Exhibit 10.1

 

CONSULTING AGREEMENT

 

THIS CONSULTING AGREEMENT (the “Agreement”) is made and entered into as of March
24, 2019 (“Effective Date”) by and between Adial Pharmaceuticals, Inc., a
Delaware corporation having its principal place of business at 1001 Research
Park Blvd., Suite 100, Charlottesville, VA 22911 (collectively with its
subsidiaries, the “Company”), and Dr. Bankole A. Johnson, having an address as
set forth in the Company’s records at its principal offices (“Consultant”). Each
of Company and Consultant are sometimes hereafter referred to as a “Party” or
collectively as the “Parties.”

 

WHEREAS, the Consultant has professional expertise related to the field(s) in
which Company is researching and developing products and technologies;

 

WHEREAS, Company desires to retain the Consultant to perform and do certain work
for the Company in furtherance of the development of the business of the
Company, on the terms and conditions of this Agreement; and

 

WHEREAS, the Consultant is desirous of performing such work for the Company, on
the terms and conditions contained herein.

 

NOW THEREFORE, in full consideration of the mutual promises, covenants and
obligations contained in this Agreement, the sufficiency of which is hereby
acknowledged, the Parties agree as follows:

 

1. Services; Compensation.

 

(a)Services. Consultant shall furnish in a professional and workmanlike manner,
as an independent contractor, using Consultant’s own means and methods, without
the advice, control or supervision of the Company, personal services as agreed
to by the Parties and specified in Exhibit A (the “Services”). The nature of the
Services to be performed by Consultant, as well as the timing, compensation and
payment schedule with respect to such Services shall be set forth in Exhibit A.
Consultant shall devote no less than 75% of his working time to the provision of
the Services and shall be paid for actual Services completed in accordance with
this Agreement. The payment thereof shall constitute full payment for Services
to Company during the Term of this Agreement. Consultant will receive no other
remuneration resulting from or based upon the Services, and Consultant shall not
receive any additional benefits or compensation for the Services.

 

(b)Compensation. Company agrees to pay the Consultant the compensation specified
in Exhibit A pursuant to the payment schedule set forth on Exhibit A. Company
will reimburse Consultant for reasonable and customary travel and out-of-pocket
expenses incurred by Consultant in connection with the Services provided under
this Agreement, provided that Consultant received written pre-approval of such
expenses and provides appropriate supporting documentation of actual costs
incurred (including receipts) in accordance with the Company’s Expense and
Reimbursement Guidelines provided in Exhibit B and completes and submits an
expense report using the Company’s standard form as it exists at the time.
Company or its authorized agents shall have the right to audit such financial
documentation to verify amounts billed at any time upon request by Company.

 

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2. Term.

 

(a)The term of this Agreement shall commence on the Effective Date and shall
continue in full force and effect for three (3) years thereafter (the “Term”)
unless renewed by the mutual agreement of the Parties or unless sooner
terminated as provided herein.

 

(b)This Agreement and/or any Services to be performed by Consultant under this
Agreement may be terminated by Company (i) immediately upon Consultant’s death;
(ii) after thirty (30) days prior written notice to Consultant, for any material
breach by Consultant of any provision of this Agreement which Consultant may
cure but, having received thirty (30) days prior written notice, has failed to
cure; (iii) immediately upon notice to Consultant for any violation by
Consultant of any provision of this Agreement that cannot be cured or for any
other cause after thirty (30) days prior written notice , or (iv) at any time
without cause upon thirty (30) days written notice to Consultant but not before
12 months from the Effective Date; provided that if terminated by the Company
without cause then Consultant shall be entitled to receive his monthly payments
for an additional six (6) months and his options shall continue to vest for an
additional six (6) months from the effective date of the notice of termination,
subject to the terms of the Company’s 2017 Incentive Plan and Option Agreement.
Upon the effective termination date, Consultant shall immediately cease work and
deliver to Company all work in progress and return all Company Confidential
Information (as defined in Section 8 below) and any Company-owned materials
and/or equipment. Company’s sole obligation shall be to pay Consultant
undisputed monies owed Consultant up to the time of termination for Services
actually performed and reasonable expenses actually incurred. Any unearned or
unexpended portion of monies previously paid by Company to Consultant shall be
refunded to Company. Cause for purposes of this provision shall mean a material
breach of the responsibilities set forth in this Agreement, an intentional
breach of Company policies, a conviction for a felony crime, the commission of
an intentional and material act involving fraud or dishonesty, or a criminal act
of moral turpitude. In the event that Consultant’s termination shall be without
cause and shall occur within three (3) months before or after a Significant
Investment Event, Consultant shall then be immediately entitled to a buy-out
payment in an amount equal to $31,250 times the number of months remaining on
the initial Term of the Agreement as of the effective date of the termination,
minus the payment of the six (6) months of monthly payments provided for above
(in addition to the immediate vesting at the time of termination of all
remaining shares or options of the Company’s common stock that would have
otherwise been scheduled to vest during the remainder of the initial term as set
forth above). For purposes of this Section, a “Significant Investment Event”
shall mean a sale or series of sales of equity securities of the Company within
any three- (3) month period resulting in gross proceeds to the Company of at
least $20 million or (i) any consolidation or merger of the Company with or into
any other corporation or other entity, or (ii) series of such consolidations or
mergers within any three- (3) month period, or (iii) any other corporate
reorganization whereby either (x) forty (40) percent or more of the market value
of the Company’s common shares as of the beginning of the three-month period or
the date of the single transaction, whichever is applicable, or (y) forty (40)
percent or more of the Company’s voting power is transferred and becomes
controlled, directly, or indirectly, by a single entity or multiple related
entities.

