Document:

Exhibit 10.3

 

PLEDGE
AND SECURITY AGREEMENT

 

PLEDGE
AND SECURITY AGREEMENT (this “Agreement”), dated as of December 12, 2019, made by and among Adial Pharmaceuticals,
Inc., a Delaware corporation with an address at 1001 Research Park Blvd., Suite 100, Charlottesville, Virginia 22911 (the “Company”)
and Bankole A. Johnson, individually (“Dr. Johnson”) and En Fidecomiso de Mi Vida 11/23/2010 (Trust) ( “Pledgor”)
as the pledgor in favor of the Company.

 

WHEREAS,
Dr. Johnson has executed a Guaranty, dated December 12, 2019, in favor of the Company to secure the complete and timely performance
and discharge in full, as the case may be, of all of the obligations of Psychological Education Publishing Company under that
certain Master Services Agreement, dated as of July 5, 2019 (the “MSA”), by and between the Company and Psychological
Education Publishing Company (the “Guaranty”);

 

WHEREAS,
Dr. Johnson beneficially owns the shares of common stock, par value $0.001 per share of the Company (the “Common Stock”)
which are owned of record by Pledgor; and

 

WHEREAS,
to secure said Guaranty and as inducement for the Company to accept the Guaranty, Pledgor has agreed to execute and deliver
to the Company this Agreement providing for the pledge and grant to the Company of a security interest in Pledgor’s interest
in the collateral identified and defined below.

 

NOW,
THEREFORE, in consideration of the premises and the agreements herein and in order to induce the Company to accept the Guaranty,
Dr. Johnson and Pledgor hereby agree with the Company as follows:

 

SECTION
1. Definitions. All terms used in this Agreement which are defined in Article 9 of the Uniform Commercial Code (the “Code”)
currently in effect in the State of Delaware and which are not otherwise defined herein shall have the same meanings herein as
set forth therein.

 

SECTION
2. Pledge and Grant of Security Interest. (a) As an inducement for the Company to accept the Guaranty, Pledgor hereby unconditionally
and irrevocably pledges, grants and hypothecates to the Company a perfected, first priority security interest in and to, a lien
upon and a right of set-off against all of their respective right, title and interest of whatsoever kind and nature in and to,
the Collateral. The Collateral means: (i) all of the shares of Common Stock held by Pledgor as of the date hereof, as listed on
Annex A hereto, and (ii) all proceeds of the foregoing. Contemporaneously or prior to the execution of this Agreement,
Pledgor shall deliver or cause to be delivered to the Company any and all certificates and other instruments representing or evidencing
the Collateral, in each case, together with all Necessary Endorsements. “Necessary Endorsement” means
undated stock powers endorsed in blank or other proper instruments of assignment duly executed and such other instruments or documents
as the Company may reasonably request.

 

(b)
 Pledgor hereby represents and warrants to the Company as follows:

 

(i) The
Pledged Collateral is not pledged to secure any indebtedness other than the Guaranty and is free and clear of any liens, security
interests, encumbrances, rights or claims, other than the Lockup Agreement as entered into between the Company and Pledgor as
of the date hereof;

 

(ii) Pledgor
has the requisite corporate, partnership, limited liability company or other power and authority to enter into this Agreement
and otherwise to carry out its obligations hereunder. The execution, delivery, and performance of Pledgor of this Agreement will
not violate any provision of law, any order of any court or other agency of government, any organizational documents of Pledgor
or any agreement or other instrument to which Pledgor is a party or by which Pledgor is bound, or be in conflict with, result
in a breach of or constitute (with due notice, lapse of time, or both) a default under any such agreement or other instrument,
or result in the creation or imposition of any lien, charge, or encumbrance of any nature whatsoever upon any of the property
of assets of Pledgor, except as contemplated by the provisions of this Agreement;

 

     

     

    

 

(iii) This
Agreement constitutes the legal, valid and binding obligation of Pledgor and is enforceable against Pledgor in accordance with
the terms hereof, except as may be limited by applicable bankruptcy, insolvency, moratorium or other similar laws affecting the
enforcement of creditors’ rights generally and subject to the qualification that the availability of equitable remedies
is subject to the discretion of the court before which any proceeding therefore may be brought; and

 

(iv) Pledgor
as set forth on Annex A is the sole legal and beneficial owner of the Pledged Collateral referenced for such Pledgor on Annex
A.

 

SECTION
3. Security for Obligations. The security interest created hereby in the Pledged Collateral constitutes continuing collateral
security for the due performance and observance by Dr. Johnson of the Guaranty (the “Obligations”).

 

SECTION
4. Covenants as to the Pledged Collateral. So long as any of the Obligations shall remain outstanding, Pledgor will not
create or suffer to exist any lien, security interest or other charge or encumbrance upon or with respect to any Pledged Collateral
except for the security interest created hereby. No Pledgor will transfer, pledge, hypothecate, encumber, license, sell or otherwise
dispose of any of the Pledged Collateral without the prior written consent of the Company.

 

SECTION
5. Additional Provisions Concerning the Pledged Collateral.

 

(a) Pledgor
hereby authorizes the Company to file, without the signature of Pledgor where permitted by law, one or more financing or continuation
statements, and amendments thereto, relating to the Pledged Collateral. Pledgor shall promptly execute and deliver to the Company
such further deeds, mortgages, assignments, security agreements, financing statements or other instruments, documents, certificates
and assurances and take such further action as the Company may from time to time request and may in its sole discretion deem necessary
to perfect, protect or enforce the Company’s security interest in the Pledged Collateral.

 

(b) Notwithstanding
anything to the contrary contained herein, provided that no claim has been made by the Company under the Guaranty, on the date
which is 180 days from the date hereof, the security interest created hereby shall be released from twenty-five percent (25%)
of Pledgor’s Pledged Collateral and on the date which is one calendar year from the date hereof, the security interest created
hereby shall be released from an additional twenty-five percent (25%) of Pledgor’s Pledged Collateral.

 

SECTION
6. Remedies Upon Default. If any Event of Default under the MSA shall have occurred and be continuing:

 

(a) The
Company may, exercise in respect of the Pledged Collateral, in addition to other rights and remedies provided for herein or otherwise
available to them, all of the rights and remedies of a secured party on default under the Code then in effect in the State of
Virginia, and without limiting the generality of the foregoing and without notice except as specified below, sell the Pledged
Collateral or any part thereof in one or more parcels at public or private sale at such price or prices and on such other terms
as the Company may deem commercially reasonable. Pledgor agrees that, to the extent notice of sale shall be required by law, at
least five days’ notice to Pledgor of the time and place of any public sale or the time after which any private sale is
to be made shall constitute reasonable notification. The Company shall not be obligated to make any sale of Pledged Collateral
regardless of notice of sale having been given. The Company may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was
so adjourned.

 

    	Johnson-Adial Pledge & Security Agreement
	 	Page 2 of 6

     

    

 

(b)
 All cash proceeds received by the Company in respect of any sale of, collection from,
or other realization upon, all or any part of the Pledged Collateral shall be applied by the Company against the Obligations.
Any surplus of such cash or cash proceeds held by the Company and remaining after payment in full of all of the Obligations shall
be paid over to Pledgor or to such person as may be lawfully entitled to receive such surplus.

 

(c)
 In the event that the proceeds of any such sale, collection or realization are insufficient
to pay all amounts to which the Company is legally entitled, Pledgor shall remain liable for the deficiency and the Company shall
retain all rights to collect on such Obligations provided by applicable law.

 

SECTION
7. Notices, Etc. All notices and other communications provided for hereunder shall be in writing and shall be mailed, faxed
or delivered, if to the Company, to it at the Company’s address set forth above; and if to Pledgor, to Dr. Johnson at 3301
NE First Ave., Apt. PH1, Miami, FL 33137; or as to any of such parties at such other address as shall be designated by such parties
in a written notice to the other parties hereto complying as to delivery with the terms of this Section 7. All such notices and
other communications shall be effective (i) if mailed, when deposited in the mail, (ii) if faxed, when the facsimile transmission
is acknowledged as received, or (iii) if delivered, upon delivery.

