INDEMNIFICATION
AGREEMENT
This Indemnification Agreement (the “
Agreement ”) is made as of April 2, 2009 by and
between ArthroCare Corporation, a Delaware corporation (the “
Company ”), and Todd Newton (the “
Indemnitee ”).
RECITALS
The Company and Indemnitee recognize the
increasing difficulty in obtaining liability insurance for
directors, officers and key employees, the significant increases in
the cost of such insurance and the general reductions in the
coverage of such insurance. The Company and Indemnitee
further recognize the substantial increase in corporate litigation
in general, subjecting directors, officers and key employees to
expensive litigation risks at the same time as the availability and
coverage of liability insurance has been severely
limited. Indemnitee does not regard the current
protection available as adequate under the present circumstances,
and Indemnitee and agents of the Company may not be willing to
continue to serve as agents of the Company without additional
protection. The Company desires to attract and retain
the services of highly qualified individuals, such as Indemnitee,
and to indemnify its directors, officers and key employees so as to
provide them with the maximum protection permitted by
law.
AGREEMENT
In consideration of the mutual promises made in
this Agreement, and for other good and valuable consideration,
receipt of which is hereby acknowledged, the Company and Indemnitee
hereby agree as follows:
1.
Indemnification .
(a)
Third Party Proceedings . The Company
shall indemnify Indemnitee if Indemnitee is or was a party or is
threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the
right of the Company) by reason of the fact that Indemnitee is or
was a director, officer, employee or agent of the Company, or any
subsidiary of the Company, by reason of any action or inaction on
the part of Indemnitee while an officer or director or by reason of
the fact that Indemnitee is or was serving at the request of the
Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys’ fees), judgments,
fines and amounts paid in settlement (if such settlement is
approved in advance by the Company, which approval shall not be
unreasonably withheld) actually and reasonably incurred by
Indemnitee in connection with such action, suit or proceeding if
Indemnitee acted in good faith and in a manner Indemnitee
reasonably believed to be in or not opposed to the best interests
of the Company, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe Indemnitee’s
conduct was unlawful. The termination of any action,
suit or proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that Indemnitee did not act in good
faith and in a manner which Indemnitee reasonably believed to be in
or not opposed to the best interests of the Company, or, with
respect to any criminal action or proceeding, that Indemnitee had
reasonable cause to believe that Indemnitee’s conduct was
unlawful.
(b)
Proceedings By or in the Right of the Company .
The Company shall indemnify Indemnitee if Indemnitee
was or is a party or is threatened to be made a party to any
threatened, pending or completed action or proceeding by or in the
right of the Company or any subsidiary of the Company to procure a
judgment in its favor by reason of the fact that Indemnitee is or
was a director, officer, employee or agent of the Company, or any
subsidiary of the Company, by reason of any action or inaction on
the part of Indemnitee while an officer or director or by reason of
the fact that Indemnitee is or was serving at the request of the
Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys’ fees) and, to the
fullest extent permitted by law, amounts paid in settlement (if
such settlement is approved in advance by the Company, which
approval shall not be unreasonably withheld), in each case to the
extent actually and reasonably incurred by Indemnitee in connection
with the defense or settlement of such action or suit if Indemnitee
acted in good faith and in a manner Indemnitee reasonably believed
to be in or not opposed to the best interests of the Company and
its stockholders, except that no indemnification shall be made in
respect of any claim, issue or matter as to which Indemnitee shall
have been finally adjudicated by court order or judgment to be
liable to the Company in the performance of Indemnitee’s duty
to the Company and its stockholders unless and only to the extent
that the court in which such action or proceeding is or was pending
shall determine upon application that, in view of all the
circumstances of the case, Indemnitee is fairly and reasonably
entitled to indemnity for such expenses which such court shall deem
proper.
(c)
Mandatory Payment of Expenses . To the
extent that Indemnitee has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to
in Section 1(a) or Section 1(b) or the defense of any
claim, issue or matter therein, Indemnitee shall be indemnified
against expenses (including attorneys’ fees) actually and
reasonably incurred by Indemnitee in connection
therewith.
2.
No Employment Rights . Nothing contained
in this Agreement is intended to create in Indemnitee any right to
continued employment.
3.
Expenses; Indemnification Procedure .
(a)
Advancement of Expenses . The Company
shall advance all expenses incurred by Indemnitee in connection
with the investigation, defense, settlement or appeal of any civil
or criminal action, suit or proceeding referred to in
Section l(a) or Section 1(b) hereof (including amounts
actually paid in settlement of any such action, suit or
proceeding). Indemnitee hereby undertakes to repay
such amounts advanced only if, and to the extent that, it shall
ultimately be determined that Indemnitee is not entitled to be
indemnified by the Company as authorized hereby. Any
advances to be made under this Agreement shall be paid by the
Company to Indemnitee within twenty (20) days following delivery of
a written request therefor by Indemnitee to the Company.
(b)
Notice/Cooperation by Indemnitee .
Indemnitee shall, as a condition precedent to his or
her right to be indemnified under this Agreement, give the Company
notice in writing as soon as practicable of any claim made against
Indemnitee for which indemnification will or could be sought under
this Agreement. Notice to the Company shall be directed
to the Chief Executive Officer of the Company and shall be given in
accordance with the provisions of Section 12(d)
below. In addition, Indemnitee shall give the Company
such information and cooperation as it may reasonably require and
as shall be within Indemnitee’s power.
(c)
Procedure . Any indemnification and
advances provided for in Section 1 and this Section 3
shall be made no later than forty-five (45) days after receipt of
the written request of Indemnitee. If a claim under this
Agreement, under any statute, or under any provision of the
Company’s Certificate of Incorporation or Bylaws providing
for indemnification, is not paid in full by the Company within
forty-five (45) days after a written request for payment thereof
has first been received by the Company, Indemnitee may, but need
not, at any time thereafter bring an action against the Company to
recover the unpaid amount of the claim and, subject to
Section 11 of this Agreement, Indemnitee shall also be
entitled to be paid for the expenses (including attorneys’
fees) of bringing such action. It shall be a defense to
any such action (other than an action brought to enforce a claim
for expenses incurred in connection with any action, suit or
proceeding in advance of its final disposition) that Indemnitee has
not met the standards of conduct which make it permissible under
applicable law for the Company to indemnify Indemnitee for the
amount claimed, but the burden of proving such defense shall be on
the Company and Indemnitee shall be entitled to receive interim
payments of expenses pursuant to Section 3(a) unless and until
such defense may be finally adjudicated by court order or judgment
from which no further right of appeal exists. It is the
parties’ intention that if the Company contests
Indemnitee’s right to indemnification, the question of
Indemnitee’s right to indemnification shall be for the court
to decide, and neither the failure of the Company (including its
Board of Directors, any committee or subgroup of the Board of
Directors, independent legal counsel, or its stockholders) to have
made a determination that indemnification of Indemnitee is proper
in the circumstances because Indemnitee has met the applicable
standard of conduct required by applicable law, nor an actual
determination by the Company (including its Board of Directors, any
committee or subgroup of the Board of Directors, independent legal
counsel, or its stockholders) that Indemnitee has not met such
applicable standard of conduct, shall create a presumption that
Indemnitee has or has not met the applicable standard of
conduct.
(d)
Notice to Insurers . If, at the time of
the receipt of a notice of a claim pursuant to Section 3(b)
hereof, the Company has director and officer liability insurance in
effect, the Company shall give prompt notice of the commencement of
such proceeding to the insurers in accordance with the procedures
set forth in the respective policies. The Company shall
thereafter take all necessary or desirable action to cause such
in
