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Item 9A. Controls and Procedures

2021-03-11 compared with 2020-03-05 · 28 added, 628 removed, 109 unchanged (86% of the section changed)

22 unchanged sentences

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Board of Directors

Our Board of Directors currently consists of eleven (11) directors who are divided into three classes.

Directors in each class serve a three-year term.

The terms of each class expire at successive annual meetings so that the stockholders elect one class of directors at each annual meeting.

Pursuant to that certain Stockholders’ Agreement, dated October 16, 2017, between Squadron Capital LLC (“Squadron”) and the Company, Squadron had the right to designate four individuals for election to the Company’s Board at the time of the 2019 annual meeting of stockholders.

The persons nominated by Squadron are designated as “Squadron Directors” below.

The current classification of our Board is as follows:

• Terms expiring at the 2020 annual meeting:

Pelizzon (Squadron Director), Harald Ruf (Squadron Director), Terry D.

Schlotterback and Kevin L.

• Terms expiring at the 2021 annual meeting:

Berry, III, Stephen F.

Burns and Marie C.

Infante (Squadron Director);

• Terms expiring at the 2022 annual meeting:

Hite, Bryan W.

Hughes, Mark C.

Throdahl and Samuel D.

Riccitelli (Squadron Director).

Listed below is certain biographical information for each of the directors, including his or her age, principal occupation and other business experience and affiliations.

Berry, III , 67, has served as a director since 2009.

Berry is the former President and owner of Carr Metal Products, Inc., a precision sheet metal and plastic fabrications firm.

Berry joined Carr in 1975 and was appointed its President in 1985.

In 2006, Carr was acquired by Precimed Group, a supplier to the orthopedic industry.

Berry is a graduate of Purdue University.

We believe Mr.

Berry’s experience in growing businesses and product development, as well as his continuous involvement in the orthopedic industry, qualifies him to serve on our Board of Directors.

Burns , 76, has served as a director since April 2017.

Burns served as President and Chief Executive Officer of Wheaton Van Lines, Inc.

from 1987 until his retirement in 2009.

Prior to running Wheaton Van Lines, Mr.

Burns was a practicing attorney for over 20 years.

He has over 40 years of professional and legal experience in the Indianapolis area.

He has been the chairman of the board of directors of Wheaton Van Lines since 1987 and chairman of the board of directors of Bekins Van Lines, Inc.

Burns has been active in many professional, social and civic organizations throughout his career.

In 2006, he was recognized by Ernst and Young LLP as Entrepreneur of the Year for the State of Indiana.

In 2008, he received a lifetime achievement award from the American Moving & Storage Association.

Burns earned a Bachelor of Arts from Denison University and a JD from the Indiana University Maurer School of Law.

We believe Mr.

Burns’ extensive professional and legal experience qualifies him to serve on our Board of Directors.

Hite , 52, has served as our Chief Financial Officer since February 2015 and as a director since August 2015.

Prior to joining our company, from 2004 through 2014, Mr.

Hite served as the Chief Financial Officer and Investor Relations Officer of Symmetry Medical Inc., or Symmetry, a company previously listed on the New York Stock Exchange.

Prior to joining Symmetry, Mr.

Hite spent 13 years with General Electric Corporation in a variety of financial positions and areas including commercial, manufacturing, sourcing and services.

Hite earned a Bachelor of Science in Finance from the Indiana University Kelley School of Business.

We believe Mr.

Hite’s financial acumen and public company management experience qualify him to serve on our Board of Directors.

Hughes , 42, has served as a director since 2012.

Hughes is the Managing Director and Group Head of Medical Technology Investment Banking at P&M Corporate Finance, LLC, an investment bank providing merger and acquisition services to companies throughout North America and Europe, a position he has held since 2008.

Hughes earned a B.B.A.

with an emphasis in Finance and Accounting from the Stephen M.

Ross School of Business at the University of Michigan.

Hughes is a licensed securities representative, holding Series 7 and 63 registrations.

We believe Mr.

Hughes’s experience advising private and public medical technology companies in strategic, financial and transaction related matters qualifies him to serve on our Board of Directors.

Infante , 70, has served as a director since 2014.

Infante was nominated pursuant to the Stockholders’ Agreement with Squadron Capital LLC.

Her prior experience as a director includes educational, non-profit, and professional organizations.

Infante has more than 25 years of experience as a healthcare lawyer and a certified compliance professional.

Since 2013, she has been an active consultant and senior advisor in the healthcare industry.

Recent affiliations have included Avalon Healthcare Services, Zimmet Healthcare Services Group, Triple Tree Capital Partners and BDO Center for Healthcare Excellence and Innovation.

From 2006 to 2013, she served as the Senior Vice President, Chief Compliance Officer and General Counsel for Healthcare Law for a $3 billion leader in post-acute heathcare services whose 42,000 employees cared for over 60,000 patients annually.

Her industry expertise also stems from 15 years as a clinical specialist in orthopedic nursing.

Infante is a graduate of the University of Maryland, where she earned a Bachelor of Science in Nursing and a Master of Science.

She also holds an MBA from Loyola University and a JD from the Catholic University of America.

We believe Ms.

Infante’s clinical orthopedic experience and knowledge as a healthcare lawyer and compliance expert qualify her to serve on our Board of Directors.

Pelizzon , 64, has served as a director since 2011.

Pelizzon was nominated pursuant to the Stockholders’ Agreement with Squadron Capital LLC.

Pelizzon is the President of Squadron and a member of its Managing Committee, positions he has held since 2008.

Prior to joining Squadron, Mr.

Pelizzon was the Managing Director of Precision Edge Surgical Products Company from 2005 to 2008.

Pelizzon is a retired U.S.

Army officer who served nearly 30 years on active duty in airborne and special operations units.

Pelizzon is a graduate of the U.S.

Military Academy and earned advanced degrees from Harvard University and the U.S.

Naval War College.

We believe Mr.

Pelizzon’s leadership and management experience qualify him to serve on our Board of Directors.

Riccitelli , 60, has served as a director since December 2017.

Riccitelli currently serves as Chief Executive Officer of Pathnostics, a diagnostics company focused on improving antibiotic stewardship through better diagnosis and treatment selection for patients suffering from urinary tract infections.

From November 2017 to December 2019, Mr.

Riccitelli served as Chairman of the Board of Directors of Precipio, Inc.

From 2012 to 2017, Mr.

Riccitelli served as president and chief executive officer and a director of Signal Genetics., a publicly traded molecular diagnostic company that was ultimately sold to Miragen Therapeutics.

Riccitelli was also previously the executive vice president and chief operating officer of Genoptix, Inc., a public traded diagnostic company that was sold to Novartis in 2011.

We believe Mr.

Riccitelli’s extensive experience with healthcare companies, particularly emerging companies, qualifies him to serve on our Board of Directors.

Harald Ruf , 66, has served as a director since April 2017.

Ruf was nominated pursuant to the Stockholders’ Agreement with Squadron Capital LLC.

Ruf has worked for Squadron since 2014, first as Chief Financial Officer and currently as Chief Operating Officer.

Ruf served on the board of directors of Chromogenex Limited, based in the United Kingdom, from 2014 to 2016.

From 2010 to 2016, Mr.

Ruf served as a Managing Partner of Teuscher Ruf & Walpole, LLC, an accounting firm providing tax, audit and consulting services.

He is also the President and Chief Executive Officer of Ruf & Associates, LLC, a consulting firm that he founded in 1982.

During his career, he has co-founded a number of successful companies across several industries.

Ruf is a graduate of Brigham Young University, where he earned a Bachelor of Science in Accounting, and he is a licensed certified public accountant in the States of California and Utah.

Ruf has served as an officer and board member for local and national companies and associations and has been recognized nationally for such service.

We believe Mr.

Ruf’s 35 years of executive level experience in several industries, including medical device manufacturing, qualifies him to serve on our Board of Directors.

Schlotterback , 64, has served as a director since 2009 and as Chairman of the Board of Directors since September 2013.

Schlotterback was also employed by us from February 2009 to February 2010.

Prior to joining our Board of Directors, Mr.

Schlotterback worked for Zimmer from 1982 to 1992 and from 1996 to 2006, where he served in various leadership positions in sales, marketing and research and development, including as President of the Trauma and Spinal divisions.

Prior to joining Zimmer, Mr.

Schlotterback served in senior management roles for Mitek Surgical Products from 1992 to 1995.

Schlotterback is a founder of the Warsaw, Indiana chapter of VisionTech Angels, an investment group, and TDS Consulting, LLC, which provides consulting services to medical startup companies.

Schlotterback earned a Bachelor of Science in Mechanical Engineering Technology from Purdue University.

We believe Mr.

Schlotterback’s extensive experience in the medical device field qualifies him to serve on our Board of Directors.

Throdahl , 68, has served as our President and Chief Executive Officer since January 2011 and as a director since 2009.

Prior to joining our company, Mr.

Throdahl served from 2008 to 2009 as a Group President of Zimmer Holdings, Inc., a worldwide leader in orthopedic implants.

Throdahl previously served from 2001 to 2007 as the Chief Executive Officer and Director of Consort Medical plc in London, United Kingdom.

year career at Becton Dickinson & Co., he served as Senior Vice President of the Drug Delivery sector and President of Nippon Becton Dickinson in Tokyo.

Throdahl began his career at Mallinckrodt, Inc.

Throdahl is a graduate of Princeton University and earned an MBA from Harvard Business School.

We believe Mr.

Throdahl’s leadership of both large organizations and growing businesses qualifies him to serve on our Board of Directors.

Unger , 48, has served as a director since 2011.

Unger is currently the Chief Executive Officer of Columbia Nutritional, LLC, a nutritional supplement manufacturing company, a position he has held since 2015.

He served as the Chief Executive Officer of Intrinsic Healthcare Inc.

from 2011 to 2015.

Prior to founding Intrinsic, he served as the Global President of Orthofix International N.V., a spinal implant and biologics business, from 2009 to 2011.

Unger held various roles for Stryker Corporation from 1994 to 2009, ultimately becoming a Vice President and General Manager in the MedSurg division.

We believe Mr.

Unger’s experience as an operator of both small private companies and large public businesses, as well as his experience in the orthopedic industry, qualifies him to serve on our Board of Directors.

Executive Officers

The names, ages, and positions with the Company of all executive officers of the Company and all persons chosen to become executive officers are listed below.

The officers are elected by the Board of Directors of the Company for a term of one year or until the election of their successors.

There are no arrangements between any officer and any other person pursuant to which he or she was selected as an officer.

Throdahl , 68, President and Chief Executive Officer

See director biographies above for a description of Mr.

Throdahl’s prior business experience.

Hite , 52, Chief Financial Officer

See director biographies above for a description of Mr.

Hite’s prior business experience.

Bailey , 40, Executive Vice President

Bailey joined our company in 2007 and has served as our Executive Vice President since 2009.

Bailey also served as a member of our Board of Directors from 2007 to 2013.

Prior to joining our company, Mr.

Bailey worked as a sales representative and distributor for Smith & Nephew plc.

Bailey earned a Bachelor of Science in Sales and Sales Management from Purdue University.

Odle , 50, Executive Vice President

Odle joined our company in 2007 and has served as our Executive Vice President since 2011.

Odle also served as a member of our Board of Directors from 2007 to 2013.

Prior to joining our company, Mr.

Odle held various sales roles for Smith & Nephew plc, ultimately becoming the District Manager for Indiana and Kentucky.

Odle earned a Bachelor of Science in Marketing from the Indiana University Kelley School of Business.

Gerritzen , 50, Vice President, General Counsel and Secretary

Gerritzen has served as our General Counsel and Secretary and as our Vice President of Legal and Human Resources since January 2009.

Prior to joining our company, Mr.

Gerritzen was a partner with Bingham Greenebaum Doll LLP (now known as Dentons Bingham Greenebaum LLP), a law firm in Indianapolis, where he continues to serve as Of Counsel.

Gerritzen spends substantially all of his time working for our company.

Gerritzen earned a Bachelor of Science in Marketing and a JD from Indiana University.

Family Relationships

There are no family relationships among any of our directions or executive officers.

Other Information Relating to Directors

In 2007, while Mr.

Hite served as the Senior Vice President and Chief Financial Officer of Symmetry Medical Inc., Symmetry discovered accounting irregularities at its Sheffield, United Kingdom operating unit.

This resulted in a restatement of certain of Symmetry’s financial reports and an SEC inquiry;

however, there was no allegation that

Hite knew of or participated in any of the wrongdoing at the U.K.

Hite received a written status report from Symmetry’s internal auditor for submission to Symmetry’s audit committee that claimed to have identified potential accounting issues at the U.K.

Hite provided the report to Symmetry’s controller and independent accounting firm, and discussed its contents with each of them and Symmetry’s internal auditor, he did not provide the report to Symmetry’s audit committee.

Following the internal auditor’s resignation, Mr.

Hite hired a new internal auditor and directed her to focus on the issues at the U.K.

subsidiary, expanded Symmetry’s internal audit department and located one new member of such department at the U.K.

On January 30, 2012, without admitting or denying the findings therein, Symmetry and Mr.

Hite consented to the entry of an order settling the matter in which the SEC found, among other things, that Mr.

Hite’s failure to deliver the report to Symmetry’s audit committee circumvented Symmetry’s internal accounting controls in violation of the Exchange Act and contributed to Symmetry’s violation thereof.

Pursuant to such order, Mr.

Hite agreed to:

(i) cease and desist from committing or causing any violation or future violations of Sections 13(b)(2)(B) and 13(b)(5) of the Exchange Act and Section 304(a) of the Sarbanes-Oxley Act;

(ii) pay a civil monetary penalty;

and (iii) reimburse Symmetry for incentive compensation received during the statutory time period established by Sarbanes-Oxley.

There was no allegation that Mr.

Hite knew of or participated in any of the wrongdoing at the U.K.

subsidiary, and the board of Symmetry maintained its support for Mr.

Hite, who continued to serve as the Senior Vice President and Chief Financial Officer of Symmetry until the December 2014 sale of the majority of Symmetry to a private equity firm.

Board Committees

Our Board of Directors has established three standing committees – Audit, Compensation and Corporate Governance – each of which operates under a charter that has been approved by our Board.

Audit Committee

Riccitelli, and Mr.

Unger comprise our Audit Committee.

Hughes serves as the chairperson of the committee.

All members of our Audit Committee meet the requirements for financial literacy under the applicable rules and regulations of the SEC and the Nasdaq Global Market (“Nasdaq”).

Our board has determined that Mr.

Hughes is an “audit committee financial expert” as defined by applicable SEC rules and has the requisite financial sophistication as defined under the applicable rules and regulations of Nasdaq.

Our board has determined that each of Mr.

Riccitelli and Mr.

Unger is independent under the applicable rules and regulations of Nasdaq and meets the independence requirements contemplated by Rule 10A-3 under the Exchange Act.

The Audit Committee operates under a written charter that satisfies the applicable standards of the SEC and Nasdaq.

The Audit Committee’s main function is to oversee our accounting and financial reporting processes and the audits of our financial statements.

