CLEVELAND BIOLABS INC (Form: 8-K, Received: 06/15/2012 17:17:14)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): June 15, 2012 (June 13, 2012)

CLEVELAND BIOLABS, INC.

(Exact name of registrant as specified in its charter)


Delaware	001-32954	20-0077155
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

73 High Street

Buffalo, New York 14203

(Address of principal executive offices and zip code)

Registrant’s telephone number, including area code: (716) 849-6810

_____________________________________________________________________________________

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):

	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 5.02.

Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(c)

On June 13, 2012, Cleveland BioLabs, Inc. (the “Company”) announced that Yakov Kogan, Ph.D., M.B.A., the current Interim Chief Executive Officer of the Company, has been appointed to the position of Chief Executive Officer, effective immediately.

(e)

2012 Long-term Executive Compensation Plan

On June 13, 2012, the Compensation Committee of the Board of Directors of the Company (the “Compensation Committee”) approved the Company’s 2012 Long-term Executive Compensation Incentive Plan (the “Long-term Executive Compensation Plan”). A description of the material terms of the Long-term Executive Compensation Plan is attached as Exhibit 10.1 to this report and incorporated herein by reference.

Approval of Compensation for Chief Executive Officer and President

On June 13, 2012, in connection with the appointment of Dr. Kogan to the position of Chief Executive Officer, the Compensation Committee approved changes in the annual base salaries for Dr. Kogan and Michael Fonstein, which will go into effect on June 16, 2012, and the award of stock options to Dr. Kogan. The Compensation Committee approved the change of Dr. Kogan’s annual base salary to $345,000 and the change of Dr. Fonstein’s annual base salary to $270,000 and the award of 100,000 stock options to Dr. Kogan. The stock options will be awarded in compliance with the Company’s Equity Award Guidelines and will vest immediately when granted.

Second Amendment to Cleveland BioLabs, Inc. Equity Incentive Plan

As described below under Item 5.07 of this Current Report on Form 8-K, at the Annual Meeting of Stockholders of the Company held on June 13, 2012 (the “2012 Annual Meeting”) in Buffalo, New York, the Company's stockholders approved the Second Amendment to Cleveland BioLabs, Inc. Equity Incentive Plan (the “Second Amendment”).

The Second Amendment had previously been approved by the Company’s Board of Directors, subject to stockholder approval. A detailed description of the terms of the Second Amendment is contained in the Company’s Proxy Statement for the 2012 Annual Meeting under the caption “Approval of Second Amendment to Equity Plan”, and is incorporated herein by reference. This description is qualified in its entirety by the terms and conditions of the Second Amendment, a copy of which is filed as Exhibit 99.1 hereto and is incorporated by reference herein.

In connection with the approval of the Second Amendment, the Company has updated the Form of Stock Award and the Form of Non-Qualified Stock Option Agreement, which are filed as Exhibit 99.2 and Exhibit 99.3 hereto, respectively, and are incorporated herein by reference.

Item 5.05

Amendments to the Registrant’s Code of Ethics, or Waiver of a Provision of the Code of Ethics.

On June 12, 2012, the Company’s Board of Directors approved an amended and restated Code of Ethics for Senior Executives and Financial Officers (the “Code”). The revisions include, among other things: (1) the inclusion of financial officers with respect to the Code; (2) the addition of a section regarding the a voidance of conflicts of interest and disclosure to the Vice President-Compliance or his/her designee of any material transaction or relationship that reasonably could be expected to give rise to such a conflict ; and (3) the addition of a section regarding disclosure to the Chairperson of the Audit Committee of any material information that could affect the disclosures made by the Company in its public filings, any information concerning significant deficiencies in the design or operation of the Company’s internal financial controls, or any fraud involving any of the Company’s financial reporting, disclosures or internal controls . The foregoing summary of the amended and restated Code is subject to and qualified in its entirety by reference to the full text of the Code, as so amended and restated, a copy of which is attached as Exhibit 14.1 to this Current Report on Form 8-K and which is incorporated by reference into this Item 5.05. The amended Code is posted on the Company’s website at www.cbiolabs.com under the “Corporate Governance” subsection of the “Investors” tab.

Item 5.07.

Submission of Matters to Vote of Security Holders.

The results of matters submitted to a stockholder vote at the 2012 Annual Meeting are as follows:

Proposal 1: Election of Directors . Seven nominees were elected to serve on the Company’s Board of Directors until the next annual meeting of stockholders and until their successors are elected and qualified with the votes set forth below:

	Votes
Nominee	FOR	WITHHELD
James J. Antal	9,885,043	2,320,689
Paul E. DiCorleto	9,363,648	2,842,084
Michael Fonstein	8,596,271	3,609,461
Andrei Gudkov	9,921,289	2,284,443
Bernard L. Kasten	9,336,498	2,869,234
Yakov Kogan	9,565,112	2,640,620
David C. Hohn	9,908,656	2,297,076

Proposal 2: Ratification of Meaden & Moore, Ltd. as auditor for the fiscal year ended December 31, 2012 . The selection of Meaden & Moore, Ltd., as the Company’s independent registered public accounting firm for the fiscal year ended December 31, 2012, was ratified with the votes set forth below:

Votes FOR	Votes AGAINST	Abstentions
27,438,651	2,556,704	183,746

Proposal 3: Advisory vote to approve compensation of the Named Executive Officers . The proposal relating to the non-binding stockholder advisory vote to approve the compensation of the Company’s Named Executive Officers, as described in the Company’s proxy statement filed with the Securities and Exchange Commission on April 30, 2012, was approved with the votes set forth below:

Votes FOR	Votes AGAINST	Abstentions	Broker Non-Votes
8,099,572	3,975,497	130,663	17,973,369

Proposal 4: Approval of Second Amendment to the Cleveland BioLabs, Inc. Equity Incentive Plan . Stockholders approved the Second Amendment to the Cleveland BioLabs, Inc. Equity Incentive Plan with the votes set forth below:

Votes FOR	Votes AGAINST	Abstentions	Broker Non-Votes
6,148,632	5,886,957	170,143	17,973,369

Item 9.01.

Financial Statements and Exhibits.

(d) Exhibits: The following exhibits are filed as part of this report:

Exhibit Number	Description
10.1	2012 Long-term Executive Compensation Incentive Plan
14.1	Code of Ethics for Senior Executives and Financial Officers
99.1	Second Amendment to Cleveland BioLabs, Inc. Equity Incentive Plan
99.2	Form of Stock Award
99.3	Form of Non-Qualified Stock Option Agreement

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		CLEVELAND BIOLABS, INC.


	By:	/s/ Yakov Kogan
	Name:	Yakov Kogan
	Title:	Chief Executive Officer

Date: June 15, 2012

Exhibit 10.1

CBLI Long-term Executive Compensation Incentive Plan

The proposed CBLI strategic plan identifies 3 major milestones (goals) that will result in an increase in shareholder value. Those events are:

Goal #1 – Approval of a BLA for 502 for treatment as a single agent to reduce the risk of death following total body irradiation during or after radiation disaster (CBLB502 defense application)

Goal #2 – CBLI 502 Defense- Cumulative Firm Orders (all countries exceed $100M)

Goal #3 – Cumulative proceeds from upfront and milestone payments from licensing deals for any of CBLI compounds exceed $12M (the licensing deals done for the compounds from our subs should be adjusted by the % of CBLI ownership when the licensing agreement is executed)

Under the proposed long term plan, compensation would be paid to each member of the Executive Team (CEO, President, CFO, and CSO) upon achievement of each strategic objective. It is proposed that each payment amount would be equal to a percentage of the Executive’s base salary at the moment of the award for Goal #1 or a percentage of the cumulative firm order/licensing proceeds for Goals #2 and 3.

Upon achievement of Goal #1 in the United States, each Executive Team member will be paid a bonus equal to 100% of their base salary based on the achievement date.

Upon the first occurrence of the achievement of Goal #1 in any of the following countries or jurisdictions, each Executive Team member will be paid a bonus equal to 33% of their base salary on the achievement date: Japan, EU, China, Canada, Brazil, Russian Federation, India, Mexico, South Korea and Australia. In addition to the above described bonuses, upon the achievement of Goal #1 in the United States or in another country listed above, an amount equal to 100% of the total of the Executive Team bonus’ will be placed into a bonus pool to be distributed to non-executive employees of CBLI at the sole discretion of the Executive Team.

The following percentages of cumulative firm order/licensing proceeds will be paid to each Executive Team member upon achievement of each strategic goal/milestone as follows:

Upon achievement of Goal #2 or Goal #3, 4% from all received cumulative orders/licensing payments will be allocated to an executive bonus pool, which will be distributed among the members of the executive team. An additional 1% of all received cumulative orders/licensing payments will be allocated to an employee’s bonus pool, which will be distributed among company’s senior employees on a pro rata basis based on salary.

Based on the company’s cash position when a goal is achieved, the Compensation Committee of the BoD shall determine whether the incentive payouts will be in cash or stock, or a combination of both.

The plan will become effective immediately upon BoD approval and will expire on December 31, 2016. If any named milestones do not occur by that date, no amount is payable for the goal.

EXHIBIT 14.1

CLEVELAND BIOLABS, INC.

CODE OF ETHICS

FOR

SENIOR EXECUTIVES and FINANCIAL OFFICERS

The Board of Directors of Cleveland BioLabs, Inc. (the “ Company ”) adopted this Code of Ethics for Senior Executives and Financial Officers to meet the requirements of Section 406 of the Sarbanes-Oxley Act of 2002. It is critical to the success of the Company and in the best interests of its stockholders that its employees conduct themselves honestly and ethically. In particular, the Company’s Chief Executive Officer, Chief Financial Officer, and others performing similar executive functions (each a “ Covered Person ”) are required to observe the highest standards of ethical business conduct, including strict adherence to this Code of Ethics for Senior Executives and Financial Officers (the “ Code ”), in addition to the Company’s Code of Conduct applicable to all employees, which this Code supplements. Accordingly, each Covered Person agrees to:

· Act at all times honestly and ethically, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships.

· Avoid conflicts of interest and disclose to the Vice President - Compliance or his/her designee any material transaction or relationship that reasonably could be expected to give rise to such a conflict.

· Take all reasonable and necessary steps within his or her areas of responsibility to provide full, fair, accurate, timely, and understandable disclosure in reports and documents that the Company files with or submits to the Securities and Exchange Commission and other regulators, and in all public communications.

· Take all reasonable measures to protect the confidentiality of non-public information about the Company, its business, operations and customers obtained or created in connection with such Covered Person’s activities and to prevent the unauthorized disclosure of any such information, unless required by law, regulation or legal regulatory process.

· Conduct Company business in compliance with all applicable federal, state, foreign and local laws, rules and regulations.

· Take no action, directly or indirectly, to fraudulently influence, coerce, manipulate or mislead the Company’s independent public auditors for the purposes of rendering the financial statements of the Company misleading.

· Notify promptly the Vice President - Compliance, or Chairperson of the Audit Committee of the Board of Director’s regarding any actual or potential violation of this Code, the Code of Conduct, and/or any applicable securities or other laws, rules or regulations by any of the Company’s employees.

Promptly bring to the attention the Chairperson of the Audit Committee any material information that could affect the disclosures made by the Company in its public filings, any information concerning significant deficiencies in the design or operation of the Company’s internal financial controls, or any fraud involving any of the Company’s financial reporting, disclosures, or internal controls.

Anyone who violates this Code by engaging in unethical conduct, failing to report conduct potentially in violation of this Code or refusing to participate in any investigation of such conduct, will be subject to disciplinary actions, up to and including termination of service with the Company. Violations of this Code may also constitute violations of law and may result in civil or criminal penalties for a Covered Person or the Company.

The Board of Directors of the Company shall be responsible for the administration of this Code and shall have the sole authority to amend this Code or grant waivers of its provisions. Waivers will be disclosed as required by the Securities Exchange Act of 1934 and the rules thereunder and the applicable rules of the Nasdaq Stock Market.

ACKNOWLEDGEMENT

The undersigned Covered Person hereby acknowledges having received a copy of the this Code of Ethics for Senior Executives and Financial Officers, having read and understood this Code, and agrees to abide by it. The undersigned further acknowledges that it is his or her responsibility to seek clarification from the Company’s Vice President - Compliance if any application of the Code to a particular circumstance is not clear. The undersigned Covered Person further acknowledges that failure to adhere to this Code can result in disciplinary action up to and including termination of employment. The undersigned acknowledges that this Code does not constitute a contract of employment. .

Please sign here: ________________________

Please print your name here: _______________

Date: ___________________

Exhibit 99.1

SECOND AMENDMENT TO

CLEVELAND BIOLABS, INC.

EQUITY INCENTIVE PLAN

(as amended and restated effective April 29, 2008)

1.	Section 1 ( Establishment and Purpose ) of the Cleveland BioLabs, Inc. Equity Incentive Plan (the “ Plan ”) is hereby deleted in its entirety and replaced with the following:

The Cleveland BioLabs, Inc. Equity Incentive Plan (the “ Plan ”) was established under the name Cleveland BioLabs, Inc. 2006 Equity Incentive Plan (the “ 2006 Plan ”) by Cleveland BioLabs, Inc., a Delaware corporation (the “ Company ”). The Plan was amended, restated and renamed upon its approval by the Company’s stockholders effective April 29, 2008, and amended by the First Amendment to the Plan upon its approval by the Company’s stockholders effective June 8, 2010. The Plan is hereby further amended, as set forth herein, effective June 13, 2012, subject to the approval of the Company’s stockholders of that certain Second Amendment (the “ Second Amendment ”) to the Plan. The purpose of the Plan is to attract and retain persons eligible to participate in the Plan; motivate Participants to achieve long-term Company goals; and further align Participants’ interests with those of the Company’s other stockholders. No Awards that are settled in Stock shall be granted hereunder prior to the approval of the Plan by the Company’s stockholders. Unless the Plan is discontinued earlier by the Board as provided herein, no Award shall be granted hereunder on or after the date 10 years after the Effective Date. The Plan shall terminate on April 29, 2018, or such earlier time as the Board may determine.

2.	The first paragraph of Section 3 ( Stock Subject to Plan ) of the Plan is hereby deleted in its entirety and replaced with the following:

Subject to adjustment as provided in this Section 3 , the number of shares of Stock reserved for delivery under the Plan shall be the sum of (a) three million (3,000,000) shares, plus (b) the number of remaining shares under the 2006 Plan and the Plan, as amended, (i.e., not subject to outstanding Awards and not delivered out of shares reserved thereunder) as of the date of stockholder approval of that certain Second Amendment to the Plan, as amended, plus (c) the number of shares that become available under the 2006 Plan or the Plan, as amended, after the date of stockholder approval of the Second Amendment pursuant to forfeiture, termination, lapse or satisfaction of an Award in cash or property other than shares, application as payment for an Award, or, except with respect to Restricted Stock, to satisfy withholding, plus (d) any shares required to satisfy Substitute Awards.

3.	The foregoing amendment was duly adopted and approved in accordance with Section 9(a) of the Plan.

Exhibit 99.2

CLEVELAND BIOLABS, INC.

EQUITY INCENTIVE PLAN

FORM OF STOCK AWARD

CLEVELAND BIOLABS, INC. (the “ Company ”), hereby grants to ______________ (the “ Participant ”) under the Cleveland BioLabs, Inc. Equity Incentive Plan, as amended and restated effective April 29, 2008, and as further amended by the First Amendment thereto effective June 8, 2010 and Second Amendment thereto effective June 13, 2012 (the “ Plan ”), a Restricted Stock Award (the “ Award ”), pursuant to and evidencing the grant thereof by the Compensation Committee of the Board of Directors of the Company on ____________________, _______________(the “ Award Date ”) with respect to ____________________ shares of common stock, par value $0.005 per share (the “ Stock ”), of the Company (the “ Shares ”), all in accordance with and subject to the following terms and conditions:

1. Restrictions . The Shares vest according to the following schedule:

[Insert vesting provisions.]

All shares will be free trading shares upon vesting.

2. Voting and Dividend Rights . Upon issuance of the certificate or certificates for the Shares in the name of the Participant, the Participant shall thereupon be a stockholder with respect to all the Shares represented by such certificate or certificates and shall have the rights of a stockholder with respect to such Shares, including the right to vote such Shares and to receive all dividends and other distributions paid with respect to such Shares.

3. Taxes . The Participant will receive ordinary income equal to the fair market value of the Shares on the Award Date. The Participant should consult his or her own tax advisor for information concerning the tax consequences of the grant of this Award .

4. Withholding Taxes . The Participant shall make arrangements satisfactory to the Company regarding the payment of any Federal, state, local or foreign taxes of any kind required by law to be withheld with respect to such amount. Unless otherwise determined by the Administrator, withholding obligations may be settled with Stock, including Stock that is part of the Award that gives rise to the withholding requirement. The obligations of the Company under the Plan shall be conditional on such payment or arrangements, and the Company, its Subsidiaries and its Affiliates shall, to the extent permitted by law, have the right to deduct any such taxes from any payment otherwise due to the Participant. The Administrator may establish such procedures as it deems appropriate for the settlement of withholding obligations with Stock.

5. Issuance of Shares . The Shares will be initially evidenced by a book entry record maintained by the Company’s transfer agent. As of the Award date, physical share certificates may be issued upon the Participant’s written request to the transfer agent or Plan Administrator. The Company may place on the certificates representing the Shares such legend or legends as the

Company may deem appropriate and the Company may place a stop transfer order with respect to such Shares with the transfer agent(s) for the Shares.

6. Effect of Amendment of Plan . No discontinuation, modification, or amendment of the Plan may, without the express written consent of the Participant, adversely affect the rights of the Participant under this Award, except as expressly provided under the Plan.

This Stock Award Agreement (the “ Agreement ”) may be amended as provided under the Plan, but except as provided thereunder any such amendment shall not adversely affect Participant’s rights hereunder without Participant’s consent.

7. No Limitation on Rights of the Company . The grant of this Award shall not in any way affect the right or power of the Company to make adjustments, reclassifications, or changes in its capital or business structure or to merge, consolidate, dissolve, liquidate, sell, or transfer all or any part of its business or assets.

8. Compliance with Applicable Law . Notwithstanding anything herein to the contrary, the Company shall not be obligated to cause to be issued or delivered any certificates for Shares, unless and until the Company is advised by its counsel that the issuance and delivery of such certificates is in compliance with all applicable laws, regulations of governmental authority, and the requirements of any exchange upon which Shares are traded. The Company shall in no event be obligated to register any securities pursuant to the Securities Act of 1933 (as now in effect or as hereafter amended) or to take any other action in order to cause the issuance and delivery of such certificates to comply with any such law, regulation or requirement. The Company may require, as a condition of the issuance and delivery of such certificates and in order to ensure compliance with such laws, regulations, and requirements, that the Participants make such covenants, agreements, and representations as the Company, in its sole discretion, considers necessary or desirable.

9. Agreement Not a Contract of Employment or Other Relationship . This Agreement is not a contract of employment, and the terms of employment of the Participant or other relationship of the Participant with the Company or any of its subsidiaries or affiliates shall not be affected in any way by this Agreement except as specifically provided herein. The execution of this Agreement shall not be construed as conferring any legal rights upon the Participant for a continuation of an employment or other relationship with the Company or any of its subsidiaries or affiliates, nor shall it interfere with the right of the Company or any of its subsidiaries or affiliates to discharge the Participant and to treat him or her without regard to the effect which such treatment might have upon him or her as a Participant.

10. Notices . Any notice or other communication required or permitted hereunder shall be in writing and shall be delivered personally or sent by certified, registered, or express mail, postage prepaid, return receipt requested, or by a reputable overnight delivery service. Any such notice shall be deemed given when received by the intended recipient.

11. Governing Law . Except to the extent preempted by Federal law, this Agreement shall be construed and enforced in accordance with, and governed by, the laws of the State of Delaware without regard to the principles thereof relating to the conflicts of laws.

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12. Receipt of Plan . The Participant acknowledges receipt of a copy of the Plan, and represents that the Participant is familiar with the terms and provisions thereof, and hereby accepts this Award subject to all the terms and provisions of this Agreement and of the Plan. The Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator, Company, its Board of Directors or the Committee upon any questions arising under this Agreement or the Plan.

13. Definitions . All capitalized terms not otherwise defined herein shall have the meanings set forth in the Plan.

14. Other Terms and Conditions . The foregoing does not modify or amend any terms of the Plan. To the extent any provisions of the Agreement are inconsistent or in conflict with any terms or provisions of the Plan, the Plan shall govern.

IN WITNESS WHEREOF, this Agreement has been duly executed as of ______________ _____, _______.

	Cleveland BioLabs, Inc.

	By:
	Name:
	Title:

	Participant

	By:
	Name:

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Exhibit 99.3

CLEVELAND BIOLABS, INC.

EQUITY INCENTIVE PLAN

FORM OF NON-QUALIFIED STOCK OPTION AGREEMENT

STOCK OPTION AGREEMENT (the “ Agreement ”), dated as of __________________ ____, ___________, (the “ Grant Date ”) by and between Cleveland BioLabs, Inc. (the “ Company ”), having an address at 73 High St., Buffalo, NY 14203 and ___________________ (the “ Grantee ”), having an address at _______________________________.

In accordance with Section 4 of the Cleveland BioLabs, Inc. Equity Incentive Plan, as amended and restated effective April 29, 2008, and as further amended by the First Amendment thereto effective June 8, 2010 and the Second Amendment thereto effective June 13, 2012 (the “ Plan ”), and subject to the terms of the Plan and this Agreement, the Company hereby grants to the Grantee an option (the “ Option ”) to purchase all or any part of an aggregate of ______________ shares (the “ Shares ”) of common stock, $.005 par value per share, of the Company (the “ Stock ”). The Option granted hereby is not intended to constitute an Incentive Stock Option, within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “ Code ”).

To evidence the Option and to set forth its terms, the Company and the Grantee agree as follows:

1. Confirmation of Grant . The Company hereby evidences the Option granted to the Grantee as of __________________ ____, ___________, the date of the grant of the Option by the Company’s Compensation Committee of the Board of Directors (the “ Committee ”). The Option is a Non-Qualified Option and is not intended to be an “incentive stock option” within the meaning of Section 422 of the Code.

2. Number of Shares . This Option shall be for an aggregate of ___________ Shares (subject to adjustment as provided in Section 3 of the Plan).

3. Exercise Price . The exercise price shall be $_____ per Share (the “Exercise Price”) (subject to adjustment as provided in Section 3 of the Plan). The Exercise Price reflects 100% of the Fair Market Value of one Share of Stock on the Grant Date as calculated under the Plan. The total Exercise Price for all Shares subject to the Option is $____________ (subject to adjustment as provided in Section 3 of the Plan).

4. Term and Exercisability of the Option. The Option shall expire on __________________ ____, ___________, [Insert 10 year anniversary of grant date] and, except as otherwise provided herein, may be exercised prior to its expiration at such times and for such number of whole Shares as follows:

[Insert vesting provisions.]

Notwithstanding the foregoing provisions of this Paragraph 4, and, except as otherwise provided herein, any portion of the Option which is not otherwise exercisable at the time of the Grantee’s termination of employment (or provision of services, if applicable) with the Company and its Affiliates shall not become exercisable after such termination.

5. Exercise of Option . On or after the date any portion of the Option becomes exercisable, but prior to the expiration of the Option in accordance with Paragraph 4 above, the portion of the Option which has become exercisable may be exercised in whole or in part by the Grantee (or, pursuant to Section 6 hereof, his or her permitted successor) upon delivery of the following to the Company:

(a) a written notice of exercise which identifies this Agreement and states the number of Shares then being purchased; and

(b) any combination of cash (or by certified or bank check), and/or (i) shares of unrestricted Stock as meet the requirements in the Plan then owned by the Grantee in an amount having a combined Fair Market Value on the exercise date equal to the aggregate Exercise Price of the Shares then being purchased using such unrestricted Stock, (ii) certification of ownership of shares of mature Stock owned by the Grantee to the satisfaction of the Administrator for later delivery to the Company as specified by the Company, or (iii) unless otherwise prohibited by law for either the Company or the Grantee, an irrevocable authorization of a third party to sell Shares of Stock acquired upon the exercise of the Option and remit to the Company a sufficient portion of the sale proceeds to pay the entire exercise price and any tax withholdings resulting from such exercise.

Notwithstanding the foregoing, the Grantee (or any permitted successor) shall take whatever additional actions, including, without limitation, the furnishing of an opinion of counsel, and execute whatever additional documents the Company may, in its sole discretion, deem necessary or advisable in order to carry out or effect one or more of the obligations or restrictions imposed by the Plan, this Agreement or applicable law.

No Shares shall be issued upon exercise of the Option until full payment has been made. Upon satisfaction of the conditions and requirements of this Paragraph 5, the Company shall deliver to the Grantee (or his or her permitted successor) a certificate or certificates for the number of Shares in respect of which the Option shall have been exercised (less the number of Shares, if any, utilized in the payment of the Exercise Price in a cashless exercise as permitted under the Plan and the Agreement). Upon exercise of the Option (or a portion thereof), the Company shall have a reasonable time to issue the Stock for which the Option has been exercised, and the Grantee shall not be treated as a stockholder for any purposes whatsoever prior to such issuance. No adjustment shall be made for cash dividends or other rights for which the record date is prior to the date such Stock is recorded as issued and transferred in the Company’s official stockholder records, except as otherwise provided in the Plan or the Agreement.

6. Limitation Upon Transfer . This Option and all rights granted hereunder shall not be transferred by the Grantee, other than to a Family Member (provided the transfer is a gift without consideration and there is no subsequent transfer other than by will or the laws of

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descent and distribution), or by will or by the laws of descent and distribution, shall not otherwise be assigned, pledged or hypothecated in any way, and shall not be subject to execution, attachment or similar process. Upon any attempt to transfer this Option, other than as provided above, or to assign, pledge or hypothecate or otherwise dispose of this Option or of any rights granted hereunder contrary to the provisions hereof, or upon the levy of any attachment or similar process upon this Option or such rights, this Option and such rights shall immediately become null and void. The Option shall be exercised during the Grantee’s lifetime only by the Grantee or by the Grantee’s guardian or the Grantee’s legal representative.

7. Termination of Employment or Provision of Services by Death or Disability . If the Grantee’s employment with or provision of services for the Company and its Affiliates terminates by death or Disability, the Option shall become exercisable in full for a period of one year from the date of such death or Disability or until the expiration of the stated term of such Option, whichever period is shorter.

8. Termination of Employment or Provision of Services by Retirement . If the Grantee’s employment with or provision of services for the Company and its Affiliates terminates by Retirement, the Option shall become exercisable in full for a period of three years from the date of such termination or until the expiration of the stated term of such Option, whichever period is shorter.

9. Involuntary Termination of Employment or Provision of Services for Cause . If the Grantee’s employment with or provision of services for the Company and its Affiliates terminates for Cause, vesting of all outstanding Options held by the Grantee covered hereunder shall thereupon terminate and all Options held by the Grantee covered hereunder shall thereupon terminate.

10. Involuntary Termination of Employment or Provision of Services Without Cause . If the Grantee’s employment with or provision of services for the Company and its Affiliates terminates involuntarily for any reason other than death, Disability, Retirement or Cause, the Option held by the Grantee covered hereunder may thereafter be exercised, to the extent it was exercisable at the time of termination, for a period of one year from the date of such termination of employment or provision of services or until the expiration of the stated term of such Option, whichever period is shorter. Notwithstanding the foregoing, to the extent the Option is unvested or unexercisable at the date of termination, the Option shall thereupon terminate.

11. Other Termination of Employment or Provision of Services . If the Grantee’s employment with or provision of services for the Company and its Affiliates is terminated by the Grantee for any reason other than death, Disability or Retirement, the Option may thereafter be exercised, to the extent it was exercisable at the time of termination, for a period of 30 days from the date of such termination of employment or provision of services or until the expiration of the stated term of such Option, whichever period is shorter. Notwithstanding the foregoing, to the extent the Option is unvested or unexercisable at the date of termination, the Option shall thereupon terminate.

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12. Tolling . Notwithstanding the foregoing, to the extent permitted under Section 409A of the Code, the exercise period following a termination described in Sections (7), (8), (10) or (11) above shall be tolled for any applicable window/blackout period restrictions under the Company’s insider trading policy.

13. Change in Control . Upon a Change in Control the Options not then vested and exercisable shall become fully vested and exercisable and shall be otherwise subject to the Plan.

14. Effect of Amendment of Plan . No discontinuation, modification, or amendment of the Plan may, without the express written consent of the Grantee, adversely affect the rights of the Grantee under this Option, except as expressly provided under the Plan.

This Agreement may be amended as provided under the Plan, but except as provided thereunder shall not adversely affect Grantee’s rights hereunder without Grantee’s consent.

15. No Limitation on Rights of the Company . The grant of this Option shall not in any way affect the right or power of the Company to make adjustments, reclassifications, or changes in its capital or business structure or to merge, consolidate, dissolve, liquidate, sell, or transfer all or any part of its business or assets.

16. Rights as a Stockholder . The Grantee shall have the rights of a stockholder with respect to the Shares covered by the Option only upon becoming the holder of record of those Shares.

17. Compliance with Applicable Law . Notwithstanding anything herein to the contrary, the Company shall not be obligated to cause to be issued or delivered any certificates for Shares pursuant to the exercise of the Option, unless and until the Company is advised by its counsel that the issuance and delivery of such certificates is in compliance with all applicable laws, regulations of governmental authority, and the requirements of any exchange upon which Shares are traded. The Company shall in no event be obligated to register any securities pursuant to the Securities Act of 1933 (as now in effect or as hereafter amended) or to take any other action in order to cause the issuance and delivery of such certificates to comply with any such law, regulation or requirement. The Company may require, as a condition of the issuance and delivery of such certificates and in order to ensure compliance with such laws, regulations, and requirements, that the Grantee make such covenants, agreements, and representations as the Company, in its sole discretion, considers necessary or desirable.

18. No Obligation to Exercise Option . The granting of the Option shall impose no obligation upon the Grantee to exercise the Option.

19. Agreement Not a Contract of Employment or Other Relationship . This Agreement is not a contract of employment, and the terms of employment of the Grantee or other relationship of the Grantee with the Company or any of its subsidiaries or affiliates shall not be affected in any way by this Agreement except as specifically provided herein. The execution of this Agreement shall not be construed as conferring any legal rights upon the Grantee for a continuation of an employment or other relationship with the Company or any of its subsidiaries

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or affiliates, nor shall it interfere with the right of the Company or any of its subsidiaries or affiliates to discharge the Grantee and to treat him or her without regard to the effect which such treatment might have upon him or her as a Grantee.

20. Tax Consequences . The Company makes no representations or warranties with respect to the tax consequences of the grant or exercise of the Option and the disposition of the Shares obtained thereby. A Grantee should consult his or her own tax advisor for information concerning the tax consequences of the grant and exercise of the Option .

21. Notices . Any notice or other communication required or permitted hereunder shall be in writing and shall be delivered personally or sent by certified, registered, or express mail, postage prepaid, return receipt requested, or by a reputable overnight delivery service. Any such notice shall be deemed given when received by the intended recipient.

22. Governing Law . Except to the extent preempted by Federal law, this Agreement shall be construed and enforced in accordance with, and governed by, the laws of the State of Delaware without regard to the principles thereof relating to the conflicts of laws.

23. Receipt of Plan . The Grantee acknowledges receipt of a copy of the Plan, and represents that the Grantee is familiar with the terms and provisions thereof, and hereby accepts this Option subject to all the terms and provisions of this Agreement and of the Plan. The Grantee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator, the Company, its Board of Directors or the Committee upon any questions arising under this Agreement or the Plan.

24. Definitions . All capitalized terms not otherwise defined herein shall have the meanings set forth in the Plan.

25. Other Terms and Conditions . The foregoing does not modify or amend any terms of the Plan. To the extent any provisions of the Agreement are inconsistent or in conflict with any terms or provisions of the Plan, the Plan shall govern.

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IN WITNESS WHEREOF, this Agreement has been duly executed as of _________________________ ______, __________.

	Cleveland BioLabs, Inc.

	By:
	Name:
	Title:

	Participant

	By:
	Name:

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