Document:

Unassociated Document

Exhibit 10.1

 

CLEVELAND BIOLABS, INC.

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (the “Agreement”), made as of this 4th day of August, 2011, is entered into by Cleveland Biolabs, Inc., a Delaware corporation with its principal place of business at 73 High Street, Buffalo, NY 14203 (and together with its subsidiaries, affiliates, successors or assigns the “Company”), and C. Neil Lyons, (the “Executive”).

 

PRELIMINARY RECITALS

 

A.The Company, among other things, is engaged in the business of conducting research and development of new pharmaceuticals in the field of cancer treatment and that provide protection for cells against harmful radiation (the “Business”).

 

B.Executive has been offered a position to serve as the Company’s Chief Financial Officer.

 

C.The Company and Executive desire to formally state the terms of said employment and set forth the terms and conditions of Executive’s employment with the Company in this Agreement.

 

NOW, THEREFORE, in consideration of the premises, the mutual covenants of the parties hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

 

1.  Employment.

 

1.1  Engagement; Duties and Powers. The Company agrees to employ Executive, and Executive agrees to accept employment with the Company, as Chief Financial Officer for the Term and in accordance with the terms and conditions of this Agreement. During the Term, Executive shall serve as the Company’s Chief Financial Officer and shall have such responsibilities, duties and authorities, and shall render such services of an executive and administrative character or act in such other capacity for the Company and its affiliates, as the board of directors of the Company (the “Board”) shall from time to time lawfully direct. Executive shall perform the duties and carry out the responsibilities assigned to him, to the best of his ability, in a trustworthy, businesslike and efficient manner for the purpose of advancing the business of the Company. Executive acknowledges that his duties and responsibilities hereunder will require his full business time and best efforts and agrees that, during the Term, he will not engage in any other business activity or have any business pursuits or interests which materially interfere or conflict with the performance of his duties hereunder, provided, that nothing in this Section 1.1 shall be deemed to prohibit Executive from making Permitted Investments. Executive may accept positions on grant panels, boards of Directors, and act as a consultant for compensation with the permission of the Board.

 

1.2  Term. The engagement of Executive under this Agreement shall begin on September 1, 2011 (“Start Date”) and shall continue through and until August 31, 2012 (the “Initial Period”) unless extended as provided in this Section 1.2. Thereafter, the term of this Agreement shall automatically renew and extend for additional consecutive one-year periods (“Renewal Periods”) unless one of the parties shall deliver a written notice of termination to the other party at least sixty (60) days prior to the expiration of the Initial Period or any Renewal Period. The Initial Period through the then current Renewal Period, if any, is hereinafter referred to as the “Term.” Notwithstanding anything to the contrary contained herein, the Term is subject to termination pursuant to Section 1.3.

 

  

  

  

 

1.3  Termination.

 

(a)  If Executive dies during the Term, this Agreement shall automatically terminate on the date of Executive’s death.

 

(b)  The Company may terminate Executive’s employment hereunder upon written notice to Executive at any time (i) due to the Permanent Disability of Executive or (ii) for Cause or without Cause, for any or no reason. Such termination shall be effective upon the date of service of such notice pursuant to Section 14.6.

 

For purposes of this Agreement, “Cause” means the occurrence of any of the following events, as determined in the reasonable good faith judgment of the Board:

 

(i)  the failure of Executive to perform his duties hereunder or comply with reasonable directions of the Board which continues for ten (10) days after the Board has given written notice to Executive, specifying in reasonable detail the manner in which Executive has failed to perform such duties or comply with such directions;

 

(ii)  the determination by the Board in the exercise of its reasonable judgment that Executive has committed an act or acts constituting (a) a felony, (b) dishonesty or disloyalty with respect to the Company or (c) fraud;

 

(iii)  the determination by the Board in the exercise of its reasonable judgment that Executive has committed an act, or has failed to take action, which act or failure to take action adversely affects the Company’s business or reputation;

 

(iv)  the breach, non-performance or non-observance of any of the terms of this Agreement (other than as described in clause (i) above) or any other agreement to which Executive and the Company are parties, by Executive, if such breach, non-performance or non-observance shall continue beyond a period of ten (10) business days immediately after written notice thereof by the Company to Executive; or

 

(v)  notwithstanding clause (iv) above, immediately upon any breach of the Restrictive Covenants.

 

(c)  Executive may terminate and resign from his Employment hereunder upon not less than sixty (60) days prior written notice to the Company.

 

Executive shall be deemed to have a “Permanent Disability” for purposes of this Agreement if he suffers a physical or mental illness, injury or infirmity that prevents him from performing, with or without reasonable accommodations, his essential job functions under this Agreement, for a total period of 120 days in any 360-day period. The Board shall determine, according to the facts then available, whether and when the Permanent Disability of Executive has occurred. Such determination shall not be arbitrary or unreasonable, and the Board may, but shall not be required to, take into consideration the opinion of Executive’s personal physician, if reasonably available, and such determination by the Board shall be final and binding on the parties hereto.

 

2.  Compensation and Benefits.

 

2.1  Base Salary. As consideration for the services of Executive hereunder, the Company shall pay Executive an annual base salary of $250,000 (the “Base Salary”), payable in accordance with the Company’s customary payroll practices as in effect from time to time. Notwithstanding the foregoing, during the period beginning on and including January 1, 2012 and for each year during the Term thereafter, the Board, in its sole discretion, may elect to cause the Company to adjust the Executive’s Base Salary by an amount to be determined by the Board in its sole judgment based upon Executive’s and the Company’s performance and the achievement of the other goals and objectives approved by the Board for such year.