This committee’s responsibilities include, among other things:

appointing our independent registered public accounting firm;

evaluating the qualifications, independence and performance of our independent registered public accounting firm;

approving the audit and non-audit services to be performed by our independent registered public accounting firm;

reviewing the design, implementation, adequacy and effectiveness of our internal accounting controls and our critical accounting policies;

discussing with management and the independent registered public accounting firm the results of our annual audit and the review of our quarterly unaudited financial statements;

reviewing, overseeing and monitoring the integrity of our financial statements and our compliance with legal and regulatory requirements as they relate to financial statements or accounting matters;

reviewing on a periodic basis, or as appropriate, any investment policy and recommending to our Board any changes to such investment policy;

reviewing with management and our auditors any earnings announcements and other public announcements regarding our results of operations;

preparing the report that the SEC requires in our annual proxy statement;

reviewing and approving any related person transactions and reviewing and monitoring compliance with our code of business conduct and ethics;

and reviewing and evaluating, at least annually, the performance of the Audit Committee and its members, including compliance of the Audit Committee with its charter.

Compensation Committee

Pelizzon and Mr.

Schlotterback comprise our Compensation Committee.

Schlotterback serves as the chairperson of the committee.

Our Board has determined that each of Mr.

Berry and Mr.

Schlotterback is independent under the applicable rules and regulations of Nasdaq and is a “non-employee director” as defined in Rule 16b-3 under the Exchange Act.

While the applicable rules and regulations of Nasdaq require that the

Compensation Committee consist of at least two (2) directors (all of whom shall be independent as set forth in such rules), such rules also permit one director who is not independent and is not a current officer or employee of the Company to be appointed to the Compensation Committee if the Board determines that such individual’s membership on the Committee is required by the best interests of the Company and its stockholders, and such individual does not serve longer than two years pursuant to such exception.

Accordingly, after taking into consideration Mr.

Pelizzon’s long tenure of service on the Board, his familiarity with the Company and its strategy for growth, and his extensive industry, leadership and management experience, the Board determined that Mr.

Pelizzon’s membership on the Compensation Committee is in the best interests of the Company and its stockholders.

To the extent that Mr.

Pelizzon is not later deemed to be “independent” under the Nasdaq rules, his tenure on the Compensation Committee will terminate no later than October 11, 2020.

The Compensation Committee operates under a written charter, which the Compensation Committee reviews and evaluates at least annually.

The Compensation Committee reviews and approves policies relating to compensation and benefits of our officers and employees.

The Compensation Committee reviews and approves corporate goals and objectives relevant to the compensation of our Chief Executive Officer and other executive officers, evaluates the performance of these officers in light of those goals and objectives and approves the compensation of these officers based on such evaluations.

The Compensation Committee also reviews and approves the issuance of restricted stock and other awards under our equity incentive plan.

The Compensation Committee reviews and evaluates, at least annually, the performance of the Compensation Committee and its members, including compliance by the Compensation Committee with its charter.

Corporate Governance Committee

Riccitelli and Mr.

Unger comprise our Corporate Governance Committee.

Infante serves as the chairperson of the committee.

Our Board has determined that each member of our Corporate Governance Committee is independent under the applicable rules and regulations of Nasdaq.

The Corporate Governance Committee operates under a written charter, which the Corporate Governance Committee will review and evaluate at least annually.

The Corporate Governance Committee is responsible for making recommendations to our Board regarding candidates for directorships and the size and composition of the Board.

In addition, the Corporate Governance Committee is responsible for overseeing our corporate governance policies and reporting and making recommendations to our Board concerning governance matters.

Director Nomination Process

In considering whether to recommend any particular candidate for inclusion in our Board’s slate of recommended director nominees, our Corporate Governance Committee expects every nominee to have a high level of personal and professional integrity, strong ethics and values and the ability to make mature business judgments.

We also value experience on other public company boards of directors and board committees.

Our Corporate Governance Committee does not have a policy (formal or informal) with respect to diversity, but believes that our Board, taken as a whole, should embody a diverse set of skills, experiences and backgrounds.

In this regard, the committee also takes into consideration the value of diversity (with respect to gender, ethnicity and other factors) of our Board members.

The committee does not make any particular weighting of diversity or any other characteristic in evaluating nominees and directors.

Stockholders have the right under our bylaws to directly nominate director candidates for election at an annual meeting of stockholders, without any action or recommendation on the part of the Corporate Governance Committee or our Board of Directors, by submitting to the Company (i) the name of each director nominee, together with appropriate biographical information and background materials, (ii) information with respect to the stockholder or group of stockholders making the nomination, including the number of shares of common stock owned by such stockholder or group of stockholders, and (iii) a representation as to whether such stockholder will be or is part of a group that will deliver a proxy statement and/or form of proxy to holders of at least the percentage of the voting power of the Company’s outstanding capital stock required to elect the nominee, and by otherwise complying with the requirements of our bylaws.

Such information should be submitted to:

OrthoPediatrics Corp., 2850 Frontier Drive, Warsaw, Indiana 46582.

Pursuant to an agreement with the Company, Squadron has the right to designate up to four nominees for election to the Company’s Board of Directors,

depending on the percentage of capital stock beneficially owned by Squadron.

Currently, four members of the Company’s Board are Squadron designees.

Section 16(a):

Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s directors and executive officers and persons who beneficially own more than ten percent of the Company’s Common Shares to file with the Securities and Exchange Commission reports showing ownership of and changes in ownership of the Company’s Common Shares and other equity securities.

On the basis of information submitted by the Company’s directors and executive officers, the Company believes that its directors and executive officers timely filed all required Section 16(a) filings for fiscal year 2019.

Code of Ethics and Business Conduct Policy

We have adopted a written code of ethics and business conduct policy that applies to our directors, officers and employees, including our principal executive officer and principal financial and accounting officer.

Our code of ethics and business conduct policy is available under the Investors/Corporate Governance page of our website, www.orthopediatrics.com.

In addition, we will post on our website all other disclosures that are required by law or the listing standards of Nasdaq concerning any amendments to, or waivers from, any provision of the code and policy.

We will provide information that is responsive to this Item 10 regarding executive compensation in our definitive proxy statement or in an amendment to this Annual Report not later than 120 days after the end of the fiscal year covered by this Annual Report, in either case under the caption “Information About Directors,” “Section 16 (a) Beneficial Ownership Reporting Compliance” and possibly elsewhere therein.

That information is incorporated in this Item 10 by reference.

EXECUTIVE COMPENSATION

The following table sets forth information concerning the compensation of our named executive officers for the years indicated.

Name and Principal Position Year Salary

Incentive Plan

Throdahl, 2019 400,000 585,653 182,015 22,485 1,190,154

President and Chief 2018 330,000 211,800 151,687 23,316 716,813

Executive Officer 2017 309,000 53,200 149,247 14,260 525,707

Hite, 2019 360,000 469,394 163,814 8,400 1,001,608

Chief Financial Officer 2018 318,000 176,500 146,171 8,250 648,921

2017 309,000 244,650 149,247 — 702,897

Bailey, 2019 300,000 391,162 136,512 7,850 835,523

Executive Vice President 2018 265,500 194,150 122,039 7,965 589,654

2017 257,500 101,105 124,373 — 482,978

Odle, 2019 300,000 391,162 136,512 8,400 836,073

Executive Vice President 2018 265,500 335,350 122,039 7,965 730,854

2017 257,500 205,625 124,373 — 587,498

Gerritzen, 2019 287,000 374,183 130,596 8,400 800,179

Vice President, General 2018 230,000 105,900 105,721 — 441,621

Counsel and Secretary 2017 216,000 126,680 104,328 — 447,008

(1) Amounts reflect the aggregate grant date fair value of option awards computed in accordance with FASB ASC Topic 718.

Assumptions used in the calculation of these amounts are included in Note 11 included in our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2019.

There can be no assurance that unvested awards will vest (and, absent vesting, no value will be realized by the executive for the award).

(2) Amounts reflect bonuses paid with respect to the achievement of performance criteria under our executive bonus plan.

(3) Amounts for Mr.

Throdahl reflect lodging expenses and travel expenses, which totaled $12,321, $13,596 and $12,790 in 2019, 2018 and 2017, respectively, incurred in connection with his travel between our headquarters in Warsaw, Indiana and his primary residence in St.

Missouri, as well as dues in the amount of $1,764, $1,470 and $1,470 in 2019, 2018 and 2017 for membership in the Union League Club of Chicago, Illinois.

In addition, amounts for 2019 include 401(k) matching contributions of $8,400 for Mr.

Throdahl, Mr.

Gerritzen and $7,850 for Mr.

Narrative Disclosure to Summary Compensation Table

Base Salaries

The named executive officers receive a base salary pursuant to their employment agreements to compensate them for services rendered to us.

The base salary payable to each named executive officer is intended to provide a fixed component of compensation reflecting the executive’s skill set, experience, role and responsibilities.

The 2019 base salaries actually paid to our named executive officers are disclosed in the Summary Compensation Table above.

We expect that base salaries for the named executive officers will be reviewed periodically by the Compensation Committee, with adjustments expected to be made generally in accordance with the considerations described above and to maintain base salaries at competitive levels.

Each of our named executive officers participated in our 2019 bonus plan pursuant to which each was eligible to receive a bonus based equally on our achievement of specified sales, adjusted EBITDA, free cash flow and Company objectives, as established by the Compensation Committee.

For 2019, target bonuses were equal to 50% of each executive’s annual base salary paid in 2019.

The actual annual cash bonuses paid for performance in 2019 are set forth in the Summary Compensation Table above in the column titled “Non-Equity Incentive Plan Compensation” and reflect achievement of 91.01% of the annual performance goals.

We expect target bonus levels for our named executive officers to remain at 50% of base salary under our 2020 bonus plan.

Equity Compensation

Although we do not have a formal policy with respect to the grant of equity incentive awards to our executive officers or any formal equity ownership guidelines applicable to them, we believe that equity grants provide our executives with a strong link to our long-term performance, create an ownership culture and help to align the interests of our executives and our stockholders.

Accordingly, our Board granted restricted stock to our named executive officers in 2019, as set forth in the table below.

2019 Restricted Stock

Throdahl 14,246

Gerritzen 9,102

Other Elements of Compensation

Retirement Plans.

We currently maintain a 401(k) retirement savings plan for our employees, including our named executive officers, who satisfy certain eligibility requirements.

Our named executive officers have participated, and we expect that they will continue to be eligible to participate, in the 401(k) plan on the same terms as other full-time employees.

Effective January 1, 2018, we began matching our employees' 401(k) contributions (up to 3% of a participating employee's salary on an annual basis).

Health/Welfare Plans.

All of our full-time employees, including our named executive officers, are eligible to participate in our health and welfare plans, including:

• medical, dental and vision benefits;

• short-term and long-term disability insurance;

• life insurance.

We believe the perquisites described above are necessary and appropriate to provide a competitive compensation package to our named executive officers.

No Tax Gross-Ups

We do not make gross-up payments to cover our named executive officers' personal income taxes that may pertain to any of the compensation or perquisites paid or provided by us.

Outstanding Equity Awards of as 2019 Fiscal Year-End

The table below summarizes the aggregate stock option and restricted stock awards held by our named executive officers as of December 31, 2019.

As described above in "Equity Compensation," stock options typically vest upon grant.

Option Awards Stock Awards

Date Number of

Exercisable Number of

Unexercisable Equity

Options (#) Option

Price ($) Option

Throdahl 2/28/2019 — — — — — 14,246 669,420

2/28/2018 — — — — — 12,000 563,880

9/10/2013 402 — — 30.97 9/10/2023 — —

8/23/2012 402 — — 30.97 8/23/2022 — —

8/3/2011 402 — — 30.97 8/3/2021 — —

9/2/2010 670 — — 30.97 9/2/2020 — —

Hite 2/28/2019 — — — — — 11,418 536,532

2/28/2018 — — — — — 10,000 469,900

Bailey 2/28/2019 — — — — — 9,515 447,110

2/28/2018 — — — — — 11,000 516,890

9/10/2013 402 — — 30.97 9/10/2023 — —

8/23/2012 402 — — 30.97 8/23/2022 — —

8/03/2011 402 — — 30.97 8/3/2021 — —

9/02/2010 402 — — 30.97 9/2/2020 — —

7/23/2010 4,824 — — 30.97 7/23/2020 — —

Odle 2/28/2019 — — — — — 9,515 447,110

2/28/2018 — — — — — 19,000 892,810

9/10/2013 402 — — 30.97 9/10/2023 — —

8/23/2012 402 — — 30.97 8/23/2022 — —

8/03/2011 402 — — 30.97 8/3/2021 — —

9/02/2010 402 — — 30.97 9/2/2020 — —

7/23/2010 8,040 — — 30.97 7/23/2020 — —

Gerritzen 2/28/2019 — — — — — 9,102 427,703

2/28/2018 — — — — — 6,000 281,940

(1) Stock options granted prior to October 12, 2017 were granted under the 2007 Plan.

Stock options granted after October 12, 2017 were granted under the 2017 Plan.

All stock options are fully vested.

(2) All restricted stock vests three years after grant date.

(3) The market value for our restricted stock is based on our stock price as of December 31, 2019.

Employment Agreements

On July 31, 2014 (or in the case of Mr.

Hite, February 1, 2015), we entered into substantially similar employment agreements with each of our named executive officers.

The employment agreements provide for (i) a base salary;

(ii) participation in our annual bonus plan and (iii) employee benefits and fringe benefits generally made available to all of our employees.

The employment agreements initially expired on July 31, 2018 (or in the case of Mr.

Hite, February 1, 2019), but have been renewed for successive one-year terms thereafter.

The employment agreements also provide for the reimbursement of all reasonable business expenses incurred by a named executive officer on our behalf.

The employment agreements contain customary confidentiality, invention assignment and non-competition covenants.

The non-competition covenant restricts our named executive officers during their respective employment term and for a period of one-year thereafter from soliciting our customers or employees and from competing with us anywhere where we or the named executive officer conducted business during the 12-month period immediately preceding such executive’s termination.

Subject to continued compliance with the restrictive covenants and execution and non-revocation of a general release of claims in favor of us, the employment agreements also provide for certain severance payments and benefits if the executive’s employment is terminated by us without “cause” or by the executive for “good reason” (each, as defined in the applicable agreement).

In any such event, each executive is entitled to receive:

• 12 months of the executive’s annual base salary then in effect, payable in 12 substantially equal monthly installments;

• a lump-sum payment in the amount equal to any unpaid bonus that was earned by the executive in any fiscal year ending prior to his termination;

• a lump-sum payment equal to the pro-rated value of any bonus earned upon the satisfaction of pre-established performance objectives, payable in the year following the year in which the services were performed when such bonuses are normally paid to employees;

• up to 12 months of company-subsidized healthcare continuation coverage for the executive and his dependents.

Equity Incentive Plans

2007 Equity Incentive Plan

Prior to the completion of our initial public offering, we maintained an Amended and Restated 2007 Equity Incentive Plan (the “2007 Plan”) that provided for grants of options and restricted stock to employees, directors and associated third-party representatives of the Company.

The 2007 Plan was originally adopted by our Board and approved by our stockholders in November 2007.

