UNITED
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SECURITIES AND EXCHANGE COMMISSION
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FORM
CURRENT REPORT
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Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
As previously disclosed in a current report on Form 8-K filed on January 17, 2024, Celularity Inc., or Celularity, entered into a securities purchase agreement, or SPA, with Dragasac Limited dated January 12, 2024. As a condition of the SPA, Celularity agreed to implement certain changes to the executive compensation program in effect for members of Celularity’s executive leadership team. Accordingly, Celularity implemented a 15% across the board reduction in the annual base salary rate of the members of its executive leadership team for the year ended December 31, 2024, except for Dr. Hariri, who voluntarily elected to reduce his annual base salary rate for the year ended December 31, 2024 by 85%.
As contemplated by the SPA, Celularity entered into amendments to the employment agreements with each of David Beers, Stephen Brigido, D.P.M., K. Harold Fletcher, Esq., John Haines and Adrian Kilcoyne, M.D. and other members of its executive leadership team to implement the across the board 15% base salary reductions effective as of February 16, 2024, resulting in the annual base salary rates for the 2024 year set forth in the table below. Payment of each executive’s base salary at the rate in effect prior to the reductions will resume on January 1, 2025.
| Executive | 2024 Base Salary | |||
| David Beers | $ | 361,250.00 | ||
| Stephen Brigido, D.P.M. | $ | 361,250.00 | ||
| K. Harold Fletcher, Esq. | $ | 323.000.00 | ||
| John Haines | $ | 425,000.00 | ||
| Adrian Kilcoyne, M.D. | $ | 403,750.00 | ||
As previously disclosed in a current report on Form 8-K filed on January 30, 2023, Dr. Hariri previously agreed to temporarily suspend full payment of his 2023 base salary pursuant to his employment agreement until as late as December 31, 2023. In order to implement the requirement in the SPA that Dr. Hariri not be paid the $1,087,611.83 in base salary that was otherwise due to him for the 2023 calendar year unless Celularity raises additional cash through offerings of equity securities with aggregate net proceeds equal or greater to $21.0 million at a valuation at least equal to the valuation, cost per security or exercise/conversion price, as applicable, of the Class A common stock and PIPE Warrant purchased by Dragasac Limited pursuant to the SPA in compliance with the requirements of Internal Revenue Code Section 409A, the compensation committee of Celularity’s board of directors approved a cash bonus program, or bonus program, effective February 16, 2024, pursuant to which Dr. Hariri will be paid 125% of the unpaid base salary upon the satisfaction of the foregoing performance conditions. Accordingly, Celularity and Dr. Hariri entered into a second amendment to Dr. Hariri’s employment agreement implementing the 85% base salary reduction effective as of February 16, 2024 and documenting the bonus program. As a result of the reduction, Dr. Hariri’s annual rate of base salary for the 2024 year will be $180,000. Payment of Dr. Hariri’s base salary at the rate in effect prior to the reduction will resume on January 1, 2025.
As contemplated by the SPA, the compensation committee of Celularity’s board of directors approved, effective February 16, 2024, stock option grants under Celularity’s 2021 Equity Incentive Plan, or the 2021 Plan, to Celularity’s executive officers to purchase the number of option shares set forth in the table below, as well as grants to Celularity’s other members of the executive leadership team. Such options will have an exercise price per share equal to the closing price of Celularity’s common stock on February 16, 2024, vest quarterly over a one-year period measured from the grant date, have a term of 10 years, and be evidenced by Celularity’s standard form option agreement under the 2021 Plan.
| Executive | Stock Options | |||
| Robert J. Hariri, M.D., Ph.D. | 2,937,788 | |||
| David Beers | 183,612 | |||
| Stephen Brigido, D.P.M. | 183,612 | |||
| K. Harold Fletcher, Esq. | 164,171 | |||
| John Haines | 216,014 | |||
| Adrian Kilcoyne, M.D. | 205,213 | |||
The foregoing summary of the terms and conditions of the amendments to each such employment agreement is qualified in its entirety by reference to the full text of such agreements, which are filed herewith as Exhibits 10.1, 10.2, 10.3, 10.4, 10.5, and 10.6 and incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| CELULARITY INC. | ||||
| Date: | February 21, 2024 | By: | /s/ Robert Hariri | |
Robert J. Hariri, MD, PhD | ||||
| Chairman & CEO | ||||