 

  

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2.2  Stock Options.  Executive shall be granted an option to purchase 125,000 shares of the Company’s common stock (NASDAQ: CBLI).  The stock options will be granted as of Executive’s Start Date and will have the following parameters:

(a)    The per-share price of the stock option will be the fair market value as determined per the Cleveland BioLabs, Inc. Guidelines for Equity Awards;

(b)            The stock options will vest over three years, provided Executive continues to be employed by the Company on each respective vesting date: 25% upon the first day of employment, and an additional 25% on the employment anniversary date for each of the next three years.

(c)            The stock option will be subject to the terms of the Company’s 2006 Equity Incentive Plan (as amended and restated effective April 29, 2008 and as may be amended from time-to-time) and standard stock option agreement.

2.3  Bonus. Executive shall be eligible to participate in the bonus program established by the Cleveland BioLabs Executive Compensation Program, subject to the terms and conditions of that program, as revised from time to time.  For the fiscal year ending December 31, 2011, Executive will be eligible to participate in such bonus program on a prorated basis, and Executive’s bonus will be measured against the Company’s achievement of (1) stock performance milestones, (2) scientific milestones, (3) business milestones, (4) financial milestones, and (5) corporate governance, each of which will be weighted by the Compensation Committee.

 

2.4  Compensation After Termination.

 

(a)  If Executive is terminated by the Company for Cause or resigns, then the Company shall have no further obligations hereunder or otherwise with respect to Executive’s employment hereunder from and after the date of said termination (except payment of the Base Salary and other amounts owed to Executive for reimbursable business expenses accrued through the date of said termination), and the Company shall continue to have all other rights available hereunder (including, without limitation, all rights under the Restrictive Covenants at law or in equity).

 

(b)  If Executive is terminated by the Company without Cause, Executive shall be entitled to receive as severance pay an amount equal to the Base Salary that would otherwise have been payable if Executive continued his employment hereunder, for a six (6) month period, payable in accordance with the Company’s payroll policies, reduced by the amount of compensation earned by Executive at other employment, provided, Executive signs a general release agreement in a form to be provided by the Company. The Company shall have no other obligations hereunder or otherwise with respect to Executive’s employment from and after the termination date, and the Company shall continue to have all other rights available hereunder (including, without limitation, all rights under the Restrictive Covenants at law or in equity).

(c)  If Executive is terminated due to Permanent Disability or death, Executive or Executive’s estate, as the case may be, shall be entitled to receive as severance pay an amount equal to the Base Salary that would otherwise have been payable if Executive continued his employment hereunder for the period that otherwise would be remaining in the Term (without any further adjustment as described in Section 2.1), payable in accordance with the Company’s payroll policies, provided, Executive or his estate signs a general release agreement in a form to be provided by the Company. Notwithstanding the foregoing, in the event Executive is Permanently Disabled or dies as a result of, or in the conduct of, his employment activities hereunder, then Executive or Executive’s estate, as the case may be, shall be entitled to receive severance pay in an amount equal to the Base Salary that would otherwise have been payable if Executive continued his employment hereunder (without any further adjustment as described in Section 2.1) for a period of not less than eighteen (18) months, payable in accordance with the Company’s payroll policies, provided, Executive or his estate signs a general release agreement in a form to be provided by the Company. The Company shall have no other obligations hereunder or otherwise with respect to Executive’s employment from and after the termination date, and the Company shall continue to have all other rights available hereunder (including, without limitation, all rights under the Restrictive Covenants at law or in equity).

 

  

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2.5  Profit Sharing, Pension and Salary Deferral Benefits. It is understood by the parties to this Agreement that, during the Term, Executive shall be entitled to participate in or accrue benefits under any pension, salary deferral or profit sharing plan now existing or hereafter created for employees of the Company upon terms and conditions equivalent to those which the Company may provide for other key management employees.

 

2.6  Fringe Benefits and Expenses During the Term.

 

(a)  Executive shall be eligible to participate in any benefit plans maintained by the Company for its key management employees from time to time, including, without limitation, group life, disability and medical insurance in accordance with such plans as from time to time in effect and applicable to key management employees of the Company.

 

(b)  Executive shall be entitled to three (3) weeks paid vacation per year for the first year, and four (4) weeks paid vacation per year thereafter, earned pro rata during his employment, to be taken at such times as may be approved by the Board or its authorized designees. The maximum vacation pay that may accrue is four (4) weeks (“Vacation Cap”). When Executive accrues four (4) weeks of vacation, no further vacation will accrue until he uses vacation time and reduces the accrued vacation time below the vacation cap. He will then accrue vacation time until the vacation cap of four weeks is reached.

 

(c)  The Company shall provide Executive sick days on substantially the same terms as offered to other key management employees.

 

(d)  The Company shall reimburse Executive for all ordinary, necessary and reasonable travel and other business expenses incurred by him in connection with the performance of his duties hereunder, in accordance with the Company’s policy. Such reimbursement shall be made upon presentation of itemized expense statements and such other supporting documentation as the Company may reasonably require.

 

2.6  Taxes, Etc. All compensation payable to Executive hereunder is stated in gross amount and shall be subject to all applicable withholding taxes, other normal payroll and any other amounts required by law to be withheld.

 

3.  Confidentiality.

 

3.1  Company Information. Executive agrees at all times during the term of his employment and thereafter, to hold in strictest confidence, and not to use, except for the benefit of the Company, or to disclose to any person, firm or corporation without written authorization of the Board of Directors of the Company, any Confidential Information of the Company, except under a non-disclosure agreement duly authorized and executed by the Company. Executive understands that “Confidential Information” means any non-public information that relates to the actual or anticipated business or research and development of the Company, technical data, trade secrets or know-how, including, but not limited to, research, product plans or other information regarding Company’s products or services and markets therefor, customer lists and customers software, developments, inventions, processes, formulas, technology, designs, drawings, engineering, hardware configuration information, marketing, finances or other business information. Executive further understands that Confidential Information does not include any of the foregoing items which have become publicly known and made generally available through no wrongful act of mine or of others who were under confidentiality obligations as to the item or items involved or improvements or new versions thereof.

 

  

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3.2  Former Employer Information. Executive agrees that he will not, during his employment with the Company, improperly use or disclose any proprietary information or trade secrets of any former or concurrent employer or other person or entity and that Executive will not bring onto the premises of the Company any unpublished document or proprietary information belonging to any such employer, person or entity unless consented to in writing by such employer, person or entity.

 

3.3  Third Party Information. Executive recognizes that the Company has received and in the future will receive from third parties their confidential or proprietary information subject to a duty on the Company’s part to maintain the confidentiality of such information and to use it only for certain limited purposes. Executive agrees to hold all such confidential or proprietary information in the strictest confidence and not to disclose it to any person, firm or corporation or to use it except as necessary in carrying out my work for the Company consistent with the Company’s agreement with such third party.

4.  Inventions.

 

4.1  Inventions Retained and Licensed. Executive has attached hereto, as Exhibit A, a list describing all inventions, original works of authorship, developments, improvements, and trade secrets which were made prior to his employment with the Company (collectively referred to as “Prior Inventions”), which belong to Executive, which relate to the Company’s proposed business, products or research and development, and which are not assigned to the Company hereunder; or, if no such list is attached, Executive represents that there are no such Prior Inventions. If in the course of Executive’s employment with the Company, Executive incorporates into a Company product, process or service a Prior Invention owned by Executive or in which Executive has an interest, Executive hereby grants to the Company a nonexclusive, royalty-free, fully paid-up, irrevocable, perpetual, worldwide license to make, have made, modified use and sell such Prior Invention as part of or in connection with such product, process or service, and to practice any method related thereto.

 

4.2  Assignment of Inventions. Executive agrees that he will promptly make full written disclosure to the Company, will hold in trust for the sole right and benefit of the Company, and hereby assign to the Company, or its designee, all my right, title, and interest in and to any and all inventions, original works of authorship, developments, concepts, improvements, designs, discoveries, ideas, trademarks or trade secrets, whether or not patentable or registrable under copyright or similar laws, which Executive may solely or jointly conceive or develop or reduce to practice, or cause to be conceived or developed or reduced to practice, during the period of time Executive am in the employ of the Company (collectively referred to as “Inventions”). Executive further acknowledges that all original works of authorship which are made by me (solely or jointly with others) within the scope of and during the period of my employment with the Company and which are protectible by copyright are “works made for hire,” as that term is defined in the United States Copyright Act. Executive understands and agrees that the decision whether or not to commercialize or market any invention developed by me solely or jointly with others is within the Company’s sole discretion and for the Company’s sole benefit and that no royalty will be due to him as a result of the Company’s efforts to commercialize or market any such invention.

 

4.3  Inventions Assigned to the United States. Executive agrees to assign to the United States government all his right, title, and interest in and to any and all Inventions whenever such full title is required to be in the United States by a contract between the Company and the United States or any of its agencies.

 

4.4  Maintenance of Records. Executive agrees to keep and maintain adequate and current written records of all Inventions made by him (solely or jointly with others) during the term of his employment with the Company. The records will be in the form of notes, sketches, drawings, and any other format that may be specified by the Company. The records will be available to and remain the sole property of the Company at all times.

 

4.5  Patent and Copy Registrations. Executive agrees to assist the Company, or its designee, at the Company’s expense, in every proper way to secure the Company’s rights in the Inventions and any copyrights, patents, mask work rights or other intellectual property rights relating thereto in any and all countries, including the disclosure to the Company of all pertinent information and data with respect thereto, the execution of all applications, specifications, oaths, assignments and all other instruments which the Company shall deem necessary in order to apply for and obtain such rights and in order to assign and convey to the Company, its successors, assigns, and nominees the sole and exclusive rights, title and interest in and to such Inventions, and any copyrights, patents, mask work rights or other intellectual property rights relating thereto. Executive further agree that my obligation to execute or cause to be executed, when it is in my power to do so, any such instrument or papers shall continue after the termination of this Agreement. If the Company is unable because of my mental or physical incapacity or for any other reason to secure my signature to apply for or to pursue any application for any United States or foreign patents or copyright registrations covering Inventions or original works of authorship assigned to the Company as above, then Executive hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as his agent and attorney in fact, to act for and in his behalf and stead to execute and file any such applications and to do all other lawfully permitted acts to further the prosecution and issuance of letters patent or copyright registrations thereon with the same legal force and effect as if executed by him.

 

  

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5.  Conflicting Employment. Executive agrees that, during the term of his employment with the Company, Executive will not engage in any other employment, occupation or consulting directly related to the business in which the Company is now involved or becomes involved during the term of his employment, nor will Executive engage in any other activities that conflict with his obligations to the Company, unless written consent is given by the Board of Directors of the Company.

 

6.  Returning Company Documents. Executive agrees that, at the time of leaving the employ of the Company or at any time the Company requests, he will deliver to the Company (and will not keep in his possession, recreate or deliver to anyone else) any and all devices, records, data, notes, reports, proposals, lists, correspondence, specifications, drawings blueprints, sketches, materials, equipment, other documents or property, or reproductions of any aforementioned items developed by Executive pursuant to his employment with the Company or otherwise belonging to the Company, its successors or assigns, including, without limitation, those records maintained pursuant to Section 4.4. In the event of the termination of Executive’s employment, Executive agrees to sign and deliver the “Termination Certification” attached hereto as Exhibit B.

 

7.  Notification of New Employer. In the event that Executive leaves the employ of the Company, Executive hereby grants consent to notification by the Company to his new employer about his rights and obligations under this Agreement.

 

8.  Solicitation of Employees. Executive agrees that for a period of twelve (12) months immediately following the termination of his relationship with the Company for any reason, whether with or without cause, Executive shall not either directly or indirectly solicit, induce, recruit or encourage any of the Company’s employees to leave their employment, or take away such employees, or attempt to solicit, induce, recruit, encourage or take away employees of the Company, either for himself or for any other person or entity.  This restriction shall apply only to those employees of the Company with whom Executive came into contact or about whom Executive learned Confidential Information during the last two (2) years of his employment with the Company.

 

9.  Non-Competition. Executive agrees that during the period of employment and for a period of two (2) years immediately following the termination of his relationship with the Company for any reason, whether with or without cause, Executive shall not directly or indirectly own, manage, operate, consult or to be employed in a business substantially similar to (as defined by the Company’s therapeutic area and core technology), or competitive with, the Business of the Company and its successors and assigns or such other business activity in which the Company and its successors and assigns may substantially engage during the Term.  In recognition of the national nature of the Company’s Business, which includes the sale of its products and services nationwide, this restriction shall apply throughout the United States.

10.  Conflict of Interest Guidelines. Executive agrees to diligently adhere to the Conflict of Interest Guidelines attached as Exhibit D hereto.

 

  

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11.  Representations. Executive agrees to execute any proper oath or verify any proper document required to carry out the terms of this Agreement. Executive represent that his performance of all the terms of this Agreement will not breach any agreement to keep in confidence proprietary information acquired by Executive in confidence or in trust prior to Executive’s employment by the Company. Executive hereby represent and warrant that Executive have not entered into, and Executive will not enter into, any oral or written agreement in conflict herewith.

 

12.  Policy Manual. Executive agrees that he is responsible for knowing the contents of the Company’s Policy Manual, the contents of which may be modified or eliminated at any time.

 

13.  Enforcement . Executive acknowledges and agrees that compliance with the covenants set forth in this Agreement is necessary to protect the Confidential Information and Trade Secrets, business and goodwill of the Company, and that any breach of this Agreement will result in irreparable and continuing harm to the Company, for which money damages may not provide adequate relief.  Accordingly, in the event of any breach or anticipatory breach of this Agreement by Executive, or Executive’s claim in a declaratory judgment action that all or part of this Agreement is unenforceable, the parties agree that the Company shall be entitled to the following particular forms of relief as a result of such breach, in addition to any remedies otherwise available to it at law or equity:  (a) injunctions, both preliminary and permanent, enjoining or restraining such breach or anticipatory breach, and Executive hereby consents to the issuance thereof forthwith and without bond by any court of competent jurisdiction; and (b) recovery of all reasonable sums and costs, including attorneys’ fees, incurred by the Company to defend or enforce the provisions of this Agreement.

14.  Governing Law and Choice of Forum. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, without regard to its conflict of laws provisions.  The parties being desirous of having any disputes resolved in a forum having a substantial body of law and experience with the matters contained herein, the parties agree that any action or proceeding with respect to this Agreement and Executive’s employment shall be brought exclusively in the Supreme Court of the State of New York, Erie County, or in the United States District Court for the Western District of New York, or in any other court of competent jurisdiction sitting in the State of New York, Erie County, and the parties agree to the personal jurisdiction thereof.  The parties hereby irrevocably waive any objection they may now or hereafter have to the laying of venue of any such action in the said court(s), and further irrevocably waive any claim they may now or hereafter have that any such action brought in said court(s) has been brought in an inconvenient forum.  The parties recognize that, should any dispute or controversy arising from or relating to this agreement be submitted for adjudication to any court, arbitration panel or other third party, the preservation of the secrecy of Confidential Information or Trade Secrets may be jeopardized.  Consequently, the parties agree that all issues of fact shall be tried without a jury.

 

14.  Miscellaneous.

 

14.1  Income Tax Treatment. Executive and the Company acknowledge that it is the intention of the Company to deduct all amounts paid under Section 2 hereof as ordinary and necessary business expenses for income tax purposes. Executive agrees and represents that he will treat all amounts paid hereunder as ordinary income (except for expense reimbursement) for income tax purposes.

 

14.2  Assignment.  This Agreement shall be binding upon Executive, Executive’s heirs, executors and administrators, and upon the Company, and its successors and assigns, and shall inure to the benefit of the Company, and its successors and assigns.  This Agreement may not be assigned by Executive.  This Agreement may be enforced by the Company’s successors and assigns.

 

14.3  Severability.  The Parties agree they have attempted to limit the scope of the post-employment restrictions contained herein to the extent necessary to protect the Company’s Confidential Information and Trade Secrets, client relationships and good will.  It is the desire and intent of the parties that the provisions of this Agreement shall be enforced to the fullest extent permissible under applicable laws and public policies.  Employee agrees that the provisions of this Agreement shall be enforced to the fullest extent permissible under applicable laws and public policies.  Accordingly, if any term or provision of this Agreement or any portion thereof is declared illegal or unenforceable by any court of competent jurisdiction, such provision or portion thereof shall be deemed modified so as to render it enforceable, and to the extent such provision or portion thereof cannot be rendered enforceable, this Agreement shall be considered divisible as to such provision which shall become null and void, leaving the remainder of this Agreement in full force and effect.

 

  

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14.4  Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same Agreement.

 

14.5  Descriptive Headings; Interpretation. The descriptive headings in this Agreement are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement. The use of the word “including” in this Agreement shall be by way of example rather than by limitation.

