Where Food Comes From, Inc. - 8-K

EXHIBIT 2.1

ASSET PURCHASE AGREEMENT

BY AND AMONG

SUREHARVEST, INC.,

WHERE FOOD COMES FROM, INC.

AND

SUREHARVEST SERVICES, LLC

DECEMBER, 2016

TABLE OF CONTENTS

ASSET PURCHASE AGREEMENT

This Asset Purchase Agreement (this “ Agreement ”) is made as of December 28, 2016, and effective as of the Effective Time, by and among (i) SureHarvest, Inc., a California corporation (the “ Seller ”), (ii) SureHarvest Services, LLC, a California limited liability company (the “ Buyer ”), (iii) Jeff Dlott, the President, key manager and shareholder of Seller (“ Dlott ”) and (iv) Where Food Comes From, Inc., a Colorado corporation (“ WFCF ”). The Seller, Dlott, the Buyer and WFCF are sometimes referred to herein individually as a “ Party ” and collectively as the “ Parties .”

STATEMENT OF PURPOSE

A.       The Seller and WFCF desire that Buyer be created to purchase the assets of the Seller, as more fully described herein; thereafter, Buyer will operate as a separate business pursuant to its operating agreement.

B.       The Seller desires to sell and transfer to the Buyer, and the Buyer desires to purchase and accept from the Seller, the assets of the Seller, on the terms and conditions more specifically described herein.

AGREEMENT

NOW, THEREFORE, in consideration of the mutual promises made herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, agree as follows:

ARTICLE I - DEFINITIONS

Capitalized terms are used throughout this Agreement. Some of these terms are defined in the body of the Agreement’s text; other terms are defined below:

“ Acquired Business ” means the business of Seller that makes the provision of software and services related to sustainability measurement and benchmarking, traceability, verification and certification to the food and agriculture industries.

“ Affiliate ” means and includes, with respect to a specified Person, any Person that directly or indirectly controls, is controlled by or is under common control with such specified Person.

“ Affiliated Group ” means an affiliated group as defined in Section 1504 of the Code (or any similar combined, consolidated or unitary group defined under state, local or foreign income Tax law).

“ Ancillary Agreements ” means the Bill of Sale, Assignment and Assumption Agreement in the form attached hereto as Exhibit B , the Operating Agreement of the Buyer in the form attached hereto as Exhibit C and the other agreements to be delivered in connection with this Agreement, including without limitation the employment agreement of Jeff Dlott in the form attached hereto as Exhibit D and the escrow agreement in connection with the Indemnity Escrow in the form attached hereto as Exhibit E .

“ Cash Consideration ” means a cash amount equal to $1,121,990.

“ CERCLA ” means the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. § 9601, et seq.), as amended, and all rules, regulations and standards issued thereunder.

“ Claim ” means any claim, demand, action or cause of action for payment or performance of any debt, account, covenant, contract, promise, loss, reimbursement, compensation, liability or expense including attorney’s fees, of any and every kind, nature or description whatsoever, at law or in equity.

“ Code ” means the Internal Revenue Code of 1986, as amended.

“ Contract ” means any agreement, contract, lease, consensual obligation, promise, understanding or undertaking (whether oral or written).

“ Designated Representations ” means the representations and warranties contained in Sections 4.1 (Organization and Power), 4.2 (Authorization of Transactions), 4.3 (Capitalization), 4.9 (Title to Purchased Assets), Section 4.10 (Taxes), 4.13 (Brokerage), 5.2 (No Conflicts), and 5.4 (Brokerage).

“ Effective Time ” means 11:59 p.m. PST on the Closing Date.

“ Employee Plan ” has the meaning set forth in Section 4.16(a).

“ Environmental Liabilities ” means any Liabilities (including any notices, penalties, orders, Claims or other assertions of obligations or liabilities) that are (a) related to environmental issues (including on-site or off-site contamination and disposal, passive migration of Pollutants, personal injury and property damage, and releases of Pollutants into the air, surface or subsurface soil or water), and (b) based upon or related to any provision of applicable Environmental Requirements.

“ Environmental Requirements ” means all Legal Requirements and Licenses concerning pollution or protection of the environment and/or human health, including without limitation all those relating to the presence, use, production, generation, handling, transportation, treatment, storage, disposal, distribution, labeling, testing, processing, discharge, Release, threatened Release, control, or cleanup of any Pollutants.

“ Escrow Agent ” means Dannette Henning or any other person appointed as the escrow agent pursuant to the terms of the Escrow Agreement.

“ Escrow Agreement ” means that certain escrow agreement executed by and among Dannette Henning and the Parties hereto in substantially the form attached hereto as Exhibit D.

“ GAAP ” means United States generally accepted accounting principles in all material respects in relation to the Financial Statements, consistently applied.

“ Governmental Authority ” means any domestic or foreign government, including any federal, provincial, state, territorial, municipal or local government, and any government agency, court, department, tribunal, commission or other authority exercising executive, legislative, judicial, regulatory, administrative or other functions of, or pertaining to, government and any official of any of the foregoing.

“ Indemnity Escrow ” means the WFCF Stock Consideration and the Rollover Equity that will be held pursuant to the Escrow Agreement for the period beginning at the Closing and ending at the conclusion of the eighteenth (18 ^th ) month thereafter; such escrow is being established to support any claims by the Buyer for any breach of any representations and/or warranty by the Seller under the indemnification provisions set forth herein.

“ Knowledge ” means, with respect to an individual, that such individual will be deemed to have knowledge of a particular fact or other matter if that individual is actually aware of that fact or matter after making reasonable inquiry with respect to the particular matter in question. As applied to the Seller in this Agreement, “ Knowledge ” means Jeff Dlott is actually aware of a particular fact or other matter after making reasonable inquiry with respect to the particular matter in question. As applied to the Buyer in this Agreement, “ Knowledge ” means that either John Saunders or Leeann Saunders is actually aware of a particular fact or other matter after making reasonable inquiry with respect to the particular matter in question.

“ Legal Requirement ” means and includes any federal, state, provincial, local, municipal, foreign, international, multinational or judicial Order, constitution, law, ordinance, regulation, rule or principle of common law, regulation, statute, or treaty, as the same are in effect or enacted on or prior to the Closing Date.

“ Liability ” means, with respect to any Person, any liability or obligation of such Person of any kind, whether known or unknown, absolute or contingent, disputed or undisputed, due or to become due, vested or unvested, determined, determinable or otherwise, and whether or not the same is required to be accrued on the financial statements of such Person.

“ Lien ” means any security interest, pledge, bailment (in the nature of a pledge or for purposes of security), mortgage, deed of trust, conditional sales and title retention agreement (including any lease in the nature thereof), charge, encumbrance, restrictions on transfer, voting trust arrangement, proxy or other similar arrangement or interest in real or personal property.

“ Lock-Up Period ” the period of three (3) years beginning on the Closing Date.

“ Management ” means generation, production, handling, distribution, processing, use, storage, treatment, operation, transportation, recycling, reuse and/or disposal, as those terms are defined in CERCLA, RCRA and other Environmental Requirements (including as those terms are further defined, construed, or otherwise used in rules, regulations, standards, guidelines and publications issued pursuant to, or otherwise in implementation of, such Environmental Requirements).

“ Material Adverse Change ” means, with respect to any Person, a change that is materially adverse to the business, assets, liabilities, prospects, operating results, contracts, financial condition or operations of such Person, including as a result of any materially adverse change to the assets, customer and supplier relations or employee and sales representative relations of such Person, other than any such change that relates to or results from (a) any change in the general economic, political, financial, market or other conditions generally affecting the U.S. or any foreign economy as a whole or the industry in which the Seller’s Business operates, (b) any seasonal fluctuations in the industry in which the Seller’s Business operates (provided that the exceptions contained in clauses (a) and (b) will not apply to the extent such changes have a disproportionate effect on the Seller when compared to other companies operating in the industry), (c) any force majeure circumstances or acts of God such as fire, earthquake, hurricane, flood, tsunami, etc., or (d) any acts of war, insurrection, sabotage or terrorism, national emergency or strike.

“ Order ” means any order, injunction, judgment, decree, ruling, writ, arbitration decision, award or assessment of a Governmental Authority or arbitrator.

“ Other Property ” means any real property used in the operation of the Acquired Business that was, at or prior to the Closing Date, sold, owned, operated, leased, managed or controlled by the Seller.

“ Person ” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization or a governmental entity (or any department, agency or political subdivision thereof).

“ Pollutant ” includes any “hazardous substance” and any “pollutant or contaminant” as those terms are defined in CERCLA; any “hazardous waste” as that term is defined in RCRA; and any “hazardous material” as that term is defined in the Hazardous Materials Transportation Act (49 U.S.C. § 1801 et seq.), as amended; and including any petroleum product or byproduct, solvent, flammable or explosive material, radioactive material, asbestos, polychlorinated biphenyls (PCBs), toxic chemical, dioxins, dibenzofurans, contaminant, heavy metals (to the extent they do not occur naturally), radon gas, mold, mold spores and mycotoxins and radiation; and including any other substance or material that is reasonably determined to present a threat, hazard or risk to human health or the environment and is regulated by or under an Environmental Requirement.

“ Proceeding ” means any action, arbitration, audit, demand, examination, hearing, Claim, complaint, charge, investigation, litigation, proceeding, mediation or suit (whether civil, criminal, administrative, judicial or investigative, whether public or private) commenced, brought, conducted or heard by or before, or otherwise involving, any Governmental Authority, arbitrator or mediator.

“ Proprietary Rights ” means all the following items: patents, patent applications, patent disclosures and inventions and any reissue, continuation, continuation-in-part, division, extension or reexamination thereof; trademarks, service marks, logos, trade names (including the trade name “SureHarvest” and derivations thereof), corporate names and Internet domain names, together with all goodwill associated therewith, copyrights and copyrightable works; and all registrations, applications and renewals for any of the foregoing; trade secrets and confidential information; computer software and software systems (including data, databases and related documentation); and all copies and tangible embodiments of the foregoing (in whatever form or medium), in each case including, without limitation, the items set forth on Schedule 4.12 .

“ Proprietary Software ” means software (including data, databases and related documentation) developed by or for the Seller or for which the Seller owns or holds an exclusive license to the copyright or patent rights embodied by such software, in each case whether or not such copyright or patent rights are registered or perfected.

“ RCRA ” means the Resource Conservation and Recovery Act (42 U.S.C. § 6901 et seq .), as amended, and all rules, regulations and standards issued thereunder.

“ Records ” means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.

“ Regulation ” means Treasury Regulations (including temporary regulations) promulgated by the United States Department of Treasury with respect to the Code or other federal tax statutes, as amended.

“ Release ” means any releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, placing, discarding, abandonment, migration or disposing into the environment of any Pollutant (including the placing, discarding or abandonment of any barrel, container or other receptacle containing any Pollutant).

“ Removal ,” “ Remedial ” and “ Response ” actions include the types of activities covered by CERCLA, RCRA, and other Environmental Requirements, and whether the activities are (a) those that might be taken by a Governmental Authority or (b) those that a Governmental Authority or any other person might seek to be taken by a third party who is or has been engaged in the Management of Pollutants.

“ Representative ” means, with respect to a particular Person, any director, officer, manager, member, partner, stockholder, employee, agent, consultant, advisor, accountant, financial advisor, legal counsel or other representative of that Person.

“ Restricted Territory ” means an area encompassing any State in which the Acquired Business has been engaged or has been proposed to be engaged by the Seller at any time prior to the Closing Date.

“ Rollover Equity ” means the 1,869,984 units of membership interest in SureHarvest Services, LLC having an initial agreed value of $1,869,984 as of the Closing Date, and such units shall be subject to all terms set forth in the operating agreement of SureHarvest Services, LLC. For a period of eighteen months following the Closing, the Rollover equity shall be held in escrow by WFCF, pursuant to an escrow agreement, to support any claims by the Buyer and WFCF for breaches of representations and warranties by Seller under the indemnification provision set forth herein.

“ Seller Contract ” means any Contract to which the Seller is a party.

“ Seller ERISA Affiliate ” means any entity or trade or business which, together with Seller, would constitute a single employer under Sections 414(b), (c), (m) or (o) of the Code, or under Sections 4001(a)(14) of ERISA.

“ Seller’s Employee Liability ” means any claims, Liabilities, costs, expenses or compensation that exist, that arise by reason of, or that are in any way connected with or based on (i) an employee’s employment relationship with the Seller, including any claims arising out of facts or circumstances existing or arising prior to the Closing, and/or the termination of such relationship (whether or not the affected employee is hired by the Seller or any of its Affiliates), (ii) any foreign, federal, state, county or municipal fair employment practices act and/or any law, ordinance or regulation promulgated by any foreign, federal, state, county, municipality or other state subdivision as applied to employees of the Seller for all periods prior to the Closing, (iii) interference with and/or breach of contract with employees of the Seller that occurred prior to the Closing, (iv) interference with business relationships, contractual relationships or employment relationships involving employees of the Seller and any third party that occurred prior to the Closing and (v) all claims by employees of the Seller not hired by the Buyer or its Affiliates.

“ Seller’s Employee Plan Liability ” means with respect to Seller, any claims, Liabilities, costs, expenses or compensation which exist, which arise by reason of, or which are in any way connected with or based on, any Employee Plan sponsored, administered, maintained or contributed to by Seller or by any Seller ERISA Affiliate, or connected with or based on any Employee Plan for which Seller or any Seller ERISA Affiliate could incur Liability, or regardless of whether such Liability involves employees of Seller, and regardless of when or how such Liability arises.

“ Seller Transaction Expenses ” means all costs and expenses incurred by or on behalf of the Seller and its Affiliates in connection with the preparation, execution and performance of this Agreement, including, without limitation, all fees and out of pocket expenses due all attorneys, accountants and financial advisors of the Seller and its respective Affiliates.

“ Tax ” or “ Taxes ” means any federal, state, local or foreign income, gross receipts, franchise, estimated, alternative minimum, add-on minimum, sales, use, transfer, registration, value added, excise, natural resources, severance, stamp, occupation, premium, windfall profit, environmental, customs, duties, real property, personal property, capital stock, social security, unemployment, disability, payroll, license, employee or other withholding, or other tax, of any kind whatsoever, including any interest, penalties or additions to tax or additional amounts in respect of the foregoing.

“ Tax Benefit ” means any refund, credit or other reduction in otherwise required Tax payments.

“ Tax Contest ” means any audit, Claim, dispute or controversy relating to Taxes.

“ Tax Returns ” means returns, declarations, reports, claims for refund, information returns or other documents (including any supporting schedules, statements or information required to be attached thereto) filed or required to be filed in connection with the determination, assessment or collection of Taxes of any party or the administration of any laws, regulations or administrative requirements relating to any Taxes.

“ Transaction ” means the transactions contemplated by this Agreement and the other agreements contemplated hereby.

“ WFCF Closing Share Price ” is the price per share of the WFCF Stock Consideration, as of the Closing Date, determined in accordance with this Agreement.

“ WFCF Stock Consideration ” means 850,852 shares of WFCF’s restricted securities that are of the same class that are currently publicly traded but are subject to resale limitations; such number of shares being the number of shares having a total value of $1,682,986 when using the average trading value of the WFCF publicly-traded stock in the four-week period ending on the Closing Date. For a period of eighteen months following the Closing, the WFCF Stock Consideration combined with the Rollover Equity shall be held in escrow pursuant to the terms of the Escrow Agreement, to support any claims by the Buyer and WFCF for breaches of representations and warranties by Seller under the indemnification provision set forth herein.

ARTICLE II - PURCHASE AND SALE OF THE PURCHASED ASSETS

2.1        Assets to be Purchased and Contributed .   Pursuant to the terms and subject to the conditions set forth in this Agreement, at the Closing and effective as of the Effective Time, Seller shall sell, convey, assign, transfer and deliver to the Buyer, and the Buyer shall purchase and acquire from the Seller, free and clear of any Liens, all the Seller’s right, title and interest in and to all Seller’s property and assets used in or relating to the Acquired Business (real, personal or mixed, tangible and intangible, of every kind and description, wherever located), including the following (but excluding the Excluded Assets) (hereinafter collectively referred to as the “ Purchased Assets ”):

(a)       The tangible personal property that is expressly identified on Schedule 2.1(a) ;

(b)       all the Scheduled Contracts (including, without limitation all customer contracts, licensing contracts, consulting contracts, administration contracts and software contracts used by Seller in the Acquired Business, all as more specifically set forth on Schedule 4.11 ), provided that upon written notice to Seller at any time following the Closing the Buyer shall have the right to cause Seller to assign to Buyer any other Seller Contracts that were not disclosed to Buyer and that are useful or necessary to the operation of the Acquired Business (and to the extent any such other Seller Contract is not assignable, Seller shall ensure that Buyer is afforded the benefits of such Seller Contract in accordance with Section 2.7);

(c)      all data and Records relating to the operations of the Acquired Business, including customer lists and Records, research and development reports and Records, production reports and Records, creative materials, advertising materials, promotional materials, studies, reports, correspondence and other similar documents and Records and copies of (i) all financial and accounting Records relating to the Acquired Business and, subject to Legal Requirements, (ii) all personnel Records and other Records described in Section 2.2(b) for employees of the Seller that become employees of the Buyer;

(d)      all intangible rights and property of the Seller, going concern value and goodwill, relating to the Acquired Business;

(e)      all Claims of the Seller against third parties relating to the Purchased Assets (but not to any Excluded Assets), whether known or unknown, contingent or noncontingent, including, but not limited to, those listed on Schedule 2.1(e) ;

(f)       all Proprietary Rights of the Seller that are used in or relate to the Acquired Business, including without limitation the Proprietary Rights listed on Schedule 4.12 ;

(g)      all accounts receivable, prepaid expenses and other working capital assets (excluding cash) and trade payables, accrued third party commissions and other trade accruals relating to the Acquired Business to the extent any of the foregoing is less than 90 days old and any accrued paid time off of Seller’s employees through the Closing Date;

(h)      all other assets owned by the Seller and used in or necessary for the operation of the Acquired Business other than the Excluded Assets; and

(i)       All leases for real property used in the operation of the Acquired Business.

Notwithstanding the foregoing, the transfer of the Purchased Assets pursuant to this Agreement shall not include the assumption of any Liability (except to the extent set forth in Section 2.1(g) above) related to the Purchased Assets unless the Buyer expressly assumes that Liability pursuant to the Bill of Sale, Assignment and Assumption Agreement.

Upon Closing, the Parties acknowledge and agree, and Seller shall accommodate accordingly, that Buyer shall occupy the real property subject to leases held by Seller and used in the operation of the Acquired Business.

2.2        Excluded Assets . The assets listed on Schedule 2.2 (collectively, the “ Excluded Assets ”) are not part of the purchase and sale contemplated hereunder, are excluded from the Purchased Assets and shall remain the property of the Seller after the Closing; the Excluded Assets includes the following categories of items:

(a)      all tangible and intangible assets and properties of the Seller that are not used in, not related to and not necessary for the operation of the Acquired Business, such as personal effects, and as mutually agreed to by the Parties;

(b)      all personnel Records and other Records that the Seller is required by law to retain in its possession;

(c)      all cash and cash equivalents of the Seller; and

(d)      all rights of the Seller under this Agreement, the Ancillary Agreements to which the Seller is a party and the other documents delivered to the Seller pursuant to Section 3.2 .

2.3        Consideration; Lock-Up Period .

(a)       The consideration for the Purchased Assets (the “ Consideration ”) will be comprised of the following, adjusted in accordance with Section 2.4 :

(i)       the Cash Consideration;

(ii)      the WFCF Stock Consideration;

(iii)     the Rollover Equity; and

(iv)     the assumption of the Assumed Liabilities.

(b)       In accordance with Section 2.8 , at the Closing:

(i)       the Buyer shall deliver an amount equal to the Cash Consideration to the Seller by wire transfer of immediately available funds as follows: $802,716.11 of the Cash Consideration to satisfy the Seller’s line of credit evidenced by the payoff letter attached hereto at Exhibit A ; and $319,273.89 to an account designated by the Seller;

(ii)       WFCF shall deliver to the Escrow Agent the WFCF Stock Consideration, evidenced by a certificate representing this equity stake; the WFCF Stock Consideration shall be subject to the Escrow Agreement that will govern the Indemnity Escrow and will include a term of eighteen (18) months.

(iii)       Buyer shall deliver to the Escrow Agent the Rollover Equity, evidenced by a certificate representing this equity stake; the Rollover Equity shall be subject to the Escrow Agreement that will govern the Indemnity Escrow and will include a term of eighteen (18) months.

(iv)       the Buyer and the Seller, as applicable, shall deliver the certificates and other agreements, documents and instruments required to be delivered by or on behalf of such Party pursuant to Article III below.

(c)        Agreement Relating to WFCF Stock Consideration . Seller agrees not to sell, transfer or otherwise distribute any of the WFCF Stock Consideration anytime during the Lock-Up Period except to the extent distributed in accordance with Section 7.7 to the Seller’s shareholders upon the dissolution and liquidation of Seller which shall not occur until the later of (i) the first anniversary of the Closing Date, and (ii) the expiration of the eighteen (18) month escrow term provided that each of the Seller’s shareholders agrees in writing to be bound by the terms and other transfer restrictions of the Lock-Up Period and other applicable restrictions set forth on the applicable stock certificates. The form and content of such writing must be reasonably acceptable to WFCF. The Parties hereto further acknowledge that the WFCF Stock Consideration shall be “restricted stock” under federal securities laws (meaning that it was purchased other than through a registered public offering). The certificates evidencing the WFCF Stock Consideration shall bear a restrictive legend in substantially the following form:

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, HAVE BEEN TAKEN WITHOUT A VIEW TO THE DISTRIBUTION THEREOF WITHIN THE MEANING OF SUCH ACT, AND MAY NOT BE SOLD, PLEDGED, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE WITH SUCH ACT AND THE RULES AND REGULATIONS THEREUNDER AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THE COMPANY WILL NOT TRANSFER SUCH SHARES EXCEPT UPON RECEIPT OF EVIDENCE SATISFACTORY TO THE COMPANY, WHICH MAY INCLUDE AN OPINION OF COUNSEL, THAT THE REGISTRATION PROVISIONS OF SUCH ACT HAVE BEEN COMPLIED WITH, THAT SUCH REGISTRATION IS NOT REQUIRED AND THAT SUCH TRANSFER WILL NOT VIOLATE ANY APPLICABLE STATE SECURITIES LAWS.

(d)       Agreement Relating to Indemnity Escrow . The Seller agrees that the Buyer may withhold and retain the Indemnity Escrow pursuant to the Escrow Agreement in order to satisfy any cost, expense or damages relating to the Seller’s indemnity obligations set forth in Article VIII.

2.4        Liabilities .

(a)        Assumed Liabilities . On the Closing Date the Buyer shall assume and agree to discharge only the following Liabilities of the Seller (the “ Assumed Liabilities ”) by delivery of the Bill of Sale, Assignment and Assumption Agreement to the Seller:

(i)       any Liability of the Seller arising after the Effective Time under the Scheduled Contracts described in Schedule 4.11 or any other Seller Contract transferred to Buyer pursuant to Section 2.1(b) (other than (a) any Liability arising out of or relating to a breach or default that occurred prior to the Effective Time, (b) any Liability arising out of or relating to the Scheduled Contracts that are used to fund any Employee Plan of the Seller or (c) any Scheduled Contracts that relate to Retained Liabilities);

(ii)      any Liability arising out of the ownership or operation by the Buyer of the Purchased Assets or the Acquired Business after the Effective Time (other than any Retained Liability or any liability for which the Buyer is entitled to indemnification pursuant to Article VIII ); and

(iii)     any trade payable, accrued third party commissions and other trade accruals relating to the Acquired Business to the extent any of the foregoing is less than 90 days old as of the Closing and any accrued paid time off of Seller’s employees through the Closing Date.

(b)        Retained Liabilities . The Retained Liabilities shall remain the sole responsibility of, and shall be retained, paid, performed and discharged solely by, the Seller. “ Retained Liabilities ” shall mean every Liability of the Seller other than the Assumed Liabilities, including:

(i)       any Liability under any Seller Contract assumed by the Buyer pursuant to Section 2.4(a) that arises after the Effective Time but that arises out of or relates to any breach or default that occurred prior to the Effective Time;

(ii)        any Liability relating to or arising out of intercompany payables between any of the Seller’s shareholders, the Seller or their respective Affiliates;

(iii)       any Liability for Taxes, including (A) any Taxes arising as a result of the Seller’s operation of Acquired Business or ownership of the Purchased Assets prior to the Effective Time, (B) any Taxes that will arise as a result of the sale of the Purchased Assets pursuant to this Agreement, (C) any deferred Taxes of any nature and (D) any personal property Taxes, real property Taxes, ad valorem taxes or similar taxes with respect to the ownership of the Purchased Assets by the Seller for periods prior to the Closing regardless of when such Taxes are due;

(iv)       any Liability under any Contract not assumed by Buyer under Section 2.4(a) , including Contracts covered by Section 2.6 as a result of the failure of the Seller to obtain required consents;

(v)        any Environmental Liabilities arising out of or relating to the Seller’s operation of Acquired Business or ownership of the Purchased Assets prior to the Effective Time or Seller’s leasing, ownership or operation of the Other Property prior to the Effective Time;

(vi)       any Seller’s Employee Liability;

(vii)      any Seller’s Employee Plan Liability;

(viii)     any Liability to any shareholder, member or Affiliate of Seller, including any Liability to indemnify, reimburse or advance amounts to any officer, director, employee or agent of Seller;

(ix)        any Liability arising out of any Proceeding pending as of the Effective Time (including the matters set forth on Schedule 4.7 ) or any Liability arising out of any Proceeding commenced after the Effective Time and arising out of or relating to any occurrence or event happening prior to the Effective Time;

(x)         any Liability arising out of or resulting from any of Seller’s compliance or noncompliance with any Legal Requirement or Order of any Governmental Authority that is applicable to Seller;

(xi)        any Liability of Seller under this Agreement or any other document executed in connection with the Transaction;

(xii)       any Liability of Seller relating to any product or service provided by Seller in whole or in part prior to the Effective Time;

(xiii)      any Liability of Seller based upon any of Seller’s acts or omissions occurring after the Effective Time;

(xiv)      any Liability for Seller Transaction Expenses; and

(xv)       any Liability arising out of (A) the ownership or operation of the Purchased Assets or the Acquired Business prior to the Effective Time other than the Assumed Liabilities and (A) the ownership or operation of the Seller’s assets (other than the Purchased Assets) or the Seller’s other businesses (other than the Acquired Business) at any time before and after the Effective Time.

2.5        Allocation of Consideration . Schedule 2.5 sets forth the allocation of the Consideration at Closing among the Purchased Assets, which allocation the Parties agree has been made in accordance with Section 1060 of the Code and the accompanying Regulations. The Parties shall make consistent use of such allocation for financial accounting purposes and as a basis for all Tax purposes and in all filings, declarations and reports submitted to the IRS and applicable state and local taxing authorities in respect thereof, including the forms required to be filed under Section 1060 of the Code. The Buyer shall prepare consistent with such allocation and deliver IRS Form 8594 to the Seller for approval at least three (3) days prior to the Closing Date, and the Seller and the Buyer shall each timely file such form with the IRS. The Seller and the Buyer shall prepare and file all Tax Returns consistent with such allocation, and in any Proceeding related to the determination of any Tax, neither the Buyer nor the Seller shall contend or represent, whether orally or in writing, that the allocation of the Consideration among the Purchased Assets in accordance with Schedule 2.5 is not a correct allocation.

2.6        Assignment of Contracts and Rights .  Anything contained in this Agreement to the contrary notwithstanding, this Agreement shall not constitute an agreement or attempted agreement to transfer, sublease or assign any assumed Contract or any Claim or right with respect to any benefit arising thereunder or resulting therefrom, if an attempted transfer, sublease or assignment thereof, without the required consent of any other party thereto, would constitute a breach thereof or in any way affect the rights of the Buyer or the Seller thereunder. The Seller shall use its best efforts to obtain the consent of any such third party to the transfer, sublease or assignment thereof to the Buyer in cases in which such consent is required for such transfer, sublease or assignment. If any such consent is not obtained, the Seller shall use its best efforts to cooperate with the Buyer in reasonable and lawful arrangements designed to provide for the Buyer the benefits thereunder, including (a) adherence to reasonable procedures established by the Buyer for the immediate transfer to the Buyer of any payments or other funds received by the Seller thereunder and (b) enforcement for the benefit of the Buyer of any and all rights of the Seller thereunder against the other party or parties thereto arising out of the breach or cancellation thereof by such other party or parties or otherwise. All costs incurred by the Buyer to obtain any consent pursuant to this Section 2.6 shall be reimbursed by the Seller within ten (10) days following receipt of notice of such costs from the Buyer. Nothing contained in this Section 2.6 shall be construed to negate or diminish, as between the Seller and the Buyer, the covenants and obligations of the Seller to transfer and deliver the Purchased Assets to the Buyer as provided in this Agreement.

2.7        Tax Treatment of Contribution . The parties agree to treat the Transaction for U.S. federal income tax purposes in accordance with example 1 of Treasury Regulation Section 1.707-3(f) as (1) a taxable sale by the Seller of the appropriate portion of the Purchased Assets to the Buyer in exchange for the Cash Consideration (as adjusted) and the WCFC Stock Consideration and a proportionate share of the Assumed Liabilities under Code Section 707(a)(2)(B) and the accompanying Treasury Regulations and (2) a nontaxable contribution by the Seller of the remaining Purchased Assets and remaining Assumed Liabilities to the Buyer in exchange for the Rollover Equity under Code Section 721. The parties agree to report, act and file tax returns for U.S. federal income tax purposes and all other tax purposes consistent with such treatment.

2.8        The Closing Date .  The closing of the Transaction (the “ Closing ”) shall take place at the offices of WFCF in Castle Rock, Colorado, on December 28, 2016 via the exchange of documents and signatures by facsimile or electronic transmission, or at such other place or on such other date as is mutually acceptable to the Buyer and the Seller. The date of the Closing is referred to herein as the “ Closing Date ” and the Closing shall be deemed effective as of the Effective Time.

ARTICLE III - CONDITIONS TO CLOSING

3.1        Conditions to the Buyer’s Obligations . The obligation of the Buyer to consummate the Transaction is subject to the satisfaction or written waiver of the following conditions on or before the Closing Date:

(a)        Satisfactory Earnings Analysis . The Buyer shall have completed to its reasonable satisfaction a quality of earnings analysis for the Acquired Business.

(b)        Required Consents, Licenses and Accreditations . The consents or waivers of third parties and the authorizations, Licenses, consents, accreditations, Orders or approvals of, or declarations or filings with, or expiration of waiting periods imposed by, the entities set forth on Schedule 3.1(b) (the “ Required Consents ”) shall have been filed, issued, occurred or been obtained, and copies of same shall have been provided to the Buyer.

(c)        Key Contracts . Buyer shall have entered into new agreements with, or been assigned Seller’s rights under the Scheduled Contracts, including without limitation those agreements with the following organizations: JVF Consulting, LLC, Almond Board, California Department of Food and Agriculture, California Cherry Board, California Sustainable Winegrowing Association, California Cut Flower Commission, Mushroom Council, Oregon Hazelnut Marketing Board, Protected Harvest, Pro*Act, PhytoTrak Development Corp., Altamont Technologies (Cultura), Protected Harvest (Admin Agreement), and Enterprise Solutions Partner, Inc.

(d)        Releases . The Seller shall have received or obtained releases from third parties of any and all Liens relating to the Purchased Assets, all on terms reasonably satisfactory to the Buyer.

(e)       Bill of Sale, Assignment and Assumption Agreement . The Buyer and the Seller shall have entered into a Bill of Sale, Assignment and Assumption Agreement, in a form acceptable to the Buyer and the Seller (the “ Bill of Sale, Assignment and Assumption Agreement ”), a copy of which, in substantially final form, is set forth on Exhibit B .

(f)        Operating Agreement . The members of the Buyer, including the Seller and WFCF, shall have entered into an operating agreement that will set forth the governance of the Buyer, including buy-sell provisions of its member interests, a copy of which, in substantially final form, is set forth on Exhibit C .

(g)        Dlott Employment Agreement . The Buyer and Dlott shall have entered into an employment agreement in a form acceptable to the Buyer and Dlott, a copy of which, in substantially final form, is set forth on Exhibit D .

(h)       Good Standing Certificates . The Seller shall have delivered to the Buyer a certificate from the Secretary of State (or other applicable governmental entity) of its jurisdiction of formation and each jurisdiction listed on Schedule 4.1 in which the Seller is qualified to do business as to such entity’s good standing and payment of all taxes in such jurisdiction.

(i)        Termination of Employee Agreements . The Seller shall have terminated each of its existing employment agreements and other arrangements with employees of the Seller whose duties related to the Acquired Business and who the Seller does not intend to continue employing.

(j)        Closing Documents . On the Closing Date, the Seller shall have delivered to the Buyer such other documents or instruments as the Buyer may reasonably request in connection with this Agreement to effect the Transaction.

(k)        Escrow Agreement . The Seller, the Buyer and the Escrow Agent shall have executed the Escrow Agreement, a copy of which, in substantially final form, is set forth on Exhibit E .

(l)        Lien Waiver . Seller shall have delivered to Buyer a sample of the lien waiver evidencing the release of all liens against any and all of the Purchased Assets, in form and content satisfactory to Buyer, an effective version of which will be provided upon Closing immediately following payment and satisfaction of Seller’s debt as set forth on the Payoff Letter.

3.2        Conditions to the Seller’s Obligations .  The obligation of the Seller to consummate the Transaction is subject to the satisfaction or written waiver of the following conditions on or before the Closing Date:

(a)        Governmental Consents . All authorizations, Licenses, consents, Orders or approvals of, or declarations or filings with, or expiration of waiting periods imposed by, any Governmental Authority necessary for the consummation of the Transaction shall have been filed, occurred or been obtained.

(b)        Bill of Sale, Assignment and Assumption Agreement . The Buyer and the Seller shall have entered into a Bill of Sale, Assignment and Assumption Agreement.

(c)        Ancillary Agreements . The Buyer and the Seller shall have entered into each of the other Ancillary Agreements to which it is a party.

(d)        Closing Documents . On or prior to the Closing Date, the Buyer shall have delivered to the Seller all such other documents or instruments as the Seller may reasonably request to effect the Transaction.

(e)        Escrow Agreement . The Seller, the Buyer and the Escrow Agent shall have executed the Escrow Agreement.

ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF THE SELLER

As a material inducement to the Buyer and WFCF to enter into this Agreement and to close hereunder, the Seller hereby represents and warrants to the Buyer and WFCF that, as of the Closing Date:

4.1        Organization and Power .  The Seller is a corporation, duly incorporated, validly existing and in good standing in the State of California and is qualified to conduct the Acquired Business in every jurisdiction in which the nature of the Acquired Business or its ownership of the Purchased Assets requires it to be so qualified, except where the failure to do so would not have a Material Adverse Change on the Acquired Business. All such jurisdictions in which the Seller is qualified for purposes of the Acquired Business are set forth on the Schedule 4.1 .

4.2        Authorization of Transactions .  Just prior to the Closing, Seller has all right, title and interest in all of the Purchased Assets, free and clear of any liens. The Seller has full corporate power and authority to execute and deliver this Agreement and the Ancillary Agreements to which the Seller is a party and to consummate the Transaction and all necessary action setting forth such authority is evidenced by the written consent of the Board of Directors of Seller, a copy of which is set forth on Exhibit F . No other proceedings on the part of the Seller are necessary to approve and authorize the execution and delivery of this Agreement and the Ancillary Agreements and the consummation of the Transaction. This Agreement and each Ancillary Agreement to which the Seller is a party, has been duly executed and delivered by the Seller and each constitutes the valid and binding agreement of the Seller enforceable against it in accordance with its terms.

4.3        Capitalization . The capitalization of the Seller is completely and accurately set forth on Schedule 4.3 . The shareholders of the Seller set forth on Schedule 4. 3 are, together, the record and beneficial owner of all the equity interests of Seller, free and clear of all Liens.

4.4        Litigation . There are no Proceedings pending or, to the Seller’s Knowledge, threatened against or affecting the Seller at law or in equity, or before or by any Governmental Authority, which could reasonably be expected to affect the Seller’s performance of its obligations under this Agreement or the consummation of the Transaction.

4.5        Absence of Conflicts . Except as set forth on Schedule 4.5 , the execution and delivery of this Agreement and the consummation or performance of the Transaction in accordance with the terms of this Agreement do not and will not, directly or indirectly (with or without notice or lapse of time or both), (a) contravene, conflict with, or result in a violation of or a default under any provision of the governing or organizational documents of the Seller; (b) contravene, conflict with, or result in a violation of, or give any Governmental Authority or other Person the right to challenge the Transaction under, any Legal Requirement or Order to which the Seller or any of the assets owned or used by the Seller may be subject; (c) contravene, conflict with, or result in a violation of any of the terms or requirements of, or give any Governmental Authority the right to revoke, withdraw, suspend, cancel, terminate or modify, any License that is held by the Seller; (d) contravene, conflict with, or result in a violation or breach of any provision of, or give any Person the right to declare a default or exercise any remedy under, or to accelerate the maturity, vesting or performance of, or to cancel, terminate, or modify, any contract or agreement to which the Seller is a party or by which it is bound; (e) result in the imposition or creation of any Lien upon or with respect to any of the Purchased Assets and (f) cause Buyer to become subject to, or to become liable for payment of, any Tax, except for federal and state income taxes which may be imposed upon the Seller as a result of the closing of the Transactions contemplated by this Agreement.

4.6        Financial Statements .

(a)       The Seller has furnished the Buyer with copies of the (i) unaudited balance sheet of the Seller as of September 30, 2016 (the “ Latest Balance Sheet ”), and the related statements of income and cash flows for the nine-month period then ended; (ii) unaudited balance sheet and statements of income and cash flows of the Seller for the fiscal years ended December 31, 2014 and December 31, 2015. The Latest Balance Sheet is attached hereto as Schedule 4.6(a) . Each of the foregoing financial statements (including in all cases the notes thereto, if any) (the “ Financial Statements ”) is accurate and complete in all material respects, are consistent in all material respects with the books and records of the Seller, present fairly in all material respects the financial condition, results of operations and cash flows of the Seller as of the times and for the periods referred to therein, and have been prepared in conformity with the accounting principles historically utilized by the Seller and applied on a consistent basis during each period and on a basis consistent with that of prior periods.

(b)       The accounts receivable that are reflected on the Latest Balance Sheet or on the accounting records of the Seller as of the Closing Date (collectively, the “ Accounts Receivable ”) are recorded in accordance with GAAP and represent or will represent (i) valid obligations arising from sales actually made or services actually performed by the Seller in the ordinary course of business consistent with past practice, and (ii) amounts due to the Seller with respect to arm’s length transactions entered into in the ordinary course of business. Unless paid prior to the Closing Date, the Accounts Receivable are or will be as of the Closing Date, current and collectible net of the respective reserves shown on the Latest Balance Sheet or on the accounting records of the Seller as of the Closing Date (which reserves are calculated consistent with past practice). Except as set forth on Schedule 4.6(b) , there is no contest, Claim, or right of set-off, other than returns in the ordinary course of business consistent with past practice, under any contract with any obligor of an Accounts Receivable relating to the amount or validity of such Accounts Receivable. Schedule 4.6(b) contains a complete and accurate list of all Accounts Receivable as of the Closing and the aging of such Accounts Receivable.

4.7        Absence of Undisclosed Liabilities Compliance with Legal Requirements; Proceedings .

(a)       Except as set forth on Schedule 4.7 , the Seller does not have any Liabilities, and there is no existing condition, situation or set of circumstances which would reasonably be expected to result in such a Liability.

(b)       Without limiting the generality of the foregoing, except as set forth on Schedule 4.7 , to the Knowledge of Seller, the Seller has complied in all material respects with all applicable Legal Requirements.

(c)       Except as set forth on Schedule 4.7 , (i) there are no Proceedings pending, in which the Seller is actually named as a party, or, to the Knowledge of the Seller, threatened against the Seller or the Acquired Business by or before any arbitrator or Governmental Authority; and (ii) there are no Orders binding on the Seller with respect to the Acquired Business. There are no judgments outstanding against the Seller. To the Knowledge of the Seller, there are no grounds on which any such Proceedings might be commenced which are likely to result in a Material Adverse Change with respect to the Seller. In the last ten (10) months, there have been no other events or occurrences out of the ordinary course of business or inconsistent with the past practices of the Acquired Business.

4.8        Absence of Certain Developments . Except as set forth on Schedule 4.8 and except as expressly contemplated by this Agreement, since September 30, 2016 (i) there has been no Material Adverse Change with respect to the Acquired Business or any of the Purchased Assets, (ii) Seller has carried on the business of the Acquired Business diligently and substantially in the manner as heretofore conducted, and has not made or initiated any new, unusual, or novel methods of pricing, payment terms, purchase, sale, management, accounting or operation and has maintained all books and records of the Seller in the ordinary course and (iii) the Seller has not:

(a)      sold, leased, encumbered, licensed, assigned, abandoned or transferred any portion of its tangible assets or Proprietary Rights relating to the Acquired Business, except sales of inventory in the ordinary course of business, or canceled, without fair consideration, any debts or claims owing to or held by it;

(b)      incurred any physical damage, destruction or other casualty loss (whether or not covered by insurance) affecting any of its real or personal property relating to the Acquired Business in an aggregate amount greater than $25,000;

(c)      entered into any settlement, conciliation or similar agreement or waived any rights of value involving Claims in excess of $25,000 relating to the Purchased Assets or the Acquired Business;

(d)      waived any rights relating to the Acquired Business, other than waivers in the ordinary course of business and in accordance with past custom and practice;

(e)       incurred additional indebtedness other than trade payable incurred in the ordinary course of business or the incurrence or creation of any Lien on the Purchased Assets;

(f)       other than in the ordinary course of business, consistent with past practices, sold or leased, or agreed to sell or lease, any of the Purchase Assets;

(g)      entered into or terminated any material Contract or any material amendment or modification to any Contract;

(h)      experienced any labor dispute;

(i)       increased salary or other compensation paid to officers, managers, salaried employees, distributors or independent contractors of the Seller;

(j)       with the exception of hiring Nathan P. Smith, hired or terminated any employees whose annual compensation exceeds $50,000;

(k)      experienced any material dispute, disagreement or other adverse relationship with a supplier, customer, vendor or distributor of the Seller;

(l)       cancelled or waived any material claim or right held by the Seller;

(m)     disposed or abandoned any other proprietary right or asset of the Seller;

(n)      distributed or issued any dividend of cash or property; or

(o)      incurred any Material Adverse Change.

4.9        Title to Purchased Assets . Except as set forth on Schedule 4.9 , the Seller has good and marketable title to (or in the case of assets identified as leased in the books and records of the Seller, a valid leasehold interest in) the Purchased Assets, free and clear of all Liens. The Purchased Assets constitute all the assets, tangible and intangible, necessary to operate the Acquired Business in the manner presently operated by the Seller. Upon delivery by the Buyer to the Seller of the Consideration in accordance with Section 2.3, valid and marketable title to the Purchased Assets will pass to the Buyer, free and clear of any Lien.

4.10        Taxes . The Seller has filed all Tax Returns for all applicable Taxes, for all years and periods, and portions thereof for which the due date (with extension) falls on or before the Closing Date. Each such Tax Return has been, or will be, prepared in all material respects, in compliance with all applicable Legal Requirements, and all such Tax Returns are, or will be, complete and correct in all material respects as of the respective filing dates. All Taxes payable by the Seller and all assessments for Taxes of the Seller have been paid or will be paid by the Seller when due. Except as set forth on Schedule 4.10 , there are no Claims or investigations by any Governmental Authority pending or, to the Seller’s Knowledge, threatened against the Seller with respect to any Taxes. The Seller has withheld and paid all Taxes required to have been withheld and paid in connection with amounts paid or owing to any Person. There are no outstanding agreements or waivers extending the statutory period of limitations applicable to any Tax Returns required to be filed by, or that include or are treated as including, the Seller or with respect to any Tax assessment or deficiency affecting the Seller. Except as set forth on Schedule 4.10 , no unresolved Claim has been made, or to the Knowledge of Seller is expected to be made, by any Governmental Authority in a jurisdiction where the Seller does not file Tax Returns that it is or may be subject to taxation by that jurisdiction. The Seller has no liability for Taxes of another Person arising as a result of the Seller at any time being a member of an Affiliated Group or as a result of liability as a successor or transferee, by contract or otherwise. There are no Liens on any of the Purchased Assets that arose in connection with any failure (or alleged failure) to pay any Tax, and the Seller has no Knowledge of any basis for assertion of any Claims attributable to Taxes which, if adversely determined, would result in any such Lien. The Seller has made available to the Buyer true, correct and complete copies of all Tax Returns, examination reports, and statements of deficiencies filed, assessed against or agree to by the Seller since December 31, 2011.

4.11      Contracts and Commitments .

(a)       Schedule 4.11 describes each Seller Contract used in or relating to the Acquired Business.

(b)       Except as specifically contemplated by this Agreement or disclosed on Schedule 4.11 , (i) the Seller has no Knowledge of any cancellation, breach or anticipated breach by any party to any Contract required to be disclosed on Schedule 4.11 (the “ Scheduled Contracts ”), (ii) the Seller has performed in all material respects all obligations required to have been performed by it in connection with the Scheduled Contracts, (iii) the Seller does not have Knowledge of any claim of default under any Scheduled Contract, (iv) the Seller does not have a present expectation or intention of not fully performing any obligation pursuant to any Scheduled Contract, and (v) to the Knowledge of the Seller, no customer or supplier of the Seller that is a party to any Scheduled Contract has indicated to the Seller that (A) it has terminated its relationship with the Seller or that it will stop or materially decrease the rate of business done with the Seller, (B) it desires to renegotiate its contract with the Seller or materially change the pricing or other terms of its business with the Seller or (C) in the case of a customer, any of its projects are being materially delayed.

(c)       The Seller has provided the Buyer with a true, accurate, complete and correct copy of all of the Scheduled Contracts, together with all written amendments, waivers or other changes thereto, and Schedule 4.11 includes a materially accurate and complete written description of any oral contracts of the type required to be listed on Schedule 4.11 .

4.12      Proprietary Rights .

(a)        Schedule 4.12 sets forth a complete and correct list of the following Propriety Rights of Seller that are used in or necessary for the operation of the Acquired Business: (i) all patented or registered Proprietary Rights and all pending patent applications or other applications for registration of Proprietary Rights; (ii) all trade names and unregistered trademarks and designs used by the Seller; (iii) all material unregistered copyrights and computer software owned or used by the Seller; (iv) all licenses or similar agreements to which the Seller is a party either as licensee or licensor for the Proprietary Rights; and (v) any other material Proprietary Rights used by the Seller in the conduct of the Acquired Business.

(b)      Except as set forth on Schedule 4.12 , (i) the Seller owns and possesses all right, title and interest in and to, or has a valid and enforceable license to use, each of the Proprietary Rights used in the operation of the Acquired Business as currently conducted, free and clear of all Liens, and such Proprietary Rights constitute all the Proprietary Rights necessary to operate the Acquired Business as currently conducted; (ii) no Claim by any third party contesting the validity, enforceability, use or ownership of any Proprietary Rights used in or necessary to the operation of the Acquired Business that are owned or licensed by the Seller has been made, is currently outstanding or, to the Knowledge of the Seller, is threatened, and, to the Knowledge of the Seller, there are no grounds for same; (iii) the Seller has not received any notices of, nor does the Seller have Knowledge of, any facts which indicate a likelihood of, any infringement or misappropriation by, or conflict with, any third party with respect to any Proprietary Right that is used in or necessary to the operation of the Acquired Business; (iv) the Seller has not infringed or misappropriated any intellectual property rights of any third parties and the operation of the Acquired Business, as presently conducted, does not infringe or misappropriate any third party intellectual property right; (v) to the Knowledge of the Seller, no third party has infringed, misappropriated or otherwise conflicted with any of the Proprietary Rights of Seller used in or necessary for the operation of the Acquired Business; and (vi) following the Closing, all Proprietary Rights of Seller currently used in the Acquired Business will be owned or available for use by the Seller on terms and conditions identical in all material respects to those in effect on the date hereof.

4.13        Brokerage . The Seller does not have any liability or obligations to pay any fees or commissions to any broker, finder or agent with respect to the Transaction for which the Seller, or the Buyer could become liable or obligated.

4.14        Governmental and Other Licenses, Permits, Certifications and Accreditations . Schedule 4.14 contains a complete listing of all permits, licenses franchises, certificates, approvals and other authorizations of Governmental Authorities or other similar rights (excluding those set forth on Schedule 4.12 , but including all licenses, permits and other authorizations that are required pursuant to any Environmental Requirements for the operation of the Acquired Business) (collectively, the “ Licenses ”) held or possessed by the Seller for the conduct of the Acquired Business, and no other material licenses are required in the conduct of the Acquired Business.

4.15        Employees . To the Knowledge of the Seller, no employee to be hired by the Buyer and listed on Schedule 7.1 is subject to a noncompetition or confidentiality agreement with any third party that restricts such employee’s activities on behalf of the Seller. Each current and former employee, consultant and officer of the Seller has executed an agreement or agreements with the Seller regarding confidentiality and proprietary information and inventions assignments and disclosures, each substantially in the form or forms delivered to the counsel for the Buyer (the “ Intellectual Property Agreements ”). To the Knowledge of Seller, no current or former employee of the Seller has excluded works or inventions from his or her assignment of inventions pursuant to such current or former employee’s Intellectual Property Agreement. To the Knowledge of Seller, none of Seller’s current or former employees is in violation of an Intellectual Property Agreement.

4.16       Employee Benefit Plans .

(a)       Except as set forth on Schedule 4.16 , the Seller does not maintain, contribute to, or have any liability or potential liability with respect to, (i) any “employee benefit plan” (as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ ERISA ”)), or (ii) any other plan, program, policy, practice, arrangement or contract providing benefits or payments to current or former employees (or to their beneficiaries or dependents) of the Seller, including any bonus plan, plan for deferred compensation, nonqualified retirement plan, severance plan, stock option or stock purchase plan, employee health or other welfare benefit plan or other arrangement formal or informal (the benefit plans described in the foregoing clauses (i) and (ii), an “ Employee Plan ”). For purposes of this Section 4.16, the “Seller” shall be deemed to include any entity required to be aggregated in a controlled group or affiliated service group with the Seller for purposes of ERISA or the Code (including, without limitation, under Section 414(b), (c), (m) or (o) of the Code or Section 4001 of ERISA), at any relevant time. Each item listed on Schedule 4.16 is an Employee Plan.

(b)       The Seller has received a determination letter from the Internal Revenue Service with respect to Seller’s 401(k) plan maintained by the Seller, and nothing has occurred since the date of such determination that could adversely affect the qualification of such plan.

(c)       The Seller does not have any material liability or potential material liability with respect to any “employee pension benefit plan” (as such term is defined in Section 3(2) of ERISA) that is subject to Title IV of ERISA, Section 302 of ERISA or Section 412 of the Code or any similar federal, state or provincial law, rule or regulation (a “ Pension Plan ”) or any “multiemployer plan” (as such term is defined in Section 3(37) of ERISA), and the Seller has not incurred any liability under Title IV of ERISA or any Legal Requirement or to the Pension Benefit Guaranty Corporation (the “ PBGC ”). No Pension Plan of the Seller has incurred any “accumulated funding deficiency” (as defined in Section 302 of ERISA or Section 412 of the Code), whether or not waived; the fair market value of the assets of each Pension Plan equals or exceeds the present value of the vested and nonvested benefit liabilities (determined on a plan termination basis); no reportable event within the meaning of Section 4043 of ERISA or any similar Legal Requirement has occurred with respect to any Pension Plan; the PBGC has not threatened the termination of any Pension Plan; and the Seller has no liability or potential liability with respect to any Pension Plan that has been terminated in the past five years.

4.17        Affiliate Transactions . Except as disclosed on Schedule 4.17 , to the Knowledge of the Seller, neither any former or current officer, director or shareholder of the Seller listed on Schedule 4.17 , nor any individual related by blood, marriage or adoption to any of the foregoing individuals, or any entity in which any such Person owns any beneficial interest, (i) is a party to any agreement, contract, commitment or transaction with the Seller or that pertains to the Acquired Business, (ii) has any interest in any property, real or personal or mixed, tangible or intangible, used in or pertaining to the Acquired Business or (iii) is engaged in competition with the Seller with respect to the Acquired Business.

4.18       Environmental Matters .

(a)       Except as set forth on Schedule 4.18 , to the Knowledge of the Seller, the Seller has complied in all material respects with all Environmental Requirements in the conduct of Acquired Business.

(b)       Except as set forth on Schedule 4.18 , the Seller has not received any written or oral notice, report or other written information regarding any actual or alleged violation of Environmental Requirements or any Environmental Liabilities (including Environmental Liabilities that could in the future arise as a result of an existing violation of Environmental Requirements), relating to the Acquired Business.

(c)       The Seller has not in connection with the operation of the Acquired Business: (i) treated, stored, disposed of, arranged for or permitted the disposal of, transported, handled or Released any Pollutant; or (ii) owned or operated any property or facility, in a manner that has given or would reasonably be expected to give rise to Environmental Liabilities (including Environmental Liabilities that could in the future arise as a result of an existing violation of Environmental Requirements).

(d)        Schedule 4.18 lists all: (i) USTs; (ii) asbestos-containing material (in any form); (iii) materials or equipment containing polychlorinated byphenyls or radioactive substances; or (iv) landfills or open dumps, surface impoundments or waste disposal areas which are located on or exist at any property or facility owned, leased, controlled or operated by Seller, all of which comply with all applicable Environmental Requirements.

(e)       The Seller has furnished to Buyer all documents in its possession or control containing material information regarding any material Environmental Liability under any applicable Environmental Requirement or with respect to any Pollutants, relating to the operation of the Acquired Business.

4.19        Disclosure . Neither this Agreement, nor any of the schedules hereto, contains any untrue statement of a material fact or omits a material fact necessary to make the statements contained herein or therein, in light of the circumstances in which they were made, not misleading. There exists no undisclosed fact or circumstance which, to the Knowledge of Seller, materially and adversely affects or could reasonably foreseeably affect the present business, properties or condition, financial or otherwise, of the Seller.

4.20        Shareholder Approval . The Seller has obtained shareholder approval of this Transaction in compliance with California securities regulations and such approval included: (i) a minimum of seventy-five percent (75%) of each class of outstanding securities of Seller voted in favor of the Transaction; (ii) no more than ten percent (10%) of each class of outstanding securities of Seller voted against the Transaction; and (iii) statutory dissenters rights is available and presented to each of the holders of Seller’s securities. The Shareholder approval authorizing this Transaction as set forth in this Section 4.20 is evidenced by the written consent of the shareholders of the Seller, a copy of which is set forth on Exhibit G .

4.21        Seller Acknowledgement of Ample Consideration . The Seller acknowledges and agrees that the execution and delivery of this Agreement by the Buyer constitutes full and adequate consideration for the Seller’s and Dlott’s execution and delivery of this Agreement and the Seller’s and Dlott’s performance of their respective obligations under this Agreement; furthermore, the Seller acknowledges and agrees that the Buyer would not enter into this Agreement without obtaining the covenants set forth in Article VII of this Agreement.

ARTICLE V - REPRESENTATIONS AND WARRANTIES OF DLOTT

As a material inducement to the Buyer to enter into this Agreement, Dlott hereby represents and warrants to the Buyer that, as of the Closing Date:

5.1        Enforceability . This Agreement constitutes a valid and binding obligation of Dlott, enforceable against Dlott in accordance with its terms.

5.2        No Conflicts . Except as set forth in Schedule 4.5 , the execution and delivery by Dlott of this Agreement and the Ancillary Agreements to which Dlott is a party does not, and the performance by Dlott of his obligations under this Agreement and the Ancillary Agreements to which Dlott is a party, does not and will not:

(a)       contravene, conflict with or result in a violation of or default under any Legal Requirement applicable to Dlott or any of the Seller’s assets and properties or require any consent or approval of or any notice or filing with any Governmental Authority or regulatory body or other third party; or

(b)       contravene, conflict with or result in a breach or violation of, or default under, or give rise to any right of acceleration or termination of, any of the terms, conditions or provisions of, any note, bond, lease, license, agreement or other instrument or obligation to which Dlott is a party or by which the Seller’s assets or properties are bound, which could reasonably be expected to affect Dlott or the Seller’s performance of their obligations under this Agreement or the consummation of the Transaction.

5.3        Brokerage . Dlott has not incurred and will not incur, directly or indirectly, as a result of any action taken or permitted to be taken by or on behalf of Dlott, any liability or obligation to pay any fees or commissions to any broker, finder or agent in connection with the execution and performance of the Transaction for which the Buyer could become liable or obligated.

5.4        Interest in Competing Business . Dlott does not own any equity interest in any business that competes with the Acquired Business.

5.5        Dlott Acknowledgement of Ample Consideration . Dlott understands and agrees that the Buyer’s execution of this Agreement and/or the payments and equity to which the Seller is entitled under this Agreement inures to Dlott’s benefit and shall constitute adequate consideration for his covenants and agreements set forth in Article VII of this Agreement.

ARTICLE VI - REPRESENTATIONS AND WARRANTIES OF THE BUYER AND WFCF

As a material inducement to the Seller and Dlott to enter into this Agreement, the Buyer and WFCF jointly and severally hereby represent and warrant to the Seller and Dlott that as of the date hereof:

6.1        Organization and Power . The Buyer is a limited liability company validly existing and in good standing under the laws of the State of California, with full power and authority to enter into this Agreement and to perform its obligations hereunder.

6.2        Authorization . The execution, delivery and performance of this Agreement and the Ancillary Agreements by the Buyer and the consummation of the Transaction contemplated hereby have been duly and validly authorized by all requisite action on the part of the Buyer, and no other proceedings on its part are necessary to authorize the execution, delivery or performance of this Agreement or the Ancillary Agreements to which it is a party and all necessary action setting forth such authority of WFCF is evidenced by the written consent of the Board of Directors of WFCF, a copy of which is set forth on Exhibit H . This Agreement and the Ancillary Agreements each constitute a valid and binding obligation of the Buyer, enforceable against the Buyer in accordance with its terms.

6.3        No Violation . The Buyer is not subject to or obligated under its governing or organizational documents, any applicable Legal Requirement, or any agreement, instrument, license, franchise or permit, or subject to any Order, which would be breached or violated by its execution, delivery or performance of this Agreement or the Ancillary Agreements to which it is a party.

6.4        Litigation . There are no Proceedings, Orders or investigations pending or, to the best of the Buyer’s Knowledge, threatened against or affecting the Buyer at law or in equity, or before or by any Governmental Authority, which would adversely affect the Buyer’s performance of its obligations under this Agreement or the Ancillary Agreements or the consummation of the Transaction.

6.5        Brokerage . The Buyer has no liability or obligation to pay any fees or commissions to any broker, finder or agent with respect to the Transaction for which the Seller or the Seller’s shareholders could become liable or obligated.

6.6        Consents . No consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any Governmental Authority or third party on the part of the Buyer is required in connection with the consummation of the Transaction.

6.7        WFCF Stock Consideration . Contingent upon the truth and accuracy of Seller’s representations and warranties contained herein, the issuance of the WFCF Stock Consideration to the Seller shall be issued pursuant to an applicable federal exemption from the registration requirements of the Securities Act, and shall be issued in compliance with all applicable federal and state securities laws. The WFCF Stock Consideration shall be duly authorized, fully paid and nonassessable, and shall only be subject to those transfer restrictions contained herein, contained in the Escrow Agreement, and pursuant to the Securities Act of 1933 (the “ Act ”).

6.8        Rollover Equity . The Rollover Equity issued to the Seller represents 40% of the outstanding membership units of the Buyer on a fully-diluted basis, and other than the Call Option and Put Option described in the Buyers operating agreement, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal or similar rights) or agreements, orally or in writing, for the purchase or acquisition from the Buyer of any units or equity interest.

ARTICLE VII - COVENANTS OF THE PARTIES

7.1        Employees . The Buyer and the Seller have, upon mutual agreement, contacted the persons listed on Schedule 7.1 regarding the Transaction for the purpose of making offers of employment with or other engagement by the Buyer to be effective as of the Effective Time, which shall be contingent upon the occurrence of the Closing and the consummation of the Transaction. The Seller has informed those persons (i) that their employment with or engagement by the Seller will terminate on the Closing Date and (ii) that they will be offered employment or other engagement by the Buyer. The Seller hereby releases those persons listed on Schedule 7.1 from any confidentiality, non-solicitation or non-competition agreement to which they may be subject with the Seller after Closing that is contrary to this Agreement.

7.2        Payment of All Taxes Resulting from Purchase of Purchased Assets . Seller will pay in a timely manner all Taxes (including, without limitation, sales, use or other transfer taxes) resulting from or payable in connection with the sale of the Purchased Assets pursuant to this Agreement, with the exception of any Taxes that are the obligation of the Buyer or the Buyer’s Affiliates, pursuant to applicable Legal Requirements.

7.3        Tax Matters; Cooperation .

(a)        Payroll Reporting Requirements . The Seller and the Buyer hereby agree to utilize the “ Standard Procedure ” set forth in Revenue Procedure 2004-53, or a corresponding future revenue procedure or other administrative pronouncement from the IRS, with regard to the reporting requirements attributable to wages paid or to be paid to all persons employed by Seller prior to the Closing Date that become employees of Buyer from and after the Closing Date.

(b)        Post-Closing Cooperation . The Seller and the Buyer shall cooperate with each other after the Closing in providing any information reasonably necessary to permit the filing of Tax Returns or responding to audits or other inquiries of any taxing Governmental Authority. The Seller shall cooperate with and provide to the Buyer any information or documentation necessary for the Buyer to obtain a sale for resale or any other exemption from Taxes under state or local law. Such cooperation shall include the retention and (upon the other Party’s request) the provision of books and records and other information that are reasonably relevant to any such Tax Return or audit or inquiry and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided. The Seller and the Buyer agree to give the other Party reasonable written notice prior to transferring, destroying or discarding any such books and records or information and, if the other Party so requests, the Seller or the Buyer, as the case may be, shall allow the other Party to take possession of such books and records or other information before such transfer, destruction or discard.

7.4           Use of SureHarvest Name . Immediately after Closing, the Seller shall cease transacting business under or otherwise using for any purpose the names “SureHarvest” or any name similar thereto and shall promptly take all actions necessary to withdraw or terminate their authority to transact business anywhere under such names.

7.5           Confidentiality; Restrictive Covenants .

(a)           Confidentiality . Each of the Seller and Dlott acknowledge and agree that (i) he or it has, or may have, access to Confidential Information and that such Confidential Information does and will constitute valuable, special and unique property of the Buyer from and after the Closing Date and (ii) for a period of five (5) years after the Closing Date, neither he or it nor any of his or its Affiliates will, directly or indirectly, disclose, reveal, divulge or communicate to any Person other than authorized officers, directors, shareholders and employees of the Buyer any Confidential Information, or use or otherwise exploit any Confidential Information for his or its own benefit or the benefit of anyone other than the Buyer in a manner inconsistent with the business interest of Buyer. The term “Confidential Information” shall mean the following information and items as related to the Acquired Business: (a) corporate information, including plans, strategies, methods, policies, resolutions, negotiations; (b) marketing information, including strategies, trade secrets, methods, customer identities or other information about customers, prospect identities or other information about prospects, or market analyses or projections; (c) financial information, including cost and performance data, price lists; (d) operational and technological information, including plans, specifications, manuals, forms, templates, software, designs, procedures, formulas, discoveries, inventions, improvements, concepts and ideas; and (e) any written document, memorandum, report, correspondence, drawing or other material, or computer software or program, developed or prepared by any employee or agent of either party which incorporates, references or uses any information described above. The term “ Confidential Information ”, for purposes of this Section 7.5(a) does not include, and there shall be no obligation hereunder with respect to, information that (a) is generally available to the public or the industries in which the Acquired Business is conducted on the date of this Agreement, (b) becomes generally available to the public other than as a result of an impermissible disclosure by the Seller or Dlott or their Affiliates or Representatives, (c) the Seller or Dlott learn from other sources where such sources have not violated their confidentiality obligation to the Buyer, (d) is independently developed by the Seller or Dlott after the date hereof or (e) is required by a court of competent jurisdiction to be disclosed, provided that the Seller or Dlott give written notice to the Buyer of such disclosure and allow the Buyer to seek a protective order or otherwise limit the disclosure and provided further that such information shall be excluded from the term “Confidential Information” only to the extent required to comply with such court order.

(b)           Seller and Dlott Non-Competition Covenants . Each of the Seller and Dlott agree that for a period of three (3) years after the Closing Date (the “ Non-Compete Period ”), it or he will not, directly or indirectly, and it or he will not permit its or his Affiliates to:

(i)          own, manage, operate, control or participate in the ownership, management, operation or control of any business, whether in corporate, proprietorship or partnership form or otherwise, engaged in the Acquired Business anywhere in the Restricted Territory, other than (a) as an employee of, or consultant to, the Buyer or WFCF or (b) owning shares of stock of any corporation having a class of equity securities actively traded on a national securities exchange or on the Nasdaq Stock Market which represent, in the aggregate, not more than two percent (2%) of such corporation’s fully-diluted shares; or

(ii)         sell any of the Excluded Assets to any Person unless such Person agrees in writing (and names Buyer as a third party beneficiary for such purpose) not to use any of such Excluded Assets in the operation of the Acquired Business in the Restricted Territory for the remainder of the Non-Compete Period.

(c)           Seller and Dlott Non-Solicitation Covenants . Each of the Seller and Dlott agree that for a period of five (5) years after the Closing date (the “ Non-Solicit Period ”), it or he will not, directly or indirectly, and it or he will not permit its or his Affiliates to:

(i)          induce or attempt to induce, hire, or cause any officer, director, employee, consultant or contractor of the Buyer involved in the Acquired Business to leave the employ of the Buyer or any of its Affiliates, or in any way interfere with the relationship between the Buyer or such Affiliates on the one hand, and any such officer, director, employee, consultant or contractor, on the other hand; or

(ii)         induce, or attempt to induce, any customer or potential customers, salesperson, distributor, supplier, vendor, manufacturer, representative, agent, jobber, licensee or other Person including, without limitation, those customers and potential customers of the Acquired Business set forth on Schedule 7.5 (each an “ Acquired Customer ”) transacting business in the Restricted Territory with the Buyer or any of its Affiliates to reduce or cease doing business with the Buyer, or in any way interfere with the relationship between any such customer, salesperson, distributor, supplier, vendor, manufacturer, representative, agent, jobber, licensee, business relation or Acquired Customer, on the one hand, and the Buyer on the other hand.

(d)           Remedies; Reformation . The Parties hereto specifically acknowledge and agree that the remedy at law for any breach of the foregoing covenants in this Section 7.5 may be inadequate and that the Buyer or the Seller, as applicable, in addition to any other relief available to it, shall be entitled to such temporary and permanent injunctive relief without the necessity of proving actual damage or posting any bond whatsoever. If the final judgment of a court of competent jurisdiction declares that any term or provision of this Section 7.5 is invalid or unenforceable, the Parties agree that the court making the determination of invalidity or unenforceability shall have the power to reduce the scope, duration, or area of the term or provision, to delete specific words or phrases, or to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision, and this Agreement shall be enforceable as so modified after the expiration of the time within which the judgment may be appealed. In the event that any court will not reform such covenants, then the Parties hereto agree that such provisions shall be reformed to set forth the maximum limitations permitted by applicable Legal Requirements.

7.6           Satisfaction of Retained Liabilities . With the exception of the Assumed Liabilities, the Seller will pay or satisfy, or make adequate provision for the payment or satisfaction, in full of all the Retained Liabilities and other Liabilities of the Seller under this Agreement.

7.7           Dissolution of the Seller; Transfer of WFCF Stock Consideration . In accordance with Section 2.3(c) , at some future date, WFCF and the Buyer acknowledge that the Seller shall be liquidated and dissolved, at which time, all remaining assets of the Seller, including the WFCF Stock Consideration and the Rollover Equity, shall be distributed to the Seller’s shareholders pursuant to the Seller’s Amended and Restated Articles of Incorporation and any other bonus plans adopted by the Seller; provided however, the Parties acknowledge and agree that the distribution of the WFCF Stock Consideration and the Rollover Equity to Seller’s shareholder shall not occur until the later of each of the following; (i) the first anniversary of the Closing Date, and (ii) the expiration of escrow period set forth in the Escrow Agreement. Subject to the foregoing, upon the dissolution of the Seller and each of the Seller’s shareholders agreeing to be bound by the terms and other transfer restrictions of the Lock-Up Period and other applicable restrictions set forth on the applicable stock certificates, the form and content of which must be reasonably acceptable to WFCF, WFCF and the Buyer hereby consent to the shares of WFCF Stock Consideration and the Rollover Equity being distributed to the Seller’s shareholders. Upon distribution of the shares of WFCF Stock Consideration to the Seller’s shareholders, WFCF shall issue new stock certificates to the Seller’s shareholders pursuant to the stock allocation provided by the Seller. Upon the Seller’s distribution of the Rollover Equity to the Seller’s shareholders, the Buyer shall amend its operating agreement to reflect the Seller’s shareholders individually becoming members of the Buyer. Finally, upon such distribution to Seller’s shareholders and the expiration of all lockup periods attached to the shares of any WFCF Stock Consideration issued under this Agreement or in connection with the conversion of the Rollover Equity, and upon compliance with all applicable requirements set forth in Rule 144 of the Act, state securities laws, the Escrow Agreement, and this Agreement, WFCF shall cause its transfer agent to issue new stock certificates without legends representing shares of the WFCF Stock Consideration so as to permit the holders of such shares to trade the shares under Rule 144 of the Act.

ARTICLE VIII - SURVIVAL INDEMNIFICATION AND RELATED MATTERS

8.1           Survival . The representations and warranties contained in this Agreement shall survive the Closing for eighteen (18) months following the Closing Date except for (i) the representations and warranties contained in Sections 4.10 (Taxes) and 4.18 (Environmental Matters), each of which shall survive for thirty (30) days past applicable statute of limitations (as it may be extended), (ii) any fraud or misrepresentation or the representation and warranties contained in Sections 4.1 (Organization and Power), 4.2 (Authorizations of Transactions), 4.3 (Capitalization) and 4.5 (Absence of Conflicts), each of which shall survive for five (5) years following the Closing Date, and (iii) the representations and warranties contained in the other Designated Representations which shall survive without limitation.

(a)          The Seller agrees to indemnify the Buyer and WFCF with respect to, and hold the Buyer and WFCF harmless from, any loss, liability or expense (including, but not limited to, reasonable legal fees) (each, a “ Loss ”) which Buyer or WFCF may directly or indirectly incur or suffer by reason of, or which results, arises out of or is based upon (i) the inaccuracy of any representation or warranty made by Seller or Dlott in this Agreement, (ii) the failure of Seller or Dlott to comply with any covenants or other commitments made by Seller in this Agreement, or (iii) any Retained Liability.

(b)          The Buyer and WFCF jointly and severally agree to indemnify the Seller and Dlott with respect to, and hold Seller and Dlott harmless from, any Loss which the Seller or Dlott may directly or indirectly incur or suffer by reason of, or which results, arises out of or is based upon (i) the inaccuracy of any representation or warranty made by the Buyer or WFCF in this Agreement, (ii) the conduct of the Acquired Business by the Buyer subsequent to the Closing Date or (iii) the failure of either the Buyer or WFCF to comply with any covenants made by Buyer or WFCF in this Agreement.

8.2           Limitations . The indemnification obligations of the Seller, the Buyer and WFCF under Section 8.1 shall be subject to the following limitations:

(a)          Except in respect of any Loss arising out of or in connection with fraud or intentional misconduct or a breach of a Designated Representation, the aggregate liability for indemnification pursuant to Section 8.1(a) shall not exceed an amount equal to that portion of the Consideration that is the sum of the WFCF Stock Consideration and the Rollover Equity; and

(b)          Except in respect of any Loss arising out of or in connection with fraud or intentional misconduct or a breach of a Designated Representation, in no event shall either Party be liable to another Party pursuant to Section 8.1 unless and until the aggregate amount of all such Losses exceeds $50,000, after which point the liability shall be for the Losses in excess of the foregoing threshold.

8.3           Legal Proceedings . In the event the Buyer, the Seller or WFCF become involved in any legal, governmental or administrative proceeding which may result in indemnification claims hereunder, such Party shall promptly notify the other Party in writing and in full detail of the filing, and of the nature of such proceeding. The other Party may, at its option and expense but only upon the consent of the indemnified Party, defend and control any such proceeding if the proceeding could give rise to an indemnification obligation hereunder. In such event the Party being indemnified shall have the right to retain legal counsel at its own expense and shall have the right to approve any settlement of any dispute giving rise to such proceeding, provided that such approval may not be withheld unreasonably by the Party being indemnified. The Party being indemnified shall reasonably cooperate with the indemnifying Party in such proceeding.

8.4           Exclusive Remedies . Except for injunctive action or other equitable remedies, as otherwise provided in Section 2.4 or with respect to fraud Claims, the remedies provided in this Article VIII shall be the exclusive remedies of the Parties after the Closing in respect of any matter arising out of or in connection with this Agreement and any certificate executed in connection herewith for monetary damages arising under this Agreement.

8.5           Offset Against WFCF Stock Consideration and Rollover Equity . Except for injunctive action or other equitable remedies, as otherwise provided in Section 2.4 or with respect to fraud Claims, all amounts due the Buyer or WFCF under Section 8.1(a) shall first be satisfied by reducing the number of shares of WFCF Stock Consideration held for the benefit of the Seller or its shareholders. If there are amounts payable by the Seller to the Buyer under Section 8.1(a) which are not disputed by the Seller within thirty (30) days upon timely written notice from the Buyer, such amounts may be satisfied by the Buyer first by reducing the number of shares of WFCF Stock Consideration and then by reducing the Rollover Equity held for the benefit of the Seller or Seller’s shareholders. Any indemnification obligations of the Seller alleged by the Buyer or WFCF under Section 8.1(a), but disputed by the Seller, shall be submitted to the American Arbitration Association for arbitration in Denver, Colorado and settled by binding arbitration administered by the American Arbitration Association in accordance with its Commercial Arbitration Rules and judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof.

ARTICLE IX - ADDITIONAL AGREEMENTS

9.1           Press Releases and Announcements . No press releases related to this Agreement and the Transaction, or other announcements to the employees, customers or suppliers of the Seller, shall be issued without the mutual approval of the Buyer and the Seller (which approval shall not be unreasonably withheld or delayed), except for any public disclosure which Buyer or the Seller in good faith believes is required by law or regulation (in which case the disclosure shall be prepared jointly by the Buyer and the Seller).

9.2           Further Assurances . The Parties hereto each agree to execute such other documents or agreements as may be necessary or desirable for the implementation of this Agreement and the consummation of the Transaction. In addition, the Buyer agrees to cooperate reasonably with the Seller to the extent the Seller requests access to documents, employees or data in the event that the Seller becomes the subject of an audit or investigation by a Governmental Authority. In the event that following the Closing, the Seller or any of its respective Affiliates receive or come into the possession of any of the Purchased Assets (including without limitation any payments relating to the Accounts Receivable or Claims included in the Purchased Assets), the Seller shall, and shall cause its respective Affiliates to, immediately notify the Buyer and transfer or pay over such Purchased Assets to the Buyer. Seller will cooperate with the Buyer and use commercially reasonable efforts to assist the Buyer with the transfer to Buyer from the Seller of any Licenses necessary for the operation of the Purchased Assets following the Closing.

9.3           Expenses . Except as otherwise provided herein, the Buyer on the one hand, and the Seller on the other, will pay all of their own fees, costs and expenses (including, without limitation, fees, costs and expenses of legal counsel, accountants, investment bankers, brokers or other representatives and consultants and appraisal fees, costs and expenses) incurred in connection with the negotiation of this Agreement, the performance of their obligations hereunder and the consummation of the Transaction.

ARTICLE X - MISCELLANEOUS

10.1         Amendment . This Agreement may be amended or modified in whole or in part at any time by an agreement in writing among the Seller and the Buyer.

10.2         Waiver . Any term or provision of this Agreement may be waived in writing at any time by the Seller and the Buyer. Any waiver effected pursuant to this Section 10.2 shall be binding. No failure to exercise and no delay in exercising any right, power or privilege shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege preclude the exercise of any other right, power or privilege. No waiver of any breach of any covenant or agreement hereunder shall be deemed a waiver of a preceding or subsequent breach of the same or any other covenant or agreement.

10.3         Notices . All notices, requests, demands, claims and other communications hereunder shall be in writing and shall be deemed duly given when personally delivered, one business day after being sent by reputable overnight courier service (charges prepaid), or when telecopied (so long as such telecopied message is that same day sent by reputable overnight courier (charges prepaid)) to the intended recipient as set forth on Schedule 10.3 , or to such other address or to the attention of such other person as the recipient Party has specified by prior written notice to the sending Party.

10.4         Binding Agreement; Assignment . This Agreement and all the provisions hereof will be binding upon and inure to the benefit of the Parties and their respective successors, heirs, beneficiaries, representatives and permitted assigns; provided , however , that, except as permitted in the following sentence, neither this Agreement nor any of the rights, interests or obligations hereunder may be assigned by any Party without the prior written consent of the other Parties. Upon notice to the Seller, the Buyer (i) may assign any or all of its rights and obligations under this Agreement to any Affiliate of the Buyer and (ii) may make a collateral assignment of its rights hereunder to any lender to Buyer or any of its Affiliates.

10.5         Severability . Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law and if the rights or obligations of any Party hereto under this Agreement will not be materially and adversely affected thereby, (a) such provision will be fully severable, (b) this Agreement will be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part hereof, (c) the remaining provisions of this Agreement will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance here from and (d) in lieu of such illegal, invalid or unenforceable provision, there will be added automatically as a part of this Agreement a legal, valid and enforceable provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible.

10.6         No Strict Construction . The language used in this Agreement will be deemed to be the language jointly chosen by the Parties hereto to express their mutual intent, and no rule of strict construction will be applied against any Person.

10.7         Captions . The captions used in this Agreement are for convenience of reference only and do not constitute a part of this Agreement and will not be deemed to limit, characterize or in any way affect any provision of this Agreement, and all provisions of this Agreement will be enforced and construed as if no captions had been used in this Agreement.

10.8         Entire Agreement . The terms of this Agreement (including the Exhibits and Schedules hereto) and other documents and instruments referenced herein, are intended by the parties as a final expression of their agreement with respect to the subject matter hereof and thereof and may not be contradicted by evidence of any prior or contemporaneous agreement. The parties further intend that this Agreement constitutes the complete and exclusive statement of its terms and that no extrinsic evidence whatsoever may be introduced in any judicial proceeding, if any, involving this Agreement.

10.9         Counterparts . This Agreement may be executed in one or more counterparts (including by facsimile or .pdf file), each of which shall be deemed an original but all of which taken together will constitute one and the same instrument.

10.10       Governing Law . All questions concerning the construction, validity and interpretation of this Agreement shall be governed by and construed in accordance with the domestic laws of the State of Colorado without giving effect to any choice of law or conflict of law provision (whether of the State of Colorado or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Colorado.

10.11       Parties in Interest . Other than Persons entitled to receive indemnification under Article VIII, nothing in this Agreement, express or implied, is intended to confer on any Person other than the Parties and their respective successors and assigns any rights or remedies under or by virtue of this Agreement.

10.12       Exhibits and Schedules . The Exhibits, Schedules and constitute a part of this Agreement and are incorporated into this Agreement for all purposes.

10.13       Certain Interpretive Matters and Definitions .

(a)          Unless the context otherwise requires, (i) all references to Sections, Articles or Schedules are to Sections, Articles or Schedules of or to this Agreement, (ii) each term defined in this Agreement has the meaning assigned to it, (iii) “or” is disjunctive but not necessarily exclusive, (iv) words in the singular include the plural and vice versa, (v) words of any gender include each other gender; (vi) the terms “hereof,” “herein,” “hereby” and derivative or similar words refer to this entire Agreement, (vii) each accounting term not otherwise defined herein has the meaning assigned to it in accordance with GAAP, and (viii) the word “including” and similar terms following any statement will not be construed to limit the statement to matters listed after such word or term, whether or not a phrase of nonlimitation such as “without limitation” is used. All references to “$” or dollar amounts will be to lawful currency of the United States of America. Any representation or warranty contained herein as to the enforceability of a contract shall be subject to the effect of any bankruptcy, insolvency, reorganization, moratorium or other similar law affecting the enforcement of creditors’ rights generally and to general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law).

(b)          No provision of this Agreement will be interpreted in favor of, or against, either of the parties hereto by reason of the extent to which either such Party or its counsel participated in the drafting thereof or by reason of the extent to which any such provision is inconsistent with any prior draft hereof or thereof.

ARTICLE XI - SUBSCRIPTION

11.1         WFCF Stock Representation . In consideration of WFCF’s agreement to issue the WFCF Stock Consideration to the Seller, the Seller hereby represents and warrants to WFCF and hereby covenants and agrees as follows:

(a)          The Seller is acquiring the shares of WFCF Stock Consideration (the “ Shares ”) solely for Seller’s own account and not as nominee for, representative of, or otherwise on behalf of any other person or entity. The Seller is acquiring the Shares with the intention of holding the Shares for investment purposes only, and Seller has no present intention of participating, directly or indirectly, in a subsequent sale, transfer or other distribution of the Shares, or of dividing the Seller’s interest in the Shares with any other person or entity. The Seller has not offered any of the Shares for sale or other disposition, and Seller shall not make any sale, transfer or other disposition of the Shares in violation of state or federal law.

(b)          Seller considers itself to be a sophisticated investor in companies similarly situated to WFCF, and Seller has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of the prospective investment in the Shares. Seller is aware that Seller’s investment in the Shares is speculative and involves a high degree of risk of loss arising from, among other things, substantial market, operational, competitive and other risks, and having made its own evaluation of the risks associated with this investment.

(c)          Seller acknowledges that WFCF has delivered within a reasonable time prior to the execution of this Agreement a copy of the following: (i) WFCF’s 2016 proxy statement; (ii) WFCF’s Form 10-K for the fiscal year ended December 31, 2015; (iii) WFCF’s Form 10-Q for the fiscal quarter ended March 31, 2016; (iv) WFCF’s Form 10-Q for the fiscal quarter ended June 30, 2016 (v) WFCF’s Form 10-Q for the fiscal quarter ended September 30, 2016; (vi) WFCF’s press releases since December 31, 2015; (vii) WFCF’s Form 8-K filings since December 31, 2015, as amended; and (vi) a brief description of the securities being offered and use of the proceeds from the Transaction.

(d)          The Shares were not offered to Seller by means of any form of general or public solicitation or general advertising, or publicly disseminated advertisements or sales literature, including (a) any advertisement, article, notice, or other communication published in any newspaper, magazine, or similar media, or broadcast over television or radio or (b) any seminar or meeting to which Seller was invited by any of the foregoing means of communications.

(e)          The Seller’s investment in the Shares is reasonable and consistent with the nature and size of its present investments and net worth, Seller has no need for liquidity in the investment represented by the Shares, and Seller is financially able to bear the economic risk of this investment, including the ability to afford holding the Shares for an indefinite period of time and to afford a complete loss of this investment.

(f)           Seller is aware that WFCF may offer and sell additional shares of common stock in the future, thereby diluting Seller’s percentage equity ownership of WFCF.

(g)          Seller understands that as a publicly traded company, WFCF files with the Securities and Exchange Commission (“ SEC ”) various reports, including quarterly and annual financial statements, annual reports to shareholders, and proxy statements, and that all of such reports, statements and information are available to the public, including Seller, from the SEC and directly from WFCF. Seller has been given the opportunity to obtain copies of such public information and to ask questions of, and receive answers from, you with respect to WFCF and the Shares, concerning the terms and conditions of the issuance of the Shares to Seller, and has been given the opportunity to obtain such additional information necessary to verify the accuracy of any information provided to Seller in order for Seller to evaluate the merits and risks of an investment in the Shares. Seller has been furnished with all information concerning the Shares and WFCF that Seller desires.

(h)          In regard to any economic or legal considerations related to the Shares, Seller has relied on the advice of, or consulted with, only Seller’s own advisors, and Seller has not relied upon Buyer, WFCF, or their respective legal counsel or accountants regarding the Shares or the Transaction contemplated herein.

(i)           Seller understands and acknowledges that the issuance of the Shares to Seller was not registered under the Act or under the securities laws of any state in reliance upon an exemption or exemptions contained in the Act (and the regulations promulgated thereunder) and applicable state securities laws. Consequently, Seller understands that the Shares cannot be subsequently transferred unless they are registered under the Act and applicable state securities laws, or unless an exemption from such registration requirements is available. Seller understands and acknowledges that any certificate evidencing the Shares will bear the legend set forth in Section 2.4(e) herein, and Seller understands that a notation may be made in the stock records of WFCF restricting the transfer of any of the Shares in a manner consistent with the foregoing.

(j)           Seller understands and acknowledges that neither WFCF nor the Buyer are under any obligation to register the Shares for public sale or comply with the conditions of Rule 144 promulgated by the SEC under the Act or to take any other action necessary in order to make available any exemption for the subsequent transfer of the Shares without registration.

11.2         Rollover Equity Representation . In consideration of Buyer’s agreement to issue the Rollover Equity to the Seller, the Seller hereby represents and warrants to the Buyer and WFCF and hereby covenants and agrees as follows:

(a)          Seller is acquiring the shares Rollover Equity solely for Seller’s own account and not as nominee for, representative of, or otherwise on behalf of any other person or entity. Seller is acquiring the Rollover Equity with the intention of holding the Rollover Equity for investment purposes only, and Seller has no present intention of participating, directly or indirectly, in a subsequent sale, transfer or other distribution of the Rollover Equity, or of dividing Seller’s interest in the Rollover Equity with any other person or entity. Seller has not offered any of the Rollover Equity for sale or other disposition, and Seller shall not make any sale, transfer or other disposition of the Rollover Equity in violation of state or federal law.

(b)          Seller considers itself to be a sophisticated investor in companies similarly situated to Buyer, and Seller has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of the prospective investment in the Rollover Equity. Seller understands that there is no public market for the Rollover Equity, no public market for the Rollover Equity is likely to develop and it may not be possible for Seller to readily liquidate its investment. Seller is aware that Seller’s investment in the Buyer is speculative and involves a high degree of risk of loss arising from, among other things, substantial market, operational, competitive and other risks, and having made their own evaluation of the risks associated with this investment.

(c)          Seller acknowledges that as of the date hereof it is a manager of the Buyer. As such, Seller acknowledges that it is an “accredited investor” as that term is defined in Rule 501 of Regulation D promulgated by the SEC under the Act.

(d)          WFCF has delivered within a reasonable time prior to the execution of this Agreement a copy of the following: (i) description of the Buyer and its Operating Agreement, and (ii) a description of the Rollover Equity.

(e)          The Rollover Equity was not offered to the Seller by means of any form of general or public solicitation or general advertising, or publicly disseminated advertisements or sales literature, including (a) any advertisement, article, notice, or other communication published in any newspaper, magazine, or similar media, or broadcast over television or radio or (b) any seminar or meeting to which Seller was invited by any of the foregoing means of communications.

(f)           The Seller’s investment in the Rollover Equity is reasonable and consistent with the nature and size of its present investments and net worth, the Seller has no need for liquidity in the investment represented by the Rollover Equity, and the Seller is financially able to bear the economic risk of this investment, including the ability to afford holding the Rollover Equity for an indefinite period of time and to afford a complete loss of this investment.

(g)          Subject to the terms of the Buyer’s operating agreement, the Seller is aware that the Buyer may offer and sell additional membership interests in the future, thereby diluting the Seller’s percentage equity ownership of Buyer.

(h)          The Seller has been given the opportunity to obtain copies of all information and to ask questions of, and receive answers from, you with respect to the Buyer and the Rollover Equity, concerning the terms and conditions of the issuance of the Rollover Equity to the Seller, and has been given the opportunity to obtain such additional information necessary to verify the accuracy of any information provided to the Seller in order for the Seller to evaluate the merits and risks of an investment in the Rollover Equity. The Seller has been furnished with all information concerning the Rollover Equity and the Buyer that the Seller desires.

(i)           In regard to any economic or legal considerations related to the Rollover Equity, the Seller has relied on the advice of, or consulted with, only the Seller’s own advisors, and the Seller has not relied upon the Buyer, WFCF, or their respective legal counsel or accountants regarding the Rollover Equity or the Transaction contemplated herein.

(j)           Seller understands and acknowledges that the issuance of the Rollover Equity to the Seller was not registered under the Act or under the securities laws of any state in reliance upon an exemption or exemptions contained in the Act (and the regulations promulgated thereunder) and applicable state securities laws. Consequently, the Seller understands that the Rollover Equity cannot be subsequently transferred unless registered under the Act and applicable state securities laws, or unless an exemption from such registration requirements is available. The Seller understands and acknowledges that any certificate evidencing the Rollover Equity, if any, will bear a legend restricting the transfer of such Rollover Equity consistent with the foregoing.

(k)          The Seller understands and acknowledges that neither WFCF nor the Buyer are under any obligation to register the Rollover Equity for public sale or to take any other action necessary in order to make available any exemption for the subsequent transfer of the Rollover Equity without registration.

(l)           The Seller is a California corporation, and its principal place of business is located in the State of California, and it has no present intention of removing itself from its existing state of residence.

(m)         The Seller confirms that the representations it has made to WFCF and the Buyer herein are correct and complete as of the date hereof, and that if there should occur any material change in such representations prior to the receipt of the Shares and Rollover Equity by the Seller, the Seller agrees that it will immediately furnish such revised or corrected representations or information to WFCF and Buyer. 

[Signature Page Follows]

Signature Page To The Asset Purchase Agreement

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

SELLER:

SUREHARVEST, INC.

By: /s/ Jeff Dlott

Name: Jeff Dlott

Title: President & CEO

JEFF DLOTT

THE BUYER:

SUREHARVEST SERVICES, LLC

By: /s/ John K Saunders

Name: John K Saunders

Title: CEO

WFCF:

WHERE FOOD COMES FROM, INC.

By: /s/ John K Saunders

Name: John K Saunders

Title: CEO

Exhibit A

Payoff Letter

[See attached.]

Exhibit B

Bill of Sale, Assignment and Assumption Agreement

[See attached.]

Exhibit C

Operating Agreement of SureHarvest Services, LLC

[See attached.]

Exhibit D

Employment Agreement of Jeff Dlott

[See attached.]

Exhibit E

Escrow Agreement

[See attached.]

Exhibit F

Consent to Transaction by Board of Directors of Seller

[See attached.]

Exhibit G

Consent to Transaction by Shareholders of Seller

[See attached.]

Exhibit H

Consent to Transaction by Board of Directors of WFCF

[See attached.]

Where Food Comes From, Inc. - 8-K

EXHIBIT 2.2

Amended and Restated Operating Agreement
of
SUREHARVEST SERVICES, LLC

A CALIFORNIA Limited Liability Company

THE LIMITED LIABILITY COMPANY UNITS REPRESENTED BY THIS OPERATING AGREEMENT HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES ACTS OR LAWS OF ANY STATE IN RELIANCE UPON EXEMPTIONS UNDER THOSE ACTS. THE SALE OR OTHER DISPOSITION OF SUCH MEMBERSHIP UNITS IS RESTRICTED AS STATED IN THIS OPERATING AGREEMENT, AND IN ANY EVENT IS PROHIBITED UNLESS THE LLC RECEIVES AN OPINION OF COUNSEL SATISFACTORY TO IT AND ITS COUNSEL THAT SUCH SALE OR OTHER DISPOSITION CAN BE MADE WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY APPLICABLE STATE SECURITIES ACTS AND LAWS. BY ACQUIRING MEMBERSHIP UNITS REPRESENTED BY THIS OPERATING AGREEMENT, EACH MEMBER REPRESENTS THAT IT WILL NOT SELL OR OTHERWISE DISPOSE OF ITS MEMBERSHIP UNITS WITHOUT COMPLYING WITH THE PROVISIONS OF THIS OPERATING AGREEMENT AND REGISTRATION OR OTHER COMPLIANCE WITH THE AFORESAID ACTS AND THE RULES AND REGULATIONS ISSUED THEREUNDER.

Table of Contents
of the
Amended and Restated Operating Agreement
of
SUREHARVEST SERVICES, llc

A CALIFORNIA Limited Liability Company

Amended and Restated Operating Agreement
of
SUREHARVEST SERVICES, LLC

A CALIFORNIA Limited Liability Company

THIS SECOND AMENDED AND RESTATED OPERATING AGREEMENT is made and entered into as of the Effective date by and among SureHarvest Services, LLC, a California limited liability company (the “ LLC ”), the initial Managers and the Members whose names, addresses and taxpayer identification numbers are listed on the Information Exhibit attached hereto as Exhibit A . Unless otherwise indicated, capitalized words and phrases in this Amended and Restated Operating Agreement (this “ Agreement ”) shall have the meanings set forth in the Glossary of Terms attached hereto as Exhibit B .

Recitals:

WHEREAS , the LLC was formed pursuant to the Act on November 22, 2016 upon the filing of the Articles of Organization with the Secretary of State of the State of California; and

WHEREAS , effective as of the Effective Date and pursuant to the terms of that certain Asset Purchase Agreement, dated as of December 28, 2016 (the “ Purchase Agreement ”), by and among the LLC, Where Food Comes From, Inc., a Colorado corporation (“ WFCF ”) and SureHarvest, Inc., a California corporation (“ SureHarvest ”) SureHarvest acquired Units in the LLC; and

WHEREAS , the parties hereto now wish to amend and restate the Existing LLC Agreement in connection with the Closing of the transactions contemplated by the Purchase Agreement for the purposes of, among other things, (i) admitting certain Persons as Members and (ii) setting forth the provisions regarding the governance and management of the LLC.

NOW, THEREFORE , in consideration of the mutual promises of the parties hereto, and other good and valuable consideration, the receipt and legal sufficiency of which is hereby acknowledged, the parties hereto, intending to be legally bound, do hereby agree that the operating agreement of the LLC shall be amended and restated to read as follows:

ARTICLE I

Formation

Section 1.1 Formation; General Terms; Effective Date. The LLC was formed upon the filing of the Articles of Organization with the Secretary of State of the State of California. To the extent not previously a Member, each Person listed on the attached Information Exhibit shall be admitted to the LLC as a Member upon their execution of this Agreement. This Agreement shall be effective as of December 28, 2016 (the “ Effective Date ”).

The rights and obligations of the Members and the terms and conditions of the LLC shall be governed by the Act and this Agreement, including all the Exhibits to this Agreement. To the extent the Act and this Agreement are inconsistent with respect to any subject matter covered in this Agreement, this Agreement shall govern.

The Board shall cause to be executed and filed on behalf of the LLC all other instruments or documents, and shall do or cause to be done all such filing, recording or other acts, including the filing of the LLC’s annual report with the Secretary of State of the State of California, as may be necessary or appropriate from time to time to comply with the requirements of law for the continuation and operation of a limited liability company in California and in the other states and jurisdictions in which the LLC shall transact business.

Section 1.2 Name. The name of the LLC shall be “SureHarvest Services, LLC”. The name of the LLC shall be the exclusive property of the LLC and no Member shall have any commercial rights in the LLC’s name or any derivation thereof, even if the name contains such Member’s own name or a derivation thereof. The LLC’s name may be changed only by an amendment to the Articles of Organization adopted by the Board.

Section 1.3 Purposes. The nature of the business or purposes to be conducted or promoted by the LLC is to engage in any lawful act or activity for which limited liability companies may be organized under the Act. The LLC may engage in any and all activities necessary, desirable or incidental to the accomplishment of the foregoing. Notwithstanding anything herein to the contrary, nothing set forth herein shall be construed as authorizing the LLC to possess any purpose or power, or to do any act or thing, forbidden by law to a limited liability company organized under the laws of the State of California.

Section 1.4 Registered Agent; Registered Office. The LLC’s registered agent and registered office are set forth in the Articles of Organization and may be changed from time to time by the Board pursuant to the provisions of the Act.

Section 1.5 Commencement and Term. The LLC commenced at the time and on the date appearing in the Articles of Organization and shall continue until it is dissolved, its affairs are wound up and final liquidating distributions are made pursuant to this Agreement.

ARTICLE II

Capital Accounts; Capital; Units

Section 2.1 Capital. As of the Effective Date and after giving effect to the transactions contemplated by the Purchase Agreement, each Member agrees and acknowledges that each Member’s aggregate Capital and the number of Units held by each Member is reflected opposite such Member’s name on the Information Exhibit.

Section 2.2 Additional Capital Contributions; Participation Rights. (a)       Subject to the receipt of the approvals required by Section 5.4, the Board may from time to time authorize and cause the LLC to issue additional Interests, secured or unsecured debt obligations of the LLC, debt obligations of the LLC convertible into Interests, options or warrants to purchase Interests, or any combination of the foregoing (collectively, “ New Securities ”) with such terms and conditions and in exchange for such cash or other property as it may determine; provided , however , no Member shall have any obligation to contribute additional capital to the LLC except to the extent such Member exercises its participation rights pursuant to this Section 2.2 (in which case such Member shall be obligated to contribute capital to the LLC for the New Securities it elected to purchase) and pursuant to Section 3.4. The LLC shall offer to each Member holding Units the right to purchase all or any portion of that number of the New Securities being issued equal to (x) the number of New Securities being issued times (y) a fraction, the numerator of which is the number of Units held by such Member and the denominator is the number of Units held by all Members, on the same terms and subject to the same conditions as the proposed issuance to others. Any New Securities not initially subscribed for by the holders of Units (the “ Unsubscribed Securities ”) shall be reoffered (iteratively, as necessary) to those Persons electing initially to purchase their full proportionate share of New Securities hereunder in proportion to the number of Units held by them or in such other amounts as they may agree. Any Unsubscribed Securities not subscribed for by the Members in accordance with the previous sentence may be offered to those Persons selected by the Board in its sole discretion, including any Member or its Affiliates.

(b)           The LLC shall not (i) issue or sell any equity securities of any of its Subsidiaries, or any securities convertible into, or exchangeable or exercisable for, any equity securities of any of its Subsidiaries, or any debt obligations convertible into equity securities of any of its Subsidiaries, or any combination of the foregoing (collectively, the “ Other Securities ” ), or (ii) except in connection with the exercise by lenders to the LLC of rights and remedies under any pledge agreement, permit any of its Subsidiaries to issue or sell any Other Securities to any Person that is a Member or an Affiliate of a Member without offering the Members holding Units the right to purchase such Other Securities to the same extent that such Members would be entitled under the provisions of this Section 2.2 if such issuance or sale of Other Securities were an issuance of New Securities, and no Member shall, or shall permit any of its Affiliates to, acquire any Other Securities other than pursuant to an issuance or sale in accordance with this sentence. The Board shall determine the timing and such other procedures as may be necessary and appropriate to enable the holders of Units to exercise their rights under this Section 2.2, provided that in no event shall such Persons be given less than ten (10) days nor more than thirty (30) days prior notice before being required to commit to purchase any New Securities or Other Securities which they may initially become entitled to purchase pursuant to this Section 2.2.

Section 2.3 Liability of Members. No Member shall be liable for any debts or losses of capital or profits of the LLC or be required to guarantee the liabilities of the LLC. Except as set forth in Sections 2.1, 2.2 (to the extent such Member exercises its participation rights) and 3.4 of this Agreement, no Member shall be required to contribute or lend funds to the LLC. In no event shall any Member be liable with respect to, or be required to contribute capital to restore, a negative or deficit balance in such Member’s Capital Account upon the dissolution or liquidation or at any other time of either the LLC or such Member’s Interest except in the case and to the extent of a distribution made in violation of the express provisions of this Agreement.

Section 2.4 Maintenance of Capital Accounts; Capital Amount; Withdrawals; Interest. Separate Capital Account and Capital amounts shall be maintained for each of the Members.

No Member shall be entitled to withdraw or receive any part of its Capital Account or Capital amount or receive any distribution with respect to its Interest except as provided in this Agreement. No Member shall be entitled to receive any interest on its Capital Account or Capital amount except as provided in this Agreement. Each Member shall look solely to the assets of the LLC for distributions with respect to its Interest and, except as otherwise provided in this Agreement, shall have no right or power with respect to its Interest to demand or receive any property or cash from the LLC. No Member shall have priority over any other Member as to LLC distributions or allocations relating to its Units except as provided in this Agreement. The Capital Account of each Member on the Effective Date after giving effect to the transactions contemplated by the Purchase Agreement is equal to the Capital set forth opposite such Member’s name on the Information Exhibit.

Section 2.5 Classes of Units. Each Member shall hold an Interest. Each Member’s Interest shall be denominated in Units, and the relative rights, privileges, preferences and obligations with respect to each Member’s Interest shall be determined under this Agreement and the Act to the extent herein provided based upon the number and the class of Units held by such Member with respect to its Interest. The number and class of Units held by each Member on the Effective Date is set forth opposite each Member’s name on the Information Exhibit. Units shall have all the rights, privileges, preferences and obligations as are specifically provided for in this Agreement. This Agreement shall not be amended to provide for any additional classes of Units without the unanimous consent of the Members. On the Effective Date, 4,674,960 Units are issued and are outstanding.

ARTICLE III

Distributions

Section 3.1 Tax Distributions. The Board shall determine in its sole discretion if distributions pursuant to this Section 3.1 shall be made quarterly or annually. Within fifteen (15) days following the end of each Tax Estimation Period (in the event of quarterly distributions) and ninety (90) days following the end of each Tax Estimated Period (in the event of annual distributions), to the extent of available cash (as determined by the Board), the LLC shall distribute to the Members cash in an amount equal to (A) the excess, if any, of (i) the LLC’s Cumulative Adjusted Taxable Income computed through the end of the Tax Estimation Period in question over (ii) the LLC’s Cumulative Adjusted Taxable Income computed from the Effective Date through the end of the immediately preceding Tax Estimation Period (but in no event shall the amount described in this clause (ii) be less than the greater of zero or the LLC’s greatest amount of positive Cumulative Adjusted Taxable Income as of the end of any preceding Tax Estimation Period) (the excess of (i) over (ii) referred to as, the “ Current Net Positive Allocable Income ”), multiplied by (B) forty percent (40%). Additionally, in the event that based on the LLC’s tax returns the Board determines that the LLC’s Cumulative Adjusted Taxable Income computed through the end of any calendar year is more than the amount used for purposes of computing the amount distributable pursuant to the previous sentence, the LLC shall distribute to the Members within ninety (90) days after the end of that calendar year an amount equal to (i) such excess multiplied by (ii) forty percent (40%) for the last Tax Estimation Period during that calendar year (the “ True-Up Tax Distribution ”). Tax distributions pursuant to this Section 3.1 with respect to each Tax Estimation Period shall be made to the Members in proportion to the Current Net Positive Allocable Income in such Tax Estimation Period that is allocable to them based on their entitlement to distributions pursuant to Section 3.2(b). In the event that the LLC fails to make tax distributions in the amounts required by this Section 3.1, the LLC shall accrue on its books the amount of any unpaid tax distributions owed to the Members and shall pay such accrued amounts as soon as practicable thereafter.

Section 3.2 Discretionary Distributions. Prior to the dissolution of the LLC (including, without limitation, a Capital Transaction that results in a dissolution of the LLC), the LLC shall distribute cash or property, subject to Sections 3.1 and 3.5, in such amounts, at such times and as of such record dates as the Board shall determine in the following order of priority:

(a)           First, to the holders of Units in proportion to the Capital held by them until the Capital of all holders of Units is zero; and

(b)           The balance, to the holders of Units in proportion to the number of such Units held by them.

Capital shall be computed as of the date of the distribution.

Section 3.3 Withholding. In the event any federal, foreign, state or local jurisdiction requires the LLC to withhold taxes or other amounts with respect to any Member’s allocable share of Profits, taxable income or any portion thereof, or with respect to distributions, the LLC shall withhold from distributions or other amounts then due to such Member an amount necessary to satisfy the withholding responsibility and shall pay any amounts withheld to the appropriate taxing authorities. In such a case, for purposes of this Agreement the Member for whom the LLC has paid the withholding tax shall be deemed to have received the withheld distribution or other amount due and to have paid the withholding tax directly and such Member’s share of cash distributions or other amounts due shall be reduced by a corresponding amount.

If it is anticipated that at the due date of the LLC’s withholding obligation the Member’s share of cash distributions or other amounts due is less than the amount of the withholding obligation, the Member with respect to which the withholding obligation applies shall pay to the LLC the amount of such shortfall within thirty (30) days after notice of such shortfall is given to such Member by the LLC. In the event a Member fails to make the required payment when due hereunder, and the LLC nevertheless pays the withholding, in addition to the LLC’s remedies for breach of this Agreement, the amount paid shall be deemed a recourse loan from the LLC to such Member bearing interest at the Default Rate, and the LLC shall apply all distributions or payments that would otherwise be made to such Member toward payment of the loan and interest, which payments or distributions shall be applied first to interest and then to principal until the loan is repaid in full.

Section 3.4 Noncash Distributions and Noncash Liquidating Distributions. The Board may cause the LLC to make distributions to the Members in property (valued for such purpose at its fair market value determined in good faith by the Board) other than in cash in accordance with the provisions of Section 3.2 or Section 8.3, as applicable, so long as such non-cash property is distributed among all the Members entitled to receive such distributions in proportion to the total amounts each Member is entitled to receive in respect of such distributions taking into the account the priority of distributions expressly set forth in this Agreement.

ARTICLE IV

Allocations

Section 4.1 Profits and Losses. Except as otherwise provided in the Regulatory Allocations or Exhibit or Section 4.4, Profits (and items thereof) and Losses (and items thereof) for each Fiscal Year shall be allocated among the Members such that the ending Capital Account of each Member, immediately after giving effect to such allocations, is, as nearly as possible, equal to the excess of (A) the amount of the distributions that would be made to such Member pursuant to Section 8.3 if (i) the LLC were dissolved and terminated at the end of the Fiscal Year; (ii) its affairs were wound up and each asset on hand at the end of the Fiscal Year were sold for cash equal to its Agreed Value; (iii) all liabilities of the LLC were satisfied (limited with respect to each nonrecourse liability to the Agreed Value of the assets securing such liability); and (iv) the net assets of the LLC were distributed to the Members in accordance with Section 8.3, over (B) the sum of such Member’s share of LLC Minimum Gain and share of Member Nonrecourse Debt Minimum Gain.

Section 4.2 Code Section 704(c) Tax Allocations. For federal, state and local income tax purposes, items of taxable income, gain, loss and deduction shall be allocated among the Members in the same manner as the corresponding “book” items of income, gain, loss and deduction have been allocated among the Members pursuant to this Article IV for purposes of maintaining Capital Accounts. Income, gain, loss and deduction with respect to any Section 704(c) Property shall, solely for income tax purposes, be allocated among the Members so as to take account of any variation between the adjusted basis of such property to the LLC for federal income tax purposes and its initial Agreed Value pursuant to the “traditional method” within the meaning of Treasury Regulation Section 1.704-3(b). Any elections or decisions relating to allocations under this Section 4.2 shall be determined by the Board. Notwithstanding any other provision of this Agreement, allocations pursuant to this Section 4.2 are solely for purposes of federal, state and local income taxes and shall not be taken into account in computing any Member’s Capital Account, share of Profits, Losses, allocation of Cumulative Adjusted Taxable Income or distributions (including tax distributions pursuant to Section 3.1) pursuant to any provision of this Agreement.

Section 4.3 Miscellaneous.

(a)            Allocations Attributable to Particular Periods. For purposes of determining Profits, Losses or any other items allocable to any period, such items shall be determined on a daily, monthly or other basis, as determined by the Board using any permissible method under Code § 706 and the Treasury Regulations promulgated thereunder.

(b)           Other Items. Except as otherwise provided in this Agreement, all items of LLC income, gain, loss, deduction, credit and any other allocations not otherwise provided for shall be divided among the Members in the same proportion as they share Profits or Losses, as the case may be, for the year.

(c)        Tax Consequences; Consistent Reporting . The Members are aware of the income tax consequences of the allocations made by this Article IV and by the Regulatory Allocations and hereby agree to be bound by and utilize those allocations as reflected on the information returns of the LLC in reporting their shares of LLC income and loss for income tax purposes. Each Member agrees to report its distributive share of LLC items of income, gain, loss, deduction and credit on its separate return in a manner consistent with the reporting of such items to it by the LLC. Any Member failing to report consistently shall notify the Internal Revenue Service of the inconsistency as required by law and shall reimburse the LLC for any legal and accounting fees incurred by the LLC in connection with any examination of the LLC by federal or state taxing authorities with respect to the year for which the Member failed to report consistently.

ARTICLE V

Management

Section 5.1 Management by Board; Specific Acts Authorized; Delegation of Authority by the Board.

(a)            General Authority of the Board, Size, Composition and Voting of Board . The business, property and affairs of the LLC and its Subsidiaries shall be managed by a board of managers (the “ Board ”). The Board shall consist of five (5) Persons designated pursuant to this Section 5.1(a) (each a “ Manager ”). Subject to the provisions of this Agreement and the Act, the Board shall have full, complete and exclusive authority, power and discretion to manage and control the business, property and affairs of the LLC and its Subsidiaries, to make all decisions regarding those matters and to supervise, direct and control the actions of the officers of the LLC and to perform any and all other actions customary or incident to the management of the business, property and affairs of the LLC and its Subsidiaries. The Board shall take all such reasonable actions as are necessary for the board of managers, board of directors or similar governing body of each Subsidiary (to the extent comprised of individuals and not entities) to consist of the same individuals as the Board. The Members shall have no power to participate in the management of the LLC or to vote on any matter, except for those matters requiring the consent of the Members as specified in Section 5.4, Section 6.2(c) and Section 10.4.

So long as WFCF holds Units, WFCF shall be entitled to designate three (3) Managers to serve on the Board. The initial Managers designated by WFCF are John Saunders, Leann Saunders and Dannette Henning (each a “ WFCF Manager ”). So long as SureHarvest (or any permitted transferee of SureHarvest) hold Units, SureHarvest (or the permitted transferees of SureHarvest, acting jointly) shall be entitled to designate two (2) Managers to serve on the Board. The initial Managers designated by SureHarvest are Jeff Dlott (“Dlott”) and SureHarvest (the “ SureHarvest Managers ”).

Each Manager shall have one vote on all matters before the Board. Unless otherwise expressly provided herein, the vote, consent, approval or ratification of any matter by those Managers holding at least a majority of the votes held by all Managers then serving on the Board shall be required and shall be sufficient in order to constitute action of the Board. The board (or similar governing body) of each Subsidiary shall, to the extent it consists of individuals and not an entity or entities, consist of the same individuals as the Board. No Member or Manager shall have the actual or apparent authority to cause the LLC or any of its Subsidiaries to become bound to any contract, agreement or obligation, and no Member or Manager shall take any action purporting to be on behalf of the LLC or any of its Subsidiaries unless such action has received the prior approval, vote or consent as required pursuant to this Agreement.

(b)            Delegation of Authority to Managers and Officers. The Board may delegate additional power and authority to one or more Managers of the LLC by written resolution of the Board, which resolution shall specify the nature, extent and duration of the Board’s delegation. The LLC may also have the following officers (“ Officers ”), who shall be appointed by the Board, and who shall report to and be responsible to the Board. The Board may remove an Officer at any time and from time to time (with or without cause) and replace such Officer with a successor. An Officer may resign at any time upon notice to the Board.

(i)          Chief Executive Officer . The chief executive officer shall generally and actively manage the operation of the LLC subject to the authority of the Board. The chief executive officer shall be responsible for the administration of the LLC, including general supervision of the policies of the LLC and general and active management of the financial affairs of the LLC. Any action required of or contemplated to be taken by the Board under this Agreement may be taken by the chief executive officer unless (i) this Agreement specifically requires the vote or approval of the Board or some or all of the Members; (ii) the Board or the Members, by resolution or otherwise, have restricted the chief executive officer’s authority to act for the LLC in such matter; or (iii) the action is outside the ordinary course of the business of the LLC.

(ii)         President . Subject to the authority of the Board and the chief executive officer, as the case may be, the president shall generally and actively manage the business of the LLC. The president shall have such other powers and perform such other duties as may be prescribed by the Board or the chief executive officer, as the case may be. The initial president shall be Dlott.

(iii)        Vice Presidents . The LLC may have one or more vice presidents, appointed by the Board, and may have such further denominations as “executive vice president”, “senior vice president”, “assistant vice president” and the like. Vice presidents shall perform such duties and have such powers as may be delegated by the Board or the chief executive officer.

(iv)        Treasurer and Chief Financial Officer. The Treasurer and Chief Financial Officer shall: (i) have custody of and be responsible for all funds and securities of the LLC; (ii) receive and give receipts for money due and payable to the LLC, and deposit such moneys in the name of the LLC in such depositories as shall be selected in accordance with this Agreement; (iii) in general, perform all of the duties incident to the office of treasurer and chief financial officer; and perform such other duties as may from time to time be assigned to him or her by the Board or the chief executive officer. The LLC may have any number of Assistant Treasurers who shall perform the functions of the Treasurer in the Treasurer’s absence or inability or refusal to act. The initial Treasurer and Chief Financial Officer shall be Dannette Henning.

(v)         Secretary. The secretary shall attend all meetings of the LLC and shall record all the proceedings of the meetings in a book to be kept for that purpose. The secretary shall keep all books and records of account of the LLC and such other documents as may be required under the Act. The secretary shall perform such other duties and have such other authority as may be prescribed elsewhere in this Agreement or from time to time by the Manager or the chief executive officer, as the case may be. The secretary shall have the general duties, powers and responsibilities of a secretary of a corporation. The initial Secretary shall be Leann Saunders.

(vi)        Additional Officers . In addition to the officers listed in this Section 5.1(b), from time to time, the Board may appoint other officers as it deems necessary or appropriate with such authority to operate, manage and bind the LLC as the Board or the chief executive officer delegates to such officers.

(c)            Annual Business Plan; Annual Budgets. The Officers shall prepare annually prior to December 10 ^th of each year a written business plan and annual budget for the LLC and the Subsidiaries, which business plan and annual budget (i) shall include as attachments, line item operating and capital expenditure budgets for the coming calendar year and (ii) shall become effective only upon approval or adoption of such plan by the Board.

(d)           Meetings of the Board. Meetings of the Board may be called by any one (1) Manager. Notice of any meeting shall be given pursuant to Section 10.1 below to all Managers not less than five (5) business days prior to the meeting. Managers holding a majority of the votes held by the then appointed Managers shall be required to constitute a quorum for the transaction of business by the Board. A notice need not specify the purpose of any meeting. Notice of a meeting need not be given to any Manager who signs a waiver of notice, a consent to holding the meeting, an approval of the minutes thereof or a written consent to action taken in lieu of such meeting, whether before or after the meeting, or who attends the meeting without protesting the lack of notice prior to the commencement of the meeting. All such waivers, consents and approvals shall be filed with the LLC’s records or made a part of the minutes of the meeting. Managers may participate in any meeting of the Managers by means of conference telephones so long as all Managers participating can hear or communicate with one another. A Manager so participating is deemed to be present at the meeting.

(e)            Board Action by Written Consent. Any action that is permitted or required to be taken by the Board may be taken or ratified by written consent setting forth the specific action to be taken, which written consent is signed by Managers holding a majority of the votes held by all Managers; provided , however , that if such consent is not signed by all the Managers, the LLC will, to the extent practicable, notify each Manager of the action to be taken prior to the execution of the written consent and the written consent shall not be effective until 24 hours after such consent has been delivered to each Manager on the Board.

Section 5.2 Limitation of Liability.

(a)           Notwithstanding any other provision to the contrary contained in this Agreement, no Manager or Member shall be liable, responsible or accountable in damages or otherwise to the LLC or to any Member or assignee of a Member for any loss, damage, cost, liability or expense incurred by reason of or caused by any act or omission performed or omitted by such Person in such capacity, whether alleged to be based upon or arising from errors in judgment, negligence, gross negligence or breach of the duty of care, except with respect to any actions or omissions of such Person that constitute criminal activity, willful misconduct, fraud or a knowing violation or breach of this Agreement. Without limiting the foregoing, no Manager or Member shall in any event be liable for (i) the failure to take any action not specifically required to be taken by him under the terms of this Agreement, (ii) any action or omission taken or suffered by any other Person or (iii) any mistake, misconduct, negligence, dishonesty or bad faith on the part of any employee or agent of the LLC or its Subsidiaries appointed by such Person in good faith.

(b)           Any Manager or Member may consult, at its sole cost and expense, with legal counsel selected by it, and any act or omission suffered or taken by such Person on behalf of the LLC or in furtherance of the interests of the LLC in good faith reliance upon, and in accordance with, the prior written advice of such counsel shall be full justification for any such act or omission, and the Manager or Member shall be fully protected in so acting or omitting to act; provided , however , that if it is ultimately determined that such action was a breach of this Agreement or results in the improper receipt, directly or indirectly, of personal benefit to the Manager or Member such Person shall be accountable to the Members for such action or omission notwithstanding such prior legal advice.

(c)           Notwithstanding that it may constitute a conflict of interest, the Members, the Managers or their Affiliates may engage in any transaction with the LLC (including the purchase, sale, lease or exchange of any property or the rendering of any service or the establishment of any salary, other compensation or other terms of employment) to the maximum extent permitted by the Act.

Section 5.3 Indemnification. To the fullest extent permitted by law, the LLC shall indemnify, defend and hold harmless, any Manager and Officer (each being referred to as an “ Indemnitee ”) who was or is a party (other than a party plaintiff suing on his or her own behalf), or who is threatened to be made such a party, to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (including an action by or in the right of the LLC) arising out of, or in connection with, any actual or alleged act or omission or by reason of the fact that the Indemnitee is or was a Manager or Officer, or is or was serving at the request of the LLC as a director or officer of any other Person, against expenses (including attorneys’ fees), judgments, fines, excise taxes and amounts paid in settlement actually and reasonably incurred by the Indemnitee in connection with such action, suit or proceeding if (a) the acts, omissions or alleged acts or omissions upon which such actual or threatened action, proceeding or claims are based were not a result of fraud, self-dealing, gross negligence, willful misconduct, recklessness by such Indemnitee, and (b) the Indemnitee met the standard of conduct of (i) acting in good faith and in a manner the Indemnitee reasonably believed to be in, or not opposed to, the best interests of the LLC and (ii) with respect to any criminal proceeding, having no reasonable cause to believe the Indemnitee’s conduct was unlawful. The termination of any action or proceeding by judgment, order, settlement or conviction or upon a plea of nolo contendere or its equivalent shall not of itself create a presumption that the Indemnitee did not act in good faith and in a manner that the Indemnitee reasonably believed to be in, or not opposed to, the best interests of the LLC and, with respect to any criminal proceeding, had reasonable cause to believe that his or her conduct was unlawful. Any indemnification pursuant to this Section 5.3 shall only be from assets and property of the LLC and, notwithstanding anything to the contrary herein, no Member shall have any obligation to make additional Capital Contributions to the LLC in connection with any indemnification provided by the LLC.

The LLC may reimburse to each Indemnitee expenses (including reasonable legal fees) incurred by such Indemnitee in defending any claim, demand, action, suit or proceeding prior to the final disposition of such claim, demand, action, suit or proceeding upon receipt by the LLC of an unsecured undertaking by or on behalf of the Indemnitee to repay such amount if it shall ultimately and finally be determined by a court of competent jurisdiction that the Indemnitee is not entitled to be indemnified therefore under this Section 5.3. In a suit brought by an Indemnitee to enforce a right to reimbursement of expenses, it shall not be a defense that the Indemnitee has not met the applicable standard of conduct set forth in California law with regard to indemnification. The obligations of the LLC under this Agreement shall survive the resignation or removal of the Indemnitee as Manager or Officer of the LLC, and shall survive the termination of the LLC or this Agreement.

Section 5.4 Actions Requiring Member Consent . Notwithstanding any provision of this Agreement to the contrary, neither the Board nor any Manager, Officer or any other Person shall have the authority on behalf of the LLC to take any action set forth in this Section 5.4 (whether by merger, consolidation or otherwise) unless such action has received the express written consent of the Members holding at least sixty percent (60%) of the issued and outstanding Units held by all Members; provided , however , that those actions set forth in Subsections 5.4(b), (f) and (h) shall require the express written consent of the Members holding at least seventy-five percent (75%) of the issued and outstanding Units held by all Members:

(a)          directly or indirectly redeem, purchase or otherwise acquire, or permit any of its Subsidiaries to redeem, purchase or otherwise acquire, any of the LLC’s or any Subsidiary’s equity securities (including warrants, options and other rights to acquire equity securities);

(b)          authorize, issue, sell or enter into any agreement providing for the issuance (contingent or otherwise), or permit any of its Subsidiaries to authorize, issue, sell or enter into any agreement providing for the issuance (contingent or otherwise), of any equity securities (including profits interests) or debt securities of the LLC or any of its Subsidiaries with equity features or securities exercisable or convertible into equity securities (including profits interests) or debt securities with equity features;

(c)          liquidate, dissolve or effect a recapitalization or reorganization of the LLC in any form of transaction, or permit any of the LLC’s Subsidiaries to do any of the foregoing;

(d)          sell the LLC or any of its Subsidiaries, or cause the LLC or any Subsidiary to merge, convert into a corporation, consolidate or otherwise combine with or into any Person;

(e)          sell, lease, exchange or otherwise dispose (including by license) of any material portion of the assets or properties of the LLC or its Subsidiaries;

(f)           accept additional Capital Contributions to the LLC (or enter into any agreement regarding the issuance of additional Capital Contributions or membership interests in the LLC);

(g)          declare distributions (other than required distributions) of the LLC;

(h)          amend the LLC’s articles of organization or this Agreement;

(i)           borrow capital, including without limitation from WFCF, as necessary for the LLC’s working capital needs to fund its business operations in the ordinary course.

Section 5.5 Restrictions on Certain Actions. Subject to receipt of the approvals required by Section 5.4, if any, neither the LLC nor any Manager or Officer shall take, or shall cause its Subsidiaries to take, any of the following actions without the prior consent of the Managers holding at least sixty percent (60%) of the votes held by all Managers (which consent shall be obtained in accordance with the requirements of Section 5.1(a) or Section 5.1(c) above) or to the extent such action is expressly contemplated by the annual budget approved in accordance with Section 5.1(c); provided , however , that those actions set forth in Subsections 5.5(a), (f) and (t) shall require the prior consent of the Managers holding at least seventy-five percent (75%) of the votes held by all Managers (as otherwise set forth in this Section 5.5):

(a)          directly or indirectly declare or make any distributions upon any of the LLC’s equity securities (except for distributions in accordance with Section 3.1);

(b)          make, or permit any of its Subsidiaries to make, any loans or advance to, guarantees for the benefit of, or investments in, any Person;

(c)          sell, lease, exchange or otherwise dispose (including by license) of the assets or properties of the LLC or its Subsidiaries (other than inventory in the ordinary course) in an amount which exceeds $5,000 on an individual basis or exceeds $10,000 on a cumulative basis in any calendar year;

(d)          unless otherwise contemplated by the LLC’s annual business plan and budget which has been approved by the Board, make any capital expenditure (including research and development expenditures), except for capital expenditures which are less than $5,000 on an individual basis or less than $10,000 on a cumulative basis in any calendar year;

(e)          directly or indirectly redeem, purchase or otherwise acquire, or permit any of its Subsidiaries to redeem, purchase or otherwise acquire, any of the LLC’s or any Subsidiary’s equity securities (including, in the case of Subsidiaries, warrants, options and other rights to acquire equity securities);

(f)           authorize, issue, sell or enter into any agreement providing for the issuance (contingent or otherwise), or permit any of its Subsidiaries to authorize, issue, sell or enter into any agreement providing for the issuance (contingent or otherwise) of any equity securities (including profits interests) or debt securities with equity features or securities exercisable or convertible into equity securities (including profits interests) or debt securities with equity features;

(f)           sell the LLC or any of its Subsidiaries, or merge or consolidate the LLC with any Person or permit any of its Subsidiaries to merge or consolidate with any Person;

(h)          liquidate, dissolve or effect, or permit any of its Subsidiaries to, liquidate, dissolve or effect, a recapitalization or reorganization in any form of transaction;

(i)           create, incur, assume or suffer to exist, or permit any of its Subsidiaries to create, incur, assume or suffer to exist, indebtedness exceeding the amounts approved therefor by the Board;

(j)           enter into or make a material amendment or terminate any agreement, contract or commitment (a) representing a value to the LLC or its Subsidiaries of greater than $5,000 on an individual basis or greater than $10,000 on a cumulative basis in any calendar year or (b) representing a commitment of the LLC or its Subsidiaries greater than $5,000 on an individual basis or greater than $10,000 on a cumulative basis in any calendar year, other than (i) raw materials and inventory purchases in the ordinary course of business, (ii) subcontract agreements entered into in the ordinary course of business and (iii) sales to customers in the ordinary course;

(k)          enter into any partnership, joint venture or material business alliance, create any Subsidiary, or acquire any capital stock of or other ownership interest in any Person;

(l)           amend in any material respect or terminate any agreement relating to a joint venture or a material business alliance of the LLC or any of its Subsidiaries;

(m)         create any liens upon any assets or properties of the LLC or its Subsidiaries other than in connection with obligations pursuant to Section 5.6(f) or in the ordinary course of business;

(n)          except as specifically contemplated by this Agreement, the Purchase Agreement or any of the transactions contemplated thereby, adopt, amend or terminate any (i) agreement with employees of the LLC or its Subsidiaries, (ii) plan, policy, arrangement or understanding providing any of the following benefits to any current or former employee of the LLC or its Subsidiaries: bonuses, pension, profit sharing, deferred compensation, incentive compensation, unit ownership, equity or quasi-equity purchase, equity or quasi-equity option, equity or quasi-equity appreciation rights, phantom equity or quasi-equity, retirement, vacation or severance or (iii) other material personnel practices or policies of the LLC or its Subsidiaries;

(o)          engage, appoint or remove (a) the LLC’s or its Subsidiaries’ accountants, (b) any counsel for the LLC or its Subsidiaries (including in respect of litigation and other proceedings);

(p)          commence (including the filing of a counterclaim) or settle any claim or litigation, regulatory proceeding or arbitration (other than ordinary course employer or commercial claims, including claims under studio license agreements) to which the LLC or its Subsidiaries is, or is to be, a party or by which the LLC or its Subsidiaries or any of its business, assets or properties may be affected; provided , however , that the LLC may commence or settle any routine customer collection action so long as the amount owed by the customer is less than $5,000 and there are no other issues involved in the dispute that could have a material adverse effect on the LLC;

(q)          register any of the LLC or its Subsidiaries’ securities under any securities laws;

(r)           make any change in the LLC’s or its Subsidiaries’ fiscal year;

(s)          set or change value of any goods or services contributed by any Member as a capital contribution or any distribution to any Member;

(t)          subject to Section 10.4, make any amendment or terminate any constitutive or governing document of the LLC or its Subsidiaries, including the operating agreement or certificate of formation of the LLC or its Subsidiaries or directly or indirectly redeem any Units of the LLC or its Subsidiaries;

(u)          make any political or charitable contribution in excess of the amounts approved therefor by the Board;

(v)          cause the LLC or any of its Subsidiaries to enter into any leases, contracts or guarantees relating to new office locations;

(w)         cause the LLC or any of its Subsidiaries to modify, alter or change real property lease rates;

(x)          to enter into any contract, understanding or arrangement involving a liability of the LLC or any of its Subsidiaries in excess of $5,000 on an individual basis except for trade payables incurred in the ordinary course of business;

(y)          commit to do any of the foregoing;

(z)          delegate authority to any Person to approve the taking of any action set forth; or

(aa)        borrow capital, including without limitation from WFCF, as necessary for the LLC’s working capital needs to fund its business operations in the ordinary course.

ARTICLE VI

Transfer of Interests; Restrictive Covenants

Section 6.1 In General. A Member may not Transfer all or any portion of its Interest or Units unless such Transfer complies with the provisions of this Article VI. Any Transfer that does not comply with the provisions of this Article VI shall be void.

Section 6.2 Limited Exception for Transfers of Interests. A Member may Transfer all or any portion of its Units if each of the following conditions is satisfied:

(a)            Prior Notice. The Member proposing to effect a Transfer of such Units delivers a Transfer Notice at least twenty (20) days prior to any such proposed Transfer.

(b)            Securities Law Compliance. Either (i) the Units proposed to be transferred are registered under the Securities Act and the rules and regulations thereunder and any applicable state securities laws; or (ii) the LLC and its counsel determine, in its reasonable discretion, that the Transfer qualifies for an exemption from the registration requirements of the Securities Act, any applicable state securities laws and any securities laws of any applicable jurisdiction and, if requested by the LLC, counsel to the Member proposing to effect such Transfer provides an written legal opinion to that effect.

(c)            Member Consent . Members holding a majority of the issued and outstanding Units (but excluding for such purpose the Units held by the Member proposing the Transfer or any of its Affiliates that are also Members) shall have consented in writing to such Transfer, which consent may be given or withheld in each such Member’s sole and absolute discretion.

Any attempted Transfer not in compliance with any of the above conditions shall be null and void, and the LLC shall not recognize the attempted purchaser, assignee or transferee for any purpose whatsoever, and the Member attempting such Transfer shall have breached this Agreement for which the LLC and the other Members shall have all remedies available for breach of contract.

(d)            Transfer of SureHarvest Units . Notwithstanding the provisions of this Section 6.2, the Units and Interest held by SureHarvest may be Transferred without complying with the foregoing subsections (a) and (c) of this Section 6.2 provided that (i) the transferees of such SureHarvest Units and Interests are shareholders of SureHarvest, (ii) the Transfer complies with the provisions of Section 6.4 herein and (iii) the Transfer occurs the later of January 1, 2018 or the end of the escrow period in the Escrow Agreement.

Section 6.3 Rights of Assignees. If a Transfer complies with the provisions of the preceding Section 6.2, but the Person acquiring such Units is not admitted as a Member as a result of such Person’s failure to comply with the provisions of Section 6.4, such Person shall become an assignee with respect to such Units. An assignee with respect to such Units is entitled only to receive distributions and allocations with respect to such Units as set forth in this Agreement, and shall have no other rights, benefits or authority of a Member under this Agreement or the Act, including, without limitation, no right to receive notices to which Members are entitled under this Agreement, no right to vote, no right to inspect the books or records of the LLC, no right to bring derivative actions on behalf of the LLC, no right to purchase additional Interests, and no other rights of a Member under the Act or this Agreement; provided , however , that the Units of an assignee shall be subject to all of the restrictions, obligations and limitations under this Agreement and the Act, including without limitation the restrictions on Transfer contained in this Article VI.

Section 6.4 Admission as a Member. No Person taking or acquiring, by whatever means, all or any portion of any Units and the Interest represented thereby shall be admitted as a Member unless such Person elects to become a Member, agrees to be bound and obligated to the terms of this Agreement as memorialized by executing a joinder hereto, and, together with its transferor, executes, acknowledges and delivers to the LLC a written assignment of such Units and Interest in such form as may be reasonably required by the Board. Any transferee shall automatically be admitted as a Member of the LLC upon compliance with this Section 6.4 and shall succeed to all of the rights of the transferor under this Agreement including the right to designate Managers. The Board shall amend the Information Exhibit from time to time to reflect the admission of Members pursuant to this Section 6.4.

Section 6.5 Distributions and Allocations With Respect to Transferred Units. If any Units are transferred in compliance with the provisions of this Article VI, then (i) Profits, Losses and all other items attributable to such Units for such period shall be divided and allocated between the transferor and the transferee by taking into account their varying interests during such Fiscal Year in accordance with Code § 706(d) using any conventions permitted by the Code and applicable Treasury Regulations and selected by the transferor and transferee in connection with the transfer and approved by the Board; (ii) all distributions on or before the date of such Transfer shall be made to the transferor, and all distributions thereafter shall be made to the transferee; and (iii) the transferee shall succeed to and assume the Capital Account and other similar items of the transferor to the extent related to the transferred Units. Solely for purposes of making the allocations and distributions, the LLC shall recognize such Transfer not later than the end of the calendar month during which the LLC receives notice of such Transfer and all of the conditions in Section 6.2 are satisfied. If the LLC does not receive a notice stating the date the Units were transferred and such other information as the LLC may reasonably require within thirty (30) days after the end of the Fiscal Year during which the Transfer occurs, then all of such items shall be allocated, and all distributions shall be made to the Person, who, according to the books and records of the LLC on the last day of the Fiscal Year during which the Transfer occurs, was the owner of such Units. Neither the LLC nor any Member shall incur any liability for making allocations and distributions in accordance with the provisions of this Section 6.5, whether or not such Person had knowledge of any transfer of ownership of any Units.

Section 6.6 Right of First Refusal.

(a)           If at any time any holder of Units (a “ Selling Holder ”) proposes to effect a Transfer of any Units to any third party, then the Selling Holder shall deliver a written notice (the “ Sale Notice ”) to the LLC and to WFCF (i) the Selling Holder’s bona fide intention to effect a Transfer of Units, (ii) the number of Units to be sold or transferred (the “ Offered Units ”), (iii) the price per Unit (the “ Offered Price ”) and terms for which the Selling Holder proposes to Transfer such Units, and (iv) to the extent known, the name and address of the proposed purchaser or transferee and that such purchaser or transferee is committed to acquire the number of Units on the stated price and terms. The LLC, upon the request of the Selling Holder, will provide the address of WFCF.

(b)           For a period of twenty (20) days (the “ LLC ROFR Exercise Period ”) after the date on which the Sale Notice is delivered to the LLC pursuant to Section 6.6(a), WFCF shall have the right to purchase all or any portion of the Offered Units on the terms and conditions set forth in this Section 6.6. WFCF shall have the right, exercisable upon written notice to the Selling Holder (a “ Participating Holder Notice ”) within ten (10) days after receipt of the Sale Notice, to purchase the Offered Units, or any portion thereof, subject to the Sale Notice and on the same terms and conditions set forth therein.

(c)           The purchase price for the Offered Units to be purchased by WFCF exercising its rights of first refusal under this Agreement will be the Offered Price, and will be payable as set forth in Section 6.6(d). If the Offered Price includes consideration other than cash, the cash equivalent value of the non-cash consideration will be determined by the Board in good faith, which determination will be binding upon the Selling Holder and WFCF, absent fraud or error.

(d)           Subject to compliance with applicable state and federal securities laws, WFCF exercising its right of first refusal shall effect the purchase of any portion of the Offered Units, including the payment of the purchase price, within five (5) days after the delivery of Notice. Payment of the purchase price will be made, at the option of WFCF, as applicable, (i) in cash (by certified or cashier’s check), or (ii) by wire transfer, as the case may be. At any such closing, the Seller Holder shall deliver to WFCF, as applicable, one or more certificates, properly endorsed for transfer, representing such Offered Units so purchased.

(e)           The provisions of this Section 6.6 shall not apply to Transfers made under Section 6.2(d) or Transfers made by any Member, either during his or her lifetime or on death, to his or her ancestors, descendants or spouse, or any custodian or trustee for the account of such Member or such Member ’ s ancestors, descendants or spouse; provided, in each such case a transferee shall receive and hold such Units and Interest subject to the provisions and restrictions on transfer of this Agreement and there shall be no further transfer of such Units and Interest except in accordance herewith.

Section 6.7 Right of Co-Sale.  To the extent the holders of Units have not exercised their rights of first refusal with respect to all of the Offered Units in accordance with Section 6.6, but subject to Section 6.8, each holder of Units (a “ Co-Seller ”) shall have the opportunity to sell a pro rata portion of the remaining Offered Units (if any) (the “ Remaining Offered Units ”) which the Selling Holder proposes to sell to the third party identified in the Sale Notice on the same terms as the Selling Holder by notifying the Selling Holder in writing within fifteen (15) days following receipt of the Sale Notice; provided, that in no event shall any Co-Seller be required to provide indemnification in excess of the gross consideration received by such Co-Seller in such transaction. In the event a Co-Seller exercises its right of co-sale hereunder, the Selling Holder shall assign so much of its interest in the proposed agreement of sale as the Co-Seller shall be entitled to and shall request hereunder, and the Co-Seller shall assume such part of the obligations of the Selling Holder under such agreement as shall relate to the sale of the Units by the Co-Seller. For the purposes of this Section 6.7, the “pro rata portion” which each Co-Seller shall be entitled to sell shall be the number of Units equal to the product of the total number of remaining Offered Units proposed to be sold to such third party, multiplied by the fraction the numerator of which shall be the number of Units owned by such Co-Seller and the denominator of which shall be the total number of Units then owned by the Selling Holder and all Co-Sellers. If following receipt of the Sale Notice, any Member fails to notify the Selling Holder within the requisite period that it desires to participate in the Co-Sale transaction, then the Selling Holder may effect the transaction without the participation of such non-participating Member.

Section 6.8 Drag-Along Transaction. If a majority of the Managers serving on the Board have approved a transaction that would result in the sale of all of the Units and Interests in the LLC (whether by merger or otherwise) to a third party (a “ Drag-Along Transaction ”), then, upon fifteen (15) days written notice to the Members (the “ Drag-Along Notice ”), which notice shall include substantially all of the material details of the proposed transaction, including the proposed time and place of closing and the estimated consideration to be received by the Members in such transaction, each Member shall raise no objection to such Drag-Along Transaction and be obligated to, and shall sell, transfer and deliver, or cause to be sold, transferred and delivered, to such third party, all of its Units and Interest in the same transaction at the closing thereof. Each Member shall only be required to make representations and warranties regarding the valid and authorized sale of its Units and Interest and that such Member has good and marketable title to such Units and Interest, free and clear of all liens, claims and other encumbrances. The proceeds from such Drag-Along Transaction shall be distributed to the Members in proportion to their relative entitlement to distributions pursuant to Section 8.3. Each Member and Manager shall take all reasonably necessary and customary actions in connection with the consummation of the Drag-Along Transaction, including, without limitation, the execution of such agreements, consents and instruments and the performance of such other actions as are reasonably necessary to effectuate the allocation and distribution of the aggregate consideration upon the Drag-Along Transaction as set forth herein. If the Members have any indemnification obligations in connection with a Drag-Along Transaction, (i) the terms and conditions of each such Member’s indemnification obligation shall be in proportion to the consideration received by such Member in respect of such Member’s Units and Interest in connection with the Drag-Along Transaction based upon their relative entitlement to such consideration taking into consideration the distribution tiers in Section 8.3 such that the indemnification obligations shall be in inverse order that distributions are to be made pursuant to Section 8.3 and (ii) in no event shall any Member be required to provide indemnification in excess of the gross proceeds received by such Member in such Drag Along Transaction.

Section 6.9 Put Option; Call Option.

(a)            Put Option; Call Option . At any time following the thirty-six (36) month anniversary of the Effective Date, WFCF shall have the option, but not the obligation (the “ Call Option ”), to purchase all the Units held by SureHarvest or its transferees on the terms set forth in this Section 6.9. At any time following the thirty-six (36) month anniversary of the Effective Date, SureHarvest or its individual transferees shall have the option, but not the obligation (the “ Put Option ”), to require WFCF to purchase all the Units held by SureHarvest or its transferees on the terms set forth in this Section 6.

(b)            Exercise of the Call Option and Put Option . WFCF shall exercise the Call Option, and SureHarvest or its individual transferees shall exercise the Put Option, by notifying the LLC and the other Members in writing of its desire to exercise the Call Option or Put Option, as applicable (the “ Option Notice ”).

(c)            Purchase Price of Units . The purchase price for the Units in connection with the exercise of a Call Option or Put Option, as applicable, shall be equal to the amount the selling holders of the Units would be entitled to receive upon a liquidation of the LLC, in accordance with Section 8.3, assuming all of the assets of the LLC are sold for a purchase price equal to the product of (x) eight and half (8.5) and (y) the TTM EBITDA. As used in this Section 6.9, “ TTM EBITDA ” means for the trailing twelve months the sum of (a) the net income (or net deficit) of the LLC plus (b) to the extent deducted from revenue in computing net income for such period, the sum of (i) interest expense, (ii) income tax expense, and (iii) depreciation and amortization. The TTM EBITDA shall be calculated by the LLC’s accountants using GAAP, consistently applied, and in accordance with the historical practices of the LLC. Notwithstanding the foregoing, in no event shall the purchase price of the Units exceed the amount the selling holders of the Units would be entitled to receive upon liquidation of the LLC assuming all of the assets of the LLC are sold for a purchase price equal to $8,000,000.

(d)            Procedure . The closing of the acquisition of any Units upon exercise of a Call Option or Put Option shall occur no later than thirty (30) days following the date of the Option Notice. The LLC will pay the purchase price (i) by delivery of cash or immediately available funds in an amount equal to forty percent (40%) of the purchase price and (ii) by delivery of the same class of publicly traded stock issued by WFCF having an aggregate value equal to sixty percent (60%) of the purchase price, with the number of issued shares of such stock of WFCF based upon the average trading value of such stock in the four weeks prior to the closing of the purchase. Each seller of Units will be required to enter into a lock-up agreement with respect to the WFCF stock consideration on terms substantially similar to those contemplated by the Purchase Agreement (including a 12-month lock-up period). Each seller of Units will be required to make customary representations and warranties regarding the valid and authorized sale of the Units, including, without limitation, that each has the authority to sell the Units each has good and marketable title to the Units, free and clear of all liens, claims and other encumbrances and such sales are in compliance with all state and federal securities regulations.

Section 6.10 Limited Power of Attorney. Each Member hereby makes, constitutes and appoints the Board (and the Managers serving thereon), with full power of substitution and resubstitution, its true and lawful attorney-in-fact for it and in its name, place and stead for its use and benefit, to sign, execute, certify, acknowledge, swear to, file and record any and all agreements, certificates, instruments and other documents which such Person may deem reasonably necessary, desirable or appropriate to (i) effectuate, implement and continue the valid and subsisting existence of the LLC; (ii) to effectuate the dissolution and termination of the LLC in accordance with the provisions hereof and the Act; (iii) to effectuate all other amendments of this Agreement or the Articles of Organization made in accordance with this Agreement; (iv) to admit a Member, to effect his or her substitution as a Member, to effect the substitution of the Member’s assignee as a Member in accordance with this Agreement; (v) to effectuate and implement a Drag-Along Transaction in accordance with the provisions of Section 6.8; and (vi) to otherwise carry out the express provisions of this Agreement. Each Member authorizes each such attorney-in-fact to take any action necessary or advisable in connection with the foregoing, hereby giving each attorney-in-fact full power and authority to do and perform each and every act or thing whatsoever requisite or advisable to be done in connection with the foregoing as fully as such Member might or could do so personally, and hereby ratifies and confirms all that such attorney-in-fact shall lawfully do or cause to be done by virtue thereof or hereof.

This power of attorney is a special power of attorney coupled with an interest and is irrevocable, and (i) may be exercised by any such attorney-in-fact by listing the Member executing any agreement, certificate, instrument or other document with the single signature of any such attorney-in-fact acting as attorney-in-fact for such Member, (ii) shall survive the death, disability, legal incapacity, bankruptcy, insolvency, dissolution or cessation of existence of a Member and (iii) shall survive the assignment by a Member of any portion of its Interest, except for assignments of such Member’s entire Interest permitted under this Agreement.

ARTICLE VII

Cessation of Membership

Section 7.1 When Membership Ceases. A Person who is a Member shall cease to be a Member upon the Transfer of such Member’s entire Interest as permitted under this Agreement. A Member is not entitled to withdraw voluntarily from the LLC.

Section 7.2 Deceased, Incompetent or Dissolved Members. The personal representative, executor, administrator, guardian, conservator or other legal representative of a deceased individual Member or of an individual Member who has been adjudicated incompetent may exercise the rights of the Member for the purpose of administration of such deceased Member’s estate or such incompetent Member’s property. The beneficiaries of a deceased Member’s estate shall become Members of the LLC only upon compliance with the conditions of this Agreement. If a Member who is a Person other than an individual is dissolved, the legal representative or successor of such Person may exercise the rights of the Member pending liquidation. The distributees of such Person may become assignees of the dissolved Member only upon compliance with the conditions of this Agreement.

Section 7.3 Consequences of Cessation of Membership. In the event a Person ceases to be a Member as provided in 7.1 above, the Person (or the Person’s successor in interest) shall continue to be liable for all obligations of the former Member to the LLC and, with respect to any Interest owned by such Person, shall be an assignee with only the rights and subject to the restrictions, conditions and limitations described above.

ARTICLE VIII

Dissolution, Winding Up And Liquidating Distributions

Section 8.1 Dissolution Triggers. The LLC shall dissolve upon the first occurrence of the following events:

(a)       The determination by all the Managers serving on the Board that the LLC should be dissolved; or

(b)       The entry of a decree of judicial dissolution or the administrative dissolution of the LLC as provided in the Act.

Section 8.2 Winding Up; Termination. Upon a dissolution of the LLC, the Managers, or, if there are no Managers, a court appointed liquidating trustee, shall take full account of the LLC’s assets and liabilities and wind up the affairs of the LLC. The Persons charged with winding up the LLC shall settle and close the LLC’s business, and dispose of and convey the LLC’s noncash assets as promptly as reasonably possible following dissolution as is consistent with obtaining the fair market value for the LLC’s assets.

Section 8.3 Liquidating Distributions. Upon a dissolution of the LLC pursuant to Section 8.1, the LLC’s cash, the proceeds, if any, from the disposition of the LLC’s noncash assets and those noncash assets to be distributed to the Members, shall be distributed in the following order:

(a)       First, to the LLC’s creditors, including Members who are creditors, to the extent otherwise permitted by law, in satisfaction of liabilities of the LLC;

(b)      Next, to the Members who are creditors whose claims are not satisfied by distributions pursuant to the preceding subsection; and

(c)      The balance, to the Members in accordance with Article III.

ARTICLE IX

Books and Records

Section 9.1 Books and Records. The LLC shall keep adequate books and records at its principal place of business, which shall set forth an accurate account of all transactions of the LLC as well as the other information required by the Act.

Section 9.2 Taxable Year; Accounting Methods. The LLC shall use the Fiscal Year as its taxable year. The LLC shall report its income for income tax purposes using such method of accounting selected by the Board and permitted by law.

Section 9.3 Information.

(a)       Tax Information. Tax information necessary to enable each Member to prepare its state, federal, local and foreign income tax returns shall be delivered to each Member within seventy-five (75) days after the end of each tax year or as soon thereafter as is reasonably practicable.

(b)       Basic Financial Information . The LLC will furnish to each Member annual unaudited financial statements for each fiscal year of the LLC, including an unaudited balance sheet as of the end of such fiscal year, an unaudited statement of operations and an unaudited statement of cash flows of the Company for such year. Each Member agrees that such Member will keep confidential and will not disclose, divulge, or use for any purpose (other than to monitor its investment in the Company) any confidential information obtained from the LCC pursuant to the terms of this Agreement, including all financial information, other than to any of the Member ’ s attorneys, accountants, consultants, and other professionals, to the extent necessary to obtain their services in connection with monitoring the Member ’ s investment in the LLC.

(b)       Confidentiality . The Board has the right to keep confidential from the Members for that period of time as the Board deems reasonable, any information that the Board in good faith determines (i) to be in the nature of trade secrets, (ii) the disclosure of which may not be in the best interests of the LLC or could damage the LLC or (iii) the disclosure of which would be unlawful or would breach an agreement between the LLC and a third party. Each Member agrees that such Member will keep confidential and will not disclose, divulge, or use for any purpose (other than to monitor its investment in the Company) any confidential information obtained from the Company pursuant to the terms of this Agreement other than to any of the Investor ’ s attorneys, accountants, consultants, and other professionals, to the extent necessary to obtain their services in connection with monitoring the Investor ’ s investment in the Company. If a Member is requested or required pursuant to applicable law to disclose any confidential information regarding the LLC, that Member shall provide the Board with prompt notice of request or demand to enable the LLC to seek an appropriate protective order. If a protective order or other remedy is not obtained by the LLC, the Member shall furnish only that portion of the confidential information that is required to be disclosed and shall use reasonable efforts to obtain assurances that confidential treatment will be accorded to that portion of the confidential information that is disclosed.

(c)        Information for Members. By its execution below, each Member hereby irrevocably waives pursuant to the Act any rights it may have to any information that such Member is not otherwise entitled pursuant to the express provisions of this Agreement.

ARTICLE X

Miscellaneous

Section 10.1 Notices. Any notice, payment, demand or communication required or permitted to be given by any provision of this Agreement shall be in writing and shall be delivered personally to the Person or to an officer of the Person to whom the same is directed, or sent by registered or certified United States mail return receipt requested, or by nationally recognized overnight delivery service, addressed as follows: if to the LLC or the Board, to the LLC’s principal office address as set forth in the Certificate of Formation (with a copy to each Manager), or to such other address as may be specified from time to time by notice to the Members; if to a Member, to the Member’s address as set forth on the Information Exhibit, or to such other address as may be specified from time to time by notice to the Members; if to a Manager, to the address of such Manager as set forth in the records of the LLC (with a copy to the Member entitled to designate such Manager), or to such other address as such Manager may specify from time to time by notice to the Members. Any such notice shall be deemed to be delivered, given and received for all purposes as of the date and time of actual receipt.

Section 10.2 Binding Effect. Except as otherwise provided in this Agreement, every covenant, term and provision of this Agreement shall be binding upon and inure to the benefit of the Members, and their respective heirs, legatees, legal representatives and permitted successors, transferees and assigns.

Section 10.3 Construction. Every covenant, term and provision of this Agreement shall be construed simply according to its fair meaning and not strictly for or against any Member. No provision of this Agreement is to be interpreted as a penalty upon, or a forfeiture by, any party to this Agreement. The parties acknowledge that each party to this Agreement, together with such party’s legal counsel, has shared equally in the drafting and construction of this Agreement and, accordingly, no court construing this Agreement shall construe it more strictly against one party hereto than the other.

Section 10.4 Entire Agreement; No Oral Agreements; Amendments to the Agreement. This Agreement constitutes the entire agreement among the Members with respect to the affairs of the LLC and the conduct of its business, and supersedes all prior agreements and understandings, whether oral or written. The LLC shall have no oral operating agreements. Subject to Section 5.4, any provision of this Agreement may be amended or waived upon the written consent of all the Managers serving on the Board except that, without the consent of each Member thereby affected, no amendment or waiver shall alter (i) such Member’s obligations, liabilities or rights under Section 2.1 through Section 2.5 or the provisions of Article V, (ii) such Member’s right to receive distributions, whether interim or liquidating, with respect to a specific class of Units at the same time or in the same per Unit amounts as the other holders of the same class of Units, (iii) Sections 3.2 and 8.3 (except to the extent such amendment or waiver is required in connection with or as a result of the issuance of equity securities in compliance with Section 2.2 and, to the extent required, approved pursuant to Section 5.4, (iv) such Member’s co-sale and transfer rights and obligations pursuant to Section 6.2, 6.6, 6.7 or 6.8, (v) such Member’s rights to information pursuant to Section 9.3, or (vi) this Section 10.4 or such Member’s rights and obligations pursuant to Section 10.14. Notwithstanding any provision of this Agreement to the contrary, the Board may amend and modify the provisions of this Agreement (including Articles III and VIII and Exhibit A hereto) to the extent necessary to reflect the issuance of any Interests and the admission or substitution of any Member permitted under this Agreement. Any amendment adopted consistent with the provisions of this Section 10.4 shall be binding on the Members without the necessity of their execution of the amendment or any other instrument.

Section 10.5 Headings. Section and other headings contained in this Agreement are for reference purposes only and are not intended to describe, interpret, define or limit the scope, extent or intent of this Agreement or any provision hereof.

Section 10.6 Severability. Every provision of this Agreement is intended to be severable. If any term or provision hereof is illegal or invalid for any reason whatsoever, such illegality or invalidity shall not affect the validity or legality of the remainder of this Agreement.

Section 10.7 Additional Documents. Each Member, upon the request of the Board, agrees to perform all further acts and execute, acknowledge and deliver any documents that may be reasonably necessary, appropriate or desirable to carry out the provisions of this Agreement.

Section 10.8 Variation of Pronouns. All pronouns and any variations thereof shall be deemed to refer to masculine, feminine or neuter, singular or plural, as the identity of the Person or Persons may require.

Section 10.9 Governing Law. The laws of the State of California shall govern the validity of this Agreement, the construction and interpretation of its terms, the organization and internal affairs of the LLC and the limited liability of the Members.

Section 10.10 Waiver of Action for Partition. Each of the Members irrevocably waives any right that it may have to maintain any action for partition with respect to any of the assets of the LLC.

Section 10.11 Counterpart Execution; Facsimile Execution. This Agreement may be executed in any number of counterparts with the same effect as if all of the Members had signed the same document. Such executions may be transmitted to the LLC and/or the other Members by facsimile and such facsimile execution shall have the full force and effect of an original signature. All fully executed counterparts, whether original executions or facsimile executions or a combination, shall be construed together and shall constitute one and the same agreement.

Section 10.12 Tax Matters Member. WFCF shall be the “tax matters partner” of the LLC within the meaning of Code § 6231(a)(7) (the “ Tax Matters Member ”), and shall serve as the Tax Matters Member of the LLC until its successor is duly designated by the Board. The Tax Matters Member shall have authority to take any action that may be taken by a “tax matters partner” under Code §§ 6221 through 6234. The Tax Matters Member shall be reimbursed by the LLC for all costs and expenses incurred in fulfilling its duties as Tax Matters Member under this Section 10.12.

Section 10.13 Time of the Essence. Time is of the essence with respect to each and every term and provision of this Agreement.

Section 10.14 Expenses. The LLC shall promptly reimburse the Managers for all costs and expenses incurred by the Managers in attending meetings of the Board.

Section 10.15 Exhibits. The Exhibits to this Agreement, each of which is incorporated by reference, are:

IN WITNESS WHEREOF, the Members and the Managers have executed this Agreement on the following execution pages, to be effective as of the Effective Date.

[ Signatures Appear On Following Pages]

Execution Page
to the
Amended and Restated Operating Agreement
of
SUREHARVEST SERVICES, LLC

A California Limited Liability Company

LLC :

SUREHARVEST SERVICES, LLC

By: /s/ John K Saunders

Name: John K Saunders

Title: Manager

MEMBERS :

WHERE FOOD COMES FROM, INC.

By: /s/ John K Saunders

Name: John K Saunders

Title: CEO

SUREHARVEST, INC.

By: /s/ Jeff Dlott

Name: Jeff Dlott

Title: President & CEO

MANAGERS :

/s/ John K Saunders

John Saunders

/s/ LM Saunders

Leann Saunders

/s/ Dannette Henning

Dannette Henning

/s/ Jeff Dlott

Jeffrey Dlott

SUREHARVEST, INC.

By: /s/ Jeff Dlott

Name: Jeff Dlott

Title: President & CEO

Exhibit A
to