THIS WARRANT AND THE SECURITIES UNDERLYING
THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) AND MAY NOT
BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREFROM UNDER SUCH SECURITIES ACT, ANY APPLICABLE STATE SECURITIES LAWS AND THE RULES AND REGULATIONS THEREUNDER. 


 


PROTEA BIOSCIENCES GROUP, INC.


 


WARRANT


 


TO PURCHASE COMMON STOCK OF THE COMPANY


 





	Warrant No. __	Issue Date: _____ __, 2012



  


FOR VALUE RECEIVED,
PROTEA BIOSCIENCES GROUP, INC., a Delaware corporation (the “Company”), grants the following rights to ________________,
and [his] [her] [its] permitted assigns, heirs, executors and administrators (individually and collectively, the “Holder”),
as of the ___ day of ______, 2012 (the “Issue Date”). This warrant (the “Warrant”) has been issued by the
Company in connection with a sale of [ ] shares of the Company's common stock, par value $0.0001 per share (the “Common Stock”)
(the "Shares"), at a purchase price of $0.50 per share, pursuant to the terms and conditions set forth in that certain
Securities Purchase Agreement by and between the Company and the Holder dated as of the Issue Date (the “SPA”).


 


Section 1.Grant.


 


The Holder is hereby
granted the right (collectively, the “Purchase Rights”), in accordance with the terms and conditions of this Warrant,
from the date hereof until the expiration of the “Exercise Period” (as defined below), to purchase from the Company
that number of fully paid and non-assessable shares of the Common Stock of the Company, set forth in Section 2 hereof, at the “Exercise
Price” (as defined below), upon delivery of this Warrant to the Company with the Notice of Exercise form attached as Exhibit
1 hereto, duly executed, and upon tender of the Exercise Price for the shares of Common Stock to be purchased.


 


Section 2.Number of Shares
of Common Stock Purchasable.


 


2.1Subject to the
other provisions of this Section 2, this Warrant entitles the Holder to purchase from time to time up to ______________1
shares of the Company’s Common Stock (the “Warrant Shares”).


 


2.2In case prior to the expiration
of the Purchase Rights by exercise or by the terms of this Warrant, the Company shall undertake any reclassification, stock split,
reverse stock split, stock dividend or any similar proportionately-applied change (collectively, a “Reclassification”)
of outstanding shares of Common Stock (other than a change solely in, of, or from par value), the Holder shall thereafter be entitled,
upon exercise of this Warrant for the same total consideration as presently required, to purchase the kind and amount of shares
of stock and other securities and property receivable upon such Reclassification by a holder of the number of shares of Common
Stock which this Warrant entitles the Holder hereof to purchase immediately prior to such Reclassification. Notice of any such
Reclassification shall be given to the Holder pursuant to Section 12 hereof.


 


 


_______________________


1
The number of Warrant Shares shall equal 75% of the number of Shares purchased by Holder at the applicable closing, pursuant
to the terms and conditions set forth in the SPA.


 






    	 



    	 	



    
  


2.3In case prior to the expiration
of the Purchase Rights by exercise or by the terms of this Warrant, the Company shall determine to consolidate or merge with, or
convey all, or substantially all, of its property or assets to, any other corporation or corporations, or dissolve, liquidate or
wind up, then, as a condition precedent to such consolidation, merger, conveyance, dissolution, liquidation or winding up, notice
shall be given to the Holder pursuant to Section 12 hereof and lawful and adequate provision shall be made whereby the Holder shall
thereafter have the right to receive from the Company or the successor corporation, as the case may be, upon the basis and upon
the terms and conditions specified in this Warrant, in lieu of the shares of Common Stock of the Company theretofore purchasable
upon the exercise of the Purchase Rights, such shares of stock, securities, or assets as may be issued or payable with respect
to, or in exchange for, the number of shares of Common Stock of the Company theretofore purchasable upon the exercise of the Purchase
Rights had such consolidation, merger, conveyance, dissolution, liquidation or winding up not taken place; and in any such event
the rights of the Holder to an adjustment of the number of shares of Common Stock purchasable upon the exercise of the Purchase
Rights as herein provided, shall continue and be preserved in respect of any stock or securities which the Holder becomes entitled
to purchase.


 


2.4(a) For purposes of this Section
2.4, the capitalized terms in this Section shall have the following meanings:


 


(i) “Additional
Shares of Common Stock” shall mean all shares of Common Stock issued or sold by the Corporation after the Issue Date, other
than Exempted Securities;


 


(ii) “Convertible
Securities” shall mean shares of Common Stock issued or deemed issued upon the conversion or exercise, as appropriate, of
any debt or equity securities of the Company which are convertible into or exercisable for shares of Common Stock of the Company;


 


(iii) “Exempted
Securities” shall mean:


 


(v) 
Convertible Securities issued prior to the Issue Date, provided, however, that the agreements or instruments evidencing the Convertible
Securities have not been amended after the Issue Date so as to increase the number of shares of Common Stock issuable under the
Convertible Securities or to lower the conversion or exercise price, as appropriate, of the Convertible Securities;


 


(w)shares
of Common Stock issued or deemed issued as a dividend or distribution on the Common Stock;


 


(x)shares
of Common Stock issued or issuable upon the exercise of this Warrant;


 


(y)shares
of Common Stock issued or issuable by reason of a stock split, split-up, or other distribution on shares of Common Stock; or


 


(z)shares
of Common Stock issued or issuable to employees, consultants, directors or officers pursuant to an equity incentive plan, employment
agreement or other agreement as compensation for services provided to the Company.


 






    	 



    	 	



    
  


(b) At any time after
the Issue Date through the expiration of the Purchase Rights set forth in this Warrant by exercise or the terms of this Warrant,
the Company issues or sells Additional Shares of Common Stock, for a consideration per Additional Share of Common Stock that is
less than $0.50 (as such amount may be adjusted proportionately for any Reclassification) (a "Dilutive Issuance"), on
the date of and immediately prior to the Dilutive Issuance, the Exercise Price, then in effect, will be reduced concurrently with
the Dilutive Issuance to a price (rounded to the nearest cent) calculated by multiplying such Exercise Price by a fraction, of
which (i) the numerator shall be the number of shares of Common Stock outstanding on a fully diluted basis immediately prior to
such Dilutive Issuance plus the number of shares of Common Stock which the aggregate consideration received or to be received by
the Company for the total number of Additional Shares of Common Stock issued pursuant to the Dilutive Issuance would purchase at
the Exercise Price; and (ii) the denominator shall be the number of shares of Common Stock outstanding on a fully diluted basis
immediately prior to such Dilutive Issuance plus the number of such Additional Shares of Common Stock so issued. The provisions
of this Section 2(b) shall not operate to increase the Exercise Price.


 


Section 3.Exercise Period;
Registration Statement Notice.


 


3.1The Purchase Rights represented
hereby shall be exercisable in whole or in part from time to time after the date of issuance of this Warrant until the earlier
of (i) a Qualified Public Offering or (ii) 5:00 p.m. Eastern time on the fifth anniversary of the Issue Date hereof (the “Exercise
Period”). For purposes of this Warrant, the term “Qualified Public Offering” shall mean the closing of a firm
commitment underwritten offering pursuant to an effective registration statement under the Securities Act covering the offer and
sale of Common Stock for the account of the Company in which the net cash proceeds to the Company (after deduction of underwriting
discounts and commissions) are at least $10,000,000.


 


3.2The Company shall give the Holder
written notice, at the address of the Holder set forth on the Company’s books, not less than twenty days prior to the closing
of a Qualified Public Offering.


 


Section 4.Exercise.


 


4.1The Purchase Rights represented
by this Warrant are exercisable upon the terms and conditions set forth herein at the option of the Holder in whole at any time
and in part, but not for less than 100 shares at a time, at any time and from time to time during the Exercise Period upon the
delivery of the Notice of Exercise form attached hereto as Exhibit 1 to the Company with such notice duly executed and upon
payment in cash, wire transfer or bank cashier’s check of the Exercise Price. The Purchase Rights shall be deemed to have
been exercised, and the Holder shall be deemed to have become a stockholder of record of the Company for the purposes of receiving
dividends and for all other purposes whatsoever with respect to the shares of Common Stock so purchased, as of the date of delivery
of such properly executed notice accompanied by proper tender of the Exercise Price at the office of the Company. As promptly as
practicable on or after such date, and in any event within three (3) business days thereafter, the Company at its expense shall
issue and deliver, or cause to be issued and delivered, to the person or persons entitled to receive the same, a certificate or
certificates for the number of shares issuable upon such exercise. In the event that this Warrant is exercised in part, the Company
at its expense shall execute and deliver a new Warrant of like tenor exercisable for the number of shares for which this Warrant
may then be exercised.


