Document:

AMENDMENT
      TO RIGHTS AGREEMENT

     

    THIS
      AMENDMENT TO RIGHTS AGREEMENT
      (“Amendment”)
      is
      made as of February 17, 2006, by and among Cleveland BioLabs, Inc., a Delaware
      corporation (the “Company”),
      the
      Common Stockholders and the Purchasers of the Series A Preferred Shares.
      Capitalized terms not otherwise defined herein shall have the meaning ascribed
      to such terms in the Rights Agreement.

     

    R
      E C I T A L S

     

    WHEREAS,
      the
      Company and the Purchasers have entered into that certain Stock Purchase
      Agreement dated as of March 15, 2005 (the “Purchase
      Agreement”),
      pursuant to which the Purchasers acquired shares of the Company’s Series A
      Participating Convertible Preferred Stock, $0.005 par value per share
      (collectively, the “Series
      A Preferred Shares”);

     

    WHEREAS,
      in
      connection with the Purchase Agreement, the Company, the Common Stockholders
      and
      the Purchasers have agreed to the terms and conditions set forth in that certain
      Series A Rights Agreement dated as of March 15, 2005, by and among the Company,
      the Common Stockholders and the Purchasers (the “Rights
      Agreement”).

     

    WHEREAS,
      the
      parties to the Rights Agreement wish to amend and restate Section 5(a) of the
      Rights Agreement in its entirety; 

     

    NOW,
      THEREFORE,
      for
      good and valuable consideration, the receipt and adequacy of which is hereby
      acknowledged, the parties hereto hereby agree as follows:

     

    1. Section
      5(a).
      Section
      5(a) of the Rights Agreement is hereby amended and restated in its entirety
      to
      read as follows: 

     

    “In
      the
      event that that Corporation has not consummated one of the Required Transactions
      on or before the Public Trigger Date, the Corporation shall issue to each holder
      of Registrable Securities, such number of additional Series A Preferred Shares
      as shall equal 2% of the Series A Preferred Shares held by such holder (not
      including any previously issued Penalty Shares), plus such number of additional
      shares of Common Stock as shall equal 2% of the shares of Common Stock held
      by
      such holder (not including any previously issued Penalty Shares or shares of
      Common Stock issuable upon conversion of Series A Preferred Stock, but including
      Fee Securities and shares of Common Stock previously issued upon conversion
      of
      Series A Shares) for each thirty (30) day period beyond the Public Trigger
      Date
      that a Required Transaction has not been consummated; provided, however, Penalty
      Shares shall not accrue for a period commencing on the initial filing date
      of
      any registration statement with the Commission (the “Initial
      Filing Date”)
      to and
      including seventy (70) days thereafter, provided further, that, in the event
      that effectiveness of such registration statement is delayed due to Commission
      comments on such registration statement, and the Corporation is in good faith
      responding to such comments in a timely manner and such comments do not preclude
      the Corporation from going effective on such registration statement entirely,
      such seventy (70) day period shall be extended (only once) for an additional
      forty-five (45) day period (collectively, the “Grace
      Period”).
      For
      the avoidance of doubt, the parties hereto agree that (i) the Initial Filing
      Date is February 17, 2006, and (ii) the Grace Period shall not therefore, in
      any
      event, exceed one hundred fifteen (115) days from February 17,
      2006.”

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    2. No
      Amendment or Waiver.
      The
      execution, delivery and effectiveness of this Amendment shall not constitute
      an
      amendment or waiver of any other provision of the Rights Agreement. The terms
      of
      the Rights Agreement not affected, modified or changed by this Amendment shall
      remain in full force and effect.

     

    3. Counterparts.
      This
      Amendment may be executed in two or more counterparts, each of which shall
      be
      deemed an original, but all of which together shall constitute one and the
      same
      instrument. Facsimile signatures shall be accepted as originals. 

     

    *
      * *
      *

     

    Signature
      Page Follows

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF,
      the
      undersigned or each of their respective duly authorized officers or
      representatives have set their hands hereunder effective upon the date
      referenced-above.

     

    THE
      COMPANY:

    

    Cleveland
      BioLabs, Inc., a
      Delaware corporation

    

    

    By: _/s/
      Michael Fonstein______________

    Name:
      Michael Fonstein

    Title: President
      and Chief Executive Officer

    

     

     

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    COMMON
      STOCKHOLDERS

    

    

    ________________________________

    Michael
      Fonstein

    

    

    ________________________________

    Yakov
      Kogan

    

    

    ________________________________

    Elena
      Feinstein

    

    

    ________________________________

    George
      R.
      Stark

    

    

    ________________________________

    Mikhail
      V. Chernov

    

    

    ________________________________

    Katerina
      Gurova

    

    

    ________________________________

    Vadim
      Krivokrysenko

    

    

    

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    ChemBridge
      Corporation

    

    By:  _________________________

    Name: _________________________

    Title: _________________________

    

    

    The
      Cleveland Clinic Foundation

    

    By:  _________________________

    Name: _________________________

    Title: _________________________

    

    

    ________________________________

    Andrei
      Gudkov

     

    

    

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      	 	 	PURCHASERS
              
	 	 	 
	 	 	
              INDIVIDUAL:

            
	 	 	 
	 	 	 
	 	 	
              Print
                Name

            
	 	 	 
	 	 	 
	 	 	
              Signature

            
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	
              ENTITY:

            
	 	 	 
	 	 	 
	 	 	
              Print
                Entity Name

            
	 	 	 
	 	 	 
	 	 	
              Signature

            
	 	 	 
	 	 	 
	 	 	
              Name
                and Title of SignatoryFIFTH AMENDMENT TO CREDIT AND SECURITY AGREEMENT

This Amendment, dated as of April 17
th, 2006, is made by and among COST-U-LESS, INC., a Washington corporation
(“CUL” or a “Borrower”), CULGUAM, INC., a Guam corporation (“GUAM” or a “Borrower”), CULNEV,
INC., a Nevada corporation (“NEV” or a “Borrower”), CULUSVI, INC., a U.S. Virgin Islands corporation
(“USVI” or a “Borrower”, and together with CUL, GUAM and NEV, the “Borrowers”), and WELLS FARGO BANK,
N.A. (the “Lender”), acting through its Wells Fargo Business Credit operating division.

Recitals

Each Borrower and the Lender are
parties to a Credit and Security Agreement dated as of April 9, 2003, as amended by that certain First Amendment to Credit and
Security Agreement dated as of October 17, 2003, that certain Second Amendment to Credit and Security Agreement dated as of March 2,
2004, that certain Third Amendment to Credit and Security Agreement dated as of November 11, 2004 and that certain Fourth Amendment
dated as of May 18, 2005 (as so amended, the “Credit Agreement”).  Capitalized terms used in these recitals have the
meanings given to them in the Credit Agreement unless otherwise specified.

Each Borrower has requested that
certain amendments be made to the Credit Agreement, which the Lender is willing to make pursuant to the terms and conditions set
forth herein.

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

1.          Defined Terms.
Capitalized terms used in this Amendment which are defined in the Credit Agreement shall have the same meanings as defined therein,
unless otherwise defined herein.  

2.    Section
6.2 of the Credit Agreement is hereby amended in its entirety to read as follows:

 “(a)
         Minimum Book Net Worth
.  The Borrower will maintain, during each period described below and
for each month thereafter, its consolidated Book Net Worth, determined as at the end of each month, at an amount not less than the
amount set forth opposite such period (numbers appearing between “< >” are negative):

	
            Period

  	
            Minimum
Book Net Worth

 
  
	
            The month
ending April 2, 2006
 	
            
$24,480,000
 
	
            The month
ending April 30, 2006
 	
            
$24,530,000
 
	
            The month
ending May 28, 2006
 	
            
$24,525,000
 
	
            The month
ending July 2, 2006
 	
            
$24,740,000
 
	
            The month
ending July 30, 2006
 	
            
$24,750,000
 

 

 

 

 

 

 

	
            Period

  	
            Minimum
Book Net Worth

 
  
	
            The month
ending August 27, 2006
 	
            
$24,790,000
 
	
            The month
ending October 1, 2006
 	
            
$25,280,000
 
	
            The month
ending October 29, 2006
 	
            
$25,340,000
 
	
            The month
ending November 26, 2006
 	
            
$25,450,000
 
	
            The month
ending December 31, 2006 and thereafter
 	
            
$25,760,000

 

               (b)
Minimum Net Income.  The Borrower will achieve during each period described below, consolidated
minimum Net Income, of not less than the amount set forth opposite such period (numbers appearing between “< >”
are negative):

	
            
Period
  	
            
Minimum Net Income
  
	
            Year to
date as of April 2, 2006
 	
            $360,000

 
	
            Year to
date as of July 2, 2006
 	
            $540,000

 
	
            Year to
date as of October 1, 2006
 	
            
$1,000,000
 
	
            Year to
date as of December 31, 2006
 	
            
$1,400,000

 

 (c)
         Capital Expenditures.  The Borrower will not incur or contract to incur aggregate Capital
Expenditures of more than $7,000,000 during the Borrower’s fiscal year ending December 31, 2006 and zero thereafter until the
Borrower and the Lender agree on Financial Covenants for periods after December 31, 2006.

 (d)
         New Financial Covenants.  On or before December 31, 2006, the Borrower and the Lender shall agree on the new dollar amount for such covenant
levels for Section 6.2(a), Section 6.2(b) and Section 6.2(c) for periods after such date.  The new Financial Covenants will be based
on the Borrower’s projections for such periods and shall be no less stringent than the present Financial Covenants, but if the
Borrower and the Lender do not agree after good faith negotiations, the Lender may designate the required amounts in its sole
discretion and the failure by the Borrower to maintain the designated amounts shall constitute an Event of Default.” 

3.          No Other Changes.
Except as explicitly amended by this Amendment, all of the terms and conditions of the Credit Agreement shall remain in full force
and effect and shall apply to any advance or letter of credit thereunder.

4.          Conditions Precedent.
This Amendment shall be effective when the Lender shall have received an executed
original hereof, together with such other matters as the Lender may require, each in substance and form acceptable to the Lender in
its sole discretion.

5.          Representations and Warranties.  Each Borrower hereby represents and warrants to the Lender as follows:

 

2

 

 

 

(a)        Each Borrower has all requisite power and authority to execute this Amendment and
to perform all of its obligations hereunder, and this Amendment has been duly executed and delivered by each Borrower and
constitutes the legal, valid and binding obligation of each Borrower, enforceable in accordance with its terms.

(b)        The execution, delivery and performance by each Borrower of this Amendment have
been duly authorized by all necessary corporate action and do not (i) require any authorization, consent or approval by any
governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, (ii) violate any provision
of any law, rule or regulation or of any order, writ, injunction or decree presently in effect, having applicability to any
Borrower, or the articles of incorporation or by-laws of any Borrower, or (iii) result in a breach of or constitute a default
under any indenture or loan or credit agreement or any other agreement, lease or instrument to which any Borrower is a party or by
which it or its properties may be bound or affected.

(c)        All of the representations and warranties contained in Article V of the Credit
Agreement are correct on and as of the date hereof as though made on and as of such date, except to the extent that such
representations and warranties relate solely to an earlier date.

6.          References.  All
references in the Credit Agreement to “this Agreement” shall be deemed to refer to the Credit Agreement as amended hereby;
and any and all references in the Security Documents to the Credit Agreement shall be deemed to refer to the Credit Agreement as
amended hereby.

7.          No Waiver.  The
execution of this Amendment and acceptance of any documents related hereto shall not be deemed to be a waiver of any Default or
Event of Default under the Credit Agreement or breach, default or event of default under any Security Document or other document
held by the Lender, whether or not known to the Lender and whether or not existing on the date of this Amendment.

8.          Release.  Each Borrower
hereby absolutely and unconditionally releases and forever discharges the Lender, and any and all participants, parent corporations,
subsidiary corporations, affiliated corporations, insurers, indemnitors, successors and assigns thereof, together with all of the
present and former directors, officers, agents and employees of any of the foregoing, from any and all claims, demands or causes of
action of any kind, nature or description, whether arising in law or equity or upon contract or tort or under any state or federal
law or otherwise, which such Borrower has had, now has or has made claim to have against any such person for or by reason of any
act, omission, matter, cause or thing whatsoever arising from the beginning of time to and including the date of
this Amendment, whether such claims, demands and causes of action are matured or unmatured or known or unknown.

9.          Costs and Expenses.
Each Borrower hereby reaffirms its agreement under the Credit Agreement to pay or reimburse the Lender on demand for all costs and
expenses incurred by the Lender in connection with the Loan Documents, including without limitation all reasonable fees and
disbursements of legal counsel.  Without limiting the generality of the foregoing, each Borrower specifically agrees to pay all fees
and disbursements of counsel to the Lender for the services performed by such counsel in
connection with the preparation of this 

 

3

 

 

Amendment and the documents and instruments incidental hereto.  Each Borrower hereby agrees
that the Lender may, at any time or from time to time in its sole discretion and without further authorization by any Borrower, make
a loan to any Borrower under the Credit Agreement, or apply the proceeds of any loan, for the purpose of paying any such fees,
disbursements, costs and expenses.

10.        Joint and Several Liability.  All
obligations of each Borrower under this Amendment shall be joint and several.  All references to the term “Borrower”
herein shall refer to each of them separately and to all of them jointly and all such Persons shall be bound both severally and
jointly with the other.  Each Borrower is responsible for all of the Borrower obligations under this Amendment.  Notices from the
Lender to any Borrower shall constitute notice to all Borrowers.  Directions, instructions, representations, warranties or covenants
made by any Borrower to the Lender shall be binding on all Borrowers.

11.        Miscellaneous.  This Amendment may
be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original and all of which
counterparts, taken together, shall constitute one and the same instrument.

[This space intentionally left blank.]

 

4

 

 

 

IN WITNESS WHEREOF, the parties
hereto have caused this Amendment to be duly executed as of the date first written above.

 

	
            WELLS FARGO
BUSINESS CREDIT, INC.

 

 

 

By:  
/s/ Robb L. Jacobs                                                 

Name:  Robb L.
Jacobs

Its:  Assistant Vice
President

 
 	
            COST-U-LESS,
INC.

 

 

 

By:  
/s/ Martin P. Moore                                                 

Name:  Martin P.
Moore

Its:  Chief Financial
Officer

 
 
	
             

 	
            CULGUAM, INC.

 

 

 

By:  
/s/ Martin P. Moore                                                 

Name:  Martin P. Moore

Its:  Authorized Agent

 
 
	
             

 	
            CULNEV, INC.

 

 

 

By:  
/s/ Martin P. Moore                                                 

Name:  Martin P. Moore

Its:  Authorized Agent

 
 
	
             

 	
            CULUSVI, INC.

 

 

 

By:  
/s/ Martin P. Moore                                                 

Name:  Martin P. Moore

Its:  Authorized Agent

 
 

 

 

 

5

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