Document:

EXECUTION
VERSION

 

SEPARATION
AND RELEASE AGREEMENT

 

This
Separation and Release Agreement (this “Agreement”) is made and entered into as of September 1, 2016 (the “Contract
Date”), by and between Jim Martin (“Employee” or “You”), on the one hand, and
VBI Vaccines Inc., a corporation organized under the laws of British Columbia, Canada; VBI Vaccines (DE) Inc., a Delaware corporation;
Variation Biotechnologies (US), Inc., a Delaware corporation; Variation Biotechnologies Inc., a corporation organized under the
laws of Ontario, Canada; SciVac, Ltd., an entity incorporated pursuant to the laws of Israel; and SciVac USA, LLC, a Florida limited
liability company (all collectively, the “Company” or “Employer”), on the other hand. Employee
and the Company are sometimes each referred to herein as a “Party” and both collectively, as the “Parties”.
Terms used herein but not otherwise defined shall have the meanings ascribed thereto in the Letter Agreement (as defined below).

 

WITNESSETH:

 

WHEREAS,
Employee and the Company are parties to that certain Employment Agreement, effective May 9, 2016 (the “Letter Agreement”);
and

 

WHEREAS,
Employee and the Company desire to separate from their business relationship as provided herein;

 

NOW,
THEREFORE, in consideration of the premises and mutual promises herein contained, it is agreed as follows:

 

1.
Effective as of the Contract Date, your employment with the Company (including your position as Chief Financial Officer and any
and all other offices you held with the Company or any of its subsidiaries) shall terminate. Except for Sections 6 and 8 of the
Letter Agreement, as of the Contract Date the Letter Agreement shall terminate and have no further force or effect. The Parties
understand and agree that neither the making of this Agreement nor the fulfillment of any condition or obligation of this Agreement
constitutes an admission of any liability or wrongdoing by the Company, any of the Employee Releasees (as defined below) or any
of the Company Releasees (as defined below).

 

2.
Upon execution of this Agreement, Employee will deliver to the Company an executed resignation letter, in substantially the form
attached hereto as Exhibit A. The contents of the resignation letter shall form the substance of the Company’s required
disclosure pursuant to applicable securities laws.

 

3.
This Agreement supersedes any and all other agreements, written or verbal, which may exist between the Company and Employee solely
concerning Employee’s separation from the Company, including without limitation any representations made to Employee by
any executive officer or director of the Company.

 

4.
Employee Acknowledgments.

 

(a)
You have been advised by the Company to consult with an attorney of your choice prior to signing this Agreement.

 

(b)
You have been given a period of at least twenty-one (21) days within which to consider this Agreement.

 

    	 

    	 

    

 

EXECUTION
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(c)
Other than the severance benefits outlined in Section 6(b) of the Letter Agreement, you agree that you would not be entitled to
receive the consideration offered to You herein but for your signing this Agreement.

 

(d)
You may revoke this Agreement within seven (7) days after the date You sign it by providing written notice of the revocation to
the Chief Executive Officer of the Company no later than the seventh (7th) day after You sign it. It is understood and agreed
that any notice of revocation received by the Chief Executive Officer of the Company after the expiration of this seven (7) day
period shall be null and void.

 

5.
It is further expressly agreed by the Parties that this Agreement shall not become effective or enforceable and the consideration
referred to in Section 7 below and elsewhere herein will not be paid until the seven (7) day revocation period described in Section
4(d) above has expired without any such revocation having occurred or been attempted. Therefore, it is expressly agreed by the
Parties that the “Effective Date” of this Agreement is the first day after the date the seven (7) day revocation
period has so expired.

 

6.
Employee represents that he has consulted or has had sufficient opportunity to discuss with any person, including an attorney
of his choice, all provisions of this Agreement, that he has carefully read and fully understands all the provisions of this Agreement,
that he is competent to execute this Agreement, and that he is voluntarily entering into this Agreement of his own free will and
accord, without reliance upon any statement or representation of the Company or its representatives not expressly set forth in
writing in this Agreement.

 

7.
Provided that Employee does not so revoke this Agreement and complies with his obligations hereunder, the Company agrees as follows:

 

(a)
For the period commencing on the Contract Date through November 5, 2016 (the “Separation Payment Period”),
the Company will (i) continue to pay to Employee the monthly salary described in the Letter Agreement and (ii) pay to Employee,
upon the termination of the Separation Payment Period, a severance benefit of $56,250 payable in three equal monthly installments
and in accordance with the Company’s standard payroll procedures.

 

(b)
Employee has submitted to the Company a list of expenses for which he is seeking reimbursement. The Company will promptly reimburse
Employee for authorized expenses consistent with its corporate policy. In addition, immediately following the termination of the
Separation Payment Period, the Company will pay Employee, less statutory deductions, any amounts owed Employee for accrued but
unpaid, accrued and unused paid time off work. After the Effective Date, the Company also will reimburse You up to a maximum of
$3,500, for your reasonable legal fees and expenses incurred in negotiating this Agreement and related matters; provided that
You submit to the Company an invoice for such services from your attorney.

 

(c)
Upon execution of this Agreement by the Parties, You will deliver to the Company a flashdrive containing a copy of all information
pertaining to the Company and its subsidiaries on the harddrive of any computer within your possession, custody or control.

 

(d)
The Company will pay on Employee’s behalf payments for medical and dental benefits under the Company’s medical and
dental benefit plans, according to those benefits chosen by Employee for continuation under The Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended (“COBRA”), through the Separation Payment Period; provided, however, that nothing set
forth within this Agreement shall be construed as obligating the Company to maintain and/or continue in force any benefit plan.

 

    	2

     

    

 

EXECUTION
VERSION

 

8.
Reference is hereby made to that certain Restricted Share Unit Agreement by and between the Company and Employee dated as of June
14, 2016 (the “RSU Agreement”). The restricted stock units issued to Employee shall remain subject to the RSU
Agreement in all respects. For purposes of clarification, 1,216 RSUs shall vest, and such equivalent number of Company shares
shall be issued (the “RSU Shares”) to Employee, pursuant to the terms of the RSU Agreement and Section 16 of
the VBI Vaccines Inc. Incentive Plan. The Company shall deliver the RSU Shares to Employee within five (5) business days of the
Effective Date.

 

9.
Except as provided in Section 7(d) above, Employee’s health insurance and all other Company benefits will terminate according
to the terms of the plans. This provision is not, however, intended to waive Employee’s rights under COBRA. Employee acknowledges
that the Company will provide the COBRA notice, in accordance with federal guidelines, under which Employee may elect continuation
of coverage.

 

10.
During the Separation Payment Period, You agree to make yourself available to consult with the Chief Executive Officer of the
Company (the “CEO”) or persons designated by the CEO on matters concerning the Company and its subsidiaries
as reasonably requested by the CEO from time to time; provided, however, that in no event shall You be required, unless otherwise
agreed, to devote more than 150 hours of your time to performing such services during any calendar month. You and the Company
agree that You will receive no compensation for performing such services, but You will be: (i) paid at the rate of $125 per hour
for each hour over 150 hours performed in any calendar month (it being agreed and understood that you will advise the Company
in writing each month when you have performed 150 hours of services in any calendar month on behalf of the Company)]; and (ii)
reimbursed for all reasonable out-of-pocket expenses you incurred in performing such services that have been approved in writing
by the Company prior to your incurrence thereof. The parties hereto acknowledge that but for this Agreement You would not be required
to render the services described in this Paragraph.

 

11.
Employee represents and acknowledges that in executing this Agreement, he does not rely and has not relied upon any representation
or statement made by the Company or any of its agents, representatives or attorneys with regard to the subject matter, basis or
effect of this Agreement or otherwise other than the representations contained in this Agreement.

 

12.
Employee agrees as follows:

 

(a)
As a material inducement to the Company to enter into this Agreement and subject to the terms of this Section 12, Employee hereby
irrevocably and unconditionally releases, acquits and forever discharges the Company and each of its parent, owners, stockholders,
predecessors, successors, assigns, agents, directors, officers, employees, representatives, attorneys, divisions, subsidiaries,
affiliates and all persons acting by, through, under or in concert with any of them, (all collectively “Company Releasees”),
from any and all charges, complaints, claims, liabilities, obligations, promises, agreements, controversies, damages, penalties,
actions, causes of action, suits, rights, demands, costs, losses, debts and expenses (including without limitation attorneys’
fees and costs actually incurred), of any nature whatsoever, whether now known or unknown (“Claim” or “Claims”)
which Employee now has, owns, holds, or which Employee at any time heretofore had, owned, or held against any or all of the Company
Releasees, including, but not limited to: (a) all Claims under the Age Discrimination in Employment Act of 1967, as amended; (b)
all Claims under Title VII of the Civil Rights Act of 1964, as amended; (c) all Claims under the Employee Retirement Income Security
Act of 1974, as amended; (d) all Claims arising under the Americans With Disabilities Act of 1990, as amended; (e) all Claims
arising under the Family and Medical Leave Act of 1993, as amended; (f) all Claims related to Employee’s employment with
the Company; (g) all Claims of unlawful discrimination, retaliation or harassment based on age, sex, race, religion, national
origin, handicap, disability, equal pay, sexual orientation or otherwise; (h) all Claims of wrongful discharge, breach of an implied
or express employment contract, negligent or intentional infliction of emotional distress, libel, slander, defamation, breach
of privacy, fraud, breach of any implied covenant of good faith and fair dealing and any other federal, state, or local common
law or statutory claims, whether in tort or in contract; (i) all Claims related to unpaid wages, salary, overtime compensation,
bonuses, severance pay, vacation pay, expenses or any other compensation or benefits arising out of Employee’s employment
with the Company; (j) all Claims arising under any federal, state or local regulation, law, code or statute; (k) all Claims of
discrimination, retaliation or harassment arising under any state or local law or ordinance; and (l) all Claims relating to any
agreement, arrangement or understanding that Employee has, or may have, with the Company (including, without limitation, the Letter
Agreement, but specifically excluding this Agreement, and the RSU Agreement,(collectively, the “Other Agreements”)).
Notwithstanding anything to the contrary contained in this subsection (a), the Company agrees that Employee shall remain a beneficiary
under any past and current Directors and Officers Insurance policies to the extent that Employee was a beneficiary as of the Contract
Date, and notwithstanding anything to the contrary contained in this Agreement, Employee is not releasing in any way any coverage
under said insurance policies.

 

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EXECUTION
VERSION

 

(b)
Employee covenants and promises not to sue, commence an arbitration or otherwise pursue legal action in any forum against the
Company, other than for breach of this Agreement or the Other Agreements, and further covenants and promises to indemnify and
defend the Company from any and all such claims, demands and causes of action, including the payment of reasonable costs and attorneys’
fees relating to any claim, demand, or causes of action brought by him. Employee agrees that should any legal action be pursued
on his behalf by any person or other entity against the Company regarding the claims released by Employee in this Agreement, Employee
will not accept recovery from such action, but will assign such recovery to the Company and agrees to indemnify the Company against
such claims and assessment of damages. Employee further represents that neither he nor anyone acting on his behalf has filed any
lawsuits, arbitrations or other actions in any forum against the Company.

 

(c)
Employee further promises and agrees that he will not at any time disparage the Company or any of its directors, officers, employees,
products, operations, policies, decisions, advertising or marketing programs, if the effect of such disparagement reasonably could
be anticipated to cause material harm to the Company’s reputation, business, interests or to the morale among its work force,
or the reputation of any Company employee. Additionally, Employee will refer all inquiries that he receives (whether written or
oral) regarding the business or operations of the Company to the CEO (or his designee). Employee will make reasonable efforts
to transition Company information to an authorized representative of the Company.

 

13.
The Company agrees as follows:

 

(a)
As a material inducement to Employee to enter into this Agreement and subject to the terms of this paragraph, the Company, on
its own behalf and on behalf of each of the Company Releasees, hereby irrevocably and unconditionally releases, acquits and forever
discharges Employee, and his heirs, representatives, successors and assigns and all persons acting by, through, under or in concert
with any of them (collectively, the “Employee Releasees”), from any and all Claims which any Company Releasee
now has, owns, holds, or which any Company Releasee at any time heretofore had, owned, or held against any of the Employee Releasees
(including, without limitation, any Claims arising out of, in connection with, or related to Employee’s involvement as an
officer or director of the Company or any of its subsidiaries).

 

    	4

     

    

 

EXECUTION
VERSION

 

(b)
The Company covenants and promises not to sue, commence an arbitration or otherwise pursue legal action against Employee in any
forum, other than for breach of this Agreement or the Other Agreements, and further covenants and promises to indemnify and defend
Employee from any and all such claims, demands and causes of action, including the payment of reasonable costs and attorneys’
fees relating to any claim, demand, or causes of action brought by the Company. The Company agrees that should any legal action
be pursued on its behalf by any person or other entity against Employee regarding the claims released in this Agreement, the Company
will not accept recovery from such action, but will assign such recovery to Employee and agrees to indemnify Employee against
such claims and assessment of damages. The Company further represents that it has filed no lawsuits, arbitrations or other actions
against Employee in any forum.

 

(c)
The Company further promises and agrees that it will not at any time disparage Employee, if the effect of such disparagement reasonably
could be anticipated to cause material harm to Employee’s reputation.

 

14.
Employee will not, for a period ending one year after the Effective Date, for any reason, directly or indirectly: (a) solicit
the business of any customer of the Company, for the purpose of, or with the intention of, selling or providing to such customer
any product or service in competition with any product or service sold or provided by Employer during the 12 months immediately
preceding the termination of Employee’s employment with Employer; (b) cause or attempt to cause any employee of Employer
to cease working for Employer.

 

15.
Notwithstanding anything in this Agreement to the contrary, the Company and Employee agree that the Other Agreements shall remain
in full force and effect, as revised above.

 

16.
If Employee or the Company determines that the other has breached this Agreement, the non-breaching Party will notify the Party
in breach of that fact in writing and the Party in breach will be afforded ten (10) days to cure the breach.

 

17.
Employee agrees that by three days after the termination of the Separation Payment Period, he will use his best efforts to return
to the Company any and all property of the Company in his possession, custody or control, including without limitation marketing
plans and related information, product development plans and related information, trade secret information, pricing information,
vendor information, financial information (including usernames and passwords for online corporate and/or financial accounts),
telephone lists, computer software and hardware, keys and office equipment and confirm removal of all Company information from
all telephones and other personal electronic devices. You specifically acknowledge and agree that You will continue to be bound
by and subject to the confidentiality provisions of Section 8 of the Letter Agreement and You will not, among other things, use
or disclose any of the Company information contained on the harddrive of your computer in violation of such Section 8.

 

18.
No waiver of any of the terms of this Agreement shall be valid unless in writing and signed by both Parties. No waiver or default
of any term of this Agreement shall be deemed a waiver of any subsequent breach or default of the same or similar nature. This
Agreement may not be changed except by a later writing signed by both Parties.

 

19.
This Agreement shall be binding upon Employee and upon Employee’s heirs, administrators, representatives, executors, trustees,
successors and assigns, and shall inure to the benefit of Company Releasees and each of them, and to their heirs, administrators,
representatives, executors, trustees, successors, and assigns.

 

    	5

     

    

 

EXECUTION
VERSION

 

20.
For the same aforesaid consideration, it is further expressly agreed and understood that the Parties will promptly execute any
and all documents that are necessary and appropriate to effectuate the terms of this Agreement.

 

21.
For the same aforesaid consideration, it is expressly agreed and understood that the contents of this Agreement, including its
terms, any monetary consideration paid therein, and the parties thereto, shall not be disclosed, released or communicated to any
person (except their attorneys, spouses, and tax consultants), including natural persons, corporations, partnerships, limited
partnerships, joint ventures, sole proprietorships or other business entities, except for the purpose of enforcing this Agreement
or any provision therein or pursuant to a lawful subpoena or except as otherwise required by applicable law (including, without
limitation, Federal securities laws). Each Party agrees to give reasonable notice to the other in the event disclosure of this
Agreement is sought by subpoena or otherwise.

 

22.
This Agreement is entered into and shall be interpreted, enforced and governed by the law of the State of Massachusetts. In any
proceeding to enforce this Agreement, the prevailing Party shall be entitled to costs and reasonable attorneys’ fees.

 

23.
All notices and other communications hereunder shall be in writing and shall be given by personal delivery, mailed by registered
or certified mail (postage prepaid, return receipt requested), sent by facsimile transmission, sent by a nationally recognized
overnight courier service to the parties at the following addresses (or at such other address for a party as is specified by like
change of address):

 

	 	If
    to the	 	Jeff
    Baxter, CEO
	 	 Company:	 	 
	 	 	 	VBI
    Vaccines Inc.
	 	 	 	222
    Third Street, Suite 2241
	 	 	 	Cambridge,
    MA 02142
	 	 	 	 
	 	If
    to Employee:	 	Jim
        Martin

        *********

 

24.
The Parties agree that the Agreement may be executed in multiple originals.

 

25.
To the extent that the Company or counsel for the Company requests the assistance of Employee with respect to any legal matters
relating to the Company following the termination of the Separation Payment Period, including without limitation any lawsuit,
arbitration or other action to which the Company is a party or any inquiry or investigation made or undertaken by any government
authority, Employee shall provide such assistance upon reasonable notice to Employee, Employee shall be paid at the rate of $125
per hour plus any pre-approved expenses. Employee shall provide the Company with weekly invoices for any work performed under
this Section 25, which shall be paid within 15 days of receipt.

 

[Signature
pages follow.]

 

    	6

     

    

 

EXECUTED
as of the Contract Date.

 

	 	/s/ Jim Martin
	 	Jim Martin
	 	 
	 	VBI
    VACCINES INC.
	 	 	 
	 	By:	/s/
    Jeff Baxter
	 	Printed:	Jeff
    Baxter
	 	Title:	Chief
    Executive Officer
	 	 
	 	VBI
    VACCINES (DELAWARE) INC.
	 	 	 
	 	By:	/s/
    Jeff Baxter
	 	Printed:	Jeff
    Baxter
	 	Title:	Chief
    Executive Officer
	 	 
	 	VARIATION
    BIOTECHNOLOGIES (US), INC.
	 	 	 
	 	By:	/s/
    Jeff Baxter
	 	Printed:	Jeff
    Baxter
	 	Title:	Chief
    Executive Officer
	 	 
	 	VARIATION
    BIOTECHNOLOGIES INC.
	 	 	 
	 	By:	/s/
    Jeff Baxter
	 	Printed:	Jeff
    Baxter
	 	Title:	Chief
    Executive Officer

 

    	 

    	 

    

 

	 	SCIVAC,
    LTD.
	 	 	 
	 	By:	/s/
    Jeff Baxter
	 	Printed:	Jeff
    Baxter
	 	Title:	Chief
    Executive Officer
	 	 
	 	SCIVAC
    USA, LLC
	 	 	 
	 	By:	/s/
    Jeff Baxter
	 	Printed:	Jeff
    Baxter
	 	Title:	Chief
    Executive Officer

 

    	 

    	 

    

 

EXHIBIT
A

 

Form
of Resignation Letter

 

September
1, 2016

 

	The
    Board of Directors 
	VBI
    Vaccines Inc.
	222
    Third Street, Suite 2241
	Cambridge,
    MA 02142

 

Gentlemen,

 

Effective
as of September 1, 2016, I hereby resign my positions as Chief Financial Officer of VBI Vaccines Inc., SciVac, Ltd. And SciVac
USA, LLC; Chief Financial Officer, Chief Compliance Officer and Secretary of VBI Vaccines (Delaware) Inc.; and Chief Financial
Officer and Secretary of Variation Biotechnologies (US), Inc. and Variation Biotechnologies Inc. (collectively, the “Companies”)

 

I
confirm that my resignation from the positions in the Companies is not predicated on any disagreements or objections as to any
matter relating to the Companies’ operations, policies or practices.

 

Sincerely,

 

 

Jim
Martin

 

    	9First
Amendment 

to

Board
of Directors Services Agreement 

 

This
First Amendment to Board of Directors Services Agreement (this “Amendment”) is entered into as of the latest date
set forth below, between VBI Vaccines Inc., a corporation organized under the laws of British Columbia, Canada (the “Company”),
parent of VBI Vaccines (Delaware) Inc. (f/k/a Paulson Capital (Delaware) Corp. and VBI Vaccines Inc.), a Delaware corporation
(“VBI DE”) following VBI DE’s merger with a wholly owned subsidiary of the Company and the Company’s subsequent
name change, and Jeff R. Baxter, an individual (“Director”). All capitalized terms not otherwise defined herein shall
have the meaning set forth for such term in the Agreement (as hereinafter defined).

 

WHEREAS,
the Company and Director entered into that certain Paulson Capital (Delaware) Corp. Board of Directors Services Agreement, dated
May 8, 2014 (the “Original Agreement”); and

 

WHEREAS,
in accordance with this Amendment, the Company and Director have agreed to amend the Original Agreement to provide appropriate
provisions necessary for a Canadian company.

 

NOW
THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Company and Director hereby agree as follows:

 

1.
Section 1(b) of the Original Agreement are hereby deleted and replaced in its entirety with the following paragraph:

 

(b)
Director understands that as a member of the Board of Directors he is bound by a fiduciary duty and a duty of care to the
Company. As such, Director must act honestly and in good faith with a view to the best interests of the Company and exercise the
care, diligence and skill that a reasonably prudent individual would exercise in comparable circumstances. Membership on the Board
of Directors shall require adherence to board member conduct policies adopted by the Board of Directors and enforced equallyupon
all directors.

 

2.
Section 12 of the Original Agreement are hereby deleted and replaced in its entirety with the following paragraph:

 

12.
Requirements of Director. During the term of Director’s services to the Company hereunder, Director shall observe all
applicable laws, rules and regulations relating to independent directors of a public company as promulgated from time to time,
including acting in accordance with the Business Corporations Act (British Columbia) (the “BCBCA”) as set out in Section
1(b) of this Agreement, the regulations thereto, and the notice of articles and articles of the Company.

 

3.
Except as otherwise provided in this Amendment, all of the terms, covenants and conditions of the Original Agreement shall remain
in full force and effect.

 

4.
All references to the term “Agreement” in the Original Agreement shall be deemed to refer to the Original Agreement,
as modified by this Amendment.

 

    	 	 	 

    	 

    

 

IN
WITNESS WHEREOF, the parties have caused this Amendment to be executed by their duly authorized representative as of the date
set forth below.

 

	 	THE
COMPANY:
	 	VBI
Vaccines Inc.
	 	 	 
	Date:
    October 16, 2016	By:	/s/
Egidio Nascimento
	 	Name:	Egidio
Nascimento
	 	Title:
	CFO
	 	 	 
	 	DIRECTOR:
	 	
	Date: October
    25, 2016	/s/
Jeff R. Baxter
	 	Jeff
R. Baxter

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