Exhibit 10.2

 

EXECUTIVE SEVERANCE

 

&

 

CHANGE IN CONTROL AGREEMENT

 

THIS EXECUTIVE SEVERANCE AND CHANGE IN CONTROL AGREEMENT (the “Agreement”) is
made by and between Ritter Pharmaceuticals, Inc. (the “Company”) and John Beck
(“Executive”) as of May 24, 2018.

 

In consideration of the mutual promises, covenants and obligations contained
herein, the Company and Executive agree as follows:

 

1. At-Will Employment. The Company and Executive acknowledge that Executive’s
employment is and shall continue to be at-will, as defined under applicable law.
If Executive’s employment terminates for any reason, Executive shall not be
entitled to any payments, benefits, damages, awards or compensation other than
as provided by this Agreement, or as may otherwise be available in accordance
with the Company’s established employee plans and practices in accordance with
other agreements between the Company and Executive.

 

2. Definitions. For purposes of this Agreement, the following terms have the
following meanings:

 

(a) “Accrued Obligations” means (i) Executive’s earned but unpaid Base Salary
through the Termination Date; (ii) payment of any annual, long-term, or other
incentive award which relates to a completed fiscal year or performance period,
as applicable, and is payable (but not yet paid) on or before the Termination
Date; (iii) a lump-sum payment in respect of accrued but unused vacation days at
Executive’s per-business-day Base Salary rate in effect as of the Termination
Date; and (iv) any unpaid expense or other reimbursements due pursuant to
Company expense reimbursement policy.

 

(b) “Affiliate(s)” means, with respect to any specified Person (as such term is
used in Section 13(d) of the Securities Exchange Act of 1934, as amended), any
other Person that, directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, such specified
Person.

 

(c) “Annual Bonus” means Executive’s target annual bonus for the year in which
the Change in Control occurs.

 

(d) “Base Salary” means Executive’s base rate of pay as of a specified date.

 

(e) “Cause” means a finding by the Company that Executive has (i) been convicted
of a felony or crime involving moral turpitude; (ii) disclosed trade secrets or
confidential information of the Company (or any Parent or Subsidiary) to persons
not entitled to receive such information; (iii) engaged in conduct in connection
with Executive’s employment or service to the Company (or any Parent or
Subsidiary), that has, or could reasonably be expected to result in, material
injury to the business or reputation of the Company (or any Parent or
Subsidiary), including, without limitation, act(s) of fraud, embezzlement,
misappropriation and breach of fiduciary duty; (iv) violated the operating and
ethics policies of the Company (or any Parent or Subsidiary) in any material
way, including, but not limited to those relating to sexual harassment and the
disclosure or misuse of confidential information; (v) engaged in willful and
continued negligence in the performance of the duties assigned to Executive by
the Company, after Executive has received notice of and failed to cure such
negligence; or (vi) breached any material provision of any agreement between
Executive and the Company (or any Parent or Subsidiary), including, without
limitation, any confidentiality agreement.

 

 

 

 

(f) “Change in Control” means the occurrence of any of the following events any
time after the six (6) month anniversary of the date on which Executive’s
employment with the Company commences:

 

  (i) Any “person” (as such term is used in sections 13(d) and 14(d) of the
Exchange Act) becomes a “beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company representing
more than 50% of the voting power of the then outstanding securities of the
Company; provided that a Change of Control shall not be deemed to occur as a
result of a change of ownership resulting from the death of a shareholder, and a
Change of Control shall not be deemed to occur as a result of a transaction in
which the Company becomes a subsidiary of another corporation and in which the
shareholders of the Company, immediately prior to the transaction, will
beneficially own, immediately after the transaction, shares entitling such
shareholders to more than 50% of all votes to which all shareholders of the
parent corporation would be entitled in the election of directors (without
consideration of the rights of any class of stock to elect directors by a
separate class vote)         (ii) A change in the effective control of the
Company which occurs on the date that a majority of members of the Board is
replaced during any twelve (12) month period by Directors whose appointment or
election is not endorsed by a majority of the members of the Board prior to the
date of the appointment or election; or         (iii) The consummation of (A) a
merger or consolidation of the Company with another corporation where the
shareholders of the Company, immediately prior to the merger or consolidation,
will not beneficially own, immediately after the merger or consolidation, shares
entitling such shareholders to more than 50% of all votes to which all
shareholders of the surviving corporation would be entitled in the election of
directors (without consideration of the rights of any class of stock to elect
directors by a separate class vote); (B) a sale or other disposition of all or
substantially all of the assets of the Company; or (C) a liquidation or
dissolution of the Company.