 






    	 



    	 	



    
  


4.2In lieu of the payment methods
set forth in Section 4.1 above, in the event the Warrant Shares have not been registered under an effective registration
statement filed pursuant to the Securities Act prior to the earlier of: (i) one (1) year from the Issue Date of this Warrant; or
(ii) the closing of the Qualified Public Offering, the Holder may elect to exchange all or some of this Warrant for shares of Common
Stock equal to the value of the amount of the Warrant being exchanged on the date of exchange.  If Holder elects to exchange
this Warrant as provided in this Section 4.2, Holder shall tender to the Company the Warrant for the amount being exchanged,
along with written notice of Holder’s election to exchange some or all of the Warrant, and the Company shall issue to Holder
the number of shares of the Common Stock computed using the following formula:


 


 


	X =	Y (A-B)
	 	A


 


	Where:	X =	the number of shares of Common Stock to be issued to Holder.
	 	Y =	the number of shares of Common Stock purchasable under the amount of the Warrant being exchanged (as adjusted to the date of such calculation).
	 	A =	the Fair Market Value of one share of the Common Stock on the date that the notice of exercise is received by the Company.
	 	B =	Exercise Price (as adjusted to the date of such calculation).


 


“Fair Market Value” of one
share of Common Stock as of a particular date shall mean: (i) if traded on a national securities exchange, the average volume weighted
average price reported by Bloomberg LP (“VWAP”) of the Common Stock of the Company on such exchange over the five (5)
trading days ending immediately prior to the applicable date of valuation; (ii) if quoted on the OTC Bulletin Board or an over
the counter market operated by OTC Markets Group, Inc or its successor, the average VWAP over the thirty (30) trading days ending
immediately prior to the applicable date of valuation; (iii) if determined in connection with a Qualified Public Offering, the
offering price of the Common Stock in the Qualified Public Offering; and (iv) except as set forth in (iii), if neither (i) nor
(ii) applies, the Fair Market Value shall be the value thereof, as agreed upon by the Company and the Holder; provided, however,
that if the Company and the Holder cannot agree on such value, such value shall be determined by an independent valuation firm
experienced in valuing businesses such as the Company and jointly selected in good faith by the Company and the Holder. Fees and
expenses of the valuation firm shall be paid for by the Company.


 


Section 5.Exercise Price.


 


The exercise price for
each share of Common Stock issuable to the Holder hereunder shall be $1.10 per share subject to adjustment hereunder (the “Exercise
Price”).


 


Section 6.Company’s
Warranties and Covenants as to Capital Stock.


 


The Company has taken
all action necessary and appropriate to properly authorize, reserve and issue those shares of Common Stock issuable to the Holder
pursuant to this Warrant including an authorization of issuance and setting of exercise price. The Common Stock deliverable on
the exercise of the Purchase Rights represented hereby shall, when issued, be duly and validly issued, fully paid and nonassessable.
The Company shall at all times reserve and hold available sufficient shares of Common Stock to satisfy all conversion and purchase
rights of all outstanding convertible securities and warrants.


 






    	 



    	 	



    
  


Section 7.Transfer; Compliance
With Securities Laws; Right of Company to Request Opinion of Counsel Confirming Such Compliance; Holder Responsible for Costs of
Transfer Including Reasonable Counsel Fees.


 


The Purchase Rights shall
be registered on the books of the Company, which shall be kept by it at its principal office for that purpose. This Warrant and
the Common Stock issuable upon exercise of the Purchase Rights, may not be transferred or assigned in whole or in part without
compliance with all applicable federal and state securities laws by the transferor and the transferee, including, if requested
by the Company, an opinion of counsel satisfactory to the Company to the effect that the transfer or assignment is in compliance
with applicable securities laws. Subject to such compliance, the Purchase Rights shall be transferable on said books, in whole
or in part, by the Holder in person or by duly authorized attorney upon surrender of this Warrant properly endorsed by the Holder
executing the Permitted Transfer or Assignment Form attached hereto and made a part hereof as Exhibit 2. All reasonable
and documented costs associated with any transfer or assignment, including, without limitation, the reasonable fees of counsel
to the Company shall be borne by the transferor or assignor. The Company agrees that, while the Purchase Rights remain valid and
outstanding, its stock transfer books shall not be closed for any purpose whatsoever except under arrangements which shall insure
to persons exercising warrants or applying for transfer of stock all rights and privileges which they might have had or received
if the stock transfer books had not been closed and they had exercised their Purchase Rights at any time during which such transfer
book shall have been closed.


 


Section 8.Charges, Taxes
and Expenses.


 


Issuance of certificates
for shares of Common Stock issuable upon the exercise of this Warrant or any portion thereof (and issuance of a replacement Warrant
certificate in the event of partial exercise) shall be made without charge to the Holder hereof for any issue taxes or any other
incidental expenses in respect of the issuance of such certificates to and in the name of the registered Holder of this Warrant,
all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder of
this Warrant. Certificates will be issued in a name other than that of the Holder upon the request of a Holder and payment by the
Holder of any applicable transfer taxes and compliance with all applicable securities laws and with all applicable provisions of
this Warrant including but not limited to Section 7 hereof.


 


Section 9.Exchange for
Other Denominations.


 


This Warrant is exchangeable
for new certificates of like tenor and date representing in the aggregate the right to purchase the number of shares purchasable
hereunder in denominations designated by the Holder at the time of surrender. In the event of the purchase, at any time prior to
the expiration of the Exercise Period, of less than all of the shares of Common Stock purchasable hereunder, the Company shall
cancel this Warrant upon surrender thereof, and shall promptly execute and deliver to the Holder hereof a new warrant of like tenor
and date for the balance of the shares purchasable hereunder.


 


Section 10.Loss, Theft,
Destruction or Mutilation of Warrant.


 


Upon receipt by the Company
of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant, and, in case
of loss, theft or destruction, of indemnity or security reasonably satisfactory to it, and upon reimbursement to the Company of
all reasonable and documented expenses incidental thereto, and upon surrender of this Warrant, if mutilated, the Company shall
promptly make and deliver a new warrant of like tenor and date, in lieu of this Warrant and cancel this Warrant.


 


Section 11.Registration
Rights.


 


The Warrant Shares are
subject to the registration rights set forth in Section 8 of the SPA.


 






    	 



    	 	



    
 


Section 12.Notices Including
Certificate of Company In Event of Adjustment.


 


(a)Whenever the number of
shares purchasable hereunder shall be adjusted pursuant to Section 2 hereof, the Company shall issue a certificate signed by its
Chief Financial Officer or its President or such other appropriate officer, setting forth, in reasonable detail, the event requiring
the adjustment, the amount of the adjustment, the method by which such adjustment was calculated, and the number of shares purchasable
hereunder after giving effect to such adjustment, and shall cause a copy of such certificate to be mailed (by first-class mail,
postage prepaid) to the Holder of this Warrant.


 


(b)In case:


 


(i)the Company shall take a record
of the holders of its Common Stock for the purpose of entitling them to receive any dividend or other distribution, or any right
to subscribe for or purchase any shares of stock of any class or any other securities, or to receive any other right, or


 


(ii)of any capital reorganization
of the Company, any reclassification of the capital stock of the Company, any consolidation or merger of the Company with or into
another corporation, or any conveyance of all or substantially all of the assets of the Company to another corporation, or


 


(iii)of any voluntary dissolution,
liquidation or winding-up of the Company,


 


then, and in each such case, the Company
shall mail or deliver or cause to be mailed or delivered to the Holder or Holders a notice specifying, as the case may be, (A)
the date on which a record is to be taken for the purpose of such dividend, distribution or right, and stating the amount and character
of such dividend, distribution or right, or (B) the date on which such reorganization, reclassification, consolidation, merger,
conveyance, dissolution, liquidation or winding-up is to take place, and the time, if any is to be fixed, as of which the holders
of record of Common Stock shall be entitled to exchange their shares of Common Stock for securities or other property deliverable
upon such reorganization, reclassification, consolidation, merger, conveyance, dissolution, liquidation or winding-up. Such notice
shall be mailed or delivered at least 15 business days prior to the date therein specified.


 


(c)All notices, requests, consents
and demands required by this Warrant shall be in writing and shall be personally delivered or mailed, postage prepaid, to the Company
at:


 


PROTEA
BIOSCIENCES GROUP, INC.


955 Hartman Run Road


Morgantown, WV 26507


Attn: President


Fax: 304-292-7101


 


with a copy (which shall not constitute
notice) to:


 


Richardson & Patel
LLP


750 Third Avenue, 9th
Floor


New York, New York
10017


Attn: David Feldman,
Esq.


Fax: (917) 677-8165


 


and to the Holder at the address of such
Holder set forth in the SPA executed by the original holder of this Warrant in connection with the purchase of the Shares. All
notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (i) upon personal delivery to
the party to be notified, (ii) when sent by confirmed facsimile if sent during normal business hours of the recipient, if not,
then on the next business day, (iii) five (5) days after having been sent by registered or certified mail, return receipt requested,
postage prepaid, or (iv) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery
with written verification of receipt.


 






    	 



    	 	



    
  


Section 13.Miscellaneous.


 


This Warrant shall not
entitle the Holder to any of the rights of a stockholder of the Company. This Warrant shall be binding upon the Company’s
successors. This Warrant shall be governed, construed and enforced in accordance with the laws of the State of Delaware. In case
any provision of this Warrant shall be invalid, illegal or unenforceable, or partially invalid, illegal or unenforceable, the provision
shall be enforced to the extent, if any, that it may legally be enforced and the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby. This Warrant shall any term hereof may be changed, waived, discharged
or terminated only by a statement in writing signed by the party against which enforcement of such change, waiver, discharge or
termination is sought. The headings in this Warrant are for purposes of reference only, and shall not limit or otherwise affect
any of the terms hereof.


 


 


[Signatures appear on following page.]


 






    	 



    	 



    
   






IN WITNESS WHEREOF,
the Company has caused this Warrant to be duly executed, under seal and delivered on its behalf as of the Issue Date set forth
above.


 





	 	PROTEA BIOSCIENCES GROUP, INC.
	 	 	 
	 	 	 
	 	By: 	 
	 	 	Stephen Turner
	 	 	President



 






    	 



    	 	



    



 


EXHIBIT 1


 


 


NOTICE OF EXERCISE PURSUANT TO


ATTACHED WARRANT


 


 


________________, 20___


 


 


To: PROTEA BIOSCIENCES GROUP, INC.


 


(1)The undersigned, the Holder
of record of the attached Warrant of PROTEA BIOSCIENCES GROUP, INC., hereby exercises the option granted by the Purchase Rights
evidenced by the attached Warrant [and hereby tenders payment of the Exercise Price as determined by the Warrant] [on a “cashless”
basis as permitted by Section 4.2 of the Warrant] to purchase upon the terms set forth in such Warrant [________] shares of Common
Stock, which constitutes all [or a portion] of the shares of Common Stock issued pursuant to the Purchase Rights represented by
this Warrant of PROTEA BIOSCIENCES GROUP, INC. All capitalized terms used but not defined in this notice have the meanings assigned
to such terms in the Warrant.


 


(2)In exercising this Warrant,
the undersigned hereby confirms and acknowledges that (a) the undersigned has complied with all terms and conditions of the SPA
as defined in the Warrant, including the requirement that the offer and sale of the Shares was limited to “accredited”
investors only, (b) the shares of the Common Stock to be issued are being acquired solely for investment and solely for the account
of the undersigned, (c) the undersigned will not offer, sell or otherwise dispose of any such shares of Common Stock except under
circumstances that will not result in a violation of the Securities Act of 1933, as amended, or any applicable state securities
laws, and (d) as required under the terms of the SPA, the certificate or certificates representing said shares of Common Stock
shall bear a restrictive legend prohibiting and restricting transfer of such shares except in compliance with applicable federal
and state securities laws.


 


(3)Please issue a certificate or
certificates representing said shares of Common Stock in the name of the undersigned or in such other name as is specified below.


 


(4)Please issue a new Warrant for
the unexercised portion of the attached Warrant, if any, in the name of the undersigned or in such other name as is specified below:


 





	ATTEST:	HOLDER:	 
	 	 	 
	 	 	 
	 	By: 	 
	 	 	 
	 	Name: 	 
	 	 	 
	 	Title: 	 


   


(If certificates for Common Stock or new
Warrants are requested in a name other than the undersigned, be advised that the delivery of the certificates and/or new Warrants
will be delayed until the Company assures itself that such change is permitted under Section 7 of the Warrant that such change
does not violate applicable federal and state securities laws.)


 






    	 



    	 	



    
 


EXHIBIT 2


 


PERMITTED TRANSFER OR ASSIGNMENT FORM


 


NOTE: THIS ASSIGNMENT BEARS A RESTRICTIVE
LEGEND BELOW


 


FOR VALUE RECEIVED,
the undersigned Holder of record of this Warrant of PROTEA BIOSCIENCES GROUP, INC. (the “Company”), which is dated
___________, hereby sells, assigns and transfers unto the Assignee named below all of the rights, including, without limitation,
the Purchase Rights (as such term is defined in this Warrant) of the undersigned under the within Warrant, with respect to the
number of shares of Common Stock set forth below:


 





	Name of Transferee/Assignee	Address	No.
of Shares





 


and does hereby irrevocably constitute
and appoint the Secretary of PROTEA BIOSCIENCES GROUP, INC. to make such transfer on the books of PROTEA BIOSCIENCES GROUP, INC.,
maintained for the purpose, with full power of substitution in the premises.


 


Attached hereto, if
and to the extent requested by the Company, is an opinion of counsel that the assignment does not violate or is exempt from, any
federal and state securities laws. As provided in the Warrant, including but not limited to Section 7 of the Warrant, the Company
may, in its sole discretion, decide whether such opinion is satisfactory, and Assignee and Holder agree to any reasonable delay
in transfer caused by such evaluation and further acknowledge and agree that they shall bear all reasonable and documented costs
associated with any transfer or assignment, including, without limitation, the reasonable fees of counsel to the Company shall
be borne by the transferor or assignor.


 


The undersigned also
represents that, by assignment hereof, the Assignee acknowledges that this Warrant and the shares of Common Stock to be issued
upon exercise hereof or conversion thereof are being acquired for investment and that the Assignee will not offer, sell or otherwise
dispose of this Warrant or any shares of stock to be issued upon exercise hereof or conversion thereof except under circumstances
which will not result in a violation of the Securities Act of 1933, as amended, or any state securities laws. Further, the Assignee
has acknowledged that upon exercise of this Warrant, the Assignee shall, if requested by the Company, confirm in writing, in a
form satisfactory to the Company, that the shares of Common Stock so purchased are being acquired for investment and not with a
view toward distribution or resale in violation of applicable securities laws.


 


Accordingly, the
following restrictive legend is made applicable to this assignment (and to this Warrant and securities covered by this Warrant
as assigned hereby to Assignee):


 


This Assignment and this Warrant and
the securities underlying this Warrant as assigned hereby, have not been registered under the Securities Act of 1933, as amended
(the “Securities Act”), and may not be offered, sold or otherwise transferred, assigned, pledged or hypothecated in
the absence of such registration or an exemption therefrom under such Securities Act, any applicable state securities laws and
the rules and regulations thereunder.


 


 


[Signatures appear on following page.]


 






    	 



    	 	



    
 





	Dated:	 	 	HOLDER:	 
	 	 	 		 
	 	 	 	By:	 
	 	 	 	Name:	 
	 	 	 	Title:	 
	 	 	 	 	 
	Dated:	 	 	ASSIGNEE:	 
	 	 	 	 	 
	 	 	 	By:	 
	 	 	 	Name:	 
	 	 	 	Title: