Item 5.02 Departure of Directors
or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On September 28, 2020, Rubius Therapeutics,
Inc. (the “Company”) announced the appointment of Jose (Pepe) Carmona, age 48, as the Company’s Chief Financial
Officer, effective as of October 1, 2020 (the “Effective Date”). Mr. Carmona will also serve as the Company’s
Principal Financial Officer, Principal Accounting Officer and Treasurer.
Prior
to his appointment, Mr. Carmona served as the Chief Financial Officer of Radius Health, Inc. (“Radius”), a biopharmaceutical
company that is developing and commercializing endocrine therapeutics, from 2017 to 2020. Prior to Radius, Mr. Carmona served
as the Chief Financial Officer of Innocoll Holdings plc (“Innocoll”), a pharmaceutical and medical device company,
and its predecessor entity, Innocoll AG, from 2015 to 2017. Prior to Innocoll, he served as Chief Financial Officer of Alcon Europe,
Middle East & Africa, a division of Novartis AG (“Novartis”), a pharmaceutical company, from 2013 to 2015 and prior
to that he held numerous financial management positions with increasing responsibility at Novartis, as Divisional Chief Financial
Officer in North America, Latin America and other senior global financial roles, from 2003 to 2013. Mr. Carmona received his B.S.
in Industrial Civil Engineering from Universidad Tecnica Federico Santa Maria in Valparaiso, Chile, and his M.B.A. from Columbia
Business School in New York City.
On September 23, 2020, the Company entered
into an Employment Agreement with Mr. Carmona (the “Employment Agreement”). Pursuant to the terms of the Employment
Agreement, Mr. Carmona will receive an initial annual base salary of $450,000, and is eligible to earn an annual cash incentive
award based on performance with a target value equal to 40% of his annual base salary. Mr. Carmona will also be eligible to receive
a sign-on bonus of $200,000, which he must repay in the event his employment is terminated for cause or he voluntarily resigns
before the first anniversary of payment of the sign-on bonus, which will be paid concurrently with the Company’s annual bonus
payouts for fiscal 2020. Mr. Carmona will also be eligible to participate in the Company’s employee benefit programs and
plans.
In connection with his appointment, the Board
of Directors of the Company approved a grant to Mr. Carmona of an option to purchase 400,000 shares of the Company’s common
stock, at a per share exercise price of the closing price of the Company’s common stock on the Nasdaq Global Select Market
on the date of grant, with 25 percent of the shares underlying the option vesting on the first anniversary of the Effective Date
and the remainder of the shares underlying the option vesting thereafter in 12 equal quarterly installments until the fourth anniversary
of the Effective Date, subject to Mr. Carmona’s continued employment through such vesting date.
The Employment Agreement
further provides that if Mr. Carmona’s employment is terminated by the Company without Cause (as defined in the Employment
Agreement) or Mr. Carmona resigns for Good Reason (as defined in the Employment Agreement), he will be entitled to receive:
(i) base salary continuation for nine months following termination, or the “Severance Payments,” and, (ii) if
Mr. Carmona is enrolled in the Company’s health care program immediately prior to the date of termination and properly elects
to receive COBRA benefits, nine months of COBRA premiums for himself and his eligible dependents at the Company’s normal
rate of contribution for employees for coverage at the level in effect immediately prior to the date of termination (or a monthly
cash payment in lieu thereof if the Company determines it cannot pay such amounts without potentially violating applicable law).
Payment of the Severance Payments shall immediately cease if Mr. Carmona breaches the terms of the Restrictive Covenants Agreement
between him and the Company.
In lieu of the severance
payments and benefits set forth above, in the event Mr. Carmona’s employment is terminated by the Company without Cause
or he resigns for Good Reason, in either case within 12 months following a Change in Control (as defined in the Employment
Agreement), he will be entitled to receive: (i) a lump sum cash amount equal to one times the sum of (A) his current
base salary (or his base salary in effect prior to the Change in Control, if higher) plus (B) his target annual cash incentive
compensation for the year of termination, (ii) if Mr. Carmona is enrolled in the Company’s health care program
immediately prior to the date of termination and properly elects to receive COBRA benefits, 12 months of COBRA premiums for
himself and his eligible dependents at the Company’s normal rate of contribution for employees for coverage at the level
in effect immediately prior to the date of termination (or a monthly cash payment in lieu thereof if the Company determines it
cannot pay such amounts without potentially violating applicable law), and (iii) except as otherwise provided in the applicable
award agreement, accelerated vesting of 100% of all Time-Based Equity Awards held by Mr. Carmona. The
payments and benefits provided under the Employment Agreement in connection with a change in control may not be eligible for a
federal income tax deduction for the company pursuant to Section 280G of the Code. These payments and benefits also may be
subject to an excise tax under Section 4999 of the Code. If the payments or benefits payable to the Mr. Carmona in connection
with a change in control would be subject to the excise tax on golden parachutes imposed under Section 4999 of the Code,
then those payments or benefits will be reduced if such reduction would result in a higher net after-tax benefit to Mr. Carmona.
During
his employment and for 12 months thereafter, Mr. Carmona has agreed to be subject
to certain restrictive covenants, including a nonsolicitation of the Company’s customers and a nonsolicitation and no-hire of
its employees. Mr. Carmona is also subject to a noncompetition provision during his employment and for up to 12 months thereafter,
subject to the type of termination.
Mr. Carmona has no
family relationships with any of the Company’s directors or executive officers, and he has no direct or indirect material
interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.
Mr. Carmona succeeds Andrew Oh as Chief Financial
Officer, Principal Financial Officer, Principal Accounting Officer and Treasurer of the Company effective as of October 1, 2020.
On June 29, 2020, the Company and Mr. Oh entered into a Transitional Services and Separation Agreement (the “Separation Agreement”)
providing for the terms of Mr. Oh’s departure.
The foregoing description of the Employment
Agreement is only a summary and is qualified in its entirety by reference to the full text of the agreements, a copy of which has
been filed hereto as Exhibit 10.1 and is incorporated herein by reference. The foregoing description of the Separation Agreement
is only a summary and is qualified in its entirety by reference to the full text of the agreement, a copy of which has been filed
as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2020.
A copy of the press release announcing this
event has been filed as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.