Document:

THIS
      CONVERTIBLE PROMISSORY NOTE AND THE SHARES OF PREFERRED STOCK AND COMMON STOCK
      HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
      STATE SECURITIES LAWS AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF
      AN
      EFFECTIVE REGISTRATION STATEMENT UNDER SUCH LAWS OR AN EXEMPTION FROM
      REGISTRATION THEREUNDER.

     

    CONVERTIBLE
      PROMISSORY NOTE

     

    
      
        	November 23, 2004 (the “Issuance
                Date”)	
                 US[$23,500]

              

      

    

          

    Cleveland
      BioLabs, Inc., a Delaware corporation, located at 7800 Blackberry Lane, Gates
      Mills, Ohio 44040 (“Borrower”
or
      the
“Corporation”),
      hereby promises to pay to the order of Paul Haber & Michelle Haber ATF Haber
      Family Trust, located at 1/58 Arcadia St., Coogee, NSW 2034 AUSTRALIA (the
      “Lender”),
      the
      principal amount of $23,500 together with interest thereon calculated from
      the
      date hereof in accordance with the provisions of this Convertible Promissory
      Note (this “Note”).

     

    1. Principal
      Amount.
      The
      amount on the face of this Note shall constitute the principal amount of this
      Note (the “Principal
      Amount”).
      The
      Principal Amount shall accrue interest at an annual rate equal to six percent
      (6%), compounded annually. The Principal Amount plus any and all accrued and
      unpaid interest through and including any Conversion Date shall constitute
      the
      Conversion Amount (the “Conversion
      Amount”).

     

    2. Maturity.
      If the
      Note shall not have previously been converted pursuant to a Mandatory
      Conversion, on the Maturity Date the Note shall be surrendered to the
      Corporation, and, at the option of the Lender, the Conversion Amount shall
      be
      (i) converted into Common Stock at the Fixed Conversion Price (as defined below)
      or (ii) redeemed by the Corporation. The Lender may elect to convert the
      Conversion Amount at the Fixed Conversion Price. If the Lender does not elect
      such a conversion, the Corporation shall redeem the entire Conversion Amount
      of
      the Note and the Lender shall be paid all principal and accrued and unpaid
      interest thereon, in accordance with the terms of the Note. “Maturity
      Date”
means
      the earlier to occur of (i) a Change of Control and (ii) the date that is
      thirty-six (36) months after the Issuance Date. The Corporation shall give
      written notice to the Lender of a Change of Control within five (5) business
      days of the occurrence thereof and the Lender will have five (5) business days
      after such notice to elect to so convert the Conversion Amount.

     

    3. Conversion
      of Note.

     

    
      	 	
              (a)

            	
              Conversion
                of the Conversion Amount.
                This Note may be converted, in whole or in part, into shares of Common
                Stock of the Corporation at any time prior to the Maturity Date in
                accordance with the terms of this Section 3(a) and Section 3(f).
                Upon
                surrendering the Note to the Corporation, the Conversion Amount shall
                be
                converted into Common Stock at the fixed conversion price of $1,500
                per
                share (the “Fixed
                Conversion Price”)
                (as adjusted for stock splits, stock dividends and similar transactions).
                Such event shall be referred to as the “Common
                Stock Conversion.”
                Upon Common Stock Conversion, the Lender, as a holder of Common Stock,
                shall be entitled to the same rights and benefits accorded to the
                other
                holders of the Common Stock.

            

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (b)

            	
              Mandatory
                Conversion of the Conversion Amount.
                If at any time prior to the Maturity Date the Corporation consummates
                an
                Initial Public Offering of the Common Stock (the “Mandatory
                Conversion Date”),
                the Note shall be surrendered to the Corporation, and the Conversion
                Amount shall be automatically converted into Common Stock at the
                fixed
                conversion price of $1,500 per share (the “Fixed
                Conversion Price”)
                (as adjusted for stock splits, stock dividends and similar transactions).
                Such event shall be referred to as the “Mandatory
                Conversion.”
                Upon Mandatory Conversion, the Lender, as a holder of Common Stock,
                shall
                be entitled to the same rights and benefits accorded to the other
                holders
                of the Common Stock.

            

    

     

    
      	 	
              (c)

