Pursuant to the terms of an employment offer letter, dated May 22, 2020, between Dr. Dilly and the
Company (the “Dilly Employment Agreement”), Dr. Dilly is entitled to receive a base salary of $600,000, a target bonus of 50% of such base salary (the “Performance Bonus”), which bonus shall be achieved in
accordance with Board-established targets, and stock options to purchase up to 520,000 shares of common stock of the Company (the “Time-Based Options”). The Time-Based Options will be granted on Dr. Dilly’s start date
under the Company’s 2015 Equity Incentive Plan at the closing price of the common stock of the Company (the “Common Stock”) on such date and will vest over a four-year period, subject to Dr. Dilly’s continued service
to the Company, with the first twenty-five percent (25%) of such shares vesting on the one-year anniversary of the Dilly Start Date, and the remaining shares vesting in equal monthly installments
over the following 36 months. No later than December 31, 2020, Dr. Dilly also will be granted a stock option under the Company’s 2015 Equity Incentive Plan to purchase 260,000 shares of Common Stock, subject to the terms of a Stock
Option Agreement (the “Performance-Based Options”) at the closing price of the Common Stock on the date of grant. The Performance-Based Options will be subject to a time-based vesting schedule and a performance-based
vesting schedule determined by the Compensation Committee of the Board at the time of grant. Pursuant to the Dilly Employment Agreement, if the Company terminates his employment without Cause (as defined in the Dilly Employment Agreement),
Dr. Dilly will be eligible to receive, subject to his execution and non-revocation of a release of claims:
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i.
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lump sum payment equal to the sum of his base salary in effect at the time for 12 months (the
“Severance Period”); provided, however that if he is terminated within a 12 month period following a change of control of the company, (A) his annual base salary shall be deemed to be the sum of (x) his base salary in
effect at the time and (y) the average of his Performance Bonuses paid for the applicable year(s), as set forth in the Dilly Employment Agreement, and (B) the length of the Severance Period shall be increased to 18 months;
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ii.
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if he elects to continue his health insurance coverage under COBRA, payment of the premiums for his continued
health insurance (or equivalent cash payment, if applicable law so requires) for up to the end of the Severance Period; and
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iii.
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full acceleration and vesting of each of his then-outstanding but unvested equity awards that would otherwise
vest over the following 12 month period following his termination; provided, however, that if he is terminated within a 12 month period following a change of control of the company, full vesting of all outstanding equity or equity-based awards
on the date of such termination; provided however that any equity or equity-based awards that vest based on the achievement of performance criteria shall vest in accordance with the change of control provisions in the award agreements applicable to
such equity or equity-based awards.
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The foregoing description of the Dilly Employment Agreement is qualified in its entirety by
reference to the text of the Dilly Employment Agreement, which will be filed as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020.
There are no arrangements or understandings between Dr. Dilly and any other persons pursuant to their respective appointments, no family relationships
between Dr. Dilly and any director or executive officer of the Company, and Dr. Dilly has no direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of
Regulation S-K. In addition, Dr. Dilly has entered into the Company’s standard indemnification agreement in the form filed as Exhibit 10.1 to the Company’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on June 12, 2015.
Appointment of Mr. Craig
Collard as a Director
On May 21, 2020, the Board appointed Craig Collard to serve as a Class I director on the Board, effective May 26,
2020, for a term expiring at the 2022 annual meeting of the Company’s stockholders or upon the earlier of his death, resignation or removal from office or the election and qualification of a successor. Effective as of two days after the public
announcement by the Company of Mr. Collard’s appointment to the Board (the “Collard Grant Date”), Mr. Collard will be granted a stock option to purchase 10,000 shares of Common Stock at an exercise price equal to the
closing sale price of the Common Stock as reported by The Nasdaq Global Market on such date, which will vest at the rate of 8.333% monthly, beginning on the one-month anniversary the Collard Grant Date, with
100% vested on the one-year anniversary of the Collard Grant Date, subject to his continued service to the Company on each vesting date. In addition, Mr. Collard will also receive an annual director
retainer payment of $40,000.
There are no arrangements or understandings between Mr. Collard and any other persons pursuant to their respective
appointments, no family relationships between Mr. Collard and any director or executive officer of the Company, and Mr. Collard has no direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a)
of Regulation S-K. In addition, Mr. Collard has entered into the Company’s standard indemnification agreement in the form filed as Exhibit 10.1 to the Company’s Registration Statement
on Form S-1 filed with the Securities and Exchange Commission on June 12, 2015.
The Proxy
Statement and the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2019 are available at http://investor.sierraoncology.com/financialreporting.