WAIVER

THIS WAIVER (this “ Agreement ”) is made and entered into as of this 16 ^th   day of January, 2009 by and among ARTHROCARE CORPORATION, a Delaware corporation (the “ Borrower ”), the Subsidiaries thereof party hereto (the “ Subsidiary Guarantors ”), the lenders party to the Credit Agreement referred to below (the “ Lenders ”), and BANK OF AMERICA, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer (the “ Administrative Agent ”).

The Lenders agreed to extend certain credit facilities to the Borrower pursuant to the Credit Agreement dated as of January 13, 2006 (as amended by that certain First Amendment dated as of December 18, 2007, that certain Second Amendment and Consent dated as of November 26, 2008 (the “ Second Amendment ”), and as further amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), by and among the Borrower, the Lenders and the Administrative Agent.

The Borrower previously advised the Administrative Agent and the Lenders that it would be restating its financial statements for fiscal years 2006, 2007 and the first quarter of 2008 as more fully described in the Borrower’s 8-K filing of July 24, 2008.  More recently, the Borrower advised the Administrative Agent and the Lenders that it would be restating its financial statements for fiscal years 2000 through and including 2007 and the first quarter of 2008 as more fully described in the Borrower’s 8-K filing of December 19, 2008 (such financial restatements, collectively, the “ Restatement ”).  In letter agreements dated July 29, 2008 and September 15, 2008, respectively, and in the Second Amendment, the Administrative Agent, on behalf of and at the direction of Lenders constituting Required Lenders, consented to extensions of the deadlines for delivery of the June 30, 2008 and September 30, 2008 financial statements (collectively, the “ Required Financial Statements ”) to the earliest of (a) the end of business on March 2, 2009, (b) the date on which the Borrower shall have received notice from The NASDAQ Stock Market, LLC (“ NASDAQ ”) that its common stock shall be delisted from The NASDAQ Global Select Market, (c) the date that the common stock of the Borrower is delisted from The NASDAQ Global Select Market and (d) the date on which the Borrower shall have received notice from NASDAQ that its requested extension of time for delivery of its June 30, 2008 and September 30, 2008 financial statements to February 9, 2009 has been denied (such extension, the “ Third Extension ” and such additional time period ending in accordance with the foregoing, the “ Third Extension Period ”).

On January 14, 2009, the Borrower notified the Administrative Agent that it received a letter dated January 14, 2009 from NASDAQ stating that its common stock will be delisted from The NASDAQ Global Select Market.  As such, the Third Extension Period ended on January 14, 2009 and the Borrower was, therefore, required to deliver the Required Financial Statements on January 14, 2009.  The Borrower did not deliver the Required Financial Statements on January 14, 2009 and, therefore, an Event of Default has occurred under Section 8.01(b) of the Credit Agreement from the Borrower’s failure to comply in a timely manner with the requirements set forth in Section 6.01 of the Credit Agreement.  The Borrower has requested that the Lenders agree to waive such Event of Default.

Subject to and in accordance with the terms and conditions set forth herein, the Lenders party hereto are willing to agree to the Borrower’s requests.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, such parties agree as follows:

Section 1.                Definitions .  All capitalized terms used and not defined herein shall have the meanings assigned thereto in the Credit Agreement.

Section 2.                Waiver .  Pursuant to Section 10.01 of the Credit Agreement and subject to the terms and conditions set forth herein, including, without limitation the requirements set forth below and the conditions to effectiveness set forth in Section 4 of this Agreement, the Administrative Agent and the Lenders party hereto hereby waive any Default or Event of Default arising under Section 8.01(b) of the Credit Agreement as a result of any breach that may have occurred under Section 6.01 of the Credit Agreement solely as a result of the Borrower’s failure to deliver the Required Financial Statements prior to the termination of the Third Extension Period (such agreement, the “ Waiver ”); provided , that the Waiver shall be deemed null and void and an Event of Default shall be deemed to have occurred as of January 14, 2009 if each of the following conditions is not met:

(a)           the Required Financial Statements shall be delivered to the Administrative Agent and the Lenders in accordance with Section 6.01 on or prior to the end of business on March 2, 2009; and

(b)           the Administrative Agent and the Lenders shall have received each financial statement subject to restatement under the Restatement (such financials, the “ Restatement Financial Statements ”) on or prior to the end of business on March 2, 2009.

Section 3.                Additional Agreements Regarding Availability .  It is hereby agreed and acknowledged by the parties hereto that the Administrative Agent and the Lenders shall have a period of up to forty-five days after their receipt of the Restatement Financial Statements and the Required Financial Statements (such period, the “ Review Period ”) to review such financial statements.  During the Review Period, the Borrower shall not request any Credit Extension (other than a continuation or conversion of an existing Eurocurrency Rate Loan or