[FORM
      OF SERIES B WARRANT]

     

    NEITHER
      THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR
      THE
      SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED
      UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
      LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
      (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
      UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL,
      IN A
      GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT
      OR
      (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.
      NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION
      WITH
      A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY
      THE
      SECURITIES. ANY TRANSFEREE OF THIS WARRANT SHOULD CAREFULLY REVIEW THE TERMS
      OF
      THIS WARRANT. THE SECURITIES REPRESENTED BY THIS WARRANT MAY BE LESS THAN THE
      NUMBER SET FORTH ON THE FACE HEREOF.

    


    [Insert
      for Non-Convertible Warrants: THE SECURITIES REPRESENTED BY THIS CERTIFICATE
      MAY
      NOT BE EXERCISED UNTIL THE STOCKHOLDER APPROVAL DATE (AS DEFINED IN THE
      SECURITIES PURCHASE AGREEMENT, DATED MARCH 16, 2007, BY AND AMONG THE COMPANY
      AND THE BUYERS PARTY THERETO).]

    


    CLEVELAND
      BIOLABS, INC.

    


    SERIES
      B Warrant To Purchase Common Stock

    


    Warrant
      No.: B-______

    Number
      of
      Shares of Common Stock:_____________

    Date
      of
      Issuance: March 16, 2007 ("Issuance
      Date")

    


    Cleveland
      BioLabs, Inc., a Delaware corporation (the "Company"),
      hereby certifies that, for good and valuable consideration, the receipt and
      sufficiency of which are hereby acknowledged, [BUYER] the registered holder
      hereof or its permitted assigns (the "Holder"),
      is
      entitled, subject to the terms set forth below, to purchase from the Company,
      at
      the Exercise Price (as defined below) then in effect, upon surrender of this
      Warrant to Purchase Common Stock (including any Warrants to Purchase Common
      Stock issued in exchange, transfer or replacement hereof, the "Warrant"),
      at
      any time or times on or after September 16, 2007 (the "Initial
      Exercise Date"),
      but
      not after 11:59 p.m., New York Time, on the Expiration Date (as defined below
      ___________________(______________)1 
      fully
      paid nonassessable shares of Common Stock (as defined below) (the
      "Warrant
      Shares").
      Except as otherwise defined herein, capitalized terms in this Warrant shall
      have
      the meanings set forth in Section 15. This Warrant is one of the Warrants (as
      defined in the Securities Purchase Agreement) to purchase Common Stock (the
      "SPA
      Warrants"
      issued
      pursuant to Section 1 of that certain Securities Purchase Agreement, dated
      as of
      March 16, 2007 (the "Subscription
      Date"),
      by
      and among the Company and the investors (the "Buyers")
      referred to therein (the "Securities
      Purchase Agreement").

     

    
      
        
1 Insert
        number of shares equal to 50% of the Conversion Amount (as defined in the
        Certificate of Designations) on the Issuance Date divided by the initial
        Conversion Price (as defined in the Certificate of
        Designations).

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    1.  EXERCISE
      OF WARRANT.

     

    (a)  Mechanics
      of Exercise.
      Subject
      to the terms and conditions hereof (including, without limitation, the
      limitations set forth in Section 1(f)), this Warrant may be exercised by the
      Holder on any day on or after the Initial Exercise Date, in whole or in part
      by
      (i) delivery of a written notice, in the form attached hereto as Exhibit B
      (the
      "Exercise
      Notice"),
      of
      the Holder's election to exercise this Warrant, (ii) (A) payment to the
      Company of an amount equal to the applicable Exercise Price multiplied by the
      number of Warrant Shares as to which this Warrant is being exercised (the
      "Aggregate
      Exercise Price")
      in
      cash or wire transfer of immediately available funds, or (B) to the extent
      permitted by Section 1(d), by notifying the Company that this Warrant is being
      exercised pursuant to a Cashless Exercise (as defined in Section 1(d)), and
      (iii) if required by Section 2(h) or unless the Holder has previously delivered
      this Warrant to the Company and it or a new replacement Warrant has not yet
      been
      delivered to the Holder, the surrender of this Warrant to a common carrier
      for
      overnight delivery to the Company; provided, that if such Warrant Shares are
      to
      be issued in any name other than that of the registered holder of this Warrant,
      such issuance shall be deemed a transfer and the provisions of Section 7(a)
      shall be applicable. On or before the first (1st) Business Day following the
      date on which the Company has received each of the Exercise Notice, the
      Aggregate Exercise Price (or notice of a Cashless Exercise) and, if required,
      this Warrant (collectively, the "Exercise
      Delivery Documents"),
      the
      Company shall transmit by facsimile an acknowledgment of confirmation of receipt
      of the Exercise Delivery Documents to the Holder and the Company's transfer
      agent (the "Transfer
      Agent").
      On or
      before the third (3rd) Business Day following the date on which the Company
      has
      received all of the Exercise Delivery Documents (the "Share
      Delivery Date"),
      the
      Company shall (X) provided that the Transfer Agent is participating in The
      Depository Trust Company ("DTC")
      Fast
      Automated Securities Transfer Program, upon the request of the Holder, credit
      such aggregate number of shares of Common Stock to which the Holder is entitled
      pursuant to such exercise to the Holder's or its designee's balance account
      with
      DTC through its Deposit Withdrawal Agent Commission system, or (Y) if the
      Transfer Agent is not participating in the DTC Fast Automated Securities
      Transfer Program, issue and dispatch by overnight courier to the address as
      specified in the Exercise Notice, a certificate, registered in the Company's
      share register in the name of the Holder or its designee, for the number of
      shares of Common Stock to which the Holder is entitled pursuant to such
      exercise. Upon delivery to the Company of the Exercise Delivery Documents,
      the
      Holder shall be deemed for all corporate purposes to have become the holder
      of
      record of the Warrant Shares with respect to which this Warrant has been
      exercised, irrespective of the date such Warrant Shares are credited to the
      Holder's DTC account or the date of delivery of the certificates evidencing
      such
      Warrant Shares, as the case may be. If this Warrant is submitted in connection
      with any exercise pursuant to this Section 1(a) and the number of Warrant Shares
      represented by this Warrant submitted for exercise is greater than the number
      of
      Warrant Shares being acquired upon an exercise, then the Company shall as soon
      as practicable and in no event later than three (3) Business Days after any
      exercise and at its own expense, issue a new Warrant (in accordance with Section
      7(d)) representing the right to purchase the number of Warrant Shares
      purchasable immediately prior to such exercise under this Warrant, less the
      number of Warrant Shares with respect to which this Warrant is exercised. No
      fractional shares of Common Stock are to be issued upon the exercise of this
      Warrant, but rather the number of shares of Common Stock to be issued shall
      be
      rounded up to the nearest whole number. The Company shall pay any and all taxes
      which may be payable with respect to the issuance and delivery of Warrant Shares
      upon exercise of this Warrant, other than income, franchise, profits or similar
      taxes of the Holder or taxes resulting from issuance of Warrant Shares to a
      Person other than the Holder. 

     

    
      
        
        

      

      
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    (b)  Exercise
      Price.
      For
      purposes of this Warrant, "Exercise
      Price"
      means
      $10.36, subject to adjustment as provided herein. 

     

    (c)  Company's
      Failure to Timely Deliver Securities.
      If the
      Company shall fail for any reason or for no reason to issue to the Holder within
      three (3) Trading Days of receipt of the Exercise Delivery Documents, a
      certificate for the number of shares of Common Stock to which the Holder is
      entitled and register such shares of Common Stock on the Company's share
      register or to credit the Holder's balance account with DTC for such number
      of
      shares of Common Stock to which the Holder is entitled upon the Holder's
      exercise of this Warrant, then, in addition to all other remedies available
      to
      the Holder, the Company shall pay in cash to the Holder on each day after such
      third Business Day that the issuance of such shares of Common Stock is not
      timely effected an amount equal to 1.0% of the product of (A) the sum of the
      number of shares of Common Stock not issued to the Holder on a timely basis
      and
      to which the Holder is entitled and (B) the Closing Sale Price of the shares
      of
      Common Stock on the Trading Day immediately preceding the last possible date
      which the Company could have issued such shares of Common Stock to the Holder
      without violating Section 1(a). In addition to the foregoing, if within three
      (3) Trading Days after the Company's receipt of the Exercise Delivery Documents,
      the Company shall fail to issue and deliver a certificate to the Holder and
      register such shares of Common Stock on the Company's share register or credit
      the Holder's balance account with DTC for the number of shares of Common Stock
      to which the Holder is entitled upon such holder's exercise hereunder or if
      the
      Company fails to deliver to the Holder the certificate or certificates
      representing the applicable Warrant Shares (or credit the Holder's balance
      account at DTC with the applicable Warrant Shares) within three (3) Trading
      Days
      after its obligation to do so under clause (ii) below and if on or after such
      Trading Day the Holder purchases (in an open market transaction or otherwise)
      shares of Common Stock to deliver in satisfaction of a sale by the Holder of
      shares of Common Stock issuable upon such exercise that the Holder anticipated
      receiving from the Company (a "Buy-In"),
      then
      the Company shall, within three (3) Business Days after the Holder's request
      and
      in the Holder's discretion, either (i) pay cash to the Holder in an amount
      equal
      to the Holder's total purchase price (including brokerage commissions, if any)
      for the shares of Common Stock so purchased (the "Buy-In
      Price"),
      at
      which point the Company's obligation to deliver such certificate or credit
      such
      Holder's balance account with DTC (and to issue such shares of Common Stock)
      shall terminate, or (ii) promptly honor its obligation to deliver to the Holder
      a certificate or certificates representing such shares of Common Stock or credit
      such Holder's balance account with DTC and pay cash to the Holder in an amount
      equal to the excess (if any) of the Buy-In Price over the product of (A) such
      number of shares of Common Stock, times (B) the Closing Bid Price on the date
      of
      exercise. By complying with either of clauses (i) or (ii) in the preceding
      sentence in accordance with the Holder's request, the Company shall have been
      deemed to have cured the failure to timely deliver such shares of Common
      Stock.

     

    
      
        
        

      

      
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    (d)  Cashless
      Exercise.
       Notwithstanding
      anything contained herein to the contrary, if a Registration Statement (as
      defined in the Registration Rights Agreement) covering the Warrant Shares that
      are the subject of the Exercise Notice (the "Unavailable
      Warrant Shares")
      is
      required pursuant to the Registration Rights Agreement to be available for
      the
      resale of such Unavailable Warrant Shares but is not so available, the Holder
      may, in its sole discretion, exercise this Warrant in whole or in part and,
      in
      lieu of making the cash payment otherwise contemplated to be made to the Company
      upon such exercise in payment of the Aggregate Exercise Price, elect instead
      to
      receive upon such exercise the "Net Number" of shares of Common Stock determined
      according to the following formula (a "Cashless
      Exercise"):

     

    Net
      Number = (A
      x
      B) - (A x C)

     

    B

     

    For
      purposes of the foregoing formula:

     

    A=
      the
      total number of shares with respect to which this Warrant is then being
      exercised.

     

    B=
      the
      arithmetic average of the Weighted Average Price of the shares of Common Stock
      (as reported by Bloomberg) over the five (5) consecutive Trading Days ending
      on
      the date immediately preceding the date of the Exercise Notice.

     

    C=
      the
      Exercise Price then in effect for the applicable Warrant Shares at the time
      of
      such exercise.

    


    (e)  Disputes.
      In the
      case of a dispute as to the determination of the Exercise Price or the
      arithmetic calculation of the Warrant Shares, the Company shall promptly issue
      to the Holder the number of Warrant Shares that are not disputed and resolve
      such dispute in accordance with Section 12.

     

    (f)  Limitations
      on Exercises.
      

     

    (i)  Beneficial
      Ownership.
      The
      Company shall not effect the exercise of this Warrant, and the Holder shall
      not
      have the right to exercise this Warrant, to the extent that after giving effect
      to such exercise, such Person (together with such Person's affiliates) would
      beneficially own in excess of 9.99% (the "Maximum
      Percentage")
      of the
      shares of Common Stock outstanding immediately after giving effect to such
      exercise. For purposes of the foregoing sentence, the aggregate number of shares
      of Common Stock beneficially owned by such Person and its affiliates shall
      include the number of shares of Common Stock issuable upon exercise of this
      Warrant with respect to which the determination of such sentence is being made,
      but shall exclude shares of Common Stock which would be issuable upon (i)
      exercise of the remaining, unexercised portion of this Warrant beneficially
      owned by such Person and its affiliates and (ii) exercise or conversion of
      the
      unexercised or unconverted portion of any other securities of the Company
      beneficially owned by such Person and its affiliates (including, without
      limitation, any convertible notes or convertible preferred stock or warrants)
      subject to a limitation on conversion or exercise analogous to the limitation
      contained herein. Except as set forth in the preceding sentence, for purposes
      of
      this paragraph, beneficial ownership shall be calculated in accordance with
      Section 13(d) of the Securities Exchange Act of 1934, as amended (the
      "Exchange
      Act").
      For
      purposes of this Warrant, in determining the number of outstanding shares of
      Common Stock, the Holder may rely on the number of outstanding shares of Common
      Stock as reflected in (1) the Company's most recent Form 10-K, Form 10-KSB,
      Form
      10-Q, Form 10-QSB, Current Report on Form 8-K or other public filing with the
      Securities and Exchange Commission, as the case may be, (2) a more recent public
      announcement by the Company or (3) any other notice by the Company or the
      Transfer Agent setting forth the number of shares of Common Stock outstanding.
      For any reason at any time, upon the written or oral request of the Holder,
      the
      Company shall within one Business Day confirm orally and in writing to the
      Holder the number of shares of Common Stock then outstanding. In any case,
      the
      number of outstanding shares of Common Stock shall be determined after giving
      effect to the conversion or exercise of securities of the Company, including
      the
      SPA Securities and the SPA Warrants, by the Holder and its affiliates since
      the
      date as of which such number of outstanding shares of Common Stock was reported.
      

     

    
      
        
        

      

      
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    (ii)  Principal
      Market Regulation.
      Notwithstanding anything to the contrary contained herein, the Company shall
      not
      be obligated to issue any shares of Common Stock upon exercise of this Warrant
      if the issuance of such shares of Common Stock would exceed that number of
      shares of Common Stock which the Company may issue upon exercise or conversion,
      as applicable, of the SPA Warrants and SPA Securities or otherwise without
      breaching the Company's obligations under the rules or regulations of the
      Principal Market (the "Exchange
      Cap"),
      except that such limitation shall not apply in the event that the Company (A)
      obtains the approval of its stockholders as required by the applicable rules
      of
      the Principal Market for issuances of shares of Common Stock in excess of such
      amount or (B) obtains a written opinion from outside counsel to the Company
      that
      such approval is not required, which opinion shall be reasonably satisfactory
      to
      the Required Holders. Until such approval or written opinion is obtained, no
      Buyer shall be issued in the aggregate, upon exercise or conversion, as
      applicable, of any SPA Warrants or SPA Securities, shares of Common Stock in
      an
      amount greater than the product of the Exchange Cap multiplied by a fraction,
      the numerator of which is the total number of shares of Common Stock underlying
      the SPA Warrants and SPA Securities issued to such Buyer pursuant to the
      Securities Purchase Agreement on the Issuance Date and the denominator of which
      is the aggregate number of shares of Common Stock underlying all of the SPA
      Warrants (other than the Non-Convertible Warrants (as defined in the Securities
      Purchase Agreement)) and SPA Securities (other than the Non-Convertible
      Preferred Shares (as defined in the Securities Purchase Agreement)) issued
      to
      the Buyers pursuant to the Securities Purchase Agreement on the Issuance Date
      (with respect to each Buyer, the "Exchange
      Cap Allocation").
      In
      the event that any Buyer shall sell or otherwise transfer any of such Buyer's
      SPA Warrants, the transferee shall be allocated a pro rata portion of such
      Buyer's Exchange Cap Allocation, and the restrictions of the prior sentence
      shall apply to such transferee with respect to the portion of the Exchange
      Cap
      Allocation allocated to such transferee. In the event that any holder of SPA
      Warrants shall exercise all of such holder's SPA Warrants for, convert all
      of
      such holder’s SPA Securities into, a number of shares of Common Stock which, in
      the aggregate, is less than such holder's Exchange Cap Allocation, then the
      difference between such holder's Exchange Cap Allocation and the number of
      shares of Common Stock actually issued to such holder shall be allocated to
      the
      respective Exchange Cap Allocations of the remaining holders of SPA Warrants
      and
      SPA Securities on a pro rata basis in proportion to the shares of Common Stock
      underlying the SPA Warrants and SPA Securities then held by each such holder.
      In
      the event that the Company is prohibited from issuing any Warrant Shares for
      which Exercise Delivery Documents have been received as a result of the
      operation of this Section 1(f)(ii), the Company shall pay cash in exchange
      for
      cancellation of such Warrant Shares, at a price per Warrant Share equal to
      the
      difference between Weighted Average Price and the Exercise Price as of the
      date
      of the attempted exercise.

     

    
      
        
        

      

      
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    (g)  Insufficient
      Authorized Shares.
      If at
      any time while this Warrant remain outstanding the Company does not have a
      sufficient number of authorized and unreserved shares of Common Stock to satisfy
      its obligation to reserve for issuance upon exercise of this Warrant at least
      a
      number of shares of Common Stock equal to 130% (the "Required
      Reserve Amount")
      of the
      number of shares of Common Stock as shall from time to time be necessary to
      effect the exercise of all of this Warrant then outstanding (an "Authorized
      Share Failure"),
      then
      the Company shall immediately take all action necessary to increase the
      Company's authorized shares of Common Stock to an amount sufficient to allow
      the
      Company to reserve the Required Reserve Amount for this Warrant then
      outstanding. Without limiting the generality of the foregoing sentence, as
      soon
      as reasonably practicable after the date of the occurrence of an Authorized
      Share Failure, but in no event later than ninety (90) days after the occurrence
      of such Authorized Share Failure, the Company shall hold a meeting of its
      stockholders for the approval of an increase in the number of authorized shares
      of Common Stock. In connection with such meeting, the Company shall provide
      each
      stockholder with a proxy statement and shall use its reasonable best efforts
      to
      solicit its stockholders' approval of such increase in authorized shares of
      Common Stock and to cause its board of directors to recommend to the
      stockholders that they approve such proposal.

     

    (h)  Book-Entry.
      Upon
      exercise of this Warrant in accordance with the terms hereof, the Holder shall
      not be required to physically surrender this Warrant to the Company unless
      it is
      being exercised for all of the Warrant Shares represented by the Warrant. The
      Holder and the Company shall maintain records showing the number of Warrant
      Shares exercised and issued and the dates of such exercises or shall use such
      other method, reasonably satisfactory to the Holder and the Company, so as
      not
      to require physical surrender of this Warrant upon each such exercise. In the
      event of any dispute or discrepancy, such records of the Company establishing
      the number of Warrant Shares to which the Holder is entitled shall be
      controlling and determinative in the absence of manifest error. Notwithstanding
      the foregoing, if this Warrant is exercised as aforesaid, the Holder may not
      transfer this Warrant unless the Holder first physically surrenders this Warrant
      to the Company in accordance with Section 7(a). The Holder and any assignee,
      by
      acceptance of this Warrant, acknowledge and agree that, by reason of the
      provisions of this paragraph, following exercises of any portion of this
      Warrant, the number of Warrant Shares represented by this Warrant may be less
      than the number stated on the face hereof. 

     

    (i)  [INSERT
      IN NON-CONVERTIBLE WARRANTS:
      Notwithstanding the foregoing, this Warrant shall not be exercisable until
      after
      the Stockholder Approval Date (as defined in the Securities Purchase
      Agreement).]

     

    
      
        
        

      

      
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    2.  ADJUSTMENT
      OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES.
      The
      Exercise Price and the number of Warrant Shares shall be adjusted from time
      to
      time as follows:

     

    (a)  Adjustment
      upon Issuance of shares of Common Stock.
      If and
      whenever on or after the Subscription Date, the Company issues or sells, or
      in
      accordance with this Section 2 is deemed to have issued or sold, any shares
      of
      Common Stock (including the issuance or sale of shares of Common Stock owned
      or
      held by or for the account of the Company, but excluding shares of Common Stock
      deemed to have been issued by the Company in connection with any Excluded
      Securities (as defined in the Certificate of Designations) for a consideration
      per share (the "New
      Issuance Price")
      less
      than a price (the "Applicable
      Price")
      equal
      to the Exercise Price in effect immediately prior to such issue or sale or
      deemed issuance or sale (the foregoing a "Dilutive
      Issuance"),
      then
      immediately after such Dilutive Issuance, the Exercise Price then in effect
      shall be reduced to an amount equal to the product of (A) the Exercise Price
      in
      effect immediately prior to such Dilutive Issuance and (B) the quotient
      determined by dividing (1) the sum of (I) the product derived by multiplying
      the
      Exercise Price in effect immediately prior to such Dilutive Issuance and the
      number of shares of Common Stock Deemed Outstanding immediately prior to such
      Dilutive Issuance plus (II) the consideration, if any, received by the Company
      upon such Dilutive Issuance, by (2) the product derived by multiplying (I)
      the
      Exercise Price in effect immediately prior to such Dilutive Issuance by (II)
      the
      number of shares of Common Stock Deemed Outstanding immediately after such
      Dilutive Issuance.
      Upon
      each
      such adjustment of the Exercise Price hereunder, the number of Warrant Shares
      shall be adjusted to the number of shares of Common Stock determined by
      multiplying the Exercise Price in effect immediately prior to such adjustment
      by
      the number of Warrant Shares acquirable upon exercise of this Warrant
      immediately prior to such adjustment and dividing the product thereof by the
      Exercise Price resulting from such adjustment. For purposes of determining
      the
      adjusted Exercise Price under this Section 2(a), the following shall be
      applicable:

     

      (i)    
      Issuance
      of Options.
      If the
      Company in any manner grants any Options and the lowest price per share for
      which one share of Common Stock is issuable upon the exercise of any such Option
      or upon conversion, exercise or exchange of any Convertible Securities issuable
      upon exercise of any such Option is less than the Applicable Price, then such
      share of Common Stock shall be deemed to be outstanding and to have been issued
      and sold by the Company at the time of the granting or sale of such Option
      for
      such price per share. For purposes of this Section 2(a)(i), the "lowest price
      per share for which one share of Common Stock is issuable upon exercise of
      such
      Options or upon conversion, exercise or exchange of such Convertible Securities
      issuable upon exercise of any such Option" shall be equal to the sum of the
      lowest amounts of consideration (if any) received or receivable by the Company
      with respect to any one share of Common Stock upon the granting or sale of
      the
      Option, upon exercise of the Option and upon conversion, exercise or exchange
      of
      any Convertible Security issuable upon exercise of such Option. No further
      adjustment of the Exercise Price or number of Warrant Shares shall be made
      upon
      the actual issuance of such shares of Common Stock or of such Convertible
      Securities upon the exercise of such Options or upon the actual issuance of
      such
      shares of Common Stock upon conversion, exercise or exchange of such Convertible
      Securities. 

     

      (ii)    
      Issuance
      of Convertible Securities.
      If the
      Company in any manner issues or sells any Convertible Securities and the lowest
      price per share for which one share of Common Stock is issuable upon the
      conversion, exercise or exchange thereof is less than the Applicable Price,
      then
      such share of Common Stock shall be deemed to be outstanding and to have been
      issued and sold by the Company at the time of the issuance or sale of such
      Convertible Securities for such price per share. For the purposes of this
      Section 2(a)(ii), the "lowest price per share for which one share of Common
      Stock is issuable upon the conversion, exercise or exchange thereof" shall
      be
      equal to the sum of the lowest amounts of consideration (if any) received or
      receivable by the Company with respect to one share of Common Stock upon the
      issuance or sale of the Convertible Security and upon conversion, exercise
      or
      exchange of such Convertible Security. No further adjustment of the Exercise
      Price or number of Warrant Shares shall be made upon the actual issuance of
      such
      shares of Common Stock upon conversion, exercise or exchange of such Convertible
      Securities, and if any such issue or sale of such Convertible Securities is
      made
      upon exercise of any Options for which adjustment of this Warrant has been
      or is
      to be made pursuant to other provisions of this Section 2(a), no further
      adjustment of the Exercise Price or number of Warrant Shares shall be made
      by
      reason of such issue or sale. 

     

    
      
        
        

      

      
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      (iii)    
      Change
      in Option Price or Rate of Conversion.
      If the
      purchase price provided for in any Options, the additional consideration, if
      any, payable upon the issue, conversion, exercise or exchange of any Convertible
      Securities, or the rate at which any Convertible Securities are convertible
      into
      or exercisable or exchangeable for shares of Common Stock increases or decreases
      at any time, the Exercise Price and the number of Warrant Shares in effect
      at
      the time of such increase or decrease shall be adjusted to the Exercise Price
      and the number of Warrant Shares which would have been in effect at such time
      had such Options or Convertible Securities provided for such increased or
      decreased purchase price, additional consideration or increased or decreased
      conversion rate, as the case may be, at the time initially granted, issued
      or
      sold. For purposes of this Section 2(a)(iii), if the terms of any Option or
      Convertible Security that was outstanding as of the date of issuance of this
      Warrant are increased or decreased in the manner described in the immediately
      preceding sentence, then such Option or Convertible Security and the shares
      of
      Common Stock deemed issuable upon exercise, conversion or exchange thereof
      shall
      be deemed to have been issued as of the date of such increase or decrease.
      No
      adjustment pursuant to this Section 2(a) shall be made if such adjustment would
      result in an increase of the Exercise Price then in effect or a decrease in
      the
      number of Warrant Shares.

     

      (iv)    
      Calculation
      of Consideration Received.
      In case
      any Option is issued in connection with the issue or sale of other securities
      of
      the Company, together comprising one integrated transaction in which no specific
      consideration is allocated to such Options by the parties thereto, the Options
      will be deemed to have been issued for a consideration of $0.01. If any shares
      of Common Stock, Options or Convertible Securities are issued or sold or deemed
      to have been issued or sold for cash, the consideration received therefor will
      be deemed to be the net amount received by the Company therefor. If any shares
      of Common Stock, Options or Convertible Securities are issued or sold for a
      consideration other than cash, the amount of such consideration received by
      the
      Company will be the fair value of such consideration, except where such
      consideration consists of securities, in which case the amount of consideration
      received by the Company will be the Weighted Average Price of such security
      on
      the date of receipt. If any shares of Common Stock, Options or Convertible
      Securities are issued to the owners of the non-surviving entity in connection
      with any merger in which the Company is the surviving entity, the amount of
      consideration therefor will be deemed to be the fair value of such portion
      of
      the net assets and business of the non-surviving entity as is attributable
      to
      such shares of Common Stock, Options or Convertible Securities, as the case
      may
      be. The fair value of any consideration other than cash or securities will
      be
      determined jointly by the Company and the Required Holders. If such parties
      are
      unable to reach agreement within ten (10) days after the occurrence of an event
      requiring valuation (the "Valuation
      Event"),
      the
      fair value of such consideration will be determined within five (5) Business
      Days after the tenth (10th)
      day
      following the Valuation Event by an independent, reputable appraiser jointly
      selected by the Company and the Required Holders. The determination of such
      appraiser shall be final and binding upon all parties absent manifest error
      and
      the fees and expenses of such appraiser shall be borne by the
      Company.

     

    
      
        
        

      

      
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          8
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      (v)    
      Record
      Date.
      If the
      Company takes a record of the holders of shares of Common Stock for the purpose
      of entitling them (A) to receive a dividend or other distribution payable
      in shares of Common Stock, Options or in Convertible Securities or (B) to
      subscribe for or purchase shares of Common Stock, Options or Convertible
      Securities, then such record date will be deemed to be the date of the issue
      or
      sale of the shares of Common Stock deemed to have been issued or sold upon
      the
      declaration of such dividend or the making of such other distribution or the
      date of the granting of such right of subscription or purchase, as the case
      may
      be.

     

      (vi)    
      Floor
      Price.
      Until
      such time as the Company receives the Stockholder Approval, no adjustment
      pursuant to Section 2(a) shall cause the Exercise Price to be less than $10.36,
      as adjusted for any stock dividend, stock split, stock combination,
      reclassification or similar transaction.

     

    (b)  Adjustment
      upon Subdivision or Combination of shares of Common Stock.
      If the
      Company at any time on or after the Subscription Date subdivides (by any stock
      split, stock dividend, recapitalization or otherwise) one or more classes of
      its
      outstanding shares of Common Stock into a greater number of shares, the Exercise
      Price in effect immediately prior to such subdivision will be proportionately
      reduced and the number of Warrant Shares will be proportionately increased.
      If
      the Company at any time on or after the Subscription Date combines (by
      combination, reverse stock split or otherwise) one or more classes of its
      outstanding shares of Common Stock into a smaller number of shares, the Exercise
      Price in effect immediately prior to such combination will be proportionately
      increased and the number of Warrant Shares will be proportionately decreased.
      Any adjustment under this Section 2(b) shall become effective at the close
      of
      business on the date the subdivision or combination becomes
      effective.

     

    (c)  Other
      Events.
      If any
      event occurs of the type contemplated by the provisions of this Section 2 but
      not expressly provided for by such provisions (including, without limitation,
      the granting of stock appreciation rights, phantom stock rights or other rights
      with equity features), then the Company's Board of Directors will make an
      appropriate adjustment consistent with the provisions of this Section 2 in
      the
      Exercise Price and the number of Warrant Shares so as to protect the rights
      of
      the Holder; provided that no such adjustment pursuant to this Section 2(c)
      will
      increase the Exercise Price or decrease the number of Warrant Shares as
      otherwise determined pursuant to this Section 2.

     

    
      
        
        

      

      
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          9
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    3.  RIGHTS
      UPON DISTRIBUTION OF ASSETS.
      If the
      Company shall declare or make any dividend or other distribution of its assets
      (or rights to acquire its assets) to holders of shares of Common Stock, by
      way
      of return of capital or otherwise (including, without limitation, any
      distribution of stock or other securities, property or options by way of a
      dividend, spin off, reclassification, corporate rearrangement, scheme of
      arrangement or other similar transaction) (a "Distribution")
      at any
      time after the issuance of this Warrant, then, in each such case, any Exercise
      Price in effect immediately prior to the close of business on the record date
      fixed for the determination of holders of shares of Common Stock entitled to
      receive the Distribution shall be reduced, effective as of the close of business
      on such record date, to a price determined by multiplying such Exercise Price
      by
      a fraction of which (i) the numerator shall be the Weighted Average Price of
      the
      shares of Common Stock on the Trading Day immediately preceding such record
      date
      minus the value of the Distribution (as determined in good faith by the
      Company's Board of Directors) applicable to one share of shares of Common Stock,
      and (ii) the denominator shall be the Weighted Average Price of the shares
      of
      Common Stock on the Trading Day immediately preceding such record date;
      provided, however, that in the event that the Distribution is of shares of
      Common Stock (or common stock) ("Other
      Shares of Common Stock")
      of a
      company whose common shares are traded on a national securities exchange or
      a
      national automated quotation system, then the Holder may elect to receive a
      warrant to purchase Other Shares of Common Stock in lieu of an increase in
      the
      number of Warrant Shares, the terms of which shall be identical to those of
      this
      Warrant, except that such warrant shall be exercisable into the number of shares
      of Other Shares of Common Stock that would have been payable to the Holder
      pursuant to the Distribution had the Holder exercised this Warrant immediately
      prior to such record date and with an aggregate exercise price equal to the
      product of the amount by which the Exercise Price of this Warrant was decreased
      with respect to the Distribution pursuant to the terms of this Section
      3.

     

    4.  PURCHASE
      RIGHTS; FUNDAMENTAL TRANSACTIONS.

     

    (a)  Purchase
      Rights.
      If at
      any time the Company grants, issues or sells any Options, Convertible Securities
      or rights to purchase stock, warrants, securities or other property pro rata
      to
      the record holders of any class of shares of Common Stock (the "Purchase
      Rights"),
      then
      the Holder will be entitled to acquire, upon the terms applicable to such
      Purchase Rights, the aggregate Purchase Rights which the Holder could have
      acquired if the Holder had held the number of shares of Common Stock acquirable
      upon complete exercise of this Warrant (without regard to any limitations on
      the
      exercise of this Warrant) immediately before the date on which a record is
      taken
      for the grant, issuance or sale of such Purchase Rights, or, if no such record
      is taken, the date as of which the record holders of shares of Common Stock
      are
      to be determined for the grant, issue or sale of such Purchase Rights; provided
      that, notwithstanding anything to the contrary contained herein in any such
      case
      the provisions of Section 2 shall not be applicable to such grant, issuance
      or
      sale by the Company.

     

    (b)  Fundamental
      Transactions.
      The
      Company shall not enter into or be party to a Fundamental Transaction in which
      the Company is not a surviving entity holding all or substantially all of the
      assets that the Company held prior to such Fundamental Transaction, unless
      the
      Successor Entity assumes in writing all of the obligations of the Company under
      this Warrant and the other Transaction Documents in accordance with the
      provisions of this Section (4)(b) pursuant to written agreements in form and
      substance reasonably satisfactory to the Required Holders, including agreements
      to deliver to each holder of Warrants in exchange for such Warrants a security
      of the Successor Entity evidenced by a written instrument substantially similar
      in form and substance to this Warrant, including, without limitation, an
      adjusted exercise price equal to the value for the shares of Common Stock
      reflected by the terms of such Fundamental Transaction, and exercisable for
      a
      corresponding number of shares of capital stock equivalent to the shares of
      Common Stock acquirable and receivable upon exercise of this Warrant (without
      regard to any limitations on the exercise of this Warrant) prior to such
      Fundamental Transaction, and reasonably satisfactory to the Required Holders.
      Prior to the consummation of any Fundamental Transaction pursuant to which
      holders of shares of Common Stock are entitled to receive securities or other
      assets with respect to or in exchange for shares of Common Stock (a
      "Corporate
      Event"),
      the
      Company shall make appropriate provision to insure that the Holder will
      thereafter have the right to receive upon an exercise of this Warrant
at
      any
      time after the consummation of the Fundamental Transaction but
      prior
      to the Expiration Date,
      in lieu
      of the shares of the Common Stock (or
      other
      securities, cash, assets or other property) purchasable
      upon the exercise of the Warrant prior to such Fundamental
      Transaction,
      such
      shares of stock, securities, cash, assets or any other property whatsoever
      (including warrants or other purchase or subscription rights) which the Holder
      would have been entitled to receive upon the happening of such Fundamental
      Transaction had the Warrant been exercised immediately prior to such Fundamental
      Transaction. Provision
      made pursuant to the preceding sentence shall be in a form and substance
      reasonably satisfactory to the Required Holders. The provisions of this Section
      shall apply similarly and equally to successive Fundamental Transactions and
      Corporate Events and shall be applied without regard to any limitations on
      the
      exercise of this Warrant.

     

    
      
        
        

      

      
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          10
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    (c)  Notwithstanding
      the foregoing, in the event of a Fundamental Transaction other than one in
      which
      a Successor Entity that is a publicly traded corporation whose stock is quoted
      or listed for trading on an Eligible Market assumes this Warrant such that
      the
      Warrant shall be exercisable for the publicly traded Common Stock of such
      Successor Entity, at the request of the Holder delivered before the ninetieth
      (90th)
      day
      after such Fundamental Transaction, the Company (or the Successor Entity) shall
      purchase this Warrant from the Holder by paying to the Holder, within five
      (5)
      Business Days after such request (or, if later, on the effective date of the
      Fundamental Transaction), cash in an amount equal to the Black Scholes value
      of
      the remaining unexercised portion of this Warrant on the date of such
      Fundamental Transaction calculated using the Black Scholes Option Pricing
      Model.

     

    5.  NONCIRCUMVENTION.
      The
      Company hereby covenants and agrees that the Company will not, by amendment
      of
      its Certificate of Incorporation, Bylaws or through any reorganization, transfer
      of assets, consolidation, merger, scheme of arrangement, dissolution, issue
      or
      sale of securities, or any other voluntary action, avoid or seek to avoid the
      observance or performance of any of the terms of this Warrant, and will at
      all
      times in good faith carry out all the provisions of this Warrant and take all
      action as may be required to protect the rights of the Holder. Without limiting
      the generality of the foregoing, the Company (i) shall not increase the par
      value of any shares of Common Stock receivable upon the exercise of this Warrant
      above the Exercise Price then in effect, (ii) shall take all such actions
      as may be reasonably necessary or appropriate in order that the Company may
      validly and legally issue fully paid and nonassessable shares of Common Stock
      upon the exercise of this Warrant, and (iii) shall, so long as any of the SPA
      Warrants are outstanding, take all action reasonably necessary to reserve and
      keep available out of its authorized and unissued shares of Common Stock, solely
      for the purpose of effecting the exercise of the SPA Warrants, 130% of the
      number of shares of Common Stock as shall from time to time be necessary to
      effect the exercise of the SPA Warrants then outstanding (without regard to
      any
      limitations on exercise).

     

    
      
        
        

      

      
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          11
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    6.  WARRANT
      HOLDER NOT DEEMED A STOCKHOLDER.
      Except
      as otherwise specifically provided herein, the Holder, solely in such Person's
      capacity as a holder of this Warrant, shall not be entitled to vote or receive
      dividends or be deemed the holder of share capital of the Company for any
      purpose, nor shall anything contained in this Warrant be construed to confer
      upon the Holder, solely in such Person's capacity as the Holder of this Warrant,
      any of the rights of a stockholder of the Company or any right to vote, give
      or
      withhold consent to any corporate action (whether any reorganization, issue
      of
      stock, reclassification of stock, consolidation, merger, conveyance or
      otherwise), receive notice of meetings, receive dividends or subscription
      rights, or otherwise, prior to the issuance to the Holder of the Warrant Shares
      which such Person is then entitled to receive upon the due exercise of this
      Warrant. In addition, nothing contained in this Warrant shall be construed
      as
      imposing any liabilities on the Holder to purchase any securities (upon exercise
      of this Warrant or otherwise) or as a stockholder of the Company, whether such
      liabilities are asserted by the Company or by creditors of the Company.
      Notwithstanding this Section 6, the Company shall provide the Holder with copies
      of the same notices and other information given to the stockholders of the
      Company generally, contemporaneously with the giving thereof to the
      stockholders.

     

    7.  REISSUANCE
      OF WARRANTS.

     

    (a)  Transfer
      of Warrant.
      If this
      Warrant is to be transferred in accordance herewith and the Purchase Agreement,
      the Holder shall surrender this Warrant to the Company, whereupon the Company
      will forthwith issue and deliver upon the order of the Holder a new Warrant
      (in
      accordance with Section 7(d)), registered as the Holder may request,
      representing the right to purchase the number of Warrant Shares being
      transferred by the Holder and, if less then the total number of Warrant Shares
      then underlying this Warrant is being transferred, a new Warrant (in accordance
      with Section 7(d)) to the Holder representing the right to purchase the number
      of Warrant Shares not being transferred.

     

    (b)  Lost,
      Stolen or Mutilated Warrant.
      Upon
      receipt by the Company of evidence reasonably satisfactory to the Company of
      the
      loss, theft, destruction or mutilation of this Warrant, and, in the case of
      loss, theft or destruction, of any indemnification undertaking by the Holder
      to
      the Company in customary form and, in the case of mutilation, upon surrender
      and
      cancellation of this Warrant, the Company shall execute and deliver to the
      Holder a new Warrant (in accordance with Section 7(d)) representing the right
      to
      purchase the Warrant Shares then underlying this Warrant.

     

    (c)  Exchangeable
      for Multiple Warrants.
      This
      Warrant is exchangeable, upon the surrender hereof by the Holder at the
      principal office of the Company, for a new Warrant or Warrants (in accordance
      with Section 7(d)) representing in the aggregate the right to purchase the
      number of Warrant Shares then underlying this Warrant, and each such new Warrant
      will represent the right to purchase such portion of such Warrant Shares as
      is
      designated by the Holder at the time of such surrender; provided, however,
      that
      no Warrants for fractional shares of Common Stock shall be given.

     

    
      
        
        

      

      
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          12
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    (d)  Issuance
      of New Warrants.
      Whenever the Company is required to issue a new Warrant pursuant to the terms
      of
      this Warrant, such new Warrant (i) shall be of like tenor with this Warrant,
      (ii) shall represent, as indicated on the face of such new Warrant, the right
      to
      purchase the Warrant Shares then underlying this Warrant (or in the case of
      a
      new Warrant being issued pursuant to Section 7(a) or Section 7(c), the Warrant
      Shares designated by the Holder which, when added to the number of shares of
      Common Stock underlying the other new Warrants issued in connection with such
      issuance, does not exceed the number of Warrant Shares then underlying this
      Warrant), (iii) shall have an issuance date, as indicated on the face of such
      new Warrant which is the same as the Issuance Date, and (iv) shall have the
      same
      rights and conditions as this Warrant.

     

    8.  MANDATORY
      EXERCISE; REDEMPTION.

     

    (a)  Mandatory
      Exercise.
      Within
      one Business Day of the last Trading Day of any Mandatory
      Exercise Period, the Company may, at its election, deliver notice to the Holder
      confirming that a Mandatory Exercise Period has occurred. Subject to
      satisfaction (or waiver by the Holder) of the Conditions to Mandatory Exercise
      (as defined below), within ten (10) Business Days after the receipt of the
      Mandatory Exercise Notice (the “Mandatory
      Exercise Deadline”),
      the
      Holder, subject to the first paragraph of this Warrant, shall submit an Exercise
      Notice in accordance with Section 2 (a “Mandatory
      Exercise Notice”),
      electing to exercise this Warrant, for all of the then remaining Warrant Shares
      which are not subject to an Exercise Notice delivered to the Company by the
      Holder on or prior to delivery to the Holder of the Mandatory Exercise Notice,
      and shall submit to the Company the Aggregate Exercise Price therefor, in cash,
      by wire transfer of immediately available funds. This Warrant shall be exercised
      in its entirety in accordance with Section 2 on the date on which the Company
      receives the Aggregate Exercise Price pursuant to the preceding sentence (the
      “Mandatory
      Exercise Date”).
      Upon
      the written request of the Holder of this Warrant, the Company shall promptly,
      but in no event later than one (1) Business Day following the receipt of such
      request, confirm in writing the status of the Company’s compliance with each of
      the Conditions to Mandatory Exercise.

     

    (b)  Redemption
      of Warrants.
      If the
      Holder shall have failed to exercise this Warrant with respect to all of the
      Warrant Shares, or shall have failed to have paid the applicable Aggregate
      Exercise Price, by the Mandatory Exercise Deadline and the Conditions to
      Mandatory Exchange have been satisfied (or waived by the Holder), (i) this
      Warrant shall be redeemed by the Company at a price (the “Redemption Amount”)
      equal
      to the product of (A) $0.01, and (B) the number of Warrant Shares as to which
      this Warrant has not been exercised on or prior to the Mandatory Exercise
      Deadline; (ii) the Company shall promptly pay the Redemption Amount to the
      Holder, by check or wire transfer, and (iii) after the Mandatory Exercise
      Deadline, this Warrant shall represent only the right to receive the Redemption
      Amount, and the Holder shall have no other rights hereunder, with respect to
      the
      Warrant Shares as to which this Warrant has not been exercised.

     

    (c)  Conditions
      to Mandatory Exercise.
      “Conditions
      to Mandatory Exercise”
      shall
      mean, on each day commencing with the first day of the applicable Mandatory
      Exercise Period through and including the earlier of the Mandatory Exercise
      Date
      and the Mandatory Exercise Deadline, the Equity Conditions (as defined in the
      Certificate of Designations) shall have been satisfied.

     

    
      
        
        

      

      
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    (d) Pro
      Rata Redemption Requirement.
      If the
      Company elects to cause a mandatory exercise pursuant to Section 8(a), then
      it
      must simultaneously take the same action in the same manner with respect to
      the
      other SPA Warrants. 

     

    9.  NOTICES.
      Whenever notice is required to be given under this Warrant, unless otherwise
      provided herein, such notice shall be given in accordance with Section 9(f)
      of
      the Securities Purchase Agreement. The Company shall provide the Holder with
      prompt written notice of all actions taken pursuant to this Warrant, including
      in reasonable detail a description of such action and the reason therefore.
      Without limiting the generality of the foregoing, the Company will give written
      notice to the Holder (i) promptly upon any adjustment of the Exercise Price,
      setting forth in reasonable detail, and certifying, the calculation of such
      adjustment and (ii) at least fifteen (15) days prior to the date on which the
      Company closes its books or takes a record (A) with respect to any dividend
      or
      distribution upon the shares of Common Stock, (B) with respect to any grants,
      issuances or sales of any Options, Convertible Securities or rights to purchase
      stock, warrants, securities or other property, other than Excluded Securities,
      to holders of shares of Common Stock or (C) for determining rights to vote
      with
      respect to any Fundamental Transaction, dissolution or liquidation, provided
      in
      each case that such information shall be made known to the public prior to
      or in
      conjunction with such notice being provided to the Holder.

     

    10.  AMENDMENT
      AND WAIVER.
      Except
      as otherwise provided herein, the provisions of this Warrant may be amended
      and
      the Company may take any action herein prohibited, or omit to perform any act
      herein required to be performed by it, only if the Company has obtained the
      written consent of the Required Holders; provided that no such action may
      increase the exercise price of any SPA Warrant or decrease the number of shares
      or change the class of stock obtainable upon exercise of any SPA Warrant without
      the written consent of the Holder. No such amendment shall be effective to
      the
      extent that it applies to less than all of the holders of the SPA Warrants
      then
      outstanding.

     

    11.  GOVERNING
      LAW.
      This
      Warrant shall be governed by and construed and enforced in accor-dance with,
      and
      all questions concerning the construction, validity, interpretation and
      performance of this Warrant 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.

     

    12.  CONSTRUCTION;
      HEADINGS.
      This
      Warrant shall be deemed to be jointly drafted by the Company and all the Buyers
      and shall not be construed against any person as the drafter hereof. The
      headings of this Warrant are for convenience of reference and shall not form
      part of, or affect the interpretation of, this Warrant.

     

    13.  DISPUTE
      RESOLUTION.
      In the
      case of a dispute as to the determination of the Exercise Price or the
      arithmetic calculation of the Warrant Shares, the Company shall submit the
      disputed determinations or arithmetic calculations via facsimile within two
      (2)
      Business Days of receipt of the Exercise Notice giving rise to such dispute,
      as
      the case may be, to the Holder. If the Holder and the Company are unable to
      agree upon such determination or calculation of the Exercise Price or the
      Warrant Shares within three Business Days of such disputed determination or
      arithmetic calculation being submitted to the Holder, then the Company shall,
      within two (2) Business Days submit via facsimile (a) the disputed determination
      of the Exercise Price to an independent, reputable investment bank selected
      by
      the Company and approved by the Holder or (b) the disputed arithmetic
      calculation of the Warrant Shares to the Company's independent, outside
      accountant. The Company shall cause at its expense the investment bank or the
      accountant, as the case may be, to perform the determinations or calculations
      and notify the Company and the Holder of the results no later than ten Business
      Days from the time it receives the disputed determinations or calculations.
      Such
      investment bank's or accountant's determination or calculation, as the case
      may
      be, shall be binding upon all parties absent demonstrable error.

     

    
      
        
        

      

      
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    14.  REMEDIES,
      OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF.
      The
      remedies provided in this Warrant shall be cumulative and in addition to all
      other remedies available under this Warrant and the other Transaction Documents,
      at law or in equity (including a decree of specific performance and/or other
      injunctive relief), and nothing herein shall limit the right of the Holder
      right
      to pursue actual damages for any failure by the Company to comply with the
      terms
      of this Warrant. The Company acknowledges that a breach by it of its obligations
      hereunder will cause irreparable harm to the Holder and that the remedy at
      law
      for any such breach may be inadequate. The Company therefore agrees that, in
      the
      event of any such breach or threatened breach, the holder of this Warrant shall
      be entitled, in addition to all other available remedies, to an injunction
      restraining any breach, without the necessity of showing economic loss and
      without any bond or other security being required.

     

    15.  TRANSFER.This
      Warrant may be offered for sale, sold, transferred or assigned without the
      consent of the Company, except as may otherwise be required by Section 2(f)
      of
      the Securities Purchase Agreement, provided that any such offer, sale, transfer
      or assignment is in compliance with applicable securities law, and the terms
      and
      conditions hereof and of the Securities Purchase Agreement .

     

    16.  CERTAIN
      DEFINITIONS.
      For
      purposes of this Warrant, the following terms shall have the following
      meanings:

     

    (a)  "Black
      Scholes Value"
      means
      the value of this Warrant based on the Black and Scholes Option Pricing Model
      obtained from the "OV" function on Bloomberg determined as of the day
      immediately following the public announcement of the applicable Fundamental
      Transaction and reflecting (i) a risk-free interest rate corresponding to the
      U.S. Treasury rate for a period equal to the remaining term of this Warrant
      as
      of such date of request and (ii) an expected volatility equal to the greater
      of
      60% and the 100 day volatility obtained from the HVT function on
      Bloomberg.

     

    (b)  "Bloomberg"
      means
      Bloomberg Financial Markets.

     

    
      
        
        

      

      
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    (c)  "Business
      Day"
      means
      any day other than Saturday, Sunday or other day on which commercial banks
      in
      The City of New York are authorized or required by law to remain
      closed.

     

    (d)  "Certificate
      of Designations"
      means
      the certificate of designations for the Series B Convertible Preferred Stock
      in
      the form attached as Exhibit
      A
      to the
      Securities Purchase Agreement.

     

    (e)  "Closing
      Bid Price"
      and
      "Closing
      Sale Price"
      means,
      for any security as of any date, the last closing bid price and last closing
      trade price, respectively, for such security on the Principal Market, as
      reported by Bloomberg, or, if the Principal Market begins to operate on an
      extended hours basis and does not designate the closing bid price or the closing
      trade price, as the case may be, then the last bid price or the last trade
      price, respectively, of such security prior to 4:00:00 p.m., New York Time,
      as
      reported by Bloomberg, or, if the Principal Market is not the principal
      securities exchange or trading market for such security, the last closing bid
      price or last trade price, respectively, of such security on the principal
      securities exchange or trading market where such security is listed or traded
      as
      reported by Bloomberg, or if the foregoing do not apply, the last closing bid
      price or last trade price, respectively, of such security in the
      over-the-counter market on the electronic bulletin board for such security
      as
      reported by Bloomberg, or, if no closing bid price or last trade price,
      respectively, is reported for such security by Bloomberg, the average of the
      bid
      prices, or the ask prices, respectively, of any market makers for such security
      as reported in the "pink sheets" by Pink Sheets LLC (formerly the National
      Quotation Bureau, Inc.). If the Closing Bid Price or the Closing Sale Price
      cannot be calculated for a security on a particular date on any of the foregoing
      bases, the Closing Bid Price or the Closing Sale Price, as the case may be,
      of
      such security on such date shall be the fair market value as mutually determined
      by the Company and the Holder. If the Company and the Holder are unable to
      agree
      upon the fair market value of such security, then such dispute shall be resolved
      pursuant to Section 12. All such determinations to be appropriately adjusted
      for
      any stock dividend, stock split, stock combination or other similar transaction
      during the applicable calculation period.

     

    (f)  "Common
      Stock"
      means
      (i) the Company's shares of Common Stock, par value $0.005 per share, and
      (ii) any share capital into which such Common Stock shall have been changed
      or any share capital resulting from a reclassification of such Common
      Stock.

     

    (g)  "Common
      Stock Deemed Outstanding"
      means,
      at any given time, the number of shares of Common Stock actually outstanding
      at
      such time, plus the number of shares of Common Stock deemed to be outstanding
      pursuant to Sections 2(a)(i) and 2(a)(ii) hereof regardless of whether the
      Options or Convertible Securities are actually exercisable at such time, but
      excluding any shares of Common Stock owned or held by or for the account of
      the
      Company or issuable upon exercise of the SPA Warrants. 

     

    (h)  "Convertible
      Securities"
      means
      any stock or securities (other than Options) directly or indirectly convertible
      into or exercisable or exchangeable for shares of Common Stock.

     

    
      
        
        

      

      
        -
          16
          -

        
          

        

      

      
        
        

      

    

     

    (i)  "Eligible
      Market"
      means
      the NASDAQ Capital Market, the American Stock Exchange, the New York Stock
      Exchange, the NASDAQ Global Market or the NASDAQ Global Select
      Market.

     

    (j)  "Expiration
      Date"
      means
      the date sixty (60) months after the Issuance Date or, if such date falls on
      a
      day other than a Trading Day or on which trading does not take place on the
      Principal Market (a "Holiday"),
      the
      next date that is not a Holiday.

     

    (k)  "Fundamental
      Transaction"
      means
      that the Company (or in the case of clause (vi) any “person” or “group” (as
      these terms are used for purposes of Sections 13(d) and 14(d) of the Exchange
      Act)) shall, directly or indirectly, in one or more related transactions, (i)
      consolidate or merge with or into (whether or not the Company is the surviving
      corporation) another Person, or (ii) sell, assign, transfer, convey or otherwise
      dispose of all or substantially all of the properties or assets of the Company
      to another Person, or (iii) allow another Person to make a purchase, tender
      or
      exchange offer that is accepted by the holders of more than the 50% of either
      the outstanding shares of Common Stock (not including any shares of Common
      Stock
      held by the Person or Persons making or party to, or associated or affiliated
      with the Persons making or party to, such purchase, tender or exchange offer),
      or (iv) consummate a stock purchase agreement or other business combination
      (including, without limitation, a reorganization, recapitalization, spin-off
      or
      scheme of arrangement) with another Person whereby such other Person acquires
      more than the 50% of the outstanding shares of Common Stock (not including
      any
      shares of Common Stock held by the other Person or other Persons making or
      party
      to, or associated or affiliated with the other Persons making or party to,
      such
      stock purchase agreement or other business combination), (v) reorganize,
      recapitalize or reclassify its Common Stock, or (vi) is or shall become the
      "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
      or indirectly, of 50% of the aggregate ordinary voting power represented by
      issued and outstanding Common Stock.

     

    (l)  “Mandatory
      Exercise Period” means
      any
      period of thirty (30) consecutive Trading Days during which the Closing Sale
      Price of the Common Stock on each such Trading Day is equal to or greater than
      the Mandatory Exercise Trigger Price.

     

    (m)  “Mandatory
      Exercise Trigger Price” means
      Thirty Dollars ($30.00) (subject to adjustment for stock splits, stock dividends
      and other similar events after the Issuance Date).

     

    (n)  "Options"
      means
      any rights, warrants or options to subscribe for or purchase shares of Common
      Stock or Convertible Securities.

     

    (o)  "Parent
      Entity"
      of a
      Person means an entity that, directly or indirectly, controls the applicable
      Person and whose common stock or equivalent equity security is quoted or listed
      on an Eligible Market, or, if there is more than one such Person or Parent
      Entity, the Person or Parent Entity with the largest public market
      capitalization as of the date of consummation of the Fundamental
      Transaction.

     

    
      
        
        

      

      
        -
          17
          -

        
          

        

      

      
        
        

      

    

     

    (p)  "Person"
      means
      an individual, a limited liability company, a partnership, a joint venture,
      a
      corporation, a trust, an unincorporated organization, any other entity and
      a
      government or any department or agency thereof.

     

    (q)  "Principal
      Market"
      means
      the NASDAQ Capital Market.

     

    (r)  "Registration
      Rights Agreement"
      means
      that certain Registration Rights Agreement dated as of the Issuance Date by
      and
      among the Company and the Buyers.

     

    (s)  "Required
      Holders"
      means
      the holders of the SPA Warrants representing at least a majority of shares
      of
      Common Stock underlying the SPA Warrants then outstanding.

     

    (t)  "SPA
      Securities"
      means
      the Preferred Shares issued pursuant to the Securities Purchase
      Agreement.

     

    (u)  "Successor
      Entity"
      means
      the Person (or, if so elected by the Required Holders, the Parent Entity) formed
      by, resulting from or surviving any Fundamental Transaction or the Person (or,
      if so elected by the Required Holders, the Parent Entity) with which such
      Fundamental Transaction shall have been entered into.

     

    (v)  "Trading
      Day"
      means
      any day on which the Common Stock is scheduled to trade on the Principal Market,
      or, if the Principal Market is not the principal trading market for the Common
      Stock, then on the principal securities exchange or securities market on which
      the Common Stock is then traded; provided that "Trading Day" shall not include
      any day on which the Common Stock is scheduled to trade on such exchange or
      market for less than 4.5 hours or any day that the Common Stock is suspended
      from trading during the final hour of trading on such exchange or market (or
      if
      such exchange or market does not designate in advance the closing time of
      trading on such exchange or market, then during the hour ending at 4:00:00
      p.m.,
      New York Time).

     

    (w)  "Weighted
      Average Price"
      means,
      for any security as of any date, the dollar volume-weighted average price for
      such security on the Principal Market during the period beginning at 9:30:01
      a.m., New York City time, and ending at 4:00:00 p.m., New York City time, as
      reported by Bloomberg through its "Volume at Price" function or, if the
      foregoing does not apply, the dollar volume-weighted average price of such
      security in the over-the-counter market on the electronic bulletin board for
      such security during the period beginning at 9:30:01 a.m., New York City time,
      and ending at 4:00:00 p.m., New York City time, as reported by Bloomberg, or,
      if
      no dollar volume-weighted average price is reported for such security by
      Bloomberg for such hours, the average of the highest closing bid price and
      the
      lowest closing ask price of any of the market makers for such security as
      reported in the "pink sheets" by Pink Sheets LLC (formerly the National
      Quotation Bureau, Inc.). If the Weighted Average Price cannot be calculated
      for
      such security on such date on any of the foregoing bases, the Weighted Average
      Price of such security on such date shall be the fair market value as mutually
      determined by the Company and the Required Holders. If the Company and the
      Required Holders are unable to agree upon the fair market value of the such
      security, then such dispute shall be resolved pursuant to Section 12 with the
      term "Weighted Average Price" being substituted for the term "Exercise Price."
      All such determinations shall be appropriately adjusted for any share dividend,
      share split or other similar transaction during such period.

     

    [Signature
      Page Follows]

    


    
      
        
        

      

      
        -
          18
          -

        
          

        

      

      
        
        

      

    


    IN
      WITNESS WHEREOF,
      the
      Company has caused this Warrant to Purchase Common Stock to be duly executed
      as
      of the Issuance Date set out above.

     

    
      	 	 	 
	 	CLEVELAND
              BIOLABS, INC.
	 
 	 
 	 
 
	 	By:  	 
	 	
              
Name: Michael
              Fonstein
	 	Title: Chief
              Executive Officer and President


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      A

    


    EXERCISE
      NOTICE

    TO
      BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS

    WARRANT
      TO PURCHASE COMMON STOCK

    


    CLEVELAND
      BIOLABS, INC.

    The
      undersigned holder hereby exercises the right to purchase _________________
      of
      the shares of Common Stock ("Warrant
      Shares")
      of
      Cleveland BioLabs, Inc., a Delaware corporation (the "Company"),
      evidenced by the attached Warrant to Purchase Common Stock (the "Warrant").
      Capitalized terms used herein and not otherwise defined shall have the
      respective meanings set forth in the Warrant.

    


    1.
      Form
      of Exercise Price. The Holder intends that payment of the Exercise Price shall
      be made as:

    


    ____________ a
      "Cash
      Exercise"
      with
      respect to _________________ Warrant Shares; and/or

    


    ____________ a
      "Cashless
      Exercise"
      with
      respect to _______________ Warrant Shares (to the extent
      permitted).

    


    2.
      Payment of Exercise Price. In the event that the holder has elected a Cash
      Exercise with respect to some or all of the Warrant Shares to be issued pursuant
      hereto, the holder shall pay the Aggregate Exercise Price in the sum of
      $___________________ to the Company in accordance with the terms of the
      Warrant.

    


    3.
      Delivery of Warrant Shares. The Company shall deliver to the holder __________
      Warrant Shares in accordance with the terms of the Warrant.

    


    Date:
      _______________ __, ______

    


    


    _____________________________

    Name
      of
      Registered Holder

     

     

    By:
      _______________________________   

    Name:

    Title:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ACKNOWLEDGMENT

    


    


    The
      Company hereby acknowledges this Exercise Notice and hereby directs Continental
      Stock Transfer & Trust Company to issue the above indicated number of shares
      of Common Stock in accordance with the Transfer Agent Instructions dated March
      __, 2007 from the Company and acknowledged and agreed to by Continental Stock
      Transfer & Trust Company.

     

    
      	 	 	 
	 	CLEVELAND
              BIOLABS, INC.
	 
 	 
 	 
 
	 	By:  	 
	 	
              
                
Name:

            
	 	
              Title: