Document:

Letter Agreement with Robert W. Zack

 
Exhibit 10.42

 
Letter Agreement with Robert W. Zack dated
February 6, 2003. 
 
 

 
1388 N. Tech Boulevard 
Gilbert, AZ 85233 
 
MEMORANDUM 
 

	 To:
	 	 Rob Zack

	 From:
	 	 Mike Murry

	 Date:
	 	 February 6, 2003

	 Subject:
	 	 Promotion to Chief Financial Officer

 
I am very pleased to offer you the position of Chief Financial Officer for Catalytica Energy Systems Inc., effective April 1, 2003. As we discussed, this is an extremely critical position, one in which you can make a major
contribution. I know you are capable of providing the financial, strategic and executive leadership that CESI needs at this stage of its development. 
 
This memo is to confirm that your new salary will be $15,333 per month, which annualizes to $184,000. This reflects a 15% increase in salary.

 
In addition, you will be granted options in the amount of 85,000
shares of Catalytica Energy Systems, Inc. These options will be granted in conjunction with the 2003 Annual Grant to employees and will be priced on the date of the grant. They will be subject to the standard 4-year vesting schedule. 
 
Rob, effective April 1, 2003, your new grade level will be E3. At this level,
you are eligible for an annual bonus target of 25% and annual option target of 8000 shares. As an Officer of CESI, your compensation (salary, bonus and options) is subject to approval by the Compensation Committee and may vary from these targets.

 
Congratulations! I look forward to working with you in this new
position.Amended and Restated Nonstatutory Option Plan

 
EXHIBIT 4.5

 
ARTHROCARE CORPORATION 
AMENDED AND RESTATED NONSTATUTORY OPTION PLAN 
 
1.    Purposes of the Plan.    The purposes of this Amended
and Restated Nonstatutory Option Plan are: 
 
(a)    To attract and retain the best available personnel for positions of substantial responsibility; 
 
(b)    To provide additional incentive to Employees and Consultants; and 
 
(c)    To promote the success of the
Company’s business. 
 
Options granted under the Plan may be
Nonstatutory Stock Options. Incentive Stock Options may not be granted under the Plan. Stock Purchase Rights may also be granted under the Plan. Options and Stock Purchase Rights may not be granted under the Plan to Officers and Directors.

 
2.    Definitions.    As used herein, the following definitions shall apply: 
 
(a)    “Administrator” means the Board or any Committee administering the Plan, in accordance with
Section 4 of the Plan. 
 
(b)    “Applicable Laws” means the legal requirements relating to the administration of stock option plans under state corporate and securities laws and the Code. 
 
(c)    “Board” means the
Board of Directors of the Company. 
 
(d)    “Code” means the Internal Revenue Code of 1986, as amended. 
 
(e)    “Committee” means a Committee appointed by the Board in accordance with Section 4 of the Plan.

 
(f)    “Common
Stock” means the Common Stock of the Company. 
 
(g)    “Company” means ArthroCare Corporation, a Delaware corporation. 
 
(h)    “Consultant” means any person, including an advisor, engaged by the Company or a Parent or
Subsidiary to render services and who is compensated for such services, provided that the term “Consultant” shall not include Employees, Directors or Officers. 
 
(i)    “Continuous Status as an Employee or Consultant” means that the
employment or consulting relationship with the Company or any Parent or Subsidiary is not interrupted or terminated. Continuous Status as an Employee or Consultant shall not be considered interrupted in the case of (i) any leave of absence approved
by the Company, including sick leave, military leave, or any other personal leave or (ii) transfers between locations of the Company or between the Company, its Parent, its Subsidiaries or its successor. 
 
(j)    “Director” means
a member of the Board. 

 
(k)    “Disability” means total and permanent disability as defined in Section 22(e)(3) of the Code. 
 
(l)    “Employee” means any person employed by the Company or any Parent or Subsidiary of the
Company; provided, however, that the term Employee shall not include Officers or Directors. 
 
(m)    “Exchange Act” means the Securities Exchange Act of 1934, as amended. 
 
(n)    “Fair Market Value” means, as of any date, the value of Common
Stock determined as follows: 
 
(i)    If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the National Market System of the National Association of Securities Dealers, Inc.
Automated Quotation (“NASDAQ”) System, the Fair Market Value of a Share of Common Stock shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such system or exchange (or the exchange
with the greatest volume of trading in Common Stock) on the last market trading day prior to the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; 
 
(ii)    If the Common Stock is quoted on
the NASDAQ System (but not on the National Market System thereof) or is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of a Share of Common Stock shall be the mean between the high bid
and low asked prices for the Common Stock on the last market trading day prior to the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; 
 
(iii)    In the absence of an
established market for the Common Stock, the Fair Market Value shall be determined in good faith by the Administrator. 
 
(o)    “Incentive Stock Option” means an Option intended to qualify as an incentive stock option
within the meaning of Section 422 of the Code and the regulations promulgated thereunder. 
 
(p)    “Nonstatutory Stock Option” means an Option not intended to qualify as an Incentive Stock Option. 
 
(q)    “Notice of Grant”
means a written notice evidencing certain terms and conditions of an individual Option or Stock Purchase Right grant. The Notice of Grant is part of the Option Agreement. 
 
(r)    “Officer” means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder. 
 
(s)    “Option” means a stock option granted pursuant to the Plan. 
 
(t)    “Option
Agreement” means a written agreement between the Company and an Optionee evidencing the terms and conditions of an individual Option grant. The Option Agreement is subject to the terms and conditions of the Plan. 
 
(u)    “Option Exchange
Program” means a program whereby outstanding options are surrendered in exchange for options with a lower exercise price. 
 

2 

 
(v)    “Optioned Stock” means the Common Stock subject to an Option or Stock Purchase Right. 
 
(w)    “Optionee” means an Employee or Consultant who holds an outstanding Option or Stock Purchase
right. 
 
(x)    “Parent” means a “parent corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code. 
 
(y)    “Plan” means this Amended and Restated Nonstatutory Option Plan.

 
(z)    “Restricted
Stock” means share of Common Stock acquired pursuant to a grant of Stock Purchase Rights under Section 11 below. 
 
(aa)    “Restricted Stock Purchase Agreement” means a written agreement between the Company and the
Optionee evidencing the terms and restrictions applying to stock purchased under a Stock Purchase Right. The Restricted Stock Purchase Agreement is subject to the terms and conditions of the Plan and the Notice of Grant. 
 
(bb)    “Rule 16b-3”
means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3, as in effect when discretion is being exercised with respect to the Plan. 
 
(cc)    “Share” means a share of the Common Stock, as adjusted in accordance with Section 13 of the
Plan. 
 
(dd)    “Stock Purchase Right” means the right to purchase Common Stock pursuant to Section 11 of the Plan, as evidenced by a Notice of Grant. 
 
(ee)    “Subsidiary”
means a “subsidiary corporation,” whether now or hereafter existing, as defined in Section 424(f) of the Code. 
 
3.    Stock Subject to the Plan.    Subject to the provisions of Section 13 of the Plan,
the maximum aggregate number of Shares which may be optioned and sold under the Plan is 3,550,000 Shares. The Shares may be authorized, but unissued, or reacquired Common Stock. 
 
If an Option or Stock Purchase Right expires or becomes unexercisable without having been exercised in full,
or is surrendered pursuant to an Option Exchange Program, the unpurchased Shares which were subject thereto shall become available for future grant or sale under the Plan (unless the Plan has terminated); provided, however; that Shares have actually
been issued, whether upon exercise of an Option or Stock Purchase Right, shall not be returned to the Plan and shall not become available for future distribution under the Plan, except that if Shares of Restricted Stock are repurchased by the
Company at their original purchase price, and the original purchaser of such Shares did not receive any benefits of ownership of such Shares, such Shares shall become available for future grant under the Plan. For purposes of the preceding sentence,
voting rights shall not be considered a benefit of ownership of Shares. 
 

3 

 
4.    Administration of the Plan. 
 
(a)    Administrator.    The Plan shall be administered by (i) the Board or (ii) a committee designated by the Board, which committee shall be constituted
to satisfy Applicable Laws. Once appointed, such Committee shall serve in its designated capacity until otherwise directed by the Board. The Board may increase the size of the Committee and appoint additional members, remove members (with or without
cause) and substitute new members, fill vacancies (however caused), and remove all members of the Committee and thereafter directly administer the Plan, all to the extent permitted by Applicable Laws. 
 
