Securities
Purchase Agreement


 


This
Securities Purchase Agreement (the “Agreement”) is made as of [ ], 2013 (the “Effective
Date”) by and among Protea Biosciences Group, Inc., a Delaware corporation
(the “Company”), and the undersigned purchaser (the “Purchaser”).


 


Recitals


 


WHEREAS, the
Company is offering (the “Offering”) up to 3,000,000 shares (the “Shares”)
of the Company’s common stock, par value $0.0001 per share (the “Common Stock”) and warrants to
purchase up to 2,250,000 shares of Common Stock, substantially in the form attached hereto as Exhibit A (the “Warrants”)
at a purchase price of $0.50 per Share for maximum aggregate proceeds equal to $1,500,000 (the “Maximum Amount”);
and


 


WHEREAS, the
Purchaser desires to purchase and the Company desires to sell the Shares and the Warrants on the terms and conditions described
herein.


 


Agreement


 


Now,
Therefore, in consideration of the foregoing, and the representations, warranties, covenants and conditions set forth
below, the Company and the Purchaser, intending to be legally bound, hereby agrees as follows:


 


1.         Purchase
of Shares. Subject to the terms of this Agreement, at the Closing (as defined below) the Company agrees to issue and
sell to the Purchaser, and the Purchaser agrees, to purchase from the Company, the number of Shares of the Company's Common Stock
set forth on the signature page hereto, at a purchase price of $0.50 per share, for the aggregate purchase price set forth on the
signature page hereto (the “Purchase Price”).


 


2.         Warrant.
In addition to the Shares, the Purchaser shall also receive a Warrant, exercisable for a term of five
years from the issue date of the Warrant, to purchase the number of shares of Common Stock (the “Warrant Shares”)
equal to 75% of the number of Shares purchased by the Purchaser pursuant to Section 1 hereof, at an exercise price of $1.10 per
share (the “Exercise Price”). The Shares, the Warrant and the Warrant Shares may hereinafter,
collectively, be referred to as the “Securities”.


 


3.         Use
of Proceeds. The Company shall use the proceeds from the sale of the Shares and the Warrant for general corporate purposes.


 


4.         The
Closing(s)


 


4.1         Closing
Date. The closing of the sale and purchase of the Shares and the Warrant (the “Closing”) shall be
held on the Effective Date.


 


4.2         Delivery.
At the Closing, the Purchaser will deliver to the Company a check or wire transfer funds in the amount of the Purchase Price and
within a reasonable time thereafter the Company will issue and deliver to the Purchaser (i) a certificate representing the Shares,
and (ii) a corresponding Warrant to purchase the Warrant Shares.


 


5.         Representations
and Warranties of the Company. Except as set forth in any periodic reports or current reports filed by the Company with
the United States Securities and Exchange Commission (the “Commission”), the Company hereby represents
and warrants to the Purchaser at the Closing, as of the date of the Closing, as follows:


 




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5.1         Organization
and Authority. The Company and each of its respective subsidiaries, (i) is a corporation or company, as applicable, validly
existing and in good standing under the laws of the jurisdiction of its incorporation or formation, as applicable, (ii) has all
requisite corporate power or company power, as applicable, and authority to own, lease and operate its properties and to carry
on its business as presently conducted, and (iii) has all requisite corporate power or company power, as applicable, and authority
to execute, deliver and perform their obligations under this Agreement and the Warrant (collectively, the “Offering
Documents”), and to consummate the transactions contemplated thereby.


 


5.2         Qualifications.
Each of the Company and its subsidiaries, is duly qualified to do business as a foreign corporation or foreign company, as applicable,
and is in good standing in all jurisdictions where such qualification is necessary and where failure so to qualify could reasonably
be expected to have a material adverse effect on the business, properties, operations, condition (financial or other), results
of operations or prospects of the Company and its subsidiaries, taken as a whole.


 


5.3         Capitalization
of the Company. The authorized capital stock of the Company consists of 100,000,000 shares of Common Stock, and 10,000,000
shares of "blank check" preferred stock, par value $0.0001 per share. The Securities to be issued to the Purchaser have
been duly authorized, and when issued and paid for in accordance with this Agreement, the Common Stock will be duly and validly
issued, fully paid and non-assessable. The Warrant Shares, when issued and paid for in accordance with the Warrant(s), will be
duly and validly issued, fully paid and non-assessable.


 


5.4         Authorization.
The Offering Documents have been duly and validly authorized by the Company. This Agreement, assuming due execution and delivery
by the Purchaser, when the Agreement is executed and delivered by the Company, will be, a valid and binding obligation of the Company,
enforceable in accordance with its terms, except as the enforceability hereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to or affecting creditors' rights generally and general principles
of equity, regardless of whether enforcement is considered in a proceeding in equity or at law.


