Blog: ORTHOPEDIATRICS CORP : Entry into a Material Definitive Agreement, Regulation FD Disclosure, Financial Statements and Exhibits (form 8-K) –

Item 1.01. Entry Into a Material Definitive Agreement.

On June 13, 2022, OrthoPediatrics Corp. (the “Company”), along with its
newly-formed, indirect wholly-owned subsidiary OrthoPediatrics Canada ULC, an
unlimited liability company governed by the laws of British Columbia, Canada
(the “Purchaser”), entered into a Sale and Purchase Agreement (the “Purchase
Agreement”) with the shareholders (each, a “Selling Shareholder” and,
collectively, the “Selling Shareholders”) of Pega Medical Inc., a corporation
incorporated under the Canada Business Corporations Act (“Pega Medical”). Pega
Medical has developed and sells a portfolio of trauma and deformity correction
devices for children, including the Fassier-Duval Telescopic Intramedullary
System, a well-recognized, innovative implant designed to treat bony deformities
in children with osteogenesis imperfecta without disrupting their normal growth.

Pursuant to the Purchase Agreement, the Purchaser has agreed to purchase from
the Selling Shareholders all of the issued and outstanding share capital of Pega
Medical for approximately CAD $42.3 million (USD $33.1 million) comprised of:
(a) CAD $39.7 million (USD $31.1 million) in cash, which amount will be adjusted
to reflect the amount of cash, other working capital and certain indebtedness
estimated to be on the balance sheet of Pega Medical at closing, as well as
being reduced to reflect an estimate of the transaction expenses to be paid by
Pega Medical, (b) CAD $1.9 million (USD $1.5 million) in shares of common stock,
$0.00025 par value per share, of the Company (“Common Stock”), and (c) CAD
$640,000 (USD $501,000) in restricted stock units issued to employees of Pega
Medical, which will be subject to an approximately three year vesting schedule.
The cash portion of the purchase consideration is subject to a post-closing
working capital adjustment. In addition, CAD $200,000 (USD $157,000) of the cash
consideration will be deposited into escrow to secure payment of post-closing
working capital adjustment, and approximately CAD $1.6 million (USD $1.2
million) of the cash consideration will be deposited into escrow for a period of
up to eighteen (18) months to cover certain indemnification obligations of the
Selling Shareholders. The acquisition is subject to certain customary conditions
and is expected to close in the third quarter of 2022. The US Dollar equivalents
listed above were calculated using the assumed exchange rate of CA $1:USD
$0.78266 which was the noon spot exchange rate of the National Bank of Canada on
June 10, 2022.

The number of shares of Common Stock to be issued will be determined based on
the 15 day volume-weighted average trading price per share ending five
(5) trading days prior to the closing date (as converted from U.S. dollars into
Canadian dollars based on the noon spot exchange rate of the National Bank of
Canada on such fifth (5th) trading day). The Common Stock to be issued to the
Selling Shareholders will be subject to a repurchase right by the Company in the
event a Selling Shareholder leaves employment with Pega Medical for certain
reasons during the 3-year period following closing. In the event the repurchase
right is triggered, the Company will have the right to repurchase the shares of
Common Stock issued to such Selling Shareholder at a price of USD $0.10 per

The Purchase Agreement contains negotiated representations, warranties and
covenants by the Selling Shareholders, the Company and the Purchaser, which are
believed to be customary for transactions of this kind. The assertions embodied
in such representations and warranties are qualified by information contained in
confidential disclosure schedules that the parties exchanged in connection with
signing the Purchase Agreement. In addition, these representations and
warranties (i) may be intended not as statements of fact, but rather as a way of
allocating risk to one of the parties if those statements prove to be
inaccurate, (ii) may apply materiality standards different from what may be
viewed as material to investors and (iii) were made only as of the date of the
Purchase Agreement or as of such other date or dates as may be specified in the
Purchase Agreement. Moreover, information concerning the subject matter of such
representations and warranties may change after the date of the Purchase
Agreement, which subsequent information may or may not be fully reflected in the
Company’s public disclosures. Investors are urged not to rely on such
representations and warranties as characterizations of the actual state of facts
or circumstances at this time or any other time.

The foregoing description of the Purchase Agreement is qualified in its entirety
by reference to the complete text thereof, a copy of which is included as
Exhibit 2.1 to this Current Report on Form 8-K and is incorporated herein by

Item 7.01. Regulation FD Disclosure.

On June 14, 2022, the Company issued a press release, a copy of which is
furnished herewith as Exhibit 99.1 and is incorporated herein by reference,
announcing the acquisition.

The information contained in this Item 7.01 (including Exhibit 99.1) is being
furnished and shall not be deemed “filed” for purposes of Section 18 of the
Exchange Act, or otherwise subject to the liabilities of that Section. The
information in this Current Report shall not be deemed incorporated by reference
in any filing under the Securities Act or the Exchange Act, except as expressly
set forth by specific reference in such a filing.

Item 9.01. Financial Statements and Exhibits.

 (d) Exhibits.

Exhibit No. Description

   2.1*                Sale and Purchase Agreement, dated June 13, 2022, among
                     OrthoPediatrics Corp., OrthoPediatrics Canada ULC, and the
                     shareholders of Pega Medical Inc.

   99.1     Press Release, dated June 14, 2022.

104                 Cover Page Interactive Data File (the cover page XBRL tags
                    are embedded in the Inline XBRL document).


* Certain exhibits and the disclosure letter to the Sale and Purchase Agreement

have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company

agrees to furnish a copy of the disclosure letter and any exhibit omitted from

the Sale and Purchase Agreement to the Securities and Exchange Commission (the

   "SEC") upon request.

                                   * * * * *

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