Exhibit 10.4





 


NEITHER THIS SECURITY NOR THE SECURITIES FOR
WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION
OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH
EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE
OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.


 


FORM OF CLASS B COMMON STOCK PURCHASE WARRANT



 


PROTEA
BIOSCIENCES GROUP, INC.


 


	Class B Warrant No.[  ]	Issue Date: _________ __, 2016


 


THIS CLASS B COMMON STOCK
PURCHASE WARRANT (the “Class B Warrant”) certifies that, for value received, [         ]
(the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions
hereinafter set forth, at any time on or after the date hereof (the “Initial Exercise Date”) and on or
prior to the close of business on the five (5) year anniversary of the Final Closing Date under the Subscription Agreement (the
“Termination Date”) but not thereafter, to subscribe for and purchase from Protea Biosciences Group,
Inc., a Delaware corporation (the “Company”), up to [         ]
shares (the “Class B Warrant Shares”) of Common Stock. The purchase price of one share of Common Stock
under this Class B Warrant shall be equal to the Exercise Price, as defined in Section 2(b).


 


Section 1.               Definitions. For
the purposes hereof, in addition to the terms defined elsewhere in this Class B Warrant, (a) capitalized terms not otherwise defined
herein shall have the meanings set forth in the Subscription Agreement and (b) the following terms shall have the following meanings:


 


“Business
Day” means any day except any Saturday, any Sunday, any day which shall be a federal legal holiday in the United
States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental
action to close.


 


“Class
B Warrant Shares” shall mean any and all shares of Common Stock issuable upon any one or more exercise of this Class
B Warrant.


 


“Common
Stock” shall mean as applicable the shares of voting common stock of the Company, par value $0.0001 per share, or
the voting common stock of any successor in interest to the Company.


 


“Common
Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof
to acquire at any time Common Stock, including, without limitation, any notes, debentures, debt, preferred stock, rights, options,
warrants or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the
holder thereof to receive Common Stock.


 






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“Exempt
Issuance” means the issuance of (a) shares of Common Stock or options to employees, officers or directors of the
Company pursuant to any stock or option plan duly adopted for such purpose, by a majority of the non-employee members of the Board
of Directors or a majority of the members of a committee of non-employee directors established for such purpose for services rendered
to the Company, (b) securities upon the exercise or exchange of or conversion of any Securities issued hereunder and/or other securities
exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding on the date of this Agreement,
provided that such securities have not been amended since the date of this Agreement to increase the number of such securities
or to decrease the exercise price, exchange price or conversion price of such securities (other than in connection with stock splits
or combinations) or to extend the term of such securities, and (c) securities issued pursuant to acquisitions or strategic transactions
approved by a majority of the disinterested directors of the Company, provided that any such issuance shall only be to a Person
(or to the equityholders of a Person) which is, itself or through its subsidiaries, an operating company or an owner of an asset
in a business synergistic with the business of the Company and shall provide to the Company additional benefits in addition to
the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose
of raising capital or to an entity whose primary business is investing in securities, provided however, that all such issuances
pursuant to this subsection (c) do not, in the aggregate, exceed five percent (5%) of the shares of Common Stock issued and outstanding
immediately prior to the Issue Date (determined on a fully-diluted basis).


 


“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 VWAP (as defined below) 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 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;
and (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.


 


“Holder”
shall mean one or more holder(s) of shares of Series A Preferred Stock.


 


“Memorandum”
shall mean the Confidential Private Placement Memorandum of the Company applicable to the offering of the Securities, dated September
29, 2016.


 


“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.


 


“Subscription
Agreement” means the Subscription Agreement, dated as of _________ __, 2016 among the Company and the original Holders,
as amended, modified or supplemented from time to time in accordance with its terms.


 


“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.


 






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“Trading
Day” means a day on which the New York Stock Exchange is open for business.


 


“Trading
Market” means the following markets or exchanges on which the Common Stock may be listed or quoted for trading on
the date in question: the NYSE MKT, LLC, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market,
the New York Stock Exchange, or the other OTC markets, including the OTCQX, OTCQB and OTC Pink markets.


 


“Transaction
Documents” shall have the meaning set forth in the Subscription Agreement.


 


“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed
or quoted on a national securities exchange, the daily volume weighted average price of the Common Stock for such date (or the
nearest preceding date) on the trading market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P.
(based on a Trading Day from 9:30 a.m. New York City time to 4:02 p.m. New York City time); (b) if the Common Stock is quoted on
the OTC Bulletin Board, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on
the OTC Bulletin Board; (c) if the Common Stock is not then listed or quoted for trading on the OTC Bulletin Board and if prices
for the Common Stock are then reported on the OTC markets, including the OTCQX, OTCQB and OTC Pink markets, or in the “Pink
Sheets” published by Pink Sheets, LLC (or a similar organization or agency succeeding to its functions of reporting prices),
the most recent bid price per share of the Common Stock so reported; or (d) in all other cases, the fair market value of a share
of Common Stock as determined by an independent appraiser selected in good faith by the Subscribers of a majority in interest of
the Securities then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company;
provided that in each case where Bloomberg L.P. data is being relied upon, Holder shall provide to the Company a copy of such information
for the Company's records.


 


Section 2.               Exercise.


 


a)           Exercise
of Warrant.


 


i.     Exercise
of the purchase rights represented by this Class B Warrant may be made, in whole or in part, at any time or times on or after the
Initial Exercise Date and on or before the Termination Date by delivery to the Company (or such other office or agency of the Company
as it may designate by notice in writing to the registered Holder at the address of the Holder appearing on the books of the Company)
of a duly executed notice of exercise (“Notice of Exercise”) form attached hereto as Exhibit A;
and, within 3 Trading Days of the date said Notice of Exercise is delivered to the Company, the Company
shall have received payment of the aggregate Exercise Price of the Class B Warrant Shares thereby purchased by wire transfer or
cashier’s check drawn on a United States bank. Notwithstanding anything herein to the contrary, the Holder shall not be required
to physically surrender this Class B Warrant to the Company until the Holder has purchased all of the Class B Warrant Shares available
hereunder and the Class B Warrant has been exercised in full, in which case, the Holder shall surrender this Class B Warrant to
the Company for cancellation within 3 Trading Days of the date the final Notice of Exercise is delivered to the Company. Partial
exercises of this Class B Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder
shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable
number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased
and the date of such purchases. In the event of any dispute or discrepancy, the records of the Company shall be controlling and
determinative in the absence of manifest error.


 






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ii.     In lieu
of the payment methods set forth in Section 2(a)(i) above, the Holder may elect to exchange all or some of this Class B
Warrant for shares of Common Stock equal to the value of the amount of the Class B Warrant being exchanged on the date of exchange.  If
Holder elects to exchange this Class B Warrant as provided in this Section 2(a)(ii), Holder shall tender to the Company
the Class B Warrant for the amount being exchanged, along with written notice of Holder’s election to exchange some or all
of the Class B 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 Class B 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).



 


b)            Exercise
Price. The exercise price per share of the Common Stock under this Class B Warrant shall be eleven and 25/100 ($0.1125)
cents1, subject to adjustment hereunder (the “Exercise
Price”).


 


c)            Exercise
Limitations. Holder shall not have the right to exercise any portion of this Class B Warrant, pursuant to Section 2 or otherwise,
to the extent that after giving effect to such issuance after exercise, the Holder (together with the Holder’s affiliates,
and any other person or entity acting as a group together with the Holder or any of the Holder’s affiliates), would beneficially
own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of this Section, beneficial ownership shall
be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. Holder
is solely responsible for any schedules required to be filed in accordance therewith. The Company shall have no obligation to verify
or confirm the accuracy of such filings. In any case, the number of outstanding shares of Common Stock shall be determined after
giving effect to the conversion or exercise of securities of the Company, including this Class B Warrant, by the Holder or its
affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial
Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving
effect to the issuance of Class B Warrant Shares issuable upon exercise of this Class B Warrant. The Holder, upon not less than
61 days’ prior notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section
2(c), provided that the Beneficial Ownership Limitation may not exceed 9.99% of the number of shares of the Common Stock outstanding
immediately after giving effect to the issuance of Class B Warrant Shares upon exercise of this Class B Warrant held by the Holder
and the provisions of this Section 2(c) shall continue to apply, unless the Holder upon not less than 61 days’ prior notice
to the Company determines to waive the Beneficial Ownership Limitation requirements described in this Section 2(c) in its entirety.
Any such increase or decrease will not be effective until the 61st day after such notice is delivered to the Company.
The limitations contained in this paragraph shall apply to a successor holder of this Class B Warrant.


 





 



1
150% of the conversion price of the Series A Preferred Stock of the Corporation.


 






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d)          Mechanics
of Exercise.


 


i.            Delivery
of Certificates Upon Exercise. Certificates for shares purchased hereunder shall be transmitted by the Company’s transfer
agent (the “Transfer Agent”) to the Holder by crediting the account of the Holder’s prime broker
with the Depository Trust Company through its Deposit Withdrawal Agent Commission (“DWAC”) system if
the Company is then a participant in such system and either (A) there is an effective registration statement permitting the resale
of the Class B Warrant Shares by the Holder or (B) the shares are eligible for resale without volume or manner-of-sale limitations
pursuant to Rule 144, and otherwise by physical delivery of certificates to the address specified by the Holder in the Notice of
Exercise within four (4) Trading Days from the delivery to the Company of the Notice of Exercise Form, surrender of this Class
B Warrant (if required) and payment of the aggregate Exercise Price as set forth above (the “Warrant Share Delivery
Date”). This Class B Warrant shall be deemed to have been exercised on the date the Exercise Price is received by
the Company. The Class B Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to be
named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Class B Warrant
has been exercised by payment to the Company of the Exercise Price and all taxes required to be paid by the Holder, if any, pursuant
to Section 2(d)(vi) prior to the issuance of such shares, have been paid. If the Company is obligated to and fails for any reason
to deliver to the Holder certificates evidencing the Class B Warrant Shares subject to a Notice of Exercise by the Class B Warrant
Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000
of Class B Warrant Shares subject to such exercise, $10 per Trading Day (increasing to $20 per Trading Day on the seventh Trading
Day after such liquidated damages begin to accrue) for each Trading Day after such Warrant Share Delivery Date until such certificates
are delivered.


 


ii.           Delivery
of New Warrants Upon Exercise. If this Class B Warrant shall have been exercised in part, the Company shall, at the request
of a Holder and upon surrender of this Class B Warrant certificate, at the time of delivery of the certificate or certificates
representing Class B Warrant Shares, deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased
Class B Warrant Shares called for by this Class B Warrant, which new Warrant shall in all other respects be identical with this
Class B Warrant.


 


iii.          Rescission
Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder a certificate or the certificates representing
the Class B Warrant Shares pursuant to Section 2(d)(i) by the Class B Warrant Share Delivery Date, then the Holder will have the
right to rescind such exercise.


 






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iv.          Compensation
for Buy-In on Failure to Timely Deliver Certificates Upon Exercise. In addition to any other rights available to the Holder,
if the Company fails for any reason to deliver to the Holder such certificate or certificates by the Class B Warrant Share Delivery
Date, and if after such Warrant Share Delivery Date the Holder is required by its brokerage firm to purchase (in an open market
transaction or otherwise), or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction
of a sale by the Holder of the Class B Warrant Shares which the Holder was entitled to receive upon the conversion relating to
such Warrant Share Delivery Date (a “Buy-In”), then the Company shall (A) pay in cash to the Holder (in
addition to any other remedies available to or elected by the Holder) the amount by which (x) the Holder’s total purchase
price (including any brokerage commissions) for the Common Stock so purchased exceeds (y) the product of (1) the aggregate number
of Class B Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue multiplied
by (2) the price at which the sell order giving rise to such purchase obligation was executed (including any brokerage commissions)
and (B) at the option of the Holder, either reinstate the portion of the Class B Warrant and equivalent number of Class B Warrant
Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder
the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery
obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In
with respect to an attempted exercise of this Class B Warrant with respect to which the sale price of the Class B Warrant Shares
(including any brokerage commissions) giving rise to such purchase obligation was a total of $10,000 under clause (A) of the immediately
preceding sentence, the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice
indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount
of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law
or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s
failure to timely deliver certificates representing Class B Warrant Shares upon exercise of this Class B Warrant as required pursuant
to the terms hereof.


 


v.           No Fractional
Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Class
B Warrant. As to any fraction of a share which Holder would otherwise be entitled to purchase upon such exercise, the Company shall,
at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied
by the Exercise Price or round up to the next whole share.


 


vi.          Charges,
Taxes and Expenses. Issuance of certificates for Class B Warrant Shares shall be made without charge to the Holder for any
issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses
shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be
directed by the Holder; provided, however, that in the event certificates for Class B Warrant Shares are to be issued
in a name other than the name of the Holder, this Class B Warrant when surrendered for exercise shall be accompanied by the assignment
form (“Assignment Form”) attached hereto as Exhibit B duly executed by the Holder and the Company may
require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.


 


vii.         Closing
of Books. The Company will not close its shareholder books or records in any manner which prevents the timely exercise of this
Class B Warrant, pursuant to the terms hereof.


 


Section 3.               Intentionally Omitted.


 






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Section 4.               Certain Adjustments.


 


a)            Stock
Dividends and Splits. If the Company, at any time while this Class B Warrant is outstanding: (i) pays a stock dividend or otherwise
make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable
in shares of Common Stock (which, for avoidance of doubt, shall not include any Class B Warrant Shares issued by the Company upon
exercise of this Class B Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines
(including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues by
reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price
shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares,
if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding
immediately after such event and the number of shares issuable upon exercise of this Class B Warrant shall be proportionately adjusted
such that the aggregate Exercise Price of this Class B Warrant shall remain unchanged. Any adjustment made pursuant to this Section
3(a) shall become effective immediately after the record date for the determination of shareholders entitled to receive such dividend
or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.


 


b)            Subsequent
Equity Sales. If the Company or any Subsidiary thereof, as applicable, at any time while this Class B Warrant is outstanding,
shall sell or grant any option to purchase, or sell or grant any right to reprice, or otherwise dispose of or issue (or announce
any offer, sale, grant or any option to purchase or other disposition) any Common Stock or Common Stock Equivalents entitling any
Person to acquire shares of Common Stock, at an effective price per share less than the then Exercise Price (such lower price,
the “Base Share Price” and such issuances collectively, a “Dilutive Issuance”)
(if the holder of the Common Stock or Common Stock Equivalents so issued shall at any time, whether by operation of purchase price
adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights
per share which are issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price
per share which is less than the Exercise Price, such issuance shall be deemed to have occurred for less than the Exercise Price
on such date of the Dilutive Issuance), then, the Exercise Price shall be reduced and only reduced to equal the Base Share Price
and the number of Class B Warrant Shares issuable hereunder shall be increased such that the aggregate Exercise Price payable hereunder,
after taking into account the decrease in the Exercise Price, shall be equal to the aggregate Exercise Price prior to such adjustment.
Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued. The Company shall notify the Holder,
in writing, no later than the Trading Day following the issuance of any Common Stock or Common Stock Equivalents subject to this
Section 4(b), indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion price and
other pricing terms (such notice, the “Dilutive Issuance Notice”). For purposes of clarification, whether
or not the Company provides a Dilutive Issuance Notice pursuant to this Section 4(b), upon the occurrence of any Dilutive Issuance,
after the date of such Dilutive Issuance the Holder is entitled to receive a number of Class B Warrant Shares based upon the Base
Share Price regardless of whether the Holder accurately refers to the Base Share Price in the Notice of Exercise Notwithstanding
the foregoing or any other provision of this Class B Warrant to the contrary, no adjustments shall be made, paid or issued under
this Section 4(b) in respect of an Exempt Issuance.


 






    	 	7



     


    

 


c)            Subsequent
Rights Offerings. In addition to any adjustments pursuant to the other subsections of this Section 4, if at any time the Company
grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata
to the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder
will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder
could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Class
B Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation)
immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such
record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or
sale of such Purchase Rights (provided, however, to the extent that the Holder’s right to participate in any such Purchase
Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate
in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right
to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its
right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).


 


d)            Pro
Rata Distributions. If the Company, at any time while this Class B Warrant is outstanding, shall distribute to all holders
of Common Stock (and not to the Holder) evidences of its indebtedness or assets (including cash and cash dividends) or rights or
warrants to subscribe for or purchase any security other than the Common Stock, then in each such case the Exercise Price shall
be adjusted by multiplying the Exercise Price in effect immediately prior to the record date fixed for determination of stockholders
entitled to receive such distribution by a fraction of which the denominator shall be the VWAP determined as of the record date
mentioned above, and of which the numerator shall be such VWAP on such record date less than the per share fair market value at
such record date of the portion of such assets or evidence of indebtedness or rights or warrants so distributed applicable to one
outstanding share of the Common Stock as determined by the Board of Directors in good faith. In either case the adjustments shall
be described in a statement provided to the Holder of the portion of assets or evidences of indebtedness so distributed or such
subscription rights applicable to one share of Common Stock. Such adjustment shall be made whenever any such distribution is made
and shall become effective immediately after the record date mentioned above.


 






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e)            Fundamental
Transaction. If, at any time while this Class B Warrant is outstanding, (i) the Company effects any merger or consolidation
of the Company with or into another Person, (ii) the Company effects any sale of all or substantially all of its assets in one
or a series of related transactions, (iii) any tender offer or exchange offer (whether by the Company or another Person) is completed
pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property
or (iv) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common
Stock is effectively converted into or exchanged for other securities, cash or property (each “Fundamental Transaction”),
then, upon any subsequent exercise of this Class B Warrant, the Holder shall have the right to receive, for each Warrant Share
that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, the number
of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and
any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental
Transaction by a holder of the number of shares of Common Stock for which this Class B Warrant is exercisable immediately prior
to such Fundamental Transaction. For purposes of any such exercise, the determination of the Exercise Price shall be appropriately
adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share
of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration
in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of
Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the
Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Class B Warrant following
such Fundamental Transaction. To the extent necessary to effectuate the foregoing provisions, any successor to the Company or surviving
entity in such Fundamental Transaction shall issue to the Holder a new warrant consistent with the foregoing provisions and evidencing
the Holder’s right to exercise such warrant into Alternate Consideration. The terms of any agreement pursuant to which a
Fundamental Transaction is effected shall include terms requiring any such successor or surviving entity to comply with the provisions
of this Section 4(d) and insuring that this Class B Warrant (or any such replacement security) will be similarly adjusted upon
any subsequent transaction analogous to a Fundamental Transaction. Notwithstanding anything to the contrary, in the event of a
Fundamental Transaction that is (1) an all cash transaction, (2) a “Rule 13e-3 transaction” as defined in Rule 13e-3
under the Exchange Act, or (3) a Fundamental Transaction involving a person or entity not traded on a national securities exchange,
the Company or any successor entity shall pay concurrently with the consummation of the Fundamental Transaction, and the Holder
shall accept an amount of cash equal to the value of this Class B Warrant as determined in accordance with the Black Scholes Option
Pricing Model obtained from the “OV” function on Bloomberg L.P. using (A) a price per share of Common Stock equal to
the VWAP of the Common Stock for the Trading Day immediately preceding the date of consummation of the applicable Fundamental Transaction,
(B) a risk-free interest rate corresponding to the U.S. Treasury rate for a 30 day period immediately prior to the consummation
of the applicable Fundamental Transaction, (C) an expected volatility equal to the 100 day volatility obtained from the “HVT”
function on Bloomberg L.P. determined as of the Trading Day immediately following the public announcement of the applicable Fundamental
Transaction and (D) a remaining option time equal to the time between the date of the public announcement of such transaction and
the Termination Date; provided that in each case where Bloomberg L.P. data is being relied upon, Holder shall provide to the Company
a copy of such information for the Company's records.


 


f)            Calculations. All
calculations under this Section 4 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For
purposes of this Section 4, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be
the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.


 


g)            Notice
to Holder.


 


i.            Adjustment
to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 4, the Company shall promptly
mail to the Holder a notice setting forth the Exercise Price after such adjustment and setting forth a brief statement of the facts
requiring such adjustment.


 


ii.           Notice
to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the
Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the
Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares
of capital stock of any class or of any rights, (D) the approval of any shareholders of the Company shall be required in connection
with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer
of all or substantially all of the assets of the Company, of any compulsory share exchange whereby the Common Stock is converted
into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation
or winding up of the affairs of the Company, then, in each case, the Company shall cause to be mailed to the Holder at its last
address as it shall appear upon the Class B Warrant Register of the Company, at least 20 calendar days prior to the applicable
record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose
of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders
of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined
or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective
or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their
shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger,
sale, transfer or share exchange; provided that the failure to mail such notice or any defect therein or in the mailing thereof
shall not affect the validity of the corporate action required to be specified in such notice. The Holder is entitled to exercise
this Class B Warrant during the period commencing on the date of such notice to the effective date of the event triggering such
notice.


 






    	 	9



     


    

 


Section 5.               Transfer of Warrant.


 


a)            Transferability.
Subject to compliance with any applicable securities laws and the conditions set forth in Section 5(d) herein and to the provisions
of the Subscription Agreement, this Class B Warrant and all rights hereunder (including, without limitation, any registration rights)
are transferable, in whole or in part, upon surrender of this Class B Warrant at the principal office of the Company or its designated
agent, together with a written assignment of this Class B Warrant substantially in the form attached hereto duly executed by the
Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such
surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee
or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue
to the assignor a new Warrant evidencing the portion of this Class B Warrant not so assigned, and this Class B Warrant shall promptly
be cancelled. The Warrant, if properly assigned, may be exercised by a new holder for the purchase of Class B Warrant Shares without
having a new Warrant issued.


 


b)            New
Class B Warrants. This Class B Warrant may be divided or combined with other Class B Warrants upon presentation hereof at the
aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Class B Warrants
are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 5(a), as to any transfer which
may be involved in such division or combination, the Company shall execute and deliver a new Class B Warrant or Class B Warrants
in exchange for this Class B Warrant or Warrants to be divided or combined in accordance with such notice. All Class B Warrants
issued on transfers or exchanges shall be dated the Initial Exercise Date and shall be identical with this Class B Warrant except
as to the number of Class B Warrant Shares issuable pursuant thereto.


 


c)            Class
B Warrant Register. The Company shall register this Class B Warrant, upon records to be maintained by the Company for that
purpose (the “Class B Warrant Register”), in the name of the record Holder hereof from time to time.
The Company may deem and treat the registered Holder of this Class B Warrant as the absolute owner hereof for the purpose of any
exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.


 






    	 	10



     


    

 


d)            Transfer
Restrictions. If, at the time of the surrender of this Class B Warrant in connection with any transfer of this Class B Warrant,
the transfer of this Class B Warrant shall not be either (i) registered pursuant to an effective registration statement under the
Securities Act and under applicable state securities or blue sky laws or (ii) eligible for resale without volume or manner-of-sale
restrictions pursuant to Rule 144, the Company may require, as a condition of allowing such transfer, that the Holder or transferee
of this Class B Warrant, as the case may be, comply with the provisions of the Subscription Agreement.


 


Section 6.               Miscellaneous.


 


a)            No Rights
as Shareholder Until Exercise. This Class B Warrant does not entitle the Holder to any voting rights or other rights as a shareholder
of the Company prior to the exercise hereof.


 


b)            Loss,
Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Class B Warrant or any stock certificate relating to the
Class B Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which,
in the case of the Class B Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant
or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated
as of such cancellation, in lieu of such Warrant or stock certificate.


 


c)            Saturdays,
Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or
granted herein shall not be a Business Day, then, such action may be taken or such right may be exercised on the next succeeding
Business Day.


 


d)            Authorized
Shares.


 


Subject to Stockholder
Approval (as such term is defined in the Subscription Agreement), the Company covenants that, during the period this Class B Warrant
is outstanding, it will reserve from its authorized and unissued Common Stock one hundred (100%) of the number of shares to provide
for the issuance of the Class B Warrant Shares upon the exercise of any purchase rights under this Class B Warrant. In case such
amount of Common Stock is insufficient at any time, the Company shall call and hold a special meeting to increase the number of
authorized shares of common stock. Management of the Company shall recommend to shareholders to vote in favor of increasing the
number of authorized shares of common stock.


 


The Company further
covenants that its issuance of this Class B Warrant shall constitute full authority to its officers who are charged with the duty
of executing stock certificates to execute and issue the necessary certificates for the Class B Warrant Shares upon the exercise
of the purchase rights under this Class B Warrant. The Company will take all such reasonable action as may be necessary to assure
that such Class B Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of
any requirements of the Trading Market upon which the Common Stock may be listed. The Company covenants that all Class B Warrant
Shares which may be issued upon the exercise of the purchase rights represented by this Class B Warrant will, upon exercise of
the purchase rights represented by this Class B Warrant, be duly authorized, validly issued, fully paid and nonassessable and free
from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer
occurring contemporaneously with such issue).


 






    	 	11



     


    

 


Except and
to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending
its amended and restated certificate of incorporation, as amended, or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of this Class B Warrant, but will at all times in good faith assist in the carrying out of all such terms and
in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Class
B Warrant against impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the par value
of any Class B Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value,
(ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid
and nonassessable Class B Warrant Shares upon the exercise of this Class B Warrant and (iii) use commercially reasonable efforts
to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be,
necessary to enable the Company to perform its obligations under this Class B Warrant.


 


Before taking
any action which would result in an adjustment in the number of Class B Warrant Shares for which this Class B Warrant is exercisable
or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be
necessary from any public regulatory body or bodies having jurisdiction thereof.


 


e)            Jurisdiction.
All questions concerning the construction, validity, enforcement and interpretation of this Class B Warrant shall be determined
in accordance with the provisions of the Subscription Agreement.


 


f)             Restrictions.
The Holder acknowledges that the Class B Warrant Shares acquired upon the exercise of this Class B Warrant, if not registered,
will have restrictions upon resale imposed by state and federal securities laws.


 


g)            Nonwaiver
and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate
as a waiver of such right or otherwise prejudice Holder’s rights, powers or remedies, notwithstanding the fact that all rights
hereunder terminate on the Termination Date. If the Company willfully and knowingly fails to comply with any provision of this
Class B Warrant, which results in any material damages to the Holder, the Company shall pay to Holder such amounts as shall be
sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of
appellate proceedings, incurred by Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights,
powers or remedies hereunder.


 


h)            Notices.
Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered
in accordance with the notice provisions of the Subscription Agreement.


 


i)             Limitation
of Liability. No provision hereof, in the absence of any affirmative action by Holder to exercise this Class B Warrant to purchase
Class B Warrant Shares, and no enumeration herein of the rights or privileges of Holder, shall give rise to any liability of Holder
for the purchase price of any Common Stock or as a shareholder of the Company, whether such liability is asserted by the Company
or by creditors of the Company.


 






    	 	12



     


    

 


j)             Remedies.
The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled
to specific performance of its rights under this Class B Warrant. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions of this Class B Warrant and hereby agrees to
waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.


 


k)            Successors
and Assigns. Subject to applicable securities laws, this Class B Warrant and the rights and obligations evidenced hereby shall
inure to the benefit of and be binding upon the successors of the Company and the successors and permitted assigns of Holder. The
provisions of this Class B Warrant are intended to be for the benefit of all Holders from time to time of this Class B Warrant
and shall be enforceable by the Holder or holder of Class B Warrant Shares.


 


l)             Amendment.
This Class B Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the
Holder.


 


m)           Severability.
Wherever possible, each provision of this Class B Warrant shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Class B Warrant shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or
the remaining provisions of this Class B Warrant.


 


n)            Headings.
The headings used in this Class B Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a
part of this Class B Warrant.


 


[Signature Page Follows.]


 




    	 	13



     


    


 


IN WITNESS WHEREOF, the
Company has caused this Class B Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.


 


	PROTEA BIOSCIENCES GROUP, INC.	 
	 	 	 
	By:	 	 
	 	Name: Stephen Turner	 
	 	Title: Chief Executive Officer	 


 




    	 	 



     


    


 


 


EXHIBIT A


 


NOTICE OF EXERCISE


 


TO:PROTEA BIOSCIENCES GROUP, INC.


 


(1)         The undersigned hereby elects to purchase
________ Class B Warrant Shares of the Company pursuant to the terms of the attached Warrant and tenders herewith payment of the
exercise price in full, together with all applicable transfer taxes, if any.


 


(2)          Payment shall take the form of (check applicable box):


 


 ̈
in lawful money of the United States; or


 


 ̈
[if permitted] the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection
2(a)(ii), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise
procedure set forth in subsection 2(a)(ii).


 


(3)          Please issue a certificate or certificates
representing said Class B Warrant Shares in the name of the undersigned or in such other name as is specified below:


 


	 	 	 


 


The Class B Warrant Shares shall be delivered to the following DWAC
Account Number or by physical delivery of a certificate to:


 


	 	 	 


 


	 	 	 


 


	 	 	 


 


(4)          Accredited Investor. The undersigned
is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.


 


[SIGNATURE OF HOLDER]


 


Name of Investing Entity: ________________________________________________


 


Signature of Authorized Signatory of Investing Entity: ______________________


 


Name of Authorized Signatory: _______________________________


 


Title of Authorized Signatory: _________________________________________


 


Date: __________________________________________________________________


 






    	 	 



     


    

 


EXHIBIT B


 


ASSIGNMENT FORM


 


(To assign the foregoing warrant, execute

this form and supply required information.

Do not use this form to exercise the warrant.)


 


FOR VALUE RECEIVED, [____] all of or [_______]
shares of the foregoing Warrant and all rights evidenced thereby are hereby assigned to


 


_______________________________________________ whose address is


 


_______________________________________________________________.


 


_______________________________________________________________


 


Dated: ______________, _______            


 


Holder’s Signature:     _____________________________


Holder’s Address:       _____________________________


                                       _____________________________


 


Signature Guaranteed: ___________________________________________


 


NOTE: The signature to this Assignment Form must correspond with
the name as it appears on the face of the Class B Warrant, without alteration or enlargement or any change whatsoever, and must
be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.