The 2007 Plan was subsequently amended in March 2008 and amended and restated in December 2012 and again in April 2014.

The 2012 amendment and restatement was approved by our stockholders in December 2012.

While we ceased making further awards under the 2007 Plan following the date the 2017 Plan became effective, any outstanding awards granted under the 2007 Plan will remain outstanding, subject to the terms of our 2007 Plan and award agreements, until such outstanding awards vest and are exercised (as applicable) or until they terminate or expire by their terms.

2017 Incentive Award Plan

Immediately prior to our initial public offering, a new incentive award plan, the 2017 Plan, was adopted, the material terms of which are summarized below.

Limitation on Awards and Shares Available .

The aggregate number of shares of our common stock available for issuance pursuant to awards granted under the 2017 Plan is 962,094.

Shares granted under the 2017 Plan may consist of authorized but unissued shares or shares purchased in the open market.

If an award under the 2017 Plan is forfeited, expires, is converted to shares of another person in connection with certain corporate transactions or is settled for cash (including shares of restricted stock that are repurchased by us during the restricted period applicable to such shares at the same price paid by the holder), any shares subject to such award may, to the extent of such forfeiture, expiration or cash settlement, be used again for new grants under the 2017 Plan.

The following shares will not be added back to the shares available for grant under the 2017 Plan:

• shares tendered by a holder or withheld by us in payment of the exercise price of an option granted under the 2017 Plan;

• shares tendered by the holder or withheld by us to satisfy any tax withholding obligation with respect to an award granted under the 2017 Plan;

• shares subject to a stock appreciation right, or SAR, granted under the 2017 Plan that are not issued in connection with the stock settlement of the SAR on exercise thereof;

• shares that we purchase on the open market with the cash proceeds received from the exercise of options granted under the 2017 Plan.

Awards granted under the 2017 Plan upon the assumption of, or in substitution for, awards authorized or outstanding under a qualifying equity plan maintained by an entity with which we enter into a merger or similar corporate transaction will not reduce the shares available for grant under the 2017 Plan;

provided, that awards using such authorized shares will not be made after the date awards or grants could have been made under the terms of the pre-existing plan, absent the acquisition or combination, and will only be made to individuals who were not employed by or providing services to us or our subsidiaries immediately prior to such transaction.

The maximum number of shares of our common stock that may be subject to one or more awards granted pursuant to the 2017 Plan to any one participant during any calendar year will be 1,000,000, and the maximum amount that may be paid under a cash award pursuant to the 2017 Plan to any one participant during any calendar year period will be $5.0 million.

In addition, the sum of the grant date fair value of equity-based awards and the amount of any cash-based awards granted to any non-employee director during any calendar year will not exceed $300,000.

Administration .

The 2017 Plan is administered by our Board with respect to awards to non-employee directors and by our Compensation Committee with respect to other participants, each of which may delegate its duties and responsibilities to committees of our directors and/or officers, subject to certain limitations that may be imposed under Section 162(m) of the Code, Section 16 of the Exchange Act and/or stock exchange rules, as applicable.

We refer to our Board of Directors or such Committee, in such capacity, as the plan administrator.

The plan administrator will have the authority to make all determinations and interpretations under, prescribe all forms for use with and adopt rules for the administration of the 2017 Plan, subject to its express terms and conditions.

The plan administrator will also set the terms and conditions of all awards under the 2017 Plan, including any vesting and vesting acceleration conditions, repurchase provisions, forfeiture provisions, form of payment and any performance criteria.

Eligibility .

Awards other than incentive stock options, or ISOs, may be granted to any of our or our subsidiaries’ officers, employees, consultants or directors.

Only officers and employees of us or our subsidiary corporations may be granted ISOs under Section 422 of the Code.

The 2017 Plan provides that the plan administrator may grant or issue options, including ISOs, non-qualified stock options, or NSOs, SARs, restricted stock, restricted stock units, or RSUs, dividend equivalents and other stock- and cash-based awards to eligible participants.

Awards other than cash awards will generally be settled in shares of our common stock, but the plan administrator may provide for the cash settlement of any award.

Each award will be evidenced by an award agreement, which will detail all terms and conditions of the

awards, including any applicable vesting and payment terms, post-termination exercise limitations and, in the case of options, will be designated as either an ISO or NSO.

A brief description of each award type follows.

• Stock Options .

Stock options provide for the purchase of shares of our common stock in the future at an exercise price set on the grant date.

The 2017 Plan provides for the grant of ISOs under the federal tax laws or NSOs.

ISOs may be granted only to employees, while NSOs may be granted to employees, directors or consultants.

The term of a stock option may not be longer than ten years (or five years in the case of ISOs granted to certain significant stockholders).

The exercise price of options will be determined by the plan administrator;

provided, that the exercise price of a stock option may not be less than 100% of the fair market value of the underlying share on the date of grant (or 110% in the case of ISOs granted to certain significant stockholders), except with respect to certain substitute options granted in connection with a corporate transaction.

Vesting conditions determined by the plan administrator may apply to stock options and may include continued service, performance goals and/or other conditions.

• Stock Appreciation Rights .

SARs entitle their holder, upon the exercise thereof, to receive from us an amount equal to the difference between the fair market value of the shares subject to the SAR on the exercise date and the exercise price of the SAR.

Each SAR will be governed by a SAR agreement and may be granted separately or in connection with stock options or other awards.

The exercise price of a SAR may not be less than 100% of the fair market value of the underlying share on the date of grant (except with respect to certain substitute SARs granted in connection with a corporate transaction) and the term of a SAR may not be longer than ten years.

Vesting conditions determined by the plan administrator may apply to SARs and may include continued service, performance goals and/or other conditions.

• Restricted Stock and Restricted Stock Units .

Restricted stock is an award of nontransferable shares of our common stock that remains forfeitable unless and until specified conditions are met, and which may be subject to a purchase price.

RSUs are contractual promises to deliver shares of our common stock in the future, which may also remain forfeitable unless and until specified conditions are met.

Delivery of the shares underlying RSUs may be deferred under the terms of the award or at the election of the participant, if the plan administrator permits such a deferral.

Vesting conditions applicable to restricted stock and RSUs may be based on continued service, performance goals and/or other conditions.

Holders of restricted stock, unlike recipients of other equity awards, will have both voting rights and the right to receive dividends, if any, prior to the time when the restrictions lapse, subject to the prohibition on paying dividends with respect to unvested awards described below.

• Dividend Equivalents .

Dividend equivalents represent the right to receive the equivalent value of the dividends, if any, per share paid by us on shares of our common stock, and may be granted separately or in connection with awards other than stock options or SARs.

Dividend equivalents are credited as of dividend payment dates during the period between the date an award is granted (or such other dates as may be determined by the plan administrator) and the date such award vests, is exercised, is distributed or expires, as determined by the plan administrator.

No dividend equivalents will be payable with respect to stock options or SARs.

• Other Stock or Cash-Based Awards .

Subject to the provisions of the 2017 Plan, the plan administrator shall determine the terms and conditions of each other stock- or cash-based award, including the term of the award, any exercise or purchase price, performance goals, transfer restrictions, vesting conditions and other terms and conditions.

Other stock- or cash-based awards may be paid in cash, shares of our common stock or a combination thereof, as determined by the plan administrator, and may be available as a form of payment in the settlement of other awards granted under the 2017 Plan, as stand-alone payments, as a part of a bonus, deferred bonus, deferred compensation or other arrangement and/or as payment in lieu of compensation to which an individual is otherwise entitled.

Dividends and Dividend Equivalent Payments on Unvested Performance-Based Awards .

No dividends or dividend equivalents with respect to an unvested award, or portion thereof, with performance-based vesting will be paid until the applicable performance-based vesting conditions are subsequently satisfied and the award vests, and any dividends or dividend equivalents with respect to the portion of an award that does not vest shall be forfeited.