 

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(c)This Agreement may be terminated by Consultant (i) after thirty (30) days
prior written notice to Company, for any material breach by Company of any
provision of this Agreement which Company may cure but, having received thirty
(30) days prior written notice, has failed to cure; (ii) immediately upon notice
to Company of any uncurable material breach by Company; or (iii) at any time
after the one year anniversary of the Effective Date without cause upon sixty
(60) days written notice to Company; provided that, if so terminated without
cause by Consultant, upon termination all payment obligations of the Company
shall cease and all equity vesting shall cease, subject to the terms of the
Company’s 2017 Incentive Plan and Option Agreement. For purposes of this
Agreement, “cause” shall mean failure of Company to comply with its obligations
under this Agreement.

 

(d)The Parties’ obligations under Sections 2(b), 2(c), 2(d), 6, 8, 9, 10, 11,
13, 15, 16, 18, 19, 20, 22 and 25 of this Agreement shall survive the expiration
or termination of this Agreement.

 

(e)The election of a party to terminate this Agreement shall not be deemed an
election of remedies, and all other remedies provided by this Agreement or
available at law or in equity shall survive any termination. Neither expiration
nor termination shall relieve either Party from any liability arising from any
breach of this Agreement.

 

3. Conflicts of Interest.

 

(a)In General. Consultant warrants and represents that he is authorized to enter
into this Agreement and that Consultant is not a party to any other agreement or
under any obligation to any third party which would prevent Consultant from
entering into this Agreement. Consultant warrants and represents that there is
no conflict of interest in Consultant’s other contracts for services or other
employment, if any, with the Services to be provided pursuant to this Agreement
and that Consultant will ensure that no such conflict arises during the Term of
this Agreement.

 

(b)Special Provision regarding Government Employee Status. In the event that
Consultant is employed by a federal, state, local, or foreign government (or an
agency thereof) or is an elected or appointed public official (collectively a
“government employee”), Consultant shall check the box below the signature line
of this Agreement to certify that execution of this Agreement, performance of
the Services, and receipt of compensation and/or reimbursement hereunder: (i) do
not conflict with any contractual obligation or terms of Consultant’s employment
or official duties, and (ii) do not violate any law, policy or ethics rules
relating to Consultant’s employment and Consultant’s performance of Services as
an independent consultant to Company. Consultant further certifies that
Consultant has and will take any actions required by the entity or agency by
which s/he is employed or to which s/he has been elected/appointed related to
the Services and compensation/reimbursement hereunder, which may include, by way
of example, disclosure of outside financial relationships, approval of outside
consulting arrangements, and recusal from participation in certain
decision-making activities. Failure to comply fully with this Section shall
constitute a material breach of this Agreement, and Company reserves the right
to require Consultant to refund any compensation, expenses, or costs hereunder,
in addition to any other legal rights Company may have.

 

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4.No Debarment or Exclusion; Consultant Responsibility.

 

(a)Consultant certifies, represents and warrants that Consultant has not been:
(i) debarred under subsections (a) or (b) of Section 306 of the Federal Food,
Drug and Cosmetic Act, as amended, 21 U.S.C. §335a(a) and (b) (the “FD&C Act”),
(ii) excluded, debarred, suspended or otherwise ineligible to participate in
federal health care programs or in federal procurement or non-procurement
programs (as that term is defined in 42 U.S.C. § 1320a-7b(f)) or convicted of a
criminal offense related to the provision of health care items or services, but
has not yet been debarred. Moreover, if Consultant is subsequently so debarred
or excluded, Consultant agrees to immediately notify Company of such debarment
or exclusion as provided in Section 19 herein, and this Agreement shall
terminate with respect to Consultant as of the date of such debarment or
exclusion.

