Consulting Agreement between Adial Pharmaceuticals, Inc. and Dr. Bankole Johnson, dated March 24, 2019

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:

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.

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.

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: ***@***

Invoices should be sent to: ***@***

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: ***@***

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.

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.

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

☐ 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.

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,

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.   

EXHIBIT B

Company’s Expense and Reimbursement Guidelines

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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