Exhibit
4.2


 


EXECUTION
VERSION


 


WARRANT


 


THE
SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL IN GENERALLY ACCEPTABLE FORM THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT
OR APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.


 


KRAIG
BIOCRAFT LABORATORIES, INC.


 


Warrant
To Purchase Common Stock


 


	Warrant
    No.: KBLB-1-1	Number
    of Shares: 3,125,000
	 	 
	 	Warrant
    Exercise Price: $0.16
	 	 
	 	Expiration
    Date: December 11, 2025


 


Date
of Issuance: December 11, 2020


 


Kraig
Biocraft Laboratories, Inc., a Wyoming corporation (the “Company”), hereby certifies that, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, YAII PN, LTD. (the “Holder”),
the registered holder hereof or its permitted assigns, is entitled, subject to the terms set forth below, to purchase from the
Company upon surrender of this Warrant, at any time or times on or after the date hereof, but not after 11:59 P.M. Eastern Time
on the Expiration Date (as defined herein) up to 3,125,000 fully paid and nonassessable shares of Common Stock (as defined herein)
of the Company (the “Warrant Shares”) at the exercise price per share provided in Section 1(b) below or as
subsequently adjusted; provided, however, that in no event shall the holder be entitled to exercise this Warrant for a number
of Warrant Shares in excess of that number of Warrant Shares which, upon giving effect to such exercise, would cause the aggregate
number of shares of Common Stock beneficially owned by the holder and its affiliates to exceed 4.99% of the outstanding shares
of the Common Stock following such exercise, except within 60 days of the Expiration Date (however, such restriction may be waived
by Holder (but only as to itself and not to any other holder) upon not less than 65 days prior notice to the Company). For purposes
of the foregoing proviso, the aggregate number of shares of Common Stock beneficially owned by the holder and its affiliates shall
include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which the determination of
such proviso is being made, but shall exclude shares of Common Stock which would be issuable upon (i) exercise of the remaining,
unexercised Warrants beneficially owned by the holder and its affiliates and (ii) exercise or conversion of the unexercised or
unconverted portion of any other securities of the Company beneficially owned by the holder and its affiliates (including, without
limitation, any convertible notes or preferred stock) subject to a limitation on conversion or exercise analogous to the limitation
contained herein. Except as set forth in the preceding sentence, for purposes of this paragraph, beneficial ownership shall be
calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended. For purposes of this Warrant,
in determining the number of outstanding shares of Common Stock a holder may rely on the number of outstanding shares of Common
Stock as reflected in (1) the Company’s most recent Form 10-Q or Form 10-K, as the case may be, (2) a more recent public
announcement by the Company or (3) any other notice by the Company or its transfer agent setting forth the number of shares of
Common Stock outstanding. Upon the written request of any holder, the Company shall promptly, but in no event later than 1 Business
Day following the receipt of such notice, confirm in writing to any such holder the number of shares of Common Stock then outstanding.
In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the exercise of Warrants
(as defined below) by such holder and its affiliates since the date as of which such number of outstanding shares of Common Stock
was reported.


 




    	 



    	 



    

 


Section
1.


 


(a)
This Warrant is issued pursuant to the Securities Purchase Agreement (“Securities Purchase Agreement”) dated
the date hereof between the Company and the Holder or issued in exchange or substitution thereafter or replacement thereof. Each
Capitalized term used, and not otherwise defined herein, shall have the meaning ascribed thereto in the Securities Purchase Agreement.


 


(b)
Definitions. The following words and terms as used in this Warrant shall have the following meanings:


 


(i)
“Approved Stock Plan” means a stock plan that has been approved by the Board of Directors of the Company prior
to the date of the Securities Purchase Agreement, pursuant to which the Company’s securities may be issued only to any employee,
officer or director for services provided to the Company.


 


(ii)
“Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in the City
of New York are authorized or required by law to remain closed.


 


(iii)
“Closing Bid Price” means the closing bid price (or closing trade if there is no closing bid price) of Common
Stock as quoted on the Principal Market (as reported by Bloomberg, LP (“Bloomberg”) through its “Volume
at Price” function).


 


(iv)
“Common Stock” means (i) the Company’s Class A common stock, no par value per share, and (ii) any capital
stock into which such Common Stock shall have been changed or any capital stock resulting from a reclassification of such Common
Stock.


 




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(v)
“Event of Default” means an event of default under the Securities Purchase Agreement or the Convertible Debenture
issued in connection therewith.


 


(vi)
“Excluded Securities” means, (a) shares issued or deemed to have been issued by the Company pursuant to an
Approved Stock Plan, (b) the shares of Common Stock issued or deemed to be issued by the Company upon conversion of the Convertible
Debenture or exercise of the Warrants, (c) shares of Common Stock or other securities issued in connection with a strategic acquisition,
intellectual property licensing agreement or other similar transaction not initiated for the purpose of capital raising, (d) warrants
and options existing and issued as of the Issuance Date and shares issued pursuant to the exercise of said warrants and options,
and (e) any securities of the Company registered in registration statement No. 333-238883 currently on file with the SEC.


 


(vii)
“Expiration Date” means the date set forth on the first page of this Warrant.


 


(viii)
“Issuance Date” means the date hereof.


 


(ix)
“Options” means any rights, warrants or options to subscribe for or purchase Common Stock or Convertible Securities.


 


(x)
“Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a
trust, an unincorporated organization and a government or any department or agency thereof.


 


(xi)
“Primary Market” means the OTC Markets’ OTCQBÒ Market.


 


(xii)
“Securities Act” means the Securities Act of 1933, as amended.


 


(xiii)
“Warrant” means this Warrant and all Warrants issued in exchange, transfer or replacement thereof.


 


(xiv)
“Warrant Exercise Price” shall be $0.16 or as subsequently adjusted as provided in Section 8 hereof.


 


(c)
Other Definitional Provisions.


 


(i)
Except as otherwise specified herein, all references herein (A) to the Company shall be deemed to include the Company’s
successors and (B) to any applicable law defined or referred to herein shall be deemed references to such applicable law as the
same may have been or may be amended or supplemented from time to time.


 


(ii)
When used in this Warrant, the words “herein”, “hereof”, and “hereunder”
and words of similar import, shall refer to this Warrant as a whole and not to any provision of this Warrant, and the words
“Section”, “Schedule”, and “Exhibit” shall refer to Sections of, and
Schedules and Exhibits to, this Warrant unless otherwise specified.


 




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(iii)
Whenever the context so requires, the neuter gender includes the masculine or feminine, and the singular number includes the plural,
and vice versa.


 


Section
2. Exercise of Warrant.


 


(a)
Subject to the terms and conditions hereof, this Warrant may be exercised by the holder hereof then registered on the books of
the Company, pro rata as hereinafter provided, at any time on any Business Day on or after the opening of business on such Business
Day, commencing with the first day after the date hereof, and prior to 5:00 P.M. Eastern Time on the Expiration Date (i) by delivery
of a written notice, in the form of the subscription notice attached as Exhibit A hereto (the “Exercise Notice”),
of such holder’s election to exercise this Warrant, which notice shall specify the number of Warrant Shares to be purchased,
payment to the Company of an amount equal to the Warrant Exercise Price(s) applicable to the Warrant Shares being purchased, multiplied
by the number of Warrant Shares (at the applicable Warrant Exercise Price) as to which this Warrant is being exercised (plus any
applicable issue or transfer taxes) (the “Aggregate Exercise Price”) in cash or wire transfer of immediately
available funds and the surrender of this Warrant (or an indemnification undertaking with respect to this Warrant in the case
of its loss, theft or destruction) to a common carrier for overnight delivery to the Company or (ii) if at the time of exercise,
the Warrant Shares are not subject to an effective registration statement or if an Event of Default has occurred and is continuing,
by delivering an Exercise Notice and in lieu of making payment of the Aggregate Exercise Price in cash or wire transfer, elect
instead to receive upon such exercise the “Net Number” of shares of Common Stock determined according to the following
formula (the “Cashless Exercise”):


 


Net
Number = (A x B) – (A x C)


B


 


For
purposes of the foregoing formula:


 


A
= the total number of Warrant Shares with respect to which this Warrant is then being exercised.


 


B
= the Closing Bid Price of the Common Stock on the date of exercise of the Warrant.


 


C
= the Warrant Exercise Price then in effect for the applicable Warrant Shares at the time of such exercise.


 


In
the event of any exercise of the rights represented by this Warrant in compliance with this Section 2, the Company shall on or
before the 3rd Business Day following the date of receipt of the Exercise Notice, the Aggregate Exercise Price and
this Warrant (or an indemnification undertaking with respect to this Warrant in the case of its loss, theft or destruction) and
the receipt of the representations of the holder specified in Section 6 hereof, if requested by the Company (the “Exercise
Delivery Documents”), and if the Warrant Shares are subject to an effective and current Registration Statement and the
Common Stock is DTC eligible, credit such aggregate number of shares of Common Stock to which the holder shall be entitled to
the holder’s or its designee’s balance account with The Depository Trust Company; provided, however, if the holder
who submitted the Exercise Notice requested physical delivery of any or all of the Warrant Shares, or, if the Warrant Shares are
not subject to an effective and current Registration Statement and the Common Stock is not DTC eligible then the Company shall,
on or before the 3rd Business Day following receipt of the Exercise Delivery Documents, issue and surrender to a common
carrier for overnight delivery to the address specified in the Exercise Notice, a certificate, registered in the name of the holder,
for the number of shares of Common Stock to which the holder shall be entitled pursuant to such request. The Warrant Shares shall
be issued with a legend unless they are subject to an effective and current Registration Statement or they are being transferred
pursuant to an exemption from such registration requirements, the availability of which is confirmed in an opinion of counsel
acceptable to the Company’s Transfer Agent. Upon delivery of the Exercise Notice and Aggregate Exercise Price referred to
in clause (i) or (ii) above the holder of this Warrant shall be deemed for all corporate purposes to have become the holder of
record of the Warrant Shares with respect to which this Warrant has been exercised. In the case of a dispute as to the determination
of the Warrant Exercise Price, the Closing Bid Price or the arithmetic calculation of the Warrant Shares, the Company shall promptly
issue to the holder the number of Warrant Shares that is not disputed and shall submit the disputed determinations or arithmetic
calculations to the holder via facsimile within 1 Business Day of receipt of the holder’s Exercise Notice.


 




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(b)
If the holder and the Company are unable to agree upon the determination of the Warrant Exercise Price or arithmetic calculation
of the Warrant Shares within 1 day of such disputed determination or arithmetic calculation being submitted to the holder, then
the Company shall immediately submit via electronic mail (i) the disputed determination of the Warrant Exercise Price or the Closing
Bid Price to an independent, reputable investment banking firm or (ii) the disputed arithmetic calculation of the Warrant Shares
to its independent, outside accountant. The Company shall cause the investment banking firm or the accountant, as the case may
be, to perform the determinations or calculations and notify the Company and the holder of the results no later than 72 hours
from the time it receives the disputed determinations or calculations. Such investment banking firm’s or accountant’s
determination or calculation, as the case may be, shall be deemed conclusive absent manifest error.


 


(c)
Unless the rights represented by this Warrant shall have expired or shall have been fully exercised, the Company shall, as soon
as practicable and in no event later than 5 Business Days after any exercise and at its own expense, issue a new Warrant identical
in all respects to this Warrant exercised except it shall represent rights to purchase the number of Warrant Shares purchasable
immediately prior to such exercise under this Warrant exercised, less the number of Warrant Shares with respect to which such
Warrant is exercised.


 


(d)
No fractional Warrant Shares are to be issued upon any pro rata exercise of this Warrant, but rather the number of Warrant Shares
issued upon such exercise of this Warrant shall be rounded up or down to the nearest whole number.


 


(e)
If the Company or its Transfer Agent shall fail for any reason or for no reason to issue to the holder within 5 days of receipt
of the Exercise Delivery Documents, a certificate for the number of Warrant Shares to which the holder is entitled or to credit
the holder’s balance account with The Depository Trust Company for such number of Warrant Shares to which the holder is
entitled upon the holder’s exercise of this Warrant, unless such failure results from a failure of the Company’s Transfer
Agent to issue such shares as a result of an act of terrorism, war, natural disaster, act of god or other force majure event,
the Company shall, in addition to any other remedies under this Warrant or otherwise available to such holder, pay as additional
damages in cash to such holder on each day the issuance of such certificate for Warrant Shares is not timely effected an amount
equal to 0.025% of the product of (A) the sum of the number of Warrant Shares not issued to the holder on a timely basis and to
which the holder is entitled, and (B) the Closing Bid Price of the Common Stock for the trading day immediately preceding the
last possible date which the Company could have issued such Common Stock to the holder without violating this Section 2.


 




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(f)
If within 5 days after the Company’s receipt of the Exercise Delivery Documents and the written request of the Holder that
a new Warrant be issued, the Company fails to deliver a new Warrant to the holder for the number of Warrant Shares to which such
holder is entitled pursuant to Section 2 hereof, then, in addition to any other available remedies under this Warrant, or otherwise
available to such holder, the holder shall be entitled to exercise or transfer its rights under such new warrant as if it had
received such new Warrant and the Company shall be obligated to honor such exercises or transfers as if the holder had submitted
the new Warrant without violating this Section 2.


 


Section
3. Covenants as to Common Stock. The Company hereby covenants and agrees as follows:


 


(a)
This Warrant is, and any Warrants issued in substitution for or replacement of this Warrant will upon issuance be, duly authorized
and validly issued.


 


(b)
All Warrant Shares which may be issued upon the exercise of the rights represented by this Warrant will, upon issuance, be validly
issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issue thereof.


 


(c)
During the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized
and reserved at least 100% of the number of shares of Common Stock needed to provide for the exercise of the rights then represented
by this Warrant and the par value of said shares will at all times be less than or equal to the applicable Warrant Exercise Price.
If at any time the Company does not have a sufficient number of shares of Common Stock authorized and available, then the Company
shall call and hold a special meeting of its stockholders within 60 days of that time for the sole purpose of increasing the number
of authorized shares of Common Stock.


 


(d)
If at any time after the date hereof the Company shall file a Registration Statement, the Company shall include the Warrant Shares
issuable to the holder, pursuant to the terms of this Warrant and shall maintain, so long as any other shares of Common Stock
shall be so listed, such listing of all Warrant Shares from time to time issuable upon the exercise of this Warrant on the Primary
Market or such national securities exchange or automated quotation system on which the Common Stock of the Company is listed;
and the Company shall so list on the Primary Market or such national securities exchange or automated quotation system on which
the Common Stock of the Company is listed, as the case may be, and shall maintain such listing of, any other shares of capital
stock of the Company issuable upon the exercise of this Warrant Shares if and so long as any shares of the same class shall be
listed on the Primary Market or such national securities exchange or automated quotation system on which the Common Stock of the
Company is listed. Provided, however, that the foregoing requirement shall not apply to registration statement No. 333-23888,
which is currently on file with the SEC (including any related registration statement, prospectus or supplement required by Rule
462 or 424 of the Securities Act).


 




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(e)
The Company will not, by amendment of its Articles of Incorporation 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 to be observed or performed by it hereunder, but will at all times in good faith assist in the carrying out
of all the provisions of this Warrant and in the taking of all such action as may reasonably be requested by the holder of this
Warrant in order to protect the exercise privilege of the holder of this Warrant against dilution or other impairment, consistent
with the tenor and purpose of this Warrant. The Company will not increase the par value of any shares of Common Stock receivable
upon the exercise of this Warrant above the Warrant Exercise Price then in effect, and (ii) will take all such actions as may
be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common
Stock upon the exercise of this Warrant.


 


(f)
This Warrant will be binding upon any entity succeeding to the Company by merger, consolidation or acquisition of all or substantially
all of the Company’s assets.


 


Section
4. Taxes. The Company shall pay any and all taxes, except any applicable withholding, which may be payable with respect
to the issuance and delivery of Warrant Shares upon exercise of this Warrant.


 


Section
5. Warrant Holder Not Deemed a Stockholder. Except as otherwise specifically provided herein, no holder, as such, of this
Warrant shall be entitled to vote or receive dividends or be deemed the holder of shares of capital stock of the Company for any
purpose, nor shall anything contained in this Warrant be construed to confer upon the holder hereof, as such, any of the rights
of a stockholder of the Company or any right to vote, give or withhold consent to any corporate action (whether any reorganization,
issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise), receive notice of meetings, receive
dividends or subscription rights, or otherwise, prior to the issuance to the holder of this Warrant of the Warrant Shares which
he or she is then entitled to receive upon the due exercise of this Warrant. In addition, nothing contained in this Warrant shall
be construed as imposing any liabilities on such holder to purchase any securities (upon exercise of this Warrant or otherwise)
or as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company. Notwithstanding
this Section 5, the Company will provide the holder of this Warrant with copies of the same notices and other information given
to the stockholders of the Company generally, contemporaneously with the giving thereof to the stockholders.


 




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Section
6. Representations of Holder. The holder of this Warrant, by the acceptance hereof, represents that it is acquiring this
Warrant and the Warrant Shares for its own account for investment only and not with a view towards, or for resale in connection
with, the public sale or distribution of this Warrant or the Warrant Shares, except pursuant to sales registered or exempted under
the Securities Act; provided, however, that by making the representations herein, the holder does not agree to hold this Warrant
or any of the Warrant Shares for any minimum or other specific term and reserves the right to dispose of this Warrant and the
Warrant Shares at any time in accordance with or pursuant to a registration statement or an exemption under the Securities Act.
The holder of this Warrant further represents, by acceptance hereof, that, as of this date, such holder is an “accredited
investor” as such term is defined in Rule 501(a)(1) of Regulation D promulgated by the Securities and Exchange Commission
under the Securities Act (an “Accredited Investor”). Upon exercise of this Warrant the holder shall, if requested
by the Company, confirm in writing, in a form satisfactory to the Company, that the Warrant Shares so purchased are being acquired
solely for the holder’s own account and not as a nominee for any other party, for investment, and not with a view toward
distribution or resale and that such holder is an Accredited Investor. If such holder cannot make such representations because
they would be factually incorrect, it shall be a condition to such holder’s exercise of this Warrant that the Company receive
such other representations as the Company considers reasonably necessary to assure the Company that the issuance of its securities
upon exercise of this Warrant shall not violate any United States or state securities laws.


 


Section
7. Ownership and Transfer.


 


(a)
The Company shall maintain at its principal executive offices (or such other office or agency of the Company as it may designate
by notice to the holder hereof), a register for this Warrant, in which the Company shall record the name and address of the person
in whose name this Warrant has been issued, as well as the name and address of each transferee. The Company may treat the person
in whose name any Warrant is registered on the register as the owner and holder thereof for all purposes, notwithstanding any
notice to the contrary, but in all events recognizing any transfers made in accordance with the terms of this Warrant.


 


Section
8. Adjustment of Warrant Exercise Price. The Warrant Exercise Price of this Warrant shall be adjusted from time to time
as follows:


 


(a)
Adjustment of Warrant Exercise Price. If and whenever on or after the Issuance Date of this Warrant, the Company issues
or sells, or is deemed to have issued or sold, any shares of Common Stock (other than Excluded Securities for a consideration
per share (the “New Issuance Price”) less than the Warrant Exercise Price, in effect immediately prior to such
issuance or sale (the “Applicable Price”), then immediately after such issue or sale the Warrant Exercise Price
then in effect shall be reduced to an amount equal to such New Issuance Price.


 




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(b)
Effect on Warrant Exercise Price of Certain Events. For purposes of determining the adjusted Warrant Exercise Price under
Section 8(a) above, the following shall be applicable:


 


(i)
Issuance of Options. If after the date hereof, the Company in any manner grants any Options, other than Excluded Securities,
and the lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion
or exchange of any convertible securities issuable upon exercise of any such Option is less than the Applicable Price, then such
share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the granting
or sale of such Option for such price per share. For purposes of this Section 8(b)(i), the lowest price per share for which one
share of Common Stock is issuable upon exercise of such Options shall be equal to the sum of the lowest amounts of consideration
receivable by the Company with respect to any one share of Common Stock upon the granting or sale of the Option, upon exercise
of the Option or upon conversion or exchange of any convertible security issuable upon exercise of such Option. No further adjustment
of the Warrant Exercise Price shall be made upon the actual issuance of such Common Stock or of such convertible securities upon
the exercise of such Options or upon the actual issuance of such Common Stock upon conversion or exchange of such convertible
securities.


 


(ii)
Issuance of Convertible Securities. If the Company in any manner issues or sells any convertible securities, other than
Excluded Securities, and the lowest price per share for which 1 share of Common Stock is issuable upon the conversion or exchange
thereof is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been
issued and sold by the Company at the time of the issuance or sale of such convertible securities for such price per share. For
the purposes of this Section 8(b)(ii), the lowest price per share for which one share of Common Stock is issuable upon such conversion
or exchange shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with
respect to one share of Common Stock upon the issuance or sale of the convertible security and upon conversion or exchange of
such convertible security. No further adjustment of the Warrant Exercise Price shall be made upon the actual issuance of such
Common Stock upon conversion or exchange of such convertible securities, and if any such issue or sale of such convertible securities
is made upon exercise of any Options for which adjustment of the Warrant Exercise Price had been or are to be made pursuant to
other provisions of this Section 8(b), no further adjustment of the Warrant Exercise Price shall be made by reason of such issue
or sale.


 


(iii)
Change in Option Price or Rate of Conversion. If the purchase price provided for in any Options, other than Excluded Securities,
the additional consideration, if any, payable upon the issue, conversion or exchange of any convertible securities, or the rate
at which any convertible securities are convertible into or exchangeable for Common Stock changes at any time, the Warrant Exercise
Price in effect at the time of such change shall be adjusted to the Warrant Exercise Price which would have been in effect at
such time had such Options or convertible securities provided for such changed purchase price, additional consideration or changed
conversion rate, as the case may be, at the time initially granted, issued or sold. For purposes of this Section 8(b)(iii), if
the terms of any Option or convertible security that was outstanding as of the Issuance Date of this Warrant, other than Excluded
Securities, are changed in the manner described in the immediately preceding sentence, then such Option or convertible security
and the Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the
date of such change. No adjustment pursuant to this Section 8(b) shall be made if such adjustment would result in an increase
of the Warrant Exercise Price then in effect.


 




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(iv)
Calculation of Consideration Received. If any Common Stock, Options or convertible securities are issued or sold or deemed
to have been issued or sold for cash, the consideration received therefore will be deemed to be the gross amount received by the
Company therefore. If any Common Stock, Options or convertible securities are issued or sold for a consideration other than cash,
the amount of such consideration received by the Company will be the fair value of such consideration, except where such consideration
consists of marketable securities, in which case the amount of consideration received by the Company will be the market price
of such securities on the date of receipt of such securities. If any Common Stock, Options or convertible securities are issued
to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity, the amount
of consideration therefore will be deemed to be the fair value of such portion of the net assets and business of the non-surviving
entity as is attributable to such Common Stock, Options or convertible securities, as the case may be. The fair value of any consideration
other than cash or securities will be determined jointly by the Company and the holders of Warrants representing at least two-thirds
(b) of the Warrant Shares issuable upon exercise of the Warrants then outstanding. If such parties are unable to reach agreement
within ten (10) days after the occurrence of an event requiring valuation (the “Valuation Event”), the fair
value of such consideration will be determined within five (5) Business Days after the tenth (10th) day following the
Valuation Event by an independent, reputable appraiser jointly selected by the Company and the holders of Warrants representing
at least two-thirds (b) of the Warrant Shares issuable upon exercise of the Warrants then outstanding. The determination of such
appraiser shall be final and binding upon all parties and the fees and expenses of such appraiser shall be borne jointly by the
Company and the holders of Warrants.


 


(v)
Integrated Transactions. In case any Option is issued in connection with the issue or sale of other securities of the Company,
together comprising one integrated transaction in which any specific consideration or no consideration is allocated to such Options
by the parties thereto (1) the per-share value of the shares of Common Stock included in such integrated transaction shall be
the sole determinate as to whether the Warrant Exercise Price is to be adjusted in accordance with the provisions of Section 8(a),
above, (2) if no shares of Common Stock are included in such integrated transaction, but shares of the Company’s preferred
stock are included in such integrated transaction, then the per-share conversion price of shares of that preferred stock shall
be the sole determinate as to whether the Warrant Exercise Price is to be adjusted in accordance with the provisions of Section
8(a), above, and (3) if no shares of Common Stock and no shares of the Company’s preferred stock are included in such integrated
transaction, but debt convertible into shares of Common Stock (whether directly or through an intermediate step, e.g.,
an initial conversion of that debt into shares of the Company’s preferred stock that, thereafter, could be converted into
shares of Common Stock), then the per-share conversion price of shares of such debt shall be the sole determinate as to whether
the Warrant Exercise Price is to be adjusted in accordance with the provisions of Section 8(a), above; provided, however,
that, if the exercise price of the Option is less than the Warrant Exercise Price (after having taken into account any adjustments
thereto in accordance with the provisions of (1), (2), or (3), immediately above), then the Option exercise price shall be utilized
in connection with the Warrant Exercise Price adjustment provisions of Section 8(a), above.


 


(vi)
Treasury Shares. The number of shares of Common Stock outstanding at any given time does not include shares owned or held
by or for the account of the Company, and the disposition of any shares so owned or held will be considered an issue or sale of
Common Stock.


 




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(vii)
Record Date. If the Company takes a record of the holders of Common Stock for the purpose of entitling them (1) to receive
a dividend or other distribution payable in Common Stock, Options or in convertible securities or (2) to subscribe for or purchase
Common Stock, Options or convertible securities, then such record date will be deemed to be the date of the issue or sale of the
shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution
or the date of the granting of such right of subscription or purchase, as the case may be.


 


(c)
Adjustment of Warrant Exercise Price upon Subdivision or Combination of Common Stock. If the Company at any time after
the date of issuance of this Warrant subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more
classes of its outstanding shares of Common Stock into a greater number of shares, any Warrant Exercise Price in effect immediately
prior to such subdivision will be proportionately reduced and the number of shares of Common Stock obtainable upon exercise of
this Warrant will be proportionately increased. If the Company at any time after the date of issuance of this Warrant combines
(by combination, reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller
number of shares, any Warrant Exercise Price in effect immediately prior to such combination will be proportionately increased
and the number of Warrant Shares issuable upon exercise of this Warrant will be proportionately decreased. Any adjustment under
this Section 8(c) shall become effective at the close of business on the date the subdivision or combination becomes effective.


 


(d)
Distribution of Assets. If the Company shall declare or make any dividend or other distribution of its assets (or rights
to acquire its assets) to holders of Common Stock, by way of return of capital or otherwise (including, without limitation, any
distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate
rearrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Warrant,
then, in each such case:


 


(i)
any Warrant Exercise Price in effect immediately prior to the close of business on the record date fixed for the determination
of holders of Common Stock entitled to receive the Distribution shall be reduced, effective as of the close of business on such
record date, to a price determined by multiplying such Warrant Exercise Price by a fraction of which (A) the numerator shall be
the Closing Sale Price of the Common Stock on the trading day immediately preceding such record date minus the value of the Distribution
(as determined in good faith by the Company’s Board of Directors) applicable to one share of Common Stock, and (B) the denominator
shall be the Closing Sale Price of the Common Stock on the trading day immediately preceding such record date; and


 


(ii)
either (A) the number of Warrant Shares obtainable upon exercise of this Warrant shall be increased to a number of shares equal
to the number of shares of Common Stock obtainable immediately prior to the close of business on the record date fixed for the
determination of holders of Common Stock entitled to receive the Distribution multiplied by the reciprocal of the fraction set
forth in the immediately preceding clause (i), or (B) in the event that the Distribution is of common stock of a company whose
common stock is traded on a national securities exchange or a national automated quotation system, then the holder of this Warrant
shall receive an additional warrant to purchase Common Stock, the terms of which shall be identical to those of this Warrant,
except that such warrant shall be exercisable into the amount of the assets that would have been payable to the holder of this
Warrant pursuant to the Distribution had the holder exercised this Warrant immediately prior to such record date and with an exercise
price equal to the amount by which the exercise price of this Warrant was decreased with respect to the Distribution pursuant
to the terms of the immediately preceding clause (i).


 




    	11



    	 



    

 


(e)
Certain Events. If any event occurs of the type contemplated by the provisions of this Section 8 but not expressly provided
for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other
rights with equity features), then the Company’s Board of Directors will make an appropriate adjustment in the Warrant Exercise
Price and the number of shares of Common Stock obtainable upon exercise of this Warrant so as to protect the rights of the holders
of the Warrants; provided, except as set forth in section 8(c),that no such adjustment pursuant to this Section 8(e) will increase
the Warrant Exercise Price or decrease the number of shares of Common Stock obtainable as otherwise determined pursuant to this
Section 8.


 


(f)
Voluntary Adjustments By Company. The Company may at any time during the term of this Warrant reduce the then current Exercise
Price to any amount and for any period of time deemed appropriate by the Board of Directors of the Company.


 


(g)
Notices.


 


(i)
Immediately upon any adjustment of the Warrant Exercise Price, the Company will give written notice thereof to the holder of this
Warrant, setting forth in reasonable detail, and certifying, the calculation of such adjustment.


 


(ii)
The Company will give written notice to the holder of this Warrant at least ten (10) days prior to the date on which the Company
closes its books or takes a record (A) with respect to any dividend or distribution upon the Common Stock, (B) with respect to
any pro rata subscription offer to holders of Common Stock or (C) for determining rights to vote with respect to any Organic Change
(as defined below), dissolution or liquidation, provided that such information shall be made known to the public prior to or in
conjunction with such notice being provided to such holder.


 


(iii)
The Company will also give written notice to the holder of this Warrant at least 10 days prior to the date on which any Organic
Change, dissolution or liquidation will take place, provided that such information shall be made known to the public prior to
or in conjunction with such notice being provided to such holder.


 


Section
9. Purchase Rights; Reorganization, Reclassification, Consolidation, Merger or Sale.


 


(a)
In addition to any adjustments pursuant to Section 8 above, if at any time the Company grants, issues or sells any Options, convertible
securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of
Common Stock (the “Purchase Rights”), then the holder of this Warrant will be entitled to acquire, upon the
terms applicable to such Purchase Rights, the aggregate Purchase Rights which such holder could have acquired if such holder had
held the number of shares of Common Stock acquirable upon complete exercise of this Warrant 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 Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.


 




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(b)
Any recapitalization, reorganization, reclassification, consolidation, merger, sale of all or substantially all of the Company’s
assets to another Person or other transaction in each case which is affected in such a way that holders of Common Stock are entitled
to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common
Stock is referred to herein as an “Organic Change.” Prior to the consummation of any (i) sale of all or substantially
all of the Company’s assets to an acquiring Person or (ii) other Organic Change following which the Company is not a surviving
entity, the Company will secure from the Person purchasing such assets or the successor resulting from such Organic Change (in
each case, the “Acquiring Entity”) a written agreement (in form and substance satisfactory to the holders of
Warrants representing at least two-thirds (iii) of the Warrant Shares issuable upon exercise of the Warrants then outstanding)
to deliver to each holder of Warrants in exchange for such Warrants, a security of the Acquiring Entity evidenced by a written
instrument substantially similar in form and substance to this Warrant and satisfactory to the holders of the Warrants (including
an adjusted warrant exercise price equal to the value for the Common Stock reflected by the terms of such consolidation, merger
or sale, and exercisable for a corresponding number of shares of Common Stock acquirable and receivable upon exercise of the Warrants
without regard to any limitations on exercise, if the value so reflected is less than any Applicable Warrant Exercise Price immediately
prior to such consolidation, merger or sale). Prior to the consummation of any other Organic Change, the Company shall make appropriate
provision (in form and substance satisfactory to the holders of Warrants representing a majority of the Warrant Shares issuable
upon exercise of the Warrants then outstanding) to insure that each of the holders of the Warrants will thereafter have the right
to acquire and receive in lieu of or in addition to (as the case may be) the Warrant Shares immediately theretofore issuable and
receivable upon the exercise of such holder’s Warrants (without regard to any limitations on exercise), such shares of stock,
securities or assets that would have been issued or payable in such Organic Change with respect to or in exchange for the number
of Warrant Shares which would have been issuable and receivable upon the exercise of such holder’s Warrant as of the date
of such Organic Change (without taking into account any limitations or restrictions on the exercisability of this Warrant).


 


Section
10. Lost, Stolen, Mutilated or Destroyed Warrant. If this Warrant is lost, stolen, mutilated or destroyed, the Company
shall promptly, on receipt of an indemnification undertaking (or, in the case of a mutilated Warrant, the Warrant), issue a new
Warrant of like denomination and tenor as this Warrant so lost, stolen, mutilated or destroyed.


 


Section
11. Notice. Any notices, consents, waivers or other communications required or permitted to be given under the terms of
this Agreement must be in writing and will be deemed to have been delivered upon: (i) receipt, when delivered personally, (ii)
1 Business Day after deposit with an overnight courier service with next day delivery specified, in each case, properly addressed
to the party to receive the same, or (iii) receipt, when sent by electronic mail (provided that the electronic mail transmission
is not returned in error or the sender is not otherwise notified of any error in transmission. The addresses and e-mail addresses
for such communications shall be:


 


	If
    to Holder:	YAII PN, Ltd.



 




    	13



    	 



    

 


	With
    Copy to:	David Gonzalez, Esq.
	 	1012 Springfield Avenue
	 	Mountainside, NJ 07092
	 	Telephone: 	(201) 536-5109
	 	Email: 	 
	 	 	 
	If
    to the Company, to:	Kraig Biocraft Laboratories, Inc.
	 	2723 South State Street – Suite 150
	 	Ann Arbor, MI 48104
	 	Attention:	Kim Thompson
	 	Telephone: 	(734) 619-8066
	 	 

        

        Email: 
	 
	 	 	 
	With
    a copy (which shall not constitute notice to: 	Hunter Taubman Fischer & Li LLC


800 Third Avenue, Suite 2800


New York, NY 10022



	 	 	 
	 	Attention: 	Louis Taubman, Esq.
	 	Telephone:	(917) 512-0827
	 	

        

        Email:
	ltaubman@htflawyers.com


 


or
at such other address and/or electronic email address and/or to the attention of such other person as the recipient party has
specified by written notice given to each other party 3 Business Days prior to the effectiveness of such change. Written confirmation
of receipt (i) given by the recipient of such notice, consent, waiver or other communication, (ii) mechanically or electronically
generated by the sender’s computer containing the time, date, recipient’s electronic mail address and the text of
such electronic mail or (iii) provided by a nationally recognized overnight delivery service, shall be rebuttable evidence of
personal service, receipt by electronic mail or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.


 




    	14



    	 



    

 


Section
12. Date. The date of this Warrant is set forth on page 1 hereof. This Warrant, in all events, shall be wholly void and
of no effect after the close of business on the Expiration Date, except that notwithstanding any other provisions hereof, the
provisions of Section 3(d) shall continue in full force and effect after such date as to any Warrant Shares or other securities
issued upon the exercise of this Warrant.


 


Section
13. Amendment and Waiver. Except as otherwise provided herein, the provisions of the Warrant may be amended and the Company
may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company has
obtained the written consent of the holders of Warrants representing at least 2/3rds of the Warrant Shares issuable upon exercise
of the Warrants then outstanding; provided that, except for Section 8(c), no such action may increase the Warrant Exercise Price
or decrease the number of shares or class of stock obtainable upon exercise of any Warrant without the written consent of the
holder of such Warrant.


 


Section
14. Assignment. This Warrant may be assigned by the Holder only if such assignment is made in compliance with all applicable
laws, including federal and state securities laws. In connection with any permitted transfer, the transferee shall make such representation
and warranties to the Company, consistent with Section 6 hereof, s the Company may reasonably request.


 


Section
15. Descriptive Headings; Governing Law. The descriptive headings of the several sections and paragraphs of this Warrant
are inserted for convenience only and do not constitute a part of this Warrant. The corporate laws of the State of New Jersey
shall govern all issues concerning the relative rights of the Company and its stockholders. All other questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of
New Jersey, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New Jersey
or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New Jersey.
Each party hereby irrevocably submits to the exclusive jurisdiction of the Superior Court of the state courts sitting in Union
County New Jersey and the Federal District Court for the District of New Jersey sitting in Newark, New Jersey, for the adjudication
of any dispute hereunder or in connection herewith or therewith, or with any transaction contemplated hereby or discussed herein,
and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that
the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address
for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process
and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted
by law.


 


Section
16. Remedies, Other Obligations, Breaches and Injunctive Relief. The remedies provided in this Warrant shall be cumulative
and in addition to all other remedies available under this Warrant, in any other agreement between the Company and the Holder,
at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit
the right of the Holder to pursue actual damages for any failure by the Company to comply with the terms of this Warrant. The
Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy
at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened
breach, the holder of this Warrant shall be entitled, in addition to all other available remedies, to an injunction restraining
any breach, without the necessity of showing economic loss and without any bond or other security being required.


 


Section
17. Waiver of Jury Trial. AS A MATERIAL INDUCEMENT FOR EACH PARTY HERETO TO ENTER INTO THIS WARRANT, THE PARTIES HERETO
HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING RELATED IN ANY WAY TO THIS WARRANT AND/OR ANY AND ALL OF THE TRANSACTION
DOCUMENTS ASSOCIATED WITH THIS TRANSACTION.


 


REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK


 




    	15



    	 



    

 


IN
WITNESS WHEREOF, the Company has caused this Warrant to be signed as of the date first set forth above.


 


	 	KRAIG
    BIOCRAFT LABORATORIES, INC.
	 	 	 
	 	By:	                
	 	Name:	 
	 	Title:	 


 




    	16



    	 



    

 


EXHIBIT
A TO WARRANT


 


EXERCISE
NOTICE


 


TO
BE EXECUTED


BY
THE REGISTERED HOLDER TO EXERCISE THIS WARRANT


 


KRAIG
BIOCRAFT LABORATORIES, INC.


 


The
undersigned holder hereby exercises the right to purchase ______________ of the shares of Common Stock (“Warrant Shares”)
of KRAIG BIOCRAFT LABORATORIES, INC. (the “Company”), evidenced by the attached Warrant (the “Warrant”).
Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant.


 


Specify
Method of exercise by check mark:


 


1.
___ Cash Exercise


 


(a)
Payment of Warrant Exercise Price. The holder shall pay the Aggregate Exercise Price of $______________ to the Company
in accordance with the terms of the Warrant.


 


(b)
Delivery of Warrant Shares. The Company shall deliver to the holder _________ Warrant Shares in accordance with the terms
of the Warrant.


 


2.
___ Cashless Exercise


 


(a)
Payment of Warrant Exercise Price. In lieu of making payment of the Aggregate Exercise Price, if permitted by the terms
of the Warrant, the holder elects to receive upon such exercise the Net Number of shares of Common Stock determined in accordance
with the terms of the Warrant.


 


(b)
Delivery of Warrant Shares. The Company shall deliver to the holder _________ Warrant Shares in accordance with the terms
of the Warrant.


 


Date:
_______________ __, ______


 


	Name
    of Registered Holder	 
	 	 	 
	By:	 	 
	Name:	 	 
	Title:	 	 


 


Address:


Taxpayer
ID No.:


 




    	 



    	 



    

 


EXHIBIT
B TO WARRANT


 


FORM
OF WARRANT POWER


 


FOR
VALUE RECEIVED, the undersigned does hereby assign and transfer to ________________, Federal Identification No. __________,
a warrant to purchase ____________ shares of the capital stock of KRAIG BIOCRAFT LABORATORIES, INC. represented by warrant certificate
no. _____, standing in the name of the undersigned on the books of said corporation. The undersigned does hereby irrevocably constitute
and appoint ______________, attorney to transfer the warrant of said corporation, with full power of substitution in the premises.


 


	Dated:	 	 		 
	 	 	 	 	 
	 	 	 	By:	 
	 	 	 	Name:	 
	 	 	 	Title: