SENIOR VP CONTINUITY AGREEMENT
SENIOR
VP
CONTINUITY AGREEMENT
This
Senior VP
Continuity Agreement (the “Agreement”)
is
made and entered into effective as of ____________,
by and
between ______________ (the “Employee”)
and
ArthroCare Corporation, a Delaware corporation (the “Company”).
RECITALS
A.
It
is
expected that the Company from time to time will consider the possibility of
a
Change of Control (as defined below). The Board of Directors of the Company
recognizes that such consideration can be a distraction to the Employee and
can
cause the Employee to consider alternative employment opportunities. The Board
of Directors has determined that it is in the best interests of the Company
and
its shareholders to assure that the Company will have the continued dedication
and objectivity of the Employee, notwithstanding the possibility, threat or
occurrence of a Change of Control.
B.
The
Board
of Directors believes that it is in the best interests of the Company and its
shareholders to provide the Employee with an incentive to continue his/her
employment and to motivate the Employee to maximize the value of the Company
upon a Change of Control for the benefit of its shareholders.
C.
The
Board
of Directors believes that it is imperative to provide the Employee with certain
benefits upon a Change of Control and, under certain circumstances, upon
termination of the Employee's employment, which benefits are intended to provide
the Employee with financial security and sufficient incentive and encouragement
to remain with the Company notwithstanding the possibility of a Change of
Control or a termination of employment.
D.
Certain
capitalized terms used in the Agreement are defined in Section 7
below.
In
consideration of the mutual covenants herein contained, and in consideration
of
the continuing employment of Employee by the Company, the parties agree as
follows:
1.
Duties
and Scope of Employment.
The
Company shall continue to employ the Employee in the position of ___________________,
as such
position was defined in terms of responsibilities and compensation as of the
effective date of this Agreement; provided,
however,
that
the Board of Directors shall have the right, subject to the other provisions
of
this Agreement, at any time prior to the occurrence of a Change of Control,
to
revise such responsibilities and compensation as the Board of Directors in
its
discretion may deem necessary or appropriate. The Employee shall comply with
and
be bound by the Company's operating policies, procedures and practices from
time
to time in effect during his/her employment. During the term of the Employee's
employment with the Company, the Employee shall devote his/her full time, skill
and attention to his/her duties and responsibilities, and shall perform them
faithfully, diligently and competently, and the Employee shall use his/her
best
efforts to further the business of the Company and its affiliated
entities.
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2.
Base
Compensation.
The
Company shall pay the Employee as compensation for his/her services a base
salary, along with such performance bonus amounts as the Board of Directors
shall authorize, in its discretion, from time to time. Such salary shall be
paid
periodically in accordance with normal Company payroll policies. The Employee's
compensation (including bonus amounts) specified in this Section 2, together
with any increases in such compensation that the Board of Directors may grant
from time to time, is referred to in this Agreement as the Employee's
“Base
Compensation.”
3.
Employee
Benefits.
The
Employee shall be eligible to participate in the employee benefit plans and
compensation programs maintained by the Company and applicable to other key
employees of the Company, including (without limitation) retirement plans,
savings or profit-sharing plans, stock option, incentive or other bonus plans,
life, disability, health, accident and other insurance programs, paid
time
off,
and
similar plans or programs, subject in each case to the generally applicable
terms and conditions of the applicable plan or program in question and to the
determination of any committee administering such plan or program.
4.
At-Will
Employment.
The
Company and the Employee acknowledge that the Employee's employment is and
shall
continue to be at-will, as defined under applicable law.
The
terms of this Agreement shall terminate upon the earlier of (i) termination
of
the Employee's position as an executive officer of the Company; or
(ii)
the
date that all obligations of the parties hereunder have been satisfied. A
termination of the terms of this Agreement pursuant to the preceding sentence
shall be effective for all purposes, except that such termination shall not
affect the payment or provision of compensation or benefits on account of a
termination of employment occurring prior to the termination of the terms of
this Agreement.
5.
Equity
Acceleration Upon a Change of Control.
Upon a
Change of Control, Employee shall immediately become 50% vested with respect
to
any outstanding unvested options to purchase the Company’s capital stock or
outstanding stock appreciation rights (SARs) that Employee then holds and/or
any
restrictions with respect to 50% of the unvested restricted shares and
restricted stock units (RSUs) of the Company’s capital stock that Employee then
holds shall immediately lapse at the time of the Change of Control.
