SECURITY AGREEMENT
 
Protea Biosciences, Inc., 955 Hartman Run Road, Suite 210, Morgantown, West
Virginia 26507, herein called "Debtor," and West Virginia Economic Development
Authority, herein called "Secured Party," agree as follows:
 
1.            Debtor hereby grants to Secured Party a first lien security
interest in all equipment and machinery of Debtor described in Exhibit A hereto,
and all replacements, additions and improvements thereto and proceeds thereof
(the "Collateral").
 
2.            The security interest created by this Security Agreement shall be
a sole first lien security interest position.
 
3.            Debtor covenants, warrants and agrees that:
 
a.           Debtor shall pay Secured Party the sum of $900,000.00 evidenced by
that certain Promissory Note of even date herewith and referred to in that
certain Loan Agreement of even date herewith between the parties hereto,
together with the interest and other obligations described in said Promissory
Note and Loan Agreement. This Security Agreement shall, in addition to securing
said sums due to Secured Party, secure all future advances made by Secured
Party, to, or for the account of Debtor, including advances for loans, repairs
to or maintenance of the Collateral, and all reasonable costs and expenses
incurred in the collection of any such indebtedness.
 
b.           The Collateral covered hereby will be used primarily in Debtor's
business located at the address mentioned above, unless Secured Party consents
in writing to another use, and said Collateral will not be misused or abused,
wasted or allowed to deteriorate, except for the ordinary wear and tear from its
intended primary use.

3263915.1
Security Agreement - 2010
 
 

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c.           Until this Security Agreement is terminated, the Collateral will be
insured against fire, theft, vandalism, malicious mischief, and other hazards in
an amount and with policy or policies of insurance acceptable to Secured Party.
Such casualty insurance policy or policies shall contain a "New York Standard
Mortgage Clause," or its equivalent. Further, until this Security Agreement is
terminated, Debtor will maintain liability insurance in amounts and coverages
satisfactory to Secured Party and, if Debtor's county is designated as a flood
prone area and the FIA map shows that Debtor's property is located within a
special flood hazard area, Debtor will purchase Federal Flood Insurance in
amounts and coverages satisfactory to Secured Party. All aforesaid policies
shall be payable to Secured Party and Debtor, as their interests appear, and
with the policy or policies, or copies thereof, deposited with Secured Party,
and such policy or policies shall provide for not less than thirty (30) days
written notice to Secured Party of the cancellation of such policy or policies.
 
d.           The Collateral will not be sold, transferred or disposed of or be
subjected to any unpaid charges, including taxes, or to any security interest,
lien or other subsequent interest of a third person created or suffered by
Debtor voluntarily or involuntarily, unless Secured Party consents in advance in
writing to such charge, transfer, disposition, security interest, lien or other
subsequent interest.
 
e.           Debtor hereby authorizes the Secured Party to file and, if
determined by Secured Party to be necessary or convenient, Debtor will sign and
execute alone or with Secured Party any Financing Statements, fixture filings,
or other documents and Debtor agrees to procure any documents and pay all costs
necessary to protect the security interests under this Security Agreement
against the rights or interests of third parties.
 
f.           Debtor will reimburse Secured Party for any action, including
without limitation attorney fees and expenses, to remedy a default which Secured
Party elects pursuant to the terms hereof or under said Loan Agreement.
 
g.           Debtor represents and warrants to the Secured Party that the
equipment and machinery described in Exhibit A shall at all times prior to the
payment in full of the debt secured hereby remain as personal property and shall
never constitute fixtures unless Security Party consents otherwise in advance in
writing.
 
4.            Until default hereunder, Debtor shall be entitled to the
possession of the Collateral and to use and enjoy the same.

3263915.1
Security Agreement - 2010
 
2

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5.            Debtor shall be in default hereunder upon an Event of Default as
set forth in said Loan Agreement or failure to pay any amount payable hereunder
or under said Promissory Note within the time provided in said Promissory Note
or upon failure to observe or perform any of Debtor's other agreements contained
herein.
 
6.           Upon Debtor's default, Secured Party may exercise its rights of
enforcement under the Uniform Commercial Code in force in West Virginia, at the
date of this Security Agreement and, in conjunction with, in addition to or in
substitution for those rights, at the discretion of Secured Party, may enter
upon Debtor's premises to take possession of, assemble, and collect the
Collateral or render it unusable, and may require Debtor to assemble the
Collateral and make it available at a place designated by Secured Party which is
mutually convenient to allow Secured Party to take possession of or dispose of
the Collateral. Secured Party may waive any default or remedy any default in any
reasonable manner without waiving the default remedy and without waiving any
other prior or subsequent defaults. In the event of default by Debtor in its
obligations to Secured Party and the repossession of the Collateral by Secured
Party, such Secured Party may sell and transfer the entire interest in and full
and complete title to the Collateral. Whenever notice is required by law to be
sent by the Secured Party to the Debtor of any sale, lease or other disposition
of the Collateral, ten (10) days' written notice sent to the Debtor's address
set forth above will be reasonable.
 
7.            Debtor warrants that it has good title to the Collateral described
herein; that the same is free and clear from all liens and encumbrances other
than the aforesaid security interest in favor of Secured Party; and that Debtor
has the right to convey the same to Secured Party as collateral.
 
8.            All the Collateral described herein is located in Monongalia
County, West Virginia, and will remain in said County until said Promissory Note
is paid in full.
 
9.            The only office of the Debtor is at 955 Hartman Run Road, Suite
210, Morgantown, West Virginia 26507.

3263915.1
Security Agreement - 2010
 
3

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Dated this ____ day of October, 2010.

PROTEA BIOSCIENCES, INC.
 
By:
/s/ Stephen Turner
 
Its:
 President

WEST VIRGINIA ECONOMIC
DEVELOPMENT AUTHORITY
 
By:.
/s/ David G. Warner
 
Its:
 Executive Director

 
3263915.1
Security Agreement - 2010
 
4

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EXHIBIT A

LIST OF EOUIPMENT AND MACHINERY AND FIXTURES

Vendor
 
Equipment
 
Model #
 
Serial #
             
AB Sciex
 
ABI 5500 QTRAP LC/MS/MS
 
5500
 
AU23751008
             
AB Sciex
 
HPLC/API4000 Mass Spec (2 Units)
 
4000
 
J1030110 & J2480202
             
Hitachi
 
Total Amino Acid Analyzer
 
L-8900
 
2145-003

  
3263915.1
Security Agreement - 2010
 
 

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CERTIFICATE OF EQUITY INJECTION

 
The undersigned, Stephen Turner, President of Protea Biosciences, Inc., a
Delaware corporation authorized to transact business in the State of West
Virginia, hereby certifies to the West Virginia Economic Development Authority
in connection with its loan in the aggregate amount of Nine Hundred Thousand and
00/100 Dollars ($900,000.00) to Protea Biosciences, Inc., that as of the date of
this Certificate Protea Biosciences, Inc. has injected at least Ninety-Seven
Thousand Two Hundred Forty-Eight and 00/100 Dollars ($97,248.00) of its own
funds into the development of the Project, as defined in the Loan Agreement, to
be partially funded by such loan, as set forth in the application of Protea
Biosciences, Inc. to the West Virginia Economic Development Authority for such
loan.
 
Dated as of the 21st day of October, 2010.

/s/ Stephen Turner
Stephen Turner

 
STATE OF WEST VIRGINIA,
COUNTY OF Monongalia, to-wit:
 
Subscribed and sworn before me this 21day of October, 2010 by Stephen Turner,
President of Protea Biosciences, Inc., a Delaware corporation.
 
My commission expires September 14, 2015.
 
/s/ Jesse L. Ayers II
NOTARY PUBLIC

 
[SEAL]
[ex10-24logo.jpg]
 
3264037.1
Certificate of Equity Injection - 2010
 
 

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CERTIFICATE OF COMPLETION

The undersigned, Stephen Turner, President of Protea Biosciences, Inc., a
Delaware corporation authorized to transact business in the State of West
Virginia, hereby certifies to the West Virginia Economic Development Authority
in connection with its loan in the aggregate amount of Nine Hundred Thousand and
00/100 Dollars ($900,000.00) to Protea Biosciences, Inc. to assist it in
financing the acquisition and installation of certain equipment, including
without limitation the equipment described in Exhibit A attached hereto, to be
located and operated in Monongalia County, West Virginia at 955 Hartman Run
Road, Suite 210, Morgantown, West Virginia, that the acquisition and
installation of said equipment have been completed as of the date of this
Certificate, said equipment is fully operational and said equipment has been
paid for in full by Protea Biosciences, Inc., all in accordance with the
application submitted by Protea Biosciences, Inc. to the West Virginia Economic
Development Authority in connection with said loan.

Dated as of the 21st day of October, 2010.

/s/ Stephen Turner
Stephen Turner

 
STATE OF WEST VIRGINIA,
COUNTY OF Monongalia, to-wit:

Subscribed and sworn before me this 21day of October, 2010 by Stephen Turner,
President of Protea Biosciences, Inc., a Delaware corporation.

My commission expires September 14, 2015.
 
/s/ Jesse L. Ayers II
NOTARY PUBLIC

 
[SEAL]
 
 [ex10-24logo.jpg]
 
3264049.1
Certificate of Completion - 2010
 
 

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