Transferability of Awards .

Awards are transferable only by will, the laws of descent and distribution and, to the extent authorized by the plan administrator, to certain permitted transferees, including members of the

participant’s immediate family.

The participant may also designate one or more beneficiaries in the event of death on a designated form provided by the plan administrator.

Changes in Capitalization;

Corporate Transactions .

In the event of certain transactions and events affecting our common stock, such as stock dividends, stock splits, mergers, acquisitions, consolidations and other corporate transactions, the plan administrator has broad discretion to take action under the 2017 Plan, as well as make adjustments to the terms and conditions of existing and future awards, in order to prevent the dilution or enlargement of intended benefits and to facilitate such transactions or events, including providing for the cash-out, assumption, substitution, accelerated vesting or termination of awards.

In addition, in the event of certain non-reciprocal transactions with our stockholders, known as “equity restructurings,” the plan administrator will make equitable adjustments to the 2017 Plan and outstanding awards.

Change in Control .

In the event of a change in control of our Company (as defined in the 2017 Plan), all outstanding equity awards will become fully vested and, as applicable, exercisable, and all forfeiture, repurchase and other restrictions on such awards will lapse immediately prior to such change in control.

Foreign Participants, Claw-Back Provisions and Participant Payments .

The plan administrator may modify award terms, establish sub-plans and/or adjust other terms and conditions of awards, subject to the share limits described above, in order to facilitate grants of awards subject to the laws and/or stock exchange rules of countries outside of the United States.

All awards will be subject to the provisions of any clawback policy that we may implement the extent set forth in such policy and/or the applicable award agreement.

With regard to tax withholding, exercise price and purchase price obligations arising in connection with awards under the 2017 Plan, the plan administrator may, in its discretion, accept cash or check, shares of our common stock that meet specified conditions, a “market sell order” or such other consideration as it deems suitable.

Termination .

Our Board may amend, suspend or terminate the 2017 Plan at any time, provided that, subject to certain exceptions set forth therein, no amendment, suspension or termination will, without the consent of the holder, materially adversely affect any rights or obligations under any award previously granted, unless the award itself otherwise expressly so provides.

In addition, except in connection with certain changes in our capital structure, stockholder approval will be required for any amendment that increases the number of shares available under the 2017 Plan, increases the award or director limits under the 2017 Plan, “reprices” any stock option or SAR, or cancels any stock option or SAR in exchange for cash or another award when the per share price of the option or SAR exceeds the fair market value of the underlying shares.

Furthermore, except in connection with certain corporate transactions, stockholder approval is required to amend the terms of outstanding stock options or SARs to reduce the per share exercise price or to cancel outstanding stock options or SARs in exchange for cash, other awards or stock options or SARs with a per share exercise price that is less than the per share exercise price of the original stock options or SARs.

Director Compensation

The Company compensates its non-employee directors for their service to the Company through a cash retainer in an amount equal to $3,000 per regular meeting.

In addition, each non-employee director who serves as the chairperson of our Board or of our Audit Committee, Compensation Committee or Corporate Governance Committee receives an additional cash fee of $3,000 per year.

Non-employee directors serving as of the date of an annual meeting of our stockholders each receive a grant of 1,400 shares of restricted stock on the date of such meeting, vesting over three years, subject to continued service through the applicable vesting date.

The following table sets forth information concerning the compensation of our non-employee directors during the year ended December 31, 2019.

Throdahl and Mr.

Hite, each of whom is a named executive officer, do not receive additional compensation for their service as a director, and therefore are not included in the table below.

($) Stock Awards

($) Option Awards

($) Non-Equity

Non-qualified

($) All Other

Berry III 12,000 65,786 — — — — 77,786

Stephen Burns 12,000 65,786 — — — — 77,786

Hughes 15,000 65,786 — — — — 80,786

Infante 15,000 65,786 — — — — 80,786

Pelizzon 12,000 65,786 — — — — 77,786

Riccitelli 12,000 65,786 — — — — 77,786

Harald Ruf 12,000 65,786 — — — — 77,786

Schlotterback 18,000 65,786 — — — — 83,786

Unger 12,000 65,786 — — — — 77,786

We will provide information that is responsive to this Item 11 regarding executive compensation in our definitive proxy statement or in an amendment to this Annual Report not later than 120 days after the end of the fiscal year covered by this Annual Report, in either case under the caption “Executive Compensation,” and possibly elsewhere therein.

That information is incorporated in this Item 11 by reference.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required under this Item 12 relating to equity compensation plans is set forth under the caption "Equity Compensation Plan Information" in Part II, Item 5 of this Annual Report on Form 10-K.

The following table and accompanying footnotes set forth information with respect to the beneficial ownership of our common stock by:

• each person known by us to beneficially own more than 5% of our common stock;

• each of our named executive officers;

• each of our directors (including the director nominees);

• all of our directors and executive officers as a group,

based upon 16,881,192 shares of common stock outstanding as of March 3, 2020.

Beneficial ownership is determined under the SEC rules and regulations and generally includes voting or investment power over securities.

Except in cases where community property laws apply or as indicated in the footnotes to this table, we believe each stockholder identified in the table possesses sole voting and investment power over all shares of equity securities shown as beneficially owned by the stockholder.

Shares of common stock subject to options that are currently exercisable or exercisable within 60 days of the date of March 3, 2020 are considered outstanding and beneficially owned by the person holding the options for the purposes of computing the percentage ownership of that person but are not treated as outstanding for the purpose of computing the percentage ownership of any other person.

Except as otherwise indicated, the address of each beneficial owner listed below is c/o OrthoPediatrics Corp., 2850 Frontier Drive, Warsaw, Indiana 46582.

Name of Beneficial Owner Number of Shares Beneficially Owned Percentage Beneficially Owned

5% or Greater Stockholders:

Squadron Capital LLC (1)

5,376,764 31.9 %

Named Executive Officers and Directors:

5,392,564 31.9 %

Berry III (7)

Gerritzen (8)

Schlotterback (10)

Harald Ruf (11)

Riccitelli (15)

All executive officers and directors as a group (14 persons) (16)

5,980,728 35.4 %

* Represents beneficial ownership of less than 1% of our outstanding common stock.

(1) Based in part on information contained in a Schedule 13G filed on February 13 , 2020.

Squadron Capital LLC is the record owner of 5,375,424 shares of common stock and 1,340 shares of common stock issuable upon exercise of options.

Squadron Capital LLC is managed by a management committee, the members of which are David R.

Pelizzon, Jennifer N.

Pritzker, Harry B.

Rosenberg and Charles E.

Pelizzon is a director of the Company and owns 13,000 shares of common stock and 1,400 restricted shares that Mr.

Pelizzon has the ability to vote, but is restricted from transferring until their vesting date.

Squadron Capital LLC is a wholly-owned subsidiary of Squadron Capital Holdings LLC.

Squadron Capital Holdings LLC is owned by the following trusts:

JNP Parachute Mirror Trust L – Harry B.

Rosenberg and Charles E.

Dobrusin, Trustees;

Trust #15M2 – Harry B.

Rosenberg and Charles E.

Dobrusin, Trustees;

JNP 2010 – P.G.

Trust – Harry B.

Rosenberg and Charles E.

Dobrusin, Trustees;

#15 M2 Parachute Trust – Harry B.

Rosenberg and Charles E.

Dobrusin, Trustees.

As trustees of the trusts listed above, Mr.

Rosenberg and Mr.

Dobrusin may be deemed beneficial owners of the shares held by Squadron Capital LLC insofar as they may be deemed to share the power to direct the voting or disposition of such shares.

The business address for Squadron Capital LLC is c/o Squadron Capital Holdings LLC, 18 Hartford Avenue, PO Box 223, Granby, CT 06035.

The address of the principal business and principal office for Harry B.

Rosenberg and Charles E.

Dobrusin, not individually, but solely in the capacity as co-trustees of the trusts referenced above, is 10 S.

Wacker Drive., Suite 4000, Chicago, IL 60606.

(2) Consists of 13,000 shares of common stock directly owned by Mr.

Pelizzon and 5,376,764 shares of common stock owned by Squadron Capital LLC, which includes 1,340 shares of common stock issuable upon exercise of options (see footnote 1).

Pelizzon is the President of Squadron and a member of its management committee.

Pelizzon disclaims beneficial ownership of the shares and shares underlying options held by Squadron, except to the extent of his pecuniary interests therein.

Also includes 2,334 restricted shares that Mr.

Pelizzon has the ability to vote, but is restricted from transferring until their vesting date.

(3) Includes options to acquire 1,876 shares of common stock and 36,295 restricted shares that Mr.

Throdahl has the ability to vote, but is restricted from transferring until their vesting date.

(4) Includes options to acquire 6,432 shares of common stock and 29,564 restricted shares that Mr.

Bailey has the ability to vote, but is restricted from transferring until their vesting date.

(5) Includes options to acquire 9,648 shares of common stock and 36,052 restricted shares that Mr.

Odle has the ability to vote, but is restricted from transferring until their vesting date.

(6) Includes 30,497 restricted shares that Mr.

Hite has the ability to vote, but is restricted from transferring until their vesting date.

(7) Includes options to acquire 2,680 shares of common stock and 2,334 restricted shares that Mr.

Berry has the ability to vote, but is restricted from transferring until their vesting date.

(8) Includes 22,419 restricted shares that Mr.

Gerritzen has the ability to vote, but is restricted from transferring until their vesting date.

(9) Includes 2,334 restricted shares that Mr.

Burns has the ability to vote, but is restricted from transferring until their vesting date.

(10) Includes options to acquire 2,010 shares of common stock and 2,334 restricted shares that Mr.

Schlotterback has the ability to vote, but is restrict ed from transferring until their vesting date.

(11) Includes 11,966 shares held as tenants-in-common with Mr.

Ruf's son and 2,334 restricted shares that Mr.

Ruf has the ability to vote, but is restricted from transferring until their vesting date.

(12) Includes options to acquire 670 shares of common stock and 2,334 restricted shares that Mr.

Hughes has the ability to vote, but is restricted from transferring until their vesting date.

(13) Includes options to acquire 474 shares of common stock and 2,334 restricted shares that Mr.

Unger has the ability to vote, but is restricted from transferring until their vesting date .

(14) Includes 2,334 restricted shares that Ms.

Infante has the ability to vote, but is restricted from transferring until their vesting date .

(15) Includes 2,334 restricted shares that Mr.

Riccitelli has the ability to vote, but is restricted from transferring until their vesting date .

(16) Includes shares of common stock issuable upon the exercise of outstanding warrants and stock options, as set forth in previous footnotes.

We will provide information that is responsive to this Item 12 regarding ownership of securities by certain beneficial owners in our definitive proxy statement or in an amendment to this Annual Report not later than 120 days after the end of the fiscal year covered by this Annual Report, in either case under the caption “Security Ownership of Certain Beneficial Owners and Management and Related Stockholders,” and possibly elsewhere therein.

That information is incorporated in this Item 12 by reference.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Transactions with Related Persons

The following is a description of transactions since January 1, 2018 to which we have been a participant in which the amount involved exceeded or will exceed the lessor of (a) $120,000, and (b) one percent of the average of our total assets at year-end for the last two completed fiscal years, and in which any of our directors, executive officers or holders of more than 5% of our capital stock, or any members of their immediate family, had or will have a direct or indirect material interest, other than compensation arrangements which are described under “Executive and Director Compensation.”

Supply Relationships .

We have used, or currently use, each of FMI Hansa Medical Products, LLC, or FMI, and Structure Medical, LLC, or Structure Medical, as suppliers for components of our products.

In 2017, FMI merged with and into Structure Medical.

Structure Medical is owned by Squadron, and Mr.

Pelizzon, one of our directors, is the President of Squadron and a member of its Managing Committee and Mr.

Ruf, another of our directors, is the Chief Operating Officer.

For the years ended December 31, 2019 and 2018, we made aggregate payments to Structure and FMI totaling $3.9 million and $4.0 million, respectively.

Real Estate Mortgage .

In connection with the purchase of our office and warehouse space in Warsaw, Indiana in August 2013, we entered into a mortgage note payable to Tawani Enterprises Inc., the owner of which

is a member of Squadron’s Managing Committee.

Pursuant to the terms of the mortgage note, we pay Tawani Enterprises Inc.

monthly principal and interest installments of $15,543, with interest compounded at 5% until maturity in August 2028, at which time a final payment of principal and interest is due.

The mortgage is secured by the related real estate and building.

The mortgage balance was $1.3 million and $1.4 million as of December 31, 2019 and 2018, respectively.

Vilex Divesture .

On December 31, 2019, the Company divested substantially all of the assets relating to Vilex's adult product offerings to a wholly-owned subsidiary of Squadron in exchange for a $25.0 million reduction in a term note owed to Squadron (which had funded a portion of the initial acquisition of the Vilex Companies).

In conjunction with the divestiture, the Company also executed an exclusive license arrangement with Squadron providing for perpetual access to certain intellectual property.

Related Persons Transaction Policy

Our Board of Directors has adopted a written related person transaction policy, setting forth the policies and procedures for the review and approval or ratification of related-person transactions.

This policy will cover, with certain exceptions set forth in Item 404 of Regulation S-K under the Securities Act, any transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships in which we were or are to be a participant, where the amount involved exceeds $120,000 and a related person had or will have a direct or indirect material interest, including, without limitation, purchases of goods or services by or from the related person or entities in which the related person has a material interest, indebtedness, guarantees of indebtedness and employment by us of a related person.

In reviewing and approving any such transactions, our audit committee is tasked to consider all relevant facts and circumstances, including, but not limited to, whether the transaction is on terms comparable to those that could be obtained in an arm’s length transaction and the extent of the related person’s interest in the transaction.

All of the transactions described in this section occurred prior to the adoption of this policy.

Parent of Smaller Reporting Company

We do not have a parent company, though, Squadron, our controlling investor, beneficially owns approximately 31.9% of our outstanding common stock.

Pursuant to an agreement with the Company, Squadron has the right to designate up to four nominees for election to the Company’s Board of Directors, depending on the percentage of capital stock beneficially owned by Squadron.

Currently, four members of the Company’s Board are Squadron designees.

Director Independence

Our Board of Directors currently consists of eleven (11) members.

Our Board has determined that Mr.

Riccitelli, Mr.

Schlotterback and Mr.

Unger are independent directors in accordance with the listing requirements of the Nasdaq Global Market (“Nasdaq”).

The Nasdaq independence definition includes a series of objective tests, including that the director is not, and has not been for at least three years, one of our employees and that neither the director nor any of his or her family members has engaged in various types of business dealings with us.

In addition, as required by Nasdaq rules, our Board has made a subjective determination as to each independent director that no relationships exist, which, in the opinion of our Board, would interfere with his or her exercise of independent judgment in carrying out the responsibilities of a director.

In making these determinations, our Board reviewed and discussed information provided by the directors and us with regard to each director’s business and personal activities and relationships as they may relate to us and our management.

There are no family relationships among any of our directors or executive officers.

