LICENSE AGREEMENT

This License Agreement (“ Agreement ”) is made as of this 3rd day of September, 2009 (the “ Effective Date ”), by and between Cleveland BioLabs, Inc., a Delaware corporation with its principal place of business at 73 High Street Buffalo, NY 14203, U.S.A. (“ Licensor ”) and Zhejiang Hisun Pharmaceutical Co., Ltd., a corporation organized under laws of People’s Republic of China, with its principal office at 46 Waisha Road Jiaojiang District, Taizhou City Zhejiang Province (“ Licensee ”).

WHEREAS, Licensor is the assignee of certain patent applications (“ Patents ,” as more fully defined below) related to Licensor’s drug candidate Protectan CBLB612 as developed by Licensor;

WHEREAS, Licensee wishes to obtain, and Licensor wishes to grant to Licensee and its Affiliates (as defined below), an exclusive license in the Territory (as defined below) under the Patents for the development and commercialization of Licensed Products for the Field (as defined below); and

WHEREAS, Licensee and Licensor acknowledge that there is substantial additional formulation and clinical work to be done in order to successfully develop and commercialize the Licensed Products.

NOW THEREFORE, in consideration of the mutual obligations and promises as set forth herein, the parties do hereby agree as follows:

1.              Definitions . As used in this Agreement, the following terms have the following respective meanings:

“Affiliate” means any corporation, company, partnership, joint venture and/or firm that controls, is controlled by, or is under common control of either party hereto. For purposes of this definition, control shall mean direct or indirect ownership of more than fifty percent (50%) of the stock or participating shares entitled to vote for the election of directors (but only as long as such ownership exists).

“Agreement” has the meaning ascribed to such term in the preamble.

“Confidential Information” means any and all information or data relating to any Licensed Product(s) which a party (“ Discloser ”) directly or indirectly discloses to the other party (“ Receiver ”), its employees or representatives, or is conceived or reduced to practice during the Term by Discloser or its agents, whether in writing, orally or by observation, including all scientific, clinical, technical, commercial, financial and business information and Know-How, and other information or data which are considered confidential in nature by Discloser. The Confidential Information of Licensee shall also include: (i) the fact that Licensee intends to develop, use or market any particular product, process or system; and (ii) all information concerning the business, products, marketing efforts, technology or finances of Licensee within the Territory.  However, Confidential Information shall not include information or any portion thereof which:

(a)           is known to Receiver at the time of disclosure and documented by written records made prior to the date of this Agreement;

(b)           is subsequently disclosed to Receiver without any obligations of confidence by an unaffiliated third person who has not obtained it directly or indirectly from Discloser and who has the right to make such disclosure;

(c)           becomes published or otherwise part of the public domain;

(d)           is independently developed by or for Receiver by person(s) having no knowledge of or access to such information and without breach of any confidentiality obligation as evidenced  by its written records; or

(e)           is required to be disclosed by legal, regulatory, statutory or governmental process or authorities, provided in each case Receiver promptly informs Discloser and uses its best efforts to limit the disclosure and to maintain confidentiality to the maximum extent possible and permits Discloser to attempt by appropriate legal means to limit such disclosure.

          The contents of the Exhibits to this Agreement shall constitute Confidential Information.

“Confidentiality Procedures” has the meaning ascribed to such term in Section 8.3 of this Agreement.

“Deductions ” has the meaning ascribed to such term in the definition of “Net Sale” in this Section 1 .

“Discloser” has the meaning ascribed to such term in the definition of “Confidential Information” in this Section 1 .

“ Dispute ” has the meaning ascribed to such term in Section 14.3 .

“Effective Date” has the meaning ascribed to such term in the preamble.

“Field” means all human therapeutic, prophylactic, and diagnostic uses of Licensed Products for cancer and other diseases.

“Improvement” means any addition, development, modification, enhancement and adaptation that directly relates to or is used directly in connection with the Patents or a Licensed Product.  Ownership of Improvements shall be as set forth in Section 5.4 .

“including” and its variants mean including without limitation.

“Indemnitees” has the meaning ascribed to such term in Section 7.1 .

“Know-How” means any proprietary technology, information, methods of use, processes techniques or ideas or inventions (other than the Patents) owned, possessed or used by Licensor as of the Effective Date and during the Term of this Agreement that is directly related to or used in connection with the Technology, including all trade secrets and any other technical information relating to the development, use or sale of Licensed Products.

“Liabilities” has the meaning ascribed to such term in Section 7.1 .

“Licensed Product” means any material, product, kit, service, process, procedure that (i) is covered by at least one Valid Claim, or (ii) contains any of the chemical compounds set forth in Exhibit A attached hereto and incorporated herein by reference, or (iii) whose manufacture, use, offer for sale or sale would constitute, but for the license granted herein, an infringement of any Valid Claim.