 

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(g) “Disability” means total and permanent disability as defined in Section
22(e)(3) of the Code or in the Company’s long-term disability plan. A
termination of Executive’s employment due to a Disability shall be effective
only if the party terminating Executive’s employment first gives at least 15
days’ written notice of such termination to the other party.

 

(h) “Good Reason” means, without Executive’s express written consent, the
occurrence of any one or more of the following: (i) a substantial and material
diminution in Executive’s duties or responsibilities; (ii) a material reduction
in Executive’s Base Salary; or (iii) the relocation of Executive’s principal
place of employment to a location that is more than 50 miles from the prior
location. A termination of employment by Executive for Good Reason shall be
effectuated by giving the Company written notice (“Notice of Termination for
Good Reason”), not later than 90 days following the occurrence of the
circumstance that constitutes Good Reason, setting forth in reasonable detail
the specific conduct of the Company that constitutes Good Reason and the
specific provision(s) of this Agreement on which Executive relied. The Company
shall be entitled, during the 30-day period following receipt of a Notice of
Termination for Good Reason, to cure the circumstances that gave rise to Good
Reason, provided that the Company shall be entitled to waive its right to cure
or reduce the cure period by delivery of written notice to that effect to
Executive (such 30-day or shorter period, the “Cure Period”). If, during the
Cure Period, such circumstance is remedied, Executive will not be permitted to
terminate employment for Good Reason as a result of such circumstance. If, at
the end of the Cure Period, the circumstance that constitutes Good Reason has
not been remedied, Executive shall terminate employment for Good Reason on the
date of expiration of the Cure Period.

 

(i) “Termination Date” means the date on which Executive’s employment hereunder
terminates.

 

3. Termination Without Cause or by Executive With Good Reason. Subject to
Section 6 below, if, after the six (6) month anniversary of the date on which
Executive’s employment with the Company commences, the Company terminates
Executive’s employment without Cause, or the Executive terminates for Good
Reason, Executive shall be entitled to: (a) the Accrued Obligations; (b) an
amount equal to six (6) months of the Base Salary as in effect immediately prior
to the Termination Date, paid in a lump sum on the sixtieth (60th) day following
the Termination Date; and (c) medical, dental benefits provided by the Company
to Executive and Executive’s spouse and dependents (in each case, as provided in
any applicable plan) at least equal to the levels of benefits provided to other
similarly situated active employees of the Company and its subsidiaries until
the earlier of (i) the six (6) month anniversary of the Termination Date or (ii)
the date that Executive becomes covered under a subsequent employer’s medical
and dental plans.

 

4. Change in Control Termination. Subject to Section 6 below, in the event that
within the one (1) month prior to or the twelve (12) months following a Change
in Control the Company terminates Executive’s employment without Cause, or the
Executive terminates for Good Reason, then, in lieu of the payments and benefits
otherwise due to Executive under Section 3 above, Executive shall be entitled
to: (a) the Accrued Obligations; (b) an amount equal to the sum of six (6)
months of the Base Salary as in effect on the Termination Date or the date of
the Change in Control, whichever is greater; (c) medical, dental benefits
provided by the Company to Executive and Executive’s spouse and dependents (in
each case, as provided in any applicable plan) at least equal to the levels of
benefits provided to other similarly situated active employees of the Company
and its subsidiaries until the earlier of (i) the six (6) month anniversary of
the Termination Date or (ii) the date that Executive becomes covered under a
subsequent employer’s medical and dental plans; and (d) acceleration of vesting
of all equity and equity-based awards.

 

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5. Other Terminations. If Executive’s employment hereunder is terminated (a) by
Executive without Good Reason; (b) by the Company for Cause; or (c) due to
Executive’s death or Executive’s Disability, Executive and/or Executive’s estate
or beneficiaries shall be entitled to the Accrued Obligations.

 

6. Release. Executive’s entitlement to the payments (other than the Accrued
Obligations) and benefits described in Sections 3 and 4 above is expressly
contingent upon Executive providing the Company with a signed release
satisfactory to the Company (the “Release”). To be effective, such Release must
be delivered by Executive to the Company no later than 45 days following the
Termination Date and must not be revoked during the seven (7) days following
such delivery. If such Release is not executed in a timely manner or is revoked,
all such payments and benefits shall immediately cease and the Executive shall
be required to repay to the Company any such payments that have already been
paid to the Executive.

 

7. Withholding. The Company shall withhold all applicable federal, state and
local taxes, social security and workers’ compensation contributions and other
amounts as may be required by law with respect to compensation payable to
Executive.

 

8. Modification of Payments. In the event it shall be determined that any
payment, right or distribution by the Company or any other person or entity to
or for the benefit of Executive pursuant to the terms of this Agreement or
otherwise, in connection with, or arising out of, his employment with the
Company or a change in ownership or effective control of the Company or a
substantial portion of its assets (a “Payment”) is a “parachute payment” within
the meaning of Section 280G of the Internal Revenue Code of 1986, as amended
(the “Code”) on account of the aggregate value of the Payments due to Executive
being equal to or greater than three times the “base amount,” as defined in
Section 280G(b)(3) of the Code, (the “Parachute Threshold”) so that Executive
would be subject to the excise tax imposed by Section 4999 of the Code (the
“Excise Tax”) and the net after-tax benefit that Executive would receive by
reducing the Payments to the Parachute Threshold is greater than the net
after-tax benefit Executive would receive if the full amount of the Payments
were paid to Executive, then the Payments payable to Executive shall be reduced
(but not below zero) so that the Payments due to Executive do not exceed the
amount of the Parachute Threshold, reducing first any Payments under Section
4(d) above.

 

9. Section 409A. (a) Notwithstanding anything herein to the contrary, this
Agreement is intended to be interpreted and applied so that the payment of the
benefits set forth herein either shall either be exempt from the requirements of
Section 409A of the Code (“Section 409A”) or shall comply with the requirements
of such provision.

 

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(b) Notwithstanding any provision of this Agreement to the contrary, if
Executive is a “specified employee” within the meaning of Section 409A, any
payments or arrangements due upon a termination of Executive’s employment under
any arrangement that constitutes a “nonqualified deferral of compensation”
within the meaning of Section 409A and which do not otherwise qualify under the
exemptions under Treas. Regs. Section 1.409A-1 (including without limitation,
the short-term deferral exemption or the permitted payments under Treas. Regs.
Section 1.409A-1(b)(9)(iii)(A)), shall be delayed and paid or provided, without
interest, on the earlier of (i) the date which is six months after Executive’s
“separation from service” (as such term is defined in Section 409A and the
regulations and other published guidance thereunder) for any reason other than
death, and (ii) the date of Executive’s death.

 

(c) After any Termination Date, Executive shall have no duties or
responsibilities that are inconsistent with having a “separation from service”
within the meaning of Section 409A and, notwithstanding anything in the
Agreement to the contrary, distributions upon termination of employment of
nonqualified deferred compensation may only be made upon a “separation from
service” as determined under Section 409A and such date shall be the Termination
Date for purposes of this Agreement. Each payment under this Agreement or
otherwise shall be treated as a separate payment for purposes of Section 409A.
In no event may Executive, directly or indirectly, designate the calendar year
of any payment to be made under this Agreement which constitutes a “nonqualified
deferral of compensation” within the meaning of Section 409A and to the extent
an amount is payable within a time period, the time during which such amount is
paid shall be in the discretion of the Company.

 

10. Merger Clause. Effective as of the Effective Date, this Agreement contains
the complete, full, and exclusive understanding of Executive and the Company as
to its subject matter and shall, on such date, and supersede any prior agreement
between Executive and the Company regarding severance benefits. Any amendments
to this Agreement shall be effective and binding on Executive and the Company
only if any such amendments are in writing and signed by both Parties.

 

11. Assignment. (a) This Agreement is personal to Executive and, without the
prior written consent of the Company, shall not be assigned by Executive
otherwise than by will or the laws of descent and distribution, and any
assignment in violation of this Agreement shall be void.

 

(b) This Agreement and all rights of Executive hereunder shall inure to the
benefit of, and be enforceable by, Executive’s personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If Executive should die while any amounts would still be
payable to him or her hereunder if he or she had continued to live, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to Executive’s devisee, legatee or other designee or,
should there be no such designee, to Executive’s estate.

 

(c) The Company shall require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business or assets of the Company (a “Successor”) to assume and agree to perform
this Agreement in the same manner and to the same extent that the Company would
have been required to perform it if no such succession had taken place. As used
in this Agreement, (i) the term “Company” shall mean the Company as hereinbefore
defined and any Successor and any permitted assignee to which this Agreement is
assigned and (ii) the term “Board” shall mean the Board as hereinbefore defined
and the board of directors or equivalent governing body of any Successor and any
permitted assignee to which this Agreement is assigned.

 

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12. Dispute Resolution. The parties agree that any dispute arising out of or
relating to this Agreement or the formation, breach, termination or validity
thereof, will be settled by binding arbitration by a panel of three arbitrators
in accordance with the commercial arbitration rules of the American Arbitration
Association. The arbitration proceedings will be located in Los Angeles County,
California. The arbitrators are not empowered to award damages in excess of
compensatory damages and each party irrevocably waives any damages in excess of
compensatory damages. Judgment upon any arbitration award may be entered into
any court having jurisdiction thereof and the parties consent to the
jurisdiction of any court of competent jurisdiction located in the State of
California.

 

13. GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN THE STATE OF
CALIFORNIA, AND THE VALIDITY, INTERPRETATION, CONSTRUCTION AND PERFORMANCE OF
THIS AGREEMENT IN ALL RESPECT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
CALIFORNIA WITHOUT REGARD TO ITS PRINCIPLES OF CONFLICTS OF LAW.

 

14. Amendment; No Waiver. No provision of this Agreement may be amended,
modified, waived or discharged except by a written document signed by Executive
and duly authorized officer of the Company. The failure of a party to insist
upon strict adherence to any term of this Agreement on any occasion shall not be
considered as a waiver of such party’s rights or deprive such party of the right
thereafter to insist upon strict adherence to that term or any other term of
this Agreement. No failure or delay by any party in exercising any right or
power hereunder will operate as a waiver thereof, nor will any single or partial
exercise of any other right or power. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof have
been made by any party, which are not set forth expressly in this Agreement.

 

15. Severability. If any term or provision of this Agreement is invalid, illegal
or incapable of being enforced by any applicable law or public policy, all other
conditions and provisions of this Agreement shall nonetheless remain in full
force and effect so long as the economic and legal substance of the transactions
contemplated by this Agreement is not affected in any manner materially adverse
to any party. Upon any such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the transactions contemplated hereby be consummated as originally
contemplated to the fullest extent possible.

 

16. Survival. The rights and obligations of the parties under the provisions of
this Agreement that relate to post-termination obligations shall survive and
remain binding and enforceable, notwithstanding the expiration of the term of
this Agreement, the termination of Executive’s employment with the Company for
any reason or any settlement of the financial rights and obligations arising
from Executive’s employment hereunder, to the extent necessary to preserve the
intended benefits of such provisions.

 

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17. Notices. All notices and other communications required or permitted by this
Agreement will be made in writing and all such notices and communications will
be deemed to have been duly given when delivered or (unless otherwise specified)
mailed by United States certified or registered mail, return receipt requested,
postage prepaid, addressed to the Company at its headquarters, and addressed to
Executive at his last address on file with the Company, or to such other address
as any party may have furnished to the other in writing in accordance herewith,
except that notices of change of address shall be effective only upon receipt.

 

18. Headings and References. The headings of this Agreement are inserted for
convenience only and neither constitute a part of this Agreement nor affect in
any way the meaning or interpretation of this Agreement. When a reference in
this Agreement is made to a Section, such reference shall be to a Section of
this Agreement unless otherwise indicated.

 

19. Counterparts. This Agreement may be executed in one or more counterparts
(including via facsimile), each of which shall be deemed to be an original, but
all of which together shall constitute one and the same instrument.

 

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IN WITNESS WHEREOF, this Agreement has been executed by the parties as of the
date first written above.

 

  RITTER PHARMACEUTICALS, INC.         By: /s/ Andrew J. Ritter   Name: Andrew
J. Ritter   Title: President                                                   
Executive         /s/ John Beck     John Beck

 

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