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ARTC > SEC Filings for ARTC > Form 8-K on 2-Jul-2013All Recent SEC Filings

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Entry into a Material Definitive Agreement, Completion of Acquisition or Disposit

Item 1.01 Entry into a Material Definitive Agreement

The information set forth under Item 2.01 of this Current Report on Form 8-K is incorporated herein by reference.

Item 2.01. Completion of Acquisition or Disposition of Assets.

On July 1, 2013, ArthroCare Corporation (the "Company") and a wholly-owned subsidiary of the Company ("Merger Sub") entered into an Agreement and Plan of Merger (the "Agreement") with ENTrigue Surgical, Inc., a privately held Delaware corporation ("ENTrigue"), and a representative of the securityholders of ENTrigue, pursuant to which Merger Sub merged with and into ENTrigue, with ENTrigue surviving as a wholly-owned subsidiary of the Company (the "Merger"). The closing of the Merger transaction coincided with the signing of the Agreement on July 1, 2013 (the "Closing Date").

Pursuant to the Agreement, the Company paid approximately $45 million in cash on the Closing Date to the former stockholders of ENTrigue (the "Former Stockholders"), less a customary working capital adjustment and an amount placed in escrow to secure the indemnification obligations of the Former Stockholders and former option holders (together the "Former Securityholders"). Each option to purchase shares of common stock of ENTrigue was fully accelerated and terminated pursuant to the Agreement. The Agreement also provides that the Former Securityholders will have the right to receive contingent consideration (the "Contingent Consideration") in the future based on the net sales of certain products over the first five years ending on the anniversary of the Closing Date. Such Contingent Consideration is equal to a multiple of each year's annual growth of net sales of identified ENTrigue products cleared or in development as disclosed at the Closing Date ("ENTrigue Products"). The applicable sales growth multiple is 0.6 for each of the first three years following the Closing Date, 1.1 for the fourth year, and 1.25 for fifth year. The payment obligation with respect to such Contingent Consideration shall terminate on the fifth anniversary of the Closing Date.

The Agreement contains separate customary representations, warranties and covenants with respect to ENTrigue and the Company. The Agreement also provides for post-closing indemnification by the Former Securityholders for breaches of representations, warranties and covenants subject to certain limitations on damages.

Item 8.01 Other Events

On July 1, 2013, the Company entered into a Series C Share Purchase Agreement (the "Purchase Agreement") with Ortho-Space Ltd., an Israeli limited company ("Ortho-Space") pursuant to which the Company invested approximately $3.7 million in cash to acquire approximately 19.8% of the voting securities of Ortho-Space. The Company also has a right to invest an additional $0.8 million to purchase additional shares of Series C-1 Preferred Stock of Ortho-Space pursuant to the same terms and conditions under the Purchase Agreement.

Item 9.01 Exhibits

(d) Exhibits

The following exhibits are attached hereto and furnished herewith.

Exhibit No.                                Description

2.1           Agreement and Plan of Merger, by and among ArthroCare Corporation,
              Durante Merger Sub, Inc., ENTrigue Surgical, Inc., and Shareholder
              Representative Services, LLC as the Representative, dated as of
              July 1, 2013

99.1          Press Release, dated July 2, 2013.

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