(b)    Powers of the
Administrator.    Subject to the provisions of the Plan, and in the case of a Committee, subject to the specific duties delegated by the Board to such Committee, the Administrator shall have the authority, in its discretion:

 
(i)    to determine the
Fair Market Value of the Common Stock, in accordance with Section 2(n) of the Plan; 
 
(ii)    to select the Consultants and Employees to whom Options and Stock Purchase Rights may be granted hereunder; 
 
(iii)    to determine whether and to what extent Options and Stock Purchase Rights or
any combination thereof, are granted hereunder; 
 
(iv)    to determine the number of shares of Common Stock to be covered by each Option and Stock Purchase Right granted hereunder; 
 
(v)    to approve forms of agreement for use under the Plan; 
 
(vi)    to determine the terms and
conditions, not inconsistent with the terms of the Plan, of any award granted hereunder. Such terms and conditions include, but are not limited to, the exercise price, the time or times when Options or Stock Purchase Rights may be exercised (which
may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions and any restriction or limitation regarding any Option or Stock Purchase Right or the shares of Common Stock relating thereto, based in each case on
such factors as the Administrator, in its sole discretion, shall determine; 
 
(vii)    to reduce the exercise price of any Option or Stock Purchase Right to the then current Fair Market Value if the Fair Market Value of the Common Stock covered by such Option
or Stock Purchase Right shall have declined since the date the Option or Stock Purchase Right was granted; 
 
(viii)    to construe and interpret the terms of the Plan and awards granted pursuant to the Plan; 
 
(ix)    to prescribe, amend and rescind
rules and regulations relating to the Plan; 
 
(x)    to modify and amend each Option or Stock Purchase Right (subject to Section 15(c) of the Plan); 
 
(xi)    to authorize any person to execute on behalf of the Company any instrument required to effect the grant of an
Option or Stock Purchase Right previously granted by the Administrator; 
 
(xii)    to institute an Option Exchange Program; 
 

4 

 
(xiii)    to determine the terms and restrictions applicable to Options and Stock Purchase Rights and any Restricted Stock; 
 
(xiv)    to allow Optionees to satisfy withholding tax obligations by electing to have
the Company withhold from the Shares to be issued upon exercise of an Option or Stock Purchase Right that number of Shares having a Fair Market Value equal to the minimum amount required to be withheld based on the statutory withholding rates for
federal and state tax purposes that apply to supplemental taxable income. The Fair Market Value of the Shares to be withheld shall be determined on the date that the amount of tax to be withheld is to be determined. All elections by Optionees to
have Shares withheld for this purpose shall be made in such form and under such conditions as the Administrator may deem necessary or advisable; and 
 
(xv)    to make all other determinations deemed necessary or advisable for administering the Plan. 
 
(c)    Effect of Administrator’s
Decision. The Administrator’s decisions, determinations and interpretations shall be final and binding on all Optionees and any other holders of Options or Stock Purchase Rights. 
 
5.    Eligibility.    Options and Stock Purchase Rights may be
granted to Employees and Consultants. If otherwise eligible, an Employee or Consultant who has been granted an Option or Stock Purchase Right may be granted additional Options or Stock Purchase Rights. 
 
6.    Limitations.    Neither the Plan or any Option or Stock Purchase Right shall confer upon an Optionee any right with respect to continuing the Optionee’s employment or
consulting relationship with the Company, nor shall they interfere in any way with the Optionee’s right or the Company’s right to terminate such employment or consulting relationship at any time, with or without cause. 
 
7.    Term of
Plan.    The Plan shall become effective upon its adoption by the Board. It shall continue in effect for a term of ten (10) years unless terminated earlier under Section 15 of the Plan. 
 
8.    Term of
Option.    The term of each Option shall be stated in the Notice of Grant. 
 
9.    Option Exercise Price and Consideration. 
 
(a)    Exercise Price.    The per share exercise price for the
Shares to be issued pursuant to exercise of an Option shall be determined by the Administrator. 
 
(b)    Waiting Period and Exercise Dates.    At the time an Option is granted, the Administrator shall fix the period within which the Option may be
exercised and shall determine any conditions which must be satisfied before the Option may be exercised. In so doing, the Administrator may specify that an Option may not be exercised until the completion of a service period. 
 
(c)    Form of
Consideration.    The Administrator shall determine the acceptable form of consideration for exercising an Option, including the method of payment. Such consideration may consist entirely of 
 
(i)    cash; 
 
(ii)    check; 
 

5 

 
(iii)    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; 
 
(iv)    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; 
 
(v)    any combination of the foregoing methods of payment; or 
 
(vi)    such other consideration and method of payment for the issuance of Shares to the extent permitted by
Applicable Laws. 
 
