ARTHROCARE CORPORATION EMPLOYMENT AGREEMENT
Exhibit
10.66
ARTHROCARE
CORPORATION
This
Employment Agreement (the “Agreement”)
is
effective as of April 21, 2008
(the
“Effective
Date”),
by
and between Xxxx
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Company and Executive intend that the Prior Agreement be superseded in all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.
8
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.
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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).
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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
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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
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|||
|
By:
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/s/ Xxxxxxx X. Xxxxx | ||
| Xxxxxxx X. Xxxxx | |||
|
Title:
President and Chief Executive Officer
|
|||
|
Address:
|
0000
Xxxxxx Xxxxxxxxx, Xxxxxxxx Xxx, Xxxxx 000; Xxxxxx, XX 00000
|
||
|
EXECUTIVE:
|
|||
|
XXXX
RAFFLE
|
|||
|
Signature:
|
/s/
Xxxx 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
15