            	
              Optional
                Conversion of the Conversion Amount.
                If at any time prior to the Maturity Date the Corporation shall raise
                any
                additional funds either through the issuance of additional debt or
                equity
                (the “Optional
                Conversion Date”),
                at the election of the Leader the Note may be surrendered to the
                Corporation, and the Conversion Amount shall then be converted into
                the
                new equity or new debt as is being sold and issued by the Corporation
                (the
                “New
                Equity”
                or “New
                Debt,”
                as applicable). The Conversion Amount shall be converted (i) if into
                New
                Equity, at a price per share equal to the lowest price per share
                at which
                the New Equity is sold by the Corporation or (ii) if into New Debt,
                into
                the new debt instrument with a principal amount equal to the Conversion
                Amount. Such event shall be referred to as the “Optional
                Conversion.”
                Upon an Optional Conversion, the Lender, as a holder of New Equity
                or New
                Debt, shall be entitled to the same rights and benefits accorded
                to the
                other holders of the New Equity or New Debt. This Optional Conversion
                shall not apply to (i) any transaction involving the Company’s issuances
                of securities (A) as consideration in a merger or consolidation,
                (B) in
                connection with any strategic partnership or joint venture (the primary
                purpose of which is not to raise equity capital) or (C) as consideration
                for the acquisition of a business, product, license or other assets
                by the
                Company, (ii) the issuance of Common Stock in a registered public
                offering, (iii) the issuance of securities upon exercise or conversion
                of
                the Company’s warrants or other convertible securities outstanding on the
                Issuance Date, and (iv) the issuance of securities in connection
                with any
                stock splits or stock dividends of the
                Company.

            

    

     

    
      	 	
              (d)

            	
              Computation
                of the Number of Conversion Shares.
                Upon conversion into equity, the Lender shall receive a number of
                shares
                of New Equity or Common Stock, as the case may be, equal to the number
                of
                shares computed by dividing (1) the Conversion Amount by (2) the
                applicable conversion price set forth above in Section 2, 3(a), 3(b)
                or
                Section 3(c), as the case may be (the “Conversion
                Shares”).

            

    

     

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (e)

            	
              Notices.
                If the Corporation shall sell any New Equity or New Debt prior to
                October
                17, 2007, the Corporation shall give written notice to the Lender
                at least
                twenty (20) business days prior thereto setting forth the price per
                share
                and/or rights and benefits of such New Equity or New
                Debt.

            

    

     

    
      	 	
              (f)

            	
              Note
                Conversion Deliveries.
                The Corporation and the Lender hereby agree to take such actions
                as may be
                required to ensure that upon conversion of the Note, the following
                shall
                occur:

            

    

     

    
      	 	
              (i)

            	
              the
                Lender shall surrender its originally executed Note to the Corporation
                and
                such Note shall be deemed
                cancelled;

            

    

     

    
      	 	
              (ii)

            	
              the
                Corporation shall deliver to the Lender a certificate or certificates
                representing the number of Conversion Shares issuable by reason of
                such
                conversion, or instruments in principal amount of the Conversion
                Amount,
                in the Lender’s name. Such certificates or other instruments shall bear a
                legend which is substantially similar to such legends affixed to
                other
                certificates or instruments of the same class or series of stock
                or
                debt.

            

    

     

    
      	 	
              (iii)

            	
              the
                Lender hereby agrees to execute and deliver to the Corporation any
                documents which other holders of such equity or debt have executed
                with
                respect to shares issued in the sale of New Equity or New Debt, or
                the
                Corporation’s Common Stockholders Agreement in the event the Lender
                converts this Note into Common
                Stock.

            

    

     

    4. Triggering
      Events.

     

    
      	 	
              (a)

            	
              Definition.
                For purposes of this Note, a Triggering Event shall be deemed to
                have
                occurred if:

            

    

     

    
      	 	
              (i)

            	
              Borrower
                falls to properly convert this Note on the terms and conditions specified
                herein;

            

    

     

    
      	 	
              (ii)

            	
              Borrower
                fails to properly redeem this Note or pay any accrued and unpaid
                interest
                upon maturity on the terms and conditions specified
                herein;

            

    

     

    
      	 	
              (iii)

            	
              The
                institution of a proceeding against Borrower under any state insolvency
                laws, federal bankruptcy law, or similar debtor relief laws then
                in
                effect;

            

    

     

    
      	 	
              (b)

            	
              Consequences
                of Triggering Event.

            

    

     

    
      	 	
              (i)

            	
              If
                a Triggering Event has occurred, the holder of this Note may demand
                (by
                written notice delivered to Borrower) immediate payment of all of
                the
                outstanding principal amount of this Note, plus any accrued interest
                thereon.

            

    

     

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (ii)

            	
              Any
                holder of this Note shall also have any other rights which such holder
                may
                have been afforded under any contract or agreement at any time or
                any
                other rights which such holder may have pursuant to applicable
                law.

            

    

     

    5. Cancellation.
      After
      conversion of the entire Conversion Amount or upon redemption and payment of
      all
      principal and accrued and unpaid interest on the Note at maturity, the Note
      shall be surrendered by the holder hereof to the Corporation for cancellation
      and shall not be reissued.

     

    6. Representations,
      Warranties and Covenants as to Common Stock.
      The
      Corporation hereby represents, warrants, covenants and agrees as
      follows:

     

    
      	 	
              (a)

            	
              This
                Note is, and any Notes issued in substitution for or replacement
                of this
                Note will upon issuance be, duly authorized and validly issued, and
                no
                further consent or authorization is required by the Corporation,
                its Board
                of Directors or its stockholders. The Corporation has the requisite
                corporate power and authority to enter into and perform its obligations
                under this Note in accordance with the terms hereof. This Note constitutes
                the valid and binding obligation of the Corporation, enforceable
                against
                the Corporation in accordance with its
                terms.