 


5.5         Non-Contravention.
The execution and delivery of the Offering Documents by the Company, the issuance of the Securities as contemplated by the Offering
Documents and the completion by the Company of the other transactions contemplated by the Offering Documents do not and will not,
with or without the giving of notice or the lapse of time, or both, (i) result in any violation of any provision of the certificate
of incorporation or by-laws or similar instruments of the Company or its subsidiaries, (ii) conflict with or result in a breach
by the Company or its subsidiaries of any of the terms or provisions of, or constitute a default under, or result in the modification
of, or result in the creation or imposition of any lien, security interest, charge or encumbrance upon any of the properties or
assets of the Company or its subsidiaries, pursuant to any agreements, instruments or documents filed as exhibits to the Company’s
reports filed with the Commission pursuant to the Securities Exchange Act of 1934, as amended, or any indenture, mortgage, deed
of trust or other agreement or instrument to which any of the Company or any of its subsidiaries is a party or by which the Company
or any of its subsidiaries or any of their properties or assets are bound or affected, in any such case which could reasonably
be expected to have a material adverse effect on the business, properties, operations, condition (financial or other), results
of operations or prospects of the Company its subsidiaries, taken as a whole, or the validity or enforceability of, or the ability
of the Company to perform its obligations under the Offering Documents, (iii) violate or contravene any applicable law, rule or
regulation or any applicable decree, judgment or order of any court, United States federal or state regulatory body, administrative
agency or other governmental body having jurisdiction over the Company or any of its subsidiaries or any of their respective properties
or assets that could reasonably be expected to have a material adverse effect on the business, properties, operations, condition
(financial or other), results of operations or prospects of the Company and its subsidiaries, taken as a whole, or the validity
or enforceability of, or the ability of the Company to perform its obligations under the Offering Documents, or (iv) cause the
loss of, or violate, any permit, certification, registration, approval, consent, license or franchise necessary for the Company
or its subsidiaries to own or lease and operate any of its properties and to conduct any of its business or the ability of the
Company or its subsidiaries to make use thereof, except such loss or violations as individually or in the aggregate would not have
a material adverse effect on the business, properties, operations, condition (financial or other), results of operations or prospects
of the Company and its subsidiaries, taken as a whole.


 




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5.6         Information
Provided. The Company hereby represents and warrants to the Purchaser that the information, provided by the Company to the
Purchaser, does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they are made, not misleading, it being understood that for
purposes of this Section 5.6, any statement contained in such information shall be deemed to be modified or superseded for purposes
of this Section 5.6 to the extent that a statement in any document included in such information which was prepared and furnished
to the Purchaser on a later date modifies or replaces such statement, whether or not such later prepared and furnished statement
so states.


 


5.7         Absence
of Certain Proceedings. Neither the Company nor its subsidiaries is aware of any action, suit, proceeding, inquiry or investigation
before or by any court, public board or body, or governmental agency pending or threatened against or affecting the Company or
any of its subsidiaries, in any such case wherein an unfavorable decision, ruling or finding could reasonably be expected to have
a material adverse effect on the business, properties, operations, condition (financial or other), results of operations or prospects
of the Company, or the transactions contemplated by the Offering Documents or which could adversely affect the validity or enforceability
of, or the authority or ability of the Company to perform its obligations under the Offering Documents; and to the Company's knowledge
there is not pending or contemplated any, and there has been no, investigation by the Commission involving the Company or its subsidiaries
or any of their current directors or officers.


 


5.8         Compliance
with Law. Neither the Company nor any of its subsidiaries is in violation of or has any liability under any statute, law, rule,
regulation, ordinance, decision or order of any governmental agency or body or any court, domestic or foreign, except where such
violation or liability could not individually or in the aggregate be reasonably expected to have a material adverse effect on the
business, properties, operations, condition (financial or other), results of operations or prospects of the Company and its subsidiaries,
taken as a whole; and to the knowledge of the Company there is no pending investigation that would reasonably be expected to lead
to such a claim.


 


5.9         Tax
Matters. The Company and its subsidiaries has filed all federal, state and local income and franchise tax returns required
to be filed and has paid all taxes shown by such returns to be due, and no tax deficiency has been determined adversely to the
Company or any of its subsidiaries which has had (nor does the Company or any of its subsidiaries have any knowledge of any tax
deficiency which, if determined adversely to the Company or any of its subsidiaries, might have) could reasonably be expected to
have a material adverse effect on the business, properties, operations, condition (financial or other), results of operations,
or prospects of the Company or any of its subsidiaries, taken as a whole.


 


5.10         Filings,
Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any notice
to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other
person in connection with the execution, delivery and performance by the Company of the Offering Documents, other than: (i) the
filings required pursuant to this Agreement, (ii) the filings with the Commission pursuant to Section 8 of this Agreement, and
(iii) the filing of Form D with the Commission and such filings as are required to be made under applicable state securities laws.


 




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5.11         Private
Placement. Assuming the accuracy of the representations and warranties of the Purchaser set forth in Section 6 below, no registration
under the Securities Act is required for the offer and sale of the Securities by the Company to the Purchaser as contemplated hereby.


 


5.12         No
General Solicitation. Neither the Company nor any of its officers or directors has offered or sold any of the Securities by
any form of general solicitation or general advertising.


 


5.13         Investment
Company. The Company is not, and is not an affiliate of, and immediately after receipt of payment for the Securities, will
not be or be an affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as
amended. The Company shall conduct its business in a manner so that it will not become an “investment company” subject
to registration under the Investment Company Act of 1940, as amended.


 


6.         Representations
and Warranties of the Purchaser


 


6.1         The
Purchaser acknowledges that this subscription may be accepted or rejected, in whole or in part, by the Company in its sole discretion.
The Company shall have no obligation to sell the Securities to the Purchaser unless and until this Agreement is executed and delivered
by the Purchaser and accepted by the Company and the Company has received the Purchase Price.


 


6.2         Except
as provided under applicable state securities laws, this subscription is irrevocable upon acceptance by the Company, except that
the Purchaser shall have no obligation under it in the event that the subscription is rejected in whole or the offering of the
Securities is canceled.


 


6.3         The
Purchaser recognizes that the purchase of the Securities involves a high degree of risk including, but not limited to, the following:
(i) an investment in the Company is highly speculative, and only investors who can afford the loss of their entire investment should
consider investing in the Company and the Securities; (ii) the Purchaser may not be able to liquidate the Purchaser’s investment;
(iii) transferability of the Securities is extremely limited; (iv) in the event of a disposition of the Securities, the Purchaser
could sustain the loss of the Purchaser’s entire investment, and (v) the Company has not paid any dividends since inception
and does not anticipate the payment of dividends in the foreseeable future.


 


6.4         The
Purchaser represents that the Purchaser is an “accredited investor” as such term is defined in Rule 501 of Regulation
D promulgated under the Securities Act of 1933, as amended (the “Securities Act”), and that the Purchaser
is able to bear the economic risk of an investment in the Securities. If the Purchaser is purchasing in an individual capacity,
then Purchaser certifies that either (a) the Purchaser had an individual income of more than $200,000 in each of calendar years
2011 and 2012, or joint income with the Purchaser’s spouse in excess of $300,000 in each of those years, and that the Purchaser
reasonably expects to reach the same income level in calendar year 2013 or (b) the Purchaser has an individual net worth, or with
the Purchaser’s spouse has a joint net worth, in excess of $1,000,000 (excluding the value of
the individual’s primary residence).


 


6.5         The
Purchaser hereby acknowledges and represents that the Purchaser has prior investment experience, including investment in securities
that are not listed, are unregistered and are not traded on any stock exchange or an automated quotation system.


 




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6.6         The
Purchaser hereby acknowledges receipt and careful review of this Agreement and the form of Warrant and hereby represents that the
Purchaser has been furnished by the Company during the course of this transaction with all information regarding the Company and
the Securities that the Purchaser has requested or desired to know, has been afforded the opportunity to ask questions of, and
to receive answers from, duly authorized officers or other representatives of the Company concerning the terms and conditions of
the Securities and the affairs of the Company and has received any additional information which the Purchaser has requested. In
evaluating the suitability of this investment in the Company, the Purchaser has not relied upon any representations or other information
(whether oral or written) other than as set forth in this Agreement.


 


6.7         To
the extent the Purchaser has deemed necessary, the Purchaser has retained, at the sole expense of the Purchaser, and relied upon
appropriate professional advice regarding the investment, tax and legal merits and consequences of this Agreement and its purchase
of the Securities hereunder.


 


6.8         The
Purchaser represents that no Securities were offered or sold to it by means of any form of general solicitation or general advertising,
and in connection therewith the Purchaser did not (A) receive or review any advertisement, article, notice or other communication
published in a newspaper or magazine or similar media or broadcast over television or radio, whether closed circuit or generally
available; or (B) attend any seminar meeting or industry investor conference whose attendees were invited by any general solicitation
or general advertising.


 


6.9         The
Purchaser hereby represents that the Purchaser either by reason of the Purchaser’s business or financial experience, or the
business or financial experience of the Purchaser’s professional advisors (who are unaffiliated with and who are not compensated
by the Company or any affiliate or selling agent of the Company, directly or indirectly), has the capacity to protect the Purchaser’s
interests in connection with the transaction contemplated hereby and to adequately evaluate the risks and merits of the investment
in the Securities.


 


6.10         The
Purchaser is able to bear the substantial economic risks of an investment in the Company and could afford a complete loss of such
investment. The Purchaser's overall commitment to investments which are not readily marketable is not disproportionate to the Purchaser's
net worth and the Purchaser's investment in the Company will not cause such overall commitment to become excessive. The Purchaser
has adequate net worth and means of providing for current needs and personal contingencies to sustain a complete loss of the Purchaser's
investment in the Company, and the Purchaser has no need for liquidity in this investment.


 


6.11         The
Purchaser hereby acknowledges that the Securities have not been reviewed by the Commission or any state regulatory authority, and
that the sale of the Securities is intended to be exempt from the registration requirements of Section 8 of the Securities Act
based in part upon the Purchaser’s representations and agreements contained in this Agreement. The Purchaser agrees that
it shall not sell or otherwise transfer the Securities unless they are registered under the Securities Act and applicable state
securities laws or unless and until the Company receives an opinion of counsel satisfactory to the Company that an exemption from
such registration is available. The Purchaser acknowledges that no federal or state agency has made any determination as to the
fairness of the offering of the Securities, or any recommendation or endorsement of the Securities.


 


6.12         The
Purchaser understands that the Securities have not been registered under the Securities Act by reason of a claimed exemption under
the provisions of the Securities Act which depends, in part, upon the Purchaser’s investment intention. In this connection,
the Purchaser hereby represents that the Purchaser is purchasing the Securities for the Purchaser’s own account for investment
and not with a view toward the resale or distribution to others. If other than a natural person, the Purchaser was not formed for
the purpose of purchasing the Securities.


 




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6.13         The
Purchaser understands that the Securities may not be sold, transferred, or otherwise disposed of without registration under the
Securities Act or an exemption therefrom, and that in the absence of an effective registration statement covering the Securities
or an available exemption from registration under the Securities Act, the Securities must be held indefinitely. In particular,
the Purchaser is aware that the Securities may not be sold pursuant to Rule 144 promulgated under the Securities Act unless all
of the conditions of such rule are met.


 


6.14         The
Purchaser acknowledges that except as set forth in Section 5 of this Agreement, the Company has made no representations with respect
to registration of the Securities, that no such registration is contemplated in the foreseeable future, that there can be no assurance
that there will be any market for the Securities in the future, and that, as a result, the Purchaser must be prepared to bear the
economic risk of the Purchaser’s entire investment for an indefinite period of time.


 


6.15         The
Purchaser consents to the placement of a legend on any certificate or other document evidencing the Securities that such Securities
have not been registered under the Securities Act or any state securities or “blue sky” laws and setting forth or referring
to the restrictions on transferability and sale thereof contained in this Agreement. The Purchaser is aware that the Company will
make a notation in its appropriate records with respect to the restrictions on the transferability of such Securities.


 


6.16         The
Purchaser hereby represents that the address of the Purchaser furnished by Purchaser on the signature page hereof is the Purchaser’s
legal residence or principal business address, as the case may be.


 


6.17         The
Purchaser represents that the Purchaser has full power and authority to execute and deliver this Agreement and to purchase the
Securities. This Agreement constitutes the legal, valid and binding obligation of the Purchaser, enforceable against the Purchaser
in accordance with its terms.


 


6.18         The
Purchaser acknowledges that at such time, if ever, as the Securities are registered under the Securities Act, sales of the Securities
will continue to be subject to state securities laws.


 


6.19         The
Purchaser represents and warrants that the Purchaser has not engaged, consented to nor authorized any broker, finder or intermediary
to act on the Purchaser’s behalf, directly or indirectly, as a broker, finder or intermediary in connection with the transactions
contemplated by this Agreement. The Purchaser shall indemnify and hold harmless the Company from and against all fees, commissions
or other payments owing to any such person or firm acting on behalf of the Purchaser hereunder.


 


6.20         The
Purchaser shall be the beneficial owner of the Securities for which the Purchaser subscribes.


 


6.21         If
this Agreement is executed and delivered on behalf of a partnership, trust, corporation or other entity, the Purchaser has been
duly authorized to execute and deliver this Agreement and all other documents and instruments executed and delivered on behalf
of such entity in connection with this investment in the Company.


 


6.22         The
Purchaser has completed the Accredited Investor Questionnaire attached hereto as Exhibit B, and represents and warrants
that the information contained in such documents is true and complete as of the date of this Agreement.


 




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6.23         The
foregoing representations and warranties are true as of the date of this Agreement and shall be true as of the Closing. If, in
any respect, such representations and warranties shall not be true on or prior to such date, the Purchaser will give prompt written
notice of such fact to the Company.


 


6.24         The
Purchaser understands and acknowledges that the Company may conduct additional offerings simultaneously and may issue shares of
Common Stock or other securities at a per share price that may be different than the purchase price paid for the Securities or
with other terms and conditions that may not be offered to the Purchaser hereto.


 


7.         “Market
Stand-off” Agreement.


 


The
Purchaser agrees that, if the Purchaser is requested by an underwriter (an “Underwriter”) of shares of
the Company’s Common Stock or other securities of the Company, the Purchaser will not sell, assign or otherwise transfer
or dispose of any Common Stock, Warrants or other securities of the Company held by it or under its control for a specified period
of time (not to exceed 180 days) following the effective date of a registration statement filed by the Company under the Securities
Act in connection with such underwritten offering. Although the provisions of Section 7 of this Agreement shall be binding upon
the Purchaser and the Purchaser’s successors and assigns without the execution of any further agreements or documents memorializing
this obligation, if the Company or an Underwriter so requests the Purchaser will execute such further agreements and documents
as are requested to further memorialize this obligation. Any such further agreements or documents shall be in a form satisfactory
to the Company and the Underwriter. The Company may impose stop-transfer instructions with respect to the shares of Common Stock
or other securities subject to the foregoing restriction until the end of the specified period.


 


8.         Registration
Rights.


 


8.1         For
purposes of this Section 8 the capitalized terms in this Section 8 shall have the following meanings:


 


(a)         “Family
Member” means a) with respect to any individual, such individual’s spouse, any descendants (whether natural
or adopted), any trust all of the beneficial interests of which are owned by any of such individuals or by any of such individuals
together with any organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, the estate of any
such individual, and any corporation, association, partnership or limited liability company all of the equity interests of which
are owned by those above described individuals, trusts or organizations and (b) with respect to any trust, the owners of the beneficial
interests of such trust.


 


(b)         “Holders”
means the Purchaser or any of Purchaser’s Permitted Assignees who acquires rights in accordance with this Agreement with
respect to any Registrable Securities (defined below) directly or indirectly from the Purchaser or from any Permitted Assignee
(defined below).


 


(c)         “Investor
Shares” means the Shares.


 


(d)         “Investor
Warrants” means the Warrants.


 


(e)         “Permitted
Assignee” means (a) with respect to a partnership, its partners or former partners in accordance with their partnership
interests, (b) with respect to a corporation, its stockholders in accordance with their interest in the corporation, (c) with respect
to a limited liability company, its members or former members in accordance with their interest in the limited liability company,
(d) with respect to an individual party, any Family Member of such party, (e) an entity that is controlled by, controls, or is
under common control with a transferor, or (f) a party to this Agreement.


 




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(f)
         “Registrable Securities”
means the Investor Shares and the Registrable Warrant Shares but excludes (i) any Registrable Securities sold by a person in a
transaction pursuant to registration statement filed under the Securities Act, or (ii) any Registrable Securities that are at the
time subject to an effective registration statement under the Securities Act.


 


(g)         “Registrable
Warrant Shares” means the shares of Common Stock issued or issuable to the Purchaser upon exercise of the Investor
Warrants.


 


8.2         Piggyback
Registration.   In the event the Company shall determine in its sole discretion to register with the Commission for
sale any Common Stock, for its own account or for the account of others, other than (i) a registration relating solely to employee
benefit plans or securities issued or issuable to employees, consultants (to the extent the securities owned or to be owned by
such consultants could be registered on Form S-8) or any of their Family Members (including a registration on Form S-8) or (ii)
a registration relating solely to a Securities Act Rule 145 transaction or a registration on Form S-4 in connection with a merger,
acquisition, divestiture, reorganization or similar event, the Company shall promptly give to the holders of the Registrable Securities
written notice thereof (and in no event shall such notice be given less than ten (10) calendar days prior to the filing of such
registration statement), and shall, include all of the Registrable Securities specified in a written request delivered by the Holder
thereof within five (5) calendar days after receipt of such written notice from the Company. The Company may, without the consent
of the Holders, withdraw such registration statement prior to its becoming effective if the Company or such other stockholders
have elected to abandon the proposal to register the securities proposed to be registered thereby.


 


Notwithstanding the
foregoing, if such registration undertaken by the Company is in connection with an underwritten public offering, and the underwriter
in such public offering reasonably determines that inclusion of all of the Registrable Securities in such registration would be
detrimental to the successful completion of the offering contemplated in such registration statement, and based on such determination
recommends inclusion in such registration statement of fewer or none of the Registrable Securities of the Holders, then (x) the
number of Registrable Securities of the Holders included in such registration statement shall be reduced pro-rata among such Holders
(based upon the number of Registrable Securities requested to be included in the registration), if the Company after consultation
with the underwriter(s) recommends the inclusion of fewer Registrable Securities, or (y) none of the Registrable Securities of
the Holders shall be included in such registration statement, if the Company after consultation with the underwriter(s) recommends
the inclusion of none of such Registrable Securities; provided, however, that if Securities are being offered for the account of
other persons or entities as well as the Company, such reduction shall not represent a greater fraction of the number of Registrable
Securities intended to be offered by the Holders than the fraction of similar reductions imposed on such other persons or entities
(other than the Company).


 


8.3         Expenses.
The Company shall bear all expenses incurred by the Company in compliance with the registration obligation of the Company, including,
without limitation, all registration and filing fees, printing expenses, fees and disbursements of counsel for the Company incurred
in connection with any registration, qualification or compliance pursuant to this Agreement and all underwriting discounts, selling
commissions and expense allowances applicable to the sale of any securities by the Company for its own account in any registration.
All underwriting discounts, selling commissions and expense allowances applicable to the sale by Purchaser of Registrable Securities
and all fees and disbursements of counsel for the Purchaser shall be borne by the Purchaser.


 


 




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8.4         Indemnification.



 


(a)         To
the extent permitted by law, the Company will indemnify the Purchaser, each of its officers, directors, agents, employees and partners,
and each person controlling the Purchaser, with respect to each registration of Registrable Securities under the Securities Act
and qualification of Registrable Securities under state securities laws effected pursuant to this Agreement, against all claims,
losses, damages and liabilities (or actions, proceedings or settlements in respect thereof) arising out of or based on (i) any
untrue statement (or alleged untrue statement) of a material fact contained in any prospectus, offering circular or other document
prepared and filed by the Company pursuant to which Registrable Securities were registered under the Securities Act (including
any related registration statement, notification or the like) incident to any such registration or qualification, or (ii) any 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 by the Company of the Securities Act or any rule or regulation thereunder applicable to the Company
and relating to action or inaction required of the Company in connection with any such registration or qualification, and subject
to the provisions of this section below, will reimburse the Purchaser, the Purchaser’s officers, directors, agents, employees
and partners, and each person controlling the Purchaser, for any legal and any other expenses as they are reasonably incurred in
connection with investigating and defending any such claim, loss, damage, liability or action, provided, however, that the
Company will not be liable to the extent that any such claim, loss, damage, liability or expense arises out of or is based on any
failure of the Purchaser or the Purchaser’s representatives to distribute Registrable Securities in accordance with applicable
laws (including failure to deliver any required preliminary prospectus or final prospectus (or the final prospectus as amended
and supplemented) at or before the written confirmation of the sale of such Registrable Securities); nor shall the Company be liable
in any such case for any such loss, claim, damage, liability or action to the extent that it arises out of or is based upon a violation
which occurs in reliance upon and in conformity with written information furnished expressly for use in connection with such registration
by the Purchaser, any such partner, officer, director, employee, agent or controlling person of the Purchaser, or any such underwriter
or any person who controls any such underwriter. Notwithstanding the foregoing, the indemnity contained in this subsection shall
not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without
the consent of the Company (which consent shall not be unreasonably withheld).


 


(b)         To
the extent permitted by law, the Purchaser will indemnify the Company, and its directors, officers, agents, employees and each
underwriter, if any, of the Company’s securities covered by such a registration statement, each person who controls the Company
or such underwriter within the meaning of the Securities Act and the rules and regulations thereunder, against all claims, losses,
damages and liabilities (or actions in respect thereof) arising out of or based on any failure of the Purchaser or the Purchaser’s
representatives to distribute Registrable Securities in accordance with applicable laws (including failure to deliver any required
preliminary prospectus or final prospectus (or the final prospectus as amended and supplemented to the extent such amendment or
supplement is timely provided to the Purchaser as required herein) as required by applicable law); or any untrue statement (or
alleged untrue statement) of a material fact contained in any such registration statement, prospectus, offering circular or other
document, or any 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, directors, officers, partners, persons, underwriters
or control persons for any legal or any other expenses as they are reasonably incurred in connection with investigating or defending
any such claim, loss, damage, liability or action, in each case to the extent, but only to the extent, that such untrue statement
(or alleged untrue statement) or omission (or alleged omission) is made in such registration statement, prospectus, offering circular
or other document in reliance upon and in conformity with written information furnished to the Company by the Purchaser for specific
use in such registration statement, prospectus, offering circular or other document; provided, however, that the obligations of
the Purchaser hereunder shall be limited to an amount equal to the net proceeds to the Purchaser from Registrable Securities sold
under such registration statement, prospectus, offering circular or other document as contemplated herein; provided, further, that
the indemnity agreement contained in this subsection shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the Purchaser, which consent shall not be unreasonably
withheld or delayed.


 




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(c)         Each
party entitled to indemnification under this section (the “Indemnified Party”) shall give notice to the party
required to provide indemnification (the “Indemnifying Party”) promptly after such Indemnified Party has actual
knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom, provided that counsel for the Indemnifying Party, who shall conduct the defense
of such claim or any litigation resulting therefrom, shall be approved by the Indemnified Party (whose approval shall not unreasonably
be withheld), and the Indemnified Party may participate in such defense at such party’s expense; and provided further that
if counsel to the Indemnified Party shall reasonably believe that a material conflict of interest is likely to exist if the same
counsel were to represent such Indemnified Party and the Indemnifying Party then the Indemnified Party may retain one separate
counsel at the expense of the Indemnifying Party; and provided further that the failure of any Indemnified Party to give notice
as provided herein shall not relieve the Indemnifying Party of its obligations under this Agreement unless and only to the extent
that such failure to give notice results in material prejudice to the Indemnifying Party. No Indemnifying Party, in the defense
of any such claim or litigation, shall, except with the consent of each Indemnified Party, consent to entry of any judgment or
enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or litigation. Each Indemnified Party shall furnish
such information regarding itself or the claim in question as an Indemnifying Party may reasonably request in writing and as shall
be reasonably required in connection with defense of such claim and litigation resulting therefrom.


 


(d)         If
the indemnification provided for in this section is held by a court of competent jurisdiction to be unavailable to an Indemnified
Party with respect to any loss, liability, claim, damage or expense referred to herein, then the Indemnifying Party, in lieu of
indemnifying such Indemnified Party hereunder, shall contribute to the amount paid or payable by such Indemnified Party as a result
of such loss, liability, claim, damage or expense in such proportion as is appropriate to reflect the relative fault of the Indemnifying
Party on the one hand and of the Indemnified Party on the other in connection with the statements or omissions which resulted in
such loss, liability, claim, damage or expense as well as any other relevant equitable considerations. The relative fault of the
Indemnifying Party and of the Indemnified Party shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the Indemnifying
Party or by the Indemnified Party and the parties’ relative intent, knowledge, access to information and opportunity to correct
or prevent such statement or omission.


 


9.         Purchaser
Indemnification.


 


         The
Purchaser acknowledges that the Purchaser understands the meaning and legal consequences of the representations, warranties and
agreements contained in this Agreement, and hereby agrees to indemnify and hold harmless the Company and any affiliate thereof,
and the officers, directors, stockholders, agents and employees of the foregoing or any professional advisors thereto from and
against any and all loss, damage, liability or expense (including reasonable attorneys' fees) due to or arising out of a breach
of any representation or warranty or failure to fulfill any obligation of the Purchaser, contained in this Agreement, or arising
out of the sale or distribution by the Purchaser of any Securities in violation of the Securities Act or any applicable state securities
laws. Notwithstanding any of the representations, warranties, acknowledgments or agreements made herein by the Purchaser, the Purchaser
does not hereby, or in any other manner, waive any rights granted to him or her under federal or state securities laws.




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10.         Anti-Dilution.


 


10.1         Definitions.
For purposes of this Section 10 the capitalized terms in this Section 10 shall have the following meanings:


 


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


 


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


 


(c)         “Exempted
Securities” shall mean:


 


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


 


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


 


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


 


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


 


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


 


(d)         “Original
Issue Date” shall mean the closing date with respect to the purchase and sale of the Securities.


 


(e)         "Weighted
Average Adjusted Purchase Price" shall mean the adjusted Purchase Price computed in accordance with the following
formula:


 


	P2  =	 P1        x	(A + B)
	(A + C)


 


	Where:	P2 =	the Weighted Average Adjusted Purchase Price.
	 	P1 =	the Purchase Price (subject to proportionate adjustment pursuant to forward or reverse stock splits, stock dividends or other similar proportionately-applied change). 
	 	A =	the number of shares of the Common Stock outstanding, on a fully diluted basis, immediately prior to the Dilutive Issuance (defined below).


 




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	 	B =	the number of shares which the aggregate offering price of the total number of Additional Shares of Common Stock issued pursuant to the Dilutive Issuance (assuming receipt by the Company in full of all consideration payable upon exercise of any rights, options or warrants issued in such Dilutive Issuance) would purchase at the Purchase Price (as adjusted for forward or reverse stock splits, stock dividends or other similar proportionately-applied change).  
	 	C =	the number of Additional Shares of Common Stock issued pursuant to the Dilutive Issuance.


 


 


10.2         Adjustment
Upon Issuance of Additional Shares of Common Stock. If, at any time prior to December 31, 2013, the Company issues or sells
Additional Shares of Common Stock at a price per share (or conversion or exercise price, as the case may be) of less than $0.50
(subject to proportionate adjustment for forward or reverse stock splits, stock dividends or other similar proportionately-applied
change)(a "Dilutive Issuance"), then, not later than ten (10) business days following such Dilutive Issuance,
the Company shall be required to issue to the Purchaser, for no additional consideration, an additional number of shares of Common
Stock equal to the difference of (i) an amount equal to (A) the aggregate Purchase Price paid under this Agreement divided by (B)
the Weighted Average Adjusted Purchase Price, less (ii) the number of shares of Common Stock issued to the Purchaser hereunder,
less (iii) the number of shares of Common Stock issued to the Purchaser pursuant to this Section 10.2 as a result of a prior Dilutive
Issuance. Such additional shares of Common Stock shall be issued to the Purchaser whenever a Dilutive Issuance occurs. A Dilutive
Issuance shall not include any issuance of Exempted Securities. No additional Warrant shall be issued pursuant to this Section
10.2 as a result of any Dilutive Issuance.


 


11.         Miscellaneous


 


11.1         Notice.
Any notice or other communication given hereunder shall be deemed sufficient if in writing and sent by registered or certified
mail, return receipt requested, by overnight delivery by reputable courier or delivered by hand against written receipt therefor,
if to the Company addressed to Protea Biosciences Group, Inc. 955 Hartman Run Road, #210, Morgantown, WV 26507, Attn: President,
or such other address as has been provided to the Purchaser by the Company in writing, and if to the Purchaser at the Purchaser’s
address stated on the signature page of this Agreement, or such other address as has been provided to the Company by the Purchaser
in writing. Notices shall be deemed to have been given or delivered on the date of mailing, except notices of change of address,
which shall be deemed to have been given or delivered when received.


 


11.2         Amendment.
This Agreement shall not be changed, modified or amended except by a writing signed by the parties to be charged, and this Agreement
may not be discharged except by performance in accordance with its terms or by a writing signed by the party to be charged.


 


11.3         Successors
and Assigns; Entire Agreement. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their
respective heirs, legal representatives, successors and assigns. Any such transferee or assignee of the Purchaser will be bound
by this Agreement and shall explicitly assume any obligations of the Purchaser under this Agreement in a writing delivered to the
Company. This Agreement sets forth the entire agreement and understanding between the parties as to the subject matter hereof and
merge and supersede all prior discussions, agreements and understandings of any and every nature among them.


 


11.4         Waiver.
A waiver by either party of a breach of any provision of this Agreement shall not operate, or be construed, as a waiver of any
subsequent breach by the same party.


  




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11.5         Further
Assurances. The parties shall execute and deliver all such further documents, agreements and instruments and shall take such
other and further action as may be necessary or appropriate to carry out the purposes and intent of this Agreement.


 


11.6         Counterparts.
This Agreement may be executed in two or more counterparts each of which shall be deemed an original, but all of which shall together
constitute one and the same instrument. Executed facsimile or other electronic signature pages (e.g., portable document format)
to this Agreement shall be considered originals.


 


11.7         Governing
Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware without
regard to principles of conflicts or choice of law.


 


11.8         Expenses.
The Purchaser will pay the Purchaser’s own expenses in connection with the transactions contemplated hereby, whether or not
such transactions are consummated.


 


11.9         Survival.
The representations, warranties and covenants of the Purchaser contained herein shall survive the closing of the purchase and sale
of the Securities and any transfer or disposition of the Securities.


  


[Signature
Page Follows]


 




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In
Witness Whereof, the parties have executed this Securities Purchase Agreement
as of the date first written above.


 


	 	Company:
	 	 
	 	PROTEA BIOSCIENCES GROUP, INC.
	 	 	 
	 	By:	 
	 	 	Name:   Steven Turner
	 	 	Title:     President


 


	 	PURCHASER: 
	 	 
	 	 
	 	Purchaser Name (Print)
	 	 
	 	 
	 	Authorized Person (if Purchaser is an entity or trust)
	 	 
	 	 
	 	Signature of Purchaser or Authorized Person
	 	 
	 	 
	 	Aggregate Purchase Price
	 	 
	 	 
	 	Number of Shares
	 	 
	 	 
	 	Number of Warrant Shares


  




    	 



    	 



    

 


Exhibit
A


 


Form
of Warrant


 




    	 



    	 



    

 


Exhibit
B


 


Form
of Accredited Investor Questionnaire


 


PROTEA BIOSCIENCES GROUP, INC.


 


ACCREDITED INVESTOR CERTIFICATION


 


Please complete the following certification.
If the answer to any question is “none” or “none applicable,” please so state.


 


Your answers will, at all times, be kept
strictly confidential, however, you hereby agree that Protea Biosciences Group, Inc. may present this questionnaire to such parties
as it deems appropriate in order to assure itself that the issuance of the securities to you will not result in a violation of
the exemption from registration under U.S. securities laws.


 


In case of insufficient space, please use
the reverse side to assure that complete answers are submitted. If the securities are being purchased jointly, all joint owners
should complete.


 


	Name:	 


 


	Address:	 


 


	Social Security Number or Taxpayer Identification Number:	 


 


	Telephone Number:	 


 


	E-mail Address:	 


 


	State of Residence or Principal Place of Business:	 


 


	Type of Business:	 


 




    	 



    	 



    

 


Accredited Investor Qualification Information—Please
check or initial all that apply.1





 


	_____ (a) 	The undersigned is a natural person whose net worth, or joint net worth with spouse, at the time of purchase, exceeds $1,000,000 (excluding the value of my primary residence).
	 	 
	_____ (b)	The undersigned is a natural person whose individual gross income (excluding that of my spouse) exceeded $200,000 in the last two fiscal years, and who reasonably expects individual gross income exceeding $200,000 in the current fiscal year.
	 	 
	_____ (c) 	The undersigned is a natural person whose joint gross income with spouse exceeded $300,000 in the last two fiscal years, and who reasonably expects joint gross income with my spouse exceeding $300,000 in the current fiscal year.
	 	 
	_____ (d) 	The undersigned is a bank, savings and loan association, broker/dealer, insurance company, investment company, pension plan, or other entity defined in Rule 501(a)(1) of Regulation D as promulgated under the Securities Act of 1933 by the Securities and Exchange Commission.
	 	 
	_____ (e) 	The undersigned is a trust, and the trustee is a bank, savings and loan association, or other institutional investor as defined in Rule 501(a)(1) of Regulation D as promulgated under the Securities Act of 1933 by the Securities and Exchange Commission.
	 	 
	_____ (f) 	The undersigned is a private business development company as defined in section 202(a)(22) of the Investment Advisers Act of 1940.
	 	 
	_____ (g) 	The undersigned is a trust, and the grantor (i) has the power to revoke the trust at any time and regain title to the trust assets; and (ii) meets the requirements of items (a) (b), or (c) above.
	 	 
	_____ (h) 	The undersigned is a tax-exempt organization described in Section 501(c) (3) of the Internal Revenue Code, or a corporation, business trust, or partnership, not formed for the specific purpose of acquiring the securities with total assets in excess of $5,000,000.
	 	 
	_____ (i) 	The undersigned is a trust with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities, whose purchase is directed by a person who has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of an investment in the securities.
	 	 
	_____ (j) 	The undersigned is an entity in which all of the equity owners meet the requirements of items (a) through (i) above.


 


1If the securities are being
purchased jointly, each joint owner should initial where applicable.


 




    	 



    	 



    

 


SIGNATURE PAGE FOR


INDIVIDUALS AND TRUSTS


 


IN WITNESS WHEREOF,
I hereby represent that all of the above representations are true and correct to the best of my knowledge.


 


The securities will
be owned, and should be shown on the records of Protea Biosciences Group, Inc., as follows (please check box):


 


		 ̈	A single person



 


		 ̈	Husband and wife, as community property



 


		 ̈	Joint tenants with right of survivorship (both parties must sign)



 


		 ̈	Tenants-in-Common (all parties must sign)



 


		 ̈	Trust (trustee must sign as trustee and indicate name of trust and date of trust document; trustee
must also provide a copy of trust document)



 


		 ̈	Other (explain, signature as required)



 


Executed this __ day
of_____, 2013


 


	 		 
	 	(Signature)	 
	 	 	 
	 		 
	 	(Please Print Name of Individual or Trust and	 
	 	 Date of Trust if Applicable)	 
	 	 	 
	 		 
	 	(Signature)	 
	 	 	 
	 		 
	 	(Please Print Name of Individual or Trust and 	 
	 	Date of Trust if Applicable)	 


 




    	 



    	 



    

 


SIGNATURE PAGE FOR


CORPORATIONS AND PARTNERSHIPS


 


IN WITNESS WHEREOF,
I hereby represent that all of the above representations are true and correct to the best of my knowledge.


 


		 ̈	Corporation (signature of authorized officer(s) required; please provide certified resolution authorizing
investment)



 


		 ̈	Partnership (signature of all general partners required by partnership agreement; partnerships
must provide copy of partnership agreement)



 


Executed this __ day
of _____, 2013


 


	 		 
	 	(Please Print Name of Entity)	 
	 	 	 
	 	By: 	 	 
	 	 	 
	 		 
	 	(Name)	 
	 	 	 
	 		 
	 	(Title)	 
	 	 	 
	 	By: 	 	 
	 	 	 
	 		 
	 	(Name)	 
	 	 	 
	 		 
	 	(Title)