8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT PURSUANT TO

SECTION 13 OR 15(d) of the

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): May 8, 2014

PAULSON CAPITAL (DELAWARE) CORP.

(Exact name of registrant as specified in its charter)

Commission File Number: 000-18188

Delaware	93-0589534
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1331 NW Lovejoy Street, Suite 720 Portland, Oregon	97209
(Address of principal executive offices)	(Zip Code)
Registrant’s telephone number, including area code: 503-243-6000
N/A Former name or former address if changed since last report:

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement.

Merger Agreement

On May 8, 2014, Paulson Capital (Delaware) Corp., a Delaware corporation (the “Registrant”), Variation Biotechnologies (US), Inc., a Delaware corporation (“VBI”), and VBI Acquisition Corp., a Delaware corporation and wholly owned subsidiary of the Registrant (the “Merger Sub”), entered into an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which, subject to the satisfaction or waiver of certain conditions, the Merger Sub will merge with and into VBI, with VBI surviving as a wholly owned subsidiary of the Registrant.

At the effective time of the merger, each share of VBI common stock and Series A Preferred Stock will be converted into the right to receive 1.226 shares of the Registrant’s common stock, par value $0.0001 per share (the “Paulson Common Stock”) (as may be adjusted under the Merger Agreement, the “Exchange Ratio”). No fraction of a share of Paulson Common Stock will be issued, but instead each holder of shares of VBI common stock and Series A Preferred Stock who would otherwise be entitled to a fraction of a share of Paulson Common Stock will receive from the Registrant one full share of Paulson Common Stock (i.e., rounded up to the nearest whole share). The total number of shares of Paulson Common Stock to be issued to the former holders of VBI common stock and Series A Preferred Stock at the effective time of the merger would be 42,772,713. These newly issued shares, together with the options to purchase shares of VBI common stock that will be converted into options to purchase shares of Paulson Common Stock (and will be assumed by the Registrant at the effective time of the merger), would represent approximately 41.5% of the shares of Paulson Common Stock on a fully diluted basis after the effective time of the merger (not including shares of Paulson Common Stock issued to VBI stockholders in the $11 million private placement contemplated to be completed concurrently with the merger, which will represent approximately 19% of the shares of Paulson Common Stock on a fully diluted basis after the merger and the private placement).

Subject to, and immediately prior to the effective time of the merger, all outstanding convertible debt securities issued by VBI will be converted into capital stock of VBI, and at the effective time of the merger, VBI shall have no convertible notes or other indebtedness outstanding (other than the Venture Debt, as defined in the Merger Agreement). At the effective time of the merger, each outstanding option to purchase a share of VBI common stock, whether vested or unvested, and so long as such option has not, prior to the effective time of the merger, been exercised, cancelled, terminated or expired, will be deemed to constitute an option to purchase, on the same terms and conditions, a number of shares of Paulson Common Stock (rounded down to the nearest whole share) equal to the product of (i) the number of shares of VBI common stock subject to such option multiplied by (ii) the Exchange Ratio (defined above), at an exercise price per share of Paulson Common Stock equal to the quotient of (i) the exercise price per share of VBI common stock (rounded up to the nearest cent) subject to such option divided by (ii) the Exchange Ratio.

The Registrant and VBI each made customary representations, warranties and covenants in the Merger Agreement, including, among others, covenants by each of the Registrant and VBI to, subject to certain exceptions, conduct its business in the ordinary course during the interim period between the execution of the Merger Agreement and the consummation of the merger.

The obligation of the parties to consummate the merger is subject to a number of closing conditions, including, among other customary conditions:

• the Registrant’s stockholders will have approved the merger proposal at a special meeting of its shareholders to be held at a time and place to be determined, and VBI stockholders will have approved the merger;

• ten days shall have elapsed since an information statement containing the information required by Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder has been filed by the Registrant with the SEC and transmitted to the stockholders of the Registrant in accordance with Rule 14f-1;

• VBI must have paid the reasonable legal fees on an accountable basis incurred by the Registrant on or prior to the effective date of the merger in connection with the preparation and negotiation of the documents prepared in connection with the merger and the closing of the transactions contemplated by the Merger Agreement or other documents prepared in connection with the merger;

• the directors, officers and certain VBI stockholders must have entered into voting agreements at the time of execution of the Merger Agreement representing not less than fifty and one tenths percent (50.1%) voting power of VBI’s capital stock in support of the merger;

• VBI must not have any material indebtedness for money borrowed (other than a venture debt facility for up to $6,000,000 to be entered into by VBI contemporaneously with the closing of the merger); 

• the name of Paulson Capital (Delaware) Corp. must have been changed to “VBI Vaccines Inc.”;

• the Registrant must have delivered to Broadridge Financial Solutions (the escrow agent) (or another escrow agent mutually agreed upon by the Registrant and VBI) instructions as to the reserve for issuance of the number of shares of Paulson Common Stock equal to $1,000,000 divided by the price per share used in the private placement (described in the Merger Agreement) and must have deposited or caused to be deposited $250,000 with the escrow agent, each allocated among the VBI stockholders as provided in the Merger Agreement, as the sole source of recovery by VBI (absent fraud) for damages resulting from breaches of any representations, warranties or covenants of the Registrant or Merger Sub under the Merger Agreement;

• the Registrant must have furnished to VBI the Liquidating Trust Indemnification Agreement (as defined in the Merger Agreement), pursuant to which the Liquidating Trust agrees to guarantee the Registrant's indemnification obligations in the Merger Agreement, substantially in the form attached to the Merger Agreement as Exhibit F, executed by the Registrant and the duly authorized representative of the Liquidating Trust (as defined in the Merger Agreement);

• holders of approximately 40% of all Paulson Common Stock must have entered into voting agreements with the Registrant at the time of executing the Merger Agreement in form and substance acceptable to VBI and the Registrant in support of the merger;

• the Registrant’s Board must have, subject to compliance with Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, and effective upon the effective time of the merger: (i) increased the Registrant's Board to seven directors; (ii) elected to the Registrant's Board (a) the following five VBI director designees: Jeff Baxter, Steven Gillis (Chairman), Michael Steinmetz, Michel De Wilde and Sam Chawla; and (b) Trent Davis and Alan Timmins, as the two designees of the Registrant; and (iii) appointed as the officers of the Registrant Jeff Baxter, President & CEO; David Anderson, Senior Vice President Research; Egidio Nascimento, Chief Financial Officer; Marc Kirchmeier, Vice President, Formulations; and T. Adam Buckley, Vice President, Operations & Project Management;

• each of the officers and directors of the Registrant immediately prior to the effective time of the merger, other than Trent Davis and Alan Timmins, must have delivered duly executed resignations from their positions with the Registrant effective immediately after the effective time of the merger;

• VBI and the Registrant must have in escrow for the benefit of the surviving company in the merger aggregate gross proceeds of at least $11,000,000 (rounded up to the nearest thousand) (or such lesser amount agreed to in writing by VBI in its sole discretion) received pursuant to a private placement of Paulson Common Stock solely to accredited investors in compliance with the exemption from registration provided by Section 4(a)(2) of the Securities Act or Rule 506 of Regulation D thereunder, on terms satisfactory to VBI and the Registrant; and the conditions to closing such private placement must have been satisfied and such amount of gross proceeds must be unencumbered cash available to the surviving company in the merger at the effective time of the merger;

• the Registrant shall have no liabilities except for the reasonable legal fees on an accountable basis incurred by the Registrant on or prior to the effective date of the merger in connection with the preparation and negotiation of the documents in connection with the merger and the closing of the transactions contemplated by the Merger Agreement or such other documents prepared in connection with the merger;

• holders of no more than five percent (5%) of the outstanding shares of VBI common stock and Series A Preferred Stock will have exercised, or remained entitled to exercise, their appraisal rights under Section 262 of the Delaware General Corporation Law;

• the Registrant shall have entered into definitive documentation, reasonably acceptable to VBI, whereby the Registrant’s ownership in its operating subsidiary, Paulson Investment Company, Inc. (“PIC”) shall be reduced to 0.01%, pursuant to the plan set forth in Exhibit E to the Merger Agreement (the “Existing Sub Ownership Plan”), by the issuance of equity securities to holders of convertible promissory notes of PIC and to members of PIC’s management team;

• NASDAQ must have approved an initial listing application of VBI on a post-merger basis for purposes of listing of Paulson Common Stock on NASDAQ following the merger; also the Registrant must be in compliance with all of NASDAQ’s criteria for continued listing, the staff of NASDAQ shall not have appealed the decision of the NASDAQ Hearings Panel set forth in the letter, dated February 19, 2014, from NASDAQ to the Registrant, Paulson Common Stock shall continue to be listed on NASDAQ from the date of the Merger Agreement through the closing of the merger, the Paulson Common Stock must be listed on NASDAQ from the closing of the merger until the effective time of the merger, and prior to the effective time of the merger, Paulson Common Stock shall be FAST eligible with the Depository Trust Company (“DTC”);

• the Registrant must have completed the actions voted upon at the Annual Meeting of Shareholders as described in the Registrant’s Definitive Proxy Statement on Schedule 14A filed by the Registrant with the SEC on October 18, 2013;

• the Registrant must have available not less than $5,250,000 in unencumbered cash invested by those investors who subscribed to purchase securities of the Registrant on July 25, 2013 (each a "July 2013 Investor") or their designees pursuant to the series of agreements described in the Current Report on Form 8-K/A filed with the SEC by the Registrant on August 30, 2013 (the “July 2013 Financing Documents”), all of the conditions to closing the transactions contemplated by the July 2013 Financing Documents must have been satisfied at or prior to the effective time of the merger and the $5,250,000 gross proceeds resulting from such closing must have been released from escrow to the Registrant at or prior to the effective time of the merger;

• the Registrant shall have no material indebtedness for money borrowed except as directly attributable to PIC as set forth in the Merger Agreement and presented in the Registrant's financial statements provided pursuant to the Merger Agreement solely for the purpose of complying with ASC 810 – Consolidation; notwithstanding however that contemporaneously with the closing of the merger, the Registrant may issue up to $6 million in principal amount of non-convertible venture debt instruments to venture debt investors approved by VBI, including, without limitation, Perceptive Advisors LLC or its affiliated investment vehicles;

• the Registrant's Class A Warrants must have been exchanged for Paulson Common Stock;

• the Registrant’s Class B Warrants must have been converted into Paulson Common Stock (or modified or exchanged for a new class of preferred stock of the Registrant);

• all of the Registrant's Series A Preferred Stock issued pursuant to the July 2013 Financing Documents must have been converted to Paulson Common Stock;

• the Registrant must have no issued or outstanding shares of its preferred stock that have preferential rights over the Paulson Common Stock;

• the Registrant’s organizational documents must have been amended to delete the certificate of designation of its Series A Preferred Stock;

• the Interest Preservation Letter Agreement included in the July 2013 Financing Documents must have been terminated and must not be deemed a “Dilutive Acquisition” and must have no effect with respect to the merger or any issuances prior thereto;

• The July 2013 Investors must not have any continuing “most favored nation” rights, registration rights (provided the provisions of Rule 144 are then applicable), anti-dilution rights (other than standard proportionate adjustments for stock splits or dividends, stock combinations, recapitalizations and similar events)or any other special investor rights except as may be granted to all investors in the above described $11,000,000 private placement;

• the Registrant must not have outstanding special investor rights (such as anti-dilution rights or registration rights) of holders of Paulson Common Stock and preferred stock other than registration rights of the July 2013 Investors if no Rule 144 resale exemption is available to them and other than as may be granted to all the investors in the private placement;

• the Registrant must have prepaid general liability, representations and warranties insurance (insuring VBI against damages resulting from any breach of the Registrant's representations and warranties under the Merger Agreement) if available on terms acceptable to the Registrant and VBI, and directors and officers tail insurance policies in effect, naming VBI (where possible and/or applicable) and its affiliates as additional insured parties; and PIC must have prepaid general liability, errors and omissions, employment practices liability and directors and officers insurance policies in effect, including, without limitation, a tail policy, naming the Registrant and VBI (where possible and/or applicable) and their respective affiliates as insured parties;

• prior to the effective time of the merger, PIC shall have (i) obtained all requisite consents or approvals of FINRA pursuant to FINRA Conduct Rule 1017 relating to the change in equity ownership of PIC that may be deemed to result as a consequence of (A) the merger and (B) the issuances of PIC (or its successor) equity interests upon conversion of notes of PIC, in exchange for PIC Series B Preferred Stock and to PIC's management, as further described in the Existing Sub Ownership Plan and (ii) entered into and performed its obligations under the FINRA filing agreement by and among VBI, PIC and the Registrant, pursuant to which PIC is obligated, among other things, to file a continuing membership application with FINRA pursuant to FINRA Rule 1017 no later than 3 days following the date of the Merger Agreement;

• the Registrant must have filed an amendment to its Certificate of Incorporation setting forth a certificate of designation of a new class of preferred stock of the Registrant (as required by the terms of secured convertible promissory notes issued by VBI in March 2014) that will not have any economic or voting preferences over the common stock of the Registrant but will have limits on the amount of common stock that may be issued upon conversion of such preferred stock;

• the Registrant must have obtained stockholder approval of the reverse split proposal and effected a reverse split of the outstanding Paulson Common Stock if required for its market price on the NASDAQ Capital Market to be at least $4.00 per share at the closing of the merger or for such longer period as is required by the listing rules of the NASDAQ Capital Market;

• the Registrant must have obtained stockholder approval of the VBI Vaccines Inc. 2014 Equity Incentive Plan, to become effective upon the closing of the merger;

• the Registrant must have obtained all approvals required to amend, and shall have amended, its Certificate of Incorporation to effect the new certificate of incorporation proposals and such other amendments thereto as VBI shall reasonably request prior to the initial filing with the SEC of the applicable proxy statement by the Registrant;

• Middlebury Securities, LLC and Evolution Venture Partners, LLC must have entered into lock-up agreements in form and substance acceptable to VBI covering such number of shares of Paulson Common Stock acceptable to VBI; and

• each leak-out agreement executed by the July 2013 Investors shall be in effect and binding upon the July 2013 Investors and there shall be no uncured breach by the Registrant that, with the passage of time, could cause the termination of any such leak-out agreement in accordance with its terms.

The Merger Agreement contains certain other termination rights for each of the Registrant and VBI, including the right of each party to terminate the Merger Agreement if the Merger has not been consummated by July 25, 2014. In addition, VBI has the right to terminate the Merger Agreement if the Registrant becomes subject of any proceeding of NASDAQ to delist the Registrant.

The foregoing description of the Merger Agreement does not purport to be complete, and is qualified in its entirety by reference to the full text of the Merger Agreement, which is filed herewith as Exhibit 2.1 and is incorporated herein by reference.

A copy of the Merger Agreement has been included as an exhibit to this Current Report on Form 8-K to provide investors with information regarding its terms. It is not intended to provide any other factual information about the Registrant, VBI or any of their respective subsidiaries or affiliates. The representations, warranties and covenants contained in the Merger Agreement were made only for purposes of that agreement and as of specific dates; were made solely for the benefit of the parties to the Merger Agreement; may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures; may not have been intended to be statements of fact, but rather, as a method of allocating contractual risk and governing the contractual rights and relationships between the parties to the Merger Agreement; and may be subject to standards of materiality applicable to contracting parties that differ from those applicable to investors. Investors should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the Registrant, VBI or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations, warranties and covenants may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in the Registrant’s public disclosures.

Voting Agreements of Certain VBI Stockholders and Certain Stockholders of the Registrant

Concurrently with the execution of the Merger Agreement, certain majority stockholders of VBI and a holder of approximately 40% of the Paulson Common Stock, respectively, have entered into Voting Agreements, referred to as the “voting agreements,” pursuant to which those VBI stockholders and such stockholder of the Registrant have, among other matters, agreed to support the merger and the other transactions contemplated by the merger.

Under the voting agreements, in addition to agreeing to vote in favor of approval of the merger and the Merger Agreement and the transactions contemplated thereby, each VBI stockholder and such stockholder of the Registrant party to a voting agreement have agreed to not transfer, sell, offer to sell, exchange, assign, pledge or otherwise dispose of or encumber any of the VBI stock or stock of the Registrant held by such stockholders prior to the merger becoming effective, the termination of the Merger Agreement or the amendment of the voting agreement in a manner adverse to the stockholder, whichever occurs first.

The foregoing description of the voting agreements does not purport to be complete, and is qualified in its entirety by reference to the full text of the voting agreements, which are filed herewith as Exhibits 10.1, 10.2, 10.3, 10.4 and 10.5 and are incorporated herein by reference.

Leak-Out and Lock-Up Agreements

Under the leak-out agreement entered into by each of the July 2013 Investors, each July 2013 Investor has agreed to certain sale and transfer restrictions with respect to the Registrant's securities acquired from the Registrant in connection with the private placement described in the July 2013 Financing Documents.

Specifically, pursuant to the leak-out agreement, each July 2013 Investor individually agrees as follows:

•     From the date of execution of the Merger Agreement until the earliest of (i) the closing of the merger, (ii) the termination of the Merger Agreement, (iii) 60 days following July 25, 2014, and (iv) any breach by the Registrant of any term of the leak-out agreement or the favored nations provision of the July 2013 subscription agreement that is not cured within five business days following delivery of written notice of such breach by one of the July 2013 Investors, as applicable, to the Registrant:

●     It shall sell, in any calendar month, no more than the greater of (i) 400,000 shares and (ii) the difference of (A) 800,000 shares less (B) the aggregate number of shares sold by it and its affiliates, successors and assigns, collectively, in the calendar month immediately prior to the calendar month in which such date of determination occurs; and

●     It shall not sell any shares for less than $1.00 per share.

•     If the closing of the merger occurs on or before the 60^th day following July 25, 2014, then from the closing date of the merger until the earliest of (i) 180 days thereafter, (ii) the time of filing with the SEC by the Registrant (or any of its subsidiaries) of any registration statement (other than on Form S-8) with respect to the issuance or resale of any securities of the Registrant (or any of its subsidiaries) (other than a registration statement solely registering shares held by either of the July 13 Investors or their respective affiliates, successors or assigns), (iii) the time of release, in whole or in part, of any shares of the Registrant from all, or any part, of any leak-out agreement, transfer or sale restrictions set forth in any other leak-out agreement entered into in connection with the merger or otherwise, and (iv) any breach by the Registrant of any term of the leak-out agreement or the favored nations provision of the July 2013 subscription agreement that is not cured within five business days following delivery of written notice of such breach by either of the July 2013 Investors, as applicable, to the Registrant:

●     It shall sell, in any calendar month, no more than the greater of (i) 500,000 shares and (ii) the difference of (A) 800,000 shares less (B) the aggregate number of shares sold by it and its affiliates, successors and assigns, collectively, in the calendar month immediately prior to the calendar month in which such date of determination occurs; and

●     It shall not sell any shares for less than $0.50 per share.

The foregoing leak-out restrictions shall not apply as to any sale by the selling entity at a price per share of Paulson Common Stock equal to or greater than $3.00.

The foregoing descriptions of the leak-out agreements does not purport to be complete, and are qualified in their entirety by reference to the full text of the leak-out agreements, which are filed herewith as Exhibits 10.6 and 10.7 and are incorporated herein by reference.

In connection with the issuance of shares of Paulson Common Stock to Middlebury Securities, LLC (“Middlebury”) and Evolution Venture Partners, LLC (“Evolution”), if the placement agent fee proposal described in the proxy statement to be filed by the Registrant in connection with the approval of the merger receives the requisite stockholder approval, Middlebury and Evolution will each be required to enter into a lock-up agreement for a period of two years in form and substance acceptable to VBI covering such number of shares of Paulson Common Stock as is acceptable to VBI.

FINRA Filing Agreement 

Concurrently with the execution of the Merger Agreement, the Registrant, PIC and VBI entered into a FINRA filing agreement, pursuant to which PIC is obligated, among other things, to file a continuing membership application with FINRA pursuant to FINRA Conduct Rule 1017 no later than 3 business days following the date of the Merger Agreement to seek approval of the merger and the restructuring of PIC contemplated by the Existing Sub Ownership Plan, which application was timely filed on May 13, 2014.

The foregoing description of the FINRA filing agreement does not purport to be complete, and is qualified in its entirety by reference to the full text of the FINRA filing agreement, which is filed herewith as Exhibit 10.8 and is incorporated herein by reference.

Liquidating Trust Indemnification Agreement

Upon consummation of the merger, VBI, the Registrant and the duly authorized representative of the Liquidating Trust (as defined in the Merger Agreement) will enter into a liquidating trust indemnification agreement pursuant to which the Liquidating Trust agrees to guarantee the Registrant's indemnification obligations in the Merger Agreement.

The foregoing description of the liquidating trust indemnification agreement does not purport to be complete, and is qualified in its entirety by reference to the full text of the form of liquidating trust indemnification agreement, which is included as Exhibit F to the Merger Agreement filed herewith as Exhibit 2.1 and is incorporated herein by reference.

New Employment Arrangements

Concurrently with the execution of the Merger Agreement, certain VBI executive officers who are expected to remain with the surviving corporation of the merger have entered into agreements with Registrant, the Merger Sub, or an affiliate of Registrant or the Merger Sub. Please see Item 5.02 below for a description of these employment agreements.

Item 5.02    Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Effective following the merger and only if the merger is consummated, the Registrant has agreed to employ the following VBI officers in the following positions with the Registrant: Jeff Baxter, Chief Executive Officer; Egidio Nascimento, Chief Financial Officer; and Dr. David Anderson, Senior Vice President, Research. Each of Messrs. Baxter and Nascimento and Dr. Anderson entered into an employment agreement with the Registrant as described more fully below.

Mr. Baxter, age 52, joined VBI in September of 2009, and has served as Chief Executive Officer and a member of the Board of Directors of VBI since September 2009. Previously, he was a managing partner of The Column Group, a venture capital firm. Until July of 2006, Mr. Baxter was SVP, R&D Finance and Operations, of GlaxoSmithKline (GSK). In his 19 years of pharma experience, he has held line management roles in commercial, manufacturing and IT and the office of the CEO. His most recent position in R&D included responsibility for finance, pipeline resource planning and allocation, business development deal structuring and SROne (GSK’s in-house $125 million venture capital fund). He also chaired GSK’s R&D Operating Board. Prior to GSK, he worked at Unilever and British American Tobacco. Mr. Baxter was educated at Thames Valley University and is a Fellow of the Chartered Institute of Management Accountants (FCMA).

Pursuant to an employment agreement dated May 8, 2014 between Jeff Baxter and the Registrant, Mr. Baxter is to be employed as the Registrant’s Chief Executive Officer, effective upon the merger. Pursuant to this agreement, Mr. Baxter shall receive an initial annual salary in the amount of $385,000. Mr. Baxter may be eligible for options to purchase common stock of the Registrant in the Board’s discretion. Any outstanding options shall accelerate fully if Mr. Baxter is terminated without cause, is terminated during the period that begins when negotiations with an unrelated third party for a Change of Control (as defined in the employment agreement) begin and ends on the 12-month anniversary of the closing of the Change of Control transaction or terminates his employment for Good Reason (as defined in the employment agreement). Mr. Baxter is eligible to be considered for an annual cash bonus of up to fifty percent (50%) of his then applicable base salary based on Mr. Baxter meeting certain performance objectives, and if Mr. Baxter is dismissed from employment by the Registrant for any reason other than “cause,” the Registrant is obligated to pay Mr. Baxter severance compensation equal to six months plus one month for every full year of service up to a maximum of 12 months.

Mr. Nascimento, age 48, joined Variation Biotechnologies Inc., a wholly owned subsidiary of VBI, in 2005, and has served as Chief Financial Officer of VBI since December 2006, with experience in finance and accounting, having previously worked as Vice President of Finance at Genome Canada and as CFO of two start-up companies. Subsequent to starting and managing a new & emerging business group in Ottawa, Ontario he has focused his career on managing and securing financing for leading-edge technology and biotechnology companies. During his career, he has played a key role in helping six companies raise over $205 million in capital and is currently on the board of several private for-profit and not-for-profit organizations. Mr. Nascimento is a Chartered Professional Accountant (CPA) and Chartered Accountant (CA) and holds a Bachelor of Commerce degree from the University of Ottawa, Canada.

Pursuant to an employment agreement dated May 8, 2014 between Egidio Nascimento and the Registrant, Mr. Nascimento is to be employed as the Registrant’s Chief Financial Officer, effective upon the merger. Pursuant to this agreement, Mr. Nascimento shall receive an initial annual salary in the amount of $240,000. Mr. Nascimento may be eligible for options to purchase common stock of the Registrant in the Board’s discretion. Any outstanding options shall accelerate fully if Mr. Nascimento is terminated without cause, is terminated during the period that begins when negotiations with an unrelated third party for a Change of Control (as defined in the employment agreement) begin and ends on the 12-month anniversary of the closing of the Change of Control transaction or terminates his employment for Good Reason (as defined in the employment agreement). Mr. Nascimento is eligible to be considered for an annual cash bonus of up to twenty-five percent (25%) of his then applicable base salary based on Mr. Nascimento meeting certain performance objectives, and if Mr. Nascimento is dismissed from employment by the Registrant for any reason other than “cause,” the Registrant is obligated to pay Mr. Nascimento severance compensation equal to six months plus one month for every full year of service up to a maximum of 12 months.

Dr. Anderson, age 43, is an immunologist with expertise in the areas of vaccine development, autoimmunity and tumor immunology. Dr. Anderson joined VBI full time as Vice President of Immunology in 2009 from Harvard Medical School, where he held a position as Assistant Professor. As a co-founder of VBI and Vice President of Research, Dr. Anderson is an inventor on many of VBI’s patents and actively manages VBI’s research operation. Dr. Anderson holds a Ph.D. from Harvard University and a B.S. from the University of California at Davis.

Pursuant to an employment agreement dated May 8, 2014 between David Anderson and the Registrant, Dr. Anderson is to be employed as the Registrant’s Senior Vice President, Research, effective upon the merger. Pursuant to this agreement, Dr. Anderson shall receive an initial annual salary in the amount of $250,000. Mr. Anderson may be eligible for options to purchase common stock of the Registrant in the Board’s discretion. Any outstanding options shall accelerate fully if Dr. Anderson is terminated without cause, is terminated during the period that begins when negotiations with an unrelated third party for a Change of Control (as defined in the employment agreement) begin and ends on the 12-month anniversary of the closing of the Change of Control transaction or terminates his employment for Good Reason (as defined in the employment agreement). Dr. Anderson is eligible to be considered for an annual cash bonus of up to thirty-five percent (35%) of his then applicable base salary based on Dr. Anderson meeting certain performance objectives, and if Dr. Anderson is dismissed from employment by the Registrant for any reason other than “cause,” the Registrant is obligated to pay Dr. Anderson severance compensation equal to six months plus one month for every full year of service up to a maximum of 12 months.

The foregoing descriptions of the employment agreements do not purport to be complete, and are qualified in their entirety by reference to the full text of the employment agreements, which are filed herewith as Exhibits 10.9, 10.10 and 10.11 and are incorporated herein by reference.

Item 9.01    Financial Statements and Exhibits.

(d) Exhibits

Exhibit No.	Description
2.1	Agreement and Plan of Merger (incorporated by reference to Annex A to the Registrant’s Preliminary Proxy Statement on Schedule 14A filed with the Commission on May 9, 2014)
10.1	Voting Agreement with Clarus Lifesciences I, L.P.*
10.2	Voting Agreement with Arch Venture Fund VI, L.P.*
10.3	Voting Agreement with 5AM Ventures, L.P.*
10.4	Voting Agreement with 5AM Co-Investors II, L.P.*
10.5	Voting Agreement between Variation Biotechnologies (US), Inc. and Paulson Family LLC*
10.6	Leak-Out Agreement No. 1*
10.7	Leak-Out Agreement No. 2*
10.8	FINRA Filing Agreement (incorporated by reference to Exhibit G to Annex A to the Registrant’s Preliminary Proxy Statement on Schedule 14A filed with the Commission on May 9, 2014)
10.9	Employment Agreement with Jeff Baxter*
10.10	Employment Agreement with Egidio Nascimento*
10.11	Employment Agreement with David Anderson*

*Filed herewith

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	PAULSON CAPITAL (DELAWARE) CORP.
Date: May 14, 2014	By:	/s/ Trent D. Davis
		Trent D. Davis
		President

EXHIBIT INDEX

Exhibit No.	Description
2.1	Agreement and Plan of Merger (incorporated by reference to Annex A to the Registrant’s Preliminary Proxy Statement on Schedule 14A filed with the Commission on May 9, 2014)
10.1	Voting Agreement with Clarus Lifesciences I, L.P.*
10.2	Voting Agreement with Arch Venture Fund VI, L.P.*
10.3	Voting Agreement with 5AM Ventures, L.P.*
10.4	Voting Agreement with 5AM Co-Investors II, L.P.*
10.5	Voting Agreement between Variation Biotechnologies (US), Inc. and Paulson Family LLC*
10.6	Leak-Out Agreement No. 1*
10.7	Leak-Out Agreement No. 2*
10.8	FINRA Filing Agreement (incorporated by reference to Exhibit G to Annex A to the Registrant’s Preliminary Proxy Statement on Schedule 14A filed with the Commission on May 9, 2014)
10.9	Employment Agreement with Jeff Baxter*
10.10	Employment Agreement with Egidio Nascimento*
10.11	Employment Agreement with David Anderson*

*Filed herewith

EX-10

Exhibit 10.1

VOTING AGREEMENT

This Voting Agreement (this "Agreement"), dated as of May 8, 2014, is entered into by and between the undersigned stockholder ("Stockholder") of Variation Biotechnologies (US), Inc., a Delaware corporation (the "Company"), and Paulson Capital (Delaware) Corp., a Delaware corporation ("Parent").

WHEREAS, concurrently with or following the execution of this Agreement, the Company, Parent and VBI Acquisition Corp., a Delaware corporation and wholly owned subsidiary of Parent ("Merger Sub"), have entered, or will enter, into an Agreement and Plan of Merger (as the same may be amended from time to time, the "Merger Agreement"), providing for, among other things, the merger (the "Merger") of Merger Sub and the Company pursuant to the terms and conditions of the Merger Agreement;

WHEREAS, as a condition to its willingness to enter into the Merger Agreement, Parent has required that Stockholder execute and deliver this Agreement; and

WHEREAS, in order to induce Parent to enter into the Merger Agreement, Stockholder is willing to make certain representations, warranties, covenants and agreements with respect to the shares of common stock, par value $0.01 per share, of the Company ("Company Common Stock"), and Series A preferred stock, par value $0.01 per share, of the Company ("Company Series A Preferred Stock" and, together with the Company Common Stock, "Company Capital Stock") beneficially owned by Stockholder and set forth below Stockholder's signature on the signature page hereto (the "Original Shares" and, together with any additional shares of Company Capital Stock acquired by Stockholder pursuant to Section 6 hereof, the "Shares").

NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt, sufficiency and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

1. Definitions.

For purposes of this Agreement, capitalized terms used and not defined herein shall have the respective meanings ascribed to them in the Merger Agreement.

2. Representations of Stockholder.

Stockholder represents and warrants to Parent that:

(a) (i) Stockholder owns beneficially (as such term is defined in Rule 13d-3 under the Exchange Act) all of the Original Shares free and clear of all liens, claims, options, charges or other encumbrances that would have the effect of preventing or disabling Stockholder from performing Stockholder’s obligations under this Agreement, and (ii) except pursuant hereto or as set forth on Schedule 2(a) hereto, there are no options, warrants or other rights, agreements, arrangements or commitments of any character to which Stockholder is a party relating to the pledge, disposition or voting of any of the Original Shares and there are no voting trusts or voting agreements with respect to the Original Shares.

(b) Stockholder does not beneficially own any shares of Company Capital Stock other than (i) the Original Shares and (ii) any options, warrants or other rights to acquire any additional shares of Company Capital Stock or any security exercisable for or convertible into shares of Company Capital Stock, set forth on the signature page of this Agreement (collectively, "Options"), in respect to which there are no, except pursuant hereto or as set forth on Schedule 2(b) hereto, options, warrants or other rights, agreements, arrangements or commitments of any character to which Stockholder is a party relating to the pledge, disposition or voting of any of the Options and there are no voting trusts or voting agreements with respect to the Options.

(c) Stockholder has full corporate power and authority and legal capacity to enter into, execute and deliver this Agreement and to perform fully Stockholder's obligations hereunder (including the proxy described in Section 3(b) below)). This Agreement has been duly and validly executed and delivered by Stockholder and constitutes the legal, valid and binding obligation of Stockholder, enforceable against Stockholder in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar Laws relating to or affecting creditors' rights generally and general equitable principles (whether considered in a proceeding in equity or at law).

(d) None of the execution and delivery of this Agreement by Stockholder, the consummation by Stockholder of the transactions contemplated hereby or compliance by Stockholder with any of the provisions hereof will materially conflict with or result in a material breach, or constitute a material default (with or without notice of lapse of time or both) under any provision of, any trust agreement, loan or credit agreement, note, bond, mortgage, indenture, lease or other agreement, instrument or Law applicable to Stockholder or to Stockholder's property or assets, which conflict, breach, or default shall have the effect of preventing or disabling Stockholder from performing Stockholder’s obligations under this Agreement.

3. Agreement to Vote Shares; Irrevocable Proxy.

(a) Stockholder agrees during the term of this Agreement to vote the Shares at any annual or special meeting of stockholders of the Company, or execute a written consent or consents if stockholders of the Company are requested to vote their shares through the execution of an action by written consent in lieu of any such annual or special meeting of stockholders of the Company, and to cause any holder of record of Shares to vote: (i) in favor of (1) approval of the Merger and the Merger Agreement and the transactions contemplated thereunder, at every meeting (or in connection with any action by written consent) of the stockholders of the Company at which such matters are considered and at every lawful adjournment or postponement thereof and (2) approval of any proposal to adjourn or postpone the meeting to a later date during the term of this Agreement, if there are not sufficient votes for the approval of the Merger Agreement or the transactions contemplated thereunder on the date on which such meeting is held; (ii) against any action, proposal, transaction or agreement which could reasonably be expected to result in a breach of any covenant, representation or warranty or any other obligation or agreement of the Company under the Merger Agreement or of Stockholder under this Agreement or which would reasonably be expected to result in any of the conditions to the Company’s obligations under the Merger Agreement not being fulfilled. This Agreement is intended to bind Stockholder as a stockholder of the Company only with respect to the specific matters set forth herein. Except as set forth in clauses (i) and (ii) of this Section 3(a), Stockholder shall not be restricted from voting in favor of, against or abstaining with respect to any other matter presented to the stockholders of the Company.

(b) Stockholder hereby appoints Parent and any designee of Parent, and each of them individually, its proxies and attorneys-in-fact, with full power of substitution and resubstitution, to vote or act by written consent during the term of this Agreement with respect to the Shares in accordance with Section 3(a). This proxy and power of attorney is given to secure the performance of the duties of Stockholder under this Agreement. Stockholder shall take such further action or execute such other instruments as may be necessary to effectuate the intent of this proxy. This proxy and power of attorney granted by Stockholder shall be irrevocable during the term of this Agreement, shall be deemed to be coupled with an interest sufficient in law to support an irrevocable proxy and shall revoke any and all prior proxies granted by Stockholder with respect to the Shares. The power of attorney granted by Stockholder herein is a durable power of attorney and shall survive the dissolution or bankruptcy of Stockholder but will not survive the termination of this Agreement. The proxy and power of attorney granted hereunder shall terminate upon the termination of this Agreement. Parent acknowledges and agrees that Stockholder may vote the Shares on all other matters not referred to in Section 3(a), and the attorneys and proxies named above may not exercise the proxy with respect to such matters.

4. No Voting Trusts or Other Arrangement.

Stockholder agrees that during the term of this Agreement, Stockholder will not, and will not permit any entity under Stockholder's control to, deposit any of the Shares in a voting trust, grant any proxies with respect to the Shares or subject any of the Shares to any arrangement with respect to the voting of the Shares other than agreements entered into with Parent.

5. Transfer and Encumbrance.

Stockholder agrees that during the term of this Agreement, other than as set forth in the Merger Agreement, Stockholder will not, directly or indirectly, transfer, sell, offer to sell, exchange, assign, pledge or otherwise dispose of or encumber ("Transfer") any of the Shares or enter into any contract, option or other agreement with respect to, or consent to, a Transfer of, any of the Shares or Stockholder's voting or economic interest therein. Any attempted Transfer of Shares or any interest therein in violation of this Section 0 shall be null and void. This Section 0 shall not prohibit a Transfer of the Shares by Stockholder to an Affiliate of Stockholder; provided, that a Transfer referred to in this sentence shall be permitted only if, as a precondition to such Transfer, the transferee agrees in a writing, to be bound by all of the terms of this Agreement applicable to Shareholder. For the purposes of this Section 5, “Affiliate” means, with respect to any specified Person, any other Person who or which, directly or indirectly, controls, is controlled by, or is under common control with such specified Person, including, without limitation, any general partner, officer, director, or manager of such Person and any venture capital or private equity fund now or hereafter existing that is controlled by one or more general partners or managing members of, or shares the same management company with, such Person.

6. Additional Shares.

Stockholder agrees that all shares of Company Capital Stock that Stockholder purchases or acquires the right to vote or otherwise acquires beneficial ownership (as defined in Rule 13d-3 under the Exchange Act) of after the execution of this Agreement shall be subject to the terms of this Agreement and shall constitute Shares for all purposes of this Agreement until termination of this Agreement.

7. Reserved.

8. Documentation and Information.

Except as required by applicable Law, Stockholder shall not make any public announcement regarding this Agreement and the transactions contemplated hereby without the prior written consent of Parent; provided, that if Stockholder determines, based upon advice of counsel, that a public announcement is required by applicable Law, Stockholder shall use its commercially reasonable efforts to provide Parent with reasonable advance notice of such determination and reasonable time to comment on such announcement in advance of such issuance. Stockholder consents to and hereby authorizes Parent to publish and disclose in all documents and schedules filed with the SEC to the extent required by Law, and any press release or other disclosure document that Parent reasonably determines to be necessary, based upon advice of counsel, in connection with the transactions contemplated by the Merger Agreement, and in each case only to the extent so required or necessary, Stockholder's identity and ownership of the Shares, the existence of this Agreement and the nature of Stockholder's commitments and obligations under this Agreement, and Stockholder acknowledges that Parent may, in Parent's sole discretion, file this Agreement or a form hereof with the SEC or any other Governmental Body during the term of this Agreement and only to the extent required by Law. Subject to applicable Law, Stockholder agrees to promptly give Parent any information it may reasonably require for the preparation of any such disclosure documents, and Stockholder agrees to promptly notify Parent of any required corrections with respect to any written information supplied by Stockholder specifically for use in any such disclosure document, if and to the extent that any such information shall have become false or misleading in any material respect.

9. Termination.

This Agreement shall terminate automatically without a need for any further action upon the earliest to occur of (i) the Effective Time and (ii) the date on which the Merger Agreement is terminated in accordance with its terms or amended in a manner adverse to the Stockholder.

10. No Agreement as Director, Officer or a Fiduciary; No other Representations; No Reliance.

Stockholder makes no agreement or understanding in this Agreement in Stockholder's capacity as a director, officer or fiduciary of the Company or any of its subsidiaries (if Stockholder holds such office or is a fiduciary thereof), and nothing in this Agreement: (a) will limit or affect any actions or omissions taken by Stockholder in stockholder's capacity as a director, officer or fiduciary, including in exercising rights under the Merger Agreement, and no such actions or omissions shall be deemed a breach of this Agreement; or (b) will be construed to prohibit, limit or restrict Stockholder from exercising Stockholder's fiduciary duties as an officer, director or other fiduciary of the Company or its stockholders. Except as expressly set forth in this Agreement, neither Stockholder nor any of its agents, employees or representatives have made, nor are any of them making any representation or warranty, express or implied, in respect of the Shares or the Stockholder, and any such other representations or warranties are hereby expressly disclaimed. Parent expressly acknowledges and agrees that neither Parent nor any of Parent’s agents, employees or representatives is relying on any other representation or warranty of Stockholder or any of its agents, employees or representatives, including the accuracy or completeness of any such other representations and warranties, whether express or implied.

11. Specific Performance.

Each party hereto acknowledges that it will be impossible to measure in money the damage to the other party if a party hereto fails to comply with any of the obligations imposed by this Agreement, that every such obligation is material and that, in the event of any such failure, the other party will not have an adequate remedy at law or damages. Accordingly, each party hereto agrees that injunctive relief or other equitable remedy, in addition to remedies at law or damages, is the appropriate remedy for any such failure and will not oppose the seeking of such relief on the basis that the other party has an adequate remedy at law. Each party hereto agrees that it will not seek, and agrees to waive any requirement for, the securing or posting of a bond in connection with the other party's seeking or obtaining such equitable relief.

12. Entire Agreement.

This Agreement supersedes all prior agreements, written or oral, between the parties hereto with respect to the subject matter hereof and contains the entire agreement between the parties with respect to the subject matter hereof. This Agreement may not be amended or supplemented, and no provisions hereof may be modified or waived, except by an instrument in writing signed by both of the parties hereto. No waiver of any provisions hereof by either party shall be deemed a waiver of any other provisions hereof by such party, nor shall any such waiver be deemed a continuing waiver of any provision hereof by such party.

13. Notices.

All notices, requests, claims, demands, and other communications hereunder shall be in writing and shall be deemed to have been given (a) when delivered by hand (with written confirmation of receipt), (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested), (c) on the date sent by facsimile or e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient, or (d) on the third day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 13):

If to Parent:      Paulson Capital (Delaware) Corp.

1331 NW Lovejoy Street, Suite 720

Portland, Oregon 97209

Facsimile: 503-248-2390

Attn: Trent Davis

Copies to (which shall not constitute notice):

Holland & Knight LLP
2300 U.S. Bancorp Tower

111 S.W. Fifth Avenue
Portland, OR 97204
Facsimile: 503-241-8014

Attn: Mark von Bergen, Esq.

And

Sichenzia Ross Friedman & Ference, LLP

61 Broadway

Suite 3200

New York, NY 10006

Facsimile 212-930-9725

Attn: Harvey Kesner, Esq.

If to Stockholder, to the address or facsimile number set forth for Stockholder on the signature page hereof.

14. Miscellaneous.

(a) This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York without giving effect to any choice or conflict of law provision or rule (whether of the State of New York or any other jurisdiction) that would cause the application of Laws of any jurisdiction other than those of the State of New York.

(b) Each of the parties hereto irrevocably agrees that any legal action or proceeding with respect to this Agreement and the rights and obligations arising hereunder, or for recognition and enforcement of any judgment in respect of this Agreement and the rights and obligations arising hereunder brought by the other party hereto or its successors or assigns shall be brought and determined exclusively in the Court of Chancery of the State of Delaware, or in the event (but only in the event) that such court does not have subject matter jurisdiction over such action or proceeding, in any state or federal court within the State of Delaware and any direct appellate court therefrom. Each of the parties hereto agrees that mailing of process or other papers in connection with any such action or proceeding in the manner provided in Section 13 or in such other manner as may be permitted by applicable Laws, will be valid and sufficient service thereof. Each of the parties hereto hereby irrevocably submits with regard to any such action or proceeding for itself and in respect of its property, generally and unconditionally, to the personal jurisdiction of the aforesaid courts and agrees that it will not bring any action relating to this Agreement or any of the transactions contemplated by this Agreement in any court or tribunal other than the aforesaid courts. Each of the parties hereto hereby irrevocably waives, and agrees not to assert, by way of motion, as a defense, counterclaim or otherwise, in any action or proceeding with respect to this Agreement and the rights and obligations arising hereunder, or for recognition and enforcement of any judgment in respect of this Agreement and the rights and obligations arising hereunder (i) any claim that it is not personally subject to the jurisdiction of the above named courts for any reason other than the failure to serve process in accordance with this Section 14(b), (ii) any claim that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise), and (iii) to the fullest extent permitted by the applicable Law, any claim that (x) the suit, action or proceeding in such court is brought in an inconvenient forum, (y) the venue of such suit, action or proceeding is improper, or (z) this Agreement, or the subject matter hereof, may not be enforced in or by such courts.

(c) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (B) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 14(c).

(d) If any term or provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal or unenforceable, 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 greatest extent possible.

(e) This Agreement may be executed 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.

(f) Each party hereto shall execute and deliver such additional documents as may be necessary or desirable to effect the transactions contemplated by this Agreement.

(g) All Section headings herein are for convenience of reference only and are not part of this Agreement, and no construction or reference shall be derived therefrom.

(h) The obligations of Stockholder set forth in this Agreement shall not be effective or binding upon Stockholder until after such time as the Merger Agreement is executed and delivered by the Company, Parent and Merger Sub, and the parties agree that there is not and has not been any other agreement, arrangement or understanding between the parties hereto with respect to the matters set forth herein.

(i) Neither party to this Agreement may assign any of its rights or obligations under this Agreement without the prior written consent of the other party hereto. Any assignment contrary to the provisions of this Section 14(i) shall be null and void.

15. No Ownership Interest; No Unspecified Obligations.

Nothing contained in this Agreement shall be deemed to vest in Parent or Merger Sub any direct or indirect ownership or incidence of ownership of or with respect to any Shares, except as expressly provided herein. All rights, ownership and economic benefits of and relating to the Shares shall remain vested in and belong to Stockholder, and neither Parent nor Merger Sub shall have any authority to direct Stockholder in, and Stockholder will in no way be limited from the voting or disposition of, or the taking of any other action in connection with, any of the Shares, except as otherwise specifically provided herein.

[SIGNATURE PAGE FOLLOWS]

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

PAULSON CAPITAL (DELAWARE) CORP.

By: ___/s/ Trent Davis___________________

Name: Trent Davis

Title: President

CLARUS LIFESCIENCES I, L.P.

By: Clarus Ventures I GP, LP., its General Partner

By: Clarus Ventures I, LLC, its General Partner

By: ___/s/ Michael Steinmetz __________________ 

Name: Michael Steinmetz

Title: Managing Director

Number of Shares of Company Common Stock Beneficially Owned as of the Date of this Agreement:

Number of Options Beneficially Owned as of the Date of this Agreement:

Street Address:

City/State/Zip Code:

Fax:

[Signature Page to Voting Agreement]

EX-10

Exhibit 10.2

VOTING AGREEMENT

This Voting Agreement (this "Agreement"), dated as of May 8, 2014, is entered into by and between the undersigned stockholder ("Stockholder") of Variation Biotechnologies (US), Inc., a Delaware corporation (the "Company"), and Paulson Capital (Delaware) Corp., a Delaware corporation ("Parent").

WHEREAS, concurrently with or following the execution of this Agreement, the Company, Parent and VBI Acquisition Corp., a Delaware corporation and wholly owned subsidiary of Parent ("Merger Sub"), have entered, or will enter, into an Agreement and Plan of Merger (as the same may be amended from time to time, the "Merger Agreement"), providing for, among other things, the merger (the "Merger") of Merger Sub and the Company pursuant to the terms and conditions of the Merger Agreement;

WHEREAS, as a condition to its willingness to enter into the Merger Agreement, Parent has required that Stockholder execute and deliver this Agreement; and

WHEREAS, in order to induce Parent to enter into the Merger Agreement, Stockholder is willing to make certain representations, warranties, covenants and agreements with respect to the shares of common stock, par value $0.01 per share, of the Company ("Company Common Stock"), and Series A preferred stock, par value $0.01 per share, of the Company ("Company Series A Preferred Stock" and, together with the Company Common Stock, "Company Capital Stock") beneficially owned by Stockholder and set forth below Stockholder's signature on the signature page hereto (the "Original Shares" and, together with any additional shares of Company Capital Stock acquired by Stockholder pursuant to Section 6 hereof, the "Shares").

NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt, sufficiency and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

1. Definitions.

For purposes of this Agreement, capitalized terms used and not defined herein shall have the respective meanings ascribed to them in the Merger Agreement.

2. Representations of Stockholder.

Stockholder represents and warrants to Parent that:

(a) (i) Stockholder owns beneficially (as such term is defined in Rule 13d-3 under the Exchange Act) all of the Original Shares free and clear of all liens, claims, options, charges or other encumbrances that would have the effect of preventing or disabling Stockholder from performing Stockholder’s obligations under this Agreement, and (ii) except pursuant hereto or as set forth on Schedule 2(a) hereto, there are no options, warrants or other rights, agreements, arrangements or commitments of any character to which Stockholder is a party relating to the pledge, disposition or voting of any of the Original Shares and there are no voting trusts or voting agreements with respect to the Original Shares.

(b) Stockholder does not beneficially own any shares of Company Capital Stock other than (i) the Original Shares and (ii) any options, warrants or other rights to acquire any additional shares of Company Capital Stock or any security exercisable for or convertible into shares of Company Capital Stock, set forth on the signature page of this Agreement (collectively, "Options"), in respect to which there are no, except pursuant hereto or as set forth on Schedule 2(b) hereto, options, warrants or other rights, agreements, arrangements or commitments of any character to which Stockholder is a party relating to the pledge, disposition or voting of any of the Options and there are no voting trusts or voting agreements with respect to the Options.

(c) Stockholder has full corporate power and authority and legal capacity to enter into, execute and deliver this Agreement and to perform fully Stockholder's obligations hereunder (including the proxy described in Section 3(b) below)). This Agreement has been duly and validly executed and delivered by Stockholder and constitutes the legal, valid and binding obligation of Stockholder, enforceable against Stockholder in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar Laws relating to or affecting creditors' rights generally and general equitable principles (whether considered in a proceeding in equity or at law).

(d) None of the execution and delivery of this Agreement by Stockholder, the consummation by Stockholder of the transactions contemplated hereby or compliance by Stockholder with any of the provisions hereof will materially conflict with or result in a material breach, or constitute a material default (with or without notice of lapse of time or both) under any provision of, any trust agreement, loan or credit agreement, note, bond, mortgage, indenture, lease or other agreement, instrument or Law applicable to Stockholder or to Stockholder's property or assets, which conflict, breach, or default shall have the effect of preventing or disabling Stockholder from performing Stockholder’s obligations under this Agreement.

3. Agreement to Vote Shares; Irrevocable Proxy.

(a) Stockholder agrees during the term of this Agreement to vote the Shares at any annual or special meeting of stockholders of the Company, or execute a written consent or consents if stockholders of the Company are requested to vote their shares through the execution of an action by written consent in lieu of any such annual or special meeting of stockholders of the Company, and to cause any holder of record of Shares to vote: (i) in favor of (1) approval of the Merger and the Merger Agreement and the transactions contemplated thereunder, at every meeting (or in connection with any action by written consent) of the stockholders of the Company at which such matters are considered and at every lawful adjournment or postponement thereof and (2) approval of any proposal to adjourn or postpone the meeting to a later date during the term of this Agreement, if there are not sufficient votes for the approval of the Merger Agreement or the transactions contemplated thereunder on the date on which such meeting is held; (ii) against any action, proposal, transaction or agreement which could reasonably be expected to result in a breach of any covenant, representation or warranty or any other obligation or agreement of the Company under the Merger Agreement or of Stockholder under this Agreement or which would reasonably be expected to result in any of the conditions to the Company’s obligations under the Merger Agreement not being fulfilled. This Agreement is intended to bind Stockholder as a stockholder of the Company only with respect to the specific matters set forth herein. Except as set forth in clauses (i) and (ii) of this Section 3(a), Stockholder shall not be restricted from voting in favor of, against or abstaining with respect to any other matter presented to the stockholders of the Company.

(b) Stockholder hereby appoints Parent and any designee of Parent, and each of them individually, its proxies and attorneys-in-fact, with full power of substitution and resubstitution, to vote or act by written consent during the term of this Agreement with respect to the Shares in accordance with Section 3(a). This proxy and power of attorney is given to secure the performance of the duties of Stockholder under this Agreement. Stockholder shall take such further action or execute such other instruments as may be necessary to effectuate the intent of this proxy. This proxy and power of attorney granted by Stockholder shall be irrevocable during the term of this Agreement, shall be deemed to be coupled with an interest sufficient in law to support an irrevocable proxy and shall revoke any and all prior proxies granted by Stockholder with respect to the Shares. The power of attorney granted by Stockholder herein is a durable power of attorney and shall survive the dissolution or bankruptcy of Stockholder but will not survive the termination of this Agreement. The proxy and power of attorney granted hereunder shall terminate upon the termination of this Agreement. Parent acknowledges and agrees that Stockholder may vote the Shares on all other matters not referred to in Section 3(a), and the attorneys and proxies named above may not exercise the proxy with respect to such matters.

4. No Voting Trusts or Other Arrangement.

Stockholder agrees that during the term of this Agreement, Stockholder will not, and will not permit any entity under Stockholder's control to, deposit any of the Shares in a voting trust, grant any proxies with respect to the Shares or subject any of the Shares to any arrangement with respect to the voting of the Shares other than agreements entered into with Parent.

5. Transfer and Encumbrance.

Stockholder agrees that during the term of this Agreement, other than as set forth in the Merger Agreement, Stockholder will not, directly or indirectly, transfer, sell, offer to sell, exchange, assign, pledge or otherwise dispose of or encumber ("Transfer") any of the Shares or enter into any contract, option or other agreement with respect to, or consent to, a Transfer of, any of the Shares or Stockholder's voting or economic interest therein. Any attempted Transfer of Shares or any interest therein in violation of this Section 0 shall be null and void. This Section 0 shall not prohibit a Transfer of the Shares by Stockholder to an Affiliate of Stockholder; provided, that a Transfer referred to in this sentence shall be permitted only if, as a precondition to such Transfer, the transferee agrees in a writing, to be bound by all of the terms of this Agreement applicable to Shareholder. For the purposes of this Section 5, “Affiliate” means, with respect to any specified Person, any other Person who or which, directly or indirectly, controls, is controlled by, or is under common control with such specified Person, including, without limitation, any general partner, officer, director, or manager of such Person and any venture capital or private equity fund now or hereafter existing that is controlled by one or more general partners or managing members of, or shares the same management company with, such Person.

6. Additional Shares.

Stockholder agrees that all shares of Company Capital Stock that Stockholder purchases or acquires the right to vote or otherwise acquires beneficial ownership (as defined in Rule 13d-3 under the Exchange Act) of after the execution of this Agreement shall be subject to the terms of this Agreement and shall constitute Shares for all purposes of this Agreement until termination of this Agreement.

7. Reserved.

8. Documentation and Information.

Except as required by applicable Law, Stockholder shall not make any public announcement regarding this Agreement and the transactions contemplated hereby without the prior written consent of Parent; provided, that if Stockholder determines, based upon advice of counsel, that a public announcement is required by applicable Law, Stockholder shall use its commercially reasonable efforts to provide Parent with reasonable advance notice of such determination and reasonable time to comment on such announcement in advance of such issuance. Stockholder consents to and hereby authorizes Parent to publish and disclose in all documents and schedules filed with the SEC to the extent required by Law, and any press release or other disclosure document that Parent reasonably determines to be necessary, based upon advice of counsel, in connection with the transactions contemplated by the Merger Agreement, and in each case only to the extent so required or necessary, Stockholder's identity and ownership of the Shares, the existence of this Agreement and the nature of Stockholder's commitments and obligations under this Agreement, and Stockholder acknowledges that Parent may, in Parent's sole discretion, file this Agreement or a form hereof with the SEC or any other Governmental Body during the term of this Agreement and only to the extent required by Law. Subject to applicable Law, Stockholder agrees to promptly give Parent any information it may reasonably require for the preparation of any such disclosure documents, and Stockholder agrees to promptly notify Parent of any required corrections with respect to any written information supplied by Stockholder specifically for use in any such disclosure document, if and to the extent that any such information shall have become false or misleading in any material respect.

9. Termination.

This Agreement shall terminate automatically without a need for any further action upon the earliest to occur of (i) the Effective Time and (ii) the date on which the Merger Agreement is terminated in accordance with its terms or amended in a manner adverse to the Stockholder.

10. No Agreement as Director, Officer or a Fiduciary; No other Representations; No Reliance.

Stockholder makes no agreement or understanding in this Agreement in Stockholder's capacity as a director, officer or fiduciary of the Company or any of its subsidiaries (if Stockholder holds such office or is a fiduciary thereof), and nothing in this Agreement: (a) will limit or affect any actions or omissions taken by Stockholder in stockholder's capacity as a director, officer or fiduciary, including in exercising rights under the Merger Agreement, and no such actions or omissions shall be deemed a breach of this Agreement; or (b) will be construed to prohibit, limit or restrict Stockholder from exercising Stockholder's fiduciary duties as an officer, director or other fiduciary of the Company or its stockholders. Except as expressly set forth in this Agreement, neither Stockholder nor any of its agents, employees or representatives have made, nor are any of them making any representation or warranty, express or implied, in respect of the Shares or the Stockholder, and any such other representations or warranties are hereby expressly disclaimed. Parent expressly acknowledges and agrees that neither Parent nor any of Parent’s agents, employees or representatives is relying on any other representation or warranty of Stockholder or any of its agents, employees or representatives, including the accuracy or completeness of any such other representations and warranties, whether express or implied.

11. Specific Performance.

Each party hereto acknowledges that it will be impossible to measure in money the damage to the other party if a party hereto fails to comply with any of the obligations imposed by this Agreement, that every such obligation is material and that, in the event of any such failure, the other party will not have an adequate remedy at law or damages. Accordingly, each party hereto agrees that injunctive relief or other equitable remedy, in addition to remedies at law or damages, is the appropriate remedy for any such failure and will not oppose the seeking of such relief on the basis that the other party has an adequate remedy at law. Each party hereto agrees that it will not seek, and agrees to waive any requirement for, the securing or posting of a bond in connection with the other party's seeking or obtaining such equitable relief.

12. Entire Agreement.

This Agreement supersedes all prior agreements, written or oral, between the parties hereto with respect to the subject matter hereof and contains the entire agreement between the parties with respect to the subject matter hereof. This Agreement may not be amended or supplemented, and no provisions hereof may be modified or waived, except by an instrument in writing signed by both of the parties hereto. No waiver of any provisions hereof by either party shall be deemed a waiver of any other provisions hereof by such party, nor shall any such waiver be deemed a continuing waiver of any provision hereof by such party.

13. Notices.

All notices, requests, claims, demands, and other communications hereunder shall be in writing and shall be deemed to have been given (a) when delivered by hand (with written confirmation of receipt), (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested), (c) on the date sent by facsimile or e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient, or (d) on the third day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 13):

If to Parent:      Paulson Capital (Delaware) Corp.

1331 NW Lovejoy Street, Suite 720

Portland, Oregon 97209

Facsimile: 503-248-2390

Attn: Trent Davis

Copies to (which shall not constitute notice):

Holland & Knight LLP
2300 U.S. Bancorp Tower

111 S.W. Fifth Avenue
Portland, OR 97204
Facsimile: 503-241-8014

Attn: Mark von Bergen, Esq.

And

Sichenzia Ross Friedman & Ference, LLP

61 Broadway

Suite 3200

New York, NY 10006

Facsimile 212-930-9725

Attn: Harvey Kesner, Esq.

If to Stockholder, to the address or facsimile number set forth for Stockholder on the signature page hereof.

14. Miscellaneous.

(a) This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York without giving effect to any choice or conflict of law provision or rule (whether of the State of New York or any other jurisdiction) that would cause the application of Laws of any jurisdiction other than those of the State of New York.

(b) Each of the parties hereto irrevocably agrees that any legal action or proceeding with respect to this Agreement and the rights and obligations arising hereunder, or for recognition and enforcement of any judgment in respect of this Agreement and the rights and obligations arising hereunder brought by the other party hereto or its successors or assigns shall be brought and determined exclusively in the Court of Chancery of the State of Delaware, or in the event (but only in the event) that such court does not have subject matter jurisdiction over such action or proceeding, in any state or federal court within the State of Delaware and any direct appellate court therefrom. Each of the parties hereto agrees that mailing of process or other papers in connection with any such action or proceeding in the manner provided in Section 13 or in such other manner as may be permitted by applicable Laws, will be valid and sufficient service thereof. Each of the parties hereto hereby irrevocably submits with regard to any such action or proceeding for itself and in respect of its property, generally and unconditionally, to the personal jurisdiction of the aforesaid courts and agrees that it will not bring any action relating to this Agreement or any of the transactions contemplated by this Agreement in any court or tribunal other than the aforesaid courts. Each of the parties hereto hereby irrevocably waives, and agrees not to assert, by way of motion, as a defense, counterclaim or otherwise, in any action or proceeding with respect to this Agreement and the rights and obligations arising hereunder, or for recognition and enforcement of any judgment in respect of this Agreement and the rights and obligations arising hereunder (i) any claim that it is not personally subject to the jurisdiction of the above named courts for any reason other than the failure to serve process in accordance with this Section 14(b), (ii) any claim that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise), and (iii) to the fullest extent permitted by the applicable Law, any claim that (x) the suit, action or proceeding in such court is brought in an inconvenient forum, (y) the venue of such suit, action or proceeding is improper, or (z) this Agreement, or the subject matter hereof, may not be enforced in or by such courts.

(c) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (B) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 14(c).

(d) If any term or provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal or unenforceable, 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 greatest extent possible.

(e) This Agreement may be executed 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.

(f) Each party hereto shall execute and deliver such additional documents as may be necessary or desirable to effect the transactions contemplated by this Agreement.

(g) All Section headings herein are for convenience of reference only and are not part of this Agreement, and no construction or reference shall be derived therefrom.

(h) The obligations of Stockholder set forth in this Agreement shall not be effective or binding upon Stockholder until after such time as the Merger Agreement is executed and delivered by the Company, Parent and Merger Sub, and the parties agree that there is not and has not been any other agreement, arrangement or understanding between the parties hereto with respect to the matters set forth herein.

(i) Neither party to this Agreement may assign any of its rights or obligations under this Agreement without the prior written consent of the other party hereto. Any assignment contrary to the provisions of this Section 14(i) shall be null and void.

15. No Ownership Interest; No Unspecified Obligations.

Nothing contained in this Agreement shall be deemed to vest in Parent or Merger Sub any direct or indirect ownership or incidence of ownership of or with respect to any Shares, except as expressly provided herein. All rights, ownership and economic benefits of and relating to the Shares shall remain vested in and belong to Stockholder, and neither Parent nor Merger Sub shall have any authority to direct Stockholder in, and Stockholder will in no way be limited from the voting or disposition of, or the taking of any other action in connection with, any of the Shares, except as otherwise specifically provided herein.

[SIGNATURE PAGE FOLLOWS]

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

PAULSON CAPITAL (DELAWARE) CORP.

By: ___/s/ Trent Davis___________________

Name: Trent Davis

Title: President

ARCH VENTURE FUND VI, L.P.

By: ARCH Venture Partners, LP., its General Partner

By: ARCH Venture Partners VI, LLC, its General Partner

By: ___/s/ Keith Crandell __________________ 

Name: Keith Crandell

Title: Managing Director

Number of Shares of Company Common Stock Beneficially Owned as of the Date of this Agreement:

Number of Options Beneficially Owned as of the Date of this Agreement:

Street Address:

City/State/Zip Code:

Fax:

[Signature Page to Voting Agreement]

EX-10

Exhibit 10.3

VOTING AGREEMENT

This Voting Agreement (this "Agreement"), dated as of May 8, 2014, is entered into by and between the undersigned stockholder ("Stockholder") of Variation Biotechnologies (US), Inc., a Delaware corporation (the "Company"), and Paulson Capital (Delaware) Corp., a Delaware corporation ("Parent").

WHEREAS, concurrently with or following the execution of this Agreement, the Company, Parent and VBI Acquisition Corp., a Delaware corporation and wholly owned subsidiary of Parent ("Merger Sub"), have entered, or will enter, into an Agreement and Plan of Merger (as the same may be amended from time to time, the "Merger Agreement"), providing for, among other things, the merger (the "Merger") of Merger Sub and the Company pursuant to the terms and conditions of the Merger Agreement;

WHEREAS, as a condition to its willingness to enter into the Merger Agreement, Parent has required that Stockholder execute and deliver this Agreement; and

WHEREAS, in order to induce Parent to enter into the Merger Agreement, Stockholder is willing to make certain representations, warranties, covenants and agreements with respect to the shares of common stock, par value $0.01 per share, of the Company ("Company Common Stock"), and Series A preferred stock, par value $0.01 per share, of the Company ("Company Series A Preferred Stock" and, together with the Company Common Stock, "Company Capital Stock") beneficially owned by Stockholder and set forth below Stockholder's signature on the signature page hereto (the "Original Shares" and, together with any additional shares of Company Capital Stock acquired by Stockholder pursuant to Section 6 hereof, the "Shares").

NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt, sufficiency and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

1. Definitions.

For purposes of this Agreement, capitalized terms used and not defined herein shall have the respective meanings ascribed to them in the Merger Agreement.

2. Representations of Stockholder.

Stockholder represents and warrants to Parent that:

(a) (i) Stockholder owns beneficially (as such term is defined in Rule 13d-3 under the Exchange Act) all of the Original Shares free and clear of all liens, claims, options, charges or other encumbrances that would have the effect of preventing or disabling Stockholder from performing Stockholder’s obligations under this Agreement, and (ii) except pursuant hereto or as set forth on Schedule 2(a) hereto, there are no options, warrants or other rights, agreements, arrangements or commitments of any character to which Stockholder is a party relating to the pledge, disposition or voting of any of the Original Shares and there are no voting trusts or voting agreements with respect to the Original Shares.

(b) Stockholder does not beneficially own any shares of Company Capital Stock other than (i) the Original Shares and (ii) any options, warrants or other rights to acquire any additional shares of Company Capital Stock or any security exercisable for or convertible into shares of Company Capital Stock, set forth on the signature page of this Agreement (collectively, "Options"), in respect to which there are no, except pursuant hereto or as set forth on Schedule 2(b) hereto, options, warrants or other rights, agreements, arrangements or commitments of any character to which Stockholder is a party relating to the pledge, disposition or voting of any of the Options and there are no voting trusts or voting agreements with respect to the Options.

(c) Stockholder has full corporate power and authority and legal capacity to enter into, execute and deliver this Agreement and to perform fully Stockholder's obligations hereunder (including the proxy described in Section 3(b) below)). This Agreement has been duly and validly executed and delivered by Stockholder and constitutes the legal, valid and binding obligation of Stockholder, enforceable against Stockholder in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar Laws relating to or affecting creditors' rights generally and general equitable principles (whether considered in a proceeding in equity or at law).

(d) None of the execution and delivery of this Agreement by Stockholder, the consummation by Stockholder of the transactions contemplated hereby or compliance by Stockholder with any of the provisions hereof will materially conflict with or result in a material breach, or constitute a material default (with or without notice of lapse of time or both) under any provision of, any trust agreement, loan or credit agreement, note, bond, mortgage, indenture, lease or other agreement, instrument or Law applicable to Stockholder or to Stockholder's property or assets, which conflict, breach, or default shall have the effect of preventing or disabling Stockholder from performing Stockholder’s obligations under this Agreement.

3. Agreement to Vote Shares; Irrevocable Proxy.

(a) Stockholder agrees during the term of this Agreement to vote the Shares at any annual or special meeting of stockholders of the Company, or execute a written consent or consents if stockholders of the Company are requested to vote their shares through the execution of an action by written consent in lieu of any such annual or special meeting of stockholders of the Company, and to cause any holder of record of Shares to vote: (i) in favor of (1) approval of the Merger and the Merger Agreement and the transactions contemplated thereunder, at every meeting (or in connection with any action by written consent) of the stockholders of the Company at which such matters are considered and at every lawful adjournment or postponement thereof and (2) approval of any proposal to adjourn or postpone the meeting to a later date during the term of this Agreement, if there are not sufficient votes for the approval of the Merger Agreement or the transactions contemplated thereunder on the date on which such meeting is held; (ii) against any action, proposal, transaction or agreement which could reasonably be expected to result in a breach of any covenant, representation or warranty or any other obligation or agreement of the Company under the Merger Agreement or of Stockholder under this Agreement or which would reasonably be expected to result in any of the conditions to the Company’s obligations under the Merger Agreement not being fulfilled. This Agreement is intended to bind Stockholder as a stockholder of the Company only with respect to the specific matters set forth herein. Except as set forth in clauses (i) and (ii) of this Section 3(a), Stockholder shall not be restricted from voting in favor of, against or abstaining with respect to any other matter presented to the stockholders of the Company.

(b) Stockholder hereby appoints Parent and any designee of Parent, and each of them individually, its proxies and attorneys-in-fact, with full power of substitution and resubstitution, to vote or act by written consent during the term of this Agreement with respect to the Shares in accordance with Section 3(a). This proxy and power of attorney is given to secure the performance of the duties of Stockholder under this Agreement. Stockholder shall take such further action or execute such other instruments as may be necessary to effectuate the intent of this proxy. This proxy and power of attorney granted by Stockholder shall be irrevocable during the term of this Agreement, shall be deemed to be coupled with an interest sufficient in law to support an irrevocable proxy and shall revoke any and all prior proxies granted by Stockholder with respect to the Shares. The power of attorney granted by Stockholder herein is a durable power of attorney and shall survive the dissolution or bankruptcy of Stockholder but will not survive the termination of this Agreement. The proxy and power of attorney granted hereunder shall terminate upon the termination of this Agreement. Parent acknowledges and agrees that Stockholder may vote the Shares on all other matters not referred to in Section 3(a), and the attorneys and proxies named above may not exercise the proxy with respect to such matters.

4. No Voting Trusts or Other Arrangement.

Stockholder agrees that during the term of this Agreement, Stockholder will not, and will not permit any entity under Stockholder's control to, deposit any of the Shares in a voting trust, grant any proxies with respect to the Shares or subject any of the Shares to any arrangement with respect to the voting of the Shares other than agreements entered into with Parent.

5. Transfer and Encumbrance.

Stockholder agrees that during the term of this Agreement, other than as set forth in the Merger Agreement, Stockholder will not, directly or indirectly, transfer, sell, offer to sell, exchange, assign, pledge or otherwise dispose of or encumber ("Transfer") any of the Shares or enter into any contract, option or other agreement with respect to, or consent to, a Transfer of, any of the Shares or Stockholder's voting or economic interest therein. Any attempted Transfer of Shares or any interest therein in violation of this Section 0 shall be null and void. This Section 0 shall not prohibit a Transfer of the Shares by Stockholder to an Affiliate of Stockholder; provided, that a Transfer referred to in this sentence shall be permitted only if, as a precondition to such Transfer, the transferee agrees in a writing, to be bound by all of the terms of this Agreement applicable to Shareholder. For the purposes of this Section 5, “Affiliate” means, with respect to any specified Person, any other Person who or which, directly or indirectly, controls, is controlled by, or is under common control with such specified Person, including, without limitation, any general partner, officer, director, or manager of such Person and any venture capital or private equity fund now or hereafter existing that is controlled by one or more general partners or managing members of, or shares the same management company with, such Person.

6. Additional Shares.

Stockholder agrees that all shares of Company Capital Stock that Stockholder purchases or acquires the right to vote or otherwise acquires beneficial ownership (as defined in Rule 13d-3 under the Exchange Act) of after the execution of this Agreement shall be subject to the terms of this Agreement and shall constitute Shares for all purposes of this Agreement until termination of this Agreement.

7. Reserved.

8. Documentation and Information.

Except as required by applicable Law, Stockholder shall not make any public announcement regarding this Agreement and the transactions contemplated hereby without the prior written consent of Parent; provided, that if Stockholder determines, based upon advice of counsel, that a public announcement is required by applicable Law, Stockholder shall use its commercially reasonable efforts to provide Parent with reasonable advance notice of such determination and reasonable time to comment on such announcement in advance of such issuance. Stockholder consents to and hereby authorizes Parent to publish and disclose in all documents and schedules filed with the SEC to the extent required by Law, and any press release or other disclosure document that Parent reasonably determines to be necessary, based upon advice of counsel, in connection with the transactions contemplated by the Merger Agreement, and in each case only to the extent so required or necessary, Stockholder's identity and ownership of the Shares, the existence of this Agreement and the nature of Stockholder's commitments and obligations under this Agreement, and Stockholder acknowledges that Parent may, in Parent's sole discretion, file this Agreement or a form hereof with the SEC or any other Governmental Body during the term of this Agreement and only to the extent required by Law. Subject to applicable Law, Stockholder agrees to promptly give Parent any information it may reasonably require for the preparation of any such disclosure documents, and Stockholder agrees to promptly notify Parent of any required corrections with respect to any written information supplied by Stockholder specifically for use in any such disclosure document, if and to the extent that any such information shall have become false or misleading in any material respect.

9. Termination.

This Agreement shall terminate automatically without a need for any further action upon the earliest to occur of (i) the Effective Time and (ii) the date on which the Merger Agreement is terminated in accordance with its terms or amended in a manner adverse to the Stockholder.

10. No Agreement as Director, Officer or a Fiduciary; No other Representations; No Reliance.

Stockholder makes no agreement or understanding in this Agreement in Stockholder's capacity as a director, officer or fiduciary of the Company or any of its subsidiaries (if Stockholder holds such office or is a fiduciary thereof), and nothing in this Agreement: (a) will limit or affect any actions or omissions taken by Stockholder in stockholder's capacity as a director, officer or fiduciary, including in exercising rights under the Merger Agreement, and no such actions or omissions shall be deemed a breach of this Agreement; or (b) will be construed to prohibit, limit or restrict Stockholder from exercising Stockholder's fiduciary duties as an officer, director or other fiduciary of the Company or its stockholders. Except as expressly set forth in this Agreement, neither Stockholder nor any of its agents, employees or representatives have made, nor are any of them making any representation or warranty, express or implied, in respect of the Shares or the Stockholder, and any such other representations or warranties are hereby expressly disclaimed. Parent expressly acknowledges and agrees that neither Parent nor any of Parent’s agents, employees or representatives is relying on any other representation or warranty of Stockholder or any of its agents, employees or representatives, including the accuracy or completeness of any such other representations and warranties, whether express or implied.

11. Specific Performance.

Each party hereto acknowledges that it will be impossible to measure in money the damage to the other party if a party hereto fails to comply with any of the obligations imposed by this Agreement, that every such obligation is material and that, in the event of any such failure, the other party will not have an adequate remedy at law or damages. Accordingly, each party hereto agrees that injunctive relief or other equitable remedy, in addition to remedies at law or damages, is the appropriate remedy for any such failure and will not oppose the seeking of such relief on the basis that the other party has an adequate remedy at law. Each party hereto agrees that it will not seek, and agrees to waive any requirement for, the securing or posting of a bond in connection with the other party's seeking or obtaining such equitable relief.

12. Entire Agreement.

This Agreement supersedes all prior agreements, written or oral, between the parties hereto with respect to the subject matter hereof and contains the entire agreement between the parties with respect to the subject matter hereof. This Agreement may not be amended or supplemented, and no provisions hereof may be modified or waived, except by an instrument in writing signed by both of the parties hereto. No waiver of any provisions hereof by either party shall be deemed a waiver of any other provisions hereof by such party, nor shall any such waiver be deemed a continuing waiver of any provision hereof by such party.

13. Notices.

All notices, requests, claims, demands, and other communications hereunder shall be in writing and shall be deemed to have been given (a) when delivered by hand (with written confirmation of receipt), (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested), (c) on the date sent by facsimile or e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient, or (d) on the third day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 13):

If to Parent:      Paulson Capital (Delaware) Corp.

1331 NW Lovejoy Street, Suite 720

Portland, Oregon 97209

Facsimile: 503-248-2390

Attn: Trent Davis

Copies to (which shall not constitute notice):

Holland & Knight LLP
2300 U.S. Bancorp Tower

111 S.W. Fifth Avenue
Portland, OR 97204
Facsimile: 503-241-8014

Attn: Mark von Bergen, Esq.

And

Sichenzia Ross Friedman & Ference, LLP

61 Broadway

Suite 3200

New York, NY 10006

Facsimile 212-930-9725

Attn: Harvey Kesner, Esq.

If to Stockholder, to the address or facsimile number set forth for Stockholder on the signature page hereof.

14. Miscellaneous.

(a) This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York without giving effect to any choice or conflict of law provision or rule (whether of the State of New York or any other jurisdiction) that would cause the application of Laws of any jurisdiction other than those of the State of New York.

(b) Each of the parties hereto irrevocably agrees that any legal action or proceeding with respect to this Agreement and the rights and obligations arising hereunder, or for recognition and enforcement of any judgment in respect of this Agreement and the rights and obligations arising hereunder brought by the other party hereto or its successors or assigns shall be brought and determined exclusively in the Court of Chancery of the State of Delaware, or in the event (but only in the event) that such court does not have subject matter jurisdiction over such action or proceeding, in any state or federal court within the State of Delaware and any direct appellate court therefrom. Each of the parties hereto agrees that mailing of process or other papers in connection with any such action or proceeding in the manner provided in Section 13 or in such other manner as may be permitted by applicable Laws, will be valid and sufficient service thereof. Each of the parties hereto hereby irrevocably submits with regard to any such action or proceeding for itself and in respect of its property, generally and unconditionally, to the personal jurisdiction of the aforesaid courts and agrees that it will not bring any action relating to this Agreement or any of the transactions contemplated by this Agreement in any court or tribunal other than the aforesaid courts. Each of the parties hereto hereby irrevocably waives, and agrees not to assert, by way of motion, as a defense, counterclaim or otherwise, in any action or proceeding with respect to this Agreement and the rights and obligations arising hereunder, or for recognition and enforcement of any judgment in respect of this Agreement and the rights and obligations arising hereunder (i) any claim that it is not personally subject to the jurisdiction of the above named courts for any reason other than the failure to serve process in accordance with this Section 14(b), (ii) any claim that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise), and (iii) to the fullest extent permitted by the applicable Law, any claim that (x) the suit, action or proceeding in such court is brought in an inconvenient forum, (y) the venue of such suit, action or proceeding is improper, or (z) this Agreement, or the subject matter hereof, may not be enforced in or by such courts.

(c) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (B) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 14(c).

(d) If any term or provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal or unenforceable, 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 greatest extent possible.

(e) This Agreement may be executed 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.

(f) Each party hereto shall execute and deliver such additional documents as may be necessary or desirable to effect the transactions contemplated by this Agreement.

(g) All Section headings herein are for convenience of reference only and are not part of this Agreement, and no construction or reference shall be derived therefrom.

(h) The obligations of Stockholder set forth in this Agreement shall not be effective or binding upon Stockholder until after such time as the Merger Agreement is executed and delivered by the Company, Parent and Merger Sub, and the parties agree that there is not and has not been any other agreement, arrangement or understanding between the parties hereto with respect to the matters set forth herein.

(i) Neither party to this Agreement may assign any of its rights or obligations under this Agreement without the prior written consent of the other party hereto. Any assignment contrary to the provisions of this Section 14(i) shall be null and void.

15. No Ownership Interest; No Unspecified Obligations.

Nothing contained in this Agreement shall be deemed to vest in Parent or Merger Sub any direct or indirect ownership or incidence of ownership of or with respect to any Shares, except as expressly provided herein. All rights, ownership and economic benefits of and relating to the Shares shall remain vested in and belong to Stockholder, and neither Parent nor Merger Sub shall have any authority to direct Stockholder in, and Stockholder will in no way be limited from the voting or disposition of, or the taking of any other action in connection with, any of the Shares, except as otherwise specifically provided herein.

[SIGNATURE PAGE FOLLOWS]

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

PAULSON CAPITAL (DELAWARE) CORP.

By: ___/s/ Trent Davis___________________

Name: Trent Davis

Title: President

5AM VENTURES, L.P.

By: 5AM Partners II, LLC, its General Partner

By: ___/s/ Scott Rocklage __________________ 

Name: Scott Rocklage

Title: Managing Member

Number of Shares of Company Common Stock Beneficially Owned as of the Date of this Agreement:

Number of Options Beneficially Owned as of the Date of this Agreement:

Street Address:

City/State/Zip Code:

Fax:

[Signature Page to Voting Agreement]

EX-10

Exhibit 10.4

VOTING AGREEMENT

This Voting Agreement (this "Agreement"), dated as of May 8, 2014, is entered into by and between the undersigned stockholder ("Stockholder") of Variation Biotechnologies (US), Inc., a Delaware corporation (the "Company"), and Paulson Capital (Delaware) Corp., a Delaware corporation ("Parent").

WHEREAS, concurrently with or following the execution of this Agreement, the Company, Parent and VBI Acquisition Corp., a Delaware corporation and wholly owned subsidiary of Parent ("Merger Sub"), have entered, or will enter, into an Agreement and Plan of Merger (as the same may be amended from time to time, the "Merger Agreement"), providing for, among other things, the merger (the "Merger") of Merger Sub and the Company pursuant to the terms and conditions of the Merger Agreement;

WHEREAS, as a condition to its willingness to enter into the Merger Agreement, Parent has required that Stockholder execute and deliver this Agreement; and

WHEREAS, in order to induce Parent to enter into the Merger Agreement, Stockholder is willing to make certain representations, warranties, covenants and agreements with respect to the shares of common stock, par value $0.01 per share, of the Company ("Company Common Stock"), and Series A preferred stock, par value $0.01 per share, of the Company ("Company Series A Preferred Stock" and, together with the Company Common Stock, "Company Capital Stock") beneficially owned by Stockholder and set forth below Stockholder's signature on the signature page hereto (the "Original Shares" and, together with any additional shares of Company Capital Stock acquired by Stockholder pursuant to Section 6 hereof, the "Shares").

NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt, sufficiency and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

1. Definitions.

For purposes of this Agreement, capitalized terms used and not defined herein shall have the respective meanings ascribed to them in the Merger Agreement.

2. Representations of Stockholder.

Stockholder represents and warrants to Parent that:

(a) (i) Stockholder owns beneficially (as such term is defined in Rule 13d-3 under the Exchange Act) all of the Original Shares free and clear of all liens, claims, options, charges or other encumbrances that would have the effect of preventing or disabling Stockholder from performing Stockholder’s obligations under this Agreement, and (ii) except pursuant hereto or as set forth on Schedule 2(a) hereto, there are no options, warrants or other rights, agreements, arrangements or commitments of any character to which Stockholder is a party relating to the pledge, disposition or voting of any of the Original Shares and there are no voting trusts or voting agreements with respect to the Original Shares.

(b) Stockholder does not beneficially own any shares of Company Capital Stock other than (i) the Original Shares and (ii) any options, warrants or other rights to acquire any additional shares of Company Capital Stock or any security exercisable for or convertible into shares of Company Capital Stock, set forth on the signature page of this Agreement (collectively, "Options"), in respect to which there are no, except pursuant hereto or as set forth on Schedule 2(b) hereto, options, warrants or other rights, agreements, arrangements or commitments of any character to which Stockholder is a party relating to the pledge, disposition or voting of any of the Options and there are no voting trusts or voting agreements with respect to the Options.

(c) Stockholder has full corporate power and authority and legal capacity to enter into, execute and deliver this Agreement and to perform fully Stockholder's obligations hereunder (including the proxy described in Section 3(b) below)). This Agreement has been duly and validly executed and delivered by Stockholder and constitutes the legal, valid and binding obligation of Stockholder, enforceable against Stockholder in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar Laws relating to or affecting creditors' rights generally and general equitable principles (whether considered in a proceeding in equity or at law).

(d) None of the execution and delivery of this Agreement by Stockholder, the consummation by Stockholder of the transactions contemplated hereby or compliance by Stockholder with any of the provisions hereof will materially conflict with or result in a material breach, or constitute a material default (with or without notice of lapse of time or both) under any provision of, any trust agreement, loan or credit agreement, note, bond, mortgage, indenture, lease or other agreement, instrument or Law applicable to Stockholder or to Stockholder's property or assets, which conflict, breach, or default shall have the effect of preventing or disabling Stockholder from performing Stockholder’s obligations under this Agreement.

3. Agreement to Vote Shares; Irrevocable Proxy.

(a) Stockholder agrees during the term of this Agreement to vote the Shares at any annual or special meeting of stockholders of the Company, or execute a written consent or consents if stockholders of the Company are requested to vote their shares through the execution of an action by written consent in lieu of any such annual or special meeting of stockholders of the Company, and to cause any holder of record of Shares to vote: (i) in favor of (1) approval of the Merger and the Merger Agreement and the transactions contemplated thereunder, at every meeting (or in connection with any action by written consent) of the stockholders of the Company at which such matters are considered and at every lawful adjournment or postponement thereof and (2) approval of any proposal to adjourn or postpone the meeting to a later date during the term of this Agreement, if there are not sufficient votes for the approval of the Merger Agreement or the transactions contemplated thereunder on the date on which such meeting is held; (ii) against any action, proposal, transaction or agreement which could reasonably be expected to result in a breach of any covenant, representation or warranty or any other obligation or agreement of the Company under the Merger Agreement or of Stockholder under this Agreement or which would reasonably be expected to result in any of the conditions to the Company’s obligations under the Merger Agreement not being fulfilled. This Agreement is intended to bind Stockholder as a stockholder of the Company only with respect to the specific matters set forth herein. Except as set forth in clauses (i) and (ii) of this Section 3(a), Stockholder shall not be restricted from voting in favor of, against or abstaining with respect to any other matter presented to the stockholders of the Company.

(b) Stockholder hereby appoints Parent and any designee of Parent, and each of them individually, its proxies and attorneys-in-fact, with full power of substitution and resubstitution, to vote or act by written consent during the term of this Agreement with respect to the Shares in accordance with Section 3(a). This proxy and power of attorney is given to secure the performance of the duties of Stockholder under this Agreement. Stockholder shall take such further action or execute such other instruments as may be necessary to effectuate the intent of this proxy. This proxy and power of attorney granted by Stockholder shall be irrevocable during the term of this Agreement, shall be deemed to be coupled with an interest sufficient in law to support an irrevocable proxy and shall revoke any and all prior proxies granted by Stockholder with respect to the Shares. The power of attorney granted by Stockholder herein is a durable power of attorney and shall survive the dissolution or bankruptcy of Stockholder but will not survive the termination of this Agreement. The proxy and power of attorney granted hereunder shall terminate upon the termination of this Agreement. Parent acknowledges and agrees that Stockholder may vote the Shares on all other matters not referred to in Section 3(a), and the attorneys and proxies named above may not exercise the proxy with respect to such matters.

4. No Voting Trusts or Other Arrangement.

Stockholder agrees that during the term of this Agreement, Stockholder will not, and will not permit any entity under Stockholder's control to, deposit any of the Shares in a voting trust, grant any proxies with respect to the Shares or subject any of the Shares to any arrangement with respect to the voting of the Shares other than agreements entered into with Parent.

5. Transfer and Encumbrance.

Stockholder agrees that during the term of this Agreement, other than as set forth in the Merger Agreement, Stockholder will not, directly or indirectly, transfer, sell, offer to sell, exchange, assign, pledge or otherwise dispose of or encumber ("Transfer") any of the Shares or enter into any contract, option or other agreement with respect to, or consent to, a Transfer of, any of the Shares or Stockholder's voting or economic interest therein. Any attempted Transfer of Shares or any interest therein in violation of this Section 0 shall be null and void. This Section 0 shall not prohibit a Transfer of the Shares by Stockholder to an Affiliate of Stockholder; provided, that a Transfer referred to in this sentence shall be permitted only if, as a precondition to such Transfer, the transferee agrees in a writing, to be bound by all of the terms of this Agreement applicable to Shareholder. For the purposes of this Section 5, “Affiliate” means, with respect to any specified Person, any other Person who or which, directly or indirectly, controls, is controlled by, or is under common control with such specified Person, including, without limitation, any general partner, officer, director, or manager of such Person and any venture capital or private equity fund now or hereafter existing that is controlled by one or more general partners or managing members of, or shares the same management company with, such Person.

6. Additional Shares.

Stockholder agrees that all shares of Company Capital Stock that Stockholder purchases or acquires the right to vote or otherwise acquires beneficial ownership (as defined in Rule 13d-3 under the Exchange Act) of after the execution of this Agreement shall be subject to the terms of this Agreement and shall constitute Shares for all purposes of this Agreement until termination of this Agreement.

7. Reserved.

8. Documentation and Information.

Except as required by applicable Law, Stockholder shall not make any public announcement regarding this Agreement and the transactions contemplated hereby without the prior written consent of Parent; provided, that if Stockholder determines, based upon advice of counsel, that a public announcement is required by applicable Law, Stockholder shall use its commercially reasonable efforts to provide Parent with reasonable advance notice of such determination and reasonable time to comment on such announcement in advance of such issuance. Stockholder consents to and hereby authorizes Parent to publish and disclose in all documents and schedules filed with the SEC to the extent required by Law, and any press release or other disclosure document that Parent reasonably determines to be necessary, based upon advice of counsel, in connection with the transactions contemplated by the Merger Agreement, and in each case only to the extent so required or necessary, Stockholder's identity and ownership of the Shares, the existence of this Agreement and the nature of Stockholder's commitments and obligations under this Agreement, and Stockholder acknowledges that Parent may, in Parent's sole discretion, file this Agreement or a form hereof with the SEC or any other Governmental Body during the term of this Agreement and only to the extent required by Law. Subject to applicable Law, Stockholder agrees to promptly give Parent any information it may reasonably require for the preparation of any such disclosure documents, and Stockholder agrees to promptly notify Parent of any required corrections with respect to any written information supplied by Stockholder specifically for use in any such disclosure document, if and to the extent that any such information shall have become false or misleading in any material respect.

9. Termination.

This Agreement shall terminate automatically without a need for any further action upon the earliest to occur of (i) the Effective Time and (ii) the date on which the Merger Agreement is terminated in accordance with its terms or amended in a manner adverse to the Stockholder.

10. No Agreement as Director, Officer or a Fiduciary; No other Representations; No Reliance.

Stockholder makes no agreement or understanding in this Agreement in Stockholder's capacity as a director, officer or fiduciary of the Company or any of its subsidiaries (if Stockholder holds such office or is a fiduciary thereof), and nothing in this Agreement: (a) will limit or affect any actions or omissions taken by Stockholder in stockholder's capacity as a director, officer or fiduciary, including in exercising rights under the Merger Agreement, and no such actions or omissions shall be deemed a breach of this Agreement; or (b) will be construed to prohibit, limit or restrict Stockholder from exercising Stockholder's fiduciary duties as an officer, director or other fiduciary of the Company or its stockholders. Except as expressly set forth in this Agreement, neither Stockholder nor any of its agents, employees or representatives have made, nor are any of them making any representation or warranty, express or implied, in respect of the Shares or the Stockholder, and any such other representations or warranties are hereby expressly disclaimed. Parent expressly acknowledges and agrees that neither Parent nor any of Parent’s agents, employees or representatives is relying on any other representation or warranty of Stockholder or any of its agents, employees or representatives, including the accuracy or completeness of any such other representations and warranties, whether express or implied.

11. Specific Performance.

Each party hereto acknowledges that it will be impossible to measure in money the damage to the other party if a party hereto fails to comply with any of the obligations imposed by this Agreement, that every such obligation is material and that, in the event of any such failure, the other party will not have an adequate remedy at law or damages. Accordingly, each party hereto agrees that injunctive relief or other equitable remedy, in addition to remedies at law or damages, is the appropriate remedy for any such failure and will not oppose the seeking of such relief on the basis that the other party has an adequate remedy at law. Each party hereto agrees that it will not seek, and agrees to waive any requirement for, the securing or posting of a bond in connection with the other party's seeking or obtaining such equitable relief.

12. Entire Agreement.

This Agreement supersedes all prior agreements, written or oral, between the parties hereto with respect to the subject matter hereof and contains the entire agreement between the parties with respect to the subject matter hereof. This Agreement may not be amended or supplemented, and no provisions hereof may be modified or waived, except by an instrument in writing signed by both of the parties hereto. No waiver of any provisions hereof by either party shall be deemed a waiver of any other provisions hereof by such party, nor shall any such waiver be deemed a continuing waiver of any provision hereof by such party.

13. Notices.

All notices, requests, claims, demands, and other communications hereunder shall be in writing and shall be deemed to have been given (a) when delivered by hand (with written confirmation of receipt), (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested), (c) on the date sent by facsimile or e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient, or (d) on the third day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 13):

If to Parent:      Paulson Capital (Delaware) Corp.

1331 NW Lovejoy Street, Suite 720

Portland, Oregon 97209

Facsimile: 503-248-2390

Attn: Trent Davis

Copies to (which shall not constitute notice):

Holland & Knight LLP
2300 U.S. Bancorp Tower

111 S.W. Fifth Avenue
Portland, OR 97204
Facsimile: 503-241-8014

Attn: Mark von Bergen, Esq.

And

Sichenzia Ross Friedman & Ference, LLP

61 Broadway

Suite 3200

New York, NY 10006

Facsimile 212-930-9725

Attn: Harvey Kesner, Esq.

If to Stockholder, to the address or facsimile number set forth for Stockholder on the signature page hereof.

14. Miscellaneous.

(a) This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York without giving effect to any choice or conflict of law provision or rule (whether of the State of New York or any other jurisdiction) that would cause the application of Laws of any jurisdiction other than those of the State of New York.

(b) Each of the parties hereto irrevocably agrees that any legal action or proceeding with respect to this Agreement and the rights and obligations arising hereunder, or for recognition and enforcement of any judgment in respect of this Agreement and the rights and obligations arising hereunder brought by the other party hereto or its successors or assigns shall be brought and determined exclusively in the Court of Chancery of the State of Delaware, or in the event (but only in the event) that such court does not have subject matter jurisdiction over such action or proceeding, in any state or federal court within the State of Delaware and any direct appellate court therefrom. Each of the parties hereto agrees that mailing of process or other papers in connection with any such action or proceeding in the manner provided in Section 13 or in such other manner as may be permitted by applicable Laws, will be valid and sufficient service thereof. Each of the parties hereto hereby irrevocably submits with regard to any such action or proceeding for itself and in respect of its property, generally and unconditionally, to the personal jurisdiction of the aforesaid courts and agrees that it will not bring any action relating to this Agreement or any of the transactions contemplated by this Agreement in any court or tribunal other than the aforesaid courts. Each of the parties hereto hereby irrevocably waives, and agrees not to assert, by way of motion, as a defense, counterclaim or otherwise, in any action or proceeding with respect to this Agreement and the rights and obligations arising hereunder, or for recognition and enforcement of any judgment in respect of this Agreement and the rights and obligations arising hereunder (i) any claim that it is not personally subject to the jurisdiction of the above named courts for any reason other than the failure to serve process in accordance with this Section 14(b), (ii) any claim that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise), and (iii) to the fullest extent permitted by the applicable Law, any claim that (x) the suit, action or proceeding in such court is brought in an inconvenient forum, (y) the venue of such suit, action or proceeding is improper, or (z) this Agreement, or the subject matter hereof, may not be enforced in or by such courts.

(c) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (B) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 14(c).

(d) If any term or provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal or unenforceable, 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 greatest extent possible.

(e) This Agreement may be executed 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.

(f) Each party hereto shall execute and deliver such additional documents as may be necessary or desirable to effect the transactions contemplated by this Agreement.

(g) All Section headings herein are for convenience of reference only and are not part of this Agreement, and no construction or reference shall be derived therefrom.

(h) The obligations of Stockholder set forth in this Agreement shall not be effective or binding upon Stockholder until after such time as the Merger Agreement is executed and delivered by the Company, Parent and Merger Sub, and the parties agree that there is not and has not been any other agreement, arrangement or understanding between the parties hereto with respect to the matters set forth herein.

(i) Neither party to this Agreement may assign any of its rights or obligations under this Agreement without the prior written consent of the other party hereto. Any assignment contrary to the provisions of this Section 14(i) shall be null and void.

15. No Ownership Interest; No Unspecified Obligations.

Nothing contained in this Agreement shall be deemed to vest in Parent or Merger Sub any direct or indirect ownership or incidence of ownership of or with respect to any Shares, except as expressly provided herein. All rights, ownership and economic benefits of and relating to the Shares shall remain vested in and belong to Stockholder, and neither Parent nor Merger Sub shall have any authority to direct Stockholder in, and Stockholder will in no way be limited from the voting or disposition of, or the taking of any other action in connection with, any of the Shares, except as otherwise specifically provided herein.

[SIGNATURE PAGE FOLLOWS]

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

PAULSON CAPITAL (DELAWARE) CORP.

By: ___/s/ Trent Davis___________________

Name: Trent Davis

Title: President

5AM CO-INVESTORS II, L.P.

By: 5AM Partners II, LLC, its General Partner

By: ___/s/ Scott Rocklage __________________ 

Name: Scott Rocklage

Title: Managing Member

Number of Shares of Company Common Stock Beneficially Owned as of the Date of this Agreement:

Number of Options Beneficially Owned as of the Date of this Agreement:

Street Address:

City/State/Zip Code:

Fax:

[Signature Page to Voting Agreement]

EX-10

Exhibit 10.5

VOTING AGREEMENT

This Voting Agreement (this "Agreement"), dated as of May 8, 2014, is entered into by and between Variation Biotechnologies (US), Inc. (the “Company”) and the undersigned stockholder ("Stockholder") of Paulson Capital (Delaware) Corp., a Delaware corporation ("Parent").

WHEREAS, concurrently with or following the execution of this Agreement, the Company, Parent and VBI Acquisition Corp., a Delaware corporation and wholly owned subsidiary of Parent ("Merger Sub"), have entered, or will enter, into an Agreement and Plan of Merger (as the same may be amended from time to time, the "Merger Agreement"), providing for, among other things, the merger (the "Merger") of Merger Sub and the Company pursuant to the terms and conditions of the Merger Agreement;

WHEREAS, as a condition to its willingness to enter into the Merger Agreement, the Company has required that Stockholder execute and deliver this Agreement; and

WHEREAS, in order to induce the Company to enter into the Merger Agreement, Stockholder is willing to make certain representations, warranties, covenants and agreements with respect to the shares of common stock, par value $0.0001 per share, of Parent ("Parent Common Stock"), Series A preferred stock, par value $0.0001 per share, of Parent ("Parent Series A Preferred Stock"), and Series B preferred stock, par value $0.0001 per share, of Parent ("Parent Series B Preferred Stock" and, together with the Parent Common Stock and the Parent Series A Preferred Stock, "Parent Capital Stock") beneficially owned by Stockholder and set forth below Stockholder's signature on the signature page hereto (the "Original Shares" and, together with any additional shares of Parent Capital Stock acquired by Stockholder pursuant to Section 6 hereof, the "Shares").

NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt, sufficiency and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

1. Definitions.

For purposes of this Agreement, capitalized terms used and not defined herein shall have the respective meanings ascribed to them in the Merger Agreement.

2. Representations of Stockholder.

Stockholder represents and warrants to the Company that:

(a) (i) Stockholder owns beneficially (as such term is defined in Rule 13d-3 under the Exchange Act) all of the Original Shares free and clear of all liens, claims, options, charges or other encumbrances that would have the effect of preventing or disabling Stockholder from performing Stockholder’s obligations under this Agreement, and (ii) except pursuant hereto or as set forth on Schedule 2(a) hereto, there are no options, warrants or other rights, agreements, arrangements or commitments of any character to which Stockholder is a party relating to the pledge, disposition or voting of any of the Original Shares and there are no voting trusts or voting agreements with respect to the Original Shares.

(b) Stockholder does not beneficially own any shares of Parent Capital Stock other than (i) the Original Shares and (ii) any options, warrants or other rights to acquire any additional shares of Parent Capital Stock or any security exercisable for or convertible into shares of Parent Capital Stock, set forth on the signature page of this Agreement (collectively, "Options"), in respect to which there are no, except pursuant hereto or as set forth on Schedule 2(b) hereto, options, warrants or other rights, agreements, arrangements or commitments of any character to which Stockholder is a party relating to the pledge, disposition or voting of any of the Options and there are no voting trusts or voting agreements with respect to the Options.

(c) Stockholder has full corporate power and authority and legal capacity to enter into, execute and deliver this Agreement and to perform fully Stockholder's obligations hereunder (including the proxy described in Section 3(b) below)). This Agreement has been duly and validly executed and delivered by Stockholder and constitutes the legal, valid and binding obligation of Stockholder, enforceable against Stockholder in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar Laws relating to or affecting creditors' rights generally and general equitable principles (whether considered in a proceeding in equity or at law).

(d) None of the execution and delivery of this Agreement by Stockholder, the consummation by Stockholder of the transactions contemplated hereby or compliance by Stockholder with any of the provisions hereof will materially conflict with or result in a material breach, or constitute a material default (with or without notice of lapse of time or both) under any provision of, any trust agreement, loan or credit agreement, note, bond, mortgage, indenture, lease or other agreement, instrument or Law applicable to Stockholder or to Stockholder's property or assets, which conflict, breach, or default shall have the effect of preventing or disabling Stockholder from performing Stockholder’s obligations under this Agreement.

3. Agreement to Vote Shares; Irrevocable Proxy.

(a) Stockholder agrees during the term of this Agreement to vote the Shares at any annual or special meeting of stockholders of Parent, or execute a written consent or consents if stockholders of Parent are requested to vote their shares through the execution of an action by written consent in lieu of any such annual or special meeting of stockholders of Parent, and to cause any holder of record of Shares to vote: (i) in favor of (1) approval of the Merger and the Merger Agreement and the transactions contemplated thereunder, at every meeting (or in connection with any action by written consent) of the stockholders of Parent at which such matters are considered and at every lawful adjournment or postponement thereof and (2) approval of any proposal to adjourn or postpone the meeting to a later date during the term of this Agreement, if there are not sufficient votes for the approval of the Merger Agreement or the transactions contemplated thereunder on the date on which such meeting is held; (ii) against any action, proposal, transaction or agreement which could reasonably be expected to result in a breach of any covenant, representation or warranty or any other obligation or agreement of Parent under the Merger Agreement or of Stockholder under this Agreement or which would reasonably be expected to result in any of the conditions to Parent’s obligations under the Merger Agreement not being fulfilled. This Agreement is intended to bind Stockholder as a stockholder of Parent only with respect to the specific matters set forth herein. Except as set forth in clauses (i) and (ii) of this Section 3(a), Stockholder shall not be restricted from voting in favor of, against or abstaining with respect to any other matter presented to the stockholders of Parent.

(b) Stockholder hereby appoints the Company and any designee of the Company, and each of them individually, its proxies and attorneys-in-fact, with full power of substitution and resubstitution, to vote or act by written consent during the term of this Agreement with respect to the Shares in accordance with Section 3(a). This proxy and power of attorney is given to secure the performance of the duties of Stockholder under this Agreement. Stockholder shall take such further action or execute such other instruments as may be necessary to effectuate the intent of this proxy. This proxy and power of attorney granted by Stockholder shall be irrevocable during the term of this Agreement, shall be deemed to be coupled with an interest sufficient in law to support an irrevocable proxy and shall revoke any and all prior proxies granted by Stockholder with respect to the Shares. The power of attorney granted by Stockholder herein is a durable power of attorney and shall survive the dissolution or bankruptcy of Stockholder but will not survive the termination of this Agreement. The proxy and power of attorney granted hereunder shall terminate upon the termination of this Agreement. The Company acknowledges and agrees that Stockholder may vote the Shares on all other matters not referred to in Section 3(a), and the attorneys and proxies named above may not exercise the proxy with respect to such matters.

4. No Voting Trusts or Other Arrangement.

Stockholder agrees that during the term of this Agreement, Stockholder will not, and will not permit any entity under Stockholder's control to, deposit any of the Shares in a voting trust, grant any proxies with respect to the Shares or subject any of the Shares to any arrangement with respect to the voting of the Shares other than agreements entered into with the Company.

5. Transfer and Encumbrance.

Stockholder agrees that during the term of this Agreement, other than as set forth in the Merger Agreement, Stockholder will not, directly or indirectly, transfer, sell, offer to sell, exchange, assign, pledge or otherwise dispose of or encumber ("Transfer") any of the Shares or enter into any contract, option or other agreement with respect to, or consent to, a Transfer of, any of the Shares or Stockholder's voting or economic interest therein. Any attempted Transfer of Shares or any interest therein in violation of this Section 5 shall be null and void. This Section 5 shall not prohibit a Transfer of the Shares by Stockholder to an Affiliate of Stockholder; provided, that a Transfer referred to in this sentence shall be permitted only if, as a precondition to such Transfer, the transferee agrees in a writing, to be bound by all of the terms of this Agreement applicable to Shareholder. For the purposes of this Section 5, “Affiliate” means, with respect to any specified Person, any other Person who or which, directly or indirectly, controls, is controlled by, or is under common control with such specified Person, including, without limitation, any general partner, officer, director, or manager of such Person and any venture capital or private equity fund now or hereafter existing that is controlled by one or more general partners or managing members of, or shares the same management company with, such Person.

6. Additional Shares.

Stockholder agrees that all shares of Parent Capital Stock that Stockholder purchases or acquires the right to vote or otherwise acquires beneficial ownership (as defined in Rule 13d-3 under the Exchange Act) of after the execution of this Agreement shall be subject to the terms of this Agreement and shall constitute Shares for all purposes of this Agreement until termination of this Agreement.

7. Reserved.

8. Documentation and Information.

Except as required by applicable Law, Stockholder shall not make any public announcement regarding this Agreement and the transactions contemplated hereby without the prior written consent of the Company; provided, that if Stockholder determines, based upon advice of counsel, that a public announcement is required by applicable Law, Stockholder shall use its commercially reasonable efforts to provide the Company with reasonable advance notice of such determination and reasonable time to comment on such announcement in advance of such issuance. Stockholder consents to and hereby authorizes the Company to publish and disclose in all documents and schedules filed with the SEC to the extent required by Law, and any press release or other disclosure document that the Company reasonably determines to be necessary, based upon advice of counsel, in connection with the transactions contemplated by the Merger Agreement, and in each case only to the extent so required or necessary, Stockholder's identity and ownership of the Shares, the existence of this Agreement and the nature of Stockholder's commitments and obligations under this Agreement, and Stockholder acknowledges that the Company may, in the Company 's sole discretion, file this Agreement or a form hereof with the SEC or any other Governmental Body during the term of this Agreement and only to the extent required by Law. Subject to applicable Law, Stockholder agrees to promptly give the Company any information it may reasonably require for the preparation of any such disclosure documents, and Stockholder agrees to promptly notify the Company of any required corrections with respect to any written information supplied by Stockholder specifically for use in any such disclosure document, if and to the extent that any such information shall have become false or misleading in any material respect.

9. Termination.

This Agreement shall terminate automatically without a need for any further action upon the earliest to occur of (i) the Effective Time and (ii) the date on which the Merger Agreement is terminated in accordance with its terms or amended in a manner adverse to the Stockholder.

10. No Agreement as Director, Officer or a Fiduciary; No other Representations; No Reliance.

Stockholder makes no agreement or understanding in this Agreement in Stockholder's capacity as a director, officer or fiduciary of Parent or any of its subsidiaries (if Stockholder holds such office or is a fiduciary thereof), and nothing in this Agreement: (a) will limit or affect any actions or omissions taken by Stockholder in stockholder's capacity as a director, officer or fiduciary, including in exercising rights under the Merger Agreement, and no such actions or omissions shall be deemed a breach of this Agreement; or (b) will be construed to prohibit, limit or restrict Stockholder from exercising Stockholder's fiduciary duties as an officer, director or other fiduciary of Parent or its stockholders. Except as expressly set forth in this Agreement, neither Stockholder nor any of its agents, employees or representatives have made, nor are any of them making any representation or warranty, express or implied, in respect of the Shares or the Stockholder, and any such other representations or warranties are hereby expressly disclaimed. The Company expressly acknowledges and agrees that neither the Company nor any of the Company’s agents, employees or representatives is relying on any other representation or warranty of Stockholder or any of its agents, employees or representatives, including the accuracy or completeness of any such other representations and warranties, whether express or implied.

11. Specific Performance.

Each party hereto acknowledges that it will be impossible to measure in money the damage to the other party if a party hereto fails to comply with any of the obligations imposed by this Agreement, that every such obligation is material and that, in the event of any such failure, the other party will not have an adequate remedy at law or damages. Accordingly, each party hereto agrees that injunctive relief or other equitable remedy, in addition to remedies at law or damages, is the appropriate remedy for any such failure and will not oppose the seeking of such relief on the basis that the other party has an adequate remedy at law. Each party hereto agrees that it will not seek, and agrees to waive any requirement for, the securing or posting of a bond in connection with the other party's seeking or obtaining such equitable relief.

12. Entire Agreement.

This Agreement supersedes all prior agreements, written or oral, between the parties hereto with respect to the subject matter hereof and contains the entire agreement between the parties with respect to the subject matter hereof. This Agreement may not be amended or supplemented, and no provisions hereof may be modified or waived, except by an instrument in writing signed by both of the parties hereto. No waiver of any provisions hereof by either party shall be deemed a waiver of any other provisions hereof by such party, nor shall any such waiver be deemed a continuing waiver of any provision hereof by such party.

13. Notices.

All notices, requests, claims, demands, and other communications hereunder shall be in writing and shall be deemed to have been given (a) when delivered by hand (with written confirmation of receipt), (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested), (c) on the date sent by facsimile or e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient, or (d) on the third day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 13):

If to the

Company: Variation Biotechnologies (US), Inc.
222 Third Street, Suite 2241
Cambridge, MA 02142
Facsimile: 1-888-391-2579 Attn: Jeff Baxter

With copies to: Richardson & Patel LLP 
The Chrysler Building 405 Lexington Avenue, 49th Floor
New York, NY 10174
Facsimile: 917-591-6898 Attn: Kevin Friedmann, Esq.

If to Stockholder, to the address or facsimile number set forth for Stockholder on the signature page hereof.

14. Miscellaneous.

(a) This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York without giving effect to any choice or conflict of law provision or rule (whether of the State of New York or any other jurisdiction) that would cause the application of Laws of any jurisdiction other than those of the State of New York.

(b) Each of the parties hereto irrevocably agrees that any legal action or proceeding with respect to this Agreement and the rights and obligations arising hereunder, or for recognition and enforcement of any judgment in respect of this Agreement and the rights and obligations arising hereunder brought by the other party hereto or its successors or assigns shall be brought and determined exclusively in the Court of Chancery of the State of Delaware, or in the event (but only in the event) that such court does not have subject matter jurisdiction over such action or proceeding, in any state or federal court within the State of Delaware and any direct appellate court therefrom. Each of the parties hereto agrees that mailing of process or other papers in connection with any such action or proceeding in the manner provided in Section 13 or in such other manner as may be permitted by applicable Laws, will be valid and sufficient service thereof. Each of the parties hereto hereby irrevocably submits with regard to any such action or proceeding for itself and in respect of its property, generally and unconditionally, to the personal jurisdiction of the aforesaid courts and agrees that it will not bring any action relating to this Agreement or any of the transactions contemplated by this Agreement in any court or tribunal other than the aforesaid courts. Each of the parties hereto hereby irrevocably waives, and agrees not to assert, by way of motion, as a defense, counterclaim or otherwise, in any action or proceeding with respect to this Agreement and the rights and obligations arising hereunder, or for recognition and enforcement of any judgment in respect of this Agreement and the rights and obligations arising hereunder (i) any claim that it is not personally subject to the jurisdiction of the above named courts for any reason other than the failure to serve process in accordance with this Section 14(b), (ii) any claim that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise), and (iii) to the fullest extent permitted by the applicable Law, any claim that (x) the suit, action or proceeding in such court is brought in an inconvenient forum, (y) the venue of such suit, action or proceeding is improper, or (z) this Agreement, or the subject matter hereof, may not be enforced in or by such courts.

(c) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (B) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 14(c).

(d) If any term or provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal or unenforceable, 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 greatest extent possible.

(e) This Agreement may be executed 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.

(f) Each party hereto shall execute and deliver such additional documents as may be necessary or desirable to effect the transactions contemplated by this Agreement.

(g) All Section headings herein are for convenience of reference only and are not part of this Agreement, and no construction or reference shall be derived therefrom.

(h) The obligations of Stockholder set forth in this Agreement shall not be effective or binding upon Stockholder until after such time as the Merger Agreement is executed and delivered by the Company, Parent and Merger Sub, and the parties agree that there is not and has not been any other agreement, arrangement or understanding between the parties hereto with respect to the matters set forth herein.

(i) Neither party to this Agreement may assign any of its rights or obligations under this Agreement without the prior written consent of the other party hereto. Any assignment contrary to the provisions of this Section 14(i) shall be null and void.

15. No Ownership Interest; No Unspecified Obligations.

Nothing contained in this Agreement shall be deemed to vest in the Company any direct or indirect ownership or incidence of ownership of or with respect to any Shares, except as expressly provided herein. All rights, ownership and economic benefits of and relating to the Shares shall remain vested in and belong to Stockholder, and the Company shall not have any authority to direct Stockholder in, and Stockholder will in no way be limited from the voting or disposition of, or the taking of any other action in connection with, any of the Shares, except as otherwise specifically provided herein.

[SIGNATURE PAGE FOLLOWS]

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

VARIATION BIOTECHNOLOGIES (US), INC.

By: ______/s/ Jeff Baxter_____________

Name: Jeff Baxter

Title: Chief Executive Officer

STOCKHOLDER:

Paulson Family LLC

By: ______/s/ Chester L.F. Paulson_____________

Name: Chester L.F. Paulson

Title: Co-Manager

By: ______/s/ Jacqueline Paulson_____________

Name: Jacqueline Paulson

Title: Co-Manager

Number of Shares of Parent Common Stock Beneficially Owned as of the Date of this Agreement: ______________________________

Number of Options Beneficially Owned as of the Date of this Agreement: ____________________

Street Address: __________________________

City/State/Zip Code: ______________________

Fax: ___________________________________

[Signature Page to Voting Agreement]

EX-10

Exhibit 10.6

HUDSON BAY MASTER FUND LTD

May 8, 2014

Paulson Capital (Delaware) Corp.
1331 NW Lovejoy Street, Suite 720

Portland, Oregon 97209

Attn: Trent Davis

Variation Biotechnologies (US), Inc.
222 Third Street, Suite 2241
Cambridge, MA 02142
Attn: Jeff Baxter

Dear Sirs:

This agreement (the “Leak-Out Agreement”) is being delivered to you in connection with that certain Agreement and Plan of Merger (the “Merger Agreement”), dated as of May 8, 2014 (the “Execution Date”), by and among Variation Biotechnologies (US), Inc., a Delaware corporation (the “Company”); Paulson Capital (Delaware) Corp., a Delaware corporation (“Parent”); and VBI Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of Parent (“Merger Sub”).

The undersigned holder (the “Holder”) of securities of Parent (consisting exclusively of (A) securities acquired upon the purchase or exercise of any securities acquired (the “Units”) pursuant to that certain Subscription Agreement dated as of July 25, 2013 (the “SPA”) and (B) securities issued in replacement of the Units and securities issued thereunder upon conversion, exercise, exchange or adjustment pursuant to the Merger Agreement, on an as-converted, or as-exercised basis, if applicable, and without regard to any limitations on conversion or exercise applicable thereto, if any, collectively, the “Restricted Securities”), in each case, as described on the signature page of the undersigned holder, agrees with Parent and the Company as follows:

During the period commencing on the Execution Date and ending on the earlier of: (a) the time of consummation of the merger contemplated by the Merger Agreement (the “Merger Time”, and such merger, the “Merger”), (b) the termination of the Merger Agreement by any party thereto, (c) September 23, 2014 (the “Merger Deadline”) or (d) any breach by Parent of any term of this Leak-Out Agreement or Section 2(d) of the SPA (Favored Nations Provision), if not cured within 5 business days following delivery of written notice of such breach by Holder to Parent (“Cured”), neither the Holder, nor any of its Affiliates, successors or assigns, collectively, shall (i) sell more than the Pre-Merger Sale Limit (as defined below) of Restricted Securities in any calendar month or (ii) sell any Restricted Securities for less than $1.00 per share (subject to adjustment for any stock splits or combinations, stock dividends, recapitalizations or similar events); provided, that the forgoing restrictions shall not apply to any sale of Restricted Securities at a price equal to or greater than $3.00 per share (subject to adjustment for any stock splits or combinations, stock dividends, recapitalizations or similar events).

If the Merger Time occurs prior to the Merger Deadline, then during the period commencing at the Merger Time and ending on the earlier of: (a) the 180th calendar day immediately following the calendar day on which the Merger Time occurs, (b) the time of filing with the Securities and Exchange Commission by Parent (or any of its subsidiaries) of any registration statement (other than on Form S-8), including without limitation, Form S-1, S-4 or S-3, with respect to the issuance or resale of any securities of Parent (or any of its subsidiaries) (other than a registration statement solely registering Restricted Securities held by an original Unit purchaser under the SPA or their respective Affiliates, successors or assigns (c) the time of release (whether by termination of an applicable leak-out agreement or otherwise), in whole or in part, of any securities of Parent from all, or any part, of any leak-out agreement, transfer or sale restrictions set forth in any other leak-out agreement entered into in connection with the Merger or otherwise or (d) any breach by Parent of any term of this Leak-Out Agreement that is not Cured, neither the Holder, nor any of its Affiliates, collectively, shall (i) sell more than the Post-Merger Sale Limit (as defined below) of Restricted Securities in any calendar month or (ii) sell any Restricted Securities for less than $0.50 per share (subject to adjustment for any stock splits or combinations, stock dividends, recapitalizations or similar events); provided, that the forgoing restrictions shall not apply to any sale of Restricted Securities at a price equal to or greater than $3.00 per share (subject to adjustment for any stock splits or combinations, stock dividends, recapitalizations or similar events).

For the purpose of this Leak-Out Agreement, the following definitions shall apply:

“Affiliate” means, with respect to any specified Person, (x) any other Person who or which, directly or indirectly, controls, is controlled by, or is under common control with such specified Person, including, without limitation, any partner, officer, director, member of such Person and any fund now or hereafter existing that is controlled by or under common control with one or more general partners or managing members of, or shares the same management company with, such Person or (y) if such Person is a natural person, such Person’s spouse, lineal descendant (including any adopted child or adopted grandchild) or other family member, or a custodian or trustee of any trust, partnership or limited liability company for the benefit of, in whole or in part, or the ownership interests of which are, directly or indirectly, controlled by, such Person or any other member or members of such Person’s family.

“Cumulative Unsold Amount” means, with respect to any date of determination, the difference of (i) Eight Hundred Thousand (800,000) Restricted Securities (on an as converted to common stock basis and subject to adjustment for any stock splits or combinations, stock dividends, recapitalizations or similar events), less (ii) the aggregate number of Restricted Securities sold by the Holder and its Affiliates, successors and assigns, collectively (subject to adjustment for any stock splits or combinations, stock dividends, recapitalizations or similar events), in the calendar month immediately prior to the calendar month in which such date of determination occurs.

“Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity and any governmental or any department or agency thereof.

“Post-Merger Sale Limit” means, with respect to any date of determination, such number of Restricted Securities equal to the greater of (i) Five Hundred Thousand (500,000) Restricted Securities (on an as converted to common stock basis and subject to adjustment for any stock splits or combinations, stock dividends, recapitalizations or similar events) or (ii) the Cumulative Unsold Amount as of such date of determination, in each case prorated for the first partial month, if any, and the last partial month, if any, in such period in which the date of determination occurs.

“Pre-Merger Sale Limit” means, with respect to any date of determination, such number of Restricted Securities equal to the greater of (i) Four Hundred Thousand (400,000) Restricted Securities (on an as converted to common stock basis and subject to adjustment for any stock splits or combinations, stock dividends, recapitalizations or similar events) or (ii) the Cumulative Unsold Amount as of such date of determination, in each case prorated for the first partial month, if any, and the last partial month, if any, in such period in which the date of determination occurs.

Notwithstanding anything herein to the contrary, on or after the date hereof, the Holder may, directly or indirectly, sell or transfer all, or any part, of the Restricted Securities (or any securities convertible or exercisable into Restricted Securities, as applicable) to any Person (an “Assignee”) without complying with (or otherwise limited by) the restrictions set forth in this Leak-Out Agreement; provided, that as a condition to any such sale or transfer an authorized signatory of the Company, Parent and such Assignee duly execute and deliver a leak-out agreement in the form of this Leak-Out Agreement with respect to such transferred Restricted Securities (or such securities convertible or exercisable into Restricted Securities, as applicable) (an “Assignee Agreement”) and sales of Holder and its Affiliates and all Assignees shall be aggregated for all purposes of this Leak-Out Agreement and all Assignee Agreements.

Parent represents and warrants to the Company that none of the Unit purchasers, nor any of their respective Affiliates, have purchased securities of Parent from Parent other than the Restricted Securities.  The Holder represents and warrants to the Company that neither the Holder, nor any of its respective Affiliates, have purchased securities of Parent from Parent other than the Restricted Securities.

Parent further represents and warrants as of the date hereof and covenants and agrees from and after the date hereof that none of the terms offered to any Person entering into a Leak-Out agreement who is a Unit Purchaser under the SPA (or in connection with any lockup or leak-out agreement entered in connection with the Merger Agreement or the Merger) (collectively, “Other Agreement”) with respect to any consent, release, amendment, settlement or waiver of the terms, conditions or transactions herein or in such Other Agreement, is or will be more favorable to such Person than those set forth in this Leak-Out Agreement or provided to any Person unless the provisions of this paragraph are complied with. If, and whenever on or after the date hereof, Parent desires to provide terms which might affect any of the actions prohibited in the immediately preceding sentence, then (i) Parent shall provide the Holder with notice thereof (x) at least two (2) business days prior to such date and (y) upon the consummation thereof the terms and conditions of this Leak-Out Agreement shall be, without any further action by the Holder or Parent, automatically amended and modified in an economically and legally equivalent manner such that the Holder shall receive the benefit of the more favorable terms and/or conditions (as the case may be), provided that upon written notice to Parent at any time prior to the expiration of such two (2) business day period the Holder may elect not to accept the benefit of any such amended or modified term or condition, in which event the term or condition contained in this Leak-Out Agreement shall continue to apply to the Holder as it was in effect immediately prior to such amendment or modification as if such amendment or modification never occurred with respect to the Holder, provided, further, that the on and following the execution of the Merger Agreement, until the Merger has occurred or the Merger Agreement is terminated without such a closing, Company must agree in writing to any such action prior to Parent taking such action. Notwithstanding anything herein to the contrary, no agreement with the purchasers of Parent’s common stock issued pursuant to those certain Subscription Agreements dated as of January 29, 2014 in the aggregate amount of $250,000 (any such agreement, a “January PIPE Investor Agreement”) shall constitute an Other Agreement requiring any notice or adjustment hereunder, provided, however, that such January PIPE Investor Agreement is not amended, modified or waived subsequent to its original date of effectiveness, in which case, such January PIPE Investor Agreement shall thereafter constitute an Other Agreement for purposes hereunder.

Upon Parent filing a Current Report on Form 8-K and a preliminary Proxy Statement on Schedule 14A with the Securities and Exchange Commission describing all the material terms of the transactions contemplated by the Merger Agreement, including, without limitation, this Leak-Out Agreement, in the forms required by the Securities Exchange Act of 1934, as amended, and attaching this form of Leak-Out Agreement as an exhibit thereto, which Parent agrees to file with the Securities and Exchange Commission no later than four (4) business days following the Execution Date, Parent shall have disclosed all material, non-public information (if any) delivered prior to the Merger Time to the Holder by Parent or any of its subsidiaries, or any of their respective officers, directors, employees or agents in connection with the transactions contemplated by the Merger Agreement and this Leak-Out Agreement.

Provided there have been no changes in applicable law, rule, or regulation or interpretation by the Staff of the Securities and Exchange Commission following the Execution Date, Parent agrees not to take any position contrary to that of the holding period of the Restricted Securities tacking back to July 25, 2013, the original issue date of the Restricted Securities (or, as applicable, such securities convertible or exercisable into Restricted Securities (assuming for such purpose that any warrants to purchase Common Stock of Parent, if any, are exercised on a cashless basis)). Parent shall use reasonable best efforts to cause Parent’s transfer agent to timely obtain and process (at Parent’s sole cost and expense) such opinions of counsel (the “Opinion Firm”) as Parent’s transfer agent may require or request in connection with the removal of any restrictive legend and Parent shall provide such required undertakings, certificates, documentation and additional information as such transfer agent and Opinion Firm shall require in connection with such activities. As a condition to the issuance of each such opinion and transfer agent actions, Parent and its counsel shall have the right to require that Holder timely execute an attestation as to Holder not being an Affiliate of Parent and that the Holder (and its Affiliates, successors and assigns) have fully complied with the terms applicable to Holder under this Leak-Out Agreement and reasonable evidence of such compliance.

This Leak-Out Agreement shall not be effective unless signed and delivered by all Holders of Units acquired pursuant to the SPA.

Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Leak-Out Agreement must be in writing.

This Leak-Out Agreement constitutes the entire agreement among the parties hereto with respect to the subject matter hereof and supersedes all prior negotiations, letters and understandings relating to the subject matter hereof and are fully binding on the parties hereto.

This Leak-Out Agreement may be executed simultaneously in any number of counterparts. Each counterpart shall be deemed to be an original, and all such counterparts shall constitute one and the same instrument. This Leak-Out Agreement may be executed and accepted by facsimile or PDF signature and any such signature shall be of the same force and effect as an original signature.

The terms of this Leak-Out Agreement shall be binding upon and shall inure to the benefit of each of the parties hereto and their respective successors and assigns.

This Leak-Out Agreement may not be amended or modified except in writing signed by each of the parties hereto.

All questions concerning the construction, validity, enforcement and interpretation of this letter agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in The City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper.

Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this letter agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party hereby irrevocably waives any right it may have, and agrees not to request, a jury trial for the adjudication of any dispute hereunder or in connection with or arising out of this letter agreement or any transaction contemplated hereby. 

Each party hereto acknowledges that, in view of the uniqueness of the transactions contemplated by this letter agreement, the other parties hereto would not have an adequate remedy at law for money damages in the event that this Leak-Out Agreement has not been performed in accordance with its terms, and therefore agrees that such other parties shall be entitled to specific enforcement of the terms hereof in addition to any other remedy to which it may be entitled, at law or in equity

Very truly yours,

HUDSON BAY MASTER FUND LTD

Exact Name of Securityholder

__/s/ Yoav Roth ___________

Authorized Signature

______________________________

Title: Authorized Signatory

List of Restricted Securities:

______________________________

______________________________

______________________________

______________________________

Agreed to and Acknowledged:

PAULSON CAPITAL (DELAWARE) CORP.

By: ___/s/ Trent Davis____________________

       Name: Trent Davis

       Title: President

VARIATION BIOTECHNOLOGIES (US), INC.

By: __/s/_J. Baxter____________________

       Name: J.R. Baxter

       Title: President and CEO

EX-10

Exhibit 10.7

DKR VENTURES, LLC

May 8, 2014

Paulson Capital (Delaware) Corp.
1331 NW Lovejoy Street, Suite 720

Portland, Oregon 97209

Attn: Trent Davis

Variation Biotechnologies (US), Inc.
222 Third Street, Suite 2241
Cambridge, MA 02142
Attn: Jeff Baxter

Dear Sirs:

This agreement (the “Leak-Out Agreement”) is being delivered to you in connection with that certain Agreement and Plan of Merger (the “Merger Agreement”), dated as of May 8, 2014 (the “Execution Date”), by and among Variation Biotechnologies (US), Inc., a Delaware corporation (the “Company”); Paulson Capital (Delaware) Corp., a Delaware corporation (“Parent”); and VBI Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of Parent (“Merger Sub”).

The undersigned holder (the “Holder”) of securities of Parent (consisting exclusively of (A) securities acquired upon the purchase or exercise of any securities acquired (the “Units”) pursuant to that certain Subscription Agreement dated as of July 25, 2013 (the “SPA”) and (B) securities issued in replacement of the Units and securities issued thereunder upon conversion, exercise, exchange or adjustment pursuant to the Merger Agreement, on an as-converted, or as-exercised basis, if applicable, and without regard to any limitations on conversion or exercise applicable thereto, if any, collectively, the “Restricted Securities”), in each case, as described on the signature page of the undersigned holder, agrees with Parent and the Company as follows:

During the period commencing on the Execution Date and ending on the earlier of: (a) the time of consummation of the merger contemplated by the Merger Agreement (the “Merger Time”, and such merger, the “Merger”), (b) the termination of the Merger Agreement by any party thereto, (c) September 23, 2014 (the “Merger Deadline”) or (d) any breach by Parent of any term of this Leak-Out Agreement or Section 2(d) of the SPA (Favored Nations Provision), if not cured within 5 business days following delivery of written notice of such breach by Holder to Parent (“Cured”), neither the Holder, nor any of its Affiliates, successors or assigns, collectively, shall (i) sell more than the Pre-Merger Sale Limit (as defined below) of Restricted Securities in any calendar month or (ii) sell any Restricted Securities for less than $1.00 per share (subject to adjustment for any stock splits or combinations, stock dividends, recapitalizations or similar events); provided, that the forgoing restrictions shall not apply to any sale of Restricted Securities at a price equal to or greater than $3.00 per share (subject to adjustment for any stock splits or combinations, stock dividends, recapitalizations or similar events).

If the Merger Time occurs prior to the Merger Deadline, then during the period commencing at the Merger Time and ending on the earlier of: (a) the 180th calendar day immediately following the calendar day on which the Merger Time occurs, (b) the time of filing with the Securities and Exchange Commission by Parent (or any of its subsidiaries) of any registration statement (other than on Form S-8), including without limitation, Form S-1, S-4 or S-3, with respect to the issuance or resale of any securities of Parent (or any of its subsidiaries) (other than a registration statement solely registering Restricted Securities held by an original Unit purchaser under the SPA or their respective Affiliates, successors or assigns (c) the time of release (whether by termination of an applicable leak-out agreement or otherwise), in whole or in part, of any securities of Parent from all, or any part, of any leak-out agreement, transfer or sale restrictions set forth in any other leak-out agreement entered into in connection with the Merger or otherwise or (d) any breach by Parent of any term of this Leak-Out Agreement that is not Cured, neither the Holder, nor any of its Affiliates, collectively, shall (i) sell more than the Post-Merger Sale Limit (as defined below) of Restricted Securities in any calendar month or (ii) sell any Restricted Securities for less than $0.50 per share (subject to adjustment for any stock splits or combinations, stock dividends, recapitalizations or similar events); provided, that the forgoing restrictions shall not apply to any sale of Restricted Securities at a price equal to or greater than $3.00 per share (subject to adjustment for any stock splits or combinations, stock dividends, recapitalizations or similar events).

For the purpose of this Leak-Out Agreement, the following definitions shall apply:

“Affiliate” means, with respect to any specified Person, (x) any other Person who or which, directly or indirectly, controls, is controlled by, or is under common control with such specified Person, including, without limitation, any partner, officer, director, member of such Person and any fund now or hereafter existing that is controlled by or under common control with one or more general partners or managing members of, or shares the same management company with, such Person or (y) if such Person is a natural person, such Person’s spouse, lineal descendant (including any adopted child or adopted grandchild) or other family member, or a custodian or trustee of any trust, partnership or limited liability company for the benefit of, in whole or in part, or the ownership interests of which are, directly or indirectly, controlled by, such Person or any other member or members of such Person’s family.

“Cumulative Unsold Amount” means, with respect to any date of determination, the difference of (i) Eight Hundred Thousand (800,000) Restricted Securities (on an as converted to common stock basis and subject to adjustment for any stock splits or combinations, stock dividends, recapitalizations or similar events), less (ii) the aggregate number of Restricted Securities sold by the Holder and its Affiliates, successors and assigns, collectively (subject to adjustment for any stock splits or combinations, stock dividends, recapitalizations or similar events), in the calendar month immediately prior to the calendar month in which such date of determination occurs.

“Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity and any governmental or any department or agency thereof.

“Post-Merger Sale Limit” means, with respect to any date of determination, such number of Restricted Securities equal to the greater of (i) Five Hundred Thousand (500,000) Restricted Securities (on an as converted to common stock basis and subject to adjustment for any stock splits or combinations, stock dividends, recapitalizations or similar events) or (ii) the Cumulative Unsold Amount as of such date of determination, in each case prorated for the first partial month, if any, and the last partial month, if any, in such period in which the date of determination occurs.

“Pre-Merger Sale Limit” means, with respect to any date of determination, such number of Restricted Securities equal to the greater of (i) Four Hundred Thousand (400,000) Restricted Securities (on an as converted to common stock basis and subject to adjustment for any stock splits or combinations, stock dividends, recapitalizations or similar events) or (ii) the Cumulative Unsold Amount as of such date of determination, in each case prorated for the first partial month, if any, and the last partial month, if any, in such period in which the date of determination occurs.

Notwithstanding anything herein to the contrary, on or after the date hereof, the Holder may, directly or indirectly, sell or transfer all, or any part, of the Restricted Securities (or any securities convertible or exercisable into Restricted Securities, as applicable) to any Person (an “Assignee”) without complying with (or otherwise limited by) the restrictions set forth in this Leak-Out Agreement; provided, that as a condition to any such sale or transfer an authorized signatory of the Company, Parent and such Assignee duly execute and deliver a leak-out agreement in the form of this Leak-Out Agreement with respect to such transferred Restricted Securities (or such securities convertible or exercisable into Restricted Securities, as applicable) (an “Assignee Agreement”) and sales of Holder and its Affiliates and all Assignees shall be aggregated for all purposes of this Leak-Out Agreement and all Assignee Agreements.

Parent represents and warrants to the Company that none of the Unit purchasers, nor any of their respective Affiliates, have purchased securities of Parent from Parent other than the Restricted Securities.  The Holder represents and warrants to the Company that neither the Holder, nor any of its respective Affiliates, have purchased securities of Parent from Parent other than the Restricted Securities.

Parent further represents and warrants as of the date hereof and covenants and agrees from and after the date hereof that none of the terms offered to any Person entering into a Leak-Out agreement who is a Unit Purchaser under the SPA (or in connection with any lockup or leak-out agreement entered in connection with the Merger Agreement or the Merger) (collectively, “Other Agreement”) with respect to any consent, release, amendment, settlement or waiver of the terms, conditions or transactions herein or in such Other Agreement, is or will be more favorable to such Person than those set forth in this Leak-Out Agreement or provided to any Person unless the provisions of this paragraph are complied with. If, and whenever on or after the date hereof, Parent desires to provide terms which might affect any of the actions prohibited in the immediately preceding sentence, then (i) Parent shall provide the Holder with notice thereof (x) at least two (2) business days prior to such date and (y) upon the consummation thereof the terms and conditions of this Leak-Out Agreement shall be, without any further action by the Holder or Parent, automatically amended and modified in an economically and legally equivalent manner such that the Holder shall receive the benefit of the more favorable terms and/or conditions (as the case may be), provided that upon written notice to Parent at any time prior to the expiration of such two (2) business day period the Holder may elect not to accept the benefit of any such amended or modified term or condition, in which event the term or condition contained in this Leak-Out Agreement shall continue to apply to the Holder as it was in effect immediately prior to such amendment or modification as if such amendment or modification never occurred with respect to the Holder, provided, further, that the on and following the execution of the Merger Agreement, until the Merger has occurred or the Merger Agreement is terminated without such a closing, Company must agree in writing to any such action prior to Parent taking such action. Notwithstanding anything herein to the contrary, no agreement with the purchasers of Parent’s common stock issued pursuant to those certain Subscription Agreements dated as of January 29, 2014 in the aggregate amount of $250,000 (any such agreement, a “January PIPE Investor Agreement”) shall constitute an Other Agreement requiring any notice or adjustment hereunder, provided, however, that such January PIPE Investor Agreement is not amended, modified or waived subsequent to its original date of effectiveness, in which case, such January PIPE Investor Agreement shall thereafter constitute an Other Agreement for purposes hereunder.

Upon Parent filing a Current Report on Form 8-K and a preliminary Proxy Statement on Schedule 14A with the Securities and Exchange Commission describing all the material terms of the transactions contemplated by the Merger Agreement, including, without limitation, this Leak-Out Agreement, in the forms required by the Securities Exchange Act of 1934, as amended, and attaching this form of Leak-Out Agreement as an exhibit thereto, which Parent agrees to file with the Securities and Exchange Commission no later than four (4) business days following the Execution Date, Parent shall have disclosed all material, non-public information (if any) delivered prior to the Merger Time to the Holder by Parent or any of its subsidiaries, or any of their respective officers, directors, employees or agents in connection with the transactions contemplated by the Merger Agreement and this Leak-Out Agreement.

Provided there have been no changes in applicable law, rule, or regulation or interpretation by the Staff of the Securities and Exchange Commission following the Execution Date, Parent agrees not to take any position contrary to that of the holding period of the Restricted Securities tacking back to July 25, 2013, the original issue date of the Restricted Securities (or, as applicable, such securities convertible or exercisable into Restricted Securities (assuming for such purpose that any warrants to purchase Common Stock of Parent, if any, are exercised on a cashless basis)). Parent shall use reasonable best efforts to cause Parent’s transfer agent to timely obtain and process (at Parent’s sole cost and expense) such opinions of counsel (the “Opinion Firm”) as Parent’s transfer agent may require or request in connection with the removal of any restrictive legend and Parent shall provide such required undertakings, certificates, documentation and additional information as such transfer agent and Opinion Firm shall require in connection with such activities. As a condition to the issuance of each such opinion and transfer agent actions, Parent and its counsel shall have the right to require that Holder timely execute an attestation as to Holder not being an Affiliate of Parent and that the Holder (and its Affiliates, successors and assigns) have fully complied with the terms applicable to Holder under this Leak-Out Agreement and reasonable evidence of such compliance.

This Leak-Out Agreement shall not be effective unless signed and delivered by all Holders of Units acquired pursuant to the SPA.

Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Leak-Out Agreement must be in writing.

This Leak-Out Agreement constitutes the entire agreement among the parties hereto with respect to the subject matter hereof and supersedes all prior negotiations, letters and understandings relating to the subject matter hereof and are fully binding on the parties hereto.

This Leak-Out Agreement may be executed simultaneously in any number of counterparts. Each counterpart shall be deemed to be an original, and all such counterparts shall constitute one and the same instrument. This Leak-Out Agreement may be executed and accepted by facsimile or PDF signature and any such signature shall be of the same force and effect as an original signature.

The terms of this Leak-Out Agreement shall be binding upon and shall inure to the benefit of each of the parties hereto and their respective successors and assigns.

This Leak-Out Agreement may not be amended or modified except in writing signed by each of the parties hereto.

All questions concerning the construction, validity, enforcement and interpretation of this letter agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in The City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper.

Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this letter agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party hereby irrevocably waives any right it may have, and agrees not to request, a jury trial for the adjudication of any dispute hereunder or in connection with or arising out of this letter agreement or any transaction contemplated hereby. 

Each party hereto acknowledges that, in view of the uniqueness of the transactions contemplated by this letter agreement, the other parties hereto would not have an adequate remedy at law for money damages in the event that this Leak-Out Agreement has not been performed in accordance with its terms, and therefore agrees that such other parties shall be entitled to specific enforcement of the terms hereof in addition to any other remedy to which it may be entitled, at law or in equity

Very truly yours,

DKR VENTURES, LLC

__/s/ Barry Honig ___________

Barry Honig, Sole Member

List of Restricted Securities:

______________________________

______________________________

______________________________

______________________________

Agreed to and Acknowledged:

PAULSON CAPITAL (DELAWARE) CORP.

By: ___/s/ Trent Davis____________________

       Name: Trent Davis

       Title: President

VARIATION BIOTECHNOLOGIES (US), INC.

By: __/s/_J. Baxter____________________

       Name: J.R. Baxter

       Title: President and CEO

EX-10

Exhibit 10.9

EMPLOYMENT AGREEMENT

This Employment Agreement (the “Agreement”) is made as of the 8^th day of May, 2014 by and between Jeff Baxter, on the one hand (the “Executive”), and Paulson Capital (Delaware) Corp., a Delaware corporation (the “Company”), on the other hand.

WHEREAS, the Company and the Executive desire to set forth, in a definitive employment agreement, their respective rights and obligations with respect to the Executive’s employment by the Company upon the closing of the merger (the “Merger”) contemplated by that certain Agreement and Plan of Merger, dated as of the date of this Agreement, by and among the Company, Variation Biotechnologies (US), Inc., a Delaware corporation (“VBI”), and VBI Acquisition Corp., a Delaware corporation and wholly-owned subsidiary of the Company (“Merger Sub”), whereby VBI shall merge with and into Merger Sub, with VBI becoming the surviving corporation and a wholly-owned subsidiary of the Company (the “Merger Agreement”);

WHEREAS, the Executive’s employment by the Company shall not commence until the closing of the Merger (the “Effective Time”); and

WHEREAS, the Executive will be a key employee of the Company, with significant access to information concerning the Company, its subsidiaries and their respective businesses, and the disclosure or misuse of such information or the engaging in competitive activities by the Executive would cause substantial harm to the Company.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1.     Employment. The Company agrees to employ the Executive, and the Executive agrees to accept such employment, upon the terms and conditions hereinafter set forth.

2.     Term. The Executive’s employment shall commence at the Effective Time and shall continue until termination by either party in accordance with Section 10 of this Agreement.

3.     Duties. The Executive will serve as President & Chief Executive Officer of the Company and shall have such duties of a senior executive nature as the Board of Directors of the Company (the “Board”) shall determine from time to time. The Executive shall report to the Board and, for so long as Executive serves as President & Chief Executive Officer, shall also be a member of the Board.

4.     Full Time; Best Efforts. The Executive shall use the Executive’s best efforts to promote the interests of the Company, and shall devote the Executive’s full business time and efforts to its business and affairs. The Executive shall not engage in any other activity which could reasonably be expected to interfere with the performance of the Executive’s duties, services and responsibilities hereunder without the approval of the Board in its sole discretion. Notwithstanding the foregoing, the Executive may continue to serve on an advisory board to GSK DPU (not to exceed 1 day per quarter), provided that the Board is and remains satisfied that such responsibilities do not interfere to any material extent with Executive’s performance of his duties as President & Chief Executive Officer.

5.     Compensation and Benefits. During the term of the Executive’s employment under this Agreement, the Executive shall be entitled to compensation and benefits as follows:

(a)     Base Salary. The Executive shall receive a salary at the rate of $385,000 annually (the “Base Salary”), payable in accordance with regular payroll practices of the Company.

(b)     Bonus.

  (i) Annual Bonus. The Executive shall be eligible to be considered for an annual cash bonus of up to fifty percent (50%) of the Executive’s then applicable Base Salary (the “Bonus”), commencing with the 2014 calendar year (and pro-rated with respect to 2014). Bonus entitlement shall be based on the Executive’s meeting of certain performance objectives, which shall be mutually established by the Executive and the Board within thirty (30) days after the Effective Time and shall be re-established on an annual basis thereafter. Bonus eligibility and entitlement will be at the sole discretion of the Board and will be contingent upon the Executive remaining actively employed with the Company through the date any Bonus is paid. The Bonus will be paid in March of the following calendar year. The Executive shall not be entitled to any portion of any Bonus that might otherwise have been awarded for any calendar year during which the Executive’s employment terminates for any reason. All determinations regarding any Bonus will be made by the Board in its sole discretion.

  (ii) Transaction Bonus. Within thirty (30) days following the closing date of the Merger, the Executive will receive a one-time bonus in the amount of $125,000.

(c)     Temporary Residence and Commuting Expenses. Subject to the terms and conditions of Section 5(d), the Company agrees to reimburse the Executive for reasonable living and travel expenses between the Executive’s Pennsylvania residences and the Company’s main office in Cambridge, MA including (i) rental of a temporary residence in the greater Boston area, and (ii) reasonable commuting expenses, in accordance with the Company’s travel policy, (collectively, “Temporary Residence Expenses”).

(d)     Timing of Expense Reimbursement; Repayment. Payments by the Company of the Executive’s Temporary Residence Expenses shall be made within thirty (30) days of demand thereof. All such payments shall be subject to presentation to the Company’s Chief Financial Officer of documentation, expense statements, vouchers and/or such other supporting documentation as approved by or in accordance with policies established by the Board.

(e)     Benefits/Business Expense Reimbursement. In addition to the Base Salary, the Bonus, and the payment of Temporary Residence Expenses, the Executive shall be entitled to receive customary benefits that are generally available to employees of the Company in accordance with the then-existing terms and conditions of its benefits policies. The Executive’s benefits will include (i) four (4) weeks of paid vacation per year, which will accrue monthly, (ii) term life insurance with a death benefit in the amount of the Base Salary payable to a beneficiary designated by the Executive, (iii) standard short and long term disability benefits, (iv) standard health insurance benefits, and (v) participation in the Company’s 401(k) plan. Other than the 401(k) plan, the Company shall not be required to provide any pension or retirement benefits to the Executive. In the event the Executive receives payments from the disability insurer, the Company shall have the right to offset such payments against the Base Salary otherwise payable to Executive during the period for which such payments are made. The Executive represents and warrants that he has no reason to believe that he is not insurable with a reputable insurance company for the limits of the coverage discussed herein.

If the Executive is deemed to be uninsurable for any of the coverage discussed herein, the Company shall not be deemed to be in breach of this Agreement for failing to provide such coverage. The Company may change any benefits contractor, in its sole discretion, and any such change will not be a breach of this Agreement. The Executive shall be entitled to reimbursement of all reasonable expenses incurred in the ordinary course of business on behalf of the Company, subject to the presentation of appropriate supporting documentation, expense statements, vouchers and/or such other supporting documentation as approved by or in accordance with policies established by the Board.

(f)     Withholding. The Company may withhold from any compensation payable to the Executive all applicable U.S. withholding and employment taxes and other statutory deductions.

(g)     Stock Options. While the Executive remains an employee of the Company, option grants to the Executive may be granted at such times as the Board shall deem appropriate. The amount and vesting terms related to any such grant shall be in the discretion of the Board. Any options granted to the Executive shall be subject to the terms and conditions of the equity incentive plan of the Company pursuant to which such options are granted and the applicable award agreement thereunder (if any), save and except that (A) the vesting of any such option shall accelerate fully if the Executive is terminated without Cause, is terminated during the period that begins when negotiations with an unrelated third party for a Change of Control begin and ends on the twelve (12) month anniversary of the closing of the Change of Control transaction (“Change of Control Termination”) or terminates his employment for Good Reason, and (B) if the Executive is terminated for Cause under clause (v) of the definition of Cause hereunder (i.e. failure to meet performance expectations of the Board), the Executive shall have a period of three (3) months following such termination to exercise any outstanding vested options before the exercise period of such vested options expires.

6.     Confidentiality; Intellectual Property. The Executive agrees that during the Executive’s employment with the Company, whether or not under this Agreement, and at all times thereafter:

(a)     The Executive will not at any time, directly or indirectly, disclose or divulge any Confidential Information (as hereinafter defined), except as required in connection with the performance of the Executive’s duties for the Company, and except to the extent required by law (but only after the Executive has provided the Company with reasonable notice and opportunity to take action against any legally required disclosure). As used herein, “Confidential Information” means all trade secrets and all other information of a business, financial, marketing, technical or other nature relating to the business of the Company including, without limitation, any customer or vendor lists, prospective customer names, financial statements and projections, know-how, pricing policies, operational methods, methods of doing business, technical processes, formulae, designs and design projects, inventions, computer hardware, software programs, business plans and projects pertaining to the Company and including any information of others that the Company has agreed to keep confidential; provided, however, that Confidential Information shall not include any information that has entered or enters the public domain through (i) no fault of the Executive, and (ii) no breach by any other current or former employee of his/her confidentiality obligations to the Company.

(b)     The Executive shall make no use whatsoever, directly or indirectly, of any Confidential Information at any time, except as required in connection with the performance of the Executive’s duties for the Company.

(c)     Upon the Executive’s termination of employment for any reason, and upon the request of the Company at any time and for any reason, the Executive shall immediately deliver to the Company all materials (including all electronic and hard copies) in the Executive’s possession which contain or relate to Confidential Information.

(d)     All inventions, modifications, discoveries, designs, developments, improvements, processes, software programs, works of authorship, documentation, formulae, data, techniques, know-how, secrets or intellectual property rights or any interest therein (collectively, the “Developments”) made by the Executive, either alone or in conjunction with others, at any time or at any place during the Executive’s employment with the Company, whether or not reduced to writing or practice during such period of employment, which relate to the business in which the Company is engaged or in which the Company intends to engage, shall be and hereby are the exclusive property of the Company, without any further compensation to the Executive. In addition, without limiting the generality of the prior sentence, all Developments which are copyrightable work by the Executive are intended to be “work made for hire” and shall be and hereby are the property of the Company.

(e)     The Executive shall promptly disclose any Developments to the Company. If any Development is not the property of the Company by operation of law, this Agreement or otherwise, the Executive will, and hereby does, assign to the Company all right, title and interest in such Development, without further consideration, and will assist the Company and its nominees in every way, at the expense of the Company, to secure, maintain and defend its rights in such Development. The Executive shall sign all instruments necessary for the filing and prosecution of any applications for, or extension or renewals of, letters patent (or other intellectual property registrations or filings) of the United States, Canada or any other country in which the Company desires to file and that relates to any Development. The Executive hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as such Executive’s agent and attorney-in-fact (which designation and appointment shall be deemed coupled with an interest and shall survive the Executive’s death or incapacity), to act for and on the Executive’s behalf to execute and file any such applications, extensions or renewals and to do all other lawfully permitted acts to further the prosecution and issuance of such letters patent, other intellectual property registrations or filings, or such other similar documents with the same legal force and effect as if executed by the Executive.

(f)     Attached hereto as Exhibit A is a list of all inventions, modifications, discoveries, designs, developments, improvements, processes, software programs, works of authorship, documentation, formulae, data, techniques, know-how, secrets or intellectual property rights or any interest therein made by the Executive prior to the date of this Agreement (collectively, the “Prior Inventions”), which belong to the Executive and which relate to the business or reasonably anticipated business of the Company and which are not assigned to the Company hereunder; or, if no such list is attached, the Executive represents that there are no such Prior Inventions.

If in the course of the Executive’s employment with the Company, the Executive incorporates into a Company product, process, or machine a Prior Invention owned by the Executive or in which the Executive has an interest, the Company is hereby granted and shall have a non-exclusive, royalty-free, irrevocable, perpetual, transferable, worldwide license to make, have made, modify, use, sell, and otherwise exploit such Prior Invention as part of or in connection with such product, process or machine, or any enhancements or extensions thereof.

(g)     The Executive waives in whole all moral rights which he may have in the Developments, including the right to the integrity of the Developments, the right to be associated with the Developments, the right to restrain or claim damages for any distortion, mutilation or other modification of the Developments, and the right to restrain use or reproduction of the Developments in any context and in connection with any product, service, cause or institution. The Executive agrees to confirm such waiver from time to time as requested by the Company.

7.     Non-competition. The Executive acknowledges and agrees that the consideration for the following covenants is the Company’s agreement to provide Severance (as defined in Section 10 below) in the event of the Executive’s termination without Cause (other than as a result of the death or Disability of the Executive) or by the Executive for Good Reason. The Executive agrees that, during the Executive’s employment with the Company and for one year thereafter, irrespective of whether the Executive resigns or is terminated either with or without Cause, the Executive will not, directly or indirectly, individually or as a consultant to, or an employee, officer, director, manager, stockholder (except as a stockholder owning less than one percent (1%) of the shares of a corporation whose shares are traded on a national securities exchange), partner, member, or other owner or participant in any business entity other than the Company:

(a)     carry on, participate in, or engage in any business that competes directly with the Business of the Company in the United States or Canada. For purposes of this Agreement, the term “Business of the Company” means the research, development or commercialization of virus-like particle vaccines for prophylactic and therapeutic use in both humans and animals;

(b)     solicit, employ, hire, endeavor to entice away from the Company, or offer employment or any consulting arrangement to, any person or entity who is, or was within the one-year period immediately prior thereto, employed by, or a consultant to, the Company; or

(c)     solicit or endeavor to entice away from the Company, any person or entity who is, or was within the one-year period immediately prior thereto, a customer or client of, supplier to, or other party having material business relations with the Company;

provided, however; that if the Executive is terminated for Cause under clause (v) of the definition of Cause hereunder (i.e. failure to meet performance expectations of the Board), the non-competition requirement of this Section 7 shall not apply.

8.     Remedies. Without limiting the remedies available to the Company, the Executive acknowledges that a breach of any of the covenants contained in Sections 6 or 7 herein could result in irreparable injury to the Company for which there might be no adequate remedy at law, and that, in the event of such a breach or threat thereof, the Company shall be entitled to obtain a temporary restraining order and/or a preliminary injunction and a permanent injunction restraining the Executive from engaging in any activities prohibited by Sections 6 or 7 herein or such other equitable relief as may be required to enforce specifically any of the covenants of Sections 6 or 7 herein. For purposes of Sections 6, 7, and 8 of this Agreement, the term “Company” shall include Variation Biotechnologies, Inc., a corporation incorporated under the Canada Business Corporation Act, the Company, their respective subsidiaries and affiliated companies, and the respective successors and assigns of each of the foregoing.

9.     Review of Agreement; Reasonable Restrictions. The Executive: (a) has carefully read and understands all of the provisions of this Agreement and has had the opportunity for this Agreement to be reviewed by counsel; (b) is voluntarily entering into this Agreement; (c) has not relied upon any representation or statement made by the Company (or its subsidiaries, affiliates, equity holders, agents, representatives, employees, or attorneys) with regard to the subject matter or effect of this Agreement; (d) acknowledges that the duration, geographical scope, and subject matter of Sections 6, 7, and 8 of this Agreement are reasonable and necessary given the Executive’s unique position within the Company and special knowledge of the Company and its customers; (e) acknowledges that the duration, geographical scope, and subject matter of Sections 6, 7, and 8 of this Agreement are reasonable and necessary to protect the goodwill, customer relationships, legitimate business interests, and Confidential Information of the Company and its affiliates, and that the Company would not have entered into this Agreement without the benefit of such provisions; (f) acknowledges the significant consideration which he is receiving for entering into this Agreement; and (g) will be able to earn a satisfactory livelihood without violating this Agreement.

10.   Termination.

(a)     General. The Executive’s employment with the Company may be terminated at any time by the Company with Cause or without Cause.

(b)     Disability. The Executive’s employment with the Company may be terminated at any time by the Company in the event of the Disability of the Executive.

(c)     Change of Control. For purposes of this Agreement, the term “Change of Control” shall mean the sale or disposition by Company to an unrelated third party of substantially all of its business or assets, or the sale of the capital stock of the Company in connection with the sale or transfer of a controlling interest in the Company to an unrelated third party, or the merger or consolidation of the Company with another corporation as part of a sale or transfer of a controlling interest in the Company to an unrelated third party. For purposes of this definition, the term “controlling interest” means the sale or transfer of the Company’s securities representing more 50% of the voting power.

(d)     Definitions. As used herein, the following terms shall have the following meanings:

“Cause” means that, in the good faith and reasonable determination of the Board, the Executive has (i) breached any fiduciary duty or legal or contractual obligation to the Company or any of its subsidiaries or affiliates, where written notice is given to the Executive and the Executive does not cure the breach within fourteen (14) days; (ii) engaged in gross negligence, willful misconduct, fraud, embezzlement, acts of dishonesty, or a conflict of interest relating to the affairs of the Company or any of its subsidiaries or affiliates; (iii) been convicted of or pleaded nolo contendere to: (A) any misdemeanor relating to the affairs of the Company or any of its subsidiaries or affiliates (with the exception of minor misdemeanors not involving moral turpitude); or (B) any felony or indictable offence; (iv) engaged in a violation of any federal or state laws (with the exception of minor misdemeanors not involving moral turpitude), or federal or state securities laws; or (v) the Executive has materially failed to meet minimum performance expectations of the Board after reasonable notice of the material performance deficiency and a reasonable opportunity to remedy such deficiency.

“Good Reason” means (i) a material breach of any material provision of this Agreement, which breach is not cured by the Company within thirty (30) days after receipt of written notice thereof from the Executive; or (ii) the assignment of duties or responsibilities to the Executive by the Board, which are inconsistent in a material and adverse respect with the Executive’s position with the Company as of the date of this Agreement; provided that, in the case of each of (i) and (ii), the Company shall have been given written notice by the Executive describing in reasonable detail the occurrence of the event or circumstance for which the Executive believes the Executive may resign for Good Reason within fifteen (15) days of the first occurrence thereof and the Company shall not have cured such event or circumstance within thirty (30) days after the receipt of such notice.

“Disability” means the Executive is unable to perform the Executive’s duties as an employee of the Company for a period of four (4) consecutive months in any twelve-month period as a result of illness (mental or physical) or an accident.

“Severance” means a lump sum payment equal to six (6) months of Base Salary (at the rate in effect on the date of termination)plus (ii) an additional one (1) month’s payment of Base Salary for each full year served by the Executive following the Effective Time.

(e)     Effects of Termination.

  (i)     Termination Without Severance. If the Executive’s employment is terminated during the term of this Agreement because of the Executive’s death or Disability, or if the Company terminates the employment of the Executive with Cause, then the Company shall have no further obligation to provide the Executive with notice or to make any payments or provide any benefits (except for the continuation of benefits as and to the extent required by law under the Consolidated Budget Reconciliation Act (“COBRA”), or applicable state equivalent laws, or the Employee Retirement Income Security Act of 1974, as amended (“ERISA”)) to the Executive hereunder after the date of termination, except for payments of Base Salary and properly documented expense reimbursement that had accrued but had not been paid prior to the date of such termination, and payments for any accrued but unused vacation time.

  (ii)     Termination With Severance. If the Executive’s employment is terminated by the Company without Cause (other than as a result of the death or Disability of the Executive), the termination is a Change of Control Termination, or the termination is by the Executive for Good Reason, the Executive shall be entitled to payments of Base Salary and properly documented expense reimbursement that had accrued but had not been paid prior to the date of such termination, payments for any accrued but unused vacation time, and payments of the Severance.

    (f)     Conditions and Limitations to Severance. Notwithstanding the foregoing, the obligation of the Company to make Severance payments to the Executive shall be subject to the following provisions and conditions:

  (i)     Release of Claims. If the Executive is entitled to Severance under this Agreement, the obligation of the Company to pay Severance shall be contingent upon the Executive signing a general release of claims in the form attached hereto as Exhibit B.

  (ii)     Consequences of Breach. If the Executive breaches the Executive’s obligations under Sections 6, 7, or 23 of this Agreement, the Company may immediately cease payments of Severance and may recover all Severance paid to the Executive after the date of such breach, subject to any statutory obligations which the Company has in respect of the payment of statutory notice and severance. The cessation and recovery of these payments shall be in addition to, and not as an alternative to, any other remedies at law or in equity available to the Company, including without limitation the right to seek specific performance or an injunction.

(g)     Survival. The provisions of Sections 6 through 23 of this Agreement shall survive the term of this Agreement and the termination of the Executive’s employment with the Company and shall continue thereafter in full force and effect in accordance with their terms.

11.   Enforceability, etc. This Agreement shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision hereof shall be prohibited or invalid under any such law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating or nullifying the remainder of such provision or any other provisions of this Agreement. If any one or more of the provisions contained in this Agreement shall for any reason be held to be excessively broad as to duration, geographical scope, activity or subject, such provisions shall be construed by limiting and reducing it so as to be enforceable to the maximum extent permitted by applicable law.

12.   Notices. Any notice, demand or other communication given pursuant to this Agreement shall be in writing and shall be personally delivered, sent by nationally recognized overnight courier or express mail, or mailed by first class certified or registered mail, postage prepaid, return receipt requested as follows:

(a)   If to the Executive:

Jeff Baxter

562 Haycock Run Road

Kintnersville, PA 18930

(b)   If to the Company:

Variation Biotechnologies (US), Inc.

222 Third Street, Suite 2241
Cambridge, MA 02142
Attention: Chief Financial Officer

or at such other address as may have been furnished by such person in writing to the other party.

13.   Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware, without regard to their conflict-of-law provisions.

14.   Amendments and Waivers. This Agreement may be amended or modified only by a written instrument signed by the Company and the Executive. No waiver of this Agreement or any provision hereof shall be binding upon the party against whom enforcement of such waiver is sought unless it is made in writing and signed by or on behalf of such party.

The waiver of a breach of any provision of this Agreement shall not be construed as a waiver or a continuing waiver of the same or any subsequent breach of any provision of this Agreement. No delay or omission in exercising any right under this Agreement shall operate as a waiver of that or any other right.

15.   Binding Effect; Assignment. This Agreement shall be binding on and inure to the benefit of the Executive and the Executive’s heirs, executors and administrators, and on the Company and its successors and assigns. The rights and obligations of the Executive hereunder are personal and may not be assigned without the prior written consent of the Company.

16.   Entire Agreement. This Agreement constitutes the final and entire agreement of the parties with respect to the matters covered hereby and replaces and supersedes all other agreements and understandings relating hereto and to the Executive’s employment.

17.   Counterparts. This Agreement may be executed in two counterparts, including counterpart signature pages or counterpart facsimile signature pages, each of which shall be deemed an original, but both of which together shall constitute one and the same instrument.

18.   No Conflicting Agreements. The Executive represents and warrants to the Company that the Executive is not a party to or bound by any confidentiality, non-competition, non-solicitation, employment, consulting or other agreement or restriction which could conflict with, or be violated by, the performance of the Executive’s duties to the Company or obligations under this Agreement.

19.   Captions. The captions of the sections of this Agreement are for convenience of reference only and in no way define, limit or affect the scope or substance of any section of this Agreement.

20.   No Strict Construction. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises under any provision of this Agreement, this Agreement shall be construed as if drafted jointly by the parties thereto, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of authoring any of the provisions of this Agreement.

21.   Notification of New Employer. For or a period of up to one year after Executive’s termination, the Executive consents to notification by the Company to the Executive’s new employer or its agents regarding the Executive’s rights and obligations under this Agreement.

22.   Key Man Insurance. The Executive acknowledges that the Company may wish to purchase insurance on the life of the Executive, the proceeds of which would be payable to the Company or an affiliate of same. The Executive hereby consents to such insurance and agrees to submit to any medical examination and release of medical records required to obtain such insurance.

23.   Cooperation. The Executive agrees to cooperate fully with the Company in the defense or prosecution of any threatened or actual claims, actions, arbitrations, audits, hearings, investigations, litigations or suits (whether civil, criminal, administrative, judicial or investigative, whether formal or informal, whether public or private) commenced, brought, conducted or heard by or before, or otherwise involving, any governmental body or self-regulatory organization (“Proceedings”) which may be brought against or on behalf of the Company which relate to events that occurred or allegedly occurred during his employment with the Company. The Executive’s full cooperation in connection with such claims or actions shall include, without implication or limitation, being available to meet with counsel for the Company to prepare for discovery or trial and to testify truthfully as a witness when reasonably requested by the Company at reasonable times designated by the Company. The Company agrees to reimburse the Executive for any reasonable out-of-pocket expenses that he incurs in connection with cooperation pursuant to this section, subject to the presentation of reasonable documentation.

[Remainder of Page Intentionally Omitted]

This Agreement has been executed and delivered as of the date first above written.

COMPANY: 

Paulson Capital (Delaware) Corp. 

By     /s/ Trent Davis                

Title: President 

EXECUTIVE: 

_____/s/ Jeff Baxter_________________ 

Jeff Baxter 

[SIGNATURE PAGE TO EMPLOYMENT AGREEMENT]

EXHIBIT A

PRIOR INVENTIONS

None.

EXHIBIT B

FORM OF GENERAL RELEASE

In consideration of the severance benefits (the “Severance”) offered to me by Paulson Capital (Delaware), Corp., a Delaware corporation (the “Company”), pursuant to my Employment Agreement with the Company dated April __, 2014 (“Employment Agreement”) and in connection with the termination of my employment, I agree to the following general release (the “Release”).

1.     On behalf of myself, my heirs, executors, administrators, successors, and assigns, I hereby fully and forever generally release and discharge the Company, its current, former and future parents, subsidiaries, affiliated companies, related entities, employee benefit plans, and their fiduciaries, predecessors, successors, officers, directors, shareholders, agents, employees and assigns (collectively, the “Company”) from any and all claims, causes of action, and liabilities up through the date of my execution of the Release. The claims subject to this release include, but are not limited to, those relating to my employment with the Company and/or any predecessor to the Company and the termination of such employment. All such claims (including related attorneys’ fees and costs) are barred without regard to whether those claims are based on any alleged breach of a duty arising in statute, contract, or tort. This expressly includes waiver and release of any rights and claims arising under any and all laws, rules, regulations, and ordinances, including, but not limited to: Title VII of the Civil Rights Act of 1964; the Older Workers Benefit Protection Act; the Americans With Disabilities Act; the Age Discrimination in Employment Act; the Fair Labor Standards Act; the National Labor Relations Act; the Family and Medical Leave Act; the Employee Retirement Income Security Act of 1974, as amended (“ERISA”); the Workers Adjustment and Retraining Notification Act; the Equal Pay Act of 1963; and any similar laws of the state of Washington and/or any other state or governmental entity. The parties agree to apply Washington law in interpreting the Release. This Release does not extend to, and has no effect upon, any benefits that have accrued, and to which I have become vested, under any employee benefit plan within the meaning of ERISA sponsored by the Company.

2.     In understanding the terms of the Release and my rights, I have been advised to consult with an attorney of my choice prior to executing the Release. I understand that nothing in the Release shall prohibit me from exercising legal rights that are, as a matter of law, not subject to waiver such as: (a) my rights under applicable workers’ compensation laws; (b) my right, if any, to seek unemployment benefits; (c) my right to file a charge or complaint with a government agency such as but not limited to the Equal Employment Opportunity Commission, the National Labor Relations Board, or any applicable state agency. To the fullest extent permitted by law, any dispute regarding the scope of this general release shall be resolved through binding arbitration pursuant to Section 9 below, and the arbitration provision set forth in my Employment Agreement.

3.     I understand and agree that the Company will not provide me with the Severance set forth in my Employment Agreement unless I execute the Release. I also understand that I have received or will receive, regardless of the execution of the Release, all wages owed to me together with any accrued but unused vacation pay, less applicable withholdings and deductions, earned through my termination date.

4.     As part of my existing and continuing obligations to the Company, I have returned to the Company all the Company documents (and all copies thereof) and other the Company property that I have had in my possession at any time, including but not limited to the Company files, notes, drawings, records, business plans and forecasts, financial information, specification, computer-recorded information, tangible property (including, but not limited to, computers, laptops, pagers, etc.), credit cards, entry cards, identification badges and keys; and any materials of any kind which contain or embody any proprietary or confidential information of the Company (and all reproductions thereof).

I understand that, even if I did not sign the Release, I am still bound by the Company’s Proprietary Information, Invention, Assignment and Noncompete Agreement signed by me in connection with my employment with the Company, pursuant to the terms of such agreement.

5.     I represent and warrant that I am the sole owner of all claims relating to my employment with the Company and/or with any predecessor of the Company, and that I have not assigned or transferred any claims relating to my employment to any other person or entity.

6.     I agree to keep the Severance set forth in my Employment Agreement and the provisions of the Release confidential and not to reveal its contents to anyone except my lawyer, my spouse or other immediate family member, and/or my financial consultant, or as required by legal process or applicable law.

7.     I understand and agree that the Release shall not be construed at any time as an admission of liability or wrongdoing by either the Company or me.

8.     Any controversy or any claim arising out of or relating to the interpretation, enforceability or breach of the Release shall be settled by arbitration in accordance with the arbitration provision set forth in my Employment Agreement. If for any reason this arbitration provision is not enforceable, I agree to arbitration under the employment arbitration rules of the American Arbitration Association or any successor hereto. The parties further agree that the arbitrator shall not be empowered to add to, subtract from, or modify, alter or amend the terms of the Release. Any applicable arbitration rules or policies shall be interpreted in a manner so as to ensure their enforceability under applicable state or federal law.

9.     I agree that I have had at least twenty-one (21) calendar days in which to consider whether to execute the Release, no one hurried me into executing the Release during that period, and no one coerced me into executing the Release. I understand that the offer of the Severance and the Release shall expire on the sixtieth (60^th) calendar day after my employment termination date if I have not accepted the Release and the Release has not become effective by that time. I further understand that the Company’s obligations under the Release shall not become effective or enforceable until the eighth (8^th) calendar day after the date I sign the Release provided that I have timely delivered it to the Company (the “Effective Date”) and that in the seven (7) day period following the date I deliver a signed copy of the Release to the Company I understand that I may revoke my acceptance of the Release. I understand that the Severance will become available to me only if the Release becomes effective, on the sixty-first (61st) calendar day after my termination date.

10.     In executing the Release, I acknowledge that I have not relied upon any statement made by the Company, or any of its representatives or employees, with regard to the Release unless the representation is specifically included herein. Furthermore, the Release contains our entire understanding regarding eligibility for and the payment of severance benefits and supersedes any or all prior representation and agreement regarding the subject matter of the Release. Once effective and enforceable, this agreement can only be changed by another written agreement signed by me and an authorized representative of the Company.

11.     Should any provision of the Release be determined by an arbitrator, court of competent jurisdiction, or government agency to be wholly or partially invalid or unenforceable, the legality, validity and enforceability of the remaining parts, terms, or provisions are intended to remain in full force and effect. Specifically, should a court, arbitrator, or agency conclude that a particular claim may not be released as a matter of law, it is the intention of the parties that the general release and the waiver of unknown claims above shall otherwise remain effective to release any and all other claims.

I acknowledge that I have obtained sufficient information to intelligently exercise my own judgment regarding the terms of the Release before executing the Release.

[SIGNATURE PAGE TO GENERAL RELEASE AGREEMENT FOLLOWS]

EMPLOYEE’S ACCEPTANCE OF RELEASE

BEFORE SIGNING MY NAME TO THE RELEASE, I STATE THE FOLLOWING: I HAVE READ THE RELEASE, I UNDERSTAND IT AND I KNOW THAT I AM GIVING UP IMPORTANT RIGHTS. I HAVE OBTAINED SUFFICIENT INFORMATION TO INTELLIGENTLY EXERCISE MY OWN JUDGMENT. I HAVE BEEN ADVISED THAT I SHOULD CONSULT WITH AN ATTORNEY BEFORE SIGNING IT, AND I HAVE SIGNED THE RELEASE KNOWINGLY AND VOLUNTARILY.

Date delivered to employee ___________, ______.
Executed this ___________ day of ___________, ______.
	Employee Signature
	Employee Name (Please Print)

[SIGNATURE PAGE TO GENERAL RELEASE AGREEMENT FOLLOWS]

EX-10

Exhibit 10.10

EMPLOYMENT AGREEMENT

This Employment Agreement (the “Agreement”) is made as of the 8^th day of May, 2014 by and between Egidio Nascimento, on the one hand (the “Executive”), and Variation Biotechnologies, Inc., a corporation incorporated under the Canada Business Corporation Company (the “Canadian Company”), on the other hand. In this Agreement, the term “Company” shall mean the Canadian Company considered on a consolidated basis with Paulson Capital (Delaware) Corp., a Delaware corporation (the “U.S. Company”).

WHEREAS, the Company and the Executive desire to set forth, in a definitive employment agreement, their respective rights and obligations with respect to the Executive’s employment by the Company upon the closing of the merger (the “Merger”) contemplated by that certain Agreement and Plan of Merger, dated as of the date of this Agreement, by and among the U.S. Company, Variation Biotechnologies (US), Inc., a Delaware corporation (“VBI”), and VBI Acquisition Corp., a Delaware corporation and wholly-owned subsidiary of the U.S. Company (“Merger Sub”), whereby VBI shall merge with and into Merger Sub, with VBI becoming the surviving corporation and a wholly-owned subsidiary of the U.S. Company (the “Merger Agreement”) and the Canadian Company shall continue as a wholly-owned subsidiary of VBI following the Merger;

WHEREAS, the Executive’s employment by the Company shall not commence until the closing of the Merger (the “Effective Time”);

WHEREAS, the Canadian Company agrees to provide all monetary compensation to the Executive; and

WHEREAS, the Executive will be a key employee of the Company, with significant access to information concerning the Company, its subsidiaries and their respective businesses, and the disclosure or misuse of such information or the engaging in competitive activities by the Executive would cause substantial harm to the Company.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1.     Employment. The Company agrees to employ the Executive, and the Executive agrees to accept such employment, upon the terms and conditions hereinafter set forth.

2.     Term. The Executive’s employment shall commence at the Effective Time and shall continue until termination by either party in accordance with Section 10 of this Agreement.

3.     Duties. The Executive will serve as Chief Financial Officer of the Canadian Company and the U.S. Company and shall have such duties of a senior executive nature as the Chief Executive Officer or the U.S. Company’s Board of Directors (the “Board”) shall determine from time to time. The Executive shall report to the Chief Executive Officer.

4.     Full Time; Best Efforts. The Executive shall use the Executive’s best efforts to promote the interests of the Company, and shall devote the Executive’s full business time and efforts to its business and affairs.

The Executive shall not engage in any other activity which could reasonably be expected to interfere with the performance of the Executive’s duties, services and responsibilities hereunder without the approval of the Board in its sole discretion.

5.     Compensation and Benefits. During the term of the Executive’s employment under this Agreement, the Executive shall be entitled to compensation and benefits as follows:

(a)     Base Salary. The Executive shall receive a salary at the rate of $240,000 USD annually (the “Base Salary”), payable by the Canadian Company in accordance with regular payroll practices of the Company in CAD Canadian dollar equivalent, which shall be adjusted quarterly based on the average Bank of Canada exchange rate for the immediately preceding calendar quarter.

(b)     Bonus.

(i) Annual Bonus. The Executive shall be eligible to be considered for an annual cash bonus of up to twenty-five percent (25%) of the Executive’s then applicable Base Salary (the “Bonus”), commencing with the 2014 calendar year (and pro-rated with respect to 2014) and payable by the Canadian Company. Bonus entitlement shall be based on the Executive’s meeting of certain performance objectives, which shall be mutually established by the Executive and the Board within thirty (30) days after the Effective Time and shall be re-established on an annual basis thereafter. Bonus eligibility and entitlement will be at the sole discretion of the Board and will be contingent upon the Executive remaining actively employed with the Company through the date any Bonus is paid. The Bonus will be paid in March of the following calendar year. The Executive shall not be entitled to any portion of any Bonus that might otherwise have been awarded for any calendar year during which the Executive’s employment terminates for any reason. All determinations regarding any Bonus will be made by the Board in its sole discretion.

(ii) Transaction Bonus. Within thirty (30) days following the closing date of the Merger, the Executive will receive a one-time bonus in the amount of $75,000 USD payable by the Canadian Company.

(c)     Benefits/Business Expense Reimbursement. In addition to the Base Salary and the Bonus, the Executive shall be entitled to receive customary benefits that are generally available to employees of the Company in accordance with the then-existing terms and conditions of its benefits policies. The Executive’s benefits will include (i) four (4) weeks of paid vacation per year, which will accrue monthly, (ii) term life insurance with a death benefit in the amount of the Base Salary payable to a beneficiary designated by the Executive, (iii) standard short and long term disability benefits, (iv) standard health insurance benefits, and (v) participation in the Company’s 401(k) plan or a Registered Retirement Savings Plan (“RRSP”), the Canadian equivalent. Other than the 401(k) plan or RRSP, the Company shall not be required to provide any pension or retirement benefits to the Executive. In the event the Executive receives payments from the disability insurer, the Company shall have the right to offset such payments against the Base Salary otherwise payable to Executive during the period for which such payments are made. The Executive represents and warrants that he has no reason to believe that he is not insurable with a reputable insurance company for the limits of the coverage discussed herein. If the Executive is deemed to be uninsurable for any of the coverage discussed herein, the Company shall not be deemed to be in breach of this Agreement for failing to provide such coverage. The Company may change any benefits contractor, in its sole discretion, and any such change will not be a breach of this Agreement. The Executive shall be entitled to reimbursement of all reasonable expenses incurred in the ordinary course of business on behalf of the Company, subject to the presentation of appropriate supporting documentation, expense statements, vouchers and/or such other supporting documentation as approved by or in accordance with policies established by the Board.

(d)     Withholding. The Company may withhold from any compensation payable to the Executive all applicable U.S. or Canadian equivalent withholding and employment taxes and other statutory deductions.

(e)     Stock Options. While the Executive remains an employee of the Company, option grants to the Executive may be granted at such times as the Board shall deem appropriate. The amount and vesting terms related to any such grant shall be in the discretion of the Board. Any options granted to the Executive shall be subject to the terms and conditions of the equity incentive plan of the Company pursuant to which such options are granted and the applicable award agreement thereunder (if any), save and except that (A) the vesting of any such option shall accelerate fully if the Executive is terminated without Cause, is terminated during the period that begins when negotiations with an unrelated third party for a Change of Control begin and ends on the twelve (12) month anniversary of the closing of the Change of Control transaction (“Change of Control Termination”) or terminates his employment for Good Reason, and (B) if the Executive is terminated for Cause under clause (v) of the definition of Cause hereunder (i.e. failure to meet performance expectations of the Board), the Executive shall have a period of three (3) months following such termination to exercise any outstanding vested options before the exercise period of such vested options expires.

6.     Confidentiality; Intellectual Property. The Executive agrees that during the Executive’s employment with the Company, whether or not under this Agreement, and at all times thereafter:

(a)     The Executive will not at any time, directly or indirectly, disclose or divulge any Confidential Information (as hereinafter defined), except as required in connection with the performance of the Executive’s duties for the Company, and except to the extent required by law (but only after the Executive has provided the Company with reasonable notice and opportunity to take action against any legally required disclosure). As used herein, “Confidential Information” means all trade secrets and all other information of a business, financial, marketing, technical or other nature relating to the business of the Company including, without limitation, any customer or vendor lists, prospective customer names, financial statements and projections, know-how, pricing policies, operational methods, methods of doing business, technical processes, formulae, designs and design projects, inventions, computer hardware, software programs, business plans and projects pertaining to the Company and including any information of others that the Company has agreed to keep confidential; provided, however, that Confidential Information shall not include any information that has entered or enters the public domain through (i) no fault of the Executive, and (ii) no breach by any other current or former employee of his/her confidentiality obligations to the Company.

(b)     The Executive shall make no use whatsoever, directly or indirectly, of any Confidential Information at any time, except as required in connection with the performance of the Executive’s duties for the Company.

(c)     Upon the Executive’s termination of employment for any reason, and upon the request of the Company at any time and for any reason, the Executive shall immediately deliver to the Company all materials (including all electronic and hard copies) in the Executive’s possession which contain or relate to Confidential Information.

(d)     All inventions, modifications, discoveries, designs, developments, improvements, processes, software programs, works of authorship, documentation, formulae, data, techniques, know-how, secrets or intellectual property rights or any interest therein (collectively, the “Developments”) made by the Executive, either alone or in conjunction with others, at any time or at any place during the Executive’s employment with the Company, whether or not reduced to writing or practice during such period of employment, which relate to the business in which the Company is engaged or in which the Company intends to engage, shall be and hereby are the exclusive property of the Company, without any further compensation to the Executive. In addition, without limiting the generality of the prior sentence, all Developments which are copyrightable work by the Executive are intended to be “work made for hire” and shall be and hereby are the property of the Company.

(e)     The Executive shall promptly disclose any Developments to the Company. If any Development is not the property of the Company by operation of law, this Agreement or otherwise, the Executive will, and hereby does, assign to the Company all right, title and interest in such Development, without further consideration, and will assist the Company and its nominees in every way, at the expense of the Company, to secure, maintain and defend its rights in such Development. The Executive shall sign all instruments necessary for the filing and prosecution of any applications for, or extension or renewals of, letters patent (or other intellectual property registrations or filings) of the United States, Canada or any other country in which the Company desires to file and that relates to any Development. The Executive hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as such Executive’s agent and attorney-in-fact (which designation and appointment shall be deemed coupled with an interest and shall survive the Executive’s death or incapacity), to act for and on the Executive’s behalf to execute and file any such applications, extensions or renewals and to do all other lawfully permitted acts to further the prosecution and issuance of such letters patent, other intellectual property registrations or filings, or such other similar documents with the same legal force and effect as if executed by the Executive.

(f)     Attached hereto as Exhibit A is a list of all inventions, modifications, discoveries, designs, developments, improvements, processes, software programs, works of authorship, documentation, formulae, data, techniques, know-how, secrets or intellectual property rights or any interest therein made by the Executive prior to the date of this Agreement (collectively, the “Prior Inventions”), which belong to the Executive and which relate to the business or reasonably anticipated business of the Company and which are not assigned to the Company hereunder; or, if no such list is attached, the Executive represents that there are no such Prior Inventions. If in the course of the Executive’s employment with the Company, the Executive incorporates into a Company product, process, or machine a Prior Invention owned by the Executive or in which the Executive has an interest, the Company is hereby granted and shall have a non-exclusive, royalty-free, irrevocable, perpetual, transferable, worldwide license to make, have made, modify, use, sell, and otherwise exploit such Prior Invention as part of or in connection with such product, process or machine, or any enhancements or extensions thereof.

(g)     The Executive waives in whole all moral rights which he may have in the Developments, including the right to the integrity of the Developments, the right to be associated with the Developments, the right to restrain or claim damages for any distortion, mutilation or other modification of the Developments, and the right to restrain use or reproduction of the Developments in any context and in connection with any product, service, cause or institution. The Executive agrees to confirm such waiver from time to time as requested by the Company.

7.     Non-competition. The Executive acknowledges and agrees that the consideration for the following covenants is the Company’s agreement to provide Severance (as defined in Section 10 below) in the event of the Executive’s termination without Cause (other than as a result of the death or Disability of the Executive) or by the Executive for Good Reason. The Executive agrees that, during the Executive’s employment with the Company and for one year thereafter, irrespective of whether the Executive resigns or is terminated either with or without Cause, the Executive will not, directly or indirectly, individually or as a consultant to, or an employee, officer, director, manager, stockholder (except as a stockholder owning less than one percent (1%) of the shares of a corporation whose shares are traded on a national securities exchange), partner, member, or other owner or participant in any business entity other than the Company:

(a)     carry on, participate in, or engage in any business that competes directly with the Business of the Company in the United States or Canada. For purposes of this Agreement, the term “Business of the Company” means the research, development or commercialization of virus-like particle vaccines for prophylactic and therapeutic use in both humans and animals;

(b)     solicit, employ, hire, endeavor to entice away from the Company, or offer employment or any consulting arrangement to, any person or entity who is, or was within the one-year period immediately prior thereto, employed by, or a consultant to, the Company; or

(c)     solicit or endeavor to entice away from the Company, any person or entity who is, or was within the one-year period immediately prior thereto, a customer or client of, supplier to, or other party having material business relations with the Company;

provided, however; that if the Executive is terminated for Cause under clause (v) of the definition of Cause hereunder (i.e. failure to meet performance expectations of the Board), the non-competition requirement of this Section 7 shall not apply.

8.     Remedies. Without limiting the remedies available to the Company, the Executive acknowledges that a breach of any of the covenants contained in Sections 6 or 7 herein could result in irreparable injury to the Company for which there might be no adequate remedy at law, and that, in the event of such a breach or threat thereof, the Company shall be entitled to obtain a temporary restraining order and/or a preliminary injunction and a permanent injunction restraining the Executive from engaging in any activities prohibited by Sections 6 or 7 herein or such other equitable relief as may be required to enforce specifically any of the covenants of Sections 6 or 7 herein.

9.     Review of Agreement; Reasonable Restrictions. The Executive: (a) has carefully read and understands all of the provisions of this Agreement and has had the opportunity for this Agreement to be reviewed by counsel; (b) is voluntarily entering into this Agreement; (c) has not relied upon any representation or statement made by the Company (or their respective subsidiaries, affiliates, equity holders, agents, representatives, employees, or attorneys) with regard to the subject matter or effect of this Agreement; (d) acknowledges that the duration, geographical scope, and subject matter of Sections 6, 7, and 8 of this Agreement are reasonable and necessary given the Executive’s unique position within the Company and special knowledge of the Company and its customers; (e) acknowledges that the duration, geographical scope, and subject matter of Sections 6, 7, and 8 of this Agreement are reasonable and necessary to protect the goodwill, customer relationships, legitimate business interests, and Confidential Information of the Company and their respective affiliates, and that the Company would not have entered into this Agreement without the benefit of such provisions; (f) acknowledges the significant consideration which he is receiving for entering into this Agreement; and (g) will be able to earn a satisfactory livelihood without violating this Agreement.

10.  Termination.

(a)     General. The Executive’s employment with the Company may be terminated at any time by the Company with Cause or without Cause. Any decision regarding termination of the Executive shall be made by the Board.

(b)     Disability. The Executive’s employment with the Company may be terminated at any time by the Company in the event of the Disability of the Executive.

(c)     Change of Control. For purposes of this Agreement, the term “Change of Control” shall mean the sale or disposition by Company to an unrelated third party of substantially all of its business or assets, or the sale of the capital stock of the Company in connection with the sale or transfer of a controlling interest in the Company to an unrelated third party, or the merger or consolidation of the Company with another corporation as part of a sale or transfer of a controlling interest in the Company to an unrelated third party. For purposes of this definition, the term “controlling interest” means the sale or transfer of the Company’s securities representing more 50% of the voting power.

(d)     Definitions. As used herein, the following terms shall have the following meanings:

“Cause” means that, in the good faith and reasonable determination of the Board, the Executive has (i) breached any fiduciary duty or legal or contractual obligation to the Company or any of its subsidiaries or affiliates, where written notice is given to the Executive and the Executive does not cure the breach within fourteen (14) days; (ii) engaged in gross negligence, willful misconduct, fraud, embezzlement, acts of dishonesty, or a conflict of interest relating to the affairs of the Company or any of its subsidiaries or affiliates; (iii) been convicted of or pleaded nolo contendere to: (A) any misdemeanor relating to the affairs of the Company or any of its subsidiaries or affiliates (with the exception of minor misdemeanors not involving moral turpitude); or (B) any felony or indictable offence; (iv) engaged in a violation of any federal or state laws (with the exception of minor misdemeanors not involving moral turpitude), or federal or state securities laws; or (v) the Executive has materially failed to meet minimum performance expectations of the Company’s Chief Executive Officer after reasonable notice of the material performance deficiency and a reasonable opportunity to remedy such deficiency.

“Good Reason” means (i) a material breach of any material provision of this Agreement, which breach is not cured by the Company within thirty (30) days after receipt of written notice thereof from the Executive; or (ii) the assignment of duties or responsibilities to the Executive by the Board, which are inconsistent in a material and adverse respect with the Executive’s position with the Company as of the date of this Agreement; provided that, in the case of each of (i) and (ii), the Company shall have been given written notice by the Executive describing in reasonable detail the occurrence of the event or circumstance for which the Executive believes the Executive may resign for Good Reason within fifteen (15) days of the first occurrence thereof and the Company shall not have cured such event or circumstance within thirty (30) days after the receipt of such notice.

“Disability” means the Executive is unable to perform the Executive’s duties as an employee of the Company for a period of four (4) consecutive months in any twelve-month period as a result of illness (mental or physical) or an accident.

“Severance” means a lump sum payment equal to six (6) months of Base Salary (at the rate in effect on the date of termination) plus (ii) an additional one (1) month’s payment of Base Salary for each full year served by the Executive following the Effective Time.

(e)     Effects of Termination.

(i)     Termination Without Severance. If the Executive’s employment is terminated during the term of this Agreement because of the Executive’s death or Disability, or if the Company terminates the employment of the Executive with Cause, then the Company shall have no further obligation to provide the Executive with notice or to make any payments or provide any benefits (except for the continuation of benefits as and to the extent required by law under the Consolidated Budget Reconciliation Act (“COBRA”), or applicable state or Canadian equivalent laws, or the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), or applicable Canadian equivalent) to the Executive hereunder after the date of termination, except for payments of Base Salary and properly documented expense reimbursement that had accrued but had not been paid prior to the date of such termination, and payments for any accrued but unused vacation time.

(ii)     Termination With Severance. If the Executive’s employment is terminated by the Company without Cause (other than as a result of the death or Disability of the Executive), the termination is a Change of Control Termination, or the termination is by the Executive for Good Reason, the Executive shall be entitled to payments of Base Salary and properly documented expense reimbursement that had accrued but had not been paid prior to the date of such termination, payments for any accrued but unused vacation time, and payments of the Severance.

(f)     Conditions and Limitations to Severance. Notwithstanding the foregoing, the obligation of the Company to make Severance payments to the Executive shall be subject to the following provisions and conditions:

(i)     Release of Claims. If the Executive is entitled to Severance under this Agreement, the obligation of the Company to pay Severance shall be contingent upon the Executive signing a general release of claims in the form attached hereto as Exhibit B.

(ii)     Consequences of Breach. If the Executive breaches the Executive’s obligations under Sections 6, 7, or 23 of this Agreement, the Company may immediately cease payments of Severance and may recover all Severance paid to the Executive after the date of such breach, subject to any statutory obligations which the Company has in respect of the payment of statutory notice and severance. The cessation and recovery of these payments shall be in addition to, and not as an alternative to, any other remedies at law or in equity available to the Company, including without limitation the right to seek specific performance or an injunction.

(g)     Survival. The provisions of Sections 6 through 23 of this Agreement shall survive the term of this Agreement and the termination of the Executive’s employment with the Company and shall continue thereafter in full force and effect in accordance with their terms.

11.  Enforceability, etc. This Agreement shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision hereof shall be prohibited or invalid under any such law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating or nullifying the remainder of such provision or any other provisions of this Agreement. If any one or more of the provisions contained in this Agreement shall for any reason be held to be excessively broad as to duration, geographical scope, activity or subject, such provisions shall be construed by limiting and reducing it so as to be enforceable to the maximum extent permitted by applicable law.

12.  Notices. Any notice, demand or other communication given pursuant to this Agreement shall be in writing and shall be personally delivered, sent by nationally recognized overnight courier or express mail, or mailed by first class certified or registered mail, postage prepaid, return receipt requested as follows:

(a)   If to the Executive:

Egidio Nascimento

16 Imp de la Cote D’Or

Gatineau, Quebec

J8R 4B4

(b)   If to the Company:

Variation Biotechnologies (US), Inc.

222 Third Street, Suite 2241
Cambridge, MA 02142
Attention: Chief Executive Officer

or at such other address as may have been furnished by such person in writing to the other party.

13.  Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the Province of Ontario, without regard to their conflict-of-law provisions.

14.  Amendments and Waivers. This Agreement may be amended or modified only by a written instrument signed by the Company and the Executive. No waiver of this Agreement or any provision hereof shall be binding upon the party against whom enforcement of such waiver is sought unless it is made in writing and signed by or on behalf of such party. The waiver of a breach of any provision of this Agreement shall not be construed as a waiver or a continuing waiver of the same or any subsequent breach of any provision of this Agreement. No delay or omission in exercising any right under this Agreement shall operate as a waiver of that or any other right.

15.  Binding Effect; Assignment. This Agreement shall be binding on and inure to the benefit of the Executive and the Executive’s heirs, executors and administrators, and on the Company and its successors and assigns. The rights and obligations of the Executive hereunder are personal and may not be assigned without the prior written consent of the Company.

16.  Entire Agreement. This Agreement constitutes the final and entire agreement of the parties with respect to the matters covered hereby and replaces and supersedes all other agreements and understandings relating hereto and to the Executive’s employment.

17.  Counterparts. This Agreement may be executed in two counterparts, including counterpart signature pages or counterpart facsimile signature pages, each of which shall be deemed an original, but both of which together shall constitute one and the same instrument.

18.  No Conflicting Agreements. The Executive represents and warrants to the Company that the Executive is not a party to or bound by any confidentiality, non-competition, non-solicitation, employment, consulting or other agreement or restriction which could conflict with, or be violated by, the performance of the Executive’s duties to the Company or obligations under this Agreement.

19.  Captions. The captions of the sections of this Agreement are for convenience of reference only and in no way define, limit or affect the scope or substance of any section of this Agreement.

20.  No Strict Construction. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises under any provision of this Agreement, this Agreement shall be construed as if drafted jointly by the parties thereto, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of authoring any of the provisions of this Agreement.

21.  Notification of New Employer. For or a period of up to one year after Executive’s termination, the Executive consents to notification by the Company to the Executive’s new employer or its agents regarding the Executive’s rights and obligations under this Agreement.

22.  Key Man Insurance. The Executive acknowledges that the Company may wish to purchase insurance on the life of the Executive, the proceeds of which would be payable to the Company or an affiliate of same. The Executive hereby consents to such insurance and agrees to submit to any medical examination and release of medical records required to obtain such insurance.

23.  Cooperation. The Executive agrees to cooperate fully with the Company in the defense or prosecution of any threatened or actual claims, actions, arbitrations, audits, hearings, investigations, litigations or suits (whether civil, criminal, administrative, judicial or investigative, whether formal or informal, whether public or private) commenced, brought, conducted or heard by or before, or otherwise involving, any governmental body or self-regulatory organization (“Proceedings”) which may be brought against or on behalf of the Company which relate to events that occurred or allegedly occurred during his employment with the Company. The Executive’s full cooperation in connection with such claims or actions shall include, without implication or limitation, being available to meet with counsel for the Company to prepare for discovery or trial and to testify truthfully as a witness when reasonably requested by the Company at reasonable times designated by the Company. The Company agrees to reimburse the Executive for any reasonable out-of-pocket expenses that he incurs in connection with cooperation pursuant to this section, subject to the presentation of reasonable documentation.

[Remainder of Page Intentionally Omitted]

This Agreement has been executed and delivered as of the date first above written.

COMPANY: 

Paulson Capital (Delaware) Corp. 

By     /s/ Trent Davis                     

Title: President  

CANADIAN COMPANY: 

Variation Biotechnologies, Inc. 

By     /s/ Jeff Baxter                    

Title: Chief Executive Officer

EXECUTIVE:

___/s/ Egidio Nascimento__________________

Egidio Nascimento

[SIGNATURE PAGE TO EMPLOYMENT AGREEMENT]

EXHIBIT A

PRIOR INVENTIONS

None.

EXHIBIT B

FORM OF GENERAL RELEASE

In consideration of the severance benefits (the “Severance”) offered to me by Paulson Capital (Delaware), Corp., a Delaware corporation (the “Company”), pursuant to my Employment Agreement with the Company dated April __, 2014 (“Employment Agreement”) and in connection with the termination of my employment, I agree to the following general release (the “Release”).

1.     On behalf of myself, my heirs, executors, administrators, successors, and assigns, I hereby fully and forever generally release and discharge the Company, its current, former and future parents, subsidiaries, affiliated companies, related entities, employee benefit plans, and their fiduciaries, predecessors, successors, officers, directors, shareholders, agents, employees and assigns (collectively, the “Company”) from any and all claims, causes of action, and liabilities up through the date of my execution of the Release. The claims subject to this release include, but are not limited to, those relating to my employment with the Company and/or any predecessor to the Company and the termination of such employment. All such claims (including related attorneys’ fees and costs) are barred without regard to whether those claims are based on any alleged breach of a duty arising in statute, contract, or tort. This expressly includes waiver and release of any rights and claims arising under any and all laws, rules, regulations, and ordinances, including, but not limited to: Title VII of the Civil Rights Act of 1964; the Older Workers Benefit Protection Act; the Americans With Disabilities Act; the Age Discrimination in Employment Act; the Fair Labor Standards Act; the National Labor Relations Act; the Family and Medical Leave Act; the Employee Retirement Income Security Act of 1974, as amended (“ERISA”); the Workers Adjustment and Retraining Notification Act; the Equal Pay Act of 1963; and any similar laws of the state of Washington and/or any other state or governmental entity. The parties agree to apply Washington law in interpreting the Release. This Release does not extend to, and has no effect upon, any benefits that have accrued, and to which I have become vested, under any employee benefit plan within the meaning of ERISA sponsored by the Company.

2.     In understanding the terms of the Release and my rights, I have been advised to consult with an attorney of my choice prior to executing the Release. I understand that nothing in the Release shall prohibit me from exercising legal rights that are, as a matter of law, not subject to waiver such as: (a) my rights under applicable workers’ compensation laws; (b) my right, if any, to seek unemployment benefits; (c) my right to file a charge or complaint with a government agency such as but not limited to the Equal Employment Opportunity Commission, the National Labor Relations Board, or any applicable state agency. To the fullest extent permitted by law, any dispute regarding the scope of this general release shall be resolved through binding arbitration pursuant to Section 9 below, and the arbitration provision set forth in my Employment Agreement.

3.     I understand and agree that the Company will not provide me with the Severance set forth in my Employment Agreement unless I execute the Release. I also understand that I have received or will receive, regardless of the execution of the Release, all wages owed to me together with any accrued but unused vacation pay, less applicable withholdings and deductions, earned through my termination date.

4.     As part of my existing and continuing obligations to the Company, I have returned to the Company all the Company documents (and all copies thereof) and other the Company property that I have had in my possession at any time, including but not limited to the Company files, notes, drawings, records, business plans and forecasts, financial information, specification, computer-recorded information, tangible property (including, but not limited to, computers, laptops, pagers, etc.), credit cards, entry cards, identification badges and keys; and any materials of any kind which contain or embody any proprietary or confidential information of the Company (and all reproductions thereof).

1.     I understand that, even if I did not sign the Release, I am still bound by the Company’s Proprietary Information, Invention, Assignment and Noncompete Agreement signed by me in connection with my employment with the Company, pursuant to the terms of such agreement.

5.     I represent and warrant that I am the sole owner of all claims relating to my employment with the Company and/or with any predecessor of the Company, and that I have not assigned or transferred any claims relating to my employment to any other person or entity.

6.     I agree to keep the Severance set forth in my Employment Agreement and the provisions of the Release confidential and not to reveal its contents to anyone except my lawyer, my spouse or other immediate family member, and/or my financial consultant, or as required by legal process or applicable law.

7.     I understand and agree that the Release shall not be construed at any time as an admission of liability or wrongdoing by either the Company or me.

8.     Any controversy or any claim arising out of or relating to the interpretation, enforceability or breach of the Release shall be settled by arbitration in accordance with the arbitration provision set forth in my Employment Agreement. If for any reason this arbitration provision is not enforceable, I agree to arbitration under the employment arbitration rules of the American Arbitration Association or any successor hereto. The parties further agree that the arbitrator shall not be empowered to add to, subtract from, or modify, alter or amend the terms of the Release. Any applicable arbitration rules or policies shall be interpreted in a manner so as to ensure their enforceability under applicable state or federal law.

9.     I agree that I have had at least twenty-one (21) calendar days in which to consider whether to execute the Release, no one hurried me into executing the Release during that period, and no one coerced me into executing the Release. I understand that the offer of the Severance and the Release shall expire on the sixtieth (60^th) calendar day after my employment termination date if I have not accepted the Release and the Release has not become effective by that time. I further understand that the Company’s obligations under the Release shall not become effective or enforceable until the eighth (8^th) calendar day after the date I sign the Release provided that I have timely delivered it to the Company (the “Effective Date”) and that in the seven (7) day period following the date I deliver a signed copy of the Release to the Company I understand that I may revoke my acceptance of the Release. I understand that the Severance will become available to me only if the Release becomes effective, on the sixty-first (61st) calendar day after my termination date.

10.     In executing the Release, I acknowledge that I have not relied upon any statement made by the Company, or any of its representatives or employees, with regard to the Release unless the representation is specifically included herein. Furthermore, the Release contains our entire understanding regarding eligibility for and the payment of severance benefits and supersedes any or all prior representation and agreement regarding the subject matter of the Release. Once effective and enforceable, this agreement can only be changed by another written agreement signed by me and an authorized representative of the Company.

11.     Should any provision of the Release be determined by an arbitrator, court of competent jurisdiction, or government agency to be wholly or partially invalid or unenforceable, the legality, validity and enforceability of the remaining parts, terms, or provisions are intended to remain in full force and effect. Specifically, should a court, arbitrator, or agency conclude that a particular claim may not be released as a matter of law, it is the intention of the parties that the general release and the waiver of unknown claims above shall otherwise remain effective to release any and all other claims.

2.     I acknowledge that I have obtained sufficient information to intelligently exercise my own judgment regarding the terms of the Release before executing the Release.

 [SIGNATURE PAGE TO GENERAL RELEASE AGREEMENT FOLLOWS]

EMPLOYEE’S ACCEPTANCE OF RELEASE

BEFORE SIGNING MY NAME TO THE RELEASE, I STATE THE FOLLOWING: I HAVE READ THE RELEASE, I UNDERSTAND IT AND I KNOW THAT I AM GIVING UP IMPORTANT RIGHTS. I HAVE OBTAINED SUFFICIENT INFORMATION TO INTELLIGENTLY EXERCISE MY OWN JUDGMENT. I HAVE BEEN ADVISED THAT I SHOULD CONSULT WITH AN ATTORNEY BEFORE SIGNING IT, AND I HAVE SIGNED THE RELEASE KNOWINGLY AND VOLUNTARILY.

Date delivered to employee ___________, ______.
Executed this ___________ day of ___________, ______.
	Employee Signature
	Employee Name (Please Print)

 [SIGNATURE PAGE TO GENERAL RELEASE AGREEMENT FOLLOWS]

EX-10

Exhibit 10.11

EMPLOYMENT AGREEMENT

This Employment Agreement (the “Agreement”) is made as of the 8^th day of May, 2014 by and between David Anderson, on the one hand (the “Executive”), and Paulson Capital (Delaware) Corp., a Delaware corporation (the “Company”), on the other hand.

WHEREAS, the Company and the Executive desire to set forth, in a definitive employment agreement, their respective rights and obligations with respect to the Executive’s employment by the Company upon the closing of the merger (the “Merger”) contemplated by that certain Agreement and Plan of Merger, dated as of the date of this Agreement, by and among the Company, Variation Biotechnologies (US), Inc., a Delaware corporation (“VBI”), and VBI Acquisition Corp., a Delaware corporation and wholly-owned subsidiary of the Company (“Merger Sub”), whereby VBI shall merge with and into Merger Sub, with VBI becoming the surviving corporation and a wholly-owned subsidiary of the Company (the “Merger Agreement”);

WHEREAS, the Executive’s employment by the Company shall not commence until the closing of the Merger (the “Effective Time”); and

WHEREAS, the Executive will be a key employee of the Company with significant access to information concerning the Company, its subsidiaries and their respective businesses, and the disclosure or misuse of such information or the engaging in competitive activities by the Executive would cause substantial harm to the Company.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1.          Employment. The Company agrees to employ the Executive, and the Executive agrees to accept such employment, upon the terms and conditions hereinafter set forth.

2.          Term. The Executive’s employment shall commence at the Effective Time and shall continue until termination by either party in accordance with Section 10 of this Agreement.

3.          Duties. The Executive will serve as Senior Vice President, Research of the Company and shall have such duties of a senior executive nature as the Company’s Board of Directors (the “Board”) shall determine from time to time. The Executive shall report to the Chief Executive Officer.

4.          Full Time; Best Efforts. The Executive shall use the Executive’s best efforts to promote the interests of the Company, and shall devote the Executive’s full business time and efforts to its business and affairs. The Executive shall not engage in any other activity which could reasonably be expected to interfere with the performance of the Executive’s duties, services and responsibilities hereunder without the approval of the Board in its sole discretion.

5.          Compensation and Benefits. During the term of the Executive’s employment under this Agreement, the Executive shall be entitled to compensation and benefits as follows:

 (a)     Base Salary. The Executive shall receive a salary at the rate of $250,000 annually (the “Base Salary”), payable in accordance with regular payroll practices of the Company.

 (b)     Bonus.

   (i) Annual Bonus. The Executive shall be eligible to be considered for an annual cash bonus of up to thirty-five percent (35%) of the Executive’s then applicable Base Salary (the “Bonus”), commencing with the 2014 calendar year (and pro-rated with respect to 2014). Bonus entitlement shall be based on the Executive’s meeting of certain performance objectives, which shall be mutually established by the Executive and the Board within thirty (30) days after the Effective Time and shall be re-established on an annual basis thereafter. Bonus eligibility and entitlement will be at the sole discretion of the Board and will be contingent upon the Executive remaining actively employed with the Company through the date any Bonus is paid. The Bonus will be paid in March of the following calendar year. The Executive shall not be entitled to any portion of any Bonus that might otherwise have been awarded for any calendar year during which the Executive’s employment terminates for any reason. All determinations regarding any Bonus will be made by the Board in its sole discretion.

(ii) Transaction Bonus. Within thirty (30) days following the closing date of the Merger, the Executive will receive a one-time bonus in the amount of $75,000.

 (c)     Benefits/Business Expense Reimbursement. In addition to the Base Salary and the Bonus, the Executive shall be entitled to receive customary benefits that are generally available to employees of the Company in accordance with the then-existing terms and conditions of its benefits policies. The Executive’s benefits will include (i) four (4) weeks of paid vacation per year, which will accrue monthly, (ii) term life insurance with a death benefit in the amount of the Base Salary payable to a beneficiary designated by the Executive, (iii) standard short and long term disability benefits, (iv) standard health insurance benefits, and (v) participation in the Company’s 401(k) plan. Other than the 401(k) plan, the Company shall not be required to provide any pension or retirement benefits to the Executive. In the event the Executive receives payments from the disability insurer, the Company shall have the right to offset such payments against the Base Salary otherwise payable to Executive during the period for which such payments are made. The Executive represents and warrants that he has no reason to believe that he is not insurable with a reputable insurance company for the limits of the coverage discussed herein. If the Executive is deemed to be uninsurable for any of the coverage discussed herein, the Company shall not be deemed to be in breach of this Agreement for failing to provide such coverage. The Company may change any benefits contractor, in its sole discretion, and any such change will not be a breach of this Agreement. The Executive shall be entitled to reimbursement of all reasonable expenses incurred in the ordinary course of business on behalf of the Company, subject to the presentation of appropriate supporting documentation, expense statements, vouchers and/or such other supporting documentation as approved by or in accordance with policies established by the Board.

 (d)     Withholding. The Company may withhold from any compensation payable to the Executive all applicable U.S. withholding and employment taxes and other statutory deductions.

 (e)     Stock Options. While the Executive remains an employee of the Company, option grants to the Executive may be granted at such times as the Board shall deem appropriate. The amount and vesting terms related to any such grant shall be in the discretion of the Board. Any options granted to the Executive shall be subject to the terms and conditions of the equity incentive plan of the Company pursuant to which such options are granted and the applicable award agreement thereunder (if any), save and except that (A) the vesting of any such option shall accelerate fully if the Executive is terminated without Cause, is terminated during the period that begins when negotiations with an unrelated third party for a Change of Control begin and ends on the twelve (12) month anniversary of the closing of the Change of Control transaction (“Change of Control Termination”) or terminates his employment for Good Reason, and (B) if the Executive is terminated for Cause under clause (v) of the definition of Cause hereunder (i.e. failure to meet performance expectations of the Board), the Executive shall have a period of three (3) months following such termination to exercise any outstanding vested options before the exercise period of such vested options expires.

6.          Confidentiality; Intellectual Property. The Executive agrees that during the Executive’s employment with the Company, whether or not under this Agreement, and at all times thereafter:

 (a)     The Executive will not at any time, directly or indirectly, disclose or divulge any Confidential Information (as hereinafter defined), except as required in connection with the performance of the Executive’s duties for the Company, and except to the extent required by law (but only after the Executive has provided the Company with reasonable notice and opportunity to take action against any legally required disclosure). As used herein, “Confidential Information” means all trade secrets and all other information of a business, financial, marketing, technical or other nature relating to the business of the Company including, without limitation, any customer or vendor lists, prospective customer names, financial statements and projections, know-how, pricing policies, operational methods, methods of doing business, technical processes, formulae, designs and design projects, inventions, computer hardware, software programs, business plans and projects pertaining to the Company and including any information of others that the Company has agreed to keep confidential; provided, however, that Confidential Information shall not include any information that has entered or enters the public domain through (i) no fault of the Executive, and (ii) no breach by any other current or former employee of his/her confidentiality obligations to the Company.

 (b)     The Executive shall make no use whatsoever, directly or indirectly, of any Confidential Information at any time, except as required in connection with the performance of the Executive’s duties for the Company.

 (c)     Upon the Executive’s termination of employment for any reason, and upon the request of the Company at any time and for any reason, the Executive shall immediately deliver to the Company all materials (including all electronic and hard copies) in the Executive’s possession which contain or relate to Confidential Information.

 (d)     All inventions, modifications, discoveries, designs, developments, improvements, processes, software programs, works of authorship, documentation, formulae, data, techniques, know-how, secrets or intellectual property rights or any interest therein (collectively, the “Developments”) made by the Executive, either alone or in conjunction with others, at any time or at any place during the Executive’s employment with the Company, whether or not reduced to writing or practice during such period of employment, which relate to the business in which the Company is engaged or in which the Company intends to engage, shall be and hereby are the exclusive property of the Company, without any further compensation to the Executive. In addition, without limiting the generality of the prior sentence, all Developments which are copyrightable work by the Executive are intended to be “work made for hire” and shall be and hereby are the property of the Company.

 (e)     The Executive shall promptly disclose any Developments to the Company. If any Development is not the property of the Company by operation of law, this Agreement or otherwise, the Executive will, and hereby does, assign to the Company all right, title and interest in such Development, without further consideration, and will assist the Company and its nominees in every way, at the expense of the Company, to secure, maintain and defend its rights in such Development. The Executive shall sign all instruments necessary for the filing and prosecution of any applications for, or extension or renewals of, letters patent (or other intellectual property registrations or filings) of the United States, Canada or any other country in which the Company desires to file and that relates to any Development. The Executive hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as such Executive’s agent and attorney-in-fact (which designation and appointment shall be deemed coupled with an interest and shall survive the Executive’s death or incapacity), to act for and on the Executive’s behalf to execute and file any such applications, extensions or renewals and to do all other lawfully permitted acts to further the prosecution and issuance of such letters patent, other intellectual property registrations or filings, or such other similar documents with the same legal force and effect as if executed by the Executive.

 (f)     Attached hereto as Exhibit A is a list of all inventions, modifications, discoveries, designs, developments, improvements, processes, software programs, works of authorship, documentation, formulae, data,  techniques, know-how, secrets or intellectual property rights or any interest therein made by the Executive prior to the date of this Agreement (collectively, the “Prior Inventions”), which belong to the Executive and which relate to the business or reasonably anticipated business of the Company and which are not assigned to the Company hereunder; or, if no such list is attached, the Executive represents that there are no such Prior Inventions. If in the course of the Executive’s employment with the Company, the Executive incorporates into a Company product, process, or machine a Prior Invention owned by the Executive or in which the Executive has an interest, then 1) the Executive will notify the Company in writing at least 60 days before efforts are made to develop or commercialize such Prior Inventions, and 2) the Company is hereby granted a 60 day right of first negotiation to license the Prior Invention(s) on terms mutually agreeable to relevant parties. If the Company elects to pursue negotiations, the parties agree to negotiate exclusivity for a period of 90 days.

 (g)     The Executive waives in whole all moral rights which he may have in the Developments, including the right to the integrity of the Developments, the right to be associated with the Developments, the right to restrain or claim damages for any distortion, mutilation or other modification of the Developments, and the right to restrain use or reproduction of the Developments in any context and in connection with any product, service, cause or institution. The Executive agrees to confirm such waiver from time to time as requested by the Company.

7.          Non-competition. The Executive acknowledges and agrees that the consideration for the following covenants is the Company’s agreement to provide Severance (as defined in Section 10 below) in the event of the Executive’s termination without Cause (other than as a result of the death or Disability of the Executive) or by the Executive for Good Reason.

The Executive agrees that, during the Executive’s employment with the Company and for one year thereafter, irrespective of whether the Executive resigns or is terminated either with or without Cause, the Executive will not, directly or indirectly, individually or as a consultant to, or an employee, officer, director, manager, stockholder (except as a stockholder owning less than one percent (1%) of the shares of a corporation whose shares are traded on a national securities exchange), partner, member, or other owner or participant in any business entity other than the Company:

 (a)     carry on, participate in, or engage in any business that competes directly with the Business of the Company in the United States or Canada. For purposes of this Agreement, the term “Business of the Company” means the research, development or commercialization of virus-like particle vaccines for prophylactic and therapeutic use in both humans and animals;

 (b)     solicit, employ, hire, endeavor to entice away from the Company, or offer employment or any consulting arrangement to, any person or entity who is, or was within the one-year period immediately prior thereto, employed by, or a consultant to, the Company; or

 (c)     solicit or endeavor to entice away from the Company, any person or entity who is, or was within the one-year period immediately prior thereto, a customer or client of, supplier to, or other party having material business relations with the Company;

provided, however; that if the Executive is terminated for Cause under clause (v) of the definition of Cause hereunder (i.e. failure to meet performance expectations of the Board), the non-competition requirement of this Section 7 shall not apply.

8.          Remedies. Without limiting the remedies available to the Company, the Executive acknowledges that a breach of any of the covenants contained in Sections 6 or 7 herein could result in irreparable injury to the Company for which there might be no adequate remedy at law, and that, in the event of such a breach or threat thereof, the Company shall be entitled to obtain a temporary restraining order and/or a preliminary injunction and a permanent injunction restraining the Executive from engaging in any activities prohibited by Sections 6 or 7 herein or such other equitable relief as may be required to enforce specifically any of the covenants of Sections 6 or 7 herein. For purposes of Sections 6, 7, and 8 of this Agreement, the term “Company” shall include Variation Biotechnologies, Inc., a corporation incorporated under the Canada Business Corporation Act, the Company, their respective subsidiaries and affiliated companies, and the respective successors and assigns of each of the foregoing.

9.          Review of Agreement; Reasonable Restrictions. The Executive: (a) has carefully read and understands all of the provisions of this Agreement and has had the opportunity for this Agreement to be reviewed by counsel; (b) is voluntarily entering into this Agreement; (c) has not relied upon any representation or statement made by the Company (or its subsidiaries, affiliates, equity holders, agents, representatives, employees, or attorneys) with regard to the subject matter or effect of this Agreement; (d) acknowledges that the duration, geographical scope, and subject matter of Sections 6, 7, and 8 of this Agreement are reasonable and necessary given the Executive’s unique position within the Company and special knowledge of the Company and its customers; (e) acknowledges that the duration, geographical scope, and subject matter of Sections 6, 7, and 8 of this Agreement are reasonable and necessary to protect the goodwill, customer relationships, legitimate business interests, and Confidential Information of the Company and its affiliates, and that the Company would not have entered into this Agreement without the benefit of such provisions; (f) acknowledges the significant consideration which he is receiving for entering into this Agreement; and (g) will be able to earn a satisfactory livelihood without violating this Agreement.

10.        Termination.

 (a)     General. The Executive’s employment with the Company may be terminated at any time by the Company with Cause or without Cause. Any decision regarding termination of the Executive shall be made by the Board.

 (b)     Disability. The Executive’s employment with the Company may be terminated at any time by the Company in the event of the Disability of the Executive.

 (c)     Change of Control. For purposes of this Agreement, the term “Change of Control” shall mean the sale or disposition by Company to an unrelated third party of substantially all of its business or assets, or the sale of the capital stock of the Company in connection with the sale or transfer of a controlling interest in the Company to an unrelated third party, or the merger or consolidation of the Company with another corporation as part of a sale or transfer of a controlling interest in the Company to an unrelated third party. For purposes of this definition, the term “controlling interest” means the sale or transfer of the Company’s securities representing more 50% of the voting power.

 (d)     Definitions. As used herein, the following terms shall have the following meanings:

“Cause” means that, in the good faith and reasonable determination of the Board, the Executive has (i) breached any fiduciary duty or legal or contractual obligation to the Company or any of its subsidiaries or affiliates, where written notice is given to the Executive and the Executive does not cure the breach within fourteen (14) days; (ii) engaged in gross negligence, willful misconduct, fraud, embezzlement, acts of dishonesty, or a conflict of interest relating to the affairs of the Company or any of its subsidiaries or affiliates; (iii) been convicted of or pleaded nolo contendere to: (A) any misdemeanor relating to the affairs of the Company or any of its subsidiaries or affiliates (with the exception of minor misdemeanors not involving moral turpitude); or (B) any felony or indictable offence; (iv) engaged in a violation of any federal or state laws (with the exception of minor misdemeanors not involving moral turpitude), or federal or state securities laws; or (v) the Executive has materially failed to meet minimum performance expectations of the Company’s Chief Executive Officer after reasonable notice of the material performance deficiency and a reasonable opportunity to remedy such deficiency.

“Good Reason” means (i) a material breach of any material provision of this Agreement, which breach is not cured by the Company within thirty (30) days after receipt of written notice thereof from the Executive; (ii) the assignment of duties or responsibilities to the Executive by the Board, which are inconsistent in a material and adverse respect with the Executive’s position with the Company as of the date of this Agreement; or (iii) the relocation of the Executive, without the Executive’s prior consent, by the Company to a work location more than fifty (50) miles from the location of the Company’s headquarters; provided that, in the case of each of (i), (ii) and (iii), the Company shall have been given written notice by the Executive describing in reasonable detail the occurrence of the event or circumstance for which the Executive believes the Executive may resign for Good Reason within fifteen (15) days of the first occurrence thereof and the Company shall not have cured such event or circumstance within thirty (30) days after the receipt of such notice.

“Disability” means the Executive is unable to perform the Executive’s duties as an employee of the Company for a period of four (4) consecutive months in any twelve-month period as a result of illness (mental or physical) or an accident.

“Severance” means a lump sum payment equal to six (6) months of Base Salary (at the rate in effect on the date of termination) plus (ii) an additional one (1) month’s payment of Base Salary for each full year served by the Executive following the Effective Time.

 (e)     Effects of Termination.

(i)     Termination Without Severance. If the Executive’s employment is terminated during the term of this Agreement because of the Executive’s death or Disability, or if the Company terminates the employment of the Executive with Cause, then the Company shall have no further obligation to provide the Executive with notice or to make any payments or provide any benefits (except for the continuation of benefits as and to the extent required by law under the Consolidated Budget Reconciliation Act (“COBRA”), or applicable state equivalent laws, or the Employee Retirement Income Security Act of 1974, as amended (“ERISA”)) to the Executive hereunder after the date of termination, except for payments of Base Salary and properly documented expense reimbursement that had accrued but had not been paid prior to the date of such termination, and payments for any accrued but unused vacation time.

(ii)     Termination With Severance. If the Executive’s employment is terminated by the Company without Cause (other than as a result of the death or Disability of the Executive), the termination is a Change of Control Termination, or the termination is by the Executive for Good Reason, the Executive shall be entitled to payments of Base Salary and properly documented expense reimbursement that had accrued but had not been paid prior to the date of such termination, payments for any accrued but unused vacation time, and payments of the Severance.

 (f)     Conditions and Limitations to Severance. Notwithstanding the foregoing, the obligation of the Company to make Severance payments to the Executive shall be subject to the following provisions and conditions:

(i)     Release of Claims. If the Executive is entitled to Severance under this Agreement, the obligation of the Company to pay Severance shall be contingent upon the Executive signing a general release of claims in the form attached hereto as Exhibit B.

(ii)     Consequences of Breach. If the Executive breaches the Executive’s obligations under Sections 6, 7, or 23 of this Agreement, the Company may immediately cease payments of Severance and may recover all Severance paid to the Executive after the date of such breach, subject to any statutory obligations which the Company has in respect of the payment of statutory notice and severance. The cessation and recovery of these payments shall be in addition to, and not as an alternative to, any other remedies at law or in equity available to the Company, including without limitation the right to seek specific performance or an injunction.

 (g)     Survival. The provisions of Sections 6 through 23 of this Agreement shall survive the term of this Agreement and the termination of the Executive’s employment with the Company and shall continue thereafter in full force and effect in accordance with their terms.

11.        Enforceability, etc. This Agreement shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision hereof shall be prohibited or invalid under any such law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating or nullifying the remainder of such provision or any other provisions of this Agreement. If any one or more of the provisions contained in this Agreement shall for any reason be held to be excessively broad as to duration, geographical scope, activity or subject, such provisions shall be construed by limiting and reducing it so as to be enforceable to the maximum extent permitted by applicable law.

12.        Notices. Any notice, demand or other communication given pursuant to this Agreement shall be in writing and shall be personally delivered, sent by nationally recognized overnight courier or express mail, or mailed by first class certified or registered mail, postage prepaid, return receipt requested as follows:

(a)   If to the Executive:

David Anderson

20 E Springfield Street, Apt 6

Boston, MA 02118

(b)   If to the Company:

Variation Biotechnologies (US), Inc.

222 Third Street, Suite 2241
Cambridge, MA 02142
Attention: Chief Financial Officer

or at such other address as may have been furnished by such person in writing to the other party.

13.       Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware, without regard to their conflict-of-law provisions.

14.       Amendments and Waivers. This Agreement may be amended or modified only by a written instrument signed by the Company and the Executive. No waiver of this Agreement or any provision hereof shall be binding upon the party against whom enforcement of such waiver is sought unless it is made in writing and signed by or on behalf of such party. The waiver of a breach of any provision of this Agreement shall not be construed as a waiver or a continuing waiver of the same or any subsequent breach of any provision of this Agreement. No delay or omission in exercising any right under this Agreement shall operate as a waiver of that or any other right.

15.        Binding Effect; Assignment. This Agreement shall be binding on and inure to the benefit of the Executive and the Executive’s heirs, executors and administrators, and on the Company and its successors and assigns. The rights and obligations of the Executive hereunder are personal and may not be assigned without the prior written consent of the Company.

16.        Entire Agreement. This Agreement constitutes the final and entire agreement of the parties with respect to the matters covered hereby and replaces and supersedes all other agreements and understandings relating hereto and to the Executive’s employment.

17.        Counterparts. This Agreement may be executed in two counterparts, including counterpart signature pages or counterpart facsimile signature pages, each of which shall be deemed an original, but both of which together shall constitute one and the same instrument.

18.        No Conflicting Agreements. The Executive represents and warrants to the Company that the Executive is not a party to or bound by any confidentiality, non-competition, non-solicitation, employment, consulting or other agreement or restriction which could conflict with, or be violated by, the performance of the Executive’s duties to the Company or obligations under this Agreement.

19.        Captions. The captions of the sections of this Agreement are for convenience of reference only and in no way define, limit or affect the scope or substance of any section of this Agreement.

20.        No Strict Construction. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises under any provision of this Agreement, this Agreement shall be construed as if drafted jointly by the parties thereto, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of authoring any of the provisions of this Agreement.

21.        Notification of New Employer. For or a period of up to one year after Executive’s termination, the Executive consents to notification by the Company to the Executive’s new employer or its agents regarding the Executive’s rights and obligations under this Agreement.

22.        Key Man Insurance. The Executive acknowledges that the Company may wish to purchase insurance on the life of the Executive, the proceeds of which would be payable to the Company or an affiliate of same. The Executive hereby consents to such insurance and agrees to submit to any medical examination and release of medical records required to obtain such insurance.

23.        Cooperation. The Executive agrees to cooperate fully with the Company in the defense or prosecution of any threatened or actual claims, actions, arbitrations, audits, hearings, investigations, litigations or suits (whether civil, criminal, administrative, judicial or investigative, whether formal or informal, whether public or private) commenced, brought, conducted or heard by or before, or otherwise involving, any governmental body or self-regulatory organization (“Proceedings”) which may be brought against or on behalf of the Company which relate to events that occurred or allegedly occurred during his employment with the Company. The Executive’s full cooperation in connection with such claims or actions shall include, without implication or limitation, being available to meet with counsel for the Company to prepare for discovery or trial and to testify truthfully as a witness when reasonably requested by the Company at reasonable times designated by the Company. The Company agrees to reimburse the Executive for any reasonable out-of-pocket expenses that he incurs in connection with cooperation pursuant to this section, subject to the presentation of reasonable documentation.

[Remainder of Page Intentionally Omitted]

This Agreement has been executed and delivered as of the date first above written.

COMPANY: 

Paulson Capital (Delaware) Corp. 

By     /s/ Trent Davis               

Title: President 

EXECUTIVE: 

___/s/ David Anderson_____________ 

David Anderson 

 [SIGNATURE PAGE TO EMPLOYMENT AGREEMENT]

EXHIBIT A

PRIOR INVENTIONS

1.     An inventor identified in PCT patent application entitled “Selective differentiation, identification, and modulation of human Th17 cells” (PCT/US2009/031477). In summary, this invention provides for the differentiation of human Th17 cells. More specifically, the invention refines and extends the understanding of the regulation of IL-17A secretion from human CD4+ T cells, and defines the conditions required for human Th17 cell differentiation.

2.     An inventor identified in PCT patent application entitled “Therapeutic uses of TIM-3 modulators” (PCT/US2007/024067). In summary, the invention provides novel methods of treating neurological disorders, including neurodegenerative disorders such as MS. The invention also provides novel methods of treating cancers, including glial tumors such as glioblastoma multiforme. The invention further provides vaccines and related uses.

3.     An inventor identified in unpublished PCT patent application entitled “Compostions and methods for diagnosis and treatment of malignant gliomas.” In summary, the invention relates to fragments of the glioma-associated antigens MAGE and IL-13 receptor a2. The peptides and compositions of the peptides are useful in therapeutic and diagnostic contexts.

4.     An inventor identified in a provisional patent application entitled “Compositions and methods for the treatment of malignant cancer.” In summary, the invention relates to microparticle formulation of MAGE peptides together with a TLR8 agonist. The composition of peptides and TLR8 agonist into a vaccine is useful in therapeutic contexts against malignant cancers.

EXHIBIT B

FORM OF GENERAL RELEASE

In consideration of the severance benefits (the “Severance”) offered to me by Paulson Capital (Delaware), Corp., a Delaware corporation (the “Company”), pursuant to my Employment Agreement with the Company dated April __, 2014 (“Employment Agreement”) and in connection with the termination of my employment, I agree to the following general release (the “Release”).

1.     On behalf of myself, my heirs, executors, administrators, successors, and assigns, I hereby fully and forever generally release and discharge the Company, its current, former and future parents, subsidiaries, affiliated companies, related entities, employee benefit plans, and their fiduciaries, predecessors, successors, officers, directors, shareholders, agents, employees and assigns (collectively, the “Company”) from any and all claims, causes of action, and liabilities up through the date of my execution of the Release. The claims subject to this release include, but are not limited to, those relating to my employment with the Company and/or any predecessor to the Company and the termination of such employment. All such claims (including related attorneys’ fees and costs) are barred without regard to whether those claims are based on any alleged breach of a duty arising in statute, contract, or tort. This expressly includes waiver and release of any rights and claims arising under any and all laws, rules, regulations, and ordinances, including, but not limited to: Title VII of the Civil Rights Act of 1964; the Older Workers Benefit Protection Act; the Americans With Disabilities Act; the Age Discrimination in Employment Act; the Fair Labor Standards Act; the National Labor Relations Act; the Family and Medical Leave Act; the Employee Retirement Income Security Act of 1974, as amended (“ERISA”); the Workers Adjustment and Retraining Notification Act; the Equal Pay Act of 1963; and any similar laws of the state of Washington and/or any other state or governmental entity. The parties agree to apply Washington law in interpreting the Release. This Release does not extend to, and has no effect upon, any benefits that have accrued, and to which I have become vested, under any employee benefit plan within the meaning of ERISA sponsored by the Company.

2.     In understanding the terms of the Release and my rights, I have been advised to consult with an attorney of my choice prior to executing the Release. I understand that nothing in the Release shall prohibit me from exercising legal rights that are, as a matter of law, not subject to waiver such as: (a) my rights under applicable workers’ compensation laws; (b) my right, if any, to seek unemployment benefits; (c) my right to file a charge or complaint with a government agency such as but not limited to the Equal Employment Opportunity Commission, the National Labor Relations Board, or any applicable state agency. To the fullest extent permitted by law, any dispute regarding the scope of this general release shall be resolved through binding arbitration pursuant to Section 9 below, and the arbitration provision set forth in my Employment Agreement.

3.     I understand and agree that the Company will not provide me with the Severance set forth in my Employment Agreement unless I execute the Release. I also understand that I have received or will receive, regardless of the execution of the Release, all wages owed to me together with any accrued but unused vacation pay, less applicable withholdings and deductions, earned through my termination date.

4.     As part of my existing and continuing obligations to the Company, I have returned to the Company all the Company documents (and all copies thereof) and other the Company property that I have had in my possession at any time, including but not limited to the Company files, notes, drawings, records, business plans and forecasts, financial information, specification, computer-recorded information, tangible property (including, but not limited to, computers, laptops, pagers, etc.), credit cards, entry cards, identification badges and keys; and any materials of any kind which contain or embody any proprietary or confidential information of the Company (and all reproductions thereof).

I understand that, even if I did not sign the Release, I am still bound by the Company’s Proprietary Information, Invention, Assignment and Noncompete Agreement signed by me in connection with my employment with the Company, pursuant to the terms of such agreement.

5.     I represent and warrant that I am the sole owner of all claims relating to my employment with the Company and/or with any predecessor of the Company, and that I have not assigned or transferred any claims relating to my employment to any other person or entity.

6.     I agree to keep the Severance set forth in my Employment Agreement and the provisions of the Release confidential and not to reveal its contents to anyone except my lawyer, my spouse or other immediate family member, and/or my financial consultant, or as required by legal process or applicable law.

7.     I understand and agree that the Release shall not be construed at any time as an admission of liability or wrongdoing by either the Company or me.

8.     Any controversy or any claim arising out of or relating to the interpretation, enforceability or breach of the Release shall be settled by arbitration in accordance with the arbitration provision set forth in my Employment Agreement. If for any reason this arbitration provision is not enforceable, I agree to arbitration under the employment arbitration rules of the American Arbitration Association or any successor hereto. The parties further agree that the arbitrator shall not be empowered to add to, subtract from, or modify, alter or amend the terms of the Release. Any applicable arbitration rules or policies shall be interpreted in a manner so as to ensure their enforceability under applicable state or federal law.

9.     I agree that I have had at least twenty-one (21) calendar days in which to consider whether to execute the Release, no one hurried me into executing the Release during that period, and no one coerced me into executing the Release. I understand that the offer of the Severance and the Release shall expire on the sixtieth (60^th) calendar day after my employment termination date if I have not accepted the Release and the Release has not become effective by that time. I further understand that the Company’s obligations under the Release shall not become effective or enforceable until the eighth (8^th) calendar day after the date I sign the Release provided that I have timely delivered it to the Company (the “Effective Date”) and that in the seven (7) day period following the date I deliver a signed copy of the Release to the Company I understand that I may revoke my acceptance of the Release. I understand that the Severance will become available to me only if the Release becomes effective, on the sixty-first (61st) calendar day after my termination date.

10.     In executing the Release, I acknowledge that I have not relied upon any statement made by the Company, or any of its representatives or employees, with regard to the Release unless the representation is specifically included herein. Furthermore, the Release contains our entire understanding regarding eligibility for and the payment of severance benefits and supersedes any or all prior representation and agreement regarding the subject matter of the Release. Once effective and enforceable, this agreement can only be changed by another written agreement signed by me and an authorized representative of the Company.

11.     Should any provision of the Release be determined by an arbitrator, court of competent jurisdiction, or government agency to be wholly or partially invalid or unenforceable, the legality, validity and enforceability of the remaining parts, terms, or provisions are intended to remain in full force and effect. Specifically, should a court, arbitrator, or agency conclude that a particular claim may not be released as a matter of law, it is the intention of the parties that the general release and the waiver of unknown claims above shall otherwise remain effective to release any and all other claims.

I acknowledge that I have obtained sufficient information to intelligently exercise my own judgment regarding the terms of the Release before executing the Release.

 [SIGNATURE PAGE TO GENERAL RELEASE AGREEMENT FOLLOWS]

EMPLOYEE’S ACCEPTANCE OF RELEASE

BEFORE SIGNING MY NAME TO THE RELEASE, I STATE THE FOLLOWING: I HAVE READ THE RELEASE, I UNDERSTAND IT AND I KNOW THAT I AM GIVING UP IMPORTANT RIGHTS. I HAVE OBTAINED SUFFICIENT INFORMATION TO INTELLIGENTLY EXERCISE MY OWN JUDGMENT. I HAVE BEEN ADVISED THAT I SHOULD CONSULT WITH AN ATTORNEY BEFORE SIGNING IT, AND I HAVE SIGNED THE RELEASE KNOWINGLY AND VOLUNTARILY.

Date delivered to employee ___________, ______.
Executed this ___________ day of ___________, ______.
	Employee Signature
	Employee Name (Please Print)

[Signature Page to General Release Agreement]