            

    

     

    
      	 	
              (b)

            	
              The
                Corporation will not, by amendment of its Certificate of Incorporation,
                as
                amended (the “Certificate
                of Incorporation”),
                or through any reorganization, transfer of assets, consolidation,
                merger,
                dissolution, issue or sale of securities, or any other voluntary
                action,
                avoid or seek to avoid the observance or performance of any of the
                terms
                to be observed or performed by it hereunder, but will at all times
                in good
                faith assist in the carrying out of all the provisions of this Note
                consistent with the tenor, purpose and specific language of this
                Note.

            

    

     

    
      	 	
              (c)

            	
              The
                execution, delivery and performance of this Note by the Corporation,
                the
                performance by the Corporation of its obligations hereunder and the
                consummation by the Corporation of the transactions contemplated
                hereby
                will not (i) result in a violation of the Certificate of Incorporation
                of
                the Corporation or its bylaws; (ii) conflict with, or constitute
                a default
                (or an event which with notice or lapse of time or both would become
                a
                default) under, or give to others any rights of termination, amendment,
                acceleration or cancellation of, any material agreement, indenture
                or
                instrument to which the Corporation or any of its subsidiaries is
                a party
                other than any of the foregoing events listed in this clause (ii)
                which do
                not individually or in the aggregate have a material adverse effect
                on the
                Corporation; (iii) result in a violation of any law, rule, regulation,
                order or judgment (including, without limitation, federal and state
                securities laws and regulations and the rules) applicable to the
                Corporation or any of its subsidiaries or by which any property or
                assets
                of the Corporation or any of its subsidiaries is
                bound.

            

    

     

    
      	 	
              (d)

            	
              The
                Corporation is not required to obtain any consent, authorization
                or order
                of, or make any filing or registration with, any court or governmental
                agency or any regulatory or self-regulatory agency in order for it
                to
                execute, deliver or perform any of its obligations under this
                Note.

            

    

     

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (e)

            	
              This
                Note will be binding upon any entity succeeding to the Corporation
                by
                merger, consolidation or acquisition of all or substantially all
                of the
                Corporation’s assets.

            

    

     

    
      	 	
              (f)

            	
              All
                information that has been provided in writing by the Corporation
                or its
                representatives to the Lender is true, accurate and not misleading
                in all
                material respects and no information regarding the Corporation or
                its
                affairs that would be material to the Lender in deciding whether
                to
                provide monies to the Corporation on the terms of this Note has been
                withheld from the Lender.

            

    

     

    
      	 	
              (g)

            	
              So
                long as this Note is outstanding, the Company shall not, without
                the prior
                approval of the holder of this Note, enter into, amend, modify or
                supplement any agreement, transaction, commitment or arrangement
                with any
                of its officers, directors, persons who were officers or directors
                of the
                Company at any time during the previous two years, or stockholders
                who
                beneficially own 10% or more of the Common Stock or any other class
                of
                equity of the Company, except for any agreement, transaction, commitment
                or arrangement that is approved by a majority of the disinterested
                directors of the Company. For purposes hereof, any director who is
                also an
                officer of the Company shall not be a disinterested director with
                respect
                to any such agreement, transaction, commitment or arrangement with
                respect
                to which another officer is interested if the Board or a committee
                thereof
                considered or will be considering a substantially similar agreement,
                transaction, commitment or arrangement with respect to which such
                director
                was, is or will be interested.

            

    

     

    7. Financial
      Statements and Other Information.
      So long
      as this Note remains outstanding the Company will deliver to any holder of
      such
      outstanding Note:

     

    
      	 	
              (a)

            	
              Unaudited
                Quarterly Financial Statements.
                As soon as practicable after the end of each quarter of each fiscal
                year
                and in any event within forty-five (45) days thereafter, a balance
                sheet
                of the Company as of the end of such period, and statement of operations
                of the Company for such period and for the current fiscal year to
                date,
                subject to changes resulting from immaterial normal year-end audit
                adjustments, all in reasonable detail and certified by the principal
                financial officer of the Company;
                and

            

    

     

    
      	 	
              (b)

            	
              Budget.
                Not less than thirty (30) days prior to the commencement of each
                fiscal
                year, an annual business plan, including a budget and financial
                projections for the Company, for such year (the “Budget”),
                all in reasonable detail, together with underlying
                assumptions.

            

    

     

    8. Amendment
      and Waiver. 
      Except
      as otherwise expressly provided herein, the provisions of this Note may be
      amended and Borrower may take any action herein prohibited, or omit to perform
      any act herein required to be performed by it, only if Borrower has obtained
      the
      written consent of the holder of this Note.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    9. Future
      Offering.
      In the
      event the Lender has elected to convert this note into other debt or equity
      of
      the Corporation, other than common stock, the Corporation shall use its best
      efforts to provide such newly issued security and such Lender (solely as part
      of
      the group(s) that are acquiring such newly issued security) with weighted
      average anti-dilution protection.