 

(b)Consultant certifies, represents and warrants that Consultant will not use in
any capacity the Services of any person debarred under the FD&C Act in
connection with Consultant’s performance of this Agreement. Consultant shall
select and shall have full and complete control of and responsibility for all
actions of his agents and permitted subcontractors, if any (collectively,
“Consultant’s Agents”) and none of Consultant’s Agents shall be, or shall be
deemed to be, the agents, affiliates, officers, directors, employees or
subcontractors of Company for any purpose whatsoever by virtue of this
Agreement. Company shall have no duty, liability or responsibility of any kind,
to or for the acts or omissions of Consultant or any of Consultant’s Agents.
Consultant hereby acknowledges and agrees that Consultant shall cause each of
Consultant’s Agents who participate in rendering the Services provided hereunder
to comply with the terms of this Agreement.

 

5.Consulting Relationship. This Agreement establishes an independent contractor
relationship between the Parties, and all of the terms and conditions of this
Agreement shall be interpreted in light of that relationship. The relationship
of Company and Consultant for purposes of this Agreement is completely
independent and unrelated to any other relationship that exists or may exist in
the future between the Parties. This Agreement does not create any
employer-employee, agency, or partnership relationship. As an independent
contractor, Consultant’s fees and expenses shall be limited to those expressly
stated in this Agreement. Consultant shall not, in his capacity as a Consultant,
participate in Company’s fringe benefit plans or any other compensation or
benefit plans that Company maintains for its own employees. Consultant
represents and warrants that Consultant shall not knowingly or directly trade
any stock of the Company in violation of any applicable Securities Laws.

 

6.Consultant Responsible for Taxes. In conformity with Consultant’s independent
contractor status and without limiting any of the foregoing,  Consultant agrees
to accept liability for the payment of all taxes or contributions for
unemployment insurance or pensions or annuities or social security payments
which are measured by the wages, salaries or other remuneration paid to
Consultant or Consultant’s Agents, if any, and to reimburse and indemnify
Company for any such taxes or contributions or penalties which Company may be
compelled to pay.  Consultant also agrees to take all actions and comply with
all applicable administrative regulations necessary for the payment by
Consultant of such taxes and contributions.

 

7.Insurance. Through his position as an officer of the Company, Consultant shall
be covered by the Company’s insurance policies in force to the extent they cover
Company officers and their activities related to the business of the Company.

 

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8.Confidentiality.

 

(a)Consultant agrees to use Company Confidential Information (as defined herein)
solely to perform Consultant’s obligations under this Agreement and agrees to
retain in confidence and to refrain from disclosing and/or using Company
Confidential Information for Consultant’s personal benefit or the benefit of any
third party. The term “Company Confidential Information” shall include, without
limitation: (i) any and all information, formulae, methods, techniques,
processes, know-how and data, technical or non-technical, whether written,
graphic, computer-generated or orally furnished to Consultant by Company or
indirectly learned by Consultant as a result of Consultant’s Services under this
Agreement or obtained by Consultant while visiting Company’s facilities; (ii)
information which has been received by or disclosed to Consultant or
Consultant’s Agents, either in oral or written or other tangible form including,
without limitation, Company’s business plans and/or compound or product
information, and any physical substances or equipment provided to Consultant by
Company; (iii) Intellectual Property (defined herein); and (iv) copies and
derivations of and improvements on any of the foregoing. Company Confidential
Information is and shall be solely owned by Company. Consultant also agrees to
safeguard and keep confidential the confidential and proprietary information of
Company’s actual or potential investors, licensees, customers, vendors,
suppliers, consultants and others with whom Company does or may do business, to
the same extent as if it were Company Confidential Information.

 

(b)The foregoing restrictions shall not apply to Company Confidential
Information that Consultant can properly demonstrate by written documentation:
(i) is or became public knowledge through no fault of Consultant or Consultant’s
Agents; or (ii) is lawfully made available to Consultant by an independent third
party; or (iii) is already in Consultant’s possession at the time of initial
receipt from Company; or (iv) is independently developed by Consultant or
Consultant’s Agents.

 

(c)Consultant may disclose that portion of Company Confidential Information
which is required by law, regulation, rule, act or order of any governmental
authority or agency with competent jurisdiction to be disclosed by Consultant,
provided, however, that Consultant shall give Company reasonable advance written
notice so as to permit the Company to seek a protective order or other similar
order or confidential treatment with respect to such Company Confidential
Information and thereafter Consultant discloses only the minimum Company
Confidential Information required to be disclosed in order to comply, whether or
not confidential treatment, a protective order, or other similar order is
obtained by Company.

 

(d)Except as permitted in subsection (c) above, Consultant agrees that
Consultant will not, without the prior written permission of Company, use
Company Confidential Information for any purpose other than in carrying out the
obligations of this Agreement and performing the Services. Consultant shall not
use any Company Confidential Information to apply for, secure or perfect any
intellectual property rights. Consultant shall hold Company Confidential
Information in a manner consistent with Consultant’s treatment of his own
similar confidential information, but in no event shall Consultant maintain the
confidentiality of such information with less than reasonable care and
diligence. Consultant shall provide the Company Confidential Information
received hereunder only to Consultant’s Agents who are directly concerned with
the Services provided by Consultant under this Agreement and who are subject to
and bound by written obligations of confidentiality, non-disclosure and non-use
that are no less restrictive than those provided for herein. Further, Consultant
agrees to (i) advise Consultant’s Agents of the proprietary nature of the
Company Confidential Information and the terms and conditions of this Agreement;
and (ii) use all reasonable safeguards to prevent the unauthorized use or
disclosure of Company Confidential Information by such Agents. Consultant shall
be responsible for any breach of this Agreement by Consultant’s Agents.
Consultant also agrees not to submit for publication any paper containing
Company Confidential Information without the prior written permission of
Company.

 

(e)Notwithstanding the foregoing, pursuant to 18 U.S.C. §1833(b), Consultant
shall not be held criminally or civilly liable under any Federal or State trade
secret law for the disclosure of a trade secret that: (1) is made in confidence
to a Federal, State, or local government official, either directly or
indirectly, or to an attorney, and solely for the purpose of reporting or
investigating a suspected violation of law; or (2) is made in a complaint or
other document filed in a lawsuit or other proceeding, if such filing is made
under seal. In addition, notwithstanding the foregoing, Consultant shall not be
prohibited from disclosing Proprietary Information to a government agency as a
whistleblower.

 

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9.Property/Ownership.

 

(a)All materials, documents, reports, information, descriptions, and suggestions
of every kind supplied to Consultant by Company in connection with and/or
pursuant to this Agreement or the relationship established between Consultant
and Company (including, without limitation, any such materials, documents,
reports, information, descriptions and suggestions supplied to Consultant by
Company prior to the execution of this Agreement) shall be the sole and
exclusive property of Company and shall be deemed and treated as Company
Confidential Information. Company shall have the right to use as it sees fit any
information, materials, reports, documents, ideas, descriptions, advice,
recommendations, and suggestions provided by Consultant pursuant to this
Agreement without payment of any consideration in addition to that specified in
this Agreement. Upon termination of this Agreement, Consultant shall return such
items, including all copies thereof, to Company or dispose of such items as
directed by Company.

 

(b)All information of whatever type developed or provided pursuant to this
Agreement, including those items described in Section 9(a), shall upon its
creation be the exclusive property of Company and shall be deemed and treated as
Company Confidential Information. All machines, instruments, and products
purchased, manufactured or assembled by Consultant or any of Consultant’s
Agents, in connection with and/or pursuant to this Agreement and paid for by
Company shall be the exclusive property of Company. Upon termination of this
Agreement, Consultant shall return such items, including all copies thereof, to
Company or dispose of such items as directed by Company.

 

(c)If Company provides any materials (including without limitation, compounds,
formulations, devices, samples or the like) to Consultant, unless expressly
provided for in the description of Services in Exhibit A, Consultant shall not
use, copy, distribute, reverse engineer, sell, lease, license, or otherwise
transfer, modify, adapt or create derivatives of such materials.

 

(d)Consultant shall keep and maintain adequate and current records and agrees to
keep separate and segregated from other work (including work for a third party)
all documents, records, notebooks, correspondence, and all products made thereby
that arise out of Consultant’s work under this Agreement. All rights, title and
interest therein shall be in the Company and upon expiration or termination of
this Agreement, all such documents and materials, including copies thereof, then
in Consultant’s or Consultants Agents’ possession or subject to Consultant’s or
Consultant’s Agents’ control, whether prepared by Consultant or others, will be
turned over to Company. Such records shall be available to the Company at all
times.

 

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10. Assignment of Intellectual Property.

 

(a)During the Term hereof, and without additional compensation to Consultant,
Consultant hereby sells and assigns to Company and agrees to assign to the
Company and Company shall be the exclusive owner of the entire right, title and
interest, including all renewals for the entire world, in and to all work
performed, deliverables, materials, writings, ideas, concepts, discoveries,
developments, know-how, trade secrets, techniques, methodologies, modifications,
innovations, improvements, data, documents, formulas, designs, models, drawings,
photographs, reports, information, advice, recommendations and suggestions,
tangible research materials, design inventions and other inventions made,
whether patentable or not, conceived, delivered, discovered, invented,
developed, created, made or reduced to practice or authored by Consultant or any
of Consultant’s Agents, either solely or jointly with others, pursuant to this
Agreement or with information, materials, or facilities of Company received or
used by Consultant during the Term of the Agreement and all related intellectual
property rights, including enforcement rights, including, without limiting any
of the foregoing, inventions, know-how, or trade secrets related to the
treatment of patients with pharmaceutical products, (all hereinafter at times
referred to as “Intellectual Property”), and Consultant shall cause Consultant’s
Agents to do the same, including if based upon information provided to
Consultant by or at the direction of Company or its corporate affiliates or
otherwise developed by Consultant in carrying out Consultant’s duties under this
Agreement. Consultant shall promptly disclose (and shall cause Consultant’s
Agents to promptly disclose) all Intellectual Property in writing to Company.