10.    Exercise of Option. 
 
(a)    Procedure for Exercise; Rights as a Shareholder. Any Option granted hereunder shall be exercisable according to the terms of the Plan and at such times and under such conditions as
determined by the Administrator and set forth in the Option Agreement. An Option may not be exercised for a fraction of a Share. An Option shall be deemed exercised when the Company receives: (i) written notice of exercise (in accordance with the
Option Agreement) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised, including payment of any applicable withholding tax, which in the discretion of the Administrator
may be in the form of consideration used by the Optionee to pay for such Shares under Section 9(c). Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted by the Option Agreement and the
Plan. Shares issued upon exercise of an Option shall be issued in the name of the Optionee or, if requested by the Optionee, in the name of the Optionee and his or her spouse. Until the stock certificate evidencing such Shares is issued (as
evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such stock certificate promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to
the date the stock certificate is issued, except as provided in Section 13 of the Plan. Exercising an Option in any manner shall decrease the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the
number of Shares as to which the Option is exercised. 
 
(b)    Termination of Employment or Consulting Relationship. Upon termination of an 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). In the absence of a specified time in the Notice of Grant, the Option shall remain exercisable for 90 days following the Optionee’s termination of Continuous Status as
an Employee or Consultant. If, at the date of termination, the Optionee is not entitled to exercise his or her entire Option, the Shares covered by the unexercisable portion of the Option shall revert to the Plan. If, after termination, the Optionee
does not exercise his or her Option within the time specified by the Administrator, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan. 
 
(c)    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 his or her Option at any time within twelve (12) months from the date of such termination, but only to the 

 

6 

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 term
of such Option as set forth in the Notice of Grant). If, at the date of termination, the Optionee is not entitled to exercise his or her entire Option, the Shares covered by the unexercisable portion of the Option shall revert to the Plan. If, after
termination, the Optionee does not exercise his or her Option within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan. 
 
(d)    Death of Optionee.    In the event of the death of an
Optionee, the Option 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
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, at the time of death, the Optionee was not entitled to exercise
his or her entire Option, the Shares covered by the unexercisable portion of the Option shall immediately revert to the Plan. 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, and the Shares covered by such Option shall revert to the Plan. 
 
(e)    Rule 16b-3.    Options granted to individuals subject
to Section 16 of the Exchange Act (“Insiders”) must comply with the applicable provisions of Rule l6b-3 and shall contain such additional conditions or restrictions as may be required thereunder to qualify for the maximum exemption
from Section 16 of the Exchange Act with respect to Plan transactions. 
 
11.    Stock Purchase Rights. 
 
(a)    Rights to Purchase.    Stock Purchase Rights may be issued either alone, in addition to, or in tandem with other awards granted under the Plan
and/or cash awards made outside of the Plan. After the Administrator determines that it will offer Stock Purchase Rights under the Plan, it shall advise the offeree in writing, by means of a Notice of Grant, of the terms, conditions and restrictions
related to the offer, including the number of Shares that the offeree shall be entitled to purchase, the price to be paid, and the time within which the offeree must accept such offer, which shall in no event exceed six (6) months from the date upon
which the Administrator made the determination to grant the Stock Purchase Right. The offer shall be accepted by execution of a Restricted Stock Purchase Agreement in the form determined by the Administrator. 
 
(b)    Repurchase
Option.    Unless the Administrator determines otherwise, the Restricted Stock Purchase Agreement shall grant the Company a repurchase option exercisable upon the voluntary or involuntary termination of the purchaser’s
employment with the Company for any reason (including death or Disability). The purchase price for Shares repurchased pursuant to the Restricted Stock purchase agreement shall be the original price paid by the purchaser and may be paid by
cancellation of any indebtedness of the purchaser to the Company. The repurchase option shall lapse at a rate determined by the Administrator. 
 
(c)    Rule 16b-3.    Stock Purchase Rights granted to Insiders, and Shares purchased by
Insiders in connection with Stock Purchase Rights, shall be subject to any restrictions applicable thereto in compliance with Rule 16b-3. An Insider may only purchase Shares pursuant to the grant of a Stock Purchase Right, and may only sell Shares
purchased pursuant to the grant of a Stock Purchase Right, during such time or times as are permitted by Rule 16b-3. 
 
(d)    Other Provisions.    The Restricted Stock Purchase Agreement shall contain such
other terms, provisions and conditions not inconsistent with the Plan as may be determined by the Administrator in its sole discretion. In addition, the provisions of Restricted Stock Purchase Agreements need not be the same with respect to each
purchaser. 
 

7 

 
(e)    Rights as a Shareholder.    Once the Stock Purchase Right is exercised, the purchaser shall have the rights equivalent to those of a shareholder, and shall be a shareholder when
his or her purchase is entered upon the records of the duly authorized transfer agent of the Company. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Stock Purchase Right is exercised,
except as provided in Section 13 of the Plan. 
 
12.    Non-Transferability of Options and Stock Purchase Rights.    An Option or Stock Purchase Right may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any
manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Optionee, only by the Optionee. 
 
13.    Adjustments Upon Changes in Capitalization, Dissolution, Merger, Asset Sale or Change of Control.

 
(a)    Changes in
Capitalization.    Subject to any required action by the shareholders of the Company, the number of shares of Common Stock covered by each outstanding Option and Stock Purchase Right, and the number of shares of Common Stock
which have been authorized for issuance under the Plan but as to which no Options or Stock Purchase Rights have yet been granted or which have been returned to the Plan upon cancellation or expiration of an Option or Stock Purchase Right, as well as
the price per share of Common Stock covered by each such outstanding Option or Stock Purchase Right, shall be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock resulting from a stock split, reverse
stock split, stock dividend, combination or reclassification of the Common Stock, or any other increase or decrease in the number of issued shares of Common Stock effected without receipt of consideration by the Company; provided, however, that
conversion of any convertible securities of the Company shall not be deemed to have been “effected without receipt of consideration.” Such adjustment shall be made by the Board, whose determination in that respect shall be final, binding
and conclusive. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason of such issuance shall be made
with respect to, the number or price of shares of Common Stock subject to an Option or Stock Purchase Right. 
 
(b)    Dissolution or Liquidation.    In the event of the proposed dissolution or
liquidation of the Company, to the extent that an Option or Stock Purchase Right has not been previously exercised, it will terminate immediately prior to the consummation of such proposed action. The Board may, in the exercise of its sole
discretion in such instances, declare that any Option or Stock Purchase Right shall terminate as of a date fixed by the Board and give each Optionee the right to exercise his or her Option or Stock Purchase Right as to all or any part of the
Optioned Stock, including Shares as to which the Option or Stock Purchase Right would not otherwise be exercisable. 
 
(c)    Merger or Asset Sale.    In the event of a merger of the Company with or into
another corporation, or the sale of substantially all of the assets of the Company, each outstanding Option and Stock Purchase Right shall be assumed or an equivalent option or right shall be substituted by the successor corporation or a Parent or
Subsidiary of the successor corporation. The Administrator may, in lieu of such assumption or substitution, provide for the Optionee to have the right to exercise the Option or Stock Purchase Right as to all or a portion of the Optioned Stock,
including Shares as to which it would not otherwise be exercisable. If the Administrator makes an Option or Stock Purchase Right exercisable in lieu of assumption or substitution in the event of a merger or sale of assets, the Administrator shall
notify the Optionee that the Option or Stock Purchase Right shall be fully exercisable 

 

8 

for a period of fifteen (15) days from the date of such notice, and the Option or Stock Purchase Right will terminate upon the expiration of
such period. For the purposes of this paragraph, the Option or Stock Purchase Right shall be considered assumed if, following the merger or sale of assets, the option or right confers the right to purchase, for each Share of Optioned Stock subject
to the Option or Stock Purchase Right immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each Share held
on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the
merger or sale of assets was not solely common stock of the successor corporation or its Parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option or
Stock Purchase Right, for each Share of Optioned Stock subject to the Option or Stock Purchase Right, to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders
of Common Stock in the merger or sale of assets. 
 
14.    Date of Grant.    The date of grant of an Option or Stock Purchase Right shall be, for all purposes, the date on which the Administrator makes the determination granting such
Option or Stock Purchase Right, or such other later date as is determined by the Administrator. Notice of the determination shall be provided to each Optionee within a reasonable time after the date of such grant. 
 
15.    Amendment and Termination of the
Plan. 
 
(a)    Amendment and Termination.    The Board may at any time amend, alter, suspend or terminate the Plan. 
 
(b)    Effect of Amendment or Termination.    No amendment,
alteration, suspension or termination of the Plan shall impair the rights of any Optionee, unless mutually agreed otherwise between the Optionee and the Administrator, which agreement must be in writing and signed by the Optionee and the Company.

 
16.    Conditions Upon
Issuance of Shares. 
 
(a)    Legal Compliance.    Shares shall not be issued pursuant to the exercise of an Option or Stock Purchase Right unless the exercise of such Option or Stock Purchase Right and the
issuance and delivery of such Shares shall comply with all relevant provisions of law, including, without limitation, the Securities Act of 1933, as amended, the Exchange Act, the rules and regulations promulgated thereunder, Applicable Laws, and
the requirements of any stock exchange or quotation system upon which the Shares may then be fisted or quoted, and shall be further subject to the approval of counsel for the Company with respect to such compliance. 
 
(b)    Investment
Representations.    As a condition to the exercise of an Option or Stock Purchase Right, the Company may require the person exercising such Option or Stock Purchase Right to represent and warrant at the time of any such
exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required. 
 
17.    Liability of Company.

 
(a)    Inability to
Obtain Authority.    The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of
any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained. 
 

9 

 
(b)    Grants Exceeding Allotted Shares.    If the Optioned Stock covered by an Option or Stock Purchase Right exceeds, as of the date of grant, the number of Shares which may be issued
under the Plan, such Option or Stock Purchase Right shall be void with respect to such excess Optioned Stock, unless an amendment sufficiently increasing the number of Shares subject to the Plan is adopted in accordance with Section 15(a) of the
Plan. 
 
18.    Reservation
of Shares.    The Company, during the term of this Plan, will at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan. 
 
19.    Participants in Foreign
Countries.    The Board shall have the authority to adopt such modifications, procedures and subplans as may be necessary or desirable to comply with provisions of the laws of foreign countries in which the Company or any
Parent or Subsidiary may operate to assure the viability of Options granted under the Plan in such countries and to meet the objectives of the Plan. 
 
20.    Governing Law.    The Plan shall be governed by and construed in accordance with the
laws of the State of Delaware 
 

10 

 
ARTHROCARE
CORPORATION 
AMENDED AND RESTATED NONSTATUTORY OPTION PLAN 
 
APPENDIX 
FOR COSTA RICA 
 
1.    Application.    This Appendix shall apply in relation to Options and Stock Purchase
Rights granted to Optionees residing and providing services in Costa Rica. 
 
2.    Definitions.    Definitions as set out in Section 2 of the Plan are applicable to this Appendix. 
 
3.    Taxes/Withholding.    Each Optionee shall be liable for any employer’s Costa Rican taxes or contributions to any government agency, excluding social security obligations, in
respect of the grant, exercise, release or assignment of any Option or Stock Purchase Right or the acquisition, sale or other disposition of any Shares issued upon exercise of an Option or Stock Purchase Right and the Company may require, as a
condition of exercise, that any liability it or any Parent or Subsidiary has to account for Costa Rican income or salary taxes or contributions to any governmental agency, excluding social security obligations, or any other federal, state or local
tax withholding obligation relating to the exercise or acquisition of Common Stock under an award granted pursuant to this Plan be satisfied by any of the following means (in addition to the Company’s or any Parent’s or Subsidiary’s
right to withhold from any compensation paid or payable to the Optionee an amount sufficient to satisfy such taxes and any withholding obligations;) or by a combination of such means: (i) the Optionee’s tender of a cash payment in an amount
sufficient to satisfy such taxes and any withholding obligations; (ii) the Optionee’s authorization of the Company or any Parent or Subsidiary to withhold shares of Common Stock from the shares of Common Stock otherwise issuable to the Optionee
as a result of the exercise or acquisition of Common Stock under the award having a Fair Market Value equal to an amount sufficient to satisfy such taxes and any withholding obligations; provided, however, that no shares of Common Stock will be
withheld with a value exceeding the minimum amount of tax required to be withheld by law; or (iii) the Optionee’s delivery of owned and unencumbered shares of Common Stock having a Fair Market Value equal to an amount sufficient to satisfy such
taxes and any withholding obligations. 
 