     

    10. Notices
      and Payment to Holder.
      All
      notices and all payments of principal and interest are to be delivered to the
      holder hereof at the address specified in the first paragraph of this Note,
      or
      to such other address or to the attention of such other person as specified
      by
      prior written notice to Borrower.

     

    11. Miscellaneous.
      This
      Note applies, inures to the benefit of, and binds the successors and assigns
      of
      the parties hereto. This Note is made under and all questions concerning the
      construction, validity and interpretation of this Note shall be governed by
      the
      internal laws, and not the laws of conflict, of the State of Delaware. The
      Lender shall not attempt to sell, assign, transfer, mortgage, encumber, convey,
      exchange, pledge hypothecate or otherwise dispose of this Note except to a
      Permitted Transferee. The Corporation shall not attempt to sell, assign,
      transfer, mortgage, encumber, convey, exchange, pledge hypothecate or otherwise
      dispose of this Note except with the written consent of the Lender. Ownership
      of
      an interest in this Note is required to be reflected in a record of ownership
      that identifies the owner of an interest in this Note (a “Book
      Entry”)
      maintained by the Company. The right to payment in respect of the principal
      of,
      and stated interest on, this Note may be transferred only through Book Entry.
      Ownership of an interest in this Note may not be transferred in any other manner
      and any purported transfer of the Note not in accordance with this Section
      11
      shall be void ab initio. This Section 11 is intended to qualify this Note as
      an
      obligation in registered form for purposes of Sections 881(c)(2)(B) and 1442(a)
      of the Internal Revenue Code of 1986, as amended (the “Code”)
      (and
      any successor provisions) and shall be interpreted in accordance
      therewith.

     

    12. Lost,
      Stolen, Destroyed or Mutilated Warrant.
      In case
      any Note shall be mutilated, lost, stolen or destroyed, the Corporation shall
      issue a new Note of like date, tenor and denomination and deliver the same
      in
      exchange and substitution for and upon surrender and cancellation of any
      mutilated Note, or in lieu of any Note lost, stolen or destroyed, upon receipt
      of evidence satisfactory to the Corporation of the loss, theft or destruction
      of
      such Note, and upon receipt of indemnity satisfactory to the Corporation
      (provided that such holder’s agreement to indemnify shall be deemed satisfactory
      to the Corporation without requiring the posting of a bond).

     

    13. Definitions.
      For the
      purposes of this Note, the following terms have the meaning set forth
      below:

     

    “Permitted
      Transferee” shall mean any corporation, or partnership or limited liability
      company in which the Lender is the direct and beneficial owners of all of the
      equity interests (provided the Lender agrees in writing to remain the direct
      and
      beneficial owners of all such equity interests) or which is under common control
      with the Lender.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    “Person”
      shall mean and includes any individual, corporation, partnership, limited
      liability partnership, association, limited liability company, trust, estate,
      or
      other entity.

     

    “Common
      Stock” shall mean the Corporation’s Common Stock, $0.005 par value per
      share.

     

    “Change
      of Control” means:

     

    
      	 	
              (a)

            	
              a
                sale or transfer of all or substantially all of the assets of the
                Corporation on a consolidated basis (computed on the basis of book
                value,
                determined in accordance with generally accepted accounting principles
                consistently applied, or fair market value, as determined by the
                Board of
                Directors of the Corporation in its reasonable good faith judgment)
                in any
                transaction or series of related
                transactions;

            

    

     

    
      	 	
              (b)

            	
              any
                merger, consolidation or reorganization to which the Corporation
                is a
                party, except for a merger, consolidation or reorganization in which
                after
                giving effect to such merger, consolidation or reorganization, the
                holders
                of the Corporation’s outstanding capital stock (on a fully-diluted basis)
                immediately prior to the merger, consolidation or reorganization
                will own
                immediately following such merger, consolidation or reorganization,
                a
                number of shares of the Company’s outstanding capital stock (on a fully
                diluted basis) having the ordinary voting power to elect a majority
                of the
                members of the Board of Directors of the Corporation;
                or

            

    

     

    
      	 	
              (c)

            	
              any
                sale or transfer of the Corporation’s capital stock that results in any
                person acquiring capital stock of the Corporation 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 Corporation’s
                board of directors; provided
                that the term “Change of Control” shall not include any sale of equity or
                debt securities by the Corporation in a private offering to other
                investors.

            

    

     

    “Initial
      Public Offering” means the consummation of a public offering of Common Stock
      pursuant to a registration statement declared effective by the SEC pursuant
      to a
      registration statement on Form S-1 or S-2.

     

    [signature
      page to follow]

     

    

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF,
      Borrower
      has, through its duly authorized officer, executed and delivered this Note
      as of
      the date first written above.

     

    CLEVELAND
      BIOLABS, INC.

