Document:

Exhibit
      10.66

     

    ARTHROCARE
      CORPORATION

     

    EMPLOYMENT
      AGREEMENT

     

     

    This
      Employment Agreement (the “Agreement”)
      is
      effective as of April 21, 2008
      (the
“Effective
      Date”),
      by
      and between John
      Raffle
      (“Executive”)
      and
      ArthroCare Corporation, a Delaware corporation (the “Company”).
      Certain capitalized terms used in the Agreement are defined in Section 7
      below.

     

    RECITALS

     

    WHEREAS,
      the
      Board
      of Directors of the Company believes that it is in the best interests of the
      Company and its stockholders to provide Executive with an incentive to continue
      his employment with the Company and to motivate Executive to maximize the value
      of the Company in the event of a Change of Control for the benefit of its
      stockholders; 

     

    WHEREAS,
      the
      Company and Executive have entered into that certain Senior
      VP
      Continuity
      Agreement between the Company and Executive effective as of December
      13, 2006
      (the
“Prior
      Agreement”);
      and

     

    WHEREAS,
      the
      Company and Executive intend that the Prior Agreement be superseded in all
      respects by this Agreement.

     

    AGREEMENT

     

    NOW,
      THEREFORE,
      in
      consideration of the mutual promises and agreements contained herein, the
      parties hereby agree as follows: 

     

    1. Term
      of Agreement.
      This
      Agreement shall commence on the Effective Date and shall have a term of three
      years (such period, including any extensions pursuant to this Section 1, the
      “Term”).
      This
      Agreement shall be automatically renewable for one-year periods after the
      expiration of the initial three-year
      period, unless otherwise terminated pursuant to Section 5. This Agreement may
      be
      terminated by either party, with or without cause, at the end of the
      then-current Term with six months’ advance written notice to the other
      party.

     

    2. Duties.
      

     

    (a) Position.
      Executive
      shall be employed as Senior
      Vice President,
      Strategic Business Units,
      of the
      Company. In such capacity he shall have those
      duties and responsibilities as are within the definition of such position as
      of
      the date hereof, subject to such revisions as the Board of Directors may deem
      necessary or appropriate from time to time, prior to a Change of Control (as
      defined below). Executive shall
      report
      to and be subject to the direction and control of the Company’s President
      and
      Chief
      Executive Officer (the
      “CEO”).

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (b) Obligations
      to the Company.
      Executive
      agrees to the best of his ability and experience that he will at all times
      loyally and conscientiously perform all of the duties and obligations required
      of and from Executive pursuant to the express and implicit terms hereof, and
      to
      the reasonable satisfaction of the Company. During the term of Executive’s
      employment relationship with the Company, Executive further agrees that he
      will
      devote all of his business time and attention to the business of the Company,
      Executive will not render commercial or professional services of any nature
      to
      any person or organization, whether or not for compensation, without the prior
      written consent of the Company’s Board of Directors, and Executive will not
      directly or indirectly engage or participate in any business that is competitive
      in any manner with the business of the Company. Nothing in this Agreement will
      prevent Executive from accepting speaking or presentation engagements in
      exchange for honoraria or from serving on boards of charitable organizations,
      or
      from owning no more than 1% of the outstanding equity securities of a
      corporation whose stock is listed on a national stock exchange. Executive will
      comply with and be bound by the Company’s operating policies, procedures and
      practices from time to time in effect during the term of Executive’s
      employment.

     

    3. At-Will
      Employment.
      The
      Company and Executive acknowledge that Executive’s employment is and shall
      continue to be at-will, as defined under applicable law, and that Executive’s
      employment with the Company may be terminated by either party at any time for
      any or no reason. If Executive’s employment terminates for any reason, Executive
      shall not be entitled to any payments, benefits, damages, award or compensation
      other than as provided in this Agreement. The rights and duties created by
      this
      Section 3 may not be modified in any way except by a written agreement executed
      by the Board of Directors of the Company and Executive.

     

    4. Compensation.
      For the
      duties and services to be performed by Executive hereunder, the Company shall
      pay Executive, and Executive agrees to accept, the salary, Equity Awards (as
      defined in Section 7 below), bonuses and other benefits described below in
      this
      Section 4.