4.    Governing Law.    The Plan shall be governed by and construed in accordance with the laws of the State of Delaware but mandatory provisions of Costa Rican law may be applied.

 

11 

 
ARTHROCARE
CORPORATION 
AMENDED AND RESTATED NONSTATUTORY OPTION PLAN 
 
APPENDIX 
FOR GERMANY 
 
1.    Definitions.    Definitions as set out in Section 2 of the Plan are applicable to
this Appendix. 
 
2.    Eligible Employees.    The Administrator’s discretion with respect to Sections 4 (b) and 10 (c) of the Plan will be exercised in a way complying with German law, in particular
with the labour law principle of equal treatment (arbeitsrechtlicher Gleichbehandlungsgrundsatz) and with the prohibition of discrimination (Diskriminierungsverbot). 
 
3.    Ex-gratia benefit.    The grant of an Option or a
Stock Purchase Right is an ex-gratia benefit (freiwillige Leistung). It is granted without any obligation; and even repeated granting will not create such obligation. 
 
4.    Adjustments upon Changes in Capitalization, Merger or Asset
Sale.    The Administrator’s discretion with respect to any adjustments pursuant to Section 13 will be exercised taking into fair consideration the circumstances why such adjustment is deemed appropriate. 
 
5.    Taxes/Withholding.    Capital gains realized upon exercise of an Option or a Stock Purchase Right is deemed to be a benefit in kind subject to income tax. Such gain is subject to
the progressive income tax rate (19.9 % to 48.5 %) plus a solidarity surcharge of 5.5 % thereon. The capital gain realized upon exercise of an option is determined by the difference between the fair market value of the shares at the time the options
are exercised and the purchase price. The fair market value is defined on the basis of the prices quoted on the respective stock exchange or, if the shares are not listed, according to the so-called “Stuttgart appraisal formula” for
unlisted shares of corporations. 
 
The Company
shall deduct wage tax from the gross salary of the Optionee. Additionally, the usual social security contributions, up to the relevant maximum amount, have to be paid on the difference between the exercise price and the market value at the time the
Option or Stock Purchase Right is exercised. If the regular salary of the Optionee is not sufficient for the Company to deduct wage tax and pay such tax to the competent tax office, the Company shall request the Optionee to pay the tax to the tax
office directly. The Company shall inform the tax office of such request. 
 
Capital gains from the sale of Shares are only subject to taxation, (i) if the sale takes place within one year from the purchase or (ii) if the Optionee (or the predecessor in the case of a transfer of Shares without
consideration), at any time during the five years preceding the sale, directly or indirectly held or holds a participation of 1 % or more. Capital gains deriving from a disposal of Shares are tax exempt for Optionees if the total gains from private
disposal transactions (private Veräußerungsgeschäfte) in the respective calendar year amounts to less than € 512 p.a. and per person. To the extent that capital gains upon sale of Shares are subject to German income tax,
50 % of such capital gains are subject to the progressive income tax rate plus a solidarity surcharge of 5.5 % thereon. 
 
In principle, 50 % of the gross dividends received by Optionees will be subject to income tax at the progressive tax rate plus solidarity
surcharge. Investment income received by the Optionee, including dividends and interest, after deduction of half the income-related expenses in economic connection with the dividends or the standard amount for income-related expenses of € 51
(€ 102 for married couples filing jointly), are tax-free up to the maximum amount of tax-free savings allowances of € 1,550 (or € 3,100 for married couples filing jointly). 
 

12 

 
6.    Insider Dealings.    Germany has adopted the EC-Directive on Insider Dealings. Insiders are, among others, persons who by virtue of their position as members of managing or
supervisory boards of the issuing company or its subsidiaries or by their profession or work, have knowledge of not publicly known facts which may influence the market value of the securities issued. Insiders are subject to certain restrictions in
selling or purchasing such securities or otherwise making use of their insider knowledge. Anyone in breach of those provisions will be liable to imprisonment or fine. 
 
7.    Administrator’s Decisions.    The decisions of the
Administrator in connection with any interpretation of the Plan or in any dispute relating to an Option or a Stock Purchase Right or other matters relating to the Plan shall be final and conclusive and binding on the relevant parties. It may only be
revised by competent courts. 
 
8.    Governing Law.    The Plan shall be governed by and construed in accordance with the laws of the State of Delaware but mandatory provisions of German law may be applied.

 

13 

 
ARTHROCARE
CORPORATION 
AMENDED AND RESTATED NONSTATUTORY OPTION PLAN 
 
APPENDIX 
FOR SWEDEN 
 
1.    Application.    This Appendix shall apply in relation to Options and Stock Purchase
Rights granted to Optionees residing and providing services in Sweden. 
 
2.    Definitions.    Definitions as set out in Section 2 of the Plan are applicable to this Appendix. 
 
3.    Taxes/Withholding.    Optionee shall be liable for any
social charges payable by the Optionee’s employer in respect of the exercise of the Option and, as a condition of exercise of the Option, any liability that the Company or any Parent or Subsidiary has to account for Swedish social charges or
any other federal, state or local tax withholding obligation relating to the exercise or acquisition of Shares pursuant to the Option shall be satisfied by Optionee through one or a combination of the following means, in the discretion of the
Administrator: 
 
(i)    the
withholding by the Company or any Parent or Subsidiary from any compensation paid or payable to the Optionee an amount sufficient to satisfy such social charges and any withholding obligations; 
 
(ii)    the Optionee’s tender of a
cash payment in an amount sufficient to satisfy such social charges and any withholding obligations; 
 
(iii)    the Optionee’s authorization of the Company or any Parent or Subsidiary to withhold shares of Common
Stock from the shares of Common Stock otherwise issuable to the Optionee as a result of the exercise or acquisition of Common Stock under the award having a Fair Market Value equal to an amount sufficient to satisfy such social charges and any
withholding obligations; provided, however, that no shares of Common Stock will be withheld with a value exceeding the minimum amount of tax required to be withheld by law; or 
 
(iv)    the Optionee’s delivery of owned and unencumbered shares of Common Stock
having a Fair Market Value equal to an amount sufficient to satisfy such social charges and any withholding obligations. 
 
Each Optionee shall sign a set-off consent regarding the foregoing withholding provisions. 
 
4.    Privacy.    The processing of an Optionee’s personal data shall be handled in such a manner as to comply with the Swedish Data Act. 
 
5.    Governing
Law.    The Plan shall be governed by and construed in accordance with the laws of the State of Delaware but mandatory provisions of Swedish law may be applied. 
 

14 

 
ARTHROCARE
CORPORATION 
AMENDED AND RESTATED NONSTATUTORY OPTION PLAN 
 
APPENDIX 
FOR UNITED KINGDOM 
 
1.    Application.    This Appendix shall apply in relation to Options and Stock Purchase
Rights granted to Optionees residing and providing services in the United Kingdom. 
 
2.    Definitions.    Definitions as set out in Section 2 of the Plan are applicable to this Appendix. 
 
3.    Taxes/Withholding.    Each Optionee shall be liable for any employer’s United Kingdom National Insurance Contribution in respect of the grant, exercise, release or assignment
of any Option or Stock Purchase Right or the acquisition, sale or other disposition of any Shares issued upon exercise of an Option or Stock Purchase Right and the Company may require, as a condition of exercise, that any liability it or any Parent
or Subsidiary has to account for United Kingdom income tax under the Pay As You Earn system and employer or employee National Insurance Contributions or any other federal, state or local tax withholding obligation relating to the exercise or
acquisition of Common Stock under an award granted pursuant to this Plan be satisfied by any of the following means (in addition to the Company’s or any Parent’s or Subsidiary’s right to withhold from any compensation paid or payable
to the Optionee an amount sufficient to satisfy such withholding obligations;) or by a combination of such means: (i) the Optionee’s tender of a cash payment in an amount sufficient to satisfy such withholding obligations; (ii) the
Optionee’s authorization of the Company or any Parent or Subsidiary to withhold shares of Common Stock from the shares of Common Stock otherwise issuable to the Optionee as a result of the exercise or acquisition of Common Stock under the award
having a Fair Market Value equal to an amount sufficient to satisfy such withholding obligations; provided, however, that no shares of Common Stock will be withheld with a value exceeding the minimum amount of tax required to be withheld by law; or
(iii) the Optionee’s delivery of owned and unencumbered shares of Common Stock having a Fair Market Value equal to an amount sufficient to satisfy such withholding obligations. 
 
4.    Governing Law.    The Plan shall be governed by and
construed in accordance with the laws of the State of Delaware but mandatory provisions of United Kingdom law may be applied. 
 

15

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00051-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00051-of-00352.parquet"}]]