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.

  

 
 

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(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.

  

 
 

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(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.

 

 
 

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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.

 

 
 

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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.

 

 
 

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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.

  

 
 

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(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).

  

 
 

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(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]

 

 
 

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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]