September 15, 2008
September
15, 2008
ArthroCare
Corporation
0000
Xxxxxx Xxxxxxxxx
Building
Two, Suite 100
Austin,
Texas 78735
Attention: Xxxxxxx
Xxxx
Senior
Vice President, Chief Financial Officer
Re: Credit
Agreement dated as of January 13, 2006 (as amended by that certain First
Amendment
dated as of December 18, 2007 and as further amended, restated, supplemented
or otherwise modified prior to the date hereof, the "Credit
Agreement") by
and
among ArthroCare Corporation, a Delaware corporation, as Borrower (the
"Borrower'),
the
banks and other financial institutions party thereto from
time
to time, as Lenders (the "Lenders") and
Bank
of America, N.A.,
as
Administrative
Agent, Swing Line Lender and L/C issuer (the "Administrative
Agent").
Each
capitalized term used herein but not defined herein shall be defined
in
accordance with the Credit Agreement.
Dear
Xx.
Xxxx:
The
Borrower previously advised the Administrative Agent and the Lenders
that it
would be restating
its financial statements for fiscal years 2006, 2007 and the first quarter
of
2008 as more fully
described in the Borrower's 8-K filing of July 21, 2008 (such financial
restatements, collectively,
the "Restatement"). In
a
letter dated July 29, 2008, the Administrative Agent, on behalf
of
and at the direction of Xxxxxxx constituting Required Lenders, consented
to an
extension
of the deadline for delivery of the June 30, 2008 financial statements
to
September 15, 2008.
You
have
recently advised us that further additional time is requested/needed
by the
Borrower
to complete the Restatement and provide the financial statements required
by the
Credit
Agreement for the quarter ended June 30, 2008, as well as the quarter
ended
September 30,
2008.
Accordingly, the Borrower has requested that the delivery deadline for
the June
30, 2008
financial statements be extended from September 15, 2008 to December
1, 2008 and
that the deadline for the September 30, 2008 financial statements be
extended to
December 1, 2008 (the
foregoing extensions, collectively, the "Second
Extension
Period").
Such
Second Extension Period
would be used by the Borrower to complete the Restatement. It is hereby
agreed
and acknowledged
that this letter agreement shall constitute a Loan Document for all purposes
under the Credit Agreement.
As
a
condition precedent to granting this second extension, the Borrower hereby
(a)
confirms that,
after giving effect to the extension for delivery of financial information
set
forth herein, no Default
or Event of Default has occurred and is continuing, (b) represents and
warrants
that all statements
made by or on behalf of the Borrower related to the Restatement in all
annual,
regular,
periodic and special reports that the Borrower has filed with the SEC
on or
prior to the date
of
this letter agreement are true, correct and complete in all material
respects
and (c) hereby confirms and agrees that, from the date of this letter
agreement
through and including the last day
of
the Second Extension Period, (i) it has, and will
have, sufficient liquidity (exclusive of any further requests for
Credit Extensions) to meet all of its anticipated expenditures and (ii)
it
will
not
request any Credit Extension during such Second Extension Period (other
than a
continuation
or conversion of an existing
Eurocurrency Rate Loan or the extension/renewal of an existing
Letter of Credit).
Subject
to the terms and conditions hereof, the Administrative Agent, on behalf
of and
at the direction
of Lenders constituting Required Lenders, hereby consents to (a) a further
extension of the
deadline for delivery of the June 30, 2008 financial statements to December
1,
2008 and (b) an
extension for delivery of the financial statements for the quarter ending
September 30, 2008 until
December 1, 2008.
Except
as
expressly set forth in the preceding paragraph, the Credit Agreement
and each
other Loan
Document shall remain in full force and effect, and this letter shall
not waive,
affect, or diminish
any right of the Administrative Agent and the Lenders to demand strict
compliance and performance
with
the
Credit Agreement and the other Loan Documents. In furtherance thereof,
the
Administrative Agent and the Lenders hereby reserve all rights and remedies,
and
shall be entitled, to pursue at any time and from time to time, without
notice,
demand or any other action, any and all rights and remedies provided
under the
Credit Agreement and/or the other Loan Documents,
at law, in equity or otherwise, whether or not with respect to any existing
Events of Default,
all in the sole and absolute discretion of the Administrative Agent and
the
Lenders. Except
as
expressly set forth in the preceding paragraph, neither this letter nor
any
other communication
between the Administrative Agent and/or the Lenders, on the one hand,
and the
Borrower,
on the other hand, shall be construed as a consent, waiver, forbearance
or other
modification
with respect to any term, condition or other provision of the Agreement
and/or
any other
Loan Document. Neither this letter, any other communication between the
Administrative Agent
and/or the Lenders, on the one hand, and the Borrower, on the other hand,
nor
any act or omission
on the part of the Administrative Agent and/or the Lenders constitutes,
or shall
be deemed to constitute, a course of conduct or a course of dealing so
as to
justify an expectation by the
Borrower that the Administrative Agent and the Lenders will not exercise
any
rights or remedies
available to them with respect to any existing Event of Default or any
subsequent Event of
Default or an expectation by the Borrower that the Administrative Agent
and the
Lenders will waive
any
existing Event of Default or any subsequent Event of Default.
This
letter agreement shall be governed by, and construed in accordance with,
the
laws of the State of New York.
