GENERAL RELEASE AND SEPARATION AGREEMENT

This General Release and Separation Agreement (hereafter “ Agreement ”) is entered into between Michael T. Gluk (the “ Executive ”), and ArthroCare Corporation (the “ Company ”) (collectively referred to as the “ Parties ”), effective eight days after the Executive’s signature (the “ Effective Date ”), unless he revokes his acceptance as provided in Paragraph 7(b), below.

WHEREAS, the Executive was the Senior Vice President and Chief Financial Officer of the Company;

WHEREAS, the Executive tendered his resignation, and the Company accepted such resignation effective as of December 18, 2008;

WHEREAS, the Company and the Executive now wish to document the termination of their employment relationship and fully and finally to resolve all matters between them;

THEREFORE, in exchange for the good and valuable consideration set forth herein, the adequacy of which is specifically acknowledged, the Executive and the Company hereby agree as follows:

1.            Resignation of Employment .  The Executive hereby confirms his resignation of his employment and all positions that the Executive held as an officer of the Company and all subsidiaries of the Company, and the Company confirms its acceptance of such resignations, effective December 18, 2008 (the “Resignation Date”).

2.            Payment of Accrued Wages and Expenses .  The Executive shall be paid an amount equal to all accrued wages through the Resignation Date, including accrued, unused vacation or paid time off, less applicable withholding. The Company shall pay the Executive these amounts within seven (7) days of the Effective Date of this Agreement.  The Executive shall be promptly reimbursed for all reasonable and necessary expenses incurred and submitted for reimbursement on or before December 31, 2008 in accordance with the Company’s expense reimbursement policies.

3.            Bonus for the Calendar Year Ending December 31, 2008 .  The Executive agrees that he shall not be eligible for a bonus for the calendar year ending December 31, 2008.

4.            Separation Payment .  Within seven (7) days of the Effective Date, the Company shall pay the Executive $128,900 (one hundred twenty-eight thousand nine hundred dollars) (the “Separation Payment”), less applicable taxes.  The Separation Payment shall be dated and considered paid effective December 31, 2008.

5.            Equity Awards .  All equity awards granted to the Executive shall be treated in accordance with the terms of the applicable Plan(s), Agreement(s) and Notice(s) of Grant.

6.           [Intentionally Omitted.]

7.            General Release of Claims .

(a)           The Executive, on behalf of himself and his executors, heirs, administrators, representatives and assigns, hereby agrees to release and forever discharge the Company and all predecessors, successors and their respective parent corporations, affiliates, related, and/or subsidiary entities, and all of their past and present investors, directors, shareholders, officers, general or limited partners, employees, attorneys, agents and representatives, and employee benefit plans in which the Executive is or has been a participant by virtue of his employment with the Company (the “Company Parties”), from any and all claims, debts, demands, accounts, judgments, rights, causes of action, equitable relief, damages, costs, charges, complaints, obligations, promises, agreements, controversies, suits, expenses, compensation, responsibility and liability of every kind and character whatsoever (including attorneys’ fees and costs), whether in law or equity, known or unknown, asserted or unasserted, suspected or unsuspected (collectively, “Claims”), which the Executive has or may have had against such entities based on any events or circumstances arising or occurring on or prior to the date hereof or on or prior to the Resignation Date, arising directly or indirectly out of, relating to, or in any other way involving in any manner whatsoever the Executive's employment by the Company or the separation thereof, and any and all claims arising under federal, state, or local laws relating to employment, including without limitation claims of wrongful discharge, breach of express or implied contract, fraud, misrepresentation, defamation, or liability in tort, claims of any kind that may be brought in any court or administrative agency, any claims arising under Title VII of the Civil Rights Act; the Civil Rights Act of 1866; the Sarbanes-Oxley Act; the Age Discrimination in Employment Act; the Equal Pay Act; the Fair Labor Standards Act; the Employee Retirement Income Security Act; the Americans with Disabilities Act; the Family Medical Leave Act; and/or any other local, state or federal law governing discrimination in employment and/or the payment of wages and benefits; and claims arising under the SVP Continuity Agreement entered into between the Company and the Executive.

