Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
On September 9, 2021, the Board of Directors (the "Board") of Celularity Inc.
(the "Company") appointed Andrew L. Pecora, M.D., as President of the Company
effective September 15, 2021, replacing Robert J. Hariri, M.D., Ph.D., in this
role as of such date. Dr. Hariri will continue to serve as the Company's Chief
Executive Officer (principal executive officer) and Chairman of the Board.
Andrew L. Pecora, M.D., F.A.C.P., age 64, has been serving as a consultant to
and as a member of the Scientific Advisory Board of the Company's wholly-owned
subsidiary Celularity Operations, Inc. since September 1, 2017, and previously
served as a member of its Board of Directors from June 2017 through the July
2021 business combination with the Company. Dr. Pecora has been a practicing
physician since 1989 and founder and first president of Regional Cancer Care
Associates, since 2011 he has been serving as Chairman and founder of COTA, Inc.
a data analytics company committed to bringing clarity to cancer, and is on the
board of directors of a number of private companies. Prior to consulting with
Celularity Operations, Inc., Dr. Pecora served on the board of directors of
Caladrius Biosciences, Inc. from 2011 to December 2016, and is co-founder and
past Chairman and Chief Executive Officer of PCT, a prior subsidiary of
Caladrius following its acquisition in 2011. Dr. Pecora served as Caladrius'
Chief Medical Officer from 2011 to September 2015, and served as its Chief
Visionary Officer from August 2013 through January 2015. He also served as PCT's
Chief Medical Officer from 2011 through August 2015. Prior thereto, Dr. Pecora
held numerous roles at PCT, as well as Amorcyte, Inc. Dr. Pecora served as the
Chairman and Director of the John Theurer Cancer Center at Hackensack University
Medical Center (HUMC) from 2001 to 2011, then Vice President of Cancer Services
and Chief Innovations Officer of Hackensack Meridian Health, and commencing in
2016, Dr. Pecora served as President Physician Enterprise, Chief Innovations
Officer and Institutional Official of Hackensack Meridian Health. He is a
Professor of Medicine and Oncology at Georgetown University Medical Center. Dr.
Pecora received an M.D. from the University of Medicine and Dentistry of New
Jersey, graduating with honors. He went on to complete his medical education in
internal medicine at New York Hospital and in hematology and oncology at
Memorial Sloan-Kettering Cancer Center, both in New York City. He is board
certified in internal medicine, hematology, and oncology.
Employment Agreement
In connection with Dr. Pecora's appointment as the President, the Company and
Dr. Pecora entered into an employment agreement, dated September 15, 2021,
providing for employment, on an at-will basis, as a full-time employee, subject
to a limited exception to continue his clinical practice no more than ½ day a
week, and other reasonable exceptions that do not interfere with the performance
of his duties under the employment agreement.
Pursuant to the terms of his employment agreement, Dr. Pecora is entitled to an
initial annual base salary of $900,000 per year, a short-term discretionary
performance bonus beginning with calendar year 2022, with a target bonus
percentage equal to 60% of his then current base salary. Receipt of a short-term
discretionary performance bonus is subject to achievement of individual and
company-wide annual performance goals, as set by the Company and confirmed by
its board of directors. Dr. Pecora was also granted a one-time front-loaded
equity award under the Company's 2021 Equity Incentive Plan (the "2021 Plan"),
to purchase 2,469,282 shares of the Company's Class A common, which award will
vest in up to five installments in respect of achieving certain share price
targets between the third and fourth anniversary of the effective date, subject
to Dr. Pecora continued employment with the Company. Dr. Pecora was also granted
a signing bonus equal to $1,200,000 payable in four annual installments of
$300,000, with the first payment advanced on the effective date of his
employment, and deemed earned on the one-year anniversary thereof, with
subsequent payments advanced and deemed earned on a similar basis, in each case
subject to Dr. Pecora's continued employment through such date. If Dr. Pecora's
employment terminates other than for death or disability, or Dr. Pecora is
terminated without cause or resigns for good reason prior to such sign-on bonus
being deemed earned, then such payment is subject to repayment to the Company,
with pro rata forgiveness by the Company for each full month of service in the
applicable year prior to termination of employment.
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Under Dr. Pecora's employment agreement, if he resigns for "good reason" or the
Company terminates his employment without "cause" (each as defined in the
employment agreement, and excluding a termination on account of Dr. Pecora's
death or disability), and if such termination or resignation is not in
connection with a "change in control" (as defined in the 2021 Plan), then Dr.
Pecora will be eligible to receive (i) continued payment of his base salary for
nine months following the termination (less applicable tax withholdings), (ii)
COBRA premium coverage for up to nine months, (iii) a prorated bonus for the
year of termination paid in a lump sum, and (iv) accelerated vesting of unvested
time-based equity awards that would have vested over the nine-month period
following termination had he remained continuously employed (provided that his
front-loaded equity grant will not accelerate if the four-year anniversary as
not been achieved as of the date of termination). As a condition to receiving
the foregoing severance benefits, Dr. Pecora must sign and not revoke a general
release contained in a separation agreement in the form presented by the
Company, return all company property and confidential information in his
possession, comply with his post-termination obligations, and resign from any
positions held with the Company.
Under Dr. Pecora's employment agreement, if he resigns for "good reason" or if
the Company terminates Dr. Pecora's employment without "cause", and excluding a
termination on account of Dr. Pecora's death or disability, and if such
termination or resignation occurs within three months prior to or within
12 months following the effective date of a "change in control", then Dr. Pecora
will be eligible to receive (i) continued payment of his base salary for
12 months following the termination (less applicable tax withholdings), (ii)
COBRA premium coverage for up to 12 months, (iii) 100% of his short-term bonus
for the calendar year of termination paid in a lump sum, and (iv) full
acceleration of the vesting of Dr. Pecora's unvested equity awards, provided,
however, that the front-loaded equity grant remains subject to achievement of
the price targets specified in the award agreement if the change in control is
after the one year anniversary of the grant but prior to the four year
anniversary and vest pro rata such that they reflect the annualized rate of
return implied over the four-year period adjusted to reflect the number of days
between the grant day and date of the change in control. As a condition to
receiving the foregoing severance benefits, Dr. Pecora must sign and not revoke
a general release contained in a separation agreement in the form presented by
the Company, return all company property and confidential information in his
possession, comply with his post-termination obligations, and resign from any
positions held with the Company.
Under Dr. Pecora's employment agreement, if payments and benefits payable to Dr.
Pecora in connection with a change in control are subject to Section 4999 of the
Internal Revenue Code of 1986, as amended, then such payments and benefits will
equal an amount determined by the Company in good faith to be the maximum amount
that may be provided to Dr. Pecora so that the Section 4999 excise tax does not
apply, or the largest portion of the payments after taking into account all
applicable taxes, whichever results in Dr. Pecora receiving the greater economic
benefit on an after-tax basis notwithstanding that some or all of the payment or
benefit may be subject to excise tax.
Under Dr. Pecora's employment agreement, if Dr. Pecora is terminated on account
of his death or "disability" (as defined in the employment agreement), then Dr.
Pecora (or his legal representatives, in the event of his death) will be
eligible to receive a prorated bonus for the year of termination paid in a lump
sum. As a condition to receiving the foregoing payment, Dr. Pecora (or his legal
representatives, in the event of his death) must sign and not revoke a general
release contained in a separation agreement in the form presented by the
Company.
In connection with the entry into the employment agreement, Dr. Pecora executed
the Company's standard Employee Confidential Information, Inventions,
Non-Solicitation and Non-Competition Agreement, as well as its standard
indemnification agreement for executive officers, which requires the Company,
under the circumstances and to the extent provided for therein, to indemnify Dr.
Pecora to the fullest extent permitted by applicable law against certain
expenses and other amounts incurred by him as a result of either of him being
made a party to certain actions, suits, investigations and other proceedings by
reason of the fact that he is or was an executive officer of the Company. Dr.
Pecora will also be eligible to participate in the Company's other benefit plans
although his employment agreement provides that he is not eligible for annual
equity awards until the end of the four-year measurement period for his initial
front-loaded equity grant.
The foregoing description of the employment agreement is only a summary and it
is qualified in its entirety by the employment agreement, a copy of which is
filed as Exhibit 10.1 hereto.
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Related Party Disclosures
Prior Board Service, Scientific Advisory and Consulting Agreement
In June 2017, Dr. Pecora joined the board of directors of Celularity Operations,
Inc. and was granted a stock option in connection therewith, which was assumed
in the business combination and is now fully-vested and exercisable for 384,297
shares of the Company's Class A common stock at an exercise price of $0.28 per
share. Dr. Pecora, along with the other non-employee directors of Celularity
Operations, Inc., was granted a stock option in March 2021, which was assumed in
the business combination and is now fully-vested and exercisable for 269,007
shares of the Company's Class A common stock at an exercise price of $3.83 per
share.
In September 2017, Celularity Operations, Inc. (the Company's wholly-owned
subsidiary) entered into a scientific and clinical advisor agreement with Dr.
Pecora, which was superseded in February 2019, and then further amended in April
2020 and October 2020. Under the current scientific and advisory agreement, as
amended, Dr. Pecora provided consulting and advisory services in exchange for
cash compensation and eligibility for equity awards.
The April 2020 amendment had a term of six months and provided for the payment
of $20,000 per month and the issuance of a stock option to purchase
200,000 shares of common stock (which the Company assumed in the business
combination and which is now exercisable for 153,718 shares of the Company's
Class A common stock at an exercise price of $3.70 per share). Under the October
2020 amendment, which initially expired January 31, 2021 but was extended on a
month-to-month basis until being replaced by the employment agreement described
above, Dr. Pecora received: (i) cash consideration of $20,000 per month, (ii) a
one-time cash bonus of $50,000 upon consummation of the business combination
with the Company and (iii) on April 6, 2021, he was granted options to acquire
200,000 shares of common stock (which the Company assumed in the business
combination and which are now exercisable for an aggregate of 153,718 shares of
the Company's Class A common stock at an exercise price of $10.21 per share).
In addition, on September 9, 2021, Dr. Pecora was granted a stock option under
the 2021 Plan to purchase 153,718 shares of the Company's Class A common stock
at an exercise price of $10.23 per share, 50% of which was vested in full as of
the grant date, and 50% of which is subject to time-based vesting as follows:
25% will vest on July 16, 2022 (the one-year anniversary of the business
combination between the Company and Celularity Operations, Inc.), with the
remainder vesting monthly thereafter such that it is vested in full on the
four-year anniversary of the business combination.
COTA, Inc.
In November 2020, Celularity Operations, Inc. (the Company's wholly-owned
subsidiary) and COTA entered into an Order Schedule (the "Order Schedule No.
2"), to the Master Data License Agreement between Celularity Operations, Inc.
and COTA, dated October 29, 2018, pursuant to which COTA will provide to
Celularity Operations, Inc. the licensed data in connection with AML patients.
The COTA Order Schedule No. 2 will terminate on the one-year anniversary
following the final licensed data deliverable described therein. Dr. Pecora, is
the Founder and Chairman of the Board of COTA and Dr. Robin L. Smith, a member
of the Board is an investor in COTA.
Prior Employment of an Immediate Family Member
Matthew Pecora, Dr. Pecora's son, was previously employed by Celularity
Operations, Inc. as Manager, Clinical Supply Chain. For the years ended December
31, 2018, 2019 and 2020, Mr. Pecora earned $6,865.38, $90,000.00 and
$103,534.39, respectively, in base salary and bonus and he earned equity awards
which were in line with similar roles at Celularity Operations, Inc. For the
year ended December 31, 2021, and prior to his termination of employment, Mr.
Pecora's base salary was $121,275.12. Mr. Pecora received and was eligible to
receive a bonus, equity awards and benefits on the same general terms and
conditions as applicable to unrelated employees in similar positions.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibit
No. Description
10.1 Employment Agreement by and between the Company and Dr. Andrew Pecora,
dated as of September 15, 2021.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
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