     

    (a) Salary.
      Executive shall receive an annual salary of $273,735
      (the
“Base
      Salary”).
      Executive’s Base Salary will be payable biweekly pursuant to the Company’s
      normal payroll practices. The Base Salary shall be reviewed annually by the
      CEO
      and
      the Company’s
      Board of Directors or its Compensation Committee, and adjusted as necessary
      following such review, and any increase will be effective as of the date
      determined appropriate by the Board of Directors or its Compensation Committee
      and will thereafter be deemed a part of Base Salary for purposes of Sections
      6(a) and 6(b) of this Agreement.

     

    (b) Annual
      Bonus.
      In
      addition to the Base Salary, for each fiscal year ending during the Term,
Executive
      shall have the opportunity to earn an annual performance bonus (the
“Annual
      Bonus”)
      in an
      amount up to
      60
      % of
      Executive’s Base Salary.
      The
      exact amount and composition of the Annual Bonus will be determined
      by
      the CEO
      and
      the
      Board of Directors in consultation with Executive, based upon mutually agreed
      performance objectives, both personal and corporate.

     

    (c) Equity
      Awards and Other Incentive Programs.
      Subject
      to the discretion of the Company’s Board of Directors, Executive shall be
      eligible to receive additional Equity Awards, from time to time in the future,
      on such terms and subject to such conditions as the Board of Directors shall
      determine as of the date of any such grant. To the extent permitted by Section
      422(d) of the Internal Revenue Code of 1986, as amended (the “Code”),
      any
      stock options shall be incentive stock options.
      In
      addition to the foregoing, Executive will be granted the restricted stock units
      as described in Exhibit A.

    
      
        
        

      

      
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    (i) Equity
      Award Acceleration Upon a Change of Control.
      Subject
      to any additional acceleration of vesting and exercisability and lapse of
      transfer or forfeiture restrictions described in Section 6(a) below, upon a
      Change of Control (as defined in Section 7 below), Executive shall immediately
      become vested with respect to 50% of the unvested portion of any outstanding
      unvested Equity Awards. The foregoing provision is hereby deemed to be a part
      of
      each Equity Award and to supersede any contrary provision in any agreement
      regarding such Equity Award.

     

    (ii) Equity
      Award Acceleration Upon a Hostile Takeover.
      Subject
      to any additional acceleration of vesting and exercisability and lapse of
      transfer or forfeiture restrictions described in Section 6(a) below, upon a
      Hostile Takeover (as defined in Section 7 below), the vesting and exercisability
      of all of Executive’s outstanding Equity Awards shall be automatically
      accelerated and any transfer or forfeiture restrictions on such Equity Awards
      automatically lapse as to 100% of the shares subject thereto. The foregoing
      provision is hereby deemed to be a part of each Equity Award and to supersede
      any contrary provision in any agreement relating thereto.

     

    (d) Additional
      Benefits.
      Executive shall be eligible to participate in the Company’s employee benefit
      plans of general application, including without limitation, those plans covering
      medical, disability and life insurance in accordance with the rules established
      for individual participation in any such plan and under applicable law.
      Executive shall be eligible for vacation and sick leave in accordance with
      the
      policies in effect during the Term of this Agreement and will receive such
      other
      benefits as the Company generally provides to its other employees of comparable
      position and experience. In addition, the Company shall provide to
      Executive
      reimbursement of attorneys’ fees and expenses incurred by Executive in
      connection with the negotiation and execution of this Agreement, up to a maximum
      of $3,000.

     

    (e) Reimbursement
      of Expenses.
      Executive shall be authorized to incur on behalf and for the benefit of, and
      shall be reimbursed by, the Company for reasonable expenses, provided that
      such
      expenses are substantiated in accordance with Company policies.

     

    5. Termination
      of Agreement.
      This
      Agreement may be terminated during its Term upon the occurrence of any of the
      following events:

     

    (i) The
      Company’s termination of Executive for Cause (as defined in Section 7 below)
      (“Termination
      for Cause”);

     

    (ii)
       The
      Company’s termination of Executive without Cause (as defined in Section 7
      below), which determination may be made by the Company at any time at the
      Company’s sole discretion, for any or no reason (“Termination
      Without Cause”);
      

    
      
        
        

      

      
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    (iii) The
      effective date of a written notice sent to the Company from Executive stating
      that Executive is electing to terminate his employment with the Company
      (“Voluntary
      Termination”);
      or

     

    (iv) Executive’s
      death or Disability (as defined in Section 7 below).