6.
Equity
Acceleration Upon a Hostile Takeover.
Upon a
Hostile Takeover, Employee shall immediately become 100% vested with respect
to
any outstanding options to purchase the Company’s capital stock or outstanding
SARs that Employee then holds and/or any restrictions with respect to restricted
shares and RSUs of the Company’s capital stock that Employee then holds shall
immediately lapse.
7.
Compensation
Upon Termination
of
Employment.
(a) Termination
Without Cause Apart from a Change of Control. If
the
Employee's employment is
terminated by
the
Company without
Cause at
any
time either
prior to the occurrence of a Change of Control or after the twenty
-four
(24) month
period following the effective date of a
Change
of Control,
then the
Employee
shall be entitled to
receive
severance benefits as follows:
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(i) Accrued
Compensation.
The
Company shall pay to the Employee his or her full earned but unpaid base salary,
when due, through the date of termination at the rate in effect immediately
prior to the date of termination, plus all other amounts to which the Employee
is entitled under any compensation plan or practice of the Company at the time
such payments are due, including accrued paid time off. The Employee will not
accrue paid time off following the date of termination.
(ii)
Severance
Pay.
During
the Compensation Continuation Period, the Company shall pay the Employee
continuing payments of severance pay in accordance with its normal payroll
practices at a rate equal to the Employee's base salary (not including any
bonus) in effect immediately prior to the Employee’s termination.
(iii)
Medical
Benefits.
The
Company shall reimburse the Employee for the amount of his or her premium
payment for group health coverage, if any, elected by the Employee pursuant
to
the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
(“COBRA”); provided, however, that (A) such reimbursement shall not exceed
$650.00 per month, and (B) the Employee 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 Employee 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 six (6) months following
the
Employee’s termination, the Company’s obligations to reimburse the Employee
under this subsection (iii) shall cease.
(iv) Equity
Grants.
Effective as of the date of termination, the Employee’s outstanding options and
SARs will cease to continue vesting and all of the unvested options and SARs
will be canceled. The Employee’s outstanding options and SARs which are vested
at the time of termination will remain exercisable in accordance with the terms
of the stock option agreements or stock appreciation rights agreements, as
applicable, 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 and RSUs 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 or restricted stock unit agreements, as applicable, pursuant to
which
they were granted.
(b) Involuntary
Termination
Following a Change of Control.
If the
Employee’s employment with the Company terminates in an Involuntary
Termination
at any
time within twenty four
(24)
months after a Change of Control,
then
the Employee shall be entitled to receive severance benefits as
follows:
(i) Accrued Compensation.
The
Company shall pay to the Employee his or her full earned but unpaid base salary,
when due, through the date of termination at the rate in effect immediately
prior to the Involuntary Termination, plus all other amounts to which the
Employee is entitled under any compensation plan or practice of the Company
at
the time such
payments are due, including accrued paid time off. The Employee will not accrue paid time off following the date of termination.
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payments are due, including accrued paid time off. The Employee will not accrue paid time off following the date of termination.
(ii) Severance
Pay.
During
the Compensation
Continuation Period, the Company shall pay the Employee continuing payments
of
severance pay in
accordance
with its normal payroll practices
at
a rate
equal to
the
Employee's Current Compensation.
(iii) Medical
Benefits.
The
Company shall reimburse the Employee for the amount of his or her premium
payment for group health coverage, if any, elected by the Employee pursuant
to
the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
(“COBRA”);
provided,
however,
that
(A) such reimbursement shall not exceed $650.00 per month, and (B) the Employee
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 Employee 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 Employee's termination, the Company's
obligations to reimburse the Employee under this subsection (iii)
shall
cease; provided,
finally,
that if
the Company's obligations under this subsection (iii)
cease
pursuant to clause (1),
the
Company shall make a lump sum payment to the Employee equal to the product
of
the last monthly reimbursement paid to the Employee pursuant to this subsection
(iii)
multiplied by six (6).
(iv)
Outplacement
Services.
During
the twenty-four (24) months following termination of the Employee's employment,
the Employee shall be entitled to executive-level outplacement services at
the
Company's expense, not to exceed $15,000. Such services shall be provided by
a
firm selected by the Employee from a list compiled by the Company.
(v)
Equity
Acceleration.
At the
time of the Involuntary Termination, Employee shall immediately become 100%
vested with respect to any outstanding options to purchase the Company’s capital
stock or outstanding SARs that Employee then holds and/or any restrictions
with
respect to restricted shares and RSUs of the Company’s capital stock that
Employee then holds shall immediately lapse.
(c)
Voluntary
Resignation; Termination For Cause.
If the
Employee voluntarily resigns from the Company (other than in an Involuntary
Termination), or if the Company terminates the Employee's employment for Cause,
then the Employee shall not be entitled to receive severance or other benefits
under this Section 7, but shall be eligible for those benefits (if any) as
may
then be established under any other Section of this Agreement or the Company's
then-existing severance and benefits plans and policies at the time of such
termination.
(d)
Disability;
Death.
If the
Company terminates the Employee's employment as a result of the Employee's
Disability, or such Employee's employment terminates due to the death of the
Employee, either in connection with or apart from a Change of Control, then
the
Employee shall not be entitled to receive severance or other benefits under
this
Section 7, but
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shall
be
eligible for those benefits (if any) as may then be established under any other
Section of this Agreement or the Company's then-existing severance and benefits
plans and policies at the time of such Disability or death.
(e) Release.
Payment
of any amount to the
Employee pursuant
to this Section 7 and
the
Employee’s
acceptance
of
such
amounts shall
be
subject
to the execution
of
a
general
waiver and release of all claims in the form attached hereto as Exhibit
A.
8. Definition
of Terms.
The
following terms referred to in this Agreement shall have the following
meanings:
(a)
Cause.
“Cause”
shall
mean 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)
any
act of personal dishonesty taken by the Employee in connection with his/her
responsibilities as an employee and intended to result in substantial personal
enrichment of the Employee, (ii) the Employee's commission of a felony or an
act
of fraud against the Company or its affiliates, (iii) a willful act by the
Employee that constitutes gross misconduct and that is injurious to the Company,
(iv)
the
Employee’s failure to satisfactorily perform the Employee's obligations under
Section 1 of this Agreement, which failure adversely affects the business of
the
Company or its affiliates, as determined by a majority of the members of the
Company’s Board of Directors, and
(v)
continued violations by the Employee of the Employee's obligations under Section
1 of this Agreement, which are demonstrably willful and deliberate on the
Employee's part after there has been delivered to the Employee a written demand
for performance from the Company that describes the basis for the Company's
belief that the Employee has not substantially performed his/her duties along
with an opportunity for the Employee to meet such demands, which the Employee
fails to accomplish within a reasonable period of time.
(b)
Change
of Control.
“Change
of Control”
shall
mean the occurrence of any of the following events:
(i)
Any
“person” (as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended) becomes the “beneficial owner” (as defined in
Rule 13d-3 under said Act), directly or indirectly, of securities of the Company
representing fifteen percent (15%) or more of the total voting power represented
by the Company's then outstanding voting securities;
(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 fifty percent (50%) of the total voting power
represented by the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation;
(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
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(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)
Compensation
Continuation Period.
“Compensation
Continuation Period”
shall
mean (i)
in
the case of a termination pursuant to Section 7(a) above, the period of time
commencing with termination of the Employee's employment by the Company without
Cause during the term of this Agreement and ending with the expiration of six
(6) months following the date of the Employee's termination, or (ii) in the
case
of a termination pursuant to Section 7(b) above, the
period of time commencing with termination of the Employee's employment in
an
Involuntary Termination during the term of this Agreement and ending with the
expiration of twenty-four (24) months following the date of the Employee's
termination.
(d)
Current
Compensation.
“Current
Compensation”
shall
mean an amount equal to the greater of (i) Employee's Base Compensation earned
in the fiscal year preceding the fiscal year of Employee's termination; or
(ii)
Employee's Base Compensation for the fiscal year of Employee's termination,
including 100% of any bonus which the Employee could have earned during such
fiscal year, assuming the achievement of all relevant Employee and Company
goals, milestones and performance criteria.
(e)
Disability.
“Disability”
shall
mean that the Employee has been unable to perform his duties under this
Agreement as the 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 the Employee or the Employee'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 the
Employee's employment. In the event that the Employee resumes the performance
of
substantially all of his/her duties hereunder before the termination of his
employment becomes effective, the notice of intent to terminate shall
automatically be deemed to have been revoked.
(f)
Hostile
Takeover.
“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 fifty percent (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;
(g)
Involuntary
Termination.
“Involuntary
Termination”
shall
mean (i) without the Employee's express written consent, the assignment to
the
Employee of any duties or the significant reduction of the Employee's duties,
either of which is inconsistent with the
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Employee's
position with the Company and his/her responsibilities in effect immediately
prior to such assignment, or the removal of the Employee from such position
and
responsibilities; (ii) without the Employee's express written consent, a
substantial reduction, without good business reasons, of the facilities and
perquisites (including office space and location) available to the Employee
immediately prior to such reduction; (iii) a reduction by the Company in the
Base Compensation of the Employee as in effect immediately prior to such
reduction; (iv) a material reduction by the Company in the kind or level of
employee benefits to which the Employee is entitled immediately prior to such
reduction, with the result that the Employee's overall benefits package is
significantly reduced; (v) the relocation of the Employee to a facility or
a
location more than 30 miles from the Employee's then present location, without
the Employee's express written consent; (vi) any purported termination of the
Employee 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 (vii)
the failure of the Company to obtain the assumption of this Agreement by any
successors contemplated in Section 12
below;
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 for in this Agreement.
9. 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 the Employee 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 Internal Revenue
Code (the “Excise
Tax”),
then
the Employee shall be entitled to receive an additional payment from the Company
(the “First
Reimbursement Payment”)
equal
to one hundred percent (100%) of any Excise Tax actually paid or payable by
the
Employee in connection with the Payments, plus an additional payment from the
Company in such amount that after payment of all taxes (including, without
limitation, any interest and penalties on such taxes and the Excise Tax) on
the
Reimbursement Payment, the Employee retains an amount equal to the Reimbursement
Payment.
(b)
Determination.
Unless
the Company and the Employee otherwise agree in writing, any determination
required under this Section shall be made in writing by the Company's primary
independent public accounting firm (the “Accountants”),
whose
determination shall be conclusive and binding upon the Employee 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 the Employee 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.
10. Nonsolicitation
Covenant.
The
Employee hereby agrees that he or she shall not, during the term of Employee’s
employment with the Company and until the later of (i) one year
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following
termination of Employee’s employment with the Company or (ii) the date upon
which the Employee ceases receiving payments pursuant to Section 7 above,
without the prior written consent of the Company’s Board of Directors, do any of
the following:
(a) solicit
or influence or attempt to influence any client, customer or other person either
directly or indirectly, to direct any 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; and
(b) solicit
or influence or attempt to influence any person employed by the Company to
terminate or otherwise cease his or her employment with the Company or become
an
employee of any competitor of the Company.
The
Employee’s obligations under this Section 10 shall survive termination of the
Employee’s employment with the Company and the termination of this
Agreement.
11. Non-Disparagement.
The
Employee agrees to refrain from any disparagement, criticism, defamation,
slander, or tortious interference with the contracts and relationships of the
Company or its employees, directors or principal stockholders. The Employee’s
obligations under this Section 11 shall survive termination of the Employee’s
employment with the Company and the termination of this Agreement.
12. Successors.
(a)
Company's
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 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 subsection (a) or which becomes bound by the terms of this
Agreement by operation of law.
(b)
Employee's
Successors.
The
terms of this Agreement and all rights of the Employee hereunder shall inure
to
the benefit of, and be enforceable by, the Employee's personal or legal
representatives, executors, administrators, successors, heirs, devisees and
legatees.
13. Notice.
(a)
General.
Notices
and all other communications contemplated by this Agreement shall be in writing
and shall be deemed to have been duly given when delivered personally, or by
facsimile, or three business days after deposit in the U.S. mail by registered
or certified mail, return receipt requested and postage prepaid. In the case
of
the Employee, mailed notices shall be addressed to him/her at the home address
which he/she most recently communicated to the Company in writing. In the case
of the Company, mailed notices shall be addressed to its corporate headquarters,
and all notices shall be directed to the attention of its
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Secretary.
(b)
Notice
of Termination.
Any
termination of
Employee’s employment by
the
Company for Cause or by the Employee as a result of an Involuntary Termination
shall be communicated 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 the Employee to include in the notice any fact or
circumstance which contributes to a showing of Involuntary Termination shall
not
waive any right of the Employee hereunder or preclude the Employee from
asserting such fact or circumstance in enforcing his/her rights hereunder.
14. Confidentiality.
The
Parties hereto each agree to use their best efforts to maintain in confidence
the underlying facts leading up to this Agreement, the existence of this
Agreement, the contents and terms of this Agreement, and the consideration
for
this Agreement. Each Party hereto agrees not to disclose or use and to take
every reasonable precaution to prevent disclosure or use of any such information
to or by third parties, and each agrees that there will be no publicity,
directly or indirectly, concerning any such information. The parties hereto
agree that breach of this Section shall constitute a material breach of this
Agreement that shall entitle the non-breaching party to all available legal
and
equitable remedies including, but not limited to, rescission
of this
Agreement. The parties hereto further agree that all benefits to the Employee
under this Agreement shall be conditioned on his/her compliance with his/her
obligations under this Section.
15. Miscellaneous
Provisions.
(a)
No
Duty to Mitigate.
The
Employee shall not be required to mitigate the amount of any payment or benefit
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 or benefit be reduced by the Employee obtaining new employment
or
by any earnings that the Employee may receive from any other
source.
(b)
Waiver.
No
provision of this Agreement shall be modified, waived or discharged unless
the
modification, waiver or discharge is agreed to in writing and signed by the
Employee and by an authorized officer of the Company (other than the Employee).
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)
Whole
Agreement.
This
Agreement sets forth the entire agreement of the parties hereto in respect
of
the subject matter contained herein and supersedes all prior
agreements,
promises, covenants, arrangements, communications,
representations or warranties, whether
oral or written,
by any
officer, employee or
representative
of any party hereto, and any prior agreement of the parties hereto in respect
of
the subject matter contained herein, including, without limitation, any prior
severance or change in control agreements is
hereby
terminated and
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cancelled.
Any of the Employee’s rights hereunder shall be in addition
to any
rights the Employee may otherwise have under benefit plans or agreements of
the
Company (other
than
severance plans or agreements or the Prior Agreement) to which the Employee
is a
party
or
in which the Employee is a participant, including, but
not
limited
to, any Company sponsored employee benefit plans and equity incentive plans.
The
provisions of
this
Agreement shall
not
in any way abrogate the Employee’s rights under such other plans and
agreements.
(d)
Choice
of Law.
The
validity and interpretation of this Agreement shall be governed by the laws
of
the State of California without reference to rules of conflicts of law. Employee
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.
(e)
Severability.
If any
portion of this Agreement is held by an arbitrator or a court of competent
jurisdiction to conflict with any federal, state or local law, or to be
otherwise invalid or unenforceable, such portion of this Agreement shall be
of
no force or effect and the remaining provisions of this Agreement shall
otherwise remain in full force and effect and be construed as if such portion
had not been included in this Agreement.
(f)
Arbitration.
(i) Unless
otherwise provided herein, in the event that there shall be a dispute
(a
“Dispute”) among the parties
arising
out of
or
relating
to
this
Agreement, or the breach
thereof,
the
parties agree that such dispute shall
be
resolved
by
final
and binding
arbitration before
a
single arbitrator
in Santa
Xxxxx County, California,
administered by
the
American Arbitration Association (the
“AAA”), in
accordance
with AAA’s Employment ADR Rules.
The arbitrator’s
decision shall be final and binding upon the parties, and may be entered and
enforced in any court of competent jurisdiction by either of the parties. The
arbitrator shall have the power to grant temporary, preliminary and permanent
relief, including without limitation, injunctive relief and specific
performance.
(ii) The
Company will pay the direct costs and expenses of the arbitration. The Employee
and the Company are responsible for their respective attorneys’ fees incurred in
connection with enforcing this Agreement; however, the Employee and the Company
agree that, except as may be prohibited by law, the arbitrator may, in his
or
her discretion, award reasonable attorneys’ fees to the
prevailing party. Judgment may be entered on the arbitrator's award in any
court
having jurisdiction. Punitive damages shall not be awarded.
(g)
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 (g) shall be void.
(h)
Employment
Taxes.
All
payments made pursuant to this Agreement will be subject to withholding of
applicable income and employment taxes.
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(i)
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 the Employee.
(j)
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.
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IN
WITNESS WHEREOF, each of the parties has executed this Agreement, in the case
of
the Company by its duly authorized officer, as of the day and year first above
written.
COMPANY:
ARTHROCARE
CORPORATION
By:
________________________________
Title:
_______________________________
EMPLOYEE:
___________________________________
(Signature)
___________________________________
(Print)
Date:
______________________________
-12-
EXHIBIT
A
EMPLOYEE
AGREEMENT AND RELEASE
Pursuant
to a Senior VP Continuity Agreement (the “Continuity Agreement”) dated
_________________, with ArthroCare Corporation (the “Company”), I have been
offered the opportunity to receive certain severance benefits from the Company
described in Section 7 of the Continuity Agreement to which I otherwise would
not be entitled by executing this Employee Agreement and Release (this
“Agreement”).
I
hereby
confirm my obligations under the Company’s proprietary information and
inventions agreement.
In
granting the release herein, I acknowledge that I understand that I am waiving
the benefit of any provision of law in any jurisdiction to the following effect:
“A general release does not extend to claims which the creditor does not know
or
suspect to exist in his favor at the time of executing the release, which if
known by him must have materially affected her settlement with the debtor.”
(California Civil Code Section 1542). I hereby expressly waive and relinquish
all rights and benefits under that section and any law or legal principle of
similar effect in any jurisdiction with respect to the release of unknown and
unsuspected claims granted in this Agreement.
Except
as
otherwise set forth in this Agreement, I hereby release, acquit and forever
discharge the Company, its parents and subsidiaries, and its and their
respective officers, directors, agents, servants, employees, shareholders,
successors, assigns and affiliates, of and from any and all claims, liabilities,
demands, causes of action, costs, expenses, attorneys fees, damages, indemnities
and obligations of every kind and nature, in law, equity, or otherwise, known
and unknown, suspected and unsuspected, disclosed and undisclosed (other than
any claim for indemnification I may have as a result of any third party action
against me based on my employment with the Company), arising out of or in any
way related to agreements, events, acts or conduct at any time prior to the
date
I execute this Agreement, including but not limited to: all such claims and
demands directly or indirectly arising out of or in any way connected with
my
employment with the Company or the termination of that employment, including
but
not limited to, claims of intentional and negligent infliction of emotional
distress, any and all tort claims for personal injury, claims or demands related
to salary, bonuses, commissions, stock, stock options, or any other ownership
interests in the Company, paid time off, fringe benefits, expense
reimbursements, severance pay, or any other form of compensation; claims
pursuant to any federal, state or local law or cause of action including, but
not limited to, the federal Civil Rights Act of 1964, as amended; the Federal
Equal Pay Act, as amended; the federal Age Discrimination in Employment Act
of
1967, as amended (“ADEA”); the Older Workers Benefit Protection Act of 1990; the
federal Employee Retirement Income Security Act of 1974, as amended; the federal
Americans with Disabilities Act of 1990; all claims under the Fair Labor
Standards Act; all claims under the National Labor Relations Act; all claims
under the Family and Medical Leave Act; all claims under 42 U.S.C. 1981; the
California Fair Employment and Housing Act, as amended, and the California
Labor
Code; tort law; contract law; wrongful discharge; harassment; discrimination;
fraud; defamation; emotional distress; and breach of the implied covenant of
good faith and fair dealing; all claims under any principle of common
law;
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all
claims concerning any right to reinstatement; and/or any other local, state,
or
federal law governing discrimination in employment and/or the payment of wages
and benefits; provided, however, that nothing in this paragraph shall be
construed in any way to release the Company from its obligation to indemnify
me
pursuant to the Company's indemnification agreement.
I
acknowledge that I am knowingly and voluntarily waiving and releasing any rights
I may have under ADEA. I also acknowledge that the consideration given for
the
waiver and release in the preceding paragraph hereof is in addition to anything
of value to which I was already entitled. I further acknowledge that I have
been
advised by this writing, as required by the ADEA, that: (A) my waiver and
release do not apply to any rights or claims that may arise on or after the
date
I execute this Agreement; (B) I have the right to consult with an attorney
prior
to executing this Agreement; (C) I have twenty-one (21) days to consider this
Agreement (although I may choose to voluntarily execute this Agreement earlier);
(D) I have seven (7) days following the execution of this Agreement by the
parties to revoke the Agreement; and (E) this Agreement shall not be effective
until the date upon which the revocation period has expired, which shall be
the
eighth day after this Agreement is executed by me, provided that the Company
has
also executed this Agreement by that date.
BY
SIGNING BELOW, I ACKNOWLEDGE THAT I HAVE READ THIS AGREEMENT, UNDERSTAND ITS
TERMS AND EFFECT, AND AGREE TO IT VOLUNTARILY.
Date:
[EMPLOYEE]
Acknowledged
and Agreed:
ARTHROCARE
CORPORATION
By:
Name:
Title:
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