Document:

EX-10.8

 EXHIBIT 10.8 
  

 
 30699 Russell Ranch Road, Suite 140, Westlake Village, CA 91362 

September 11, 2019 
 Timothy Andrews 

                          
               

                          
               
  

	Re:	 Incentive Bonus 

Dear Tim: 
 As you know, the board of directors (the
“Board”) of Sienna Biopharmaceuticals, Inc. (the “Company”) may authorize the Company to proceed with a chapter 11 bankruptcy (the “Reorganization”). To encourage you to remain
committed to the success of the Company and achieve certain performance targets in connection with the Reorganization, we are offering you a one-time incentive bonus, subject to the terms of this letter (the
“Incentive Bonus”). Please note that the Incentive Bonus is subject to court approval. 
 If you remain employed by the Company in
good standing through the consummation of either an Asset Sale or an Exit Investment (each as defined below), and certain performance targets are achieved, subject to court approval, you will be entitled to payment of your Incentive Bonus in an
amount equal to the portion of your annual compensation described below. As used in this letter, “annual compensation” means $503,010, which is the sum of your base salary and target annual bonus immediately prior to
commencement of the Reorganization. 
 Asset Sale. If the Company consummates a sale of all, or substantially all, of its assets resulting in gross
proceeds to the Company of at least $5 million (an “Asset Sale”), then, subject to your continued employment with the Company through the closing of the Asset Sale, you will be entitled to payment of your Incentive Bonus
in the amount determined under the table below based on proceeds paid to the Company. 
  

			
	Asset Sale Proceeds	  	Incentive Bonus Amount
	At least $5 million but less than $10 million	  	25% of annual compensation
	 	 
	At least $10 million but less than $15 million	  	50% of annual compensation
	 	 
	At least $15 million but less than $20 million	  	62.5% of annual compensation
	 	 
	$20 million or more	  	62.5% of annual compensation, plus a portion of 2.5% of the sale proceeds in excess of $20 million (such portion based on your annual
compensation as a percentage of the aggregate annual compensation of all Company employees eligible for an incentive bonus)

 If the Company’s assets are sold in a series of transactions rather than in a single transaction, any
Incentive Bonus earned will be determined based on the aggregate proceeds from all such sales. 
 Exit Investment. If a party sponsors a chapter 11
plan of reorganization and makes an investment in the Company in connection with such plan that results in gross proceeds to the Company of at least $15 million (an “Exit Investment”), then, subject to your continued
employment with the Company through the closing of the Exit Investment, you will be entitled to payment of an Incentive Bonus in an amount determined under the table below. If, in connection with an Exit Investment, the Company also consummates a
sale (or sales) of its assets, any proceeds from such sales shall be considered Exit Investment proceeds for purposes of calculating the Incentive Bonus amount. 
  

			
	Exit Investment Proceeds	  	Incentive Bonus Amount
	At least $15 million but less than $20 million	  	62.5% of annual compensation
	 	 
	$20 million or more	  	62.5% of annual compensation, plus a portion of 2.5% of the investment proceeds in excess of $20 million (such portion based on your
annual compensation as a percentage of the aggregate annual compensation of all Company employees eligible for an incentive bonus)

 Any Incentive Bonus earned will be subject to required tax withholding and authorized deductions, and will be paid at or
within 10 days after the closing of the Asset Sale (and if the Company’s assets are sold in a series of transactions, upon the closing of the last such transaction) or the Exit Investment (as applicable). As noted above, as a condition to
payment of the Incentive Bonus, you must remain continuously employed with the Company through the date of the Asset Sale or Exit Investment; however, for the purposes of this letter, you will be deemed to be employed through the date of any such
Asset Sale or Exit Investment in the event your employment with the Company is terminated by the Company without Cause or you resign for Good Reason (as each term is defined on Exhibit A) within 60 days prior to closing of the Asset Sale or
Exit Investment, subject to your delivery to the Company of a general release of claims against the Company and its affiliates in a form acceptable to the Company that becomes effective and irrevocable within 60 days after such termination of
employment. 
 In exchange for the Incentive Bonus opportunity and as evidenced by your signature to this letter, you hereby waive any right to cash
severance to which you may become entitled following the date of this letter. This means that if your employment with the Company terminates for any reason following the date of this letter, you will not receive any cash severance and, instead, will
only be entitled to receive the retention bonus set forth in the letter agreement between you and the Company as of the date of this letter, subject to your timely satisfaction of the conditions set forth in the letter. Any agreement, plan and
arrangement providing you an opportunity to earn severance will be deemed amended to the extent necessary to reflect this letter. In addition, by your signature to this letter, you hereby waive any rights to cash bonuses or additional equity grants
following the date of this letter.     

  
 2 

 You and your beneficiaries, heirs, successors and assigns shall have no legal or equitable rights, interests
or claims in any property or assets of the Company by virtue of this letter. For purposes of the payment of any Incentive Bonus, any and all of the Company’s assets shall be, and remain, the general, unpledged unrestricted assets of the
Company. Subject to court approval of the Incentive Bonus, payment of any Incentive Bonus shall be an administrative expense under Section 507(a)(1) of the U.S. Bankruptcy Code and shall be entitled to payment by the Company from the general
assets of the Company. The Company’s obligations under this letter shall be merely that of an unfunded and unsecured promise to pay money in the future. 

This letter sets forth the entire agreement between you and the Company regarding the subject matter contained herein and supersedes all prior agreements we
may have had in respect of the subject matter contained herein, other than the retention bonus letter that you entered into with the Company on or around the date hereof. Nothing contained in this letter shall (a) confer upon you any right to
continue in the employ of the Company, (b) constitute any contract or agreement of employment, or (c) interfere in any way with the at-will nature of your employment by the Company. 

This letter may only be modified or amended pursuant to a written agreement signed by you and a duly-authorized officer of the Company. During the pendency of
the Company’s chapter 11 case, no amendment to this letter shall be made which increases the amount of benefits payable to you hereunder without the approval of the bankruptcy court. 

(Signature Page Follows) 

  
 3 

 To indicate your acceptance of the terms of this letter, please sign, date and return a copy of it to the
Company. 
  

			
	Sincerely,
	
	SIENNA BIOPHARMACEUTICALS, INC.

 
			
		
	By:	 	 /s/ Frederick C. Beddingfield, III

 
			
	Name: Frederick C. Beddingfield, III
	Title: President and Chief Executive Officer

  

	
	Agreed and Accepted:
	
	/s/ Timothy K. Andrews
	Timothy K. Andrews
	
	Date: September 11, 2019

 Exhibit A 

For the purposes of the letter, Cause and Good Reason have the meanings set forth below. 

“Cause” means any one of the following: (i) your willful or reckless violation of any applicable material law or
regulation respecting the business of the Company; (ii) your conviction of, or plea of nolo contendere to, a non-vehicular felony or other crime involving moral turpitude; (iii) any act of
dishonesty, fraud, or misrepresentation in relation to your duties to the Company which act is materially and demonstrably injurious to the Company; (iv) your willful and repeated failure to perform in any material respect your duties;
(v) your failure to attempt in good faith to implement a clear and reasonable directive from your supervisor or to comply with any of the Company’s policies and procedures which failure is either material or occurs after written notice
from the Board; (vi) any act of gross misconduct which is materially and demonstrably injurious to the Company; or (vii) your breach of fiduciary duty owed to the Company; provided that in the cases of (iv)-(vii), you are given written
notice within 15 days’ notice of the occurrence and an opportunity to cure any such failure that is subject to cure, including a reasonable opportunity to present to the Board your position regarding any dispute relating to the existence of
such failure (other than on account of disability). 
 “Good Reason” means any one of the following: (i) the
material reduction of your base salary, (ii) the material reduction of your duties and responsibilities (including material reduction in status, material reduction in offices and/or a requirement to report to any person or entity that is at a
level lower than the level of your direct supervisor as of the date of this letter), (iii) the Company’s material breach of your employment agreement with the Company, or (iv) the relocation of your principal place of employment that
increases your one-way commute by more than 35 miles, provided, that, in each case, you will not be deemed to have Good Reason unless (x) you first provide the Board with
written notice of the condition giving rise to Good Reason within 30 days of its initial occurrence, (y) the Company fails to cure such condition within 30 days after receiving such written notice (the “Cure
Period”), and (z) your resignation based on such Good Reason is effective within 30 days after the expiration of the Cure Period.EX-10.9

 EXHIBIT 10.9 

SIENNA BIOPHARMACEUTICALS, INC. 

KEY EMPLOYEE RETENTION PLAN 
  

	1.	 Purpose. The purpose of this Key Employee Retention Plan (the “Plan”) is
to encourage eligible employees of Sienna Biopharmaceuticals, Inc., a Delaware corporation (the “Company”), to continue their employment with the Company following the commencement by the Company of a case under chapter 11 of
the U.S. Bankruptcy Code (the “Bankruptcy Case”). To effectuate this purpose and in recognition of the termination of the Company’s Non-Executive Change in Control Severance Plan
(the “Severance Plan”) and the discontinuance of the Company’s annual cash bonus program, the Company’s board of directors (the “Board”) has adopted this Plan. 

 

	2.	 Definitions. As used herein, the following terms have the following meanings:

  

	 	(a)	 “Cause” means any of the following: (i) a Participant’s material violation of
any applicable material law or regulation respecting the business of the Company; (ii) a Participant’s conviction of, or plea of nolo contendere to, a non-vehicular felony or other crime
involving moral turpitude; (iii) any act of dishonesty, fraud, or misrepresentation in relation to a Participant’s duties to the Company which act is materially and demonstrably injurious to the Company; (iv) a Participant’s
willful and repeated failure to perform in any material respect the Participant’s duties hereunder after 15 days’ notice and an opportunity to cure such failure and a reasonable opportunity to present to the Board the Participant’s
position regarding any dispute relating to the existence of such failure (other than on account of disability); (v) a Participant’s failure to attempt in good faith to implement a clear and reasonable directive from the Company or to comply
with any of the Company’s policies and procedures which failure is either material or occurs after written notice from the Company; (vi) any act of gross misconduct which is materially and demonstrably injurious to the Company; or
(vii) a Participant’s breach of fiduciary duty owed to the Company; provided that in the cases of (iv)-(vii), the Participant is given written notice within 15 days of the occurrence and an opportunity to cure any such failure that is
subject to cure, including a reasonable opportunity to present to the Plan Administrator the Participant’s position regarding any dispute relating to the existence of such failure (other than on account of disability). 

 

	 	(b)	 “Effective Date” means the date this Plan is approved by the Board.

  

	 	(c)	 “Good Reason” means (i) a material reduction in a Participant’s base salary,
or (ii) a relocation of a Participant’s principal place of employment that increases the Participant’s one-way commute by more than 35 miles, provided, that, in each case, a Participant
will not be deemed to have Good Reason unless (x) the Participant first provides the Company with written notice of the condition giving rise to Good Reason within 30 days of its initial occurrence, (y) the Company fails to cure such
condition within 30 days after receiving such written notice (the “Cure Period”), and (z) the Participant’s resignation based on such Good Reason is effective within 30 days after the expiration of the Cure Period

	 	(d)	 “Participant” means an individual designated by the Plan Administrator as a participant
in the Plan and set forth on Exhibit A. 

  

	 	(e)	 “Petition Date” means the date the Company files a bankruptcy petition in a U.S.
Bankruptcy Court. 

  

	 	(f)	 “Plan Administrator” means the Board or such person or persons to whom the Board has
delegated the responsibility of conducting the general administration of the Plan. 

  

	3.	 Retention Bonus. 

 

	 	(a)	 In lieu of eligibility for severance under the Severance Plan and the discontinuance of the Company’s
annual cash bonus program, each Participant shall be eligible to receive a retention bonus in the amount set forth on Exhibit A (each, a “Retention Bonus”). 

 

	 	(b)	 Each Retention Bonus shall be paid in cash in four substantially equal installments within ten days after each
of the following dates, subject to the Participant’s continued employment with the Company through the applicable date: 

  

	 	(i)	 The Effective Date, 

  

	 	(ii)	 The 45th day after the Petition Date,

  

	 	(iii)	 The 90th day after the Petition Date, and

  

	 	(iv)	 The earlier of (i) the closing of a sale of all or substantially all of the Company’s assets or
(ii) the effective date of a confirmed chapter 11 plan (the “Completion Date”). 

  

	 	(c)	 Notwithstanding the foregoing, any then-unpaid portion of the Retention Bonus shall be paid to a Participant in
a lump sum within ten day after the Completion Date, subject to the Participant’s continued employment with the Company through the Completion Date. 

  

	4.	 Termination of Employment. 

 

	 	(a)	 Termination for Cause or Resignation without Good Reason. If at any time the Company terminates a
Participant’s employment for Cause or a Participant resigns without Good Reason, the Participant shall forfeit the Participant’s right to any then-unpaid portion of the Retention Bonus. 

 

	 	(b)	 Termination Without Cause. If a Participant’s employment is terminated by the Company without Cause
or a Participant resigns for Good Reason, then, subject to the Participant delivering a general release of claims against the Company and its affiliates in a form acceptable to the Company (a “Release”) that becomes effective
and irrevocable within 60 days following the date the Participant’s employment terminates, the Participant shall be paid in a lump sum any then-unpaid portion of the Retention Bonus. Such portion of the Retention Bonus shall be paid to the
Participant within ten days after the date the Release becomes effective and irrevocable. 

	5.	 No Right To Continued Employment. Nothing contained in this Plan shall (a) confer upon any
Participant any right to continue in the employ of the Company or any of its affiliates, (b) constitute any contract or agreement of employment, or (c) interfere in any way with the at-will nature of
any Participant’s employment by the Company. The Retention Bonus is being provided in lieu of any severance Participant previously may have been eligible to receive. 

 

	6.	 Successors; Non-Transferability. For purposes of this
Plan, the Company shall include any and all successors and assignees, whether direct or indirect, by purchase, merger, consolidation, or otherwise, to all or substantially all of the business or assets of the Company, and such successors and
assignees shall perform the Company’s obligations under this Plan, in the same manner and to the same extent that the Company would be required to perform if no such succession or assignment had taken place. In such event, the term
“Company,” as used in this Plan, shall mean the Company and any successor, parent corporation or assignee to the business or assets which by reason hereof becomes bound by the terms and provisions of this Plan. No right or interest of any
Participant under the Plan shall be assignable or transferable, in whole or in part, either directly or by operation of law or otherwise, including without limitation by execution, levy, garnishment, attachment, pledge or in any manner, except by
will or the laws of descent and distribution. 

  

	7.	 Plan Administrator. The Plan shall be administered by the Board or by such other person or
persons whom the Board may from time to time delegate as the Plan Administrator. In the event that the Board so delegates administration of the Plan, the Board may at any time revest in the Board the authority to administer the Plan. Neither the
Plan Administrator nor any employee, officer or director of the Company to whom any duty or power relating to this Plan has been delegated shall be personally liable for any action, determination or interpretation made in good faith with respect to
the Plan or the Retention Bonuses, and the Company shall indemnify and hold harmless each such individual with respect to any such authorized action, determination or interpretation. The Company agrees to support reimbursement of any indemnification
obligation arising hereunder as an administrative expense under Section 503(b) of the U.S. Bankruptcy Code. 

  

	8.	 Amendment and Termination. No provision of this Plan may be amended, modified, waived or
terminated in a manner adverse to any Participant unless such amendment, modification, waiver or termination is agreed to in writing by each Participant affected thereby. During the pendency of the Bankruptcy Case, no amendment to the Plan shall be
made which increases the amount of benefits payable to any Participant hereunder without the approval of the Bankruptcy Court in the Bankruptcy Case, and no amendment to the Plan shall be made which decreases the amount of benefits payable to any
Participant hereunder without either the consent of the affected Participant or the approval of the Bankruptcy Court in the Bankruptcy Case. 

  

	9.	 Taxes. All amounts payable hereunder shall be subject to applicable federal, state and local tax
withholding. 

	10.	 Unsecured General Creditors. Participants and their beneficiaries, heirs, successors and assigns
shall have no legal or equitable rights, interests or claims in any property or assets of the Company. For purposes of the payment of benefits under this Plan, any and all of the Company’s assets shall be, and remain, the general, unpledged
unrestricted assets of the Company. Subject to court approval of the Plan, payments under this Plan shall be administrative expenses under Section 507(a)(1) of the U.S. Bankruptcy Code and shall be entitled to payment by the Company from the
general assets of the Company. The Company’s obligations under the Plan shall be merely that of an unfunded and unsecured promise to pay money in the future. 

 

	11.	 Governing Law. This Plan shall be construed, interpreted and the rights of the parties determined
in accordance with the laws of the State of California (without regard to the conflicts of laws principles thereof) and any applicable U.S. federal law. 

  

	12.	 Severability. The invalidity or unenforceability of any provision of this Plan shall not affect
the validity or enforceability of any other provision of this Plan, which shall remain in full force and effect. 

  

	13.	 Section 409A. This Plan and any payments made hereunder are intended to be
exempt from the application of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”). However, to the extent applicable, the Plan shall be interpreted in accordance with, and incorporate the terms
and conditions required by, Section 409A of the Code and Department of Treasury regulations and other interpretive guidance issued thereunder. 

  

	14.	 Effectiveness of Plan. This Plan shall become effective upon, and shall be subject to, the entry
of a final order in the Bankruptcy Case approving the Plan.

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