     

    6. Severance
      Benefits.
      Executive
      shall be entitled to receive severance benefits upon termination of employment
      only as set forth in this Section 6:

     

    (a) Termination
      Following a Change of Control.
      

     

    (i) Involuntary
      Termination.
      If
      Executive’s employment with the Company is terminated at any time within 24
      months after a Change of Control as a result of an Involuntary Termination,
      then, subject to Executive
      executing and not revoking a general release of claims in a form acceptable
      to
      the Company, Executive
      shall be entitled to receive the following severance and other
      benefits: 

     

    (A) Severance
      Pay.
      During
      the Continuation Period, Executive shall be entitled to receive as severance
      an
      amount equal to Executive’s
      Current Compensation that would otherwise have been payable during the
      Continuation Period if Executive’s service had not been terminated.
      Such
      severance payments will be made periodically in the same amounts and at the
      same
      intervals as the payments of Base Salary were made immediately prior to
      termination of employment.
      In
      addition, during the Continuation Period, the Company shall continue to make
      available to Executive and Executive’s spouse and dependents any group health
      plans, life insurance plans and other benefit plans and programs of the Company
      which were available to such individuals on the date of such termination of
      employment (the “Benefit Programs”), to the extent permitted by law and subject
      to the terms and conditions of the relevant plan or program. For purposes of
      this Section 6(a)(i)(A), Benefit Programs will not include future participation
      in any discretionary bonus or equity incentive pool, other than amounts as
      contemplated in this subsection A. 

     

    (B) Medical
      Benefits.
      The
      Company shall reimburse the Executive for the amount of his or her premium
      payment for group health coverage, if any, elected by the Executive pursuant
      to
      the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
      (“COBRA”);
      provided,
      however,
      that
      (A) such reimbursement shall not exceed $1,300 per month, and (B) the Executive
      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 Executive 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 Executive’s termination, the Company’s obligations to reimburse
      the Executive under this subsection (B) shall cease; provided,
      finally,
      that if
      the Company’s obligations under this subsection (B) cease pursuant to clause
      (1), the Company shall make a lump sum payment to the Executive equal to the
      product of the last monthly reimbursement paid to the Executive pursuant to
      this
      Section 6(a)(i) multiplied by twelve (12).

    
      
        
        

      

      
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    (C) Equity
      Award Acceleration.
      The
      vesting and exercisability of all of Executive’s outstanding Equity Awards shall
      be automatically accelerated and any transfer or forfeiture restrictions on
      such
      Equity Awards automatically lapse as to 100% of the unvested shares subject
      thereto at the time of the Involuntary Termination

     

    (ii) Voluntary
      Termination; Termination For Cause.
      If
      Executive’s employment with the Company is terminated at any time within 24
      months after a Change of Control as a result of a Voluntary Termination or
      a
      Termination for Cause, then Executive shall not be entitled to receive payment
      of any severance benefits. Executive will receive payment(s) for all salary
      and
      unpaid vacation accrued as of the date of Executive’s termination of employment
      and Executive’s benefits will be continued under the Company’s then existing
      benefit plans and policies in accordance with such plans and policies in effect
      on the date of termination and in accordance with applicable law.

     

    (b) Termination
      Apart from a Change of Control. 

     

    (i) Involuntary
      Termination.
      If
      Executive’s employment with the Company terminates at any time prior to the
      occurrence of a Change of Control or after the 24-month period following the
      effective date of a Change of Control as a result of an Involuntary Termination,
      then, subject to Executive executing and not revoking a general release of
      claims against the Company in a form acceptable to the Company, Executive will
      be entitled to receive the following severance and other benefits:

     

    (A) Severance
      Pay. The Company shall pay to Executive continuing
      payments of severance pay in accordance with its normal payroll practices at
      a
      rate
      equal
      to
      Executive’s base salary (not including bonus) in effect immediately prior to the
      Executive’s termination for a period of 12 months.
      In
      addition, for a period of 12
      months
      following Executive’s termination pursuant to this Section 6(b)(i), the Company
      shall continue to make available to Executive and Executive’s spouse and
      dependents the Benefit Programs, to the extent permitted by law and subject
      to
      the terms and conditions of the relevant plan or program. For purposes of this
      Section 6(b)(i)(A), Benefit Programs will not include future participation
      in
      any discretionary bonus or equity incentive pool, other than continuation of
      amounts as contemplated in this subsection A. 