14.6  Notices. All notices, demands or other communications to be given or delivered under or by reason of the provisions of this Agreement shall be in writing and shall be deemed to have been duly given if (i) delivered personally to the recipient, (ii) sent to the recipient by reputable express courier service (charges prepaid) or mailed to the recipient by certified or registered mail, return receipt requested and postage prepaid, or (iii) transmitted by telecopy to the recipient with a confirmation copy to follow the next day to be delivered by overnight carrier. Such notices, demands and other communications shall be sent to the addresses indicated below:

  

	  	
To the Company:

	
Cleveland BioLabs, Inc.

	  	  	
73 High Street

	  	  	
Buffalo, NY 14203

	  	  	
Attention: Chief Executive Officer

	  	  	
Facsimile: (716) 849-6820

 

	  	
with a copy to:

	  
	  	  	  
	  	  	  
	  	  	  
	  	  	  

 

	  	
To Executive:

	
C. Neil Lyons

	  	  	
7805 Brown Bridge Road                                                                

	  	  	
Highland, Maryland  20777     

	  	  	
Facsimile:

	  	  	
with a copy to:

	
 

	  	
with a copy to: 

	
__________________________

	  	  	
__________________________

	  	  	
__________________________

	  	  	
Attention:__________________

	  	  	
Facsimile: __________________

 

or to such other address or to the attention of such other person as the recipient party shall have specified by prior written notice to the sending party. Date of service of such notice shall be (w) the date such notice is personally delivered, (x) three days after the date of mailing if sent by certified or registered mail, (y) one day after the date of delivery to the overnight courier if sent by overnight courier or (z) the next business day after the date of transmittal by telecopy.

 

  

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14.7  Preamble; Preliminary Recitals. The Preliminary Recitals set forth in the Preamble hereto are hereby incorporated and made part of this Agreement.

 

14.8  Entire Agreement. Except as otherwise expressly set forth herein, this Agreement sets forth the entire understanding of the parties, and supersedes and preempts all prior oral or written understandings and agreements with respect to the subject matter hereof.

 

14.9  No Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction will be applied against any party hereto.

 

14.10  Amendment and Waivers.  The failure of either the Company or Executive, whether purposeful or otherwise, to exercise in any instance any right, power, or privilege under this Agreement or under law shall not constitute a waiver of the same or any other right, power, or privilege in any other instance.  Any waiver by the Company or by Executive must be in writing and signed by either Executive, if Executive is seeking to waive any of his rights under this Agreement, or by the President of the Company, if the Company is seeking to waive any of its rights under this Agreement.  No modification of this Agreement shall be valid unless made in a writing signed by both parties hereto, wherein specific reference is made to this Agreement.

14.11  Section 409 A.

(a) This Agreement is intended to comply with Section 409A of the Internal Revenue Code of 1986, as amended ("Section 409A") and shall, to the extent practicable, be construed in accordance therewith. Accordingly, notwithstanding anything in this Agreement to the contrary, if the Company determines that Executive is a "specified employee" (as defined in Code Section 409A(a)(2)(B)(i)) at the time of his or her Separation from Service (as defined under Section 409A) and any amount payable to Executive under this Agreement is a deferral of compensation subject to the additional tax described in Code Section 409A(a)(1)(B) and would be considered a payment upon Executive’s Separation from Service, then notwithstanding anything in this Agreement to the contrary, such amount shall not be paid before the date that is the earlier of (i) six (6) months and one (1) day after Executive’s Separation from Service or (ii) Executive’s death (the "Delay Period"). Upon the expiration of the Delay Period, the initial payment following the Delay Period shall include a lump sum payment equal to those payments that otherwise would have been paid if the delay had not applied, and any remaining payments due shall be payable in accordance with their original payment schedule.

 

(b) If either party to this Agreement reasonably determines that any amount payable pursuant to this Agreement would result in adverse tax consequences under Section 409A (including, but not limited to, the additional tax described in Code Section 409A(a)(1)(B)), then such party shall deliver written notice of such determination to the other party, and the parties hereby agree to work in good faith to amend this Agreement so it (i) is exempt from, or compliant with, the requirements of Section 409A and (ii) preserves as nearly as possible the original intent and economic effect of the affected provisions.

 

	  	 	  
	
Date: August 4, 2011

	 	
Signature

	  	 	  	  
	  	 	
By:  

	  
	  	
/s/ C. Neil Lyons

C. Neil Lyons

	  	  
	  	 	  	  
	  	 	
CLEVELAND BIOLABS, INC.

	  	 	  	  
	  	 	  	  
	  	 	
By:  

	
/s/ Yakov Kogan

Yakov Kogan, Ph.D.

	  	 	
Its:

	
Chief Operating Officer

 

  

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Exhibit A

 

LIST OF PRIOR INVENTIONS

AND ORIGINAL WORKS OF AUTHORSHIP

 

	
Title

	  	
Date

	  	
Identifying Number

or Brief Description

	  	  	  	  	  
	  	  	  	  	  

 

x No inventions or improvements

 

___  Additional Sheets Attached

 

Signature of Executive: ________________________________    

 

Print Name of Executive: _______________________________    

 

Date: _____________________________________________      

 

  

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Exhibit B

 

CLEVELAND BIOLABS, INC.

TERMINATION CERTIFICATION

 

This is to certify that the undersigned does not have in my possession, nor have I failed to return, any devices, records, data, notes, reports, proposals, lists, correspondence, specifications, drawings, blueprints, sketches, materials, equipment, other documents or property, or reproductions of any aforementioned items belonging to Cleveland BioLabs, Inc., its subsidiaries, affiliates, successors or assigns (together, the “Company”).

 

I further certify that I have complied with all the terms of the Company’s Employment Agreement signed by me, including the reporting of any inventions and original works of authorship (as defined therein), conceived or made by me (solely or jointly with others) covered by that agreement.

 

I further agree that, in compliance with the Employment Agreement, I will preserve as confidential all trade secrets, confidential knowledge, data or other proprietary information relating to products, processes, know-how, designs, formulas, developmental or experimental work, computer programs, data bases, other original works of authorship, customer lists, business plans, financial information or other subject matter pertaining to any business of the Company or any of its employees, clients, consultants or licensees.

 

I further agree that for twelve (12) months from this date, I will not solicit, induce, recruit or encourage any of the Company’s employees to leave their employment.

 

I further agree that for two (2) years from this date I will not directly or indirectly own, manage, operate, consult or to be employed in a business substantially similar to, or competitive with, the present business of the Company and its successors and assigns or such other business activity in which the Company and its successors and assigns may substantially engage during the term of employment

 

	
Date: ___________________

	  	  
	  	
(Employee’s Signature) __________________________

	  	  	  
	  	  	  
	  	
  

	
(Type/Print Employee’s Name)

	  	  
	  	  

 

  

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Exhibit C

 

CLEVELAND BIOLABS, INC.

CONFLICT OF INTEREST GUIDELINES

 

It is the policy of Cleveland BioLabs, Inc. to conduct its affairs in strict compliance with the letter and spirit of the law and to adhere to the highest principles of business ethics. Accordingly, all officers, employees and independent contractors must avoid activities which are in conflict, or give the appearance of being in conflict, with these principles and with the interests of the Company. The following are potentially compromising situations which must be avoided. Any exceptions must be reported to the President and written approval for continuation must be obtained.

1.Revealing confidential information to outsiders or misusing confidential information. Unauthorized divulging of information is a violation of this policy whether or not for personal gain and whether or not harm to the Company is intended. (The Employment Agreement elaborates on this principle and is a binding agreement.)

 

2.Accepting or offering substantial gifts, excessive entertainment, favors or payments which may be deemed to constitute undue influence or otherwise be improper or embarrassing to the Company.

 

3.Participating in civic or professional organizations that might involve divulging confidential information of the Company.

 

4.Initiating or approving personnel actions affecting reward or punishment of employees or applicants where there is a family relationship or is or appears to be a personal or social involvement.

 

5.Initiating or approving any form of personal or social harassment of employees.

 

6. Investing or holding outside directorship in suppliers, customers, or competing companies, including financial speculations, where such investment or directorship might influence in any manner a decision or course of action of the Company.

 

7.Borrowing from or lending to employees customers or suppliers.

 

8.Acquiring real estate of interest to the Company.

 

9.Improperly using or disclosing to the Company any proprietary information or trade secrets of any former or concurrent employer or other person or entity with whom obligations of confidentiality exist.

 

10.Unlawfully discussing prices, costs, customers, sales or markets with competing companies or their employees.

 

11.Making any unlawful agreement with distributors with respect to prices.

 

12.Improperly using or authorizing the use of any inventions which are the subject of patent claims of any other person or entity.

 

13.Engaging in any conduct which is not in the best interest of the Company.

 

Each officer, employee and independent contractor must take every necessary action to ensure compliance with these guidelines and to bring problem areas to the attention of higher management for review. Violations of this conflict of interest policy may result in discharge without warning.Unassociated Document

Exhibit 10.2

AGREEMENT AND GENERAL RELEASE

Cleveland Biolabs, Inc. (“Employer”) and John A. Marhofer, Jr., his heirs, executors, administrators, successors, and assigns (collectively referred to throughout this Agreement as “Employee”), agree that:

1.           Last Day of Employment.  Employee hereby resigns from any and all employment and other positions with Employer, Incuron, LLC, Panacela Labs, Inc., BioLab 612, Inc. and their affiliates effective July 31, 2011.  Employee's last day of employment will be July 31, 2011.  This Agreement shall not be valid if signed before Employee’s last day of employment or after August 1, 2011.

2.           Consideration.  In consideration for signing this Agreement and General Release and complying with its terms.Employer agrees:

a.           to pay Employee an amount equal to $110,027, payable ratably in equal installments over a six month period (the “Severance Period”) in accordance with Employer’s regular payroll practices, commencing on the first payroll date after August 8, 2011 (the “Payment Date”);

b.           if Employee properly and timely elects to continue medical, dental and vision coverage under the following plans: (i) BlueCross BlueShield PPO7200, and (ii) Aetna Passive PPO, in accordance with the continuation requirements of COBRA, Employer shall pay the same portion of the premium for such coverage that it paid during Employee’s employment for the duration of the Severance Period.  Thereafter, Employee shall be entitled to elect to continue such COBRA coverage for the remainder of the COBRA period, at Employee’s own expense, subject to the provisions of the American Recovery and Reinvestment Act of 2009.

c.           to grant to Employee 33,241 shares of common stock, par value $0.005 per share, of Employer (the “Common Stock”) for a purchase price of $0 pursuant to The Cleveland BioLabs, Inc. Equity Incentive Plan within three (3) business days following the Payment Date (the “Common Stock Grant”); and

d.           notwithstanding the provision of any option agreement between Employer and Employee to the contrary, to extend the period during which Employee may exercise any non-qualified stock option that has been previously granted to Employee that is fully vested and outstanding (and that has not been previously forfeited or exercised) as of July 31, 2011 until the earlier of July 30, 2014 or the date that the option expires by its terms.

Employee acknowledges that Employer may make customary and usual payroll deductions from all amounts paid hereunder.  Employee shall make arrangements satisfactory to Employer regarding the payment of any federal, state, local or foreign taxes of any kind required by law to be withheld with respect to the Common Stock Grant. Withholding obligations may be settled with Common Stock, including Common Stock granted pursuant to the Common Stock Grant.  In the event that Employee has not provided Employer with notice in writing by August 8, 2011 to the effect that Employee will provide Employer payment of the amount, if any, deemed necessary by Employer in its reasonable discretion to enable Employer to satisfy the minimum federal, foreign or other tax withholding or similar obligations of Employer with respect to the Common Stock Grant or in the event Employee provides such notice but does not deliver payment of the appropriate amount to Employer prior to the Payment Date, then Employer shall satisfy the minimum federal, foreign or other tax withholding or similar obligation of Employer with respect to the Common Stock Grant by withholding the number of whole shares of Common Stock (on and valued as of the Payment Date) sufficient to satisfy such minimum withholding and other obligations.

  

  

  

 

Employee agrees and understands that he is responsible for paying appropriate taxes on the consideration described above. Employee agrees to give Employer prompt notice of any governmental inquiries regarding the tax status of the consideration described above and/or this Agreement and of any government decision or ruling relating to the tax status of this Agreement or the consideration referred to herein.

 

In addition to the consideration, Employee will receive payment for accrued but unused vacation pay and business expenses approved by Employer, less usual and customary payroll deductions, in his final paycheck on July 29, 2011.

 

3.           No Consideration Absent Execution of this Agreement.  Employee understands and agrees that Employee would not receive the monies and/or benefits specified in paragraph “2” above, except for Employee’s execution of this Agreement and General Release and the fulfillment of the promises contained herein.

4.           General Release of All Claims.  Employee knowingly and voluntarily releases and forever discharges Employer, its parent corporation, affiliates, subsidiaries, divisions, predecessors, insurers, successors and assigns, and their current and former employees, attorneys, officers, directors and agents thereof, both individually and in their business capacities, and their employee benefit plans and programs and their administrators and fiduciaries (collectively referred to throughout the remainder of this Agreement as “Releasees”), of and from any and all claims, known and unknown, asserted or unasserted, which the Employee has or may have against Releasees as of the date of execution of this Agreement and General Release, including, but not limited to, any alleged violation of:

	
  

	
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Title VII of the Civil Rights Act of 1964;

	
  

	
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Sections 1981 through 1988 of Title 42 of the United States Code;

	
  

	
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The Employee Retirement Income Security Act of 1974 ("ERISA") (except for any vested benefits under any tax qualified benefit plan);

	
  

	
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The Immigration Reform and Control Act;

  

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The Americans with Disabilities Act of 1990;

	
  

	
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The Age Discrimination in Employment Act of 1967 (“ADEA”);

	
  

	
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The Worker Adjustment and Retraining Notification Act;

	
  

	
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The Fair Credit Reporting Act;

	
  

	
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The Family and Medical Leave Act;

	
  

	
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The Equal Pay Act;

	
  

	
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The New York State Human Rights Law, as amended;

	
  

	
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The New York State Civil Rights Law, as amended;

	
  

	
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The New York State Wage Payment Laws, as amended;

	
  

	
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The New York State Equal Rights Law, as amended;

	
  

	
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The New York State Equal Pay Law, as amended;

	
  

	
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The retaliation provisions of the New York State Workers’ Compensation and Disability Benefits Laws, as amended;

	
  

	
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The New York State Labor Law, as amended;

	
  

	
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The New York Occupational Safety and Health Laws, as amended;

	
  

	
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any other federal, state or local law, rule, regulation, or ordinance;

	
  

	
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any public policy, contract, tort, or common law; or

	
  

	
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any basis for recovering costs, fees, or other expenses including attorneys' fees incurred in these matters.

If any claim is not subject to release, to the extent permitted by law, Employee waives any right or ability to be a class or collective action representative or to otherwise participate in any punative or certified class, collective or multi-party action or proceeding based on such a claim in which Employer or any other Releasee identified in this Agreement is a party.

 

Notwithstanding the foregoing, the Employee and Releasees agree that this general release does not apply to any claims Employee may have for worker’s compensation benefits, unemployment insurance, the Consolidated Omnibus Budget Reconciliation Act of 1986, the provisions of the American Recovery and Reinvestment Act of 2009 or indemnification as an officer or in any other capacity of any Releasee as provided by state law or any organization documents or insurance policy of any Releasee as well as any other claims that cannot lawfully be released.

 

  

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5.           Acknowledgments and Affirmations.

Employee affirms that Employee has not filed, caused to be filed, or presently is a party to any claim against Employer.

 

Employee also affirms that Employee has been paid and/or has received all compensation, wages, bonuses, commissions, and/or benefits to which Employee may be entitled.  Employee affirms that Employee has been granted any leave to which Employee was entitled under the Family and Medical Leave Act or related state or local leave or disability accommodation laws.

 

Employee further affirms that Employee has no known workplace injuries or occupational diseases.

Employee also affirms that Employee has not divulged any proprietary or confidential information of Employer and will continue to maintain the confidentiality of such information consistent with Employer’s policies and Employee’s agreement(s) with Employer and/or common law.

Employee further affirms that Employee has not been retaliated against for reporting any allegations of wrongdoing by Employer or its officers, including any allegations of corporate fraud.  Both Parties acknowledge that this Agreement does not limit either party’s right, where applicable, to file or participate in an investigative proceeding of any federal, state or local governmental agency.  To the extent permitted by law, Employee agrees that if such an administrative claim is made, Employee shall not be entitled to recover any individual monetary relief or other individual remedies.

Employee shall not apply in the future for employment with Employer because of, among other things, irreconcilable differences with Employer.

Employee affirms that all  of the Employer's decisions regarding Employee's pay and benefits through the date of Employee's execution of this Agreement were not discriminatory based on age, disability, race, color, sex, religion, national origin or any other classification protected by law.

 

  

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6.           Confidentiality and Return of Property. Employee agrees not to disclose any information regarding the underlying facts leading up to or the existence or substance of this Agreement and General Release, except to Employee’s spouse, tax advisor, and/or an attorney with whom Employee chooses to consult regarding Employee’s consideration of this Agreement and General Release.

 

Employee affirms that Employee has returned all of Employer’s property, documents, and/or any confidential information in Employee’s possession or control.  Employee also affirms that Employee is in possession of all of Employee’s property that Employee had at Employer's premises and that Employer is not in possession of any of Employee’s property.

7.            Governing Law and Interpretation.  This Agreement and General Release shall be governed and conformed in accordance with the laws of the state in which Employee worked at the time of Employee’s last day of employment without regard to its conflict of laws provision.  In the event of a breach of any provision of this Agreement and General Release, either party may institute an action specifically to enforce any term or terms of this Agreement and General Release and/or seek any damages for breach.  Should any provision of this Agreement and General Release be declared illegal or unenforceable by any court of competent jurisdiction and cannot be modified to be enforceable, excluding the general release language, such provision shall immediately become null and void, leaving the remainder of this Agreement and General Release in full force and effect.

8.            Nonadmission of Wrongdoing.  The Parties agree that neither this Agreement and General Release nor the furnishing of the consideration for this Agreement and General Release shall be deemed or construed at any time for any purpose as an admission by Releasees of wrongdoing or evidence of any liability or unlawful conduct of any kind.

9.             Amendment.  This Agreement and General Release may not be modified, altered or changed except in writing and signed by both Parties wherein specific reference is made to this Agreement and General Release.

10.           Entire Agreement.  This Agreement and General Release sets forth the entire agreement between the Parties hereto, and fully supersedes any prior agreements or understandings between the Parties, except that Employee’s post-termination obligations under his Confidentiality Agreement with Cleveland Biolabs, Inc and his Employment Agreement with Incuron, LLC, which are incorporated herein by reference, shall remain in full force and effect. Employee acknowledges that Employee has not relied on any representations, promises, or agreements of any kind made to Employee in connection with Employee’s decision to accept this Agreement and General Release, except for those set forth in this Agreement and General Release.

 

11.           Section 409A.  Although Employer makes no guarantee with respect to the tax treatment of any amounts payable under the Agreement, the payments due under the Agreement are intended to comply with, or be exempt from, Section 409A of the Internal Revenue Code of 1986, as amended, and the regulations and guidance promulgated thereunder (“Code Section 409A”) and to the maximum extent permitted the Agreement shall be limited, construed and interpreted in accordance with such intent.  No nonqualified deferred compensation payable hereunder shall be paid or be subject to acceleration or to any change in the specified time or method of payment, except as otherwise provided under this Agreement and consistent with Code Section 409A.

 

  

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EMPLOYEE IS ADVISED THAT EMPLOYEE HAS UNTIL AUGUST 1, 2011 TO CONSIDER THIS AGREEMENT AND GENERAL RELEASE.  EMPLOYEE ACKNOWLEDGES THAT HE HAS HAD MORE THAN 21 DAYS TO CONSIDER THE OFFER CONTAINED IN THIS AGREEMENT.  EMPLOYEE ALSO IS ADVISED TO CONSULT WITH AN ATTORNEY PRIOR TO EMPLOYEE’S SIGNING OF THIS AGREEMENT AND GENERAL RELEASE.

EMPLOYEE MAY REVOKE THIS AGREEMENT AND GENERAL RELEASE FOR A PERIOD OF SEVEN (7) CALENDAR DAYS FOLLOWING THE DAY EMPLOYEE SIGNS THIS AGREEMENT AND GENERAL RELEASE.  ANY REVOCATION WITHIN THIS PERIOD MUST BE SUBMITTED, IN WRITING, TO LEAH BROWNLEE, VICE PRESIDENT – OPERATIONS, 73 HIGH STREET, BUFFALO, NY 14203 AND STATE, "I HEREBY REVOKE MY ACCEPTANCE OF OUR AGREEMENT AND GENERAL RELEASE."  THE REVOCATION MUST BE DELIVERED TO LEAH BROWNLEE, VICE PRESIDENT – OPERATIONS, 73 HIGH STREET, BUFFALO, NY 14203 WITHIN SEVEN (7) CALENDAR DAYS AFTER EMPLOYEE SIGNS THIS AGREEMENT AND GENERAL RELEASE.

EMPLOYEE AGREES THAT ANY MODIFICATIONS, MATERIAL OR OTHERWISE, MADE TO THIS AGREEMENT AND GENERAL RELEASE, DO NOT RESTART OR AFFECT IN ANY MANNER THE ORIGINAL CONSIDERATION PERIOD.

EMPLOYEE FREELY AND KNOWINGLY, AND AFTER DUE CONSIDERATION, ENTERS INTO THIS AGREEMENT AND GENERAL RELEASE INTENDING TO WAIVE, SETTLE AND RELEASE ALL CLAIMS EMPLOYEE HAS OR MIGHT HAVE AGAINST RELEASEES.

The Parties knowingly and voluntarily sign this Agreement and General Release as of the date(s) set forth below:

 

	 	 	 	 
CLEVELAND BIOLABS, INC.

	 
	 	 	 	 	 	 
	By: 	/s/ John A. Marhofer, Jr.	 	 
By: 

	 
/s/ Yakov Kogan

	 
	 	John A. Marhofer, Jr.     	 	Its:	COO	 
	Date:	8/1/11	 	Date:	8/1/11

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