We will provide information that is responsive to this Item 13 regarding transactions with related parties and director independence in our definitive proxy statement or in an amendment to this Annual Report not later than 120 days after the end of the fiscal year covered by this annual report, in either case under the caption “Certain Relationships and Related Transactions,” and possibly elsewhere therein.

That information is incorporated in this Item 13 by reference.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit and other fees billed to us by Deloitte & Touche LLP, the Company’s independent registered public accounting firm, for the years ended December 31, 2019 and 2018 are as follows:

Audit Fees $ 632,500 $ 455,000

Audit-Related Fees — —

All Other Fees 1,895 1,895

Total $ 634,395 $ 456,895

Audit fees consist of fees billed for professional services performed by Deloitte and Touche LLP for the audit of our annual financial statements, the review of interim financial statements, and related services that are normally provided in connection with registration statements.

Audit fees for 2019 include $75,500 for professional services rendered in connection with our registration statement on Form S-3 related to our follow-on offering and $200,000 related to the acquisition of the Vilex Companies and divestiture of Vilex.

Audit fees for 2018 include $105,000 for professional services rendered in connection with our registration statement on Form S-3 related to our secondary offering.

Audit-Related Fees .

Audit-related fees may consist of fees billed by an independent registered public accounting firm for assurance and related services that are reasonably related to the performance of the audit or review of our consolidated financial statements.

There were no such fees incurred in 2019 or 2018.

Tax fees may consist of fees for professional services, including tax consulting and compliance performed by an independent registered public accounting firm.

There were no such fees incurred in 2019 or 2018.

All Other Fees .

All other fees consist of the license fee for access to Deloitte & Touche LLP’s online accounting research program

Audit Committee Pre-Approval Policies and Procedures .

The Audit Committee of our Board (or a member of the Audit Committee acting under authority delegated to him or her by the Audit Committee) approves in advance all services proposed to be performed for the Company or its subsidiaries by any independent registered public accounting firm that performs (or proposes to perform) audit, review or attest services for the Company or its subsidiaries.

Under these SEC rules, the requirement for advance Audit Committee approval of services (other than audit, review or attest services) is waived if they were not recognized to be non-audit services at the time that the independent registered public accounting firm was engaged to provide those services, and certain other conditions are satisfied.

None of the services of Deloitte & Touche LLP that were covered by the fees described above were performed without the prior approval of the Audit Committee (or the prior approval of a member of the Audit Committee acting under delegated authority) in reliance upon this waiver provision of the SEC rules.

We will provide information that is responsive to this Item 14 regarding principal accounting fees and services in our definitive proxy statement or in an amendment to this Annual Report not later than 120 days after the end of the fiscal year covered by this annual report, in either case under the caption “Principal Accountant Fees and Services,” and possibly elsewhere therein.

That information is incorporated in this Item 14 by reference.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

6 unchanged sentences

Consolidated statements of comprehensive loss, years ended December 31, 2020, 2019 and 2018

Consolidated statements of redeemable convertible preferred stock and stockholders' equity (deficit), years ended December 31, 2019, 2018 and 2017

Consolidated statements of stockholders' equity (deficit), years ended December 31, 2020, 2019 and 2018

Consolidated statements of cash flows, years ended December 31, 2020, 2019 and 2018

5 unchanged sentences

(Incorporated by reference to Exhibit 2.1 of registrant's Form 8-K filed on June 4, 2019) (SEC File No.

Asset Purchase Agreement, dated December 31, 2019, by and among OrthoPediatrics Corp., Vilex in Tennessee, Inc., Orthex, LLC, Squadron Capital LLC and Squadron Newco LLC.

Asset Purchase Agreement, dated December 31, 2019, by and among OrthoPediatrics Corp., Vilex in Tennessee, Inc., Orthex, LLC, Squadron Capital LLC and Squa Asset Purchase Agreement, dated December 31, 2019, by and among OrthoPediatrics Corp., Vilex in Tennessee, Inc., Orthex, LLC, Squadron Capital LLC and Squadron Newco LLC.

(Incorporated by reference to Exhibit 2.1 of registrant's Form 8-K filed on January 6, 2020) (SEC File No.

Share Purchase Agreement, dated April 1, 2020, by and among OrthoPediatrics Corp., ApiFix Ltd.

(“ApiFix”), certain controlling shareholders of ApiFix, and the sellers’ representative named therein (Incorporated by reference to Exhibit 2.1 of registrant's Form 8-K filed on April 1, 2020) (SEC File No.

Amended and Restated Certificate of Incorporation of OrthoPediatrics Corp.

32 unchanged sentences

Fourth Amended and Restated Loan Agreement, by and among the registrant, its subsidiaries and Squadron, dated as of December 31, 2017 (Incorporated by reference to Exhibit 10.1 of registrant's Form 8-K filed on January 8, 2018) (SEC File No.

Second Amended and Restated Term Note A, by and among the registrant, its subsidiaries and Squadron, dated as of December 31, 2017 (Incorporated by reference to Exhibit 10.2 of registrant's Form 8-K filed on January 8, 2018) (SEC File No.

Revolving Note, by and among the registrant, its subsidiaries and Squadron, dated as of December 31, 2017 (Incorporated by reference to Exhibit 10.3 of registrant's Form 8-K filed on January 8, 2018) (SEC File No.

First Amendment to the Fourth Amended and Restated Loan Agreement, dated as of June 4, 2019, by and among OrthoPediatrics Corp., its subsidiaries named therein and Squadron Capital LLC (Incorporated by reference to Exhibit 10.2 of registrant's Form 8-K filed on June 5, 2019) (SEC File No.

Underwriting Agreement, dated December 11, 2019, by and among OrthoPediatrics Corp., the Selling Stockholders and Piper Jaffray & Co.

and Stifel, Nicolaus & Company, Incorporated, acting as representatives of the several Underwriters named therein (Incorporated by reference to Exhibit 1.1 of registrant's Form 8-K filed on December 12, 2019) (SEC File No.

Second Amendment to the Fourth Amended and Restated Loan Agreement, dated as of August 4, 2020, by and among OrthoPediatrics Corp., its subsidiaries named therein and Squadron Capital LLC (Incorporated by reference to Exhibit 10.3 of registrant's Form 10-Q filed on August 6, 2020) (SEC File No.

First Amended and Restated Revolving Note, dated August 4, 2020, made payable, jointly and severally, by OrthoPediatrics Corp.

and each of its subsidiaries party thereto (Incorporated by reference to Exhibit 10.4 of registrant's Form 10-Q filed on August 6, 2020) (SEC File No.

+ Subsidiaries of the registrant

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++ Furnished and not filed herewith.

w Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K.

The Company agrees to furnish a copy of any omitted schedules or exhibits to the SEC upon request.

FORM 10-K SUMMARY

1 unchanged sentence

OrthoPediatrics Corp.

President and Chief Executive Officer

Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report on Form 10-K has been signed by the following persons on behalf of the registrant and in the capacities indicated, on this 11th day of March, 2021.

Throdahl /s/ Fred L.

President and Chief Executive Officer

Chief Executive Officer

(Principal Executive Officer)

Chief Financial Officer

Chief Financial Officer and Chief Operating Officer

(Principal Financial and Accounting Officer)

Schlotterback * /s/ Bernie B.

Bailey /s/ Bernie B.

President Bernie B.

Schlotterback * /s/ Bryan W.

Schlotterback

/s/ Stephen F.

Burns * /s/ Bryan W.

Infante * /s/ David R.

/s/ Harold Ruf * /s/ Kevin L.

/s/ Samuel D.

Burns * /s/ David R.

Infante * /s/ Kevin L.

/s/ Harold Ruf * /s/ Samuel D.

* By Daniel J.

4 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures