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


 


PROTEA BIOSCIENCES GROUP, INC.


 


WARRANT


 


TO PURCHASE COMMON STOCK OF THE COMPANY


 


	Warrant No. __	 	Issue Date: , 2013




 


FOR VALUE RECEIVED,
PROTEA BIOSCIENCES GROUP, INC., a Delaware corporation (the “Company”), grants the following rights , and [his/her/its]
permitted assigns, heirs, executors and administrators (individually and collectively, the “Holder”), as of the day
of , 2013 (the “Issue Date”). This warrant (the “Warrant”) has been issued by the Company in connection
with the Conversion of those certain Notes issued by the Company and held by the Holder into shares of the Company's common stock,
par value $0.0001 per share (the “Common Stock”), at a conversion price of $0.50 per share, pursuant to the terms and
conditions set forth in that certain Conversion Agreement by and between the Company and the Holder dated as of , 2013 (the “Conversion
Agreement”). Terms not defined herein shall have the meaning set forth in the Conversion Agreement.


 


Section 1.Grant.


 


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


 


Section 2.Number of Shares
of Common Stock Purchasable.


 


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


 


2.2In case prior to the expiration
of the Purchase Rights by exercise or by the terms of this Warrant, the Company shall undertake any reclassification, stock split,
reverse stock split, stock dividend or any similar proportionately-applied change (collectively, a “Reclassification”)
of outstanding shares of Common Stock (other than a change solely in, of, or from par value), the Holder shall thereafter be entitled,
upon exercise of this Warrant for the same total consideration as presently required, to purchase the kind and amount of shares
of stock and other securities and property receivable upon such Reclassification by a holder of the number of shares of Common
Stock which this Warrant entitles the Holder hereof to purchase immediately prior to such Reclassification. Notice of any such
Reclassification shall be given to the Holder pursuant to Section 11 hereof.


 



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2.3In case prior to the expiration
of the Purchase Rights by exercise or by the terms of this Warrant, the Company shall determine to consolidate or merge with, or
convey all, or substantially all, of its property or assets to, any other corporation or corporations, or dissolve, liquidate or
wind up, then, as a condition precedent to such consolidation, merger, conveyance, dissolution, liquidation or winding up, notice
shall be given to the Holder pursuant to Section 11 hereof and lawful and adequate provision shall be made whereby the Holder shall
thereafter have the right to receive from the Company or the successor corporation, as the case may be, upon the basis and upon
the terms and conditions specified in this Warrant, in lieu of the shares of Common Stock of the Company theretofore purchasable
upon the exercise of the Purchase Rights, such shares of stock, securities, or assets as may be issued or payable with respect
to, or in exchange for, the number of shares of Common Stock of the Company theretofore purchasable upon the exercise of the Purchase
Rights had such consolidation, merger, conveyance, dissolution, liquidation or winding up not taken place; and in any such event
the rights of the Holder to an adjustment of the number of shares of Common Stock purchasable upon the exercise of the Purchase
Rights as herein provided, shall continue and be preserved in respect of any stock or securities which the Holder becomes entitled
to purchase.


 


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


 


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


 


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


 


(iii) “Exempted
Securities” shall mean:


 


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


 


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


 


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


 


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


 


(E)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.


 



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(b) At any time after
the Issue Date through December 31, 2013, the Company issues or sells Additional Shares of Common Stock, for a consideration per
Additional Share of Common Stock that is less than $0.50 (as such amount may be adjusted proportionately for any Reclassification)
(a "Dilutive Issuance"), on the date of and immediately prior to the Dilutive Issuance, the Exercise Price, then in effect,
will be reduced concurrently with the Dilutive Issuance to a price (rounded to the nearest cent) calculated by multiplying such
Exercise Price by a fraction, of which (i) the numerator shall be the number of shares of Common Stock outstanding on a fully diluted
basis immediately prior to such Dilutive Issuance plus the number of shares of Common Stock which the aggregate consideration received
or to be received by the Company for the total number of Additional Shares of Common Stock issued pursuant to the Dilutive Issuance
would purchase at the Exercise Price; and (ii) the denominator shall be the number of shares of Common Stock outstanding on a fully
diluted basis immediately prior to such Dilutive Issuance plus the number of such Additional Shares of Common Stock so issued.
The provisions of this Section 2.4(b) shall not operate to increase the Exercise Price.


 


Section 3.Exercise Period;
Registration Statement Notice.


 


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


 


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


 


Section 4.Exercise.
The Purchase Rights represented by this Warrant are exercisable upon the terms and conditions set forth herein at the option of
the Holder in whole at any time and in part, but not for less than 100 shares at a time, at any time and from time to time during
the Exercise Period upon the delivery of the Notice of Exercise form attached hereto as Exhibit 1 to the Company with such
notice duly executed and upon payment in cash, wire transfer or bank cashier’s check of the Exercise Price. The Purchase
Rights shall be deemed to have been exercised, and the Holder shall be deemed to have become a stockholder of record of the Company
for the purposes of receiving dividends and for all other purposes whatsoever with respect to the shares of Common Stock so purchased,
as of the date of delivery of such properly executed notice accompanied by proper tender of the Exercise Price at the office of
the Company. As promptly as practicable on or after such date, and in any event within three (3) business days thereafter, the
Company at its expense shall issue and deliver, or cause to be issued and delivered, to the person or persons entitled to receive
the same, a certificate or certificates for the number of shares issuable upon such exercise. In the event that this Warrant is
exercised in part, the Company at its expense shall execute and deliver a new Warrant of like tenor exercisable for the number
of shares for which this Warrant may then be exercised. 


 


Section 5.Exercise Price.
The exercise price for each share of Common Stock issuable to the Holder hereunder shall be $1.10 per share subject to adjustment
hereunder (the “Exercise Price”).


 


Section 6.Company’s
Warranties and Covenants as to Capital Stock. The Company has taken all action necessary and appropriate to properly
authorize, reserve and issue those shares of Common Stock issuable to the Holder pursuant to this Warrant including an authorization
of issuance and setting of exercise price. The Common Stock deliverable on the exercise of the Purchase Rights represented hereby
shall, when issued, be duly and validly issued, fully paid and nonassessable. The Company shall at all times reserve and hold available
sufficient shares of Common Stock to satisfy all conversion and purchase rights of all outstanding convertible securities and warrants.


 






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Section 7.Transfer; Compliance
With Securities Laws; Right of Company to Request Opinion of Counsel Confirming Such Compliance; Holder Responsible for Costs of
Transfer Including Reasonable Counsel Fees.The Purchase Rights shall be registered on the books of the Company,
which shall be kept by it at its principal office for that purpose. This Warrant and the Common Stock issuable upon exercise of
the Purchase Rights, may not be transferred or assigned in whole or in part without compliance with all applicable federal and
state securities laws by the transferor and the transferee, including, if requested by the Company, an opinion of counsel satisfactory
to the Company to the effect that the transfer or assignment is in compliance with applicable securities laws. Subject to such
compliance, the Purchase Rights shall be transferable on said books, in whole or in part, by the Holder in person or by duly authorized
attorney upon surrender of this Warrant properly endorsed by the Holder executing the Permitted Transfer or Assignment Form attached
hereto and made a part hereof as Exhibit 2. All reasonable and documented costs associated with any transfer or assignment,
including, without limitation, the reasonable fees of counsel to the Company shall be borne by the transferor or assignor. The
Company agrees that, while the Purchase Rights remain valid and outstanding, its stock transfer books shall not be closed for any
purpose whatsoever except under arrangements which shall insure to persons exercising warrants or applying for transfer of stock
all rights and privileges which they might have had or received if the stock transfer books had not been closed and they had exercised
their Purchase Rights at any time during which such transfer book shall have been closed.


 


Section 8.Charges, Taxes
and Expenses.Issuance of certificates for shares of Common Stock issuable upon the exercise of this Warrant or
any portion thereof (and issuance of a replacement Warrant certificate in the event of partial exercise) shall be made without
charge to the Holder hereof for any issue taxes or any other incidental expenses in respect of the issuance of such certificates
to and in the name of the registered Holder of this Warrant, all of which taxes and expenses shall be paid by the Company, and
such certificates shall be issued in the name of the Holder of this Warrant. Certificates will be issued in a name other than that
of the Holder upon the request of a Holder and payment by the Holder of any applicable transfer taxes and compliance with all applicable
securities laws and with all applicable provisions of this Warrant including but not limited to Section 7 hereof.


 


Section 9.Exchange for
Other Denominations.This Warrant is exchangeable for new certificates of like tenor and date representing
in the aggregate the right to purchase the number of shares purchasable hereunder in denominations designated by the Holder at
the time of surrender. In the event of the purchase, at any time prior to the expiration of the Exercise Period, of less than all
of the shares of Common Stock purchasable hereunder, the Company shall cancel this Warrant upon surrender thereof, and shall promptly
execute and deliver to the Holder hereof a new warrant of like tenor and date for the balance of the shares purchasable hereunder.


 


Section 10.Loss, Theft,
Destruction or Mutilation of Warrant.Upon receipt by the Company of evidence reasonably satisfactory to the Company
of the loss, theft, destruction or mutilation of this Warrant, and, in case of loss, theft or destruction, of indemnity or security
reasonably satisfactory to it, and upon reimbursement to the Company of all reasonable and documented expenses incidental thereto,
and upon surrender of this Warrant, if mutilated, the Company shall promptly make and deliver a new warrant of like tenor and date,
in lieu of this Warrant and cancel this Warrant.


 


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


 


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


 



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(b)In case:


 


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


 


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


 


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


 


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


 


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


 


PROTEA
BIOSCIENCES GROUP, INC.





955 Hartman Run Road





Morgantown, WV 26507





Attn: President





Fax: 304-292-7101


 


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


 


Richardson & Patel
LLP





405 Lexington Avenue,
49th Floor





New York, New York
10174





Attn: David Feldman,
Esq.





Fax: (917) 677-8165


 


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


 



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Section 12.Miscellaneous.This
Warrant shall not entitle the Holder to any of the rights of a stockholder of the Company. This Warrant shall be binding upon the
Company’s successors. This Warrant shall be governed, construed and enforced in accordance with the laws of the State of
Delaware. In case any provision of this Warrant shall be invalid, illegal or unenforceable, or partially invalid, illegal or unenforceable,
the provision shall be enforced to the extent, if any, that it may legally be enforced and the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired thereby. This Warrant shall any term hereof may be changed,
waived, discharged or terminated only by a statement in writing signed by the party against which enforcement of such change, waiver,
discharge or termination is sought. The headings in this Warrant are for purposes of reference only, and shall not limit or otherwise
affect any of the terms hereof.


 


[Signatures appear on following page.]


 


 


 


 






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


 





	 	PROTEA BIOSCIENCES GROUP, INC.
	 	 	 
	 	 	 
	 	 	 
	 	By:	 
	 	 	Stephen Turner
	 	 	President







 


 






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EXHIBIT 1


 


NOTICE OF EXERCISE PURSUANT TO


 ATTACHED WARRANT


 


                                  , 20___


 


To: PROTEA BIOSCIENCES GROUP, INC.


 


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


 


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


 


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


 


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


 


 





	ATTEST:	HOLDER:	  	 
	 	 	 	 
	 	 	 	 
	 	By:	 	 
	 	 	 	 
	 	Name:	 	 
	 	 	 	 
	 	Title:	 	 







 





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


 



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EXHIBIT 2


 


PERMITTED TRANSFER OR ASSIGNMENT FORM


 


NOTE: THIS ASSIGNMENT BEARS A RESTRICTIVE
LEGEND BELOW


 


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


 


Name of Transferee/AssigneeAddressNo.
of Shares


 


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


 


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


 


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


 


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


 


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


 


[Signatures appear on following page.]


 



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




 


 


 






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