Document:

AUSTRALIAN
      RESEARCH COUNCIL

    LINKAGE
      GRANT

    

    COLLABORATIVE
      RESEARCH AGREEMENT

    

    

    THIS
      AGREEMENT
      is made
      on 23 June 2003

     

    PARTIES

     

    THE
      UNIVERSITY OF NEW SOUTH WALES,
      a body
      corporate established pursuant to the University
      of New South Wales Act 1989
      (NSW) of
      SYDNEY NSW 2052 (UNSW)

     

    CLEVELAND
      BIOLABS,
      7800
      Blackberry Lane, Gates Mills, OH 44040, USA (Collaborator)

     

    RECITALS

     

    
      	
              A.

            	
              Following
                the submission of the Application, the Australian Research Council
                (ARC)
                has awarded a grant (ARC
                Grant)
                to
                UNSW to conduct the Project.

            

    

     

    
      	
              B.

            	
              The
                Collaborator has also agreed to make certain contributions to UNSW
                in
                connection with the Project. UNSW and the Collaborator have agreed
                to
                enter into this agreement to provide for the terms relating to those
                contributions.

            

    

     

    AGREEMENTS

     

    
      	
              1.

            	
              Definitions
                and interpretation

            

    

     

    
      	
              1.1

            	
              In
                this agreement:

            

    

     

    Application
      means
      the application LP0347836 submitted by UNSW to the ARC to conduct the Project
      approved on or about 2 October 2002, a copy of which is attached as Annexure
      1
      to this
      agreement;

     

    ARC
      Grant
      means
      the ARC contribution of the ARC Grant funds as described in the
      schedule;

     

    Commercialize,
      in
      relation to Project Intellectual Property Rights, means to manufacture, sell,
      hire or otherwise exploit a product or process, or to provide a service,
      incorporating the Project Material, or to license Project Intellectual Property
      Rights to any third party to do any of those things;

     

    Confidential
      Information
      means
      any information belonging to a party whether arising from the Project or
      acquired in confidence by one party from the other and includes all technical,
      proprietary and operational information, drawings, techniques, processes,
      know-how, methods of working, data and specifications, trade secrets and other
      commercially valuable information of any kind but does not include information
      which:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (a)

            	
              at
                the time of disclosure is already in the public
                domain;

            

    

     

    
      	 	
              (b)

            	
              becomes
                available to the public by any means other than breach of this agreement
                by the receiving party;

            

    

     

    
      	 	
              (c)

            	
              is
                received by a party from an independent third party who is lawfully
                in
                possession and has the power and authority to disclose the information;
                or

            

    

     

    
      	 	
              (d)

            	
              is
                required to be disclosed by law;

            

    

     

    Intellectual
      Property Rights
      means
      all intellectual and industrial property rights throughout the world including
      rights in respect of:

     

    
      	 	
              (e)

            	
              copyright
                (including future copyright) and rights in the nature of, or analogous
                to,
                copyright (for example, neighboring
                rights);

            

    

     

    
      	
            	(a)	
              trade
                marks and service marks;

            

    

     

    
      	
            	(b)	
              designs;

            

    

     

    
      	
            	(c)	
              inventions
                (including patents);

            

    

     

    
      	
            	(d)	
              plant
                varieties;

            

    

     

    
      	
            	(e)	
              any
                confidential information (including trade secrets and know-how);
                and

            

    

     

    
      	
            	(f)	
              circuit
                layouts,

            

    

     

    whether
      or not now existing, registered or registrable, and includes:

     

    
      	 	
              (g)

            	
              any
                right to apply for the registration;
                and

            

    

     

    
      	 	
              (h)

            	
              all
                renewals, extensions and revivals,

            

    

     

    of
      such
      rights;

     

    Project
      means
      the project described in the schedule;

     

    Project
      Intellectual Property Rights
      means
      the Intellectual Property Rights in the Project Material;

     

    Project
      Material
      means
      all material including but not limited to:

     

    (a) documents,
      computer software, equipment and data stored by any means; and

     

    
      	 	
              (b)

            	
              all
                material and subject matter in which the rights referred to in paragraphs
                (a) to (g) of the definition of “Intellectual Property Rights” in this
                clause subsist,

            

    

     

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    which
      is
      created or developed for the sole purpose of undertaking the
      Project;

     

    Terms
      of Grant
      means
      the Funding Contract between the Commonwealth as represented by the ARC and
      the
      University of New South Nales regarding funding for Linkage — Projects to
      commence in 2003 which is attached as Annexure
      2
      to this
      agreement.

     

    
      	
              1.2

            	
              Unless
                that context otherwise requires:

            

    

     

    
      	 	
              (a)

            	
              a
                word which denotes the singular denotes the plural and vice
                versa;

            

    

     

    
      	 	
              (b)

            	
              where
                a word or phrase is given a particular meaning, other parts of speech
                and
                grammatical forms of that word or phrase have corresponding
                meanings;

            

    

     

    
      	 	
              (c)

            	
              a
                reference to any legislation includes that legislation as amended,
                re-enacted, consolidated or
                substituted;

            

    

     

    
      	 	
              (d)

            	
              a
                reference to a person includes a partnership and a body whether corporate
                or otherwise;

            

    

     

    
      	 	
              (e)

            	
              payments
                under this agreement are to be made in Australian dollars
                and

            

    

     

    
      	 	
              (f)

            	
              a
                reference to a thing or amount is a reference to the whole and each
                part
                of it.

            

    

     

    
      	
              2.

            	
              ARC
                Grant

            

    

     

    
      	
              2.1

            	
              The
                parties acknowledge and agree that this agreement is governed by
                and is
                subject to the conditions of the Terms of
                Grant.

            

    

     

    
      	
              2.2

            	
              In
                the event of any inconsistency between this agreement and the conditions
                of the Terms of Grant, the conditions of the Terms of Grant
                prevail.

            

    

     

    
      	
              2.3

            	
              The
                commencement of this agreement is subject to the approval of the
                ARC to
                the change of Collaborator.

            

    

     

    
      	
              3.

            	
              Contribution
                from the Collaborator

            

    

     

    
      	
              3.1

            	
              During
                the term of this agreement, the Collaborator agrees to make the cash
                and
                in-kind contributions set out in the
                schedule.

            

    

     

    
      	
              3.2

            	
              The
                cash contribution for each calendar year referred to in the schedule
                must
                be paid by the Collaborator to UNSW within 30 days following receipt
                of an
                invoice from UNSW.

            

    

     

    
      	
              4.

            	
              Role
                of the Collaborator and
                UNSW

            

    

     

    Each
      party will perform the obligations as those obligations are described in the
      Application.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    
      	
              5.

            	
              Goods
                and services tax

            

    

     

    
      	
              5.1

            	
              In
                this clause 5:

            

    

     

    GST,
      GST
      law
      and
      other terms defined in GST law have the meaning given to those terms in
A
      New
      Tax System (Goods and Services Tax) Act 1999;

     

    GST
      Amount
      in the
      case of any taxable supply means an amount equal to 10% of the Value of that
      supply or such other amount of GST payable on that supply under GST law from
      time to time; and

     

    Value
      means
      the GST exclusive amount payable under this agreement.

     

    
      	
              5.2

            	
              Notwithstanding
                any other provision of this agreement, the amount to be paid for
                any
                taxable supply under this agreement, whether expressed as an amount
                of
                money or otherwise, is exclusive of
                GST.

            

    

     

    
      	
              5.3

            	
              To
                the extent any supply:

            

    

     

    
      	 	
              (a)

            	
              made,
                or to be made, under; or

            

    

     

    
      	 	
              (b)

            	
              in
                connection with,

            

    

     

    this
      agreement by UNSW constitutes a taxable supply, the Collaborator must pay the
      GST Amount to UNSW no later than 30 days following notice from UNSW requesting
      that payment.

     

    
      	
              5.4

            	
              Any
                amount paid or payable under this agreement on account of GST must
                be
                calculated and paid without any deduction or set-off of any other
                amount
                payable under this agreement.

            

    

     

    
      	
              6.

            	
              Confidential
                Information

            

    

     

    
      	
              6.1

            	
              Each
                party acknowledges that all Confidential Information disclosed by
                one
                party to the other, whether existing before the commencement of this
                agreement, or created during the term of this agreement, is confidential
                and, subject to clause 8, will be kept confidential and will not
                be
                disclosed to any third party without the prior written consent of
                the
                disclosing party, such consent not to be unreasonably
                withheld.

            

    

     

    
      	
              6.2

            	
              On
                the expiration or termination of this agreement each party must return
                to
                the other party all copies of the Confidential Information submitted
                by
                the disclosing party to the other
                party.

            

    

     

    
      	
              6.3

            	
              Each
                party assumes responsibility for the actions of its employees, agents
                and
                consultants who have access to the Confidential Information from
                time to
                time and will ensure that they are aware of and strictly bound by
                the
                obligations created under this
                agreement.

            

    

     

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    
      	
              7.

            	
              Intellectual
                Property

            

    

     

    
      	
              7.1

            	
              The
                ownership of Intellectual Property Rights which exist before the
                commencement of the Project (“Pre-existing Intellectual Property Rights”)
                is not altered, transferred or assigned merely by virtue of its use
                by a
                party in the Project.

            

    

     

    
      	
              7.2

            	
              The
                title to, and Intellectual Property Rights in, the Project Material
                are,
                on its creation, equally co-owned by UNSW and the Collaborator as
                tenants
                in common.

            

    

     

    
      	
              7.3

            	
              Each
                party grants to the other party a royalty-free, non-transferable,
                non-exclusive license to use Pre-existing Intellectual Property Rights
                owned by the first mentioned party, and which are directly relevant
                to the
                conduct of the Project, for the sole purpose of carrying out the
                Project.
                The license commences on the commencement of this agreement and terminates
                on:

            

    

     

    
      	 	
              (a)

            	
              the
                completion of the Project; or

            

    

     

    
      	 	
              (b)

            	
              the
                termination or expiration of this agreement as determined in accordance
                with clause 12,

            

    

     

    whichever
      first occurs.

     

    
      	
              7.4

            	
              Each
                party grants to the other a royalty-free, free of cost, perpetual,
                non-exclusive license to use Project Intellectual Property Rights
                for the
                purpose of undertaking the Project and for its own internal,
                non-commercial purposes.

            

    

     

    
      	
              7.5

            	
              Should
                a party wish to Commercialise Project Intellectual Property Rights
                the
                parties agree to negotiate a licensing arrangement on reasonable
                commercial terms which acknowledge each party’s contribution to
                the:

            

    

     

    
      	 	
              (a)

            	
              creation
                of the Project Material, including financial contributions, unreimbursed
                in-kind contributions of Pre-existing Intellectual Property Rights,
                expertise, materials, equipment, infrastructure and labor to the
                Project;
                and

            

    

     

    
      	 	
              (b)

            	
              costs
                directly incurred in relation to the creation and maintenance of
                the
                Project Intellectual Property
                Rights.

            

    

     

    
      	
              8.

            	
              Publications

            

    

     

    Each
      party is entitled to publish the results of the Project provided they obtain
      the
      prior written consent of the other party, such consent not to be unreasonably
      withheld. Consent to publish is not required 12 months following completion
      of
      the Project provided no confidential information owned by the non-publishing
      party is disclosed. The publishing party must provide the non-publishing party
      with a copy of any proposed publication at least 2 months before publication.
      Consent to publish will be deemed to have been given if the non-publishing
      party
      does not respond by the date of intended publication.

     

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    
      	
              9.

            	
              Other
                obligations

            

    

     

    Each
      party must ensure that all independent contractors and consultants engaged
      in
      the Project execute, before commencing work:

     

    
      	 	
              (a)

            	
              an
                assignment to the parties of all Project Intellectual Property Rights
                pursuant to clause 7.2; and

            

    

     

    
      	 	
              (b)

            	
              a
                confidentiality agreement with respect to Project under which the
                independent contractor or consultant agrees
                to:

            

    

     

    
      	 	
              (i)

            	
              keep
                all information in relation to the Project confidential and not to
                disclose it to any other party; and

            

    

     

    
      	 	
              (ii)

            	
              only
                use that information for the sole purpose of carrying out work on
                the
                Project.

            

    

     

    
      	
              10.

            	
              Indemnity

            

    

     

    
      	
              10.1

            	
              Each
                party (“Indemnifier”) indemnifies the other party and its officers,
                employees, agents and contractors (“those Indemnified”) from and against
                all liability, damages, costs, claims and actions howsoever arising
                (“Loss”) that those Indemnified may suffer, incur or sustain as a result
                of any willful or negligent act or omission by the Indemnifier or
                any of
                its officers, employees, agents or
                contractors.

            

    

     

    
      	
              10.2

            	
              An
                Indemnifier’s liability to any of those Indemnified under clause 10.1 will
                be reduced proportionally to the extent that any willful or negligent
                act
                or omission by those Indemnified caused or contributed to the
                Loss.

            

    

     

    
      	
              11.

            	
              Dispute
                resolution

            

    

     

    
      	
              11.1

            	
              Any
                dispute between the parties arising out of this agreement must first
                be
                referred for resolution to the general manager or vice-chancellor
                (or
                equivalent) of each party.

            

    

     

    
      	
              11.2

            	
              If
                the dispute remains unresolved for a period of 60 days after the
                referral
                referred to in clause 11.1, it may be submitted to some alternative
                dispute resolution mechanism as may be agreed in writing between
                the
                parties.

            

    

     

    
      	
              12.

            	
              Term,
                termination and expiration

            

    

     

    
      	
              12.1

            	
              The
                Project commences on the date of this agreement and continues for
                a period
                of three years or until such date as may be determined by the ARC
                (the
                “Term”).

            

    

     

    
      	
              12.2

            	
              UNSW
                may terminate this agreement immediately by notice to the Collaborator
                if
                the Collaborator:

            

    

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (a)

            	
              commits
                a breach of any term of this agreement and, if the breach is capable
                of
                remedy, fails to remedy the breach within 7 days after being required
                to
                do so in writing by UNSW; or

            

    

     

    
      	 	
              (b)

            	
              goes
                into liquidation, has a receiver or receiver and manager appointed
                to it
                or any part of its assets, enters into a scheme of arrangement with
                creditors or suffers any other form of external
                administration.

            

    

     

    
      	
              12.3

            	
              On
                termination of this agreement, the Collaborator must pay to UNSW
                all costs
                incurred by UNSW in relation to the Project at the date of termination
                and
                any reasonable additional costs in connection with the Project necessarily
                incurred by UNSW as a result of the termination provided that the
                total
                amount payable to UNSW shall not exceed the unpaid balance of the
                total
                cash contribution payable under this agreement by the
                Collaborator.

            

    

     

    
      	
              12.4

            	
              Clauses
                6, 7 and 8 survive the expiration or termination of this
                agreement.

            

    

     

    
      	
              13.

            	
              Variation

            

    

     

    This
      agreement may only be varied by the written agreement of the
      parties.

     

    
      	
              14.

            	
              Governing
                law and jurisdiction

            

    

     

    
      	
              14.1

            	
              This
                agreement is governed by and must be construed in accordance with
                the laws
                of New South Wales.

            

    

     

    
      	
              14.2

            	
              Each
                party:

            

    

     

    
      	 	
              (a)

            	
              irrevocably
                and unconditionally submits to the non-exclusive jurisdiction of
                the
                courts of New South Wales and all courts which have jurisdiction
                to hear
                appeals from them; and

            

    

     

    
      	 	
              (b)

            	
              waives
                any right to object to proceedings being brought in those courts
                for any
                reason.

            

    

     

    
      	
              15.

            	
              Waiver

            

    

     

    No
      waiver
      of any breach of this agreement will be:

     

    
      	 	
              (a)

            	
              binding
                on a party unless it is in writing and executed by that party;
                or

            

    

     

    
      	 	
              (b)

            	
              deemed
                to be a waiver by that party of any other or subsequent breach of
                the same
                term.

            

    

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    
      	
              16.

            	
              Notices

            

    

     

    
      	
              16.1

            	
              A
                notice under this agreement must be in writing and
                is:

            

    

     

    
      	 	
              (a)

            	
              given
                if delivered personally or sent by fax or prepaid registered mail
                to the
                recipient at the address of the recipient specified in this agreement
                or
                at such other address as may from time to time be notified in writing
                by
                the recipient to the party giving the notice;
                and

            

    

     

    
      	 	
              (b)

            	
              deemed
                to have been given:

            

    

     

    
      	 	
              (i)

            	
              if
                delivered personally, on the date of
                delivery:

            

    

     

    
      	 	
              (ii)

            	
              if
                sent by pre-paid mail, 3 days after posting;
                and

            

    

     

    
      	 	
              (iii)

            	
              if
                sent by fax, on production of a transmission report by the machine
                from
                which the fax was sent which indicates that the fax was sent in its
                entirety to the fax number of the
                recipient.

            

    

     

    
      	
              16.2

            	
              Notices
                under this agreement are to be sent
                to:

            

    

     

    
      
        	
                (a)

              	
                For
                  UNSW:

              	
                James
                  Walsh

                Director

                Research
                  Office

                The
                  University of New South Wales

                SYDNEY
                  NSW 2052

                Telephone:
                  + 61 2 9385 7239

                Facsimile:
                  + 61 2 9385 7238

                Email:
                  j.walsh@unsw.edu.au

              
	 	 	 
	
                (b)

              	For Cleveland
                BioLabs,
                Inc: 	
                Michael
                  Fonstein, CEO

                Cleveland
                  BioLabs, Inc.

                7800
                  Blackberry Lane, Gates Mills, OH 44040

                Telephone:
                  773-517-0789

                Fax:
                  (440) 423-0389

                Email:
                  fon@cbiolabs.com

              

      

    

    

    
      	
              17.

            	
              No
                assignment

            

    

     

    A
      party
      must not assign its rights or obligations under this agreement without the
      prior
      written consent of the other party.

     

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    
      	
              18.

            	
              Entire
                agreement

            

    

     

    Subject
      to clause 2.1, this agreement constitutes the entire agreement between the
      parties in relation to its subject matter and supersedes any previous agreement
      of the parties, or any other communication or representation made, in relation
      to its subject matter.

     

    
      	
              19.

            	
              Severance

            

    

     

    Any
      provision of this agreement which is held to be void, illegal or unenforceable
      will be severed without affecting the other provisions of this
      agreement.

     

    

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    SCHEDULE

     

    
      	
              Project
                investigators:

               

            	
              Associate
                Professor MD Norris

              Professor
                M Haber

              Professor
                AV Gudkov

            
	 	 
	
              Project
                title: 

            	
              Specific
                gene inhibition through functional genomics and high through-put
                small
                molecule screening.

            
	 	 
	
              Project
                summary: 

            	
              This
                project will utilize functional genomic technologies in an attempt
                to
                identify genes in childhood neuroblastoma as potential candidates
                for the
                future development of molecular-targeted gene therapy. By screening
                large
                libraries of chemical compounds, we aim to identify compounds with
                the
                ability to specifically inhibit these gene targets. This project
                will
                therefore define novel molecular targets and possibly facilitate
                the
                future development of new therapeutic approaches to treating
                neuroblastoma. In addition, the project will develop know-how that
                can be
                utilized by both the industry partner and the broader research community
                and will introduce to Australian science novel techniques and
                skills.

            
	 	 
	
              ARC
                Grant number: 

            	
              LP0347836

            
	 	 
	
              ARC
                Grant funds:

            	
              2003 $64,796

               

              2004 $68,432
                (indicative)

               

              2005 $69,800
                (indicative)

            
	 	 
	
              Cash
                contribution by the Collaborator

            	
              2003 $24,000

               

              2004 $38,925

               

              2005 $33,300

            
	 	 
	
              In-kind
                contribution by the Collaborator

            	
              2003 $74,300

               

              2004 $46,520

               

              2005 $65,047

            

    

    

     

    
       

      
        10

        
          

        

      

       

    

    EXECUTED
      as an
      agreement.

     

    SIGNED
      for and
      on behalf of THE
      UNIVERSITY OF NEW SOUTH WALES
      by:

     

                                  
      /s/James
      Walsh                                                      

    Signature
      of authorized person

     

    
      	Office Held: 	
              Director

              Research
                Office

              The
                University of New South Wales

              UNSW SYDNEY NSW 2052

            	
                
                

            

    

     

     

    James
      Walsh                                                                                        

    Print
      name of authorized person

    

     

    SIGNED
      for
      and
      on behalf of CLEVELAND
      BIOLABS
      by:

     

    

     

                                   
      /s/ Michael
      Fonstein                                            

    Signature
      of authorized person

     

    

     

    CEO                                                                                                      

    Office
      held

     

    

     

    Michael
      Fonstein                                                                               

    Print
      name of authorized person

     

    

    
      
        
        

      

      
        11RESTRICTED
      STOCK AGREEMENT

    

    THIS
      RESTRICTED STOCK AGREEMENT
      (this
“Agreement”)
      is
      made as of July 5, 2003, between Cleveland BioLabs, Inc., a Delaware
      corporation (the “Company”),
      and
      Michael Fonstein (“Executive”).

     

    The
      Executive has subscribed for and the Company has accepted a subscription
      agreement pursuant to which Executive has committed to purchase, and the Company
      has committed to sell, 2,200 shares of the Company’s Common Stock, par value
      $0.005 per share (the “Common
      Stock”).
      All
      of such shares of Common Stock are referred to herein as “Executive
      Shares.”
      Certain definitions are set forth in Section
      6
      of this
      Agreement.

     

    As
      an
      inducement for the Company to issue and sell the Executive Shares to Executive,
      the Company is requiring Executive to enter into this Agreement.

     

    The
      parties hereto agree as follows:

     

    1. Executive
      Shares.

     

    (a) Upon
      execution of this Agreement, Executive will purchase, and the Company will
      sell,
      2,200 shares of Common Stock at a price of $0.005 per share. The Company will
      deliver to Executive the certificates representing such Executive Shares, and
      Executive will deliver to the Company cash or a check in the aggregate amount
      of
      $11.00.

     

    (b) Within
      thirty (30) days after the purchase by Executive of Executive Shares pursuant
      to
      this Agreement, Executive will make an effective election with the Internal
      Revenue Service under Section
      83(b)
      of the
      Internal Revenue Code and the regulations promulgated thereunder in the form
      of
Annex
      A
      attached
      hereto.

     

    (c) In
      connection with the purchase and sale of the Executive Shares pursuant hereto,
      Executive represents and warrants to the Company that:

     

    (i) Executive
      is an employee, officer or director of the Company, is sophisticated in
      financial matters and is able to evaluate the risks and benefits of the
      investment in the Executive Shares;

     

    (ii) This
      Agreement and each of the other agreements contemplated hereby to which
      Executive is a party constitute legal, valid and binding obligations of
      Executive, enforceable in accordance with their terms, and the execution,
      delivery and performance of this Agreement and such other agreements by
      Executive does not and will not conflict with, violate or cause a breach of
      any
      agreement, contract or instrument to which Executive is a party or any judgment,
      order or decree to which Executive is subject; and

     

    (iii) Executive
      is not a party to or bound by any other employment agreement, noncompete
      agreement or confidentiality agreement which conflicts with the obligations
      set
      forth in this Agreement.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (d) As
      an
      inducement for the Company to commit to issue the Executive Shares to Executive,
      and as a condition thereto, Executive acknowledges and agrees that neither
      any
      future issuance of capital stock of the Company to Executive nor any provision
      contained herein shall entitle Executive to remain in the employment of the
      Company, or affect the right of the Company to terminate Executive’s employment
      at any time for any reason, subject to the terms and conditions of any
      employment agreement.

     

    2. Vesting
      of Shares.

     

    (a) Except
      as
      otherwise provided in Section
      2(b)
      below,
      the Executive Shares purchased hereunder will become vested (determined as
      nearly as practicable to the nearest share) in accordance with the following
      schedule, if as of each such date Executive is still employed by the
      Company:

     

    
      	
              Date

               

            	
              Cumulative
                Percentage of

              Executive
                Shares to be Vested

               

            
	
              1st
                Anniversary of this Agreement

            	
              33
                1/3%

            
	
              2nd
                Anniversary of this Agreement

            	
              66
                2/3%

            
	
              3rd
                Anniversary of this Agreement

            	
              100%

            

    

    

    (b) If
      Executive ceases to be employed by the Company on any date other than any
      anniversary date prior to the third anniversary of this Agreement, the
      cumulative percentage of Executive Shares to become vested will be determined
      on
      a pro rata basis according to the number of days elapsed from the prior
      anniversary date to the date of termination (but including in such calculation
      all unused vacation and personal days as if the Executive had worked such days);
      provided,
      however,
      that no
      Executive Shares shall become vested until the first anniversary of this
      Agreement. Notwithstanding the foregoing or anything herein to the contrary,
      upon the occurrence of a Sale of the Company, all Executive Shares which have
      not yet become vested shall become vested at the time of such Sale of the
      Company (such portion being referred to herein as the “Accelerated
      Shares”);
      provided,
      however,
      that
      the Accelerated Shares shall at all times be subject to any restrictions or
      limitations with respect to the Transfer thereof contained herein or as
      otherwise provided by law. Executive Shares which have become vested hereunder
      are referred to herein as “Vested
      Shares,”
and
      all other Executive Shares are referred to herein as “Unvested
      Shares.”

     

    3. Repurchase
      Option.

     

    (a) In
      the
      event Executive ceases to be employed by the Company for any reason (a
“Separation”),
      the
      Unvested Shares (whether held by Executive or. one or more of Executive’s
      transferees, other than the Company) will be subject to repurchase, in each
      case
      by the Company pursuant to the terms and conditions set forth in this
Section
      3
      (the
“Repurchase
      Option”).

     

    (b) In
      the
      event of a Separation, the Executive Securities purchased hereunder representing
      Unvested Shares shall be subject to repurchase by the Company at a purchase
      price per share equal to the Executive’s Original Cost for such
      share.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    (c) In
      the
      event of a Separation, the Company may elect to purchase all or any portion
      of
      the Unvested Shares by delivering written notice (the “Repurchase
      Notice”)
      to the
      holder or holders of the Executive Securities within 60 days after the
      Separation. The Repurchase Notice will set forth the number of Unvested Shares
      to be acquired from each holder, the aggregate consideration to be paid for
      such
      securities and the time and place for the closing of the transaction. The number
      of securities to be repurchased by the Company shall first be satisfied to
      the
      extent possible from the Unvested Shares held by Executive at the time of
      delivery of the Repurchase Notice. If the number of Unvested Shares then held
      by
      Executive is less than the total number of such securities which the Company
      has
      elected to purchase, the Company shall purchase the remaining securities elected
      to be purchased from the other holder(s) of Executive Securities under this
      Agreement, pro rata according to the number of Executive Securities held by
      such
      other holder(s) at the time of delivery of such Repurchase Notice (determined
      as
      nearly as practicable to the nearest share).

     

    (d) The
      closing of the purchase of the Unvested Shares pursuant to the Repurchase Option
      shall take place on the date designated by the Company in the Repurchase Notice,
      which date shall not be more than 2 months nor less than 5 days after the
      delivery of such notice. The Company will pay for the Executive Securities
      to be
      purchased by it pursuant to the Repurchase Option by first offsetting amounts
      outstanding under any bona fide debts owed by Executive to the Company and
      will
      pay the remainder of the purchase price to the extent reasonably permissible
      under the Company’s equity financing agreements and agreements evidencing
      indebtedness for borrowed money, by a check or wire transfer of funds. The
      Company will be entitled to receive customary representations and warranties
      from the sellers of Executive Securities (including representations and
      warranties regarding good title to the Executive Securities, the absence of
      any
      liens on such title or other encumbrances with respect to the Transfer of the
      Executive Securities and the ability of such sellers to consummate the
      sale).

     

    (e) Notwithstanding
      anything to the contrary contained in this Agreement, all repurchases of
      Executive Securities by the Company shall be subject to applicable restrictions
      contained in the Delaware General Corporation Law and as may be required by
      other parties in the Company’s equity financing agreements or agreements
      evidencing indebtedness for borrowed money, if any. If any such restrictions
      prohibit the repurchase of Executive Securities hereunder which the Company
      is
      otherwise entitled to make, the Company may make such repurchases as soon as
      it
      is permitted to do so under such restrictions.

     

    4. Restrictions
      on Transfer of Executive Securities.

     

    (a) Transfer
      of Executive Securities.
      Executive shall not Transfer any interest in any Executive Securities, except
      at
      such time as the restrictions herein terminate as provided in Section
      4(b)
      below.
      Notwithstanding the foregoing, the restrictions contained in this Section
      4
      will not
      apply with respect to (i) Transfers of shares of Executive Securities pursuant
      to applicable laws of descent and distribution or (ii) Transfer of shares of
      Executive Securities among Executive’s Family Group; provided
      that in
      each case such restrictions will continue to be applicable to the Executive
      Securities irrespective of any such Transfer. Any transferee of Executive
      Securities pursuant to a Transfer in accordance with the provisions of this
      Section
      4(a)
      is
      herein referred to as a “Permitted
      Transferee.”

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    (b) Termination
      of Restrictions.
      The
      restrictions on the Transfer of Executive Securities set forth in this
Section
      4
      will
      continue with respect to each Executive Security until the earlier of (i) a
      Qualified Public Offering; or (ii) a Sale of the Company.

     

    5. Additional
      Restrictions on Transfer of Executive Securities.

     

    (a) Legend.
      The
      certificates representing the Executive Securities will bear a legend in
      substantially the following form:

     

    “THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED AS OF JULY
      5,
      2003, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
      (THE
“ACT”), AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
      REGISTRATION STATEMENT UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION
      THEREUNDER. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT
      TO
      ADDITIONAL RESTRICTIONS ON TRANSFER, CERTAIN REPURCHASE OPTIONS AND CERTAIN
      OTHER AGREEMENTS SET FORTH IN A RESTRICTED STOCK AGREEMENT BETWEEN THE COMPANY
      AND AN EXECUTIVE OF THE COMPANY DATED AS OF JULY 5, 2003. A COPY OF SUCH
      AGREEMENT MAY BE OBTAINED BY THE HOLDER HEREOF AT THE COMPANY’S PRINCIPAL PLACE
      OF BUSINESS WITHOUT CHARGE.”

     

    (b) Opinion
      of Counsel.
      No
      holder of Executive Securities may transfer any Executive Securities (except
      pursuant to an effective registration statement under the Securities Act)
      without first delivering to the Company an opinion of counsel (reasonably
      acceptable in form and substance to the Company) that neither registration
      nor
      qualification under the Securities Act and applicable state securities laws
      is
      required in connection with such Transfer.

     

    6. Definitions.

     

    “Executive’s
      Family Group”
means
      Executive’s spouse and descendants (whether natural or adopted), any trust
      solely for the benefit of Executive and/or Executive’s spouse and/or descendants
      and any retirement plan for the Executive.

     

    “Executive
      Securities”
means
      the Executive Shares and any other securities of the Company held by Executive
      or any of Executive’s transferees permitted hereunder. All Executive Securities
      will continue to be Executive Securities in the hands of any holder other than
      Executive (except for the Company and except for transferees in a Public Sale).
      Except as otherwise provided herein, each such other holder of Executive
      Securities will succeed to all rights and obligations attributable to Executive
      as a holder of Executive Securities hereunder. Executive Securities will also
      include shares of the Company’s capital stock or other securities of the Company
      issued with respect to Executive Securities by way of a stock split, dividend
      or
      other recapitalization or reclassification.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    “Original
      Cost”
means
      with respect to each share of Common Stock purchased hereunder, $0.005 (as
      proportionately adjusted for all subsequent stock splits, stock dividends and
      other recapitalizations).

     

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

     

    “Public
      Sale”
means
      any sale pursuant to a registered public offering under the Securities Act
      or
      any sale to the public pursuant to Rule 144 promulgated under the Securities
      Act
      effected through a broker, dealer or market maker.

     

    “Qualified
      Public Offering”
means
      the sale in an underwritten public offering registered under the Securities
      Act
      of shares of the Company’s Common Stock approved by the Board resulting in net
      proceeds to the Company of no less than $20 million.

     

    “Sale
      of the Company”
means
      any transaction or series of transactions pursuant to which (A) any Person(s)
      acquires (i) capital stock of the Company possessing the voting power (other
      than voting rights accruing only in the event of a default, breach or event
      of
      noncompliance) to elect a majority of the Company’s board of directors (whether
      by merger, consolidation, reorganization, combination, sale or transfer of
      the
      Company’s capital stock, shareholder or voting agreement, proxy, power of
      attorney or otherwise) or (ii) all or substantially all of the Company’s assets
      determined on a consolidated basis; provided
      that the
      term “Sale of the Company” shall not include any sale of equity or debt
      securities by the Company in a private offering to other investors; or (B)
      more
      than 50% of the assets of the Company is spun off, split off or otherwise
      distributed.

     

    “Securities
      Act”
means
      the Securities Act of 1933, as amended.

     

    “Transfer”
means
      to sell, transfer, assign, pledge or otherwise dispose of (whether with or
      without consideration and whether voluntarily or involuntarily or by operation
      of law).

     

    7. Notices.
      Any notice provided for in this Agreement must be in writing and must be either
      personally delivered, mailed by first class mail (postage prepaid and return
      receipt requested), sent by reputable overnight courier service (charges
      prepaid), or sent via facsimile to the recipient at the address or facsimile
      number below indicated:

     

    If
      to
      the Company:

     

    Cleveland
      BioLabs, Inc.

    7800
      Blackberry Lane

    Gates
      Mills, Ohio 44040

    Attn:
      Michael Fonstein

    

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    With
      a
      copy to:

     

    Katten
      Muchin Zavis Rosenman

    525
      West
      Monroe Street

    Suite
      1600

    Chicago,
      Illinois 60661

    Fax:
      (312) 902-1061

    Tel:
      (312) 902-6200

    Attn:
      Kurt W. Florian, Esq.

    

    If
      to
      the Executive:

     

    Michael
      Fonstein

    15W155
      81st

    Burr
      Ridge, IL 60521

    

    or
      such
      other address, facsimile number or to the attention of such other person as
      the
      recipient party shall have specified by prior written notice to the sending
      party. Any notice under this Agreement will be deemed to have been given when
      so
      delivered, sent or transmitted or, if mailed, five days after deposit in the
      U.S. mail.

    

    8. General
      Provisions.

     

    (a) Transfers
      in Violation of Agreement.
      Any
      Transfer or attempted Transfer of any Executive Securities in violation of
      any
      provision of this Agreement shall be void, and the Company shall not record
      such
      Transfer on its books or treat any purported transferee of such Executive
      Securities as the owner of such securities for any purpose.

     

    (b) Severability.
      Whenever possible, each provision of this Agreement will be interpreted in
      such
      manner as to be effective and valid under applicable law, but if any provision
      of this Agreement is held to be invalid, illegal or unenforceable in any respect
      under any applicable law or rule in any jurisdiction, such invalidity,
      illegality or enforceability will not affect any other provision or any other
      jurisdiction, but this Agreement will be reformed, construed and enforced in
      such jurisdiction as if such invalid, illegal or unenforceable provision had
      never been contained herein.

     

    (c) Complete
      Agreement.
      This
      Agreement, those documents expressly referred to herein and other documents
      of
      even date herewith embody the complete agreement and understanding among the
      parties and supersede and preempt any prior understandings, agreements or
      representations by or among the parties, written or oral, which may have related
      to the subject matter hereof in any way.

     

    (d) Counterparts.
      This
      Agreement may be executed in separate counterparts, each of which is deemed
      to
      be an original and all of which taken together constitute one and the same
      agreement.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    (e) Successors
      and Assigns.
      Except
      as otherwise provided herein, this Agreement shall bind and inure to the benefit
      of and be enforceable by Executive and the Company and their respective
      successors and assigns (including subsequent holders of Executive Securities);
      provided
      that the
      rights and obligations of Executive under this Agreement shall not be assignable
      except in connection with a permitted transfer of Executive Securities
      hereunder.

     

    (f) Choice
      of Law.
      This
      Agreement shall be construed in accordance with the laws of the State of
      Delaware, without regard to principals of conflicts of law Any and all
      litigation arising out of this Agreement shall be conducted only in courts
      located in the State of Delaware.

     

    (g) Remedies.
      Each of
      the parties to this Agreement will be entitled to enforce its rights under
      this
      Agreement specifically, to recover damages and costs (including attorney’s fees)
      caused by any breach of any provision of this Agreement and to exercise all
      other rights existing in its favor. The parties hereto agree and acknowledge
      that money damages may not be an adequate remedy for any breach of the
      provisions of this Agreement and that any party may in its sole discretion
      apply
      to any court of law or equity of competent jurisdiction (without posting any
      bond or deposit) for specific performance and/or other injunctive relief in
      order to enforce or prevent any violations of the provisions of this
      Agreement.

     

    (h) Amendment
      and Waiver.
      The
      provisions of this Agreement may be amended and waived only with the prior
      written consent of the Company and Executive. No course of conduct or failure
      or
      delay in enforcing the provisions of this Agreement shall affect the validity,
      binding effect or enforceability of this Agreement.

     

    (i) Business
      Days.
      If any
      time period for giving notice or taking action hereunder expires on a day which
      is a Saturday, Sunday or holiday in the state in which the Company’s chief
      executive office is located, the time period shall be automatically extended
      to
      the business day immediately following such Saturday, Sunday or
      holiday.

     

    (j) Indemnification
      and Reimbursement of Payments on Behalf of Executive.
      The
      Company shall be entitled to deduct or withhold from any amounts owing from
      the
      Company to the Executive any federal, state, local or foreign withholding taxes,
      excise taxes, or employment taxes (“Taxes”)
      imposed with respect to the Executive’s compensation or other payments from the
      Company or the Executive’s ownership interest in the Company, including, but not
      limited to, wages, bonuses, dividends, the receipt or exercise of stock options
      and/or the receipt or vesting of restricted stock. The Executive shall indemnify
      the Company for any amounts paid with respect to any such Taxes, together with
      any interest, penalties and related expenses thereto.

     

    (k) Termination.
      This
      Agreement shall survive the termination of Executive’s employment with the
      Company and shall remain in full force and effect after such
      termination.

     

    (l) Generally
      Accepted Accounting Principles; Adjustments of Numbers.
      Where
      any accounting determination or calculation is required to be made under this
      Agreement or the exhibits hereto, such determination or calculation (unless
      otherwise provided) shall be made in accordance with generally accepted
      accounting principles, consistently applied. All numbers set forth herein which
      refer to share prices or amounts will be appropriately adjusted to reflect
      stock
      splits, stock dividends, combinations of shares, recapitalizations or other
      similar transactions affecting the subject class of stock.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    (m) Waiver
      of Jury Trial.
      Each of
      the parties hereto hereby irrevocably waives any and all right to trial by
      jury
      of any claim or cause of action in any legal proceeding arising out of or
      related to this Agreement or the transactions or events contemplated hereby
      or
      any course of conduct, course of dealing, statements (whether verbal or written)
      or actions of any party hereto. The parties hereto each agree that any and
      all
      such claims and causes of action shall be tried by a court trial without a
      jury.
      Each of the parties hereto further waives any right to seek to consolidate
      any
      such legal proceeding in which a jury trial has been waived with any other
      legal
      proceeding in which a jury trial cannot or has not been waived.

     

    *
      * * *
      *

     

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    

    IN
      WITNESS WHEREOF,
      the
      patties hereto have executed this Restricted Stock Agreement as of the date
      first written above.

     

     

    
      	 	 	 
	 	
              CLEVELAND
                BIOLABS, INC.

            
	 
 	 
 	 
 
	 	By:  	/s/
Yakov
              Kogan
	 	 	
              
                

              

              Name:  Yakov
                Kogan

              
                Its:       
                  Vice
                  President

              

            
	 	 	 
	 	 	 
	 	 	/s/ Michael Fonstein
	 	
              

              
                Michael
                  Fonstein

              

               

            
	 	 

    

    
 

     

    
      
        
        

      

      
        9

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