     

    By: /s/Michael
      Fonstein                                                         

     

    Name: Michael
      Fonstein

    Its:    
       CEO

     

     

     

    
      
        
        

      

      
        8THIS
      CONVERTIBLE PROMISSORY NOTE AND THE SHARES OF PREFERRED STOCK AND COMMON STOCK
      HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
      STATE SECURITIES LAWS AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF
      AN
      EFFECTIVE REGISTRATION STATEMENT UNDER SUCH LAWS OR AN EXEMPTION FROM
      REGISTRATION THEREUNDER.

     

    CONVERTIBLE
      PROMISSORY NOTE

     

    
      	
              November
                23, 2004 (the “Issuance
                Date”)

            	
              [US$151,000]

            
	 	 

    

    Cleveland
      BioLabs, Inc., a Delaware corporation, located at 7800 Blackberry Lane, Gates
      Mills, Ohio 44040 (“Borrower”
or
      the
“Corporation”),
      hereby promises to pay to the order of Haber Norris Pty Ltd ATF Haber Norris
      Superannuation Fund, located at Bongiorno and Partners (NSW) Pty Ltd, Level
      6,
      203 New South Head Road, Edgecliff NSW 2027, AUSTRALIA (the “Lender”),
      the
      principal amount of $151,000 together with interest thereon calculated from
      the
      date hereof in accordance with the provisions of this Convertible Promissory
      Note (this “Note”).

     

    1. Principal
      Amount.
      The
      amount on the face of this Note shall constitute the principal amount of this
      Note (the “Principal
      Amount”).
      The
      Principal Amount shall accrue interest at an annual rate equal to six percent
      (6%), compounded annually. The Principal Amount plus any and all accrued and
      unpaid interest through and including any Conversion Date shall constitute
      the
      Conversion Amount (the “Conversion
      Amount”).

     

    2. Maturity.
      If the
      Note shall not have previously been converted pursuant to a Mandatory
      Conversion, on the Maturity Date the Note shall be surrendered to the
      Corporation, and, at the option of the Lender, the Conversion Amount shall
      be
      (i) converted into Common Stock at the Fixed Conversion Price (as defined below)
      or (ii) redeemed by the Corporation. The Lender may elect to convert the
      Conversion Amount at the Fixed Conversion Price. If the Lender does not elect
      such a conversion, the Corporation shall redeem the entire Conversion Amount
      of
      the Note and the Lender shall be paid all principal and accrued and unpaid
      interest thereon, in accordance with the terms of the Note. “Maturity
      Date”
means
      the earlier to occur of (i) a Change of Control and (ii) the date that is
      thirty-six (36) months after the Issuance Date. The Corporation shall give
      written notice to the Lender of a Change of Control within five (5) business
      days of the occurrence thereof and the Lender will have five (5) business days
      after such notice to elect to so convert the Conversion Amount.

     

    3. Conversion
      of Note.

     

    
      	 	
              (a)

            	
              Conversion
                of the Conversion Amount.
                This Note may be converted, in whole or in part, into shares of Common
                Stock of the Corporation at any time prior to the Maturity Date in
                accordance with the terms of this Section 3(a) and Section 3(f).
                Upon
                surrendering the Note to the Corporation, the Conversion Amount shall
                be
                converted into Common Stock at the fixed conversion price of $1,500
                per
                share (the “Fixed
                Conversion Price”)
                (as adjusted for stock splits, stock dividends and similar transactions).
                Such event shall be referred to as the “Common
                Stock Conversion.”
                Upon Common Stock Conversion, the Lender, as a holder of Common Stock,
                shall be entitled to the same rights and benefits accorded to the
                other
                holders of the Common Stock.

            

    

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	 	
              (b)

            	
              Mandatory
                Conversion of the Conversion Amount.
                If at any time prior to the Maturity Date the Corporation consummates
                an
                Initial Public Offering of the Common Stock (the “Mandatory
                Conversion Date”),
                the Note shall be surrendered to the Corporation, and the Conversion
                Amount shall be automatically converted into Common Stock at the
                fixed
                conversion price of $1,500 per share (the “Fixed
                Conversion Price”)
                (as adjusted for stock splits, stock dividends and similar transactions).
                Such event shall be referred to as the “Mandatory
                Conversion.”
                Upon Mandatory Conversion, the Lender, as a holder of Common Stock,
                shall
                be entitled to the same rights and benefits accorded to the other
                holders
                of the Common Stock.

            

    

     

    
      	 	
              (c)

            	
              Optional
                Conversion of the Conversion Amount.
                If at any time prior to the Maturity Date the Corporation shall raise
                any
                additional funds either through the issuance of additional debt or
                equity
                (the “Optional
                Conversion Date”),
                at the election of the Lender the Note may be surrendered to the
                Corporation, and the Conversion Amount shall then be converted into
                the
                new equity or new debt as is being sold and issued by the Corporation
                (the
                “New
                Equity”
                or “New
                Debt,”
                as applicable). The Conversion Amount shall be converted (i) if into
                New
                Equity, at a price per share equal to the lowest price per share
                at which
                the New Equity is sold by the Corporation or (ii) if into New Debt,
                into
                the new debt instrument with a principal amount equal to the Conversion
                Amount. Such event shall be referred to as the “Optional
                Conversion.”
                Upon an Optional Conversion, the Lender, as a holder of New Equity
                or New
                Debt, shall be entitled to the same rights and benefits accorded
                to the
                other holders of the New Equity or New Debt. This Optional Conversion
                shall not apply to (i) any transaction involving the Company’s issuances
                of securities (A) as consideration in a merger or consolidation,
                (B) in
                connection with any strategic partnership or joint venture (the primary
                purpose of which is not to raise equity capital) or (C) as consideration
                for the acquisition of a business, product, license or other assets
                by the
                Company, (ii) the issuance of Common Stock in a registered public
                offering, (iii) the issuance of securities upon exercise or conversion
                of
                the Company’s warrants or other convertible securities outstanding on the
                Issuance Date, and (iv) the issuance of securities in connection
                with any
                stock splits or stock dividends of the
                Company.

            

    

     

    
      	 	
              (d)

            	
              Computation
                of the Number of Conversion Shares.
                Upon conversion into equity, the Lender shall receive a number of
                shares
                of New Equity or Common Stock, as the case may be, equal to the number
                of
                shares computed by dividing (1) the Conversion Amount by (2) the
                applicable conversion price set forth above in Section 2, 3(a), 3(b)
                or
                Section 3(c), as the case may be (the “Conversion
                Shares”).

            

    

     

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    
      	 	
              (e)

            	
              Notices.
                If the Corporation shall sell any New Equity or New Debt prior to
                October
                17, 2007, the Corporation shall give written notice to the Lender
                at least
                twenty (20) business days prior thereto setting forth the price per
                share
                and/or rights and benefits of such New Equity or New
                Debt.

            

    

     

    
      	 	
              (f)

            	
              Note
                Conversion Deliveries.
                The Corporation and the Lender hereby agree to take such actions
                as may be
                required to ensure that upon conversion of the Note, the following
                shall
                occur:

            

    

     

    
      	 	
              (i)

            	
              the
                Lender shall surrender its originally executed Note to the Corporation
                and
                such Note shall be deemed
                cancelled;

            

    

     

    
      	 	
              (ii)

            	
              the
                Corporation shall deliver to the Lender a certificate or certificates
                representing the number of Conversion Shares issuable by reason of
                such
                conversion, or instruments in principal amount of the Conversion
                Amount,
                in the Lender’s name. Such certificates or other instruments shall bear a
                legend which is substantially similar to such legends affixed to
                other
                certificates or instruments of the same class or series of stock
                or
                debt.

            

    

     

    
      	 	
              (iii)

            	
              the
                Lender hereby agrees to execute and deliver to the Corporation any
                documents which other holders of such equity or debt have executed
                with
                respect to shares issued in the sale of New Equity or New Debt, or
                the
                Corporation’s Common Stockholders Agreement in the event the Lender
                converts this Note into Common
                Stock.

            

    

     

    4. Triggering
      Events.

     

    
      	 	
              (a)

            	
              Definition.
                For purposes of this Note, a Triggering Event shall be deemed to
                have
                occurred if:

            

    

     

    
      	 	
              (i)

            	
              Borrower
                fails to properly convert this Note on the terms and conditions specified
                herein;

            

    

     

    
      	 	
              (ii)

            	
              Borrower
                fails to properly redeem this Note or pay any accrued and unpaid
                interest
                upon maturity on the terms and conditions specified
                herein;

            

    

     

    
      	 	
              (iii)

            	
              The
                institution of a proceeding against Borrower under any state insolvency
                laws, federal bankruptcy law, or similar debtor relief laws then
                in
                effect;

            

    

     

    
      	 	
              (b)

            	
              Consequences
                of Triggering Event.

            

    

     

    
      	 	
              (i)

            	
              If
                a Triggering Event has occurred, the holder of this Note may demand
                (by
                written notice delivered to Borrower) immediate payment of all of
                the
                outstanding principal amount of this Note, plus any accrued interest
                thereon.

            

    

     

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    
      	 	
              (ii)

            	
              Any
                holder of this Note shall also have any other rights which such holder
                may
                have been afforded under any contract or agreement at any time or
                any
                other rights which such holder may have pursuant to applicable
                law.

            

    

     

    5. Cancellation.
      After
      conversion of the entire Conversion Amount or upon redemption and payment of
      all
      principal and accrued and unpaid interest on the Note at maturity, the Note
      shall be surrendered by the holder hereof to the Corporation for cancellation
      and shall not be reissued.

     

    6. Representations,
      Warranties and Covenants as to Common Stock.
      The
      Corporation hereby represents, warrants, covenants and agrees as
      follows:

     

    
      	 	
              (a)

            	
              This
                Note is, and any Notes issued in substitution for or replacement
                of this
                Note will upon issuance be, duly authorized and validly issued, and
                no
                further consent or authorization is required by the Corporation,
                its Board
                of Directors or its stockholders. The Corporation has the requisite
                corporate power and authority to enter into and perform its obligations
                under this Note in accordance with the terms hereof. This Note constitutes
                the valid and binding obligation of the Corporation, enforceable
                against
                the Corporation in accordance with its
                terms.

            

    

     

    
      	 	
              (b)

            	
              The
                Corporation will not, by amendment of its Certificate of Incorporation,
                as
                amended (the “Certificate
                of Incorporation”),
                or through any reorganization, transfer of assets, consolidation,
                merger,
                dissolution, issue or sale of securities, or any other voluntary
                action,
                avoid or seek to avoid the observance or performance of any of the
                terms
                to be observed or performed by it hereunder, but will at all times
                in good
                faith assist in the carrying out of all the provisions of this Note
                consistent with the tenor, purpose and specific language of this
                Note.

            

    

     

    
      	 	
              (c)

            	
              The
                execution, delivery and performance of this Note by the Corporation,
                the
                performance by the Corporation of its obligations hereunder and the
                consummation by the Corporation of the transactions contemplated
                hereby
                will not (i) result in a violation of the Certificate of Incorporation
                of
                the Corporation or its bylaws; (ii) conflict with, or constitute
                a default
                (or an event which with notice or lapse of time or both would become
                a
                default) under, or give to others any rights of termination, amendment,
                acceleration or cancellation of, any material agreement, indenture
                or
                instrument to which the Corporation or any of its subsidiaries is
                a party
                other than any of the foregoing events listed in this clause (ii)
                which do
                not individually or in the aggregate have a material adverse effect
                on the
                Corporation; (iii) result in a violation of any law, rule, regulation,
                order or judgment (including, without limitation, federal and state
                securities laws and regulations and the rules) applicable to the
                Corporation or any of its subsidiaries or by which any property or
                assets
                of the Corporation or any of its subsidiaries is
                bound.

            

    

     

    
      	 	
              (d)

            	
              The
                Corporation is not required to obtain any consent, authorization
                or order
                of, or make any filing or registration with, any court or governmental
                agency or any regulatory or self-regulatory agency in order for it
                to
                execute, deliver or perform any of its obligations under this
                Note.

            

    

     

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    
      	 	
              (e)

            	
              This
                Note will be binding upon any entity succeeding to the Corporation
                by
                merger, consolidation or acquisition of all or substantially all
                of the
                Corporation’s assets.

            

    

     

    
      	 	
              (f)

            	
              All
                information that has been provided in writing by the Corporation
                or its
                representatives to the Lender is true, accurate and not misleading
                in all
                material respects and no information regarding the Corporation or
                its
                affairs that would be material to the Lender in deciding whether
                to
                provide monies to the Corporation on the terms of this Note has been
                withheld from the Lender.

            

    

     

    
      	 	
              (g)

            	
              So
                long as this Note is outstanding, the Company shall not, without
                the prior
                approval of the holder of this Note, enter into, amend, modify or
                supplement any agreement, transaction, commitment or arrangement
                with any
                of its officers, directors, persons who were officers or directors
                of the
                Company at any time during the previous two years, or stockholders
                who
                beneficially own 10% or more of the Common Stock or any other class
                of
                equity of the Company, except for any agreement, transaction, commitment
                or arrangement that is approved by a majority of the disinterested
                directors of the Company. For purposes hereof, any director who is
                also an
                officer of the Company shall not be a disinterested director with
                respect
                to any such agreement, transaction, commitment or arrangement with
                respect
                to which another officer is interested if the Board or a committee
                thereof
                considered or will be considering a substantially similar agreement,
                transaction, commitment or arrangement with respect to which such
                director
                was, is or will be interested.

            

    

     

    7. Financial
      Statements and Other Information.
      So long
      as this Note remains outstanding the Company will deliver to any holder of
      such
      outstanding Note:

     

    
      	 	
              (a)

            	
              Unaudited
                Quarterly Financial Statements.
                As soon as practicable after the end of each quarter of each fiscal
                year
                and in any event within forty-five (45) days thereafter, a balance
                sheet
                of the Company as of the end of such period, and statement of operations
                of the Company for such period and for the current fiscal year to
                date,
                subject to changes resulting from immaterial normal year-end audit
                adjustments, all in reasonable detail and certified by the principal
                financial officer of the Company;
                and

            

    

     

    
      	 	
              (b)

            	
              Budget.
                Not less than thirty (30) days prior to the commencement of each
                fiscal
                year, an annual business plan, including a budget and financial
                projections for the Company, for such year (the “Budget”),
                all in reasonable detail, together with underlying
                assumptions.

            

    

     

    8. Amendment
      and Waiver.
      Except
      as otherwise expressly provided herein, the provisions of this Note may be
      amended and Borrower may take any action herein prohibited, or omit to perform
      any act herein required to be performed by it, only if Borrower has obtained
      the
      written consent of the holder of this Note.

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    9. Future
      Offering.
      In the
      event the Lender has elected to convert this note into other debt or equity
      of
      the Corporation, other than common stock, the Corporation shall use its best
      efforts to provide such newly issued security and such Lender (solely as part
      of
      the group(s) that are acquiring such newly issued security) with weighted
      average anti-dilution protection.

     

    10. Notices
      and Payment to Holder.
      All
      notices and all payments of principal and interest are to be delivered to the
      holder hereof at the address specified in the first paragraph of this Note,
      or
      to such other address or to the attention of such other person as specified
      by
      prior written notice to Borrower.

     

    11. Miscellaneous.
      This
      Note applies, inures to the benefit of, and binds the successors and assigns
      of
      the parties hereto. This Note is made under and all questions concerning the
      construction, validity and interpretation of this Note shall be governed by
      the
      internal laws, and not the laws of conflict, of the State of Delaware. The
      Lender shall not attempt to sell, assign, transfer, mortgage, encumber, convey,
      exchange, pledge hypothecate or otherwise dispose of this Note except to a
      Permitted Transferee. The Corporation shall not attempt to sell, assign,
      transfer, mortgage, encumber, convey, exchange, pledge hypothecate or otherwise
      dispose of this Note except with the written consent of the Lender. Ownership
      of
      an interest in this Note is required to be reflected in a record of ownership
      that identifies the owner of an interest in this Note (a “Book
      Entry”)
      maintained by the Company. The right to payment in respect of the principal
      of,
      and stated interest on, this Note may be transferred only through Book Entry.
      Ownership of an interest in this Note may not be transferred in any other manner
      and any purported transfer of the Note not in accordance with this Section
      11
      shall be void ab initio. This Section 11 is intended to qualify this Note as
      an
      obligation in registered form for purposes of Sections 881(c)(2)(B) and 1442(a)
      of the Internal Revenue Code of 1986, as amended (the “Code”)
      (and
      any successor provisions) and shall be interpreted in accordance
      therewith.

     

    12. Lost,
      Stolen, Destroyed or Mutilated Warrant.
      In case
      any Note shall be mutilated, lost, stolen or destroyed, the Corporation shall
      issue a new Note of like date, tenor and denomination and deliver the same
      in
      exchange and substitution for and upon surrender and cancellation of any
      mutilated Note, or in lieu of any Note lost, stolen or destroyed, upon receipt
      of evidence satisfactory to the Corporation of the loss, theft or destruction
      of
      such Note, and upon receipt of indemnity satisfactory to the Corporation
      (provided that such holder’s agreement to indemnify shall be deemed satisfactory
      to the Corporation without requiring the posting of a bond).

     

    13. Definitions.
      For the
      purposes of this Note, the following terms have the meaning set forth
      below:

     

    “Permitted
      Transferee” shall mean any corporation, or partnership or limited liability
      company in which the Lender is the direct and beneficial owners of all of the
      equity interests (provided the Lender agrees in writing to remain the direct
      and
      beneficial owners of all such equity interests) or which is under common control
      with the Lender.

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    “Person”
      shall mean and includes any individual, corporation, partnership, limited
      liability partnership, association, limited liability company, trust, estate,
      or
      other entity.

     

    “Common
      Stock” shall mean the Corporation’s Common Stock, $0.005 par value per
      share.

     

    “Change
      of Control” means:

     

    (a) a
      sale or
      transfer of all or substantially all of the assets of the Corporation on a
      consolidated basis (computed on the basis of book value, determined in
      accordance with generally accepted accounting principles consistently applied,
      or fair market value, as determined by the Board of Directors of the Corporation
      in its reasonable good faith judgment) in any transaction or series of related
      transactions;

     

    (b) any
      merger, consolidation or reorganization to which the Corporation is a party,
      except for a merger, consolidation or reorganization in which after giving
      effect to such merger, consolidation or reorganization, the holders of the
      Corporation’s outstanding capital stock (on a fully-diluted basis) immediately
      prior to the merger, consolidation or reorganization will own immediately
      following such merger, consolidation or reorganization, a number of shares
      of
      the Company’s outstanding capital stock a fully diluted basis) having the
      ordinary voting power to elect a majority of the members of the Board of
      Directors of the Corporation; or

     

    (c) any
      sale
      or transfer of the Corporation’s capital stock that results in any person
      acquiring capital stock of the Corporation 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 Corporation’s board of directors;
provided
      that the
      term “Change of Control” shall not include any sale of equity or debt securities
      by the Corporation in a private offering to other investors.

     

    “Initial
      Public Offering” means the consummation of a public offering of Common Stock
      pursuant to a registration statement declared effective by the SEC pursuant
      to a
      registration statement on Form S-1 or S-2.

     

    [signature
      page to follow]

     

     

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    

    IN
      WITNESS WHEREOF,
      Borrower has, through its duly authorized officer, executed and delivered this
      Note as of the date first written above.

     

    CLEVELAND
      BIOLABS, INC.

     

    

     

    /s/Michael
      Fonstein                                          

    Name:
      Michael
      Fonstein

    Its:      
      CEO

     

     

    
      
         

      

      
        8

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