Item 1.01 Entry into a Material Definitive Agreement.
As previously reported, on or about March 23, 2018, Wright Medical Technology,
Inc., which was subsequently acquired by Stryker Corp., (collectively referred
to as "Wright Medical") filed a complaint against Paragon 28, Inc. (the
"Company") in the United States District Court for the District of Colorado,
Case No. 18-cv-00691-STV (the "Colorado Complaint"). The Colorado Complaint, as
amended, asserts that the Company (i) has infringed and continues to infringe
nine Wright Medical patents, (ii) has misappropriated and continues to
misappropriate Wright Medical trade secrets and confidential material, (iii) has
and is unfairly competing with Wright Medical, and (iv) has intentionally
interfered with Wright Medical contracts. The Colorado Complaint, as amended,
requests customary remedies for the claims raised, including (a) a judgment that
the Company has infringed the Wright Medical patents and misappropriated, used
and disclosed Wright Medical's trade secrets, (b) a permanent injunction
preventing us from further engaging in the alleged misconduct, including
infringing the Wright Medical patents, from manufacturing, selling or
distributing products that allegedly infringe such Wright Medical patents and
from misappropriating Wright Medical's trade secrets and confidential
information, (c) damages, including punitive and statutory enhanced damages, (d)
attorneys' fees, (e) interest on any foregoing sums, and (f) any relief as the
court deems just and equitable, which could include future royalty payments. In
addition, on or about December 23, 2021, Wright Medical filed an additional
complaint against the Company in the United States District Court for the
District of Delaware, Case No. 1:21-cv-01809-MN, which alleges infringement of
certain other patents (the "Delaware Complaint").
On November 28, 2022, the Company entered into a settlement agreement with
Stryker Corp. to settle the Colorado Complaint, the Delaware Complaint and any
Company counter claims for a total amount of $26.0 million paid by the Company
to Stryker Corp. (the "Settlement Amount"). The Settlement Amount will be paid
by the Company in three separate installments consisting of: (i) $5.0 million on
or by December 16, 2022, (ii) $8.0 million at any time between January 1, 2023
and January 16, 2023, and (iii) $13.0 million at any time between April 1, 2023
and April 17, 2023. The settlement agreement does not impact the Company's
ability to continue operating its business and does not require any changes to
the Company's existing product lines. The Settlement Amount is the only
consideration being paid, and the Company is not required to make any future
payments to Stryker Corp.
The Company entered into the settlement agreement solely to eliminate the
burden, expense, distraction, and uncertainties of litigation. The settlement
agreement is not, and shall not be construed as, an admission of liability or
that the Company engaged in any wrongful, tortious, or unlawful activity.
The foregoing summary of the settlement agreement does not purport to be
complete and is qualified in its entirety by reference to the full and complete
terms contained in the settlement agreement, a copy of which will be filed as an
exhibit to the Company's Annual Report on Form 10-K for the period ended
December 31, 2022.
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