UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q/A
Amendment No.1
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 28, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________ to _______
Commission File Number: 0-27422
ARTHROCARE CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 94-3180312
(State of incorporation) (I.R.S. Employer Identification No.)
595 North Pastoria Avenue
Sunnyvale, California 94086
(Address of principal executive offices)
(408) 736-0224
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
----- -----
The number of shares outstanding of the registrant's common stock as of
August 4, 1997 was 8,809,967.
<PAGE>
This form 10-Q/A is being filed solely for the purpose of including a
new Exhibit that supersedes an Exhibit previously filed. Other than the
Exhibit being filed herewith, all other information included in the
initial filing is unchanged.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this amendment to be signed on its
behalf by the Undersigned thereunto duly authorized.
ARTHROCARE CORPORATION
a Delaware corporation
Date: June 1, 1998
/s/ CHRISTINE E. HANNI
Christine E. Hanni
Vice President of Finance,
Chief Financial Officer and
Assistant Secretary
(Principal Financial Officer
and Accounting Officer)
Date: June 1, 1998
/s/ MICHAEL A. BAKER
Michael A. Baker
President, Chief Executive
Officer and Director
(Principal Executive Officer)
EXHIBIT INDEX
Exhibit
Number Exhibit Description
- -------- -------------------
10.24** Employment Letter Agreement dated June 20, 1997,
between the Registrant and Michael A. Baker.
11.1* Computation of Net Loss per Share.
27.1* Financial Data Schedule.
- -------------------------
* Previously filed with Quarterly Report on Form 10-Q
for quarter ended June 28, 1997.
** Supersedes Exhibit previously filed.
June 20, 1997
Michael Baker
14364 Via Baroda
Rancho Santa Fe, CA 92067
Dear Mike:
On behalf of ArthroCare Corporation (the "Company") and the Board of
Directors, I am pleased to invite you to join the Company as our next
President and Chief Executive Officer, and Member of the Board of Directors
. In this position, you will be expected to devote your full business
time, attention, and energies to the performance of your duties with the
Company. The effective date of your employment will be as soon as
reasonably possible, and you will be reporting directly to the Board of
Directors.
The terms of this offer of employment are as follows:
1. Compensation: Your annual salary for FY97 will be $250,000.00.
The Company will pay you $9,615.38 bi-weekly in accordance with the
Company's standard payroll policies. Your salary will begin as of
the effective date of employment. The first and last payment by the
Company to you will be adjusted, if necessary, to reflect a
commencement or termination date other than the first or last working
day of a pay period.
Fifty (50) percent of your 1997 actual compensation will be paid to
you as a bonus on January 1, 1998.
Your base salary will be revised on January 1, 1998. You will
present a FY98 plan for the Company to the Board. Your target
bonus will be fifty (50) percent of your 1998 salary and it will be
paid to you in January 1999, subject to meeting the Company's
objectives for 1998, which will be set by you and the Board of
Directors.
2. Benefits: You will be entitled, during the term of your employment,
to the Company's standard benefits covering employees, as such may be
in effect from time to time. You will also be entitled to four (4)
weeks of paid vacation per year.
Michael Baker
June 20, 1997
Page 2 of 4
3. Stock Options: Subject to action at the Company's next Board of
Directors Compensation Committee meeting and compliance with
applicable state and federal securities laws, the Company will grant
you an option to purchase 300,000 shares of the Company's Common
Stock pursuant to the Company's 1993 Stock Plan (the "Plan"), a copy
of which will be provided to you. The exercise price of the option
will be the closing price of the Company's Common Stock on June 20,
1997. The option will vest over four years with 1/48 of the shares
vesting at the end of each full month until all shares are vested,
subject to all provisions of the Plan and your continued employment
with the Company. In the event that the Company is sold, the vesting
of stock will accelerate and you will become fully vested (subject to
the Golden Parachute provision which limits salary to three (3) times
base).
4. Prior Bonus: We understand that Medtronic may try to reclaim the
bonus, tax payments, expenses or other claims paid to you, in that
event, we will reimburse you for that amount.
5. Relocation Expenses: You shall be paid a lump sum payment of $95,000
to cover the reasonable and customary out-of-pocket expenses
associated with (i) the sale of your current residence, including
real estate commission and reasonable and customary closing expenses
paid by you; (ii) relocation of family and household goods, including
travel; (iii) temporary living expenses in the Bay Area; and (iv)
federal and state taxes related to relocation. Expenses in excess of
$95,000 will be your responsibility. In addition, the Company will
pay for the expenses incurred in housing hunting trips, and trips to
visit your family during the time you are here and your family is in
San Diego.
6. Relocation Loan: In the event you purchase a home in the Bay Area,
the Company will agree to lend you $500,000 (the "Relocation Loan")
provided that you obtain a first mortgage that permits a second
mortgage to be placed against the residence at the close of escrow.
Such Relocation Loan will be advanced to you in two parts: the first
will be the amount advanced to you to repay Medtronic when they
demand it. The balance of the $500,000 loan will be advanced to you
at the close of escrow and the entire $500,000 will be secured by a
second mortgage interest in the purchased home and will bear interest
at the minimum applicable federal rate; provided, however, in the
event that if the Relocation Loan can be structured as an "employee-
relocation loan" (as that term is defined under Treasury
Regulations), the loan will be interest free.
Michael Baker
June 20, 1997
Page 3 of 4
7. Loan Repayment: The Relocation Loan (including any accrued interest)
will be due and payable upon the first to occur of:
a) following a sale or transfer of the property or any interest
therein;
b) if you choose to leave the employment of ArthroCare, the loan
becomes immediately payable; if ArthroCare terminates your
employment, then the loan will be due and payable in twelve months
thereafter;
c) pursuant to Section 3 above in the event the Company is sold, then
the loan will be due and payable in twelve months thereafter.
8. At-Will Employment: You should be aware that under California law
your employment with the Company is for no specified period and
constitutes "at-will" employment. As a result, you are free to
terminate your employment at any time, for any reason or for no
reason. Similarly, the Company is free to terminate your employment
at any time, for any reason or for no reason. In the event of
termination of your employment, you will not be entitled to any
payments, benefits, damages, awards, or compensation other than as
may otherwise be available in accordance with the Company's
established employee plans and policies at the time of termination
(subject to the provisions of paragraph 9 below).
9. Severance Agreement: While the Company is free to terminate your
employment at any time, for any reason or no reason, in the event of
termination of your employment by the Company without Justifiable
Cause (as defined below), you will be entitled to your monthly base
salary paid each month for twelve (12) months. During those 12
months, you will receive no bonuses and vesting of stock would cease.
You would continue to receive health and other employee benefits that
the Company provides. These payments and benefits will terminate
when you take your new employment within the twelve month period.
However, we will make up the difference should your salary at the new
position be less than that at ArthroCare, again, limited to the
overall twelve month period. In the event you terminate your
employment with the Company or the Company terminates your employment
for any Justifiable Cause, you will not be entitled to any payments,
benefits, damages, awards or compensation other than as may be
available in accordance with the Company's established employee plans
and policies at the time of termination.
Michael Baker
June 20, 1997
Page 4 of 4
9. Severance Agreement, continued: The term "Justifiable Cause" shall
include the occurrence of any of the following events: (i) the
conviction of, plea of nolo contendere in, felony or a crime
involving moral turpitude, (ii) the commission of an intentional act
of personal dishonesty or breach of fiduciary duty involving personal
profit in connection with the Company, (iii) the commission of an
act, or failure to act, which the Board of Directors of the Company
shall reasonably have found to have involved gross misconduct or
gross negligence in the conduct of your duties and (iv) alcoholism,
drug dependency or habitual absenteeism which interferes with the
performance of duties.
10. Immigration Laws: For purposes of federal immigration laws, you will
be required to provide to the Company documentary evidence of your
identity and eligibility for employment in the United States. Such
documentation must be provided within 3 business days of the
effective date of your employment, or your employment relationship
with the Company will be terminated.
11. Proprietary Information Agreement: As a condition of accepting this
offer of employment, you will be required to complete, sign and
return the Company's standard form of Proprietary Information
Agreement.
Mike, we look forward to you joining the Company. If the foregoing terms
are agreeable, please indicate your acceptance by signing the enclosed copy
of this letter in the space provided below and returning it to me. This
offer will terminate if not extended or accepted on or before June 30,
1997.
Sincerely yours,
ArthroCare Corporation
/s/ HIRA THAPLIYAL
Hira V. Thapliyal
President and CEO
ACCEPTED:
/s/ MICHAEL A. BAKER 6/22/97
Michael Baker Date
