Document:

EXHIBIT A

PROTEA BIOSCIENCES GROUP, INC.

2013 EQUITY INCENTIVE PLAN

 

1.           Purpose.
The purpose of the Protea Biosciences Group, Inc. 2013 Equity Incentive Plan is to provide a means through which the Company and
its Affiliates may attract and retain key personnel, thereby strengthening their commitment to the welfare of the Company and its
Affiliates and aligning their interests with those of the Company’s stockholders.

 

2.           Definitions.
The following definitions shall be applicable throughout the Plan:

 

(a)          “Affiliate”
means any person or entity that directly or indirectly controls, is controlled by or is under common control with the Company,
including any Parent or Subsidiary.

 

(b)          “Award”
means, individually or collectively, any Incentive Stock Option, Nonqualified Stock Option, Restricted Stock, Stock Bonus Award
and Performance Compensation Award granted under the Plan.

 

(c)          “Award
Agreement” means an agreement accepted by a Participant evidencing an Award under the Plan and containing such terms
and conditions, not inconsistent with the Plan, as the Committee shall decide.

 

(d)          “Board”
means the Board of Directors of the Company.

 

(e)          “Cause”
means (i) the Company or an Affiliate having “cause” to terminate a Participant’s employment or service,
as defined in any applicable document or policy between the Participant and the Company or an Affiliate or (ii) in the absence
of any such document or policy (or the absence of any definition of “Cause” contained therein), (A) the Participant’s
willful failure to perform his duties and responsibilities; (B) the Participant’s commission of any act of fraud, embezzlement,
dishonesty or willful misconduct, (C) unauthorized use or disclosure by the Participant of any proprietary information of the Company
or any Affiliate, or (D) Participant’s willful breach of any of his obligations under any agreement with the Company or any
Affiliate.

 

(f)          “Change
in Control” shall, in the case of a particular Award, unless the applicable Award agreement states otherwise or contains
a different definition of “Change in Control,” be deemed to occur upon:

 

(i)          An
acquisition (whether directly from the Company or otherwise) of any voting securities of the Company (the “Voting Securities”)
by any “Person” (as the term person is used for purposes of Section 13(d) or 14(d) of the Securities and Exchange Act
of 1934, as amended (the “Exchange Act”)), immediately after which such Person has “Beneficial
Ownership” (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of more than fifty percent (50%) of the
combined voting power of the Company’s then outstanding Voting Securities.

 

(ii)         Approval
by the Board of any definitive agreement, the consummation of which would cause to occur:

 

    	 

    	 

    

 

(A)         A
merger, consolidation or reorganization involving the Company, where either or both of the events described in clauses (i) or (ii)
above would be the result;

 

(B)         A
liquidation or dissolution of or appointment of a receiver, rehabilitator, conservator or similar person for, or the filing by
a third party of an involuntary bankruptcy against, the Company; or

 

(C)         An
agreement for the sale or other disposition of all or substantially all of the assets of the Company to any Person (other than
a transfer to an Affiliate of the Company).

 

(g)         “Code” means the Internal Revenue Code of 1986, as amended, and any regulations (“Treasury Regulations”)
promulgated and rulings issued thereunder.

 

(h)         “Committee”
means a committee of at least two people as the Board may appoint to administer the Plan or, if no such committee has been appointed
by the Board, the Board.

 

(i)          “Common
Shares” means the common stock, par value $0.0001 per share, of the Company (and any stock or other securities into
which such common shares may be converted or into which they may be exchanged).

 

(j)          “Company”
means Protea Biosciences Group, Inc. a Delaware corporation.

 

(k)         “Date
of Grant” means the date on which the granting of an Award is authorized, or such other date as may be specified
in such authorization.

 

(l)          “Disability”
means a “permanent and total” disability incurred by a Participant while in the employ of the Company or an Affiliate.
For this purpose, a permanent and total disability shall mean that the Participant is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be
expected to last for a continuous period of not less than twelve (12) months.

 

(m)        “Effective
Date” means the date as of which the Plan is adopted by the Board, subject to Section 3 of the Plan.

 

(n)         “Eligible
Director” means a person who is (i) a “non-employee director” within the meaning of Rule 16b-3 under
the Exchange Act, and (ii) an “outside director” within the meaning of Section 162(m) of the Code.

 

(o)         “Eligible
Person” means any (i) individual employed by the Company or an Affiliate; (ii) director of the Company
or an Affiliate; (iii) consultant or advisor to the Company or an Affiliate, provided that if the Securities Act applies such
persons must be eligible to be offered securities registrable on Form S-8 under the Securities Act; or (iv) prospective employees,
directors, officers, consultants or advisors who have accepted offers of employment or consultancy from the Company or its Affiliates.

  

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(p)          “Fair
Market Value”, unless otherwise provided by the Committee in accordance with all applicable laws, rules regulations
and standards, means, on a given date, (i) if the Common Shares (A) are listed on a national securities exchange or (B) are not
listed on a national securities exchange, but are quoted by the OTC Markets Group, Inc. (www.otcmarkets.com) or any successor or
alternative recognized over-the-counter market or another inter-dealer quotation system, on a last sale basis, the average selling
price of the Common Shares reported on such national securities exchange or other inter-dealer quotation system, determined as
the arithmetic mean of such selling prices over the thirty (30)-Business Day period preceding the Date of Grant, weighted based
on the volume of trading of such Common Shares on each trading day during such period; or (ii) if the Common Shares are not listed
on a national securities exchange or quoted in an inter-dealer quotation system on a last sale basis, the amount determined by
the Committee in good faith to be the fair market value of the Common Shares.

 

(q)          “Incentive
Stock Option” means an Option that is designated by the Committee as an incentive stock option as described in Section 422
of the Code.

 

(r)          “Mature
Shares” means Common Shares owned by a Participant that are not subject to any pledge or security interest and that
have been either previously acquired by the Participant on the open market or meet such other requirements, if any, as the Committee
may determine are necessary in order to avoid an accounting earnings charge on account of the use of such shares to pay the Exercise
Price or satisfy a withholding obligation of the Participant.

 

(s)          “Negative
Discretion” shall mean the discretion authorized by the Plan to be applied by the Committee to eliminate or reduce
the size of a Performance Compensation Award consistent with Section 162(m) of the Code.

 

(t)           “Nonqualified
Stock Option” means an Option that is not designated by the Committee as an Incentive Stock Option.

 

(u)          “Option”
means either an Incentive Stock Option or a Nonqualified Stock Option.

 

(v)          “Participant”
means an Eligible Person who has been selected by the Committee to participate in the Plan and to receive an Award pursuant to
Section 5 of the Plan.

 

(w)          “Performance
Compensation Award” shall mean any Award designated by the Committee as a Performance Compensation Award pursuant
to Section 10 of the Plan.

 

(x)           “Performance
Criteria” shall mean the criterion or criteria that the Committee shall select for purposes of establishing the Performance
Goal(s) for a Performance Period with respect to any Performance Compensation Award under the Plan.

 

(y)          “Performance
Formula” shall mean, for a Performance Period, the one or more objective formulae applied against the relevant Performance
Goal to determine, with regard to the Performance Compensation Award of a particular Participant, whether all, some portion but
less than all, or none of the Performance Compensation Award has been earned for the Performance Period.

  

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(z)          “Performance
Goals” shall mean, for a Performance Period, the one or more goals established by the Committee for the Performance
Period based upon the Performance Criteria.

 

(aa)        “Performance
Period” shall mean the one or more periods of time, as the Committee may select, over which the attainment of one
or more Performance Goals will be measured for the purpose of determining a Participant’s right to, and the payment of, a
Performance Compensation Award.

 

(bb)       “Plan”
means this Protea Biosciences Group, Inc. 2013 Equity Incentive Plan, as amended from time to time.

 

(cc)        “Restricted
Period” means the period of time determined by the Committee during which an Award is subject to restrictions or,
as applicable, the period of time within which performance is measured for purposes of determining whether an Award has been earned.

 

(dd)       “Restricted
Stock” means Common Shares, subject to certain specified restrictions constituting “substantial risks of forfeiture”
under Section 83 of the Code.

 

(ee)        “Securities
Act” means the Securities Act of 1933, as amended, and any regulations promulgated or rulings issued thereunder.

 

(ff)         “Stock
Bonus Award” means an Award granted under Section 9 of the Plan.

 

(gg)       “Subsidiary”
means any “subsidiary corporation” (within the meaning of Section 424(f) of the Code) of the Company or an Affiliate.

 

3.           Effective
Date; Duration. The Plan shall be effective as of the Effective Date, but no Award shall be exercised or paid unless and until
the Plan has been approved by the stockholders of the Company, which approval shall be within twelve (12) months after the date
the Plan is adopted by the Board. The expiration date of the Plan, on and after which date no Awards may be granted hereunder,
shall be the tenth anniversary of the Effective Date; provided, however, that such expiration shall not affect
Awards then outstanding, and the terms and conditions of the Plan shall continue to apply to such Awards.

 

4.           Administration.

 

(a)          The
Committee shall administer the Plan. To the extent required to comply with the provisions of Rule 16b-3 promulgated under the Exchange
Act (if the Board is not acting as the Committee under the Plan) or necessary to obtain the exception for performance-based compensation
under Section 162(m) of the Code, as applicable, it is intended that each member of the Committee shall, at the time he takes
any action with respect to an Award under the Plan, be an Eligible Director. However, the fact that a Committee member shall fail
to qualify as an Eligible Director shall not invalidate any Award granted by the Committee that is otherwise validly granted under
the Plan. The acts of a majority of the members present at any meeting at which a quorum is present or acts approved in writing
by a majority of the Committee shall be deemed the acts of the Committee.

  

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(b)          Subject
to the provisions of the Plan and applicable law, the Committee shall have the sole powers and authority, in its sole discretion,
to: (i) designate Participants; (ii) determine the type or types of Awards to be granted to a Participant; (iii) determine
the number of Common Shares to be covered by, or with respect to which payments, rights, or other matters are to be calculated
in connection with, Awards; (iv) determine the terms and conditions of any Award; (v) interpret, administer, reconcile
any inconsistency in, settle any controversy regarding, correct any defect in and/or complete any omission in the Plan and any
instrument or agreement relating to, or Award granted under, the Plan; (vi) establish, amend, suspend, or waive any rules
and regulations and appoint such agents as the Committee shall deem appropriate for the proper administration of the Plan; (vii) accelerate
the vesting or exercisability of, payment for or lapse of restrictions on, Awards; and (viii) make any other determination
and take any other action that the Committee deems necessary or desirable for the administration of the Plan.

 

(c)          The
Committee may delegate to one or more officers of the Company or any Affiliate the authority to act on behalf of the Committee
with respect to any matter, right, obligation, or election that is the responsibility of or that is allocated to the Committee
herein, and that may be so delegated as a matter of law, except for grants of Awards to persons (i) subject to Section 16
of the Exchange Act or (ii) who are, or who are reasonably expected to be, “covered employees” for purposes of
Section 162(m) of the Code.

 

(d)          No
member of the Board, the Committee, delegate of the Committee or any employee, advisor or agent of the Company or the Board or
the Committee shall be liable for any action taken or omitted to be taken or any determination made in good faith with respect
to the Plan or any Award hereunder.

 

5.           Grant
of Awards; Shares Subject to the Plan; Limitations.

 

(a)          The
Committee may, from time to time, grant Options, Restricted Stock, Stock Bonus Awards and/or Performance Compensation Awards to
one or more Eligible Persons.

 

(b)          Subject
to Sections 3, 11 and 12 of the Plan, the Committee is authorized to deliver under the Plan, Awards representing an aggregate of
4,000,000 Common Shares.

 

(c)          Common
Shares underlying Awards under the Plan that are forfeited, cancelled, expire unexercised, or are settled in cash shall be available
again for Awards under the Plan.

 

(d)          Common
Shares delivered by the Company in settlement of Awards may be authorized and unissued shares, shares held in the treasury of the
Company, shares purchased on the open market or by private purchase, or any combination of the foregoing.

 

6.           Participation.
Participation shall be limited to Eligible Persons who have entered into an Award Agreement.

  

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7.           Options.

 

(a)          Generally.
Each Option granted under the Plan shall be evidenced by an Award Agreement. All Options granted under the Plan shall be Nonqualified
Stock Options unless the applicable Award Agreement expressly states that the Option is intended to be an Incentive Stock Option.
Notwithstanding any designation of an Option, to the extent that the aggregate Fair Market Value of Common Shares, determined on
the Date of Grant, with respect to which Options designated as Incentive Stock Options are exercisable for the first time by any
Participant during any calendar year (under all plans of the Company or any Subsidiary) exceeds $100,000, such excess Options shall
be treated as Nonqualified Stock Options. Incentive Stock Options shall be granted only to employees of the Company and its Affiliates.
In the case of an Incentive Stock Option, the terms and conditions of such grant shall be subject to and comply with such rules
as may be prescribed by Section 422 of the Code. If for any reason an Option intended to be an Incentive Stock Option (or
any portion thereof) shall not qualify as an Incentive Stock Option, then, such Option or portion thereof shall be regarded as
a Nonqualified Stock Option appropriately granted under the Plan.

 

(b)          Exercise
Price. The exercise price (“Exercise Price”) per Common Share for each Option shall not be less
than 100% of the Fair Market Value of such share determined as of the Date of Grant; provided, however, that in the case
of an Incentive Stock Option granted to an employee who, at the time of the grant of such Option, owns shares representing more
than 10% of the voting power of all classes of shares of the Company or any Affiliate, as determined in accordance with Section
1.424-1(d) of the Treasury Regulations, the Exercise Price per share shall not be less than 110% of the Fair Market Value per share
on the Date of Grant.

 

(c)          Vesting
and Expiration. Options shall vest and become exercisable in such manner and on such date or dates determined by the Committee,
and shall expire after such period, not to exceed ten (10) years from the Date of Grant, as may be determined by the Committee
(the “Option Period”); provided, however, that the Option Period shall not exceed
five (5) years from the Date of Grant in the case of an Incentive Stock Option granted to a Participant who on the Date of Grant
owns shares representing more than 10% of the voting power of all classes of shares of the Company or any Affiliate, as determined
in accordance with Section 1.424-1(d) of the Treasury Regulations; and, provided, further, that notwithstanding
any vesting dates set by the Committee, the Committee may, in its sole discretion, accelerate the exercisability of any Option,
which acceleration shall not affect the terms and conditions of such Option other than with respect to exercisability. Unless otherwise
provided by the Committee in an Award agreement:

 

(i)          an
Option shall vest and become exercisable with respect to 100% of the Common Shares subject to such Option on the fourth (4th) anniversary
of the Date of Grant;

 

(ii)         the
vested and unvested portion of an Option shall immediately expire upon termination of employment or service of the Participant
granted the Option for Cause or as a result of the resignation by the Participant; and

 

(iii)        the
vested and unvested portion of an Option shall expire on the 90th day following the date of termination of employment or service
of the Participant granted the Option for any other reason not set forth in 7(c)(ii) above, provided however, that in the event
of termination of employment or service by reason of such Participant’s death or Disability, the vested portion of such Option
shall remain exercisable for one year following such death or Disability, but not later than the expiration of the Option Period;
but, provided however, that if such Option is an Incentive Stock Option, the vested portion of such Incentive Stock Option shall
remain exercisable for three months following the death of the Participant, but not later than the expiration of the Option Period

 

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(d)          Method
of Exercise and Form of Payment. Options that have become exercisable may be exercised by delivery of notice of exercise
to the Company in accordance with the terms of the Award Agreement accompanied by payment of the Exercise Price. The Exercise Price
shall be payable (i) in cash, check (subject to collection), and/or Mature Shares valued at Fair Market Value at the time
the Option is exercised, or; (ii) by such other method as the Committee may permit, including without limitation: (A) if
there is a public market for the Common Shares at such time, by means of a broker-assisted “cashless exercise” pursuant
to which the Company is delivered a copy of irrevocable instructions to a stockbroker to sell the Common Shares otherwise deliverable
upon the exercise of the Option and to deliver promptly to the Company an amount equal to the Exercise Price or (B) by a “net
exercise” method whereby the Company withholds from the delivery of the Common Shares for which the Option was exercised
that number of Common Shares having a Fair Market Value equal to the aggregate Exercise Price for the Common Shares for which the
Option was exercised. Any fractional Common Shares shall be settled in cash.

 

(e)          Notification
upon Disqualifying Disposition of an Incentive Stock Option. Each Participant awarded an Incentive Stock Option under the
Plan shall notify the Company in writing immediately after the date he makes a disqualifying disposition of any Common Shares acquired
pursuant to the exercise of such Incentive Stock Option. A disqualifying disposition is any sale or other taxable disposition of
such Common Shares before the later of (i) two years after the Date of Grant or (ii) one year after the date of exercise.

 

8.           Restricted
Stock.

 

(a)          Generally.
Each grant of Restricted Stock shall be evidenced by an Award Agreement. Each such grant shall be subject to the conditions set
forth in this Section 8, and to such other conditions not inconsistent with the Plan as may be reflected in the applicable
Award Agreement.

 

(b)          Restricted
Accounts; Escrow or Similar Arrangement. Upon the grant of Restricted Stock, a book entry in a restricted account shall
be established in the Participant’s name at the Company’s transfer agent and, if the Committee determines that the
Restricted Stock shall be held by the Company or in escrow rather than held in such restricted account pending the release of the
applicable restrictions, the Committee may require the Participant to additionally execute and deliver to the Company (i) an
escrow agreement satisfactory to the Committee, if applicable, and (ii) the appropriate share power (endorsed in blank) with
respect to the Restricted Stock covered by such agreement. If a Participant shall fail to execute an agreement evidencing an Award
of Restricted Stock and, if applicable, an escrow agreement and blank share power within the amount of time specified by the Committee,
the Award shall be null and void ab initio. Subject to the restrictions set forth in this Section 8 and the applicable
Award Agreement, the Participant generally shall have the rights and privileges of a stockholder as to such Restricted Stock, including
without limitation the right to vote such Restricted Stock and the right to receive dividends, if applicable. To the extent shares
of Restricted Stock are forfeited, any share certificates issued to the Participant evidencing such shares shall be returned to
the Company, and all rights of the Participant to such shares and as a stockholder with respect thereto shall terminate without
further obligation on the part of the Company.

  

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(c)          Vesting;
Acceleration of Lapse of Restrictions. Unless otherwise provided by the Committee in an Award agreement: (i) the Restricted
Period shall lapse with respect to 100% of the Restricted Stock on the third (3rd) anniversary of the Date of Grant;
and (ii) the unvested portion of Restricted Stock shall terminate and be forfeited upon termination of employment or service
of the Participant.

 

(d)          
Delivery of Restricted Stock. Upon the expiration of the Restricted Period with respect to any shares of Restricted
Stock, the restrictions set forth in the applicable Award Agreement shall be of no further force or effect with respect to such
shares, except as set forth in the applicable Award Agreement. If an escrow arrangement is used, upon such expiration, the Company
shall deliver to the Participant, or his beneficiary, without charge, the share certificate evidencing the shares of Restricted
Stock that have not then been forfeited and with respect to which the Restricted Period has expired (rounded down to the nearest
full share). Dividends, if any, that may have been withheld by the Committee and attributable to any particular share of
Restricted Stock shall be distributed to the Participant in cash or, at the sole discretion of the Committee, in shares of Common
Stock having a Fair Market Value equal to the amount of such dividends.

 

9.          Stock
Bonus Awards. The Committee may issue unrestricted Common Shares, or other Awards denominated in Common Shares, under the Plan
to Eligible Persons, either alone or in tandem with other awards, in such amounts as the Committee shall from time to time in its
sole discretion determine. Each Stock Bonus Award granted under the Plan shall be evidenced by an Award Agreement. Each Stock Bonus
Award so granted shall be subject to such conditions not inconsistent with the Plan as may be reflected in the applicable Award
Agreement.

 

10.         Performance
Compensation Awards.

 

(a)          Generally.
The Committee shall have the authority, at the time of grant of any Award described in Sections 7 through 10 of the Plan,
to designate such Award as a Performance Compensation Award intended to qualify as “performance-based compensation”
under Section 162(m) of the Code. The Committee shall have the authority to make an award of a cash bonus to any Participant
and designate such Award as a Performance Compensation Award intended to qualify as “performance-based compensation”
under Section 162(m) of the Code.

 

(b)          Discretion
of Committee with Respect to Performance Compensation Awards. With regard to a particular Performance Period, the Committee
shall have sole discretion to select the length of such Performance Period, the type of Performance Compensation Awards to be issued,
the Performance Criteria that will be used to establish the Performance Goal, the kind and/or level of the Performance Goals that
is to apply and the Performance Formula. Within the first 90 calendar days of a Performance Period, the Committee shall, with regard
to the Performance Compensation Awards to be issued for such Performance Period, exercise its discretion with respect to each of
the matters enumerated in the immediately preceding sentence and record the same in writing.

 

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(c)          Performance
Criteria. The Performance Criteria that will be used to establish the Performance Goal shall be based on the attainment
of specific levels of performance of the Company and/or one or more Affiliates, divisions or operational units, or any combination
of the foregoing, as determined by the Committee. Any one or more of the Performance Criteria adopted by the Committee may be used
on an absolute or relative basis to measure the performance of the Company and/or one or more Affiliates as a whole or any business
unit of the Company and/or one or more Affiliates (or any combination thereof), as the Committee may deem appropriate, or any of
the above Performance Criteria may be compared to the performance of a selected group of comparison companies, or a published or
special index that the Committee, in its sole discretion, deems appropriate, or as compared to various stock market indices. The
Committee also has the authority to provide for accelerated vesting of any Award based on the achievement of Performance Goals
pursuant to the Performance Criteria specified in this paragraph. To the extent required under Section 162(m) of the Code,
the Committee shall, within the first 90 calendar days of a Performance Period (or, if longer or shorter, within the maximum period
allowed under Section 162(m) of the Code), define in an objective fashion the manner of calculating the Performance Criteria
it selects to use for such Performance Period and thereafter promptly communicate such Performance Criteria to the Participant.

 

(d)          Modification
of Performance Goal. In the event that applicable tax and/or securities laws change to permit Committee discretion to alter
the governing Performance Criteria without obtaining stockholder approval of such alterations, the Committee shall have sole discretion
to make such alterations without obtaining stockholder approval. The Committee is authorized at any time during the first 90 calendar
days of a Performance Period (or, if longer or shorter, within the maximum period allowed under Section 162(m) of the Code,
if applicable), or at any time thereafter to the extent the exercise of such authority at such time would not cause the Performance
Compensation Awards granted to any Participant for such Performance Period to fail to qualify as “performance-based compensation”
under Section 162(m) of the Code, in its sole discretion, to adjust or modify the calculation of a Performance Goal for such
Performance Period, based on and in order to appropriately reflect the following events: (i) asset write-downs; (ii) litigation
or claim judgments or settlements; (iii) the effect of changes in tax laws, accounting principles, or other laws or regulatory
rules affecting reported results; (iv) any reorganization and restructuring programs; (v) extraordinary nonrecurring
items as described in Accounting Principles Board Opinion No. 30 (or any successor pronouncement thereto) and/or in management’s
discussion and analysis of financial condition and results of operations appearing in the Company’s annual report to stockholders
for the applicable year; (vi) acquisitions or divestitures; (vii) any other specific unusual or nonrecurring events,
or objectively determinable category thereof; (viii) foreign exchange gains and losses; and (ix) a change in the Company’s
fiscal year.

 

(e)          Payment
of Performance Compensation Awards.

 

(i)          Condition
to Receipt of Payment. Unless otherwise provided in the applicable Award Agreement, a Participant must be employed by the
Company on the last day of a Performance Period to be eligible for payment in respect of a Performance Compensation Award for such
Performance Period.

 

(ii)         Limitation.
A Participant shall be eligible to receive payment in respect of a Performance Compensation Award only to the extent that: (A) the
Performance Goals for such period are achieved; and (B) all or some of the portion of such Participant’s Performance
Compensation Award has been earned for the Performance Period based on the application of the Performance Formula to such achieved
Performance Goals.

 

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(iii)        Certification.
Following the completion of a Performance Period, the Committee shall review and certify in writing whether, and to what extent,
the Performance Goals for the Performance Period have been achieved and, if so, calculate and certify in writing that amount of
the Performance Compensation Awards earned for the period based upon the Performance Formula. The Committee shall then determine
the amount of each Participant’s Performance Compensation Award actually payable for the Performance Period and, in so doing,
may apply Negative Discretion.

 

(iv)         Use
of Negative Discretion. In determining the actual amount of an individual Participant’s Performance Compensation
Award for a Performance Period, the Committee may reduce or eliminate the amount of the Performance Compensation Award earned under
the Performance Formula in the Performance Period through the use of Negative Discretion if, in its sole judgment, such reduction
or elimination is appropriate. The Committee shall not have the discretion, except as is otherwise provided in the Plan, to (A) grant
or provide payment in respect of Performance Compensation Awards for a Performance Period if the Performance Goals for such Performance
Period have not been attained; or (B) increase a Performance Compensation Award above the applicable limitations set forth
in Section 5 of the Plan.

 

(f)          Timing
of Award Payments. Performance Compensation Awards granted for a Performance Period shall be paid to Participants as soon
as administratively practicable following completion of the certifications required by this Section 10, but in no event later
than two-and-one-half months following the end of the fiscal year during which the Performance Period is completed in order to
comply with the short-term deferral rule under Section 1.409A-1(b)(4) of the Treasury Regulations. Notwithstanding the foregoing,
payment of a Performance Compensation Award may be delayed, as permitted by Section 1.409A-2(b)(7)(i) of the Treasury Regulations,
to the extent that the Company reasonably anticipates that if such payment were made as scheduled, the Company's tax deduction
with respect to such payment would not be permitted due to the application of Section 162(m) of the Code.

 

11.         Adjustments
upon Changes in Capitalization, Merger and Certain Other Events.

 

(i)          Changes
in Capitalization. Subject to any action required under applicable law, the number of Common Shares covered by each outstanding
Award, and the number of Common Shares that have been authorized for issuance under the Plan but as to which no Awards have yet
been granted or that have been returned to the Plan upon cancellation or expiration of an Award, as well as the Exercise Price
covered by each outstanding Option, shall be proportionately adjusted for any increase or decrease in the number of issued Common
Shares resulting from a stock split, reverse stock split, stock dividend, combination, recapitalization or reclassification of
the Common Shares, or any other increase or decrease in the number of issued Common Shares effected without consideration by the
Company; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been “effected
without receipt of consideration.” Such adjustment shall be made by the Committee, whose determination in that respect shall
be final, binding and conclusive.

 

(ii)         Dissolution
or Liquidation. In the event of the dissolution or liquidation of the Company (other than pursuant to a plan of merger or reorganization),
each outstanding Award will become exercisable within ten (10) days immediately prior to such dissolution or liquidation and all
unexercised Awards will terminate upon such dissolution or liquidation, unless determined otherwise by the Committee. 

  

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(iii)        Effect
of Change in Control. Except to the extent otherwise provided in an Award Agreement or if otherwise determined by the Committee,
in the event of a Change in Control, notwithstanding any provision of the Plan to the contrary, with respect to all or any portion
of a particular outstanding Award: (A) all of the then outstanding Options shall immediately vest and become immediately exercisable
immediately prior to the Change in Control; (B) the Restricted Period shall expire as of a time prior to the Change in Control
(including without limitation a waiver of any applicable Performance Goals); and (C) Performance Periods in effect on the date
the Change in Control occurs shall end on such date, and the Committee shall (x) determine the extent to which Performance Goals
with respect to each such Performance Period have been met based upon such audited or unaudited financial information or other
information then available as it deems relevant and (y) cause the Participant to receive partial or full payment of Awards for
each such Performance Period based upon the Committee’s determination of the degree of attainment of the Performance Goals,
or assuming that the applicable “target” levels of performance have been attained or on such other basis determined
by the Committee. To the extent practicable, any actions taken by the Committee under this paragraph shall occur in a manner and
at a time which allows affected Participants the ability to participate in the Change in Control transaction with respect to the
Common Shares subject to their Awards.

 

12.          Amendments
and Termination.

 

(a)          Amendment
and Termination of the Plan. The Board may amend, alter, suspend, discontinue, or terminate the Plan or any portion thereof
at any time; provided, that (i) no amendment to the definition of Eligible Person shall be made without stockholder approval
and (ii) no such amendment, alteration, suspension, discontinuation or termination shall be made without stockholder approval if
such approval is necessary to comply with any tax or regulatory requirement applicable to the Plan (including, without limitation,
as necessary to comply with any rules or requirements of any securities exchange or inter-dealer quotation system on which the
Common Shares may be listed or quoted or to prevent the Company from being denied a tax deduction under Section 162(m) of
the Code); and, provided, further, that any such amendment, alteration, suspension, discontinuance
or termination that would materially and adversely affect the rights of any Participant or any holder or beneficiary of any Award
theretofore granted shall not to that extent be effective without the prior written consent of the affected Participant, holder
or beneficiary.

 

(b)          Amendment
of Award Agreements. The Committee may, to the extent consistent with the terms of any applicable Award Agreement, waive
any conditions or rights under, amend any terms of, or alter, suspend, discontinue, cancel or terminate, any Award theretofore
granted or the associated Award Agreement, prospectively or retroactively; provided, however that any such waiver,
amendment, alteration, suspension, discontinuance, cancellation or termination that would materially and adversely affect the rights
of any Participant with respect to any Award theretofore granted shall not to that extent be effective without the consent of the
affected Participant.

  

    	11

    	 

    

  

13.         General.

 

(a)          Nontransferability;
Trading Restrictions.

 

(i)          Each
Award shall be exercisable only by a Participant during the Participant’s lifetime, or, if permissible under applicable law,
by the Participant’s legal guardian or representative. No Award may be assigned, alienated, pledged, attached, sold or otherwise
transferred or encumbered by a Participant other than by will or by the laws of descent and distribution and any such purported
assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against the Company or
an Affiliate; provided that the designation of a beneficiary shall not constitute an assignment, alienation, pledge, attachment,
sale, transfer or encumbrance.

 

(ii)         Notwithstanding
the foregoing, the Committee may, in its sole discretion, permit Awards to be transferred by a Participant, subject to such rules
as the Committee may adopt consistent with any applicable Award agreement to preserve the purposes of the Plan, to: (A) any
person who is a “family member” of the Participant, as such term is used in the instructions to Form S-8 under the
Securities Act (collectively, the “Immediate Family Members”); (B) a trust solely for the benefit
of the Participant and his or her Immediate Family Members; or (C) a partnership or limited liability company whose only partners
or stockholders are the Participant and his or her Immediate Family Members; or (D) any other transferee as may be approved by
the Committee in its sole discretion.

 

(iii)        The
Committee shall have the right, either on an Award-by-Award basis or as a matter of policy for all Awards or one or more classes
of Awards, to condition the delivery of vested Common Shares received in connection with such Award on the Participant’s
agreement to such restrictions as the Committee may determine.

 

(b)          Tax
Withholding.

 

(i)          A
Participant shall be required to pay to the Company or any Affiliate, or the Company or any Affiliate shall have the right and
is hereby authorized to withhold, from any cash, Common Shares, other securities or other property deliverable under any Award
or from any compensation or other amounts owing to a Participant, the amount (in cash, Common Shares, other securities or other
property) of any required withholding taxes in respect of an Award, its exercise, or any payment or transfer under an Award or
under the Plan and to take such other action as may be necessary in the opinion of the Committee to satisfy all obligations for
the payment of such withholding and taxes.

 

(ii)         Without
limiting the generality of clause (i) above, the Committee may, in its sole discretion, permit a Participant to satisfy, in whole
or in part, the foregoing withholding liability by (A) the delivery of Common Shares (which are not subject to any pledge
or other security interest and are Mature Shares) owned by the Participant having a Fair Market Value equal to such withholding
liability or (B) having the Company withhold from the number of Common Shares otherwise issuable or deliverable pursuant to
the exercise or settlement of the Award a number of shares with a fair market value equal to such withholding liability (but no
more than the minimum required statutory withholding liability).

 

    	12

    	 

    

 

(c)          No
Claim to Awards; No Rights to Continued Employment; Waiver. No employee of the Company or an Affiliate, or other person,
shall have any claim or right to be granted an Award under the Plan or, having been selected for the grant of an Award, to be selected
for future grants. The terms and conditions of Awards and the Committee’s determinations and interpretations with respect
thereto need not be the same with respect to each Participant and may be made selectively among Participants, whether or not such
Participants are similarly situated. Neither the Plan nor any action taken hereunder shall be construed as giving any Participant
any right to be retained in the employ or service of the Company or an Affiliate, nor shall it be construed as giving any Participant
any rights to continued service on the Board. The Company or any of its Affiliates may at any time dismiss a Participant from employment
or discontinue any consulting relationship, free from any liability or any claim under the Plan, unless otherwise expressly provided
in the Plan or any Award agreement. By accepting an Award under the Plan, a Participant shall thereby be deemed to have waived
any claim to continued exercise or vesting of an Award or to damages or severance entitlement related to non-continuation of the
Award beyond the period provided under the Plan or any Award agreement, notwithstanding any provision to the contrary in any written
employment contract or other agreement between the Company and its Affiliates and the Participant, whether any such agreement is
executed before, on or after the Date of Grant.

 

(d)          International
Participants. With respect to Participants who reside or work outside of the United States of America and who are not (and
who are not expected to be) “covered employees” within the meaning of Section 162(m) of the Code, the Committee
may in its sole discretion amend the terms of the Plan or outstanding Awards (or establish a sub-plan) with respect to such Participants
in order to conform such terms with the requirements of local law or to obtain more favorable tax or other treatment for a Participant,
the Company or its Affiliates.

 

(e)          Designation
and Change of Beneficiary. Each Participant may file with the Committee a written designation of one or more persons as
the beneficiary(ies) who shall be entitled to receive the amounts payable with respect to an Award, if any, due under the Plan
upon his death. A Participant may, from time to time, revoke or change his beneficiary designation without the consent of any prior
beneficiary by filing a new designation with the Committee. The last such designation filed with the Committee shall be controlling;
provided, however, that no designation, or change or revocation thereof, shall be effective unless actually
received by the Committee prior to the Participant’s death, and in no event shall it be effective as of a date prior to such
receipt. If no beneficiary designation is filed by a Participant, the beneficiary shall be deemed to be his spouse or, if the Participant
is unmarried at the time of death, his estate. Upon the occurrence of a Participant’s divorce (as evidenced by a final order
or decree of divorce), any spousal designation previously given by such Participant shall automatically terminate.

 

(f)          No
Rights as a Stockholder. Except as otherwise specifically provided in the Plan or any Award Agreement, no person shall
be entitled to the privileges of ownership in respect of Common Shares that are subject to Awards hereunder until such shares have
been issued or delivered to that person.

 

(g)          Government
and Other Regulations.

 

(i)          The
obligation of the Company to settle Awards in Common Shares or other consideration shall be subject to all applicable laws, rules,
and regulations, and to such approvals by governmental agencies as may be required. Notwithstanding any terms or conditions of
any Award to the contrary, the Company shall be under no obligation to offer to sell or to sell, and shall be prohibited from offering
to sell or selling, any Common Shares pursuant to an Award unless such shares have been properly registered for sale pursuant to
the Securities Act with the Securities and Exchange Commission or unless the Company has received an opinion of counsel, satisfactory
to the Company, that such shares may be offered or sold without such registration pursuant to an available exemption therefrom
and the terms and conditions of such exemption have been fully complied with. The Company shall be under no obligation to register
for sale under the Securities Act any of the Common Shares to be offered or sold under the Plan.

  

    	13

    	 

    

 

(ii)         The
Committee may cancel an Award or any portion thereof if it determines, in its sole discretion, that legal or contractual restrictions
and/or blockage and/or other market considerations would make the Company’s acquisition of Common Shares from the public
markets, the Company’s issuance of Common Shares to the Participant, the Participant’s acquisition of Common Shares
from the Company and/or the Participant’s sale of Common Shares to the public markets, illegal, impracticable or inadvisable.
If the Committee determines to cancel all or any portion of an Award in accordance with the foregoing, unless doing so would violate
Section 409A of the Code, the Company shall pay to the Participant an amount equal to the excess of (A) the aggregate fair
market value of the Common Shares subject to such Award or portion thereof canceled (determined as of the applicable exercise date,
or the date that the shares would have been vested or delivered, as applicable), over (B) the aggregate Exercise Price (in
the case of an Option) or any amount payable as a condition of delivery of Common Shares (in the case of any other Award). Such
amount shall be delivered to the Participant as soon as practicable following the cancellation of such Award or portion thereof.

 

(h)          Payments
to Persons Other Than Participants. If the Committee shall find that any person to whom any amount is payable under the
Plan is unable to care for his affairs because of illness or accident, or is a minor, or has died, then any payment due to such
person or his estate (unless a prior claim therefor has been made by a duly appointed legal representative) may, if the Committee
so directs the Company, be paid to his spouse, child, relative, an institution maintaining or having custody of such person, or
any other person deemed by the Committee to be a proper recipient on behalf of such person otherwise entitled to payment. Any such
payment shall be a complete discharge of the liability of the Committee and the Company therefor.

 

(i)          Governing
Law. The Plan shall be governed by and construed in accordance with the internal laws of the State of Delaware, without
giving effect to the conflict of laws provisions.

 

(j)          Severability.
If any provision of the Plan or any Award or Award agreement is or becomes or is deemed to be invalid, illegal, or unenforceable
in any jurisdiction or as to any person or entity or Award, or would disqualify the Plan or any Award under any law deemed applicable
by the Committee, such provision shall be construed or deemed amended to conform to the applicable laws in the manner that most
closely reflects the original intent of the Award or the Plan, or if it cannot be construed or deemed amended without, in the determination
of the Committee, materially altering the intent of the Plan or the Award, such provision shall be construed or deemed stricken
as to such jurisdiction, person or entity or Award and the remainder of the Plan and any such Award shall remain in full force
and effect.

 

(k)          Obligations
Binding on Successors. The obligations of the Company under the Plan shall be binding upon any successor corporation or
organization resulting from the merger, amalgamation, consolidation or other reorganization of the Company, or upon any successor
corporation or organization succeeding to substantially all of the assets and business of the Company.

 

    	14

    	 

    

  

(l)          Code
Section 162(m) Approval. If so determined by the Committee, the provisions of the Plan regarding Performance Compensation
Awards shall be disclosed and reapproved by stockholders no later than the first stockholder meeting that occurs in the fifth year
following the year in which stockholders previously approved such provisions, in each case in order for certain Awards granted
after such time to be exempt from the deduction limitations of Section 162(m) of the Code. Nothing in this clause, however, shall
affect the validity of Awards granted after such time if such stockholder approval has not been obtained.

 

(m)          Expenses;
Gender; Titles and Headings. The expenses of administering the Plan shall be borne by the Company and its Affiliates. Masculine
pronouns and other words of masculine gender shall refer to both men and women. The titles and headings of the sections in the
Plan are for convenience of reference only, and in the event of any conflict, the text of the Plan, rather than such titles or
headings shall control.

 

(n)          Other
Agreements. Notwithstanding the above, the Committee may require, as a condition to the grant of and/or the receipt of
Common Shares under an Award, that the Participant execute lock-up, stockholder or other agreements, as it may determine in its
sole and absolute discretion.

 

(o)          Section
409A. The Plan and all Awards granted hereunder are intended to comply with, or otherwise be exempt from, the requirements
of Section 409A of the Code. The Plan and all Awards granted under the Plan shall be administered, interpreted, and construed in
a manner consistent with Section 409A of the Code to the extent necessary to avoid the imposition of additional taxes under Section
409A(a)(1)(B) of the Code. Notwithstanding anything in the Plan to the contrary, in no event shall the Committee exercise its discretion
to accelerate the payment or settlement of an Award where such payment or settlement constitutes deferred compensation within the
meaning of Section 409A of the Code unless, and solely to the extent that, such accelerated payment or settlement is permissible
under Section 1.409A-3(j)(4) of the Treasury Regulations. If a Participant is a “specified employee” (within the meaning
of Section 1.409A-1(i) of the Treasury Regulations) at any time during the twelve (12)-month period ending on the date of his termination
of employment, and any Award hereunder subject to the requirements of Section 409A of the Code is to be satisfied on account of
the Participant’s termination of employment, satisfaction of such Award shall be suspended until the date that is six (6)
months after the date of such termination of employment.

 

(p)          
Non-Uniform Determinations. The Committee's determinations under the Plan (including without limitation determinations
of the persons to receive Awards, the form, amount and timing of such Awards, the terms and provisions of such Awards and the agreements
evidencing same) need not be uniform and may be made by the Committee selectively among persons who receive, or are eligible to
receive, Awards under the Plan, whether or not such persons are similarly situated.

 

(q)          No
Trust or Fund Created. Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of
any kind or a fiduciary relationship between the Company and a Participant or any other person. To the extent that any Participant
or other person acquires a right to receive payments from the Company pursuant to an Award, such right shall be no greater than
the right of any unsecured general creditor of the Company.

 

    	15

    	 

    

 

(r)          No
Restriction of Corporate Action. Nothing contained in the Plan shall be construed to prevent the Company or any Parent
or Subsidiary from taking any corporate action which is deemed by the Company or such Parent or Subsidiary to be appropriate or
in its best interest, whether or not such action would have an adverse effect on the Plan or any Award issued under the Plan. No
employee, beneficiary or other person shall have any claim against the Company or any Parent or Subsidiary as a result of such
action.

 

(s)          Non-Exclusivity
of this Plan. Neither the adoption of this Plan by the Board nor the submission of this Plan to the stockholders of the
Company for approval shall be construed as modifying or rescinding any previously approved compensation plans or programs of the
Company or any Subsidiary or creating any limitations on the power or authority of the Board to adopt such additional or other
compensation arrangements as the Board may deem necessary or desirable.

 

(t)          Plan
Subject to Certificate of Incorporation and By-Laws. This Plan is subject to the Certificate of Incorporation and Bylaws
of the Company, as they may be amended from time to time.

 

(u)          Compliance
With Laws. In no event shall a Participant be permitted to exercise an Option in a manner that the Committee determines
would violate the Sarbanes-Oxley Act of 2002, as amended, if applicable, or any other applicable law or the rules and regulations
of any securities exchange or inter-dealer quotation system on which the securities of the company are listed or traded.

  

This Plan was approved by the Board of Directors
on February 8, 2013.

 

    	16Securities
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:

 

    	1

    	 

    

 

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.

 

    	2

    	 

    

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.

 

    	3

    	 

    

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.

 

    	4

    	 

    

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.

 

    	5

    	 

    

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.

 

    	6

    	 

    

 

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.

 

    	7

    	 

    

 

(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.

 

 

    	8

    	 

    

 

 

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.

 

    	9

    	 

    

 

 

(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.

    	10

    	 

    

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).

 

    	11

    	 

    

 

	 	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.

  

    	12

    	 

    

 

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]

 

    	13

    	 

    

 

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)

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