Notwithstanding the generality of the foregoing, the Executive does not release the following claims and rights:

(i)           Claims for unemployment compensation or any state disability insurance benefits pursuant to the terms of applicable state law;

(ii)           Claims to continued participation in certain of the Company's group benefit plans pursuant to the terms and conditions of the federal law known as COBRA;

(iii)           The Executive’s right to file a charge with any state or federal agency; provided, however, that the Executive does release his right to secure any damages for the conduct alleged in such charge; and

(iv)           The Executive’s rights under this Agreement, his rights as a shareholder, and his right to indemnification from the Company pursuant to the  Company’s Certificate of Incorporation, its Bylaws, the General Corporation Law of the State of Delaware, any applicable statute or common law, any applicable insurance policy, and the terms of the Indemnification Agreement attached as Exhibit A hereto.

(b)           In accordance with the Older Workers Benefit Protection Act of 1990, the Executive acknowledges that he is aware of the following:

(i)             This Section 7, and this Agreement are written in a manner calculated to be understood by the Executive.

(ii)            The waiver and release of claims under the Age Discrimination in Employment Act contained in this Agreement does not cover rights or claims that may arise after the date on which the Executive signs this Agreement.

(iii)           This Agreement provides for consideration in addition to anything of value to which the Executive is already entitled.

(iv)           The Executive has been advised to consult an attorney before signing this Agreement.

(v)            The Executive has been granted forty-five (45) days after he is presented with this Agreement to decide whether or not to sign this Agreement.  If the Executive executes this Agreement prior to the expiration of such period, he does so voluntarily and after having had the opportunity to consult with an attorney, and hereby waives the remainder of the consideration period.

(vi)           The Executive has the right to revoke this Agreement within seven (7) days of signing it.  In the event this Agreement is revoked, it will be null and void in its entirety, and the Executive will not receive the benefits of this Agreement, except for the payment of accrued wages, unused vacation, and unreimbursed business expenses as of the Resignation Date.

If the Executive wishes to revoke this agreement, he must deliver written notice stating that intent to revoke, in accordance with the notice provisions of Section 14, on or before 5:00 p.m. on the seventh (7 ^th ) day after the date on which the Executive signs this Agreement.

8.            Nondisparagement .  The Executive agrees that neither he nor anyone acting by, through or in concert with him shall disparage or otherwise communicate negative statements or opinions about the Company, its Board members, officers, employees or business.  The Company agrees that neither its Board members nor its officers shall disparage or otherwise communicate negative statements or opinions about the Executive.  Notwithstanding the foregoing, nothing herein shall be construed to prohibit any person from making truthful statements to any governmental agency or providing truthful testimony under oath in any legal or administrative proceeding.

9.            Cooperation .  The Executive agrees to give reasonable cooperation, at the Company’s request and with the assistance of counsel of his choosing, in any pending or future litigation or arbitration brought against the Company and in any investigation the Company may conduct.  The Company shall reimburse the Executive for all expenses (excluding attorney’s fees) reasonably incurred by him in compliance with this Section 9.  Notwithstanding the foregoing, the Company shall have no obligation to pay the Executive for time spent and expenses incurred by the Executive in any pending or future litigation or arbitration where the Executive is a co-defendant or party to the arbitration or litigation, unless the Executive is entitled to indemnification from the Company pursuant to the Company’s Certificate of Incorporation, its Bylaws, the General Corporation Law of the State of Delaware, any applicable statute or common law, any applicable insurance policy, and the terms of the Indemnification Agreement.

10.          Executive’s Representations and Warranties.   The Executive represents and warrants that:

(a)           He has been paid all wages owed to him by the Company, including all accrued, unused vacation or paid time off, through the Resignation Date;

11.          Confidential Information; Return of Company Property .  The Executive hereby expressly confirms his continuing obligations to the Company pursuant to the Employment, Proprietary Information and Invention Assignment Agreement (the “Confidentiality Agreement”) executed by the Executive on December 1, 2004.

The Executive shall deliver to the Company within 10 days of the Resignation Date all originals and copies of correspondence, drawings, manuals, letters, notes, notebooks, reports, programs, plans, proposals, financial documents, or any other documents concerning the Company’s customers, business plans, marketing strategies, products, processes or business of any kind and/or which contain proprietary information or trade secrets which are in the possession or control of the Executive or his agents or representatives.

The Executive shall return to the Company within 10 days of the Resignation Date all equipment of the Company in his possession or control.  However, the Company agrees that the Executive shall be entitled to retain possession of the cell phone he was using as of the Resignation Date.

12.          In the Event of a Claimed Breach .  All controversies, claims and disputes arising out of or relating to this Agreement, including without limitation any alleged violation of its terms, shall be resolved final and binding arbitration before a single neutral arbitrator in Austin, Texas in accordance with the Employment Dispute Resolution Rules of the American Arbitration Association (“AAA”). The arbitration shall be commenced by filing a demand for arbitration with the AAA within 14 (fourteen) days after the filing party has given notice of such breach to the other party.  The arbitrator shall award the prevailing party attorneys’ fees and expert fees, if any.  Notwithstanding the foregoing, it is acknowledged that it will be impossible to measure in money the damages that would be suffered if the parties fail to comply with any of the obligations imposed on them under Section 11(a) and (b) hereof, and that in the event of any such failure, an aggrieved person will be irreparably damaged and will not have an adequate remedy at law.  Any such person shall, therefore, be entitled to injunctive relief, including specific performance, to enforce such obligations, and if any action shall be brought in equity to enforce any of the provisions of Section 11(a) and (b) of this Agreement, none of the parties hereto shall raise the defense that there is an adequate remedy at law..

13.          Choice of Law .  This Agreement shall in all respects be governed and construed in accordance with the laws of the State of Texas, including all matters of construction, validity and performance, without regard to conflicts of law principles.

14.          Notices .  All notices, demands or other communications regarding this Agreement shall be in writing and shall be sufficiently given if either personally delivered or sent by facsimile or overnight courier, addressed as follows:

ArthroCare Corporation

7500 Rialto Boulevard

Building Two, Suite 100

Austin, Texas 78735

Attn:  General Counsel

Tel:  512-391-3900

Fax:  512-391-3901

Michael T. Gluk

2100 Demona Drive

Austin, TX 78733

15.          Severability .  Except as otherwise specified below, should any portion of this Agreement be found void or unenforceable for any reason by a court of competent jurisdiction, the parties intend that such provision be limited or modified so as to make it enforceable, and if such provision cannot be modified to be enforceable, the unenforceable portion shall be deemed severed from the remaining portions of this Agreement, which shall otherwise remain in full force and effect.  If any portion of this Agreement is so found to be void or unenforceable for any reason in regard to any one or more persons, entities, or subject matters, such portion shall remain in full force and effect with respect to all other persons, entities, and subject matters.  This paragraph shall not operate, however, to sever the Executive's obligation to provide the binding release to all entities intended to be released hereunder.

16.          Understanding and Authority .  The parties understand and agree that all terms of this Agreement are contractual and are not a mere recital, and represent and warrant that they are competent to covenant and agree as herein provided.

17.          Integration Clause .  This Agreement contains the entire agreement of the parties with regard to the separation of the Executive's employment, and supersedes any prior agreements as to that matter. This Agreement may not be changed or modified, in whole or in part, except by an instrument in writing signed by the Executive and an authorized officer of the Company.

18.          Execution in Counterparts .  This Agreement may be executed in counterparts with the same force and effectiveness as though executed in a single document.

The parties have carefully read this Agreement in its entirety; fully understand and agree to its terms and provisions; and intend and agree that it is final and binding on all parties.

IN WITNESS WHEREOF, and intending to be legally bound, the parties have executed the foregoing on the dates shown below.