     

    (B) Medical
      Benefits.
      The
      Company shall reimburse the Executive for the amount of his or her premium
      payment for group health coverage, if any, elected by the Executive pursuant
      to
      the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
      (“COBRA”);
      provided,
      however,
      that
      (A) such reimbursement shall not exceed $1,300 per month, and (B) the Executive
      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 Executive 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
      twelve (12)
      months
      following the Executive’s termination, the Company’s obligations to reimburse
      the Executive under this Section 6(b)(i) shall cease. 

    
      
        
        

      

      
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    (C) Equity
      Awards. Effective as of date of termination, the Employee’s Equity Awards will
      cease to continue vesting and all of the unvested Options Equity Awards will
      be
      canceled. The Employee’s Equity Awards which are vested at the time of
      termination will remain exercisable in accordance with the terms of their
      respective agreements pursuant to which they were granted for the periods set
      forth therein. Effective as of the date of termination, any restrictions with
      respect to restricted shares of the Company’s capital stock that Employee then
      holds shall cease lapsing and all of the unvested shares shall be subject to
      forfeiture and/or repurchase pursuant to the terms of the restricted stock
      agreements pursuant to which they were granted.

     

    (ii) Voluntary
      Termination; Termination for Cause.
      If
      Executive’s employment with the Company is terminated at any time prior to a
      Change of Control or after the 24 month
      period following the effective date of a Change of Control as a result of a
      Voluntary Termination (other than an Involuntary Termination, in which case
      Section 6(b)(i) will apply) or a Termination for Cause, then Executive shall
      not
      be entitled to receive payment of any severance or other benefits described
      in
      this Section 6. Executive will receive payment(s) for all salary and unpaid
      vacation accrued as of the date of Executive’s termination of employment and
      Executive’s benefits will be continued under the Company’s then existing benefit
      plans and policies in accordance with such plans and policies in effect on
      the
      date of termination and in accordance with applicable law.

     

    (c) Termination
      Resulting from Death or Disability.
      If
      Executive’s employment is terminated as a result of Executive’s death or
      Disability at any time prior to an Involuntary Termination, Executive,
      or, as the case may be, Executive’s estate or designated beneficiary(ies) will
      receive payment(s) for all salary and unpaid vacation accrued as of the date
      of
      Executive’s termination of employment and Executive’s benefits will be continued
      under the Company’s then existing benefit plans and policies in accordance with
      such plans and policies in effect on the date of termination and in accordance
      with applicable law.

     

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

     

    (a) “Cause”
for
      Executive’s termination will exist at any time after 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) Executive’s
      gross negligence or willful misconduct in performance of his duties hereunder
      where such gross negligence or unique misconduct has resulted or is likely
      to
      result in substantial and material damage to the Company or any of its
      subsidiaries; 

     

    (ii) Executive’s
      repeated and unjustified absence from the Company;

     

    (iii) Executive’s
      material and willful violation of any federal or state law;

     

    (iv) The
      commission of any act of fraud by Executive with respect to the
      Company;

     

    
      
        
        

      

      
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    (v) Executive’s
      conviction of a felony or a crime involving moral turpitude causing material
      harm to the standing and reputation of the Company; or

     

    (vi) Executive’s
      incurable material breach of any element of the Company’s Confidential
      Information and Invention Assignment Agreement, including without limitation,
      Executive’s theft or other misappropriation of the Company’s proprietary
      information.

     

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

    (i) intentionally
      omitted;

     

    (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 50% or more of the total voting power represented
      by
      the Company’s then outstanding voting securities;

     

    (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) “Continuation
      Period”
shall
      mean, in the event of an Involuntary Termination within 24 months after a Change
      of Control, the period of time commencing with termination of Executive’s
      employment in an Involuntary Termination during the Term of this Agreement
      and
      ending with the expiration of 24 months
      following the date of Executive’s termination.

