SECURITIES
PURCHASE AGREEMENT


 


This
Securities Purchase Agreement (this “Agreement”) is between Barfresh Food Group Inc., a Delaware corporation
(the “Company”) and each purchaser identified on the signature pages hereto (each, including its successors
and assigns, a “Purchaser” and collectively the “Purchasers”) dated with respect to each
Purchaser as of the date set forth on each Purchaser’s signature page hereto.


 


WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(a)(2) of the Securities Act of 1933,
as amended (the “Securities Act”), and Rule 506(b) promulgated thereunder, the Company desires to issue and sell to
each Purchaser, and each Purchaser, severally and not jointly, desires to purchase from the Company, securities of the Company
as more fully described in this Agreement.


 


NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration
the receipt and adequacy of which are hereby acknowledged, the Company and each Purchaser agree as follows:


 


ARTICLE
I.

DEFINITIONS


 


1.1
Definitions. In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following
terms have the meanings set forth in this Section 1.1: 


 


“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common
control with a Person as such terms are used in and construed under Rule 405 under the Securities Act. With respect to a Purchaser,
any investment fund or managed account that is managed on a discretionary basis by the same investment manager as such Purchaser
will be deemed to be an Affiliate of such Purchaser.


 


“Business
Day” means any day except Saturday, Sunday, any day that is a federal legal holiday in the United States or any day
on which banking institutions in the State of California are authorized or required by law or other governmental action to close.


 


“Closing”
or “Closing Date” means the Business Day(s) when Transaction Documents have been executed and delivered by
the applicable parties thereto, and all conditions precedent to: (i) the Purchasers’ obligations to pay the Subscription
Amount; and (ii) the Company’s obligations to deliver the Securities have been satisfied or waived.


 


“Commission”
means the Securities and Exchange Commission.


 


“Common
Stock” means the common stock of the Company, par value $0.000001 per share, and any other class of securities into
which such securities may hereafter be reclassified or changed into.


 


“Common
Stock Equivalents” means any securities of the Company which would entitle the holder thereof to acquire at any time
Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is
at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.


 


“Disclosure
Schedules” means the Disclosure Schedules of the attached hereto as Annex B and incorporated herein by reference.


 






    	 



    	 



    

 


“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.


 


“Liens”
means a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.


 


“Per
Share Purchase Price” equals $0.50, subject to adjustment for reverse and forward stock splits, stock dividends, stock
combinations and other similar transactions of the Common Stock that occur after the issuance thereof.


 


“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.


 


“Proceeding”
means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial
proceeding, such as a deposition), whether commenced or threatened.


 


“Rule
144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time
to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.


 


“Securities”
means the Shares, the Warrants and the Warrant Shares.


 


“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.


 


“Shares”
means the shares of Common Stock issued to each Purchaser pursuant to this Agreement.


 


“Short
Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall
not be deemed to include the location and/or reservation of borrowable shares of Common Stock).


 


“Subscription
Amount” means, as to each Purchaser, the aggregate amount to be paid for Shares and Warrants purchased hereunder as
specified below such Purchaser’s name on the signature page of this Agreement and next to the heading “Subscription
Amount,” in United States dollars and in immediately available funds.


 


“Subsidiary”
means any subsidiary of the Company as set forth on Schedule 3.1(a), and shall, where applicable, include any subsidiary
of the Company formed or acquired after the date hereof.


 


“Trading
Day” means a day on which the New York Stock Exchange is open for trading.


 


“Trading
Market” means the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date
in question: The New York Stock Exchange, the NYSE MKT, the Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq
Capital Market or the OTCQB.


 






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“Transaction
Documents” means this Agreement, the Registration Rights Agreement, the Warrants and any other documents or agreements
executed in connection with the transactions contemplated hereunder.


 


“Transfer
Agent” means Action Stock Transfer, with a mailing address of 2469 E. Fort Union Blvd., Suite 214, Salt Lake City, UT
84121, and a facsimile number of (801) 274-1099, or any successor transfer agent of the Company.


 


“Warrants”
means, collectively, the series “F” Common Stock purchase warrants delivered to the Purchasers at the Closing in accordance
with Section 2.2(a) hereof, which Warrants shall be exercisable immediately at a price of $0.60 per Warrant Share and have a term
of exercise equal to five (5) years from the Initial Exercise Date, in the form of Exhibit A attached hereto.


 


“Warrant
Shares” means the shares of Common Stock issuable upon exercise of the Warrants.


 


ARTICLE
II.

PURCHASE AND SALE


 


2.1
Closing.


 


(a)
On the Closing Date(s), upon the terms and subject to the conditions set forth herein, substantially concurrent with the execution
and delivery of this Agreement by the parties hereto, the Company agrees to sell, and the Purchasers, severally and not jointly,
agree to purchase, in the aggregate, the Company’s Shares at the Per Share Purchase Price of $0.50. One-half (1/2) of a
five (5) year Warrant to purchase Common Stock at an exercise price of $0.60 per Warrant Share will be issued with each Share
that is subscribed.


 


(b)
The date and time of the Closing (the “Closing”) shall be 5:00 p.m., PST time on such date as is mutually agreed to
by the Company and each Purchaser (the “Closing Date”). The aggregate purchase price for the Stock and Warrants to
be purchased by each such Purchaser at the Closing (the “Purchase Price”) shall be the amount set forth opposite each
Purchaser’s name in column (3) of the Schedule of Purchasers attached hereto as Annex A; provided that the aggregate
purchase price of the Shares and Warrants sold hereunder must be at least $5 million (“Minimum Aggregate Purchase Price”)
and may not exceed $7 million (“Maximum Aggregate Purchase Price”). Officers, directors and employees of the Company
and its Affiliates may, but are not required to, participate in this offering, and their subscriptions shall be considered in
calculating the Minimum Aggregate Purchase Price and Maximum Aggregate Purchase Price.


 


(c)
Subscribed funds will be available for use by the Company immediately after the Closing. Each Purchaser shall deliver to the Company,
via wire transfer or a certified check, immediately available funds equal to its Subscription Amount, and the Company shall deliver
to each Purchaser its respective Shares and a Warrant as determined pursuant to Section 2.2(a), and the Company and each Purchaser
shall deliver the other items set forth in Section 2.2 deliverable at the Closing. Upon satisfaction of the covenants and conditions
set forth in Sections 2.2 and 2.3, the Closing shall occur at the Company’s executive office or such other location as the
parties shall mutually agree or take place via facsimile or email at the facsimile number and email address provided herein. Notwithstanding
anything contained herein to the contrary, the Company may reject any subscription, in whole or in part, in its sole discretion.


 






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2.2
Deliveries.


 


(a)
On or prior to the Closing Date, the Company shall deliver or cause to be delivered to each Purchaser the following:


 


(i)
this Agreement and the Registration Rights Agreement duly executed by the Company;


 


(ii)
the opinion of Libertas Law Group, Inc., the Company’s counsel, dated as of the Closing Date, in the form acceptable to
such Purchaser;


 


(iii)
a certificate evidencing the formation and good standing of the Company issued by the Secretary of State of Delaware as of a date
within ten (10) days of the Closing Date;


 


(iv)
a certified copy of the Certificate of Incorporation as certified by the Delaware Secretary of State within ten (10) days of the
Closing Date;


 


(v)
a letter from the Company’s transfer agent certifying the number of shares of Common Stock outstanding on the Closing Date
immediately prior to the Closing;


 


(vi)
a certificate, duly executed by the Chief Executive Officer of the Company, dated as of the Closing Date, certifying that each
and every representation and warranty of the Company shall be true and correct as of the date when made and as of the Closing
Date as though originally made at that time (except for representations and warranties that speak as of a specific date, which
shall be true and correct as of such specific date) and the Company shall have performed, satisfied and complied in all respects
with the covenants, agreements and conditions required to be performed, satisfied or complied with by the Company at or prior
to the Closing Date;


 


(vii)
a copy of the irrevocable instructions to the Transfer Agent, duly executed by the Company, instructing the Transfer Agent to
deliver, on an expedited basis, a certificate evidencing a number of Shares equal to such Purchaser’s Subscription Amount
divided by the Per Share Purchase Price, registered in the name of such Purchaser;


 


(viii)
a letter on the letterhead of the Company, duly executed by the Chief Executive Officer of the Company, setting forth the wire
transfer instructions of the Company; and


 


(ix)
a Warrant, duly executed by the Company, registered in the name of such Purchaser to purchase up to that number of shares of Common
Stock equal to one-half (1/2) of every Share issued to such Purchaser in accordance with this Agreement, with an exercise price
equal to $0.60, subject to adjustment therein.


 






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(b)
On or prior to the Closing Date, each Purchaser shall deliver or cause to be delivered to the Company the following:


 


(i)
this Agreement and the Registration Rights Agreement duly executed by such Purchaser; and


 


(ii)
such Purchaser’s Subscription Amount by wire transfer to the Company.


 


2.3
Closing Conditions. 


 


(a)
The obligations of the Company hereunder in connection with the Closing are subject to the following conditions being met:


 


(i)
the accuracy in all material respects on the Closing Date of the representations and warranties of the Purchasers contained herein;


 


(ii)
all obligations, covenants and agreements of each Purchaser required to be performed at or prior to the Closing Date shall have
been performed; and


 


(iii)
the delivery by each Purchaser of the items set forth in Section 2.2(b) of this Agreement.


 


(b)
The respective obligations of the Purchasers hereunder in connection with the Closing are subject to the following conditions
being met:


 


(i)
each and every representation and warranty of the Company set forth herein shall be true and correct as of the date when made
and as of the Closing Date as though originally made at that time (except for representations and warranties that speak as of
a specific date, which shall be true and correct as of such specific date) and the Company shall have performed, satisfied and
complied in all respects with the covenants, agreements and conditions required to be performed, satisfied or complied with by
the Company at or prior to the Closing Date;


 


(ii)
on or prior to the Closing Date, the Company shall receive (or shall have received) at least $5 million (and no more than $7 million)
in aggregate purchase price for the Shares and Warrants to be purchased by the Purchasers hereunder.


 


(iii)
the Company shall have obtained all governmental, regulatory or third party consents and approvals, if any, necessary for the
sale of the Securities;


 


(iv)
the delivery by the Company of the items set forth in Section 2.2(a) of this Agreement;


 


(v)
there shall have been no Material Adverse Effect (defined in Section 3.1(b) below) with respect to the Company since the date
hereof; and


 


(vi)
from the date hereof to the Closing Date, trading in the Common Stock shall not have been suspended by the Commission or the Company’s
principal Trading Market (except for any suspension of trading of limited duration agreed to by the Company, which suspension
shall be terminated prior to the Closing), and, at any time prior to the Closing Date, trading in securities generally as reported
by Bloomberg L.P. shall not have been suspended or limited, or minimum prices shall not have been established on securities whose
trades are reported by such service, or on any Trading Market, nor shall a banking moratorium have been declared either by the
United States or New York State authorities nor shall there have occurred any material outbreak or escalation of hostilities or
other national or international calamity of such magnitude in its effect on, or any material adverse change in, any financial
market which, in each case, in the reasonable judgment of each Purchaser, makes it impracticable or inadvisable to purchase the
Securities at the Closing.


 






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ARTICLE
III.

REPRESENTATIONS AND WARRANTIES


 


3.1
Representations and Warranties of the Company. Except as set forth in the Disclosure Schedules, which Disclosure Schedules
shall be deemed a part hereof and shall qualify any representation or otherwise made herein to the extent of the disclosure contained
in the corresponding section of the Disclosure Schedules, the Company hereby makes the following representations and warranties
to each Purchaser:


 


(a)
Subsidiaries. All of the direct and indirect subsidiaries of the Company are set forth in the Company’s SEC Reports
(hereinafter defined in Section 3.1(h)). The Company owns, directly or indirectly, the capital stock or other equity interests
of each Subsidiary free and clear of any Liens, and all of the issued and outstanding shares of capital stock of each Subsidiary
are validly issued and are fully paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities.


 


(b)
Organization and Qualification. The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized,
validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization (as applicable),
with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted.
Neither the Company nor any Subsidiary is in violation or default of any of the provisions of its respective certificate or articles
of incorporation, bylaws or other organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified
to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature
of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified
or in good standing, as the case may be, could not have or reasonably be expected to result in (i) a material adverse effect on
the legality, validity or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations,
assets, business, prospects or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii)
a material adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligations
under any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse Effect”), and no Proceeding
has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power
and authority or qualification.


 


(c)
Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate
the transactions contemplated by each of the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder.
The execution and delivery of each of the Transaction Documents by the Company and the consummation by it of the transactions
contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company and no further action
is required by the Company, its board of directors or its stockholders in connection therewith other than in connection with the
Required Approvals. Each Transaction Document has been (or upon delivery will have been) duly executed by the Company and, when
delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable
against the Company in accordance with its terms except (i) as limited by general equitable principles and applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights
generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.


 






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(d)
No Conflicts. The execution, delivery and performance of the Transaction Documents by the Company, the issuance and sale
of the Securities and the consummation by the Company of the other transactions contemplated hereby and thereby do not and will
not: (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation,
bylaws or other organizational or charter documents; or (ii) conflict with, or constitute a default (or an event that with notice
or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets
of the Company or any Subsidiary, or give to others any rights of termination, amendment, acceleration or cancellation (with or
without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary
debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property or asset
of the Company or any Subsidiary is bound or affected; or (iii) subject to the Required Approvals, conflict with or result in
a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental
authority to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by
which any property or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and
(iii), such as could not have or reasonably be expected to result in a Material Adverse Effect.


 


(e)
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 Transaction Documents, other
than: (i) filings required pursuant to Section 4.4 of this Agreement; and (ii) the filing of Form D with the Commission and such
filings as are required to be made under applicable state securities laws (collectively, the “Required Approvals”).


 


(f)
Issuance of the Securities. The Securities are duly authorized and, when issued and paid for in accordance with the applicable
Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the
Company other than restrictions on transfer provided for in the Transaction Documents. The Warrant Shares, when issued in accordance
with the terms of the Transaction Documents, will be validly issued, fully paid and nonassessable, free and clear of all Liens
imposed by the Company other than restrictions on transfer provided for in the Transaction Documents. The Company has reserved
from its duly authorized capital stock the maximum number of shares of Common Stock issuable pursuant to this Agreement and the
Warrants.


 






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(g)
Capitalization. Except as set forth on Schedule 3.1(g), the Company has not issued any capital stock since its most recently
filed periodic report under the Exchange Act, other than pursuant to the exercise of employee stock options under the Company’s
stock option plans, the issuance of shares of Common Stock to employees pursuant to the Company’s employee stock purchase
plans and pursuant to the conversion or exercise of Common Stock Equivalents outstanding as of the date of the most recently filed
periodic report under the Exchange Act. No Person has any right of first refusal, preemptive right, right of participation, or
any similar right to participate in the transactions contemplated by the Transaction Documents. Except as set forth in the Company’s
SEC Reports and as a result of the purchase and sale of the Securities, there are no outstanding options, warrants, scrip rights
to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible
into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of Common Stock,
or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue
additional shares of Common Stock or Common Stock Equivalents. The issuance and sale of the Securities will not obligate the Company
to issue shares of Common Stock or other securities to any Person (other than the Purchasers) and will not result in a right of
any holder of Company securities to adjust the exercise, conversion, exchange or reset price under any of such securities. All
of the outstanding shares of capital stock of the Company are validly issued, fully paid and nonassessable, have been issued in
compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive
rights or similar rights to subscribe for or purchase securities. No further approval or authorization of any stockholder, the
board of directors of the Company or others is required for the issuance and sale of the Securities. There are no stockholders
agreements, voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company
is a party or, to the knowledge of the Company, between or among any of the Company’s stockholders.


 


(h)
SEC Reports; Financial Statements. The Company has filed all reports, schedules, forms, statements and other documents
required to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d)
thereof, for the two years preceding the date hereof (or such shorter period as the Company was required by law or regulation
to file such material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein,
being collectively referred to herein as the “SEC Reports”) on a timely basis or has received a valid extension
of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective
dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act, as
applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. The financial statements of the Company included in the SEC Reports comply in all material
respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect
at the time of filing. Such financial statements have been prepared in accordance with United States generally accepted accounting
principles applied on a consistent basis during the periods involved (“GAAP”), except as may be otherwise specified
in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes
required by GAAP, and fairly present in all material respects the financial position of the Company and its consolidated subsidiaries
as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case
of unaudited statements, to normal year-end audit adjustments.


 






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(i)
Material Changes; Undisclosed Events, Liabilities or Developments. Except as specifically disclosed in the Company’s
SEC Reports filed prior to the date hereof: (i) there has been no event, occurrence or development that has had or that could
reasonably be expected to result in a Material Adverse Effect; (ii) the Company has not incurred any liabilities (contingent or
otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past
practice and (B) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or disclosed
in filings made with the Commission; (iii) the Company has not altered its method of accounting; (iv) the Company has not declared
or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements
to purchase or redeem any shares of its capital stock; and (v) the Company has not issued any equity securities to any officer,
director or Affiliate, except pursuant to existing Company stock option plans or pursuant to conversion of outstanding debt. The
Company does not have pending before the Commission any request for confidential treatment of information. Except for the issuance
of the Securities contemplated by this Agreement or as set forth on Schedule 3.1(i), no event, liability or development
has occurred or exists with respect to the Company or its Subsidiaries or their respective business, properties, operations or
financial condition, that would be required to be disclosed by the Company under applicable securities laws at the time this representation
is made or deemed made that has not been publicly disclosed at least one (1) Trading Day prior to the date that this representation
is made.


 


(j)
Litigation. Except as set forth in the SEC Reports, there is no action, suit, inquiry, notice of violation, Proceeding
or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any
of their respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an “Action”) which: (i) adversely affects or challenges
the legality, validity or enforceability of any of the Transaction Documents or the Securities; or (ii) could, if there were an
unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect. Neither the Company nor any Subsidiary,
nor to the knowledge of the Company, any director or officer thereof, is or has been the subject of any Action involving a claim
of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty. There has not been,
and to the knowledge of the Company, there is not pending or contemplated, any investigation by the Commission involving the Company
or any current or former director or officer of the Company. The Commission has not issued any stop order or other order suspending
the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities
Act.


 


(k)
Labor Relations. No material labor dispute exists or, to the knowledge of the Company, is imminent with respect to any
of the employees of the Company that could reasonably be expected to result in a Material Adverse Effect. None of the Company’s
or its Subsidiaries’ employees is a member of a union that relates to such employee’s relationship with the Company
or such Subsidiary, and neither the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the
Company and its Subsidiaries believe that their relationships with their employees are good. No executive officer, to the knowledge
of the Company, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure
or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant
in favor of any third party, and the continued employment of each such executive officer does not subject the Company or any of
its Subsidiaries to any liability with respect to any of the foregoing matters. The Company and its Subsidiaries are in compliance
with all U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and
conditions of employment and wages and hours, except where the failure to be in compliance could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.


 






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(l)
Compliance. Neither the Company nor any Subsidiary: (i) is in default under or in violation of (and no event has occurred
that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary
under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation
of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any
of its properties is bound (whether or not such default or violation has been waived); (ii) is in violation of any order of any
court, arbitrator or governmental body; or (iii) is or has been in violation of any statute, rule or regulation of any governmental
authority, including without limitation all foreign, federal, state and local laws applicable to its business and all such laws
that affect the environment, except in each case as could not have or reasonably be expected to result in a Material Adverse Effect.


 


(m)
Regulatory Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the
appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as described
in the SEC Reports, except where the failure to possess such permits could not reasonably be expected to result in a Material
Adverse Effect (“Material Permits”), and neither the Company nor any Subsidiary has received any notice of
Proceedings relating to the revocation or modification of any Material Permit.


 


(n)
Title to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned
by them and good and marketable title in all personal property owned by them that is material to the business of the Company and
the Subsidiaries, in each case free and clear of all Liens, except for Liens as do not materially affect the value of such property
and do not materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries
and Liens for the payment of federal, state or other taxes, the payment of which is neither delinquent nor subject to penalties.
Any real property and facilities held under lease by the Company and the Subsidiaries are held by them under valid, subsisting
and enforceable leases with which the Company and the Subsidiaries are in compliance.


 


(o)
Patents and Trademarks. The Company and the Subsidiaries have, or have rights to use, all patents, patent applications,
trademarks, trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual
property rights and similar rights necessary or material for use in connection with their respective businesses as described in
the SEC Reports and which the failure to so have could have a Material Adverse Effect (collectively, the “Intellectual
Property Rights”). Neither the Company nor any Subsidiary has received a notice (written or otherwise) that any of the
Intellectual Property Rights used by the Company or any Subsidiary violates or infringes upon the rights of any Person. To the
knowledge of the Company, all such Intellectual Property Rights are enforceable and there is no existing infringement by another
Person of any of the Intellectual Property Rights. The Company and its Subsidiaries have taken reasonable security measures to
protect the secrecy, confidentiality and value of all of their intellectual properties, except where failure to do so could not,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.


 


(p) Insurance.
The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and
risks and in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries are
engaged. Neither the Company nor any Subsidiary has any reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary
to continue its business without a significant increase in cost.


 






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(q)
Transactions With Affiliates and Employees. Except as set forth in the SEC Reports or as otherwise set forth on Schedule
3(q), none of the officers or directors of the Company and, to the knowledge of the Company, none of the employees of the Company
is presently a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and
directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing
for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee
or, to the knowledge of the Company, any entity in which any officer, director, or any such employee has a substantial interest
or is an officer, director, trustee or partner, in each case in excess of the amount permitted under Item 404 of Regulation S-K
other than for: (i) payment of salary or consulting fees for services rendered; (ii) reimbursement for expenses incurred on behalf
of the Company; and (iii) other employee benefits, including stock option agreements under any stock option plan of the Company.


 


(r)
Private Placement. Assuming the accuracy of the Purchasers representations and warranties set forth in Section 3.2, no
registration under the Securities Act is required for the offer and sale of the Securities by the Company to the Purchasers as
contemplated hereby. The issuance and sale of the Securities hereunder does not contravene the rules and regulations of the Trading
Market.


 


(s)
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 subject to the Investment Company Act
of 1940, as amended.


 


(t)
Listing and Maintenance Requirements. The Company’s Common Stock is registered pursuant to Section 12(g) of the Exchange
Act, and the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act nor has the Company received any notification that the Commission is contemplating
terminating such registration. The Company has not, in the 12 months preceding the date hereof, received notice from any Trading
Market on which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with the
listing or maintenance requirements of such Trading Market. The Company is, and has no reason to believe that it will not in the
foreseeable future continue to be, in compliance with all such listing and maintenance requirements.


 


(u)
Disclosure. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction
Documents, the Company confirms that neither it nor any other Person acting on its behalf has provided any of the Purchasers or
their agents or counsel with any information that it believes constitutes or might constitute material, non-public information,
unless prior thereto such Purchaser shall have executed a written agreement regarding the confidentiality and use of such information.
The Company understands and confirms that the Purchasers will rely on the foregoing representation in effecting transactions in
securities of the Company. All disclosure furnished by or on behalf of the Company to the Purchasers regarding the Company, its
business and the transactions contemplated hereby, including the Disclosure Schedules to this Agreement, is true and correct and
does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not misleading. The press releases disseminated by the
Company during the twelve months preceding the date of this Agreement taken as a whole do not contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein,
in light of the circumstances under which they were made and when made, not misleading. The Company acknowledges and agrees that
no Purchaser makes or has made any representations or warranties with respect to the transactions contemplated hereby other than
those specifically set forth in Section 3.2 hereof.


 






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(v)
No Integrated Offering. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section
3.2, neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly,
made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this
offering of the Securities to be integrated with prior offerings by the Company for purposes of: (i) the Securities Act which
would require the registration of any such securities under the Securities Act; or (ii) any applicable shareholder approval provisions
of any Trading Market on which any of the securities of the Company are listed or designated.


 


(w)
Tax Status. Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result
in a Material Adverse Effect, the Company and each Subsidiary has filed all necessary federal, state and foreign income and franchise
tax returns and has paid or accrued all taxes shown as due thereon, and the Company has no knowledge of a tax deficiency which
has been asserted or threatened against the Company or any Subsidiary.


 


(x)
No General Solicitation. Neither the Company nor any person acting on behalf of the Company has offered or sold any of
the Securities by any form of general solicitation or general advertising. The Company has offered the Securities for sale only
to the Purchasers and certain other “accredited investors” within the meaning of Rule 501 under the Securities Act.


 


(y)
Foreign Corrupt Practices. Neither the Company, nor to the knowledge of the Company, any agent or other person acting on
behalf of the Company, has: (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other
unlawful expenses related to foreign or domestic political activity; (ii) made any unlawful payment to foreign or domestic government
officials or employees or to any foreign or domestic political parties or campaigns from corporate funds; (iii) failed to disclose
fully any contribution made by the Company (or made by any person acting on its behalf of which the Company is aware) which is
in violation of law; or (iv) violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended.


 


(z)
Accountants. The Company’s accounting firm is Eide Bailly LLP. To the knowledge and belief of the Company, such accounting
firm: (i) is a registered public accounting firm as required by the Exchange Act; and (ii) shall express its opinion with respect
to the financial statements to be included in the Company’s Annual Report on Form 10-K for the year ending March 31, 2015.


 


(aa)
No Disagreements with Accountants and Lawyers. There are no disagreements of any kind presently existing, or reasonably
anticipated by the Company to arise, between the Company and the accountants and lawyers formerly or presently employed by the
Company which could affect the Company’s ability to perform any of its obligations under any of the Transaction Documents,
and the Company is current with respect to any fees owed to its accountants.


 


(bb)
Acknowledgment Regarding Purchasers’ Purchase of Securities. The Company acknowledges and agrees that each of the
Purchasers is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the
transactions contemplated thereby. The Company further acknowledges that no Purchaser is acting as a financial advisor or fiduciary
of the Company (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated thereby
and any advice given by any Purchaser or any of their respective representatives or agents in connection with the Transaction
Documents and the transactions contemplated thereby is merely incidental to the Purchasers’ purchase of the Securities.
The Company further represents to each Purchaser that the Company’s decision to enter into this Agreement and the other
Transaction Documents has been based solely on the independent evaluation of the transactions contemplated hereby by the Company
and its representatives.


 






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(cc)
Acknowledgement Regarding Purchaser’s Trading Activity. Anything in this
Agreement or elsewhere herein to the contrary notwithstanding (except for Sections 3.2(f) hereof), it is understood and acknowledged
by the Company: (i) that none of the Purchasers have been asked by the Company to agree, nor has any Purchaser agreed, to desist
from purchasing or selling, long and/or short, securities of the Company, or “derivative” securities based on securities
issued by the Company or to hold the Securities for any specified term; (ii) that past or future open market or other transactions
by any Purchaser, including Short Sales, and specifically including, without limitation, Short Sales or “derivative”
transactions, before or after the closing of this or future private placement transactions, may negatively impact the market price
of the Company’s publicly-traded securities; (iii) that any Purchaser, and counter-parties in “derivative” transactions
to which any such Purchaser is a party, directly or indirectly, presently may have a “short” position in the Common
Stock, provided, however, any such short position shall not have been established by an such Purchaser, or its Affiliates, during
the Discussion Time ( as defined in Section 3.2(f)) and (iv) that each Purchaser shall not be deemed to have any affiliation with
or control over any arm’s length counter-party in any “derivative” transaction. The Company further understands
and acknowledges that (a) one or more Purchasers may engage in hedging activities at various times during the period that the
Securities are outstanding and (b) such hedging activities (if any) could reduce the value of the existing stockholders’
equity interests in the Company at and after the time that the hedging activities are being conducted. The Company acknowledges
that such aforementioned hedging activities do not constitute a breach of any of the Transaction Documents.


 


(dd)
Regulation M Compliance. The Company has not, and to its knowledge no one acting on its behalf has: (i) taken, directly
or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of any of the Securities; (ii) sold, bid for, purchased, or, paid any compensation
for soliciting purchases of, any of the Securities; or (iii) paid or agreed to pay to any Person any compensation for soliciting
another to purchase any other securities of the Company.


 


(ee)
Certain Fees. Other than payments of certain fees and commissions pursuant to the Company’s agreement with Wunderlich
Securities, no brokerage or finder’s fees or commissions are or will be payable by the Company to any broker, financial
advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated
by the Transaction Documents.


 


(ff)
No Disqualification Events. With respect to Securities to be offered and sold hereunder in reliance on Rule 506(b) under
the Securities Act (“Regulation D Securities”), none of the Company, any of its predecessors, any affiliated
issuer, any director, executive officer, other officer of the Company participating in the offering contemplated hereby, any beneficial
owner of 20% or more of the Company’s outstanding voting equity securities nor any promoter (as that term is defined in
Rule 405 under the Securities Act) connected with the Company in any capacity at the time of sale (each, an “Issuer Covered
Person” and, together, “Issuer Covered Persons”) is subject to any of the “Bad Actor”
disqualifications described in Rule 506(d)(1)(i) to (viii) under the Securities Act (a “Disqualification Event”),
except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3). The Company has exercised reasonable care to determine
whether any Issuer Covered Person is subject to a Disqualification Event. The Company has complied, to the extent applicable,
with its disclosure obligations under Rule 506(e), and has furnished to the Purchasers a copy of any disclosures provided thereunder.


 






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(gg)
Other Covered Persons. The Company is not aware of any Person (other than Wunderlich Securities) that has been or will
be paid (directly or indirectly) remuneration for solicitation of Purchasers or potential purchasers in connection with the sale
of any Regulation D Securities.


 


3.2
Representations and Warranties of the Purchasers. Each Purchaser, for itself and for no other Purchaser, hereby represents
and warrants as of the date hereof and as of the Closing Date to the Company as follows:


 


(a)
Organization; Authority. Such Purchaser is an entity duly organized, validly existing and in good standing under the laws
of the jurisdiction of its organization with full right, corporate or partnership power and authority to enter into and to consummate
the transactions contemplated by the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder.
The execution and delivery of the Transaction Documents and performance by such Purchaser of the transactions contemplated by
the Transaction Documents have been duly authorized by all necessary corporate or similar action on the part of such Purchaser.
Each Transaction Document to which it is a party has been duly executed by such Purchaser, and when delivered by such Purchaser
in accordance with the terms hereof, will constitute the valid and legally binding obligation of such Purchaser, enforceable against
it in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally; (ii)
as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies; and (iii)
insofar as indemnification and contribution provisions may be limited by applicable law.


 


(b)
Own Account. Such Purchaser understands that the Securities are “restricted securities” and have not been registered
under the Securities Act or any applicable state securities law and is acquiring the Securities as principal for its own account
and not with a view to or for distributing or reselling such Securities or any part thereof in violation of the Securities Act
or any applicable state securities law, has no present intention of distributing any of such Securities in violation of the Securities
Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other persons
to distribute or regarding the distribution of such Securities in violation of the Securities Act or any applicable state securities
law. Such Purchaser is acquiring the Securities hereunder in the ordinary course of its business.


 


(c)
Purchaser Status. At the time such Purchaser was offered the Securities, it was, and at the date hereof it is, and on each
date on which it exercises any Warrants, it will be either: (i) an “accredited investor” as defined in Rule 501 under
the Securities Act; or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act.
Such Purchaser is not required to be registered as a broker-dealer under Section 15 of the Exchange Act.


 






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(d)
Experience of Such Purchaser. Such Purchaser, either alone or together with its representatives, has such knowledge, sophistication
and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment
in the Securities and has so evaluated the merits and risks of such investment. Such Purchaser is able to bear the economic risk
of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.


 


(e)
General Solicitation. Such Purchaser is not purchasing the Securities as a result of any advertisement, article, notice
or other communication regarding the Securities published in any newspaper, magazine or similar media or broadcast over television
or radio or presented at any seminar or any other general solicitation or general advertisement.


 


(f)
Short Sales and Confidentiality Prior To The Date Hereof. Other than consummating the transactions contemplated hereunder,
such Purchaser has not, nor has any Person acting on behalf of or pursuant to any understanding with such Purchaser, directly
or indirectly executed any purchases or sales, including Short Sales, of the securities of the Company during the period commencing
from the time that such Purchaser first received a term sheet (written or oral) from the Company or any other Person representing
the Company setting forth the material terms of the transactions contemplated hereunder until the date hereof (“Discussion
Time”). Notwithstanding the foregoing, in the case of a Purchaser
that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s
assets and the portfolio managers have no knowledge of the investment decisions made by the portfolio managers managing other
portions of such Purchaser’s assets, the representation set forth above shall only apply with respect to the portion of
assets managed by the portfolio manager that made the investment decision to purchase the Securities covered by this Agreement.
Other than to other Persons party to this Agreement, such Purchaser has maintained the confidentiality of all disclosures made
to it in connection with this transaction (including the existence and terms of this transaction).


 


(g)
Non-Reliance on Statements of Agents. Purchaser represents and warrants that Purchaser has not relied on statements of
any officer, director, employee or agent of the Company not contained in this Agreement or the Company’s SEC Filings in
evaluating the merits of an investment in the Securities.


 


(h)
Certain Fees. Purchaser has not entered into any agreement or arrangement entitling any broker, financial advisor or consultant,
finder, placement agent, investment banker, bank or other Person to brokerage or finder’s fees or commissions with respect
to the transactions contemplated by the Transaction Documents. The Company shall have no obligation with respect to any fees or
with respect to any claims made by or on behalf of any Person other than Wunderlich Securities for fees of a type contemplated
in this Section that may be due in connection with the transactions contemplated by the Transaction Documents.


 






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ARTICLE
IV.

OTHER AGREEMENTS OF THE PARTIES


 


4.1
Transfer Restrictions.  


 


(a)
The Securities may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of
Securities other than pursuant to an effective registration statement or Rule 144, to the Company or to an Affiliate of a Purchaser
or in connection with a pledge as contemplated in Section 4.1(b), except in a case of the transfer of Securities to the Purchaser’s
Limited Partners, the Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the
transferor and reasonably acceptable to the Company, the form and substance of which opinion shall be reasonably satisfactory
to the Company, to the effect that such transfer does not require registration of such transferred Securities under the Securities
Act. As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement and shall
have the rights of a Purchaser under this Agreement.


 


(b)
The Purchasers agree to the imprinting, so long as is required by this Section 4.1, of a legend on any of the Securities in the
following form:


 


THESE
SECURITIES HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE
UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF
WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT
WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED
IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.


 


(c)
The Company acknowledges and agrees that a Purchaser may from time to time pledge pursuant to a bona fide margin agreement with
a registered broker-dealer or grant a security interest in some or all of the Securities to a financial institution that is an
“accredited investor” as defined in Rule 501(a) under the Securities Act and who agrees to be bound by the provisions
of this Agreement and, if required under the terms of such arrangement, such Purchaser may transfer pledged or secured Securities
to the pledgees or secured parties. Such a pledge or transfer would not be subject to approval of the Company and no legal opinion
of legal counsel of the pledgee, secured party or pledgor shall be required in connection therewith. Further, no notice shall
be required of such pledge. At the appropriate Purchaser’s expense, the Company will execute and deliver such reasonable
documentation as a pledgee or secured party of Securities may reasonably request in connection with a pledge or transfer of the
Securities. Certificates evidencing the Shares and Warrant Shares shall not contain any legend (including the legend set forth
in Section 4.1(b)): (i) following any sale of such Shares or Warrant Shares pursuant to Rule 144; or (ii) if such Shares or Warrant
Shares are eligible for sale under Rule 144 (provided that a Purchaser provides the Company with an assurance letter, which shall
not include an opinion of Purchaser’s counsel, in the form reasonably satisfactory to Company’s legal counsel, that
such Shares or Warrant Shares are eligible for sale, assignment or transfer under Rule 144); or (iii) if such legend is not required
under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff
of the Commission). The Company may not make any notation on its records or give instructions to the Transfer Agent that enlarge
the restrictions on transfer set forth in this Section, except in accordance with applicable law. Certificates for Securities
subject to legend removal hereunder shall be transmitted by the Transfer Agent to the Purchaser by crediting the account of the
Purchaser’s prime broker with the Depository Trust Company System as directed by such Purchaser. The Company shall, subject
to applicable law, cause its counsel to issue a legal opinion with respect to any resale of Securities pursuant to Rule 144 or
a registration statement. Any fees (with respect to the Transfer Agent, counsel to the Company or otherwise) associated with the
issuance of such opinion shall be borne by the Company.


 






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(d)
If the Company shall fail, for any reason or for no reason, to either (I) if the Transfer Agent is not participating in the DTC
Fast Automated Securities Transfer Program, to issue and deliver to a Purchaser (or its designee) a certificate representing the
Securities so delivered to the Company by such Purchaser that is registered on the Company’s share register or, if the Transfer
Agent is participating in the DTC Fast Automated Securities Transfer Program, to credit the balance account of such Purchaser
or such Purchaser’s designee with DTC for such number of Shares or Warrant Shares, as applicable, so delivered to the Company
or (II) if a Registration Statement covering the resale of such number of Shares or Warrant Shares, as applicable, so delivered
to the Company (the “Unavailable Shares”) is not available for the resale of such Unavailable Shares and the
Company fails to promptly, but in no event later than as required pursuant to the Registration Rights Agreement (x) so notify
such Purchaser and (y) deliver the Shares or Warrant Shares, as applicable, electronically by crediting such aggregate number
of Shares or Warrant Shares, as applicable, to such Purchaser’s or its designee’s balance account with DTC through
its Deposit/Withdrawal At Custodian system (the event described in the immediately foregoing clause (II) is hereinafter referred
as a “Notice Failure” and together with the event described in clause (I) above, a “Delivery Failure”),
and if on or after such Trading Day such Purchaser purchases (in an open market transaction or otherwise) shares of Common Stock
to deliver in satisfaction of a sale by such Purchaser of shares of Common Stock issuable upon such exercise that such Purchaser
anticipated receiving from the Company (a “Buy-In”), then the Company shall, within three (3) Trading Days
after such Purchaser’s request and in such Purchaser’s discretion, either (i) pay cash to such Purchaser in an amount
equal to such Purchaser’s total purchase price (including brokerage commissions and other out-of-pocket expenses, if any)
for the shares of Common Stock so purchased) (the “Buy-In Price”), at which point the Company’s obligation
to deliver such certificate or credit such Purchaser’s balance account shall terminate and such shares shall be cancelled,
or (ii) promptly honor its obligation to so deliver to such Purchaser a certificate or certificates or credit such Purchaser’s
DTC account representing such number of shares of Common Stock that would have been so delivered if the Company timely complied
with its obligations hereunder and pay cash to such Purchaser in an amount equal to the excess (if any) of the Buy-In Price over
the product of (A) such number of shares of Shares or Warrant Shares (as the case may be) that the Company was required to deliver
to such Purchaser by the Required Delivery Date, multiplied by (B) the lowest Closing Sale Price (as defined in the Warrants)
of the Common Stock on any Trading Day during the period commencing on the date of the delivery by such Purchaser to the Company
of the applicable Shares or Warrant Shares (as the case may be) and ending on the date of such delivery and payment under this
clause (ii). Except insofar as the payments provided for herein may be deemed to reflect the uncertainty of a Purchaser’s
damages upon a Delivery Failure and are intended to be a reasonable estimate of a Purchaser’s damages in such case, nothing
shall limit such Purchaser’s right to pursue any other remedies available to it hereunder, at law or in equity, including,
without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely
deliver certificates representing shares of Common Stock (or to electronically deliver such shares of Common Stock) as required
pursuant to the terms hereof.


 


4.2
Furnishing of Information. Until the earliest of the time that: (i) no Purchaser owns Securities; or (ii) the Securities
may be sold without restriction, the Company covenants to file in a timely manner (or obtain extensions in respect thereof and
file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to the
Exchange Act. As long as any Purchaser owns Securities, if the Company is not required to file reports pursuant to the Exchange
Act, it will prepare and furnish to the Purchasers and make publicly available in accordance with Rule 144 such information as
is required for the Purchasers to sell the Securities under Rule 144. The Company further covenants that it will take such further
action as any holder of Securities may reasonably request, to the extent required from time to time to enable such Person to sell
such Securities without registration under the Securities Act within the requirements of the exemption provided by Rule 144.


 






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4.3
Integration. The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any
security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities in
a manner that would require the registration under the Securities Act of the sale of the Securities to the Purchasers or that
would be integrated with the offer or sale of the Securities to the Purchasers for purposes of the rules and regulations of any
Trading Market such that it would require shareholder approval prior to the closing of such other transaction unless shareholder
approval is obtained before the closing of such subsequent transaction.


 


4.4
Securities Laws Disclosure; Publicity. On or before 9:30 a.m., New York time, on the first (1st) Business Day
after the date of this Agreement, the Company shall issue a press release and Current Report on Form 8-K disclosing the material
terms of the transactions contemplated hereby (the “8-K Filing”). From and after the filing of the 8-K Filing, the
Company shall have disclosed all material, non-public information (if any) provided to any of the Purchasers by the Company or
any of its Subsidiaries or any of their respective officers, directors, employees or agents in connection with the transactions
contemplated by the Transaction Documents. Subject to the foregoing, neither the Company, its Subsidiaries nor any Purchaser shall
issue any press releases or any other public statements with respect to the transactions contemplated hereby; provided, however,
the Company shall be entitled, without the prior approval of any Purchaser, to make the Press Release and any press release or
other public disclosure with respect to such transactions (i) in substantial conformity with the 8-K Filing and contemporaneously
therewith and (ii) as is required by applicable law and Trading Market regulations (provided that in the case of clause (i) each
Purchaser shall be consulted by the Company in connection with any such press release or other public disclosure prior to its
release). Without the prior written consent of the applicable Purchaser (which may be granted or withheld in such Purchaser’s
sole discretion), the Company shall not (and shall cause each of its Subsidiaries and affiliates to not) disclose the name of
such Purchaser in any filing, announcement, release or otherwise. Notwithstanding anything contained in this Agreement to the
contrary and without implication that the contrary would otherwise be true, except with respect to the material terms and conditions
of the transactions contemplated by the Transaction Documents, the Company expressly acknowledges and agrees that no Purchaser
has had, and no Purchaser shall have (unless expressly agreed to by a particular Purchaser after the date hereof in a written
definitive and binding agreement executed by the Company and such particular Purchaser (it being understood and agreed that no
Purchaser may bind any other Purchaser with respect thereto)), any duty of confidentiality with respect to, or a duty not to trade
on the basis of, any material, non-public information regarding the Company or any of its Subsidiaries.


 


4.5
Non-Public Information. Except with respect to the material terms and conditions of the transactions contemplated by the
Transaction Documents disclosed in the 8-K Filing or publicly disclosed on or prior to the Closing Date, the Company covenants
and agrees that neither it nor any other Person acting on its behalf will provide any Purchaser or its agents or counsel with
any information that the Company believes constitutes material non-public information, unless prior thereto such Purchaser shall
have executed a written agreement regarding the confidentiality and use of such information. The Company understands and confirms
that each Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the Company. To the
extent that the Company delivers any material, non-public information to a Purchaser without such Purchaser’s consent, the
Company hereby covenants and agrees that such Purchaser shall not have any duty of confidentiality with respect to, or a duty
not to trade on the basis of, such material, non-public information.


 






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4.6
Use of Proceeds. The Company shall use the net proceeds from the sale of the Securities hereunder for working capital purposes
and shall not use such proceeds for: (a) the satisfaction of any portion of the Company’s debt (other than payment of trade
payables in the ordinary course of the Company’s business and prior practices); (b) the redemption of any Common Stock or
Common Stock Equivalents; or (c) the settlement of any outstanding litigation.


 


4.7
Indemnification. Subject to the provisions of this Section 4.7, the Company will indemnify and hold each Purchaser and
its directors, officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent
role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls such Purchaser
(within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title) of such controlling persons (each, a “Purchaser Party”) harmless
from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Purchaser
Party may suffer or incur as a result of or relating to: (a) any breach of any of the representations, warranties, covenants or
agreements made by the Company in this Agreement or in the other Transaction Documents; or (b) any action instituted against a
Purchaser in any capacity, or any of them or their respective Affiliates, by any stockholder of the Company who is not an Affiliate
of such Purchaser, with respect to any of the transactions contemplated by the Transaction Documents (unless such action is based
upon a breach of such Purchaser’s representations, warranties or covenants under the Transaction Documents or any agreements
or understandings such Purchaser may have with any such stockholder or any violations by the Purchaser of state or federal securities
laws or any conduct by such Purchaser which constitutes fraud, gross negligence, willful misconduct or malfeasance). If any action
shall be brought against any Purchaser Party in respect of which indemnity may be sought pursuant to this Agreement, such Purchaser
Party shall promptly notify the Company in writing, and the Company shall have the right to assume the defense thereof with counsel
of its own choosing reasonably acceptable to the Purchaser Party. Any Purchaser Party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense
of such Purchaser Party except to the extent that: (i) the employment thereof has been specifically authorized by the Company
in writing; (ii) the Company has failed after a reasonable period of time to assume such defense and to employ counsel; or (iii)
in such action there is, in the reasonable opinion of such separate counsel, a material conflict on any material issue between
the position of the Company and the position of such Purchaser Party, in which case the Company shall be responsible for the reasonable
fees and expenses of no more than one such separate counsel. The Company will not be liable to any Purchaser Party under this
Agreement: (i) for any settlement by a Purchaser Party effected without the Company’s prior written consent, which shall
not be unreasonably withheld or delayed; or (ii) to the extent, but only to the extent that a loss, claim, damage or liability
is attributable to any Purchaser Party’s breach of any of the representations, warranties, covenants or agreements made
by such Purchaser Party in this Agreement or in the other Transaction Documents.


 






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4.8
Indemnification of Company. Subject to the provisions of this Section 4.7, each Purchaser (other than institutional investors)
severally and not jointly with the other Purchasers, will indemnify and hold the Company and its directors, officers, shareholders,
members, partners, employees and agents harmless from any and all losses, liabilities, obligations, claims, contingencies, damages,
costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and
costs of investigation that the Company may suffer or incur as a result of or relating to any breach of any of the representations,
warranties, covenants or agreements made by the Purchaser in this Agreement. If any action shall be brought against the Company
in respect of which indemnity may be sought pursuant to this Agreement, the Company shall promptly notify such Purchaser in writing,
and the Purchaser shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to
the Company. The Company shall have the right to employ separate counsel in any such action and participate in the defense thereof,
but the fees and expenses of such counsel shall be at the expense of such Company except to the extent that: (i) the employment
thereof has been specifically authorized by the Purchaser in writing; (ii) the Purchaser has failed after a reasonable period
of time to assume such defense and to employ counsel; or (iii) in such action there is, in the reasonable opinion of such separate
counsel, a material conflict on any material issue between the position of the Company and the position of such Purchaser, in
which case the Purchaser shall be responsible for the reasonable fees and expenses of no more than one such separate counsel.
Such Purchaser will not be liable to the Company under this Agreement: (i) for any settlement by the Company effected without
the Purchaser’s prior written consent, which shall not be unreasonably withheld or delayed; (ii) to the extent, but only
to the extent that a loss, claim, damage or liability is attributable to any of the Company’s breach of any of the representations,
warranties, covenants or agreements made by the Company in this Agreement; or (iii) in an amount in excess of such Purchaser’s
gain upon such Purchaser’s sale of the Common Stock and/or Warrant Shares acquired pursuant to this Agreement.


 


4.9
Reservation of Common Stock. As of the date hereof, the Company has reserved and the Company shall continue to reserve
and keep available at all times, free of preemptive rights, a sufficient number of shares of Common Stock for the purpose of enabling
the Company to issue Shares pursuant to this Agreement and Warrant Shares pursuant to any exercise of the Warrants. 


 


4.10
Listing of Common Stock. The Company hereby agrees to use best efforts to maintain the listing or quotation of the Common
Stock on a Trading Market. The Company will take all action reasonably necessary to continue the listing or quotation and trading
of its Common Stock on a Trading Market and will comply in all respects with the Company’s reporting, filing and other obligations
under the bylaws or rules of the Trading Market.


 


4.11
Short Sales and Confidentiality After The Date Hereof. Each Purchaser severally and not jointly with the other Purchasers,
covenants that neither it nor any Affiliate acting on its behalf or pursuant to any understanding with it will execute any Short
Sales during the period commencing at the Discussion Time and ending at the time that the transactions contemplated by this Agreement
are first publicly announced as described in Section 4.4. Each Purchaser, severally and
not jointly with the other Purchasers, covenants that until such time as the transactions contemplated by this Agreement are publicly
disclosed by the Company as described in Section 4.4, such Purchaser will maintain the confidentiality of the existence and terms
of this transaction and the information included in the Disclosure Schedules. Notwithstanding
the foregoing, no Purchaser makes any representation, warranty or covenant hereby that it will not engage in Short Sales in the
securities of the Company after the time that the transactions contemplated by this Agreement are first publicly announced as
described in Section 4.4. Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment
vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s assets and the portfolio managers
have no knowledge of the investment decisions made by the portfolio managers managing other portions of such Purchaser’s
assets, the covenant set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that
made the investment decision to purchase the Securities covered by this Agreement.


 






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4.12
Delivery of Securities After Closing. The Company shall deliver, or cause to be delivered, the respective Securities purchased
by each Purchaser to such Purchaser within three (3) Trading Days of the Closing Date.


 


4.13
Form D; Blue Sky Filings. The Company agrees to file in a timely manner a Form D with respect to the Securities as required
under Regulation D and to provide a copy thereof, promptly upon request of any Purchaser. The Company shall take such action as
the Company shall reasonably determine is necessary in order to obtain an exemption for, or to qualify the Securities for, sale
to the Purchasers at the Closing under applicable securities or “Blue Sky” laws of the states of the United States,
and shall provide evidence of such actions promptly upon request of any Purchaser.


 


4.14
Notice of Disqualification Events. The Company will notify the Purchasers in writing, prior to the Closing Date of (i)
any Disqualification Event relating to any Issuer Covered Person and (ii) any event that would, with the passage of time, become
a Disqualification Event relating to any Issuer Covered Person.


 


ARTICLE
V.

MISCELLANEOUS


 


5.1
Fees and Expenses. Except as provided below, each party shall pay the fees and expenses of its advisers, counsel, accountants
and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution,
delivery and performance of this Agreement. The Company shall reimburse Kelley Drye & Warren LLP for all reasonable legal
fees and expenses of Kelley Drye & Warren LLP incurred in connection with the structuring, documentation, negotiation and
closing of the transactions contemplated by the Transaction Documents and regulatory filings in connection therewith) (the “Transaction
Expenses”) which at the option of Kelley Drye & Warren LLP, may be withheld by the lead Purchaser from its Purchase
Price at the Closing in an aggregate amount not to exceed $15,000. Other than for Persons engaged by any Purchaser, the Company
shall further be responsible for the payment of any placement agent’s fees, financial advisory fees, transfer agent fees,
the fees and expenses of DTC (as defined below) fees or broker’s commissions relating to or arising out of the transactions
contemplated hereby (including, without limitation, any fees payable to any placement agent of the Company in connection with
the transactions contemplated by this Agreement), Transfer Agent fees, stamp taxes and other taxes and duties levied in connection
with the delivery of any Securities to the Purchasers. The Company shall pay, and hold each Purchaser harmless against, any liability,
loss or expense (including, without limitation, reasonable attorneys’ fees and out-of-pocket expenses) arising in connection
with any claim relating to any such payment.


 


5.2
Entire Agreement. The Transaction Documents, together with the exhibits and schedules thereto, contain the entire understanding
of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written,
with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.


 






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5.3
Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall
be in writing and shall be deemed given and effective on the earliest of: (a) the date of transmission, if such notice or communication
is delivered via facsimile or email at the facsimile number set forth on the signature pages attached hereto or the email address
set forth on the signature pages attached hereto prior to 5:30 p.m. (PST) on a Business Day; (b) the next Business Day after the
date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature
pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (PST) on any Business Day; (c) the 2nd
Business Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service; or (d) upon actual
receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as
set forth on the signature pages attached hereto.


 


5.4
Amendments; Waivers. No provision of this Agreement may be waived or amended except in a written instrument signed, in
the case of an amendment, by the Company and the Purchasers of more than fifty percent (50%) of the Shares still held by the Purchasers
or, in the case of a waiver, by the party against whom enforcement of any such waived provision is sought. No waiver of any default
with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future
or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay
or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.


 


5.5
Headings. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed
to limit or affect any of the provisions hereof.


 


5.6
Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors
and permitted assigns.


 


5.7
Assignment. Each Purchaser acknowledges that it may not assign any of its rights to or interest in or under this Agreement
without the prior written consent of the Company, and any attempted assignment without such consent shall be void and without
force or effect.


 


5.8
No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and each of their respective
successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person,
except as otherwise set forth in Section 4.8.


 


5.9
Governing Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents
shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard
to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a
party hereto or its respective affiliates, directors, officers, shareholders, employees or agents) shall be commenced exclusively
in the state and federal courts sitting in The City of New York, Borough of Manhattan. Each party hereby irrevocably submits to
the exclusive jurisdiction of the state and federal courts sitting in The City of New York, Borough of Manhattan for the adjudication
of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including
with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert
in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such
suit, action or proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered
or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under
this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.


 






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5.10
Survival. The representations and warranties contained herein shall survive the Closing and the delivery of the Shares
and Warrant Shares.


 


5.11
Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered
one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other
party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered
by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid
and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as
if such facsimile or “.pdf” signature page were an original thereof.


 


5.12
Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction
to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use
their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result
as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention
of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any
of such that may be hereafter declared invalid, illegal, void or unenforceable.


 


5.13
Replacement of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed,
the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation),
or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory
to the Company of such loss, theft or destruction. The applicant for a new certificate or instrument under such circumstances
shall also pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement
Securities.


 


5.14
Independent Nature of Purchasers’ Obligations and Rights. The obligations of each Purchaser under any Transaction
Document are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way
for the performance or non-performance of the obligations of any other Purchaser under any Transaction Document. Nothing contained
herein or in any other Transaction Document, and no action taken by any Purchaser pursuant thereto, shall be deemed to constitute
the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by
the Transaction Documents. Each Purchaser shall be entitled to independently protect and enforce its rights, including without
limitation, the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary
for any other Purchaser to be joined as an additional party in any proceeding for such purpose. Each Purchaser has been represented
by its own separate legal counsel in their review and negotiation of the Transaction Documents. The Company’s counsel does
not represent any of the Purchasers. The Company has elected to provide all Purchasers with the same terms and Transaction Documents
for the convenience of the Company and not because it was required or requested to do so by the Purchasers.


 






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5.15
Construction. The parties agree that each of them and/or their respective counsel has reviewed and had an opportunity to
revise the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the interpretation of the Transaction Documents or any amendments
hereto.


 


IN WITNESS
WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.


 





	BARFRESH
FOOD GROUP inc.


	 	Address
for Notice:

	 	 	 
	 	 	 	BARFRESH
    FOOD GROUP inc.
	 	 	 	90
    Madison Street
	 	 	 	Suite
    701
	 	 	 	Denver,
    CO 80206
	By:	/s/
    Riccardo Delle Coste	 	Facsimile:
    (303) 297-1903
	Name:	Riccardo
    Delle Coste	 	Attention:
    Riccardo Delle Coste,  
	Title:	Chief
    Executive Officer	 	Chief
    Executive Officer
	 	 	 	Email:
    riccardo@smoothieinc.com




 






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[PURCHASER
SIGNATURE PAGE TO BARFRESH FOOD GROUP INC. SECURITIES PURCHASE AGREEMENT]


 


IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.


 





	Name
    of Purchaser:	 
	 	 
	Signature
    of Authorized Signatory of Purchaser:	 
	 	 
	Name
    of Authorized Signatory: 	 
	 	 
	Title
    of Authorized Signatory: 	 
	 	 
	Date:
    	 
	 	 
	Email
    Address of Purchaser:	 
	 	 
	Telephone
    Number of Purchaser: 	 
	 	 
	Fax
    Number of Purchaser: 	 




  


	Address
                                         for Notice of Purchaser:

         
	Address
    for Delivery of Securities for Purchaser (if not same as address for notice):


 


Subscription
Amount: $                                              


 


Shares:
                                                                         


 


Warrant
Shares:                                                           


 


EIN
Number:                                                                 


 




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ANNEX
B


DISCLOSURE
SCHEDULES


 






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