“Licensee” has the meaning ascribed to such term in the preamble.

“Licensee Improvement” has the meaning ascribed to such term in Section 5.4(a) .

“Licensor ” has the meaning ascribed to such term in the preamble.

“Licensor Improvement” has the meaning ascribed to such term in Section 5.4(b) .

“Net Sales” means the gross invoice price for the sale, license, sublicense, or other transfer (whether by Licensee, any Affiliate, or sublicensee) of Licensed Products to unrelated current and future third parties, including pharmaceutical wholesalers, pharmacies, hospitals, or dispensing physicians, less any of the following charges or expenses (“ Deductions ”):

(a)           credits or allowances actually given or made for rejection, recall or return of previously sold Licensed Products;

(b)          any reasonable freight, postage, transportation, insurance, tax, or government charge, duty or assessment (including any tax such as a value added or similar tax or charge) levied on the sale, transportation or delivery of Licensed Products when included on the invoice or other written document for such transaction and paid by the transferee of the Licensed Product and collectable by Licensee, its Affiliate or sub-licensee; and

(c)           Licensee’s actual costs incurred in its conduct of pre-clinical studies, clinical studies and preparation for manufacturing, such costs not to exceed eight million dollars ($8,000,000).

Net Sales shall not include reasonable quantities delivered solely for research purposes, clinical trials, or as samples or promotions.

“New Drug Approval” means the approval issued to Licensee or any Affiliate or sublicensee of Licensee by the competent Regulatory Authority in the Territory approving the manufacture and commercial sale of a Licensed Product(s) by Licensee or any Affiliate or sublicensee of Licensee within the Territory.

“New Drug Production” means such time as Licensee or any Affiliate or sublicensee of Licensee has or is ready under the applicable law of the Territory to produce a Licensed Product for commercial sale, license, or use.

“New Drug Protection Licensed Period” means a five (5)-year period of time as permitted by the Regulatory Authority of the PRC in which no drug competitive with a Licensed Product can be sold in the PRC.

“Patents” means the patent applications, any patents issuing therefrom and patents listed in Exhibit B hereto and any and all substitutions, extensions, additions, reissues, re-examinations, renewals, divisionals, continuations, continuations-in-part whose subject matter is claimed in the parent application, or supplementary protection certificates owned by or licensed to (with the right to sublicense) Licensor during the Term directly relating to the Licensed Products or any Improvements.

“Receiver” has the meaning ascribed to such term in the definition of “Confidential Information” in this Section 1 .

“Regulatory Approval” means all governmental approvals and authorizations necessary for the manufacture and commercial sale of each Licensed Product in the Territory or part thereof, including marketing authorization, pricing approval and pricing reimbursement, as applicable.

“Regulatory Authority” means the State Food and Drug Administration of the People’s Republic of China or any successor entity as well as the Ministry of Commerce of the People’s Republic of China and its local counterparts in the Territory and any other appropriate governmental agency under which a registration, license, permit or other authorization is required to carryout the intent of this Agreement.

“Report” has the meaning ascribed to such term in Section 3.1 of this Agreement.

“Security Measures” has the meaning ascribed to such term in Section 8.3 of this Agreement.

“Technology” means the Patents and Know-How.

“Term” means the period commencing on the Effective Date and terminating as set forth in Article 9 below.

“Territory” means the People’s Republic of China, Taiwan, Hong Kong and Macau.

“Trademark” means any trademark or service mark registered or otherwise used by Licensor, including, but not limited to, Licensor’s business name, the Protectan CBLB612 name and mark and all variations thereof.

“Valid Claim” means a claim of: (i) an issued patent included in the Patents which has not been declared invalid in a final, unappealable decision of a court of appropriate jurisdiction, or (ii) a pending patent application included in the Patents which is being diligently prosecuted by or on behalf of Licensor and has not been formally terminated or abandoned without issuance of a patent.

“Work Plan” means each “Commercialization Plan” specific to each Licensed Product setting forth the plan to develop, obtain regulatory approval and sell such Licensed Product as attached hereto as Exhibit C and as updated from time to time pursuant to Section 5.1(b) .

2.              License .

2.1            License Grant .   Subject to the terms of this Agreement, Licensor hereby grants to Licensee, and Licensee accepts, for itself and its Affiliates, an exclusive, sublicensable, royalty-bearing right and license under the Technology to: (i) develop, make, have made, use, offer for sell, sell, and have sold Licensed Products and Improvements thereto, including co-promotion and co-marketing; and (ii) apply for and obtain Regulatory Approvals, all as may be required to manufacture and commercialize Licensed Products for the Field in the Territory.  It is understood that any issued Patents will be subject to the license rights granted in this Section 2 .

3.              Consideration .

3.1            Royalty Payments .

(a)           Licensee shall pay to Licensor a royalty on Net Sales of ten percent (10%) for the Term. Notwithstanding the foregoing, in the event that no Patent issues in the Territory, Licensee shall pay to Licensor a royalty on Net Sales of five percent (5%).  If at any time a Patent does issue in the Territory the royalties payable by Licensee shall automatically increase to ten percent (10%) of Net Sales occurring on or after the date that the Patent issues.

(b)           Licensee and its Affiliates, shall keep complete and accurate records containing all information required for the computation and verification of the royalties to be paid hereunder.

(c)           Within twenty (20) days after each calendar quarter beginning on the date of the first Net Sale, Licensee shall deliver to Licensor a written report of Net Sales of the Licensed Product for such calendar quarter and a calculation of the royalties due to Licensor.  Such statement of account (“ Report ”) shall show the applicable Net Sales, broken down on a Licensed-Product-by-Licensed-Product basis and shall itemize allowed Deductions.  The Report delivered by January 20 of each year shall also show a summary for the previous year. Payment of royalties due shall accompany each Report.  If no royalties are due, the Report shall so state and the reasons therefor.

(d)           All royalties due shall be paid in United States Dollars.  All royalties due shall be converted (for the purposes of calculation and payment) into equivalent United States funds at the exchange rate published by The Wall Street Journal (New York edition) nearest to the last business day of the reporting period.

(e)           Payment of royalties shall be subject to any restrictions imposed by the local government.  If foreign exchange is not freely available, Licensor has the option to accept payment in the currency of the country from which royalties are due. If a withholding or other tax is imposed on a royalty payment due, the amount of royalty payable shall be the amount due less the amount of such tax actually paid, Licensee shall cooperate with Licensor, including by filing any necessary papers, to allow Licensor to recover any such withheld royalty pursuant to any tax treaty or other method.

(f)           Licensee shall, upon fifteen (15) days’ written request of Licensor, permit an independent public accountant selected by Licensor to have access during ordinary business hours to examine such records as may be necessary to determine either the accuracy of any Report or the sufficiency of any royalty payment made under this Agreement.

(b)           $650,000.00 within ninety (90) days following the payment made pursuant to Section 3.2(a) .

3.3            Payment Term .  If any payment due hereunder is not paid when due, such payment shall be subject to a late charge from the date due until paid calculated at the rate of one percent (1.0%) per month.  All payments due hereunder shall be paid in United States Dollars and shall be paid via money transfer of readily available funds to such account or accounts as Licensor shall specify from time to time.

3.4            Exceptions .  The Patents and Know-How have not been contained in the list of prohibited and restricted imported technologies of the People’s Republic of China.  However, as provided in Articles 16, 17, and 18 of the Foreign Trade Law of the People’s Republic of China , if the Patents and Know-How are prohibited from being imported and this Agreement risks becoming invalid, the parties shall immediately take all actions, including filing documents required to withdraw any of the applications filed with the Regulatory Authority.  If the technology and products and processes underlying the licensed Patents and Know-How may not be imported, Licensor shall assist Licensee to take the actions necessary to allow such importation and Licensee, at its option and in good faith, may terminate the Agreement.

4.              Information .

4.1            Conveyance of Information .  Promptly after receipt of the payment set forth in Section 3.2(a) Licensor shall disclose to Licensee the complete text of, and all other information in its possession or control directly related to all Patent, including but not limited to, to the extent such information is available, 1) All related Published papers and Patents of CBLB 612; 2) CBLB 612 lipoprotein synthesis route(in detail) including all the process and scale up of isolation, purification and lipid modification etc; 3) Physicochemical properties and Pre-formulation; 4) Mechanism of Action; 5) In vitro and In vivo efficacy studies( mice and monkey) Including comparative studies with other marketing drugs( AMD 3100, C-GSF); 6) ADME studies; 7) Safety and Toxicology assessment; 8) Summary. Within thirty (30) days after the date Licensee is awarded the New Drug Production status by the Regulatory Authority, Licensor shall convey to Licensee manufacturing technology and current US clinical data and related Know-How in Licensor’s possession directly related to the Licensed Products. Each party shall provide a written report (each such report a “ Status Report ”) setting forth the results of any tests, including clinical data, conducted by such party to the other party (i) on a quarterly basis beginning on January 1, 2010, and (ii) upon the other party’s reasonable request.  Each Status Report shall set forth the results of any tests, including clinical data, collected by the reporting party for the interim time period beginning on the date of the prior Status Report.