 

SECTION
8. Miscellaneous.

 

(a)
 No amendment of any provisions of this Agreement shall be effective unless it is in
writing and signed by Dr. Johnson, Pledgor and the Company, and no waiver of any provision of this Agreement, and no consent to
any departure by Dr. Johnson or Pledgor, shall be effective unless it is in writing and signed by the Company, and then such waiver
or consent shall be effective only in the specific instance and for the specific purpose for which given.

 

(b)
 No failure on the part of the Company to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or
further exercise thereof or the exercise of any other right. The rights and remedies of the Company provided herein are cumulative
and are in addition to, and not exclusive of, any rights or remedies provided by law.

 

(c)
 Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceabilty without invalidating the remaining
portions hereof or thereof or affecting the validity or enforceability of such provision on any other jurisdiction.

 

(d)
 This Agreement shall create a continuing security interest in the Pledged Collateral
and shall (i) remain in full force and effect until the payment in full or release of the Obligations and (ii) be binding on Pledgor
and its assigns and shall inure, together with all rights and remedies of the Company hereunder, to the benefit of the Company
and its transferees and assigns.

 

    	Johnson-Adial Pledge & Security Agreement
	 	Page 3 of 6

     

    

 

(e)
 Upon the satisfaction in full of the Obligations: (i) this Agreement and the security
interest created hereby shall terminate and all rights to the Pledged Collateral shall revert to Pledgor, and (ii) the Company
will, upon Pledgor’s request at Pledgor’s expense, (A) return to Pledgor such of the Pledged Collateral as shall not
have been sold or otherwise disposed of or applied pursuant to the terms hereof and (B) execute and deliver to Pledgor such documents
as Pledgor shall reasonably request to evidence such termination.

 

(f)
 This Agreement shall be governed by and construed in accordance with the laws of the
State of Virginia, except as required by mandatory provisions of law and except to the extent that the validity and perfection
or the perfection and the effect of perfection or non-perfection of the security interest created hereby, or remedies hereunder,
in respect of any particular Pledged Collateral are governed by the law of a jurisdiction other than the State of Virginia. The
parties hereto agree that all actions or proceedings arising in connection with this Agreement shall be tried and litigated exclusively
in the State and Federal courts located in Delaware. The aforementioned choice of venue is intended by the parties to be mandatory
and not permissive in nature, thereby precluding the possibility of litigation between the parties with respect to or arising
out of this Agreement in any jurisdiction other than that specified in this paragraph. Each party hereby waives any right it may
have to assert the doctrine of forum non conveniens or similar doctrine or to object to venue with respect to any proceeding brought
in accordance with this paragraph, and stipulates that the State and Federal courts located in Delaware shall have in personam
jurisdiction and venue over each of them for the purpose of litigating any dispute, controversy, or proceeding arising out of
or related to this Agreement. Each party hereby authorizes and accepts service of process sufficient for personal jurisdiction
in any action against it as contemplated by this paragraph by registered or certified mail, return receipt requested, postage
prepaid, to its address for the giving of notices as set forth in this Agreement. Any final judgment rendered against a party
in any action or proceeding shall be conclusive as to the subject of such final judgment and may be enforced in other jurisdictions
in any manner provided by law.

 

(g) Dr.
Johnson shall not take any action, directly or indirectly, to interfere with or otherwise contravene or undermine the rights granted
to the Company hereunder..

 

[Signatures
appear on following page]

 

    	Johnson-Adial Pledge & Security Agreement
	 	Page 4 of 6

     

    

  

IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered as of the date first above written.

 

	 	ADIAL PHARMACEUTICALS, INC.
	 	 	 
	 	By:	/s/ William B. Stilley
	 	Name:	William B. Stilley
	 	Title:	Chief Executive Officer
	 	 	 
	 	BANKOLE A. JOHNSON:
	 	 	 
	 	/s/ Bankole A. Johnson
	 	Bankole A. Johnson
	 	 
	 	EN FIDECOMISO DE MI VIDA 11/23/2010 (TRUST)
	 	 	 
	 	By: 	/s/ Bankole A. Johnson
	 	Name: 	Bankole A. Johnson
	 	Title: 	Trustee

 

    	Johnson-Adial Pledge & Security Agreement
	 	Page 5 of 6

     

    

 

ANNEX
A

 

List
of Pledged Shares

 

	En Fideicomiso De Mi Vida 11/23/2010 (Trust)	 	 	600,000 shares of Common Stock	 

 

  

 

	Johnson-Adial
    Pledge & Security Agreement	Page
    6 of 6Exhibit 10.4

 

Lock-Up
Agreement

 

December
12, 2019

 

Board
of Directors

Adial
Pharmaceuticals, Inc.

1001
Research Park Blvd.

Charlottesville,
VA 22911

 

Ladies
and Gentlemen:

 

The
undersigned understands that Adial Pharmaceuticals, Inc. (“Adial”) intends to enter an Amendment 1 (the “Amendment”)
effective as of December 12, 2019 (the “Effective Date”) that amends that certain Statement of Work No. 1 (the
“SOW”) under the Master Services Agreement dated July 5, 2019 (the “MSA”) by and between
Adial, with business addresses at 1001 Research Park Blvd., Suite 100, Charlottesville, Virginia 22911, and Psychological Education
Publishing Company LLC, a Texas limited liability company, with a business address of 1221 Brickell Avenue, Suite 948, Miami,
Florida 33131 (“Contractor”).

 

To
induce Adial to enter the Amendment, the undersigned hereby agrees that, without the prior written consent of Adial, the undersigned
will not, during the period commencing on the date hereof and at the 5:00 p.m. U.S. Eastern time on January 1, 2021 (the “Lock-Up
Period”), (1) offer, pledge, sell, contract to sell, grant, lend, or otherwise transfer or dispose of, directly or indirectly,
any shares of common stock, par value $0.001 per share of Adial (“Shares”) or any securities convertible into
or exercisable or exchangeable for Shares, now owned by the undersigned or with respect to which the undersigned has the power
of disposition, including, without limitation, such securities held by Medico-Trans Company, LLC, En Fidecomiso de Mi Vida 11/23/2010
(Trust), En Fidecomiso de Todos Mis Suenos Grantor Retained Annuity Trust dated June 27, 2017, En Fideicomiso De Mis Suenos 11/23/2010
(Trust), De Mi Amor 11/23/2010 (Trust), (collectively, the “Lock-Up Securities”); (2) enter into any swap or
other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Lock-Up
Securities, whether any such transaction described in clause (1) or (2) above is to be settled by delivery of Lock-Up Securities,
in cash or otherwise; (3) make any demand for or exercise any right with respect to the registration of any Lock-Up Securities;
or (4) publicly disclose the intention to make any offer, sale, pledge or disposition, or to enter into any transaction, swap,
hedge or other arrangement relating to any Lock-Up Securities. Notwithstanding the foregoing, and subject to the conditions below,
the undersigned may transfer Lock-Up Securities without the prior written consent of Adial in connection with transactions relating
to Lock-Up Securities acquired in open market transactions or Shares awarded to Bankole A. Johnson by Adial, in each case after
the completion of the Amendment; provided that no filing under Section 16(a) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), shall be required or shall be voluntarily made in connection with subsequent sales of
Lock-Up Securities acquired in such open market transactions.

 

If
(i) during the last 17 days of the Lock-Up Period, Adial issues an earnings release or material news or a material event relating
to Adial occurs, or (ii) prior to the expiration of the Lock-Up Period, Adial announces that it will release earnings results
or becomes aware that material news or a material event will occur during the 16-day period beginning on the last day of the Lock-Up
Period, the restrictions imposed by this lock-up agreement shall continue to apply until the expiration of the 18-day period beginning
on the issuance of the earnings release or the occurrence of such material news or material event, as applicable, unless Adial
waives, in writing, such extension.

 

    	Johnson-Adial Lock-Up Agreement	 	Page 1 of 4

     

    

 

The
undersigned agrees that, prior to engaging in any transaction or taking any other action that is subject to the terms of this
lock-up agreement during the period from the date hereof to and including the 34th day following the expiration of
the initial Lock-Up Period, the undersigned will give notice thereof to Adial and will not consummate any such transaction or
take any such action unless it has received written confirmation from Adial that the Lock-Up Period (as may have been extended
pursuant to the previous paragraph) has expired.

 

No
provision in this agreement shall be deemed to restrict or prohibit the exercise, exchange or conversion by the undersigned of
any securities exercisable or exchangeable for or convertible into Shares, as applicable, including, without limitation, the issuance
to the undersigned of any securities exchangeable for the Shares in connection with any sale of Adial, in which case the undersigned
will be treated equally as shareholders, as required by Delaware law, and entitled as such to participate in such sale as a shareholder
of Adial; provided that the undersigned does not transfer Shares acquired on such exercise, exchange or conversion during the
Lock-Up Period, unless otherwise permitted pursuant to the terms of this lock-up agreement. For clarity, this agreement does restrict
and prohibit the entry into or modification of a so-called “10b5-1” plan at any time. In the event of a merger of
Adial into, or other sale of Adial to, a public company with a market capitalization of $5 billion or more (“AcqCo”)
in which all Shares are exchanged for shares of AcqCo, this Lock-Up Agreement shall terminate upon consummation of such merger
(or sale transaction) unless all officers and directors of Adial enter lock-up agreements in connection therewith, in which case
this lock-up agreement will be replaced by a lock-up agreement of like tenor as those entered by the officers and directors of
Adial.

 

The
undersigned understands that Adial is relying upon this lock-up agreement in proceeding toward entering the Amendment. The undersigned
further understands that this lock-up agreement is irrevocable and shall be binding upon the undersigned’s heirs, legal
representatives, successors and assigns.

 

The
undersigned understands that, if the Amendment is not executed by December 12, 2019, then this lock-up agreement shall be void
and of no further force or effect.

 

    	Johnson-Adial Lock-Up Agreement	 	Page 2 of 4

     

    

 

	 	Very truly yours,
	 	 	 
	 	/s/ Bankole A. Johnson
	 	Bankole A. Johnson
	 	 	 
	 	MEDICO-TRANS COMPANY, LLC
	 	 	 
	 	By:	/s/ Bankole A. Johnson
	 	Name:	Bankole A. Johnson
	 	Title:	Manager
	 	 	 
	 	EN FIDECOMISO DE MI VIDA 11/23/2010 (TRUST)
	 	 	 
	 	By: 	/s/ Bankole A. Johnson
	 	Name:	Bankole A. Johnson
	 	Title:	Trustee

 

    	Johnson-Adial Lock-Up Agreement	 	Page 3 of 4

     

    

 

	 	EN FIDECOMISO DE TODOS MIS SUENOS GRANTOR RETAINED ANNUITY TRUST DATED JUNE 27, 2017
	 	 	 
	 	By: 	/s/ Bankole A. Johnson
	 	Name:	Bankole A. Johnson
	 	Title:	Trustee
	 	 	 
	 	EN FIDEICOMISO DE MIS SUENOS 11/23/2010 (TRUST)
	 	 	 
	 	By:	/s/ Bankole A. Johnson
	 	Name:	Bankole A. Johnson
	 	Title:	Trustee
	 	 	 
	 	DE MI AMOR 11/23/2010 (TRUST)
	 	 	 
	 	By: 	/s/ Bankole A. Johnson
	 	Name:	Bankole A. Johnson
	 	Title:	Trustee

 

 

 

	Johnson-Adial Lock-Up Agreement	Page 4 of 4

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