     

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

     

    (e) “Disability”
shall
      mean that Executive has been unable to perform his duties under this Agreement
      as a 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 Executive or Executive’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 Executive’s employment. In the event that
      Executive resumes the performance of substantially all of his duties hereunder
      before the termination of his employment become effective, the notice of intent
      to terminate shall automatically be deemed to have been revoked.

     

    
      
        
        

      

      
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    (f) “Equity
      Award”
shall
      mean a grant of stock options, stock appreciation rights, restricted stock
      or
      restricted stock units.

     

    (g) “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 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; 

     

    (h) “Involuntary
      Termination”
shall
      include any Termination Without Cause and Executive’s Voluntary Termination,
      upon 30 days prior written notice to the Company within 90 days following:
      

     

    
      	(i)	
              The
                assignment of any duties, or the removal from or reduction or limitation
                of duties or responsibilities, which in any case is a significant
                change
                in Executive’s position, title, organization level, duties,
                responsibilities, compensation and status with the Company, without
                Executive’s express written
                consent;

            

    

    (ii) A
      substantial reduction of the facilities and perquisites provided to Executive
      (including office space or relocation more than 30 miles from the Company’s then
      present location); 

     

    (iii)
       A
      reduction in Executive’s Base Salary (other than in connection with a general
      decrease in base salaries for officers of the Company); 

     

    (iv)
       A
      material reduction in the kind or level of Executive’s benefits (including
      percentage bonus opportunity) with the result that the overall benefits package
      is significantly reduced; 

     

    (v) any
      purported termination of the Executive 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

     

    (vi)
       The
      failure of the Company to obtain the assumption of this Agreement by any
      successors; 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 in this Agreement.

     

    In
      connection with a Change of Control, if Executive and any successor company
      or
      its parent are unable to negotiate a new agreement governing the terms of
      Executive’s service with such successor company or its parent prior to the
      closing of such transaction, then Executive shall be deemed to have been
“Involuntarily Terminated” effective upon the Change of Control.

     

    
      
        
        

      

      
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    8. 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 Executive 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 Code (the
“Excise
      Tax”),
      then
      Executive shall be entitled to receive an additional payment from the Company
      (the “First
      Reimbursement Payment”)
      equal
      to 100% of any Excise Tax actually paid or payable by Executive in connection
      with the Payments, plus an additional payment from the Company in such amount
      that after payment of all taxes on the First Reimbursement Payment (including,
      without limitation, any interest and penalties on such taxes and the Excise
      Tax), Executive retains an amount equal to Reimbursement Payment.

     

    (b) Determination.
      Unless
      the Company and Executive otherwise agree in writing, any determination required
      under this Section shall be made in writing by the nationally
      recognized firm of certified public accountants (the “Accounting
      Firm”)
      used
      by the Company prior to the Change of Control (or, if such Accounting Firm
      declines to serve, the Accounting Firm shall be a nationally recognized firm
      of
      certified public accountants selected by the Company), whose
      determination shall be conclusive and binding upon Executive 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 Executive 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. 

     

    9. Confidentiality
      Agreement.
      Executive has signed an Employment, Proprietary Information and Invention
      Assignment Agreement in the form attached hereto as Exhibit A
      that
      covers protection of the Company’s proprietary information and assignment of
      inventions (the “Confidentiality
      Agreement”).
      Executive hereby represents and warrants to the Company that he has complied
      with all obligations under the Confidentiality Agreement and agrees to continue
      to abide by the terms of the Confidentiality Agreement and further agrees that
      the provisions of the Confidentiality Agreement shall survive any termination
      of
      this Agreement or of Executive’s employment relationship with the
      Company.

     

    10. Noncompetition
      Covenant.
      Executive
      hereby agrees that he shall not, during the Term of this Agreement and the
      Continuation Period, if applicable, without the prior written consent of the
      Company’s Board of Directors, carry on any business or activity (whether
      directly or indirectly, as a partner, shareholder, principal, agent, director,
      affiliate, employee or consultant) that results in or would be reasonably
      expected to result in the sale, creation or research and development of products
      that are the same or similar to those protected by any of the Company’s or its
      subsidiaries’ intellectual property rights (including, but not limited to issued
      patents, patent applications, trade secrets, and/or non-public proprietary
      information), nor
      engage in any other activities that conflict with Executive’s obligations to the
      Company.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    11. Nonsolicitation
      Covenant.
      Executive hereby agrees that he shall not, during the Term of this Agreement
      and
      for 12 months after the end of the Continuation Period, if applicable, do any
      of
      the following without the prior written consent of the Company’s Board of
      Directors:

     

    (a) Solicit
      Business.
      Solicit
      or influence or attempt to influence any client, customer or other person,
      either directly or indirectly, to direct his or its 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 (which for the avoidance
      of doubt does not prohibit the solicitation of customers for sales of products
      that are not the same or similar to those protected by the Company’s or its
      subsidiaries’ intellectual property rights as set forth in 10(a) above) ;
      and

     

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

     

    12. Conflicts.
      Executive
      represents that his performance of all the terms of this Agreement will not
      breach any other agreement to which Executive is a party. Executive has not,
      and
      will not during the Term of this Agreement, enter into any oral or written
      agreement in conflict with any of the provisions of this Agreement. Executive
      further represents that he is entering into or has entered into an employment
      relationship with the Company of his own free will.

     

    13. 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/or 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 Section 13 or which becomes bound by the terms
      of
      this Agreement by operation of law. The terms of this Agreement and all of
      Executive’s rights hereunder shall inure to the benefit of, and be enforceable
      by, Executive’s personal or legal representatives, executors, administrators,
      successors, heirs, distributees, devisees and legatees. 

     

    14. Indemnification
      Agreement.
      The Company and the Executive have entered into an Indemnification Agreement
      substantially in the form filed as Exhibit 10.1 to the Company’s Registration
      Statement on Form S-1 filed with the Securities and Exchange Commission
      (Registration No. 33-80453).

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    15. Section
      409A of the Code.
      Notwithstanding
      any provision of this Agreement to the contrary, if, at the time of Executive’s
      termination of employment with the Company, Executive is deemed to be a
“specified employee” as defined in Section 409A of the Code, any payment or
      benefit that otherwise would be paid to Executive during the period of time
      beginning with such termination of employment and ending on the earliest of
      (i)
      the date which is six months after Executive’s “separation from service” for any
      reason, other than death or “disability” (as such terms are used in Section
      409A(a)(2) of the Code), (ii) the date of Executive’s death or “disability” (as
      such term is used in Section 409A(a)(2)(C) of the Code) or (iii) the effective
      date of a “change in the ownership or effective control” of the Company (as such
      term is used in Section 409A(a)(2)(A)(v) of the Code) shall instead be paid
      to
      Executive in a lump sum as soon as practicable following such period of time
      (for the avoidance of doubt, any installment payments due to Executive after
      such period of time shall not be accelerated). The provisions of this Section
      15
      shall only apply to the extent required to avoid Executive’s incurrence of any
      penalty tax or interest under Section 409A or any regulations or guidance
      promulgated thereunder. 

     

    16. Miscellaneous
      Provisions.

     

    (a) No
      Duty to Mitigate.
      Executive shall not be required to mitigate the amount of any payment
      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 be reduced by any earnings that Executive may receive from any
      other source.

     

    (b) Amendments
      and Waivers.
      Any
      term of this Agreement may be amended or waived only with the written consent
      of
      the parties. 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) Sole
      Agreement.
      This
      Agreement, including any Exhibits hereto, constitutes the sole agreement of
      the
      parties and supersedes all oral negotiations and prior writings with respect
      to
      the subject matter hereof, including the Prior Agreement.

     

    (d)
       Notices.
      Any
      notice required or permitted by this Agreement shall be in writing and shall
      be
      deemed sufficient upon receipt, when delivered personally, by facsimile or
      by a
      nationally recognized delivery service (such as Federal Express or UPS), or
      forty-eight (48) hours after being deposited in the U.S. mail as certified
      or
      registered mail with postage prepaid, if such notice is addressed to the party
      to be notified at such party’s address as set forth below or as subsequently
      modified by written notice. Any termination by the Company for Cause or by
      Executive as a result of an Involuntary Termination shall be communication
      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 Executive to include
      in
      the notice any fact or circumstance which contributes to a showing of
      Involuntary Termination shall not waive any right of Executive hereunder or
      preclude Executive from asserting such fact or circumstance in enforcing his
      rights hereunder.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    (e) Choice
      of Law.
      The
      validity, interpretation, construction and performance of this Agreement shall
      be governed by the laws of the State of California, without giving effect to
      the
      principles of conflict of laws. Executive 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.

     

    (f) Severability.
      If one
      or more provisions of this Agreement are held to be unenforceable under
      applicable law, the parties agree to renegotiate such provision in good faith.
      In the event that the parties cannot reach a mutually agreeable and enforceable
      replacement for such provision, then (i) such provision shall be excluded from
      this Agreement, (ii) the balance of the Agreement shall be interpreted as if
      such provision were so excluded and (iii) the balance of the Agreement shall
      be
      enforceable in accordance with its terms.

     

    (g)  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.

     

    (h) Arbitration.   Any dispute
      or claim arising out of or in connection with this Agreement shall be finally
      settled by binding arbitration in San Jose, California in accordance with the
      rules of the American Arbitration Association by one arbitrator appointed
      in accordance with said rules. The arbitrator shall apply California law,
      without reference to rules of conflicts of law or rules of statutory
      arbitration, to the resolution of any dispute. Judgment on the award rendered
      by
      the arbitrator may be entered in any court having jurisdiction thereof.
      Notwithstanding the foregoing, the parties may apply to any court of competent
      jurisdiction for preliminary or interim equitable relief, or to compel
      arbitration in accordance with this paragraph, without breach of this
      arbitration provision. This Section 16(h) shall not apply to the Confidentiality
      Agreement.

     

    (i) 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 (i) shall be void.

     

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

     

    (k) 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 Executive.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    (l) ADVICE
      OF COUNSEL.
      EXECUTIVE ACKNOWLEDGES THAT, IN EXECUTING THIS AGREEMENT, HE HAS HAD THE
      OPPORTUNITY TO SEEK THE ADVICE OF INDEPENDENT LEGAL COUNSEL, AND HAS READ AND
      UNDERSTOOD ALL OF THE TERMS AND PROVISIONS OF THIS AGREEMENT. THIS AGREEMENT
      SHALL NOT BE CONSTRUED AGAINST ANY PARTY BY REASON OF THE DRAFTING OR
      PREPARATION HEREOF.

     

    The
      parties have executed this Agreement the date first written above.

    

      
        	 	
                ARTHROCARE
                  CORPORATION

              
	 	 
	 	 
	 	
                By:

              	/s/
                Michael A. Baker
	 	 	     Michael
                A. Baker
	 	 
	 	
                Title:
                  President and Chief Executive Officer

              
	 	 
	 	
                Address:

              	
                7500
                  Rialto Boulevard, Building Two, Suite 100; Austin, TX 78735
                  

              
	 	 
	 	 
	 	
                EXECUTIVE:

              
	 	 
	 	
                JOHN
                  RAFFLE

              
	 	 
	 	 
	 	
                Signature:    

              	
                /s/
                  John Raffle

              
	 	 
	 	
                Address:

              

      

    

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    EXHIBIT
      A

    

    RESTRICTED
      STOCK UNITS

    

    Executive
      shall receive a restricted stock unit grant valued at $50,000; the exact number
      of shares under this grant is determinable based on the closing price of the
      Company’s common stock on the date of grant. The restricted stock unit grant
      will vest after three years from the date of grant subject to Executive’s
      continued employment through such date so that the restricted stock unit is
      vested as to 100% of the shares of Company common stock subject thereto on
      the
      third-anniversary of the date of grant. The date of grant shall be the date
      on
      which the restricted stock unit grant is presented to the Board for approval,
      which is expected to be the first meeting following the Effective Date, and
      the
      vesting commencement date will be the Effective Date.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    EMPLOYEE
      CONFIDENTIALITY AGREEMENT

     

    
      
        
        

      

      
        15Unassociated Document

    

    

      [***Confidential
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        with
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      Securities
        and Exchange Commission. Omitted portions have been separately filed with
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        Commission.]

    
      

    

    
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        and Exchange Commission. Omitted portions have been separately filed with
        the
        Commission.]

    

    
      

    

    
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        and Exchange Commission. Omitted portions have been separately filed with
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        Commission.]

    

    
      

    

    
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        with
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        with
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        the
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