 

(b)The Parties expressly agree that all works created pursuant to this Agreement
are “Works Made for Hire”, as defined in the U.S. Copyright Act, 17 U.S.C. §
101, and shall vest in Company as author. All other work product generated by
Consultant or Consultant’s Agents pursuant to this Agreement, whether
copyrightable or not, including without limitation, any works which may be
deemed by a competent authority not to be Works Made For Hire, are, without
additional consideration, hereby assigned to Company by Consultant, including
without limitation, all right, title and interest in and to the copyright
thereof throughout the world, including all renewals and extensions thereof and
including the right to make and distribute copies in any media, to translate,
and/or make derivative works therefrom. Consultant agrees to execute and to
secure the execution from any applicable authors retained by Consultant all
registrations, assignments, transfer documents, and other instruments necessary
or desirable in the reasonable opinion of Company to record any assignment or
registration of copyright or other transfer of ownership in any work transferred
to Company pursuant to this Agreement.

 

(c)Consultant shall sign, execute and acknowledge or cause to be signed,
executed and acknowledged any and all further assignments, documents,
assurances, applications and other instruments and to perform such acts as may
be necessary, useful or convenient for the purpose of securing to Company and/or
its nominees patent, trademark or copyright protection throughout the world with
respect to all Intellectual Property and other work product to be assigned to
Company pursuant to Sections 10(a) and (b). Consultant shall do so both during
and after the term of this Agreement, for no additional consideration beyond the
payments from Company to Consultant for the Services provided during the Term of
this Agreement. Further, if Company is unable, after making reasonable inquiry,
to obtain Consultant’s signature on any such documents, Consultant hereby
appoints Company as Consultant’s attorney-in-fact to execute and deliver such
documents.

 

(d)Consultant shall specifically describe and identify in Exhibit C to this
Agreement, and shall update from time to time in writing during the Term hereof
as necessary, any and all information, materials and technology (i) which
Consultant intends to use in performing Services under this Agreement, (ii)
which is either owned by Consultant or licensed to Consultant with a right to
sublicense, and (iii) which is in existence in the form of a writing or working
prototype prior to the Effective Date of this Agreement (“Background
Technology”). Without additional consideration, Consultant hereby grants to the
Company, and the Company hereby accepts, a fully paid-up, royalty-free,
worldwide, non-exclusive, sublicenseable, perpetual, irrevocable, license under
Background Technology to the extent necessary for the Company to use, reproduce,
modify, distribute and otherwise exploit any Intellectual Property in order to
develop, make, have made, use, sell, offer for sale and import Company products
and programs. Other than that which is set forth in Exhibit C, Consultant shall
not use any information, materials or technology in the performance of the
Services that is owned or controlled by Consultant or any third party. If
Consultant will not be using any Background Technology in the performance of the
Services, Consultant shall initial Exhibit C in acknowledgement of such.

 

(e)No rights or licenses, including without limitation to trademarks,
inventions, copyrights, patents or other intellectual properties, are implied or
granted to Consultant, whether by implication, estoppel, or otherwise, under
this Agreement.

 

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11.    Publications. Consultant may not publish in any way without the prior
written consent of Company, which consent may be withheld by Company in its sole
discretion, any material or manuscript relating to Consultant’s work hereunder
and/or any information or materials that Consultant received in connection with
or pursuant to this Agreement or Consultant’s relationship established with
Company.

 

12.    Confidential Information of Third Parties. The performance by the
Consultant of the Services does not and will not breach any agreement which
obligates Consultant to keep in confidence any confidential or proprietary
information of any third party or to refrain from competing, directly or
indirectly, with the business of any third party. Consultant shall not use in
the performance of the Services or disclose to Company any such confidential or
proprietary information. In addition, Consultant represents and warrants that
Consultant’s performance of the Services hereunder does not and will not
infringe upon or misappropriate any intellectual property rights.

 

13.    Non-Solicitation. Consultant agrees that during the Term of this
Agreement and for a period of one (1) year thereafter, Consultant shall not
directly or indirectly solicit for employment or otherwise retain, employees of
Company whom Consultant has met as a result of Consultant’s performance of
Services for Company.

 

14.    Non-Competition. During the period commencing on the Effective Date and
ending twelve (12) months after the Termination Date (the “Restrictive Period”),
and provided that the Agreement has not been terminated by Consultant due to
failure to pay the Monthly Compensation (defined in Exhibit A) due hereunder,
the Consultant shall not, in any state of the United States or the European
Union where the Company conducts business as of the Termination Date, engage in,
or own, manage, operate or control, or participate in the ownership, management,
operation or control of any business or entity that develops, sells or provides
products or services competitive with the products or services developed or sold
by the Company at the time of cessation of the employment of Consultant.
Notwithstanding the foregoing, nothing in this Section 14 shall prevent the
Consultant from owning, as a passive investor, up to five percent (5%) of the
securities of any entity that are publicly traded on a national securities
exchange. For the avoidance of doubt, nothing in this Section 14 prevents the
Consultant from working in the pharmaceutical industry as long as such positions
and activities are not directly competitive with the business of the Company. As
used in this Section 14, “competitive” shall mean the development, sale or
marketing of one or more pharmaceutical products that are directly competitive
to any product of the Company at the Termination Date. Consultant agrees that
this covenant is reasonable with respect to its duration, geographical area, and
scope.

 

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15.    No Assignment, Delegation, or Subcontracting. Consultant may not, in
whole or in part, assign, delegate, or subcontract his interests and/or
obligations under this Agreement, to any person, firm, partnership, corporation
or other entity (including by operation of law, judicial process, or otherwise)
without the prior written consent of Company, which consent may be withheld in
Company’s sole discretion, and any attempt to the contrary shall be void.
Company may fully assign and transfer this Agreement in whole or in part.

 

16.    Indemnification. Consultant hereby agrees to indemnify, defend, and hold
harmless Company, its affiliates, officers, directors, agents and employees,
successors and assigns, from, against, and with respect to any and all
third-party claims of any kind based on any negligence, willful misconduct, or
violation of law or regulation on the part of Consultant or any of Consultant’s
Agents in connection with Consultant’s performance of the Services or meeting
his/her/its obligations hereunder. The Company agrees to indemnify, defend, and
hold harmless Consultant per the Company’s articles and by-laws.

 

17.    Resignation. In conjunction with and effective upon the entry into this
Agreement, Consultant has agreed to resign from the Company’s Board of
Directors. For the Term of this Agreement, Consultant shall have board
visitation rights for meetings of the Company’s Board of Directors and shall be
provided the same notice of all Board meetings as provided to the voting members
of the Board of Directors, and shall be entitled to attend and participate in
such meetings in a non-voting role, including any matters that involve the sale,
acquisition, or material change in the Company structure or organization;
provided, however, that Consultant may be excused from the meeting if requested
by a member of the Board of Directors due to a conflict of interest or
otherwise.

 

18.    Governing Law and Jurisdiction. The terms and provisions of this
Agreement shall be construed and interpreted pursuant to the laws of the
Commonwealth of Virginia, without regard to the conflict of law rules or
principles thereof or of any other jurisdiction. The United States District
Court for the Western District of Virginia or, in the event such court lacks
subject matter jurisdiction, the Circuit Court for Albemarle County, Virginia,
shall be the agreed-upon forum for the resolution of all disputes arising
hereunder, and the Parties hereto, their officers, and employees hereby consent
to (i) the jurisdiction and venue of the aforesaid courts for the purpose of
resolving all such disputes and (ii) service of process by registered mail,
return receipt requested, or any other manner consistent with federal or
Virginia laws. Consultant hereby acknowledges and agrees that in the event of
any breach of this Agreement by Consultant, including, without limitation,
actual or threatened disclosures in violation of Sections 8, 9, 10, 11, 12 or 23
without the prior express written consent of Company, Company will suffer an
irreparable injury, such that no remedy at law will afford it adequate
protection against, or appropriate compensation for, such injury. Accordingly,
Consultant hereby agrees that Company shall be entitled to specific performance
of Consultant's obligations under this Agreement, as well as such further relief
as may be granted by a court of competent jurisdiction, without Company having
to prove actual damages or post a bond.

 

19.    Severability. In the event any portion of this Agreement shall be held
illegal, void or ineffective, the remaining portions hereof shall remain in full
force and effect. If any of the terms or provisions of this Agreement are in
conflict with any applicable statute or rule of law, then such term(s) or
provision(s) shall be deemed inoperative to the extent that they may conflict
therewith and shall be deemed to be modified to conform with such statute or
rule of law.

 

20.    Non-Waiver of Rights. No failure or delay on the part of either Party
hereunder in either exercising or enforcing any right hereunder will operate as
a waiver of, or impair, any such right. No single or partial exercise or
enforcement of any such right will preclude any other or further exercise or
enforcement thereof or the exercise or enforcement of any other right. No waiver
of any such right will have effect unless given in a signed writing. No waiver
of any such right will be deemed a waiver of any other right hereunder.

 

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21.    Notice. Any report or notice required or permitted to be given hereunder
shall be effective when sent. All notices shall be in writing and given
personally or by prepaid certified mail, return receipt requested, or sent by
expedited delivery service addressed to the Parties hereunder at their
respective addresses as follows:

 

If to Company:

 

Adial Pharmaceuticals, Inc.

Attention: CEO

1001 Research Park Blvd., Suite 100

Charlottesville, VA 22911

Telephone: (434) 422-9800

Email: wstilley@adialpharma.com

 

Invoices should be sent to: jtruluck@adialpharma.com

 

If to Consultant:

 

Dr. Bankole A. Johnson

#####

 

with a copy to:

 

Eric N. Heyer, Esq.

Thomson Hine LLP

1919 M Street, N.W., Suite 700

Washington, DC 20036

Email: eric.heyer@thompsonhine.com

 

22.    Compliance with Law. Consultant represents and warrants that Consultant
and Consultants’ Agents shall comply with any and all applicable laws and
regulations including, but not limited to, health, safety, and security rules
and regulations. Notwithstanding the foregoing, Consultant agrees that
applicable laws and regulations shall include, but not be limited to, the United
States Federal Health Care Program Anti-Kickback statute and its state
counterparts, each as amended; other United States Federal and state anti-fraud
laws; United States Federal and state patient privacy and information laws; and
United States Federal Anti-Corruption laws such as the Foreign Corrupt Practices
Act of 1977, as amended. Failure to comply with this Section shall be deemed a
material breach of a material provision of this Agreement and the Company will
have the right to terminate this Agreement immediately upon written notice to
Consultant without any liability to Consultant.

 

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23.    Additional Consultant Responsibilities. Consultant understands the
regulated nature of the pharmaceutical industry and the need for Company to
retain control of the creation, approval, and dissemination (including but not
limited to any posting or placement of any social media of any type) of all
material created as a result of this Agreement. Consultant represents and
warrants that Consultant will not release any material without the express
written approval of Company. All material created as a result of this Agreement
shall be reviewed and approved through an applicable Company review process or
procedure.

 

24.    Entire Agreement. This Agreement represents the entire understanding
between the Parties with respect to the subject matter contained herein and
supersedes all prior and contemporaneous understandings and agreements, whether
oral or written, between the Parties with respect to the Services to be
performed hereunder. This Agreement may be modified only with a written
instrument duly executed by each of the Parties. No person has any authority to
make any representation or promise on behalf of any of the Parties not set forth
herein and this Agreement has not been executed in reliance upon any
representations or promises except those contained herein.

 

25.    Headings. The headings contained in this Agreement are for convenience of
reference only and shall not affect or alter the meaning or effect of any
provision hereof.

 

26.    Successors. This Agreement and all the rights, obligations, duties,
representations, warranties and covenants of each Party shall inure to the
benefit, and be the burden of, and shall be binding upon their respective
successors (including by operation of law) and permitted assigns.

 

27.    Counterparts. This Agreement may be executed simultaneously in one or
more counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same instrument. In the event that
any signature is delivered by facsimile transmission or by e-mail delivery of a
“.pdf” format data file, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile or “.pdf”
signature page were an original thereof. The Parties agree that electronic
signatures shall be deemed originals.

 

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INTENDING TO BE LEGALLY BOUND, the Parties hereto have caused this Agreement to
be executed by their duly authorized representatives.

 

By: /s/ Bankole A. Johnson   By: /s/ William B. Stilley Name: Bankole A. Johnson
  Name: William B. Stilley       Title: Chief Executive Officer

 

☐ Check this box if you are a government employee (see Section 3)

 

By checking the box, I certify as follows:

 

I certify that: (i) execution of this Agreement and performance of the Services
do not conflict with any contractual obligation, the terms of my employment, or
my official duties, and does not violate any state or federal policy relating my
employment and my performance of the Services as an independent consultant, and
(ii) I have and will take any actions required by the agency by which I am
employed or to which I have been elected/appointed related to the Services and
compensation/reimbursement hereunder, which may include, by way of example,
disclosure of outside financial relationships, approval of outside consulting
arrangements, and recusal from participation in certain decision-making
activities.

 

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EXHIBIT A

 

CONSULTING SERVICES

 

Consultant shall perform for Company the Services described below.

 

SERVICES AND WORK PLAN

 

Consultant shall serve as the Chief Medical Officer (contracted) of the Company
and will perform all duties customary to a person holding such title for
pharmaceutical companies, which duties include, without limitation,

 

●If requested, serving as the principal investigator for Company clinical
trials. ●If requested, serving as a safety reviewer, ●If requested, preparation
of reports and publications related to the Company’s business, and ●Other
activities and responsibilities reasonably requested by the Chief Executive
Officer of the Company.

 

In this role, Consultant shall serve as an Officer of the Company.

 

Additionally, and without limiting the above, Consultant will file applications
for grant funding for which the Company is eligible on behalf of the Company. In
the event grant funding is secured, Consultant will and hereby does, grant the
Company rights to, within the bounds of applicable laws and regulations, direct
the proper use of the grant funding, and Consultant agrees that he will take no
actions to redirect grant funding, or to otherwise contravene the value of the
grant to the Company, without the prior written consent of the Company, which
consent will be at the Company’s sole discretion. Consultant may apply for
grants for other entities for which the Company is not eligible or that are not
for the development or a pharmaceutical product or products that are directly
competitive to any product of the Company at the time of the grant filing
without the prior written permission of the Company, which permission will be at
the Company’s sole discretion.

 

COMPENSATION

 

Compensation for Services provided pursuant to this Agreement shall be $31,250
per month (the “Monthly Compensation”) for each month that Services are provided
payable in two equal installments on the first and fifteenth days of the month
following the month in which Services are performed.

 

Consultant shall be paid a $250,000 signing bonus within 5 days of the Effective
Date.

 

Consultant shall be granted a non-incentive option to 250,000 shares of the
Company’s common stock, such option to (i) have an effective date of grant that
is the date of execution of the Consulting Agreement, (ii) expire ten years
after the effective date of the grant (subject to earlier expiration in
connection with termination of optionee’s service with the Company), (iii) vest
pro rata on a monthly basis over three years commencing on the on the one month
anniversary of the effective grant date hereof, (iv) have an exercise price
equal to the fair market value of the Company’s common stock on the effective
date of grant date, as determined in the Company’s 2017 Equity Incentive Plan
(the “Plan”) and (v) be evidenced by one of the forms of Stock Option Agreement
and be subject to the terms of the Plan.

 

Consultant shall continue to be entitled to receive payment under the Company’s
Grant Incentive Plan as amended on December 4, 2018.

 

Consultant shall receive no other payment or expense reimbursement for
Consultant’s provision of Services as described herein.   

 

13

 

EXHIBIT B

 

Company’s Expense and Reimbursement Guidelines

 

1.Travel arrangements must be authorized in writing in advance by the Company or
booked directly by the Company. All travel arrangements should be made in
sufficient time to take advantage of time-related discounts whenever possible.
Travel expenses will only be reimbursed at reasonable prevailing commercial
rates.    2.Reimbursement for airline travel is limited to coach class (or
equivalent) for travel within the US of two (2) hours’ scheduled duration or
less for the longest leg of the trip and business class (or equivalent) for
international travel and travel within the US of more than two (2) hours’
scheduled duration for the longest leg of the trip.    3.Transportation to/from
airport should be accomplished in a reasonably cost effective manner (e.g.,
taxi). Automobile rentals should be in the compact or mid-size car class.   
4.Hotel reservations should be made at “business class” hotels within a
reasonable distance from the location at which business will be conducted.
"Business class" hotels in most cities should not exceed $300.00 per day without
the prior written approval of the Company.    5.Reasonable meal expenditures
will be reimbursed and approved up to $100.00 per day. This per diem should be
prorated accordingly for individuals working less than one full day. The per
diem allowance may not be accumulated from day to day. Vendors/Consultants are
expected to exercise good judgment in choosing restaurants in order to keep meal
expenditures within reasonable limits. TV shows, movies, mini-bar, and other
sources of personal entertainment will not be reimbursed.    6.Two personal long
distance telephone calls per day of a reasonable duration will be reimbursed.
All reasonable business related telephone calls related to the Company also will
be reimbursed.    7.Incidental expenses of a personal nature will not be
reimbursed except when mandated due to status (e.g., significant travel delays).
Reasonable laundry expenses will be reimbursed when on business travel for the
Company for at least five consecutive days.    Note:This list details
significant items and is not all inclusive. This list may be updated from time
to time in writing by the Company, including providing Consultant with a copy of
the Company’s Travel & Expense policy when available. All expenses must be
accompanied with appropriate receipts. Expenses will be reviewed for
reasonableness and compliance with these Guidelines.

 

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EXHIBIT C

 

BACKGROUND TECHNOLOGY

 

If no Background Technology will be used in performing the Services initial
here: ___________

 

If Background Technology will be used in performing the Services, list below:

 

 

 

 

 

 

 

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