4.2             Assistance .   Commencing on the Effective Date, Licensor has the exclusive right to assist Licensee in connection with Licensee’s submission to the Regulatory Authority to the extent related to the Licensed Products or Technology. Licensor will use commercially reasonable efforts to provide Licensee information and documents in Licensor’s possession and control (including any certificates regarding Licensor’s legal status) and such other assistance as reasonably required by Licensee for regulatory purposes in connection with this Agreement; provided, that in no event shall Licensor be obligated to incur expenses as a result of providing such assistance and Licensor shall be reimbursed for actual employee time and costs incurred by Licensor at the rates set forth in Exhibit D . The rates set forth on Exhibit D shall be updated by Licensor on a yearly basis.  Notwithstanding the foregoing, Licensee shall be provided at least one time on-site assistance, free of charge (except travel expenses).

4.3            Consulting Services and Future Assistance .

(a)            Consulting Services .  Commencing on the Effective Date and in addition to the assistance provided by Licensor pursuant to Section 4.3 , in connection with Licensee’s development of the Technology, Licensor shall provide to Licensee such consulting services as the parties may be mutually agreed to from time to time.  The scope of all such consulting services to be provided by Licensor shall be evidenced by one or more work orders, which shall be agreed to by both parties prior to the commencement of such consulting services. Licensor shall provide such consultation services at the rates set forth in Exhibit D .

(b)            Future Assistance .  Licensor agrees to provide such future assistance and technical support as Licensee may reasonably request in connection with Licensee’s development, scale up and commercialization of Licensed Product. Licensor shall provide such future assistance and technical support at the rates set forth in Exhibit D .

4.4            Expenses .

(a)           Licensee shall reimburse Licensor for all travel and other expenses incurred in connection with the performance of services by Licensor pursuant to Section 4.2 or Section 4.3 .  To the extent any travel for the performance of services pursuant to Section 4.2 or Section 4.3 requires travel in excess of six (6) hours, Licensee agrees to reimburse Licensor for the cost of business class accommodations for such travel.

(b)           To the extent Licensor requests Licensee to consult with or provide other services to Licensor, Licensor shall reimburse Licensee for all travel and other expenses incurred in connection with the performance of services by Licensee. To the extent any travel for the performance of services requires travel in excess of six (6) hours, Licensor agrees to reimburse Licensee for the cost of business class accommodations for such travel.

4.5            Payment Terms .  Licensor shall invoice Licensee for all services rendered and expenses incurred pursuant to Sections 4.2 , 4.3 and 4.4 on a monthly basis.  Licensee shall pay such invoice(s) within thirty (30) days of Licensee’s receipt of such invoice(s).  The payment terms set forth in Section 3.3 shall apply to all payments made pursuant to this Article 4 .

5.              Commercialization; Ownership; Improvements; Future Performance .

5.1            Commercialization .

(a)           Licensee shall use its best efforts to develop and commercialize the Licensed Products in the Territory, including obtaining the New Drug Approvals, marketing, and entering into any co-marketing, distribution and/or co-promotion arrangements.  Within thirty (30) days from the Effective Date, Licensee shall submit a reasonably satisfactory Work Plan to Licensor setting forth its plan to commercialize the Licensed Products with reasonable timelines. Licensee shall have sole responsibility for implementing the Work Plan at its own expense.  The Work Plan shall be attached hereto as Exhibit C , and shall be amended from time to time pursuant to Section 5.1(b).

(b)           Representatives of Licensor and Licensee shall meet for informational purposes at least on a semi-annual basis to review the progress of the Work Plan.  Licensee shall provide an updated Work Plan to Licensor after each such informational meeting.

5.2            Manufacturing .  Licensee and its Affiliates have sole responsibility for manufacturing Licensed Products or having Licensed Products manufactured for it by a third party manufacturer in the Territory and the Field approved by Licensor in its sole discretion.  Licensee will manufacture the Licensed Products according to the specifications set forth in Exhibit A-1 . The Exhibit A-1 shall be amended from time to time by Licensee in its sole discretion.

5.3            Ownership .  Licensor shall remain the owner of the Patents and Know-How.

5.4            Improvements .

(a)            Licensee Improvements .  All Improvements and related intellectual property that come into existence during the Term, including any clinical data and documentation, and which relate to or are derived from work done by or for Licensee or any Affiliate or sublicensee of Licensee without any contribution by Licensor or any of its Affiliates, contractors, or agents (each, a “ Licensee Improvement ”), shall be deemed the property of Licensee and shall be free from the interference of Licensor.  Licensee, on behalf of itself and any applicable Affiliate or sublicensee, hereby grants Licensor an irrevocable, non-exclusive, sublicensable, fully paid license in all areas of the world outside of the Territory to develop, make, have made, use, offer for sale, sell and have sold the Licensee Improvements.

(b)            Licensor