Exhibit 10.2 


 





PROTEA BIOSCIENCES GROUP,
INC.


 


REGISTRATION RIGHTS AGREEMENT


 


THIS REGISTRATION
RIGHTS AGREEMENT (the “Agreement”), dated as of the date set forth on the signature page hereto,
is made by and between Protea Biosciences Group, Inc., a Delaware corporation (the “Company”)
and the undersigned investor (the “Investor”).


RECITALS


 


WHEREAS, in
connection with that certain Subscription Agreement of even date herewith by and between the Company and the Investor (the “Subscription
Agreement”) the Investor purchased from the Company, certain units (the “Units”), each
Unit consisting of (a) 10,000 shares of our Series A convertible preferred stock, par value $0.0001 per share and $1.00 stated
or liquidation value per share (the “Series A Preferred Stock”), (b) 18 month warrants to purchase up
to 133,333 shares of common stock, par value $0.0001 per share (the “Common Stock”), at an exercise price
of $0.09 per share (the “Class A Warrants”), and (c) five year warrants purchase up to 133,333 shares
of Common Stock at an exercise price of $0.1125 per share (the “Class B Warrants” and together with the
Class A Warrants, collectively, the “Warrants”). .


 


WHEREAS, to
induce the Investor to purchase the Units, the Company has agreed to grant the Investor certain rights with respect to registration
of Registrable Securities under the Securities Act pursuant to the terms of this Agreement.


 


AGREEMENT


 


NOW,
THEREFORE, the Company and the Investor hereby covenant and agree as follows:


 


1.          Recitals.
The recitals set forth above are true and correct and are incorporated herein by reference.


 


2.          Certain
Definitions. As used in this Agreement, the following terms shall have the following respective meanings:


 


“Agreement”
shall have the meaning set forth in the Preamble hereof.


 


“Automatic Registration
Statement” shall have the meaning set forth in Section 3(a) of this Agreement.


 


“Closing”
shall mean the closing of the sale of the Units in which the Investor purchased the Units.


 


“Closing Date”
means the date on which the Closing occurred.


 


“Class A Warrants”
shall have the meaning set forth in the Preamble hereof.


 


“Class B Warrants”
shall have the meaning set forth in the Preamble hereof.


 




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“Commission”
shall mean the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act.


 


“Common Stock” shall have
the meaning set forth in the Preamble hereof.


 


“Company”
shall have the meaning set forth in the Preamble hereof.


 


“Conversion
Shares” shall mean the shares of Common Stock to be issued upon conversion of the Series A Preferred Stock.


 


“Effectiveness
Date” shall mean that date which is thirty (30) days following the date on which the Company is notified that the
Commission will not review the Automatic Registration Statement (and in such case of no Commission review, not later than sixty
(60) days following the Filing Deadline) or, in the event of a Commission review, within one hundred eighty (180) days following
the Filing Date.


 


“Effectiveness
Period” shall have the meaning set forth in Section 3(a) of this Agreement.


 


“Event”
shall have the meaning set forth in Section 3(c) of this Agreement.


 


“Event Date”
shall have the meaning set forth in Section 3(c) of this Agreement.


 


“Exchange Act”
shall mean the Securities Exchange Act of 1934, as amended.


 


“Excluded
Registrable Securities” shall have the meaning set forth in Section 4(a) of this Agreement.


 


“Existing
Registrable Securities” shall mean up to an aggregate of 365,979,481 shares of Common Stock outstanding, or shares
of Common Stock underlying outstanding warrants of the Company, as of the initial Closing which are subject to piggy-back registration
rights


 


“Filing
Date” shall mean that date which is forty five (45) days following the Final Closing Date and, with
respect to any additional Registration Statements which may be required herein, the earliest practical date on which the Company
is permitted by SEC Guidance to file such additional Registration Statement related to the Registrable Securities.


 


“Final Closing
Date” means the final closing date of the Offering after which the Company ceases to offer the Units for sale.


 


“Investor”
shall have the meaning set forth in the Preamble hereof.


 


“Investor Representative”
shall mean legal counsel appointed to represent the Investors.


 


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


 


“Order
of Cutback” shall have the meaning set forth in Section 3(a) of this Agreement.


 


“Piggyback
Registration” shall have the meaning set forth in Section 4(a) of this Agreement.


 




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“Prospectus”
means the prospectus included in a Registration Statement (including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated
by the Commission pursuant to the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the
terms of the offering of any portion of the Registrable Securities covered by a Registration Statement, and all other amendments
and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to
be incorporated by reference in such Prospectus.


“Purchase
Agreement” shall have the meaning set forth in the Preamble hereof.


 


“Purchase
Price” shall have the meaning set forth in the Purchase Agreement.


 


“Register,”
“registered” and “registration” each shall refer to a registration of the Registrable
Securities effected by preparing and filing a Registration Statement or statements or similar documents in compliance with the
Securities Act and the declaration or ordering of effectiveness of such Registration Statement or document by the Commission.


 


“Registrable
Securities” shall mean (a) all Conversion Shares then issuable upon conversion of the Series A Preferred Stock included
in the Units delivered to Investor in connection with the Offering, (b) all Warrant Shares then issuable upon exercise of the Warrants
included in the Units delivered to Investor in connection with the Offering (assuming on such date the Warrants are exercised in
full without regard to any exercise limitations therein), (c) all shares of Common Stock issuable upon exercise of the warrants
to be issued to Laidlaw and its agents in connection with the Offering (assuming on such date such warrants are exercised in full
without regard to any exercise limitations therein) and (d) any securities issued or then
issuable upon any stock split, dividend or other distribution, recapitalization or similar event with respect to the foregoing;
provided, however, that any such Registrable Securities shall cease to be Registrable Securities (i) when subject
to an effective Registration Statement under the Securities Act as provided for hereunder, (ii) upon any sale pursuant to a Registration
Statement or Rule 144 under the Securities Act or (iii) at such time such securities become eligible for resale without volume
or manner-of-sale restrictions and without current public information pursuant to Rule 144 as set forth in a written opinion letter
to such effect, addressed, delivered and acceptable to the Transfer Agent and the affected Investors.


 


“Registration
Statement” means any registration statement required to be filed hereunder pursuant to Sections 3 or 4 and any additional
registration statements contemplated herein, including (in each case) the Prospectus, amendments and supplements to any such registration
statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference
or deemed to be incorporated by reference in any such registration statement.


 


“Rule
415” means Rule 415 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or
interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same
purpose and effect as such Rule.


 


“Rule
424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or
interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same
purpose and effect as such Rule.


 




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“SEC
Guidance” means (i) any publicly-available written or oral guidance, comments, requirements or requests of the Commission
staff and (ii) the Securities Act.


 


“Securities Act” shall
mean the Securities Act of 1933, as amended.


 


“Series A Preferred Stock”
shall have the meaning set forth in the Preamble hereof.


 


“Shares” shall have the
meaning set forth in the Preamble hereof.


 


“Subscription Agreement”
shall have the meaning set forth in the first Recital hereof.


 


“Warrants” shall have
the meaning set forth in the Preamble hereof.


 


“Warrant
Shares” shall mean the shares of Common Stock to be issued upon exercise of the Warrants.


 


“Units”
shall have the meaning set forth in the Preamble hereof.


 


Capitalized
terms used but not defined herein shall have the meanings set forth in the Subscription Agreement.


 


3.          Automatic
Registration.


 


(a)          On
or prior to the Filing Date, the Company shall prepare and file with the Commission a registration statement (the “Automatic
Registration Statement”) covering the resale of all of the Registrable Securities and (2) the Existing Registrable
Securities for an offering to be made on a continuous basis pursuant to Rule 415.


 








Except as
contemplated in the immediately preceding paragraph, the Company agrees that it will not file any other registration statement
that does not include all of the Registrable Securities prior to the Filing Deadline. The Automatic Registration Statement required
hereunder shall be on Form S-1 or Form S-3, as applicable, and shall contain substantially the “Plan of Distribution”
attached hereto as Annex A. Subject to the terms of this Agreement, the Company shall use its reasonable best efforts to
cause the Automatic Registration Statement to be declared effective under the Securities Act as promptly as possible after the
filing thereof, but in any event not later than the Effectiveness Date, and shall use its best efforts to keep the Automatic Registration
Statement continuously effective under the Securities Act until the earlier of the date when all Registrable Securities covered
by the Registration Statement have been sold thereunder or pursuant to Rule 144 or (ii) may be sold without volume or manner-of-sale
restrictions pursuant to Rule 144 and without the requirement for the Company to be in compliance with the current public information
requirement under Rule 144, as determined by counsel to the Company pursuant to a written opinion letter to such effect, addressed
and acceptable to the Company’s transfer agent and the Investor (the “Effectiveness Period”).
The maximum amount of Registrable Securities or Existing Registrable Securities that may be included in the Automatic Registration
Statement at any one time shall be limited by Rule 415 or as may otherwise be required by the Commission. In the event that there
is a limitation by the Commission on the number of Registrable Securities or Existing Registrable Securities that may be included
for registration on the Automatic Registration Statements at one time, the removal of the securities shall be applied, first to,
the Existing Registrable Securities on a pro rata basis then, to the Conversion Shares on a pro rata basis then, to the Warrant
Shares underlying the Class A Warrants on a pro rata basis and finally to the Warrant Shares underlying the Class B Warrants on
a pro rata basis (the “Order of Cutback”). In the event, any Registrable Securities shall be removed
from the Registration Statement, the Company shall promptly advise any Investor holding such Registrable Securities and use its
best efforts to file an additional Automatic Registration Statement covering such ineligible Registrable Securities, on a pro-rata
basis, within 30 days of the date such securities become eligible for registration, which date shall be determined by the Commission,
and shall use its best efforts to cause such Automatic Registration Statement to be declared effective by the Commission as soon
as reasonably practicable. In addition, if following the initial filing of the Automatic Registration Statement, the Company reasonably
determines for any reason, after consultation with the Placement Agent, that the offering which is subject to the Automatic Registration
Statement needs to be cut back then the Company may cut back the number of Registrable Securities or Existing Registrable Securities
subject to the Automatic Registration Statement in accordance with the Order of Cutback.












 




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(b)          At
any time after the Automatic Registration Statement has become effective, the Company may, upon giving prompt written notice of
such action to the Investor, suspend the use of any such Automatic Registration Statement if, in the good faith judgment of the
Company, the use of the Automatic Registration Statement covering the Registrable Securities would be detrimental to the Company
or its stockholders at such time and the Company concludes, as a result, that it is in the best interests of the Company or its
stockholders to suspend the use of such Automatic Registration Statement at such time. The Company shall have the right to suspend
such Automatic Registration Statement for a period of not more than thirty (30) consecutive days from the date the Company notifies
the Investor of such suspension, with such suspension not to exceed an aggregate of sixty (60) days (whether or not consecutive)
during any 12-month period. In the case of the suspension of any effective Automatic Registration Statement, the Investor, immediately
upon receipt of notice thereof from the Company, will discontinue any sales of Registrable Securities pursuant to such Registration
Statement until advised in writing by the Company that the use of such Automatic Registration Statement may be resumed.


 


(c)          If: (i)
the Automatic Registration Statement is not filed on or prior to its Filing Date (if the Company files the Automatic Registration
Statement without affording the Investor Representative the opportunity to review and comment on the same as required by Section
5(a) herein, the Company shall be deemed to have not satisfied this clause (i)), (ii) a Registration Statement registering for
resale all of the Registrable Securities is not declared effective by the Commission by the Effectiveness Date (unless the reason
for such non-registration of all or any portion of the Registrable Securities is as a result of SEC Guidance under Rule 415 or
similar rule which limits the number of Registrable Securities which may be included in a registration statement with respect
to the Investors), or (iii) after the effective date of a Registration Statement, such Registration Statement ceases for any reason
to remain continuously effective as to all Registrable Securities included in such Registration Statement, or the Investors are
otherwise not permitted to utilize the prospectus therein to resell such Registrable Securities, for more than ten (10) consecutive
calendar days or more than an aggregate of fifteen (15) calendar days during any 12-month period (any such failure or breach being
referred to as an “Event”, and for purposes of clause (i), the date on which such Event occurs, and
for purpose of clause (ii) the date on which such ten (10) or fifteen (15) calendar day period, as applicable, is exceeded being
referred to as an “Event Date”), then, in addition to any other rights the Investors may have hereunder
or under applicable law, on each such Event Date and on each monthly anniversary of each such Event Date (if the applicable Event
shall not have been cured by such date) until the applicable Event is cured, the Company shall pay to each Investor an amount
in cash, as partial liquidated damages and not as a penalty, equal to 1.0% of the aggregate purchase price paid by such Investor
pursuant to the Subscription Agreement and Purchase Agreement. The parties agree that the maximum aggregate liquidated damages
payable to an Investor under this Agreement shall be 6% of the aggregate Purchase Price paid by such Investor pursuant to the
Purchase Agreement. If the Company fails to pay any partial liquidated damages pursuant to this Section in full within seven days
after the date payable, the Company will pay interest thereon at a rate of 18% per annum (or such lesser maximum amount that is
permitted to be paid by applicable law) to the Investor, accruing daily from the date such partial liquidated damages are due
until such amounts, plus all such interest thereon, are paid in full. The partial liquidated damages pursuant to the terms hereof
shall apply on a daily pro rata basis for any portion of a month prior to the cure of an Event. Notwithstanding the foregoing,
no payments shall be owed with respect to any period during which all of the holder’s Registrable Shares may be sold by
such holder under Rule 144 without volume or manner-of-sale restrictions pursuant to Rule 144 and without the requirement for
the Company to be in compliance with the current public information requirement under Rule 144.







 




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4.          Piggyback
Registrations.


 


(a)          With
respect to any Registrable Securities not otherwise included in the Automatic Registration Statement or any other Registration
Statement as a result of any limitation imposed by the Commission under Rule 415 (the “Excluded Registrable Securities”),
whenever the Company proposes to register (including, for this purpose, a registration effected by the Company for other shareholders)
any of its securities under the Securities Act (other than pursuant to (i) an Automatic Registration pursuant to Section 3 hereof
or (ii) registration pursuant to a registration statement on Form S-4 or S-8 or any successor forms thereto), and the registration
form to be used may be used for the registration of Registrable Securities (a “Piggyback Registration”),
the Company will give written notice to the holder of Excluded Registrable Securities of its intention to effect such a registration
and will, subject to the provisions of Subsection 4(b) hereof, include in such registration all Excluded Registrable Securities
with respect to which the Company has received a written request for inclusion therein within twenty (20) days after the receipt
of the Company’s notice.


 


(b)          If
a Piggyback Registration is an underwritten secondary registration on behalf of holders of the Company’s securities, and
the managing underwriters advise the Company in writing that in their opinion the number of securities requested to be included
in such registration exceeds the number which can be sold in such offering without adversely affecting the marketability of the
offering, the Company will include in such registration a pro rata share of Excluded Registrable Securities requested to be included
in such Registration Statement as calculated by dividing the number of Excluded Registrable Securities requested to be included
in such Registration Statement by the number of the Company’s securities requested to be included in such Registration Statement
by all selling security holders. In such event, the holder of Excluded Registrable Securities shall continue to have registration
rights under this Agreement with respect to any Excluded Registrable Securities not so included in such Registration Statement.


 


(c)          Notwithstanding
the foregoing, if, at any time after giving a notice of Piggyback Registration and prior to the effective date of the Registration
Statement filed in connection with such registration, the Company shall determine for any reason not to register or to delay registration
of such securities, the Company may, at its election, give written notice of such determination to each record holder of Excluded
Registrable Securities and, following such notice, (i) in the case of a determination not to register, shall be relieved of its
obligation to register any Excluded Registrable Securities in connection with such registration, and (ii) in the case of determination
to delay registering, shall be permitted to delay registering any Excluded Registrable Securities for the same period as the delay
in registering such other securities.


 


5.          Lock-Up
of Registrable Securities.  Notwithstanding anything to the
contrary, express or implied, contained in this Agreement, in the event and to the extent that the Company and the managing
underwriter or placement agent in connection with any proposed public offering of the Company’s securities shall, in
the exercise of their joint good faith judgment, determine that immediate resales by holders of Registrable Securities could
have a material adverse effect on the Company’s ability to complete the such offering, the Company and such managing
underwriter or placement agent may restrict resales of such Registrable Securities (a “Lock-Up”)
for a period of up to ninety (90) days following the effective date of such offering; provided, that, the
foregoing right to effect a Lock-Up is subject to consummation of the sale or registration for resale of not less than
$15,000,000 of the securities offered for the account of the Company. In connection with the foregoing, appropriate stop
transfer instructions with respect to the Registrable Securities may be given to the transfer agent of the Company.


 




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6.          Registration
Procedures. If and whenever the Company is required to affect the registration of any Registrable Securities under the terms
herein, the Company will:


 


(a)          
not less than five (5) business days prior to the filing of each Registration Statement and not less than one (1) business day
prior to the filing of any related Prospectus or any amendment or supplement thereto (including any document that would be incorporated
or deemed to be incorporated therein by reference), (i) furnish to each seller of Registrable Securities, copies of all such documents
proposed to be filed, which documents (other than those incorporated or deemed to be incorporated by reference) will be subject
to the review of such sellers, and (ii) cause its officers and directors, counsel and independent registered public accountants
to respond to such inquiries as shall be necessary, in the reasonable opinion of respective counsel to each seller of Registrable
Securities, to conduct a reasonable investigation within the meaning of the Securities Act. Notwithstanding the above, the Company
shall not be obligated to provide each seller of Registrable Securities advance copies of any universal shelf registration statement
registering securities in addition to those required hereunder, or any Prospectus prepared thereto;  


 


(b)          prepare
and file with the Commission the Registration Statement with respect to such securities and use its best efforts to cause such
Registration Statement to become effective in an expeditious manner;


 


(c)          (i)
prepare and file with the Commission such amendments, including post-effective amendments, to a Registration Statement and the
Prospectus used in connection therewith as may be necessary to keep a Registration Statement continuously effective as to the applicable
Registrable Securities for the Effectiveness Period and prepare and file with the Commission such additional Registration Statements
in order to register for resale under the Securities Act all of the Registrable Securities, (ii) cause the related Prospectus to
be amended or supplemented by any required Prospectus supplement (subject to the terms of this Agreement), and, as so supplemented
or amended, to be filed pursuant to Rule 424, (iii) respond as promptly as reasonably possible to any comments received from the
Commission with respect to a Registration Statement or any amendment thereto and provide as promptly as reasonably possible to
each seller of Registrable Securities true and complete copies of all correspondence from and to the Commission relating to a Registration
Statement (provided that, the Company shall excise any information contained therein which would constitute material non-public
information regarding the Company), and (iv) comply in all material respects with the applicable provisions of the Securities Act
and the Exchange Act, with respect to the disposition of all Registrable Securities covered by a Registration Statement during
the applicable period in accordance (subject to the terms of this Agreement) with the intended methods of disposition by each seller
of Registrable Securities thereof set forth in such Registration Statement as so amended or in such Prospectus as so supplemented;


 


(d)          furnish
to each seller of Registrable Securities and to each underwriter such number of copies of the Registration Statement and the Prospectus
included therein (including each preliminary prospectus) as such persons reasonably may request in order to facilitate the intended
disposition of the Registrable Securities covered by such Registration Statement;


 




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(e)          
if during the Effectiveness Period, the number of Registrable Securities at any time exceeds 100% of the
number of shares of Common Stock then registered in a Registration Statement, then the Company shall file an additional Registration
Statement covering such ineligible Registrable Securities, on a pro-rata basis, within 60 days of the date such securities become
eligible for registration, which date shall be determined by the Commission, and shall use its best efforts to cause such Registration
Statement to be declared effective by the Commission as soon as reasonably practicable;


 


(f)          use
its commercially reasonable efforts (i) to register or qualify the Registrable Securities covered by such Registration Statement
under the state securities or “blue sky” laws of such jurisdictions as the sellers of Registrable Securities or, in
the case of an underwritten public offering, the managing underwriter, reasonably shall request, (ii) to prepare and file in those
jurisdictions such amendments (including post-effective amendments) and supplements, and take such other actions, as may be necessary
to maintain such registration and qualification in effect at all times for the period of distribution contemplated thereby and
(iii) to take such further action as may be necessary or advisable to enable the disposition of the Registrable Securities in such
jurisdictions, provided, that the Company shall not for any such purpose be required to qualify generally to transact business
as a foreign corporation in any jurisdiction where it is not so qualified or to consent to general service of process in any such
jurisdiction;


 


(g)          use
its commercially reasonable efforts to list the Registrable Securities covered by such Registration Statement with any securities
exchange on which the common stock of the Company is then listed;


 


(h)          immediately
notify each seller of Registrable Securities and each underwriter under such Registration Statement, at any time when a Prospectus
relating thereto is required to be delivered under the Securities Act, of the happening of any event of which the Company has knowledge
as a result of which the Prospectus contained in such Registration Statement, as then in effect, includes any untrue statement
of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing and promptly amend or supplement such Registration Statement to correct
any such untrue statement or omission;


 


(i)          if
the offering is an underwritten offering, enter into a written agreement with the managing underwriter selected in the manner herein
provided in such form and containing such provisions as are usual and customary in the securities business for such an arrangement
between such underwriter and companies of the Company’s size and investment stature, including, without limitation, customary
indemnification and contribution provisions;


 


(j)          if
the offering is an underwritten offering, at the request of any seller of Registrable Securities, furnish to such seller on the
date that Registrable Securities are delivered to the underwriters for sale pursuant to such registration: (i) a copy of an opinion,
dated such date, of counsel representing the Company for the purposes of such registration, addressed to the underwriters, stating
that such Registration Statement has become effective under the Securities Act and that (A) to the knowledge of such counsel, no
stop order suspending the effectiveness thereof has been issued and no proceedings for that purpose have been instituted or are
pending or contemplated under the Securities Act, (B) the Registration Statement, the related Prospectus and each amendment or
supplement thereof comply as to form in all material respects with the requirements of the Securities Act (except that such counsel
need not express any opinion as to financial statements or other financial or statistical information contained therein) and (C)
to such other effects as reasonably may be requested by counsel for the underwriters; and (ii) a copy of a letter dated such date
from the independent public accountants retained by the Company, addressed to the underwriters, stating that they are independent
registered public accountants within the meaning of the Securities Act and that, in the opinion of such accountants, the financial
statements of the Company included in the Registration Statement or the Prospectus, or any amendment or supplement thereof, comply
as to form in all material respects with the applicable accounting requirements of the Securities Act, and such letter shall additionally
cover such other financial matters (including information as to the period ending no more than five business days prior to the
date of such letter) with respect to such registration as such underwriters reasonably may request;


 




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(k)          promptly
notify each seller of Registrable Securities of the issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement or the initiation of any proceedings for that purpose and make every reasonable effort to prevent the
issuance of any stop order and, if any stop order is issued, to obtain the lifting thereof at the earliest possible time;


 


(l)          take
all actions reasonably necessary to facilitate the timely preparation and delivery of certificates (not bearing any legend restricting
the sale or transfer of such securities) representing the Registrable Securities to be sold pursuant to the Registration Statement
and to enable such certificates to be in such denominations and registered in such names as each seller of Registrable Securities
or any underwriters may reasonably request; and


 


(m)          take
all other reasonable actions necessary to expedite and facilitate the registration of the Registrable Securities pursuant to the
Registration Statement.


 


7.          Obligations
of Investor. The Investor shall furnish to the Company such information regarding such Investor, the number of Registrable
Securities owned and proposed to be sold by it, the intended method of disposition of such securities and any other information
as shall be required to effect the registration of the Registrable Securities, and cooperate with the Company in preparing the
Registration Statement and in complying with the requirements of the Securities Act.


 


8.          Expenses.


 


(a)          All
expenses incurred by the Company in complying with Sections 3, 4 and 5 including, without limitation, all registration and
filing fees (including the fees of the Commission and any other regulatory body with which the Company is required to file), printing
expenses, fees and disbursements of counsel and independent public accountants for the Company, fees and expenses (including counsel
fees of the Company and the Placement Agent, as representative of the Purchasers) incurred in connection with complying with state
securities or “blue sky” laws, and fees of transfer agents and registrars are called “Registration Expenses.”
All underwriting discounts and selling commissions applicable to the sale of Registrable Securities are called “Selling Expenses.”


 


(b)          The
Company will pay all Registration Expenses in connection with any Registration Statement filed hereunder, and the Selling Expenses
in connection with each such Registration Statement shall be borne by the participating sellers in proportion to the number of
Registrable Securities sold by each or as they may otherwise agree.


 


(c)          Notwithstanding
anything herein to the contrary, at the request of any Investor, the Company shall employ its counsel at the Company’s expense
to prepare any and all legal opinions necessary for the prompt removal of restrictive legends from certificates representing Registrable
Securities as, when and to the extent such legends may be removed in compliance with the Securities Act and/or Rule 144.


 




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9.          Indemnification
and Contribution.


 


(a)          In
the event of a registration of any of the Registrable Securities under the Securities Act pursuant to the terms of this Agreement,
the Company will indemnify and hold harmless and pay and reimburse, each seller of such Registrable Securities thereunder, each
underwriter of such Registrable Securities thereunder and each other person, if any, who controls such seller or underwriter within
the meaning of the Securities Act, against any losses, claims, damages or liabilities, joint or several, to which such seller,
underwriter or controlling person may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in any Registration Statement under which such Registrable Securities were registered under the
Securities Act pursuant hereto or any preliminary prospectus or final prospectus contained therein, or any amendment or supplement
thereof, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, or any violation or alleged violation of the Securities Act
or any state securities or “blue sky” laws and will reimburse each such seller, each such underwriter and each such
controlling person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, that the Company will not be liable in any such case if and to the extent
that any such loss, claim, damage or liability arises out of or is based upon the Company’s reliance on an untrue statement
or alleged untrue statement or omission or alleged omission so made in conformity with information furnished by any such seller,
any such underwriter or any such controlling person in writing specifically for use in such Registration Statement or prospectus.


 


(b)          In
the event of a registration of any of the Registrable Securities under the Securities Act pursuant hereto, each seller of such
Registrable Securities thereunder, severally and not jointly, will indemnify and hold harmless the Company, each person, if any,
who controls the Company within the meaning of the Securities Act, each officer of the Company who signs the Registration Statement,
each director of the Company, each underwriter and each person who controls any underwriter within the meaning of the Securities
Act, against all losses, claims, damages or liabilities, joint or several, to which the Company or such officer, director, underwriter
or controlling person may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon reliance on any untrue statement or alleged untrue statement of
any material fact contained in the registration statement under which such Registrable Securities were registered under the Securities
Act pursuant hereto or any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereof,
or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and will reimburse the Company and each such officer, director, underwriter
and controlling person for any legal or other expenses reasonably incurred by them in connection with investigating or defending
any such loss, claim, damage, liability or action; provided that such seller will be liable hereunder in any such case if and only
to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in reliance upon and in conformity with information pertaining to such seller, as
such, furnished in writing to the Company by such seller specifically for use in such Registration Statement or prospectus; and
provided, further, that the liability of each seller hereunder shall be limited to the proceeds received by such seller from the
sale of Registrable Securities covered by such Registration Statement. Notwithstanding the foregoing, the indemnity provided in
this Section 8(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or expense if
such settlement is effected without the consent of such indemnified party and provided further, that the Company shall not be liable
in any such case to the extent that any such loss, claim, damage or liability (or action in respect thereof) arises out of or is
based upon an untrue statement or alleged untrue statement or omission or alleged omission in such Registration Statement, which
untrue statement or alleged untrue statement or omission or alleged omission is completely corrected in an amendment or supplement
to the Registration Statement and the undersigned indemnitees thereafter fail to deliver or cause to be delivered such Registration
Statement as so amended or supplemented prior to or concurrently with the sale of the Registrable Securities to the person asserting
such loss, claim, damage or liability (or actions in respect thereof) or expense after the Company has furnished the undersigned
with the same.


 




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(c)          Promptly
after receipt by an indemnified party hereunder of notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party hereunder, notify the indemnifying party in writing thereof,
but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to such indemnified
party other than under this Section 8 and shall only relieve it from any liability which it may have to such indemnified
party under this Section 8 if and to the extent the indemnifying party is materially prejudiced by such omission. In case
any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof,
the indemnifying party shall be entitled to participate in and, to the extent it shall wish, to assume and undertake the defense
thereof with counsel reasonably satisfactory to such indemnified party, and, after notice from the indemnifying party to such indemnified
party of its election so to assume and undertake the defense thereof, the indemnifying party shall not be liable to such indemnified
party under this Section 8 for any legal expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation and of liaison with counsel so selected; provided that if the defendants
in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably
concluded based upon written advice of its counsel that there may be reasonable defenses available to it that are different from
or additional to those available to the indemnifying party or if the interests of the indemnified party reasonably may be deemed
to conflict with the interests of the indemnifying party, the indemnified party shall have the right to select a separate counsel
and to assume such legal defenses and otherwise to participate in the defense of such action, with the expenses and fees of such
separate counsel and other expenses related to such participation to be reimbursed by the indemnifying party as incurred.


 


(d)          In
order to provide for just and equitable contribution to joint liability under the Securities Act in any case in which either (i)
any holder of Registrable Securities exercising rights under this Agreement, or any controlling person of any such holder, makes
a claim for indemnification pursuant to this Section 8 but it is judicially determined (by the entry of a final judgment
or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal)
that such indemnification may not be enforced in such case notwithstanding the fact that this Section 8 provides for indemnification
in such case, or (ii) contribution under the Securities Act may be required on the part of any such selling holder or any such
controlling person in circumstances for which indemnification is provided under this Section 8; then, and in each such case,
the Company and such holder will contribute to the aggregate losses, claims, damages or liabilities to which they may be subject
(after contribution from others) in such proportion so that such holder is responsible for the portion represented by the percentage
that the public offering price of its Registrable Securities offered by the Registration statement bears to the public offering
price of all securities offered by such Registration statement, and the Company is responsible for the remaining portion; provided,
that, in any such case, (A) no such holder will be required to contribute any amount in excess of the public offering price of
all such Registrable Securities offered by it pursuant to such Registration statement and (B) no person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 12(f) of the Securities Act) will be entitled to contribution from any person
or entity who was not guilty of such fraudulent misrepresentation.


 




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10.         Changes
in Capital Stock. If, and as often as, there is any change in the capital stock of the Company by way of a forward or reverse
stock split, stock dividend, combination or reclassification, or through a merger, consolidation, reorganization or recapitalization,
or by any other means, appropriate adjustment shall be made in the provisions hereof so that the rights and privileges granted
hereby shall continue as so changed.


 


11.         Representations
and Warranties of the Company. The Company represents and warrants to the Investor as follows:


 


(a)          The
execution, delivery and performance of this Agreement by the Company have been duly authorized by all requisite corporate action
and will not violate any provision of law, any order of any court or other agency of government, the Certificate of Incorporation
or Bylaws of the Company or any provision of any indenture, agreement or other instrument to which it or any or its properties
or assets is bound, conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under
any such indenture, agreement or other instrument or result in the creation or imposition of any lien, charge or encumbrance of
any nature whatsoever upon any of the properties or assets of the Company or its subsidiaries.


 


(b)          This
Agreement has been duly executed and delivered by the Company and constitutes the legal, valid and binding obligation of the Company,
enforceable in accordance with its terms, subject to any applicable bankruptcy, insolvency or other laws affecting the rights of
creditors generally and to general equitable principles and the availability of specific performance.


 


12.         Rule
144 Requirements. The Company agrees to:


 


(a)          make
and keep current public information about the Company available, as those terms are understood and defined in Rule 144 under the
Securities Act;


 


(b)          use
its best efforts to file with the Commission in a timely manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act; and


 


(c)          furnish
to any holder of Registrable Securities upon request (i) a written statement by the Company as to its compliance with the reporting
requirements of Rule 144 and of the Securities Act and the Exchange Act (at any time after it has become subject to such reporting
requirements), (ii) a copy of the most recent annual or quarterly report of the Company and Current Reports on Form 8-K, as filed
with the Commission, and (iii) such other reports and documents of the Company as such holder may reasonably request to avail itself
of any similar rule or regulation of the Commission allowing it to sell any such securities without registration.


 


13.         Termination.
All of the Company’s obligations to register Registrable Shares under Sections 3, 4 and 5 hereof shall terminate
upon the date on which the Investor holds no Registrable Securities or all of the Registrable Securities are eligible for resale
without volume or manner-of-sale restrictions and without current public information pursuant to Rule 144, as determined by counsel
to the Company pursuant to a written opinion letter to such effect, addressed and reasonably acceptable to the Company’s
transfer agent and the Investor.


 


14.         Miscellaneous.


 


(a)          All
covenants and agreements contained in this Agreement by or on behalf of any of the parties hereto shall bind and inure to the benefit
of the respective successors and assigns of the parties hereto (including without limitation transferees of any Registrable Securities),
whether so expressed or not.


 




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(b)          All
notices, requests, consents and other communications hereunder shall be in writing and shall be delivered in person, mailed by
certified mail, return receipt requested, postage prepaid, addressed or sent by a nationally recognized overnight courier service:
(i) if to the Company, at 955 Hartman Run Road, Morgantown, WV 26507, Attn: President; and (ii) if to any holder of Registrable
Securities, to such holder at such address as may have been furnished to the Company or its counsel in writing by such holder;
or, in any case, at such other address or addresses as shall have been furnished, in writing to the Company or its counsel (in
the case of a holder of Registrable Securities) or to the holders of Registrable Securities (in the case of the Company) in accordance
with the provisions of this paragraph. Any notice or other communication or deliveries hereunder shall be deemed given and effective
upon actual receipt by the party to whom such notice is required to be given.


 


(c)          This
Agreement shall be governed by and construed under the laws of the State of New York, without giving effect to principles of conflicts
of laws. The Company and Investor (i) agree that any legal suit, action or proceeding arising out of or relating to this Agreement
shall be instituted exclusively in in New York State Supreme Court, County of New York, or in the United States District Court
for the Southern District of New York, (ii) waive any objection which the Company or Investor may have now or hereafter to the
venue of any such suit, action or proceeding, and (iii) irrevocably consent to the jurisdiction of any such federal or state court
in any such suit, action or proceeding. The Company and Investor further agree to accept and acknowledge service of any and all
process which may be served in any such suit, action or proceeding and agree that service of process upon the Company or Investor
mailed by certified mail, return receipt requested, postage prepaid, to, in the case of the Company, the Company’s address,
and in the case of the Investor, to the Investor’s address as set forth on the Company’s books and records, shall be
deemed in every respect effective service of process upon the Company, in any such suit, action or proceeding. THE PARTIES HERETO
AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT
OR ANY DOCUMENT OR AGREEMENT CONTEMPLATED HEREBY.


 


(d)          In
the event of a breach by the Company or by the Investor, of any of their obligations under this Agreement, the Investor or the
Company, as the case may be, in addition to being entitled to exercise all rights granted by law and under this Agreement, including
recovery of damages, will be entitled to specific performance of its rights under this Agreement. The Company and the Investor
agree that monetary damages would not provide adequate compensation for any losses incurred by reason of a breach by it of any
of the provisions of this Agreement and hereby further agrees that, in the event of any action for specific performance in respect
of such breach, it shall waive the defense that a remedy at law would be adequate.


 


(e)          This
Agreement may not be amended or modified without the written consent of the Company and the Investor.


 


(f)          Failure
of any party to exercise any right or remedy under this Agreement or otherwise, or delay by a party in exercising such right or
remedy, shall not operate as a waiver thereof. No waiver shall be effective unless and until it is in writing and signed by the
party granting the waiver.


 


(g)          This
Agreement may be executed in two or more counterparts (including by facsimile or .pdf transmission) each of which shall be deemed
an original, but all of which together shall constitute one and the same instrument. This Agreement, once executed by a party,
may be delivered to the other party hereto by facsimile transmission of a copy of this Agreement bearing the signature of the party
so delivering this Agreement.


 




    	 	13	 



     


    

 


(h)          If
any provision of this Agreement shall be held to be illegal, invalid or unenforceable, such illegality, invalidity or unenforceability
shall attach only to such provision and shall not in any manner affect or render illegal, invalid or unenforceable any other provision
of this Agreement, and this Agreement shall be carried out as if any such illegal, invalid or unenforceable provision were not
contained herein.


 


(i)          This
Agreement constitutes the entire agreement among the Company and the Investor relative to the subject matter hereof and supersedes
in its entirety any and all prior agreements, understandings and discussions with respect thereto.


 


(j)          The
headings of the sections of this Agreement are for convenience and shall not by themselves determine the interpretation of this
Agreement.


 


[Signature Page Follows]


 




    	 	14	 



     


    

 


Signature Page to the Registration Rights Agreement


 


Investors:


 


The Investors set forth on Exhibit A
to the Purchase Agreement have executed a Subscription Agreement with the Company which provides, among other things, that by executing
the Subscription Agreement each Investor is deemed to have executed the REGISTRATION RIGHTS AGREEMENT in all respects and is bound
to purchase the Units set forth in such Subscription Agreement and Exhibit A to the Purchase Agreement.


 


THE COMPANY:


 


PROTEA BIOSCIENCES GROUP, INC.


 


	By: 	 
	Name: Stephen Turner
	Title: Chief Executive Officer


 


Dated:    October __, 2016


 









    	 	15	 



     


    

 


Annex A


 


Plan of Distribution


 


Each selling stockholder
(the “Selling Stockholders”) of the securities and any of their pledgees, assignees and successors-in-interest
may, from time to time, sell any or all of their securities covered hereby on any stock exchange, market or trading facility on
which the securities of the Company are traded or in private transactions.  These sales may be at fixed or negotiated
prices.  A Selling Stockholder may use any one or more of the following methods when selling securities:


 


		·	ordinary brokerage transactions
and transactions in which the broker-dealer solicits purchasers;



 


		·	block trades in which the
broker-dealer will attempt to sell the securities as agent but may position and resell a portion of the block as principal to
facilitate the transaction;



 


		·	purchases by a broker-dealer
as principal and resale by the broker-dealer for its account;



 


		·	an exchange distribution
in accordance with the rules of the applicable exchange;



 


		·	privately negotiated transactions;



 


		·	settlement of short sales
entered into after the effective date of the registration statement of which this prospectus is a part;



 


		·	in transactions through broker-dealers
that agree with the Selling Stockholders to sell a specified number of such securities at a stipulated price per security;



 


		·	through the writing or settlement
of options or other hedging transactions, whether through an options exchange or otherwise;



 


		·	a combination of any such
methods of sale; or



 


		·	any other method permitted
pursuant to applicable law.



 


The Selling Stockholders may also sell securities
under Rule 144 under the Securities Act, if available, rather than under the prospectus contained in a Registration Statement.


 


Broker-dealers engaged
by the Selling Stockholders may arrange for other brokers-dealers to participate in sales.  Broker-dealers may receive
commissions or discounts from the Selling Stockholders (or, if any broker-dealer acts as agent for the purchaser of securities,
from the purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this Prospectus, in the case of an
agency transaction not in excess of a customary brokerage commission in compliance with FINRA Rule 2440; and in the case of a principal
transaction a markup or markdown in compliance with FINRA IM-2440.


 


In connection with
the sale of the securities or interests therein, the Selling Stockholders may enter into hedging transactions with broker-dealers
or other financial institutions, which may in turn engage in short sales of the securities in the course of hedging the positions
they assume.  The Selling Stockholders may also sell securities short and deliver these securities to close out their
short positions, or loan or pledge the securities to broker-dealers that in turn may sell these securities.  The Selling
Stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or create one
or more derivative securities which require the delivery to such broker-dealer or other financial institution of securities offered
by this prospectus, which securities such broker-dealer or other financial institution may resell pursuant to this prospectus (as
supplemented or amended to reflect such transaction).


 




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The Selling Stockholders
and any broker-dealers or agents that are involved in selling the securities may be deemed to be “underwriters” within
the meaning of the Securities Act in connection with such sales.  In such event, any commissions received by such broker-dealers
or agents and any profit on the resale of the securities purchased by them may be deemed to be underwriting commissions or discounts
under the Securities Act.  Each Selling Stockholder has informed the Company that it does not have any written or oral
agreement or understanding, directly or indirectly, with any person to distribute the securities. In no event shall any broker-dealer
receive fees, commissions and markups which, in the aggregate, would exceed eight percent (8%).


 


The Company is required
to pay certain fees and expenses incurred by the Company incident to the registration of the securities.  The Company
has agreed to indemnify the Selling Stockholders against certain losses, claims, damages and liabilities, including liabilities
under the Securities Act.


 


Because Selling Stockholders
may be deemed to be “underwriters” within the meaning of the Securities Act, they will be subject to the prospectus
delivery requirements of the Securities Act including Rule 172 thereunder.  In addition, any securities covered by this
prospectus which qualify for sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather than under this
prospectus. The Selling Stockholders have advised us that there is no underwriter or coordinating broker acting in connection with
the proposed sale of the resale securities by the Selling Stockholders.


 


We agree to keep the
prospectus effective until the earlier of (i) the date on which the securities may be resold by the Selling Stockholders without
registration and without regard to any volume or manner-of-sale limitations and without current public information by reason of
Rule 144 under the Securities Act or any other rule of similar effect or (ii) all of the securities have been sold pursuant to
this prospectus or Rule 144 under the Securities Act or any other rule of similar effect.  The resale securities will
be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition,
in certain states, the resale securities covered hereby may not be sold unless they have been registered or qualified for sale
in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.


 


Under applicable rules
and regulations under the Exchange Act, any person engaged in the distribution of the resale securities may not simultaneously
engage in market making activities with respect to the common stock for the applicable restricted period, as defined in Regulation
M, prior to the commencement of the distribution.  In addition, the Selling Stockholders will be subject to applicable
provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of
purchases and sales of securities of the common stock by the Selling Stockholders or any other person.  We will make
copies of this prospectus available to the Selling Stockholders and have informed them of the need to deliver a copy of this prospectus
to each purchaser at or prior to the time of the sale (including by compliance with Rule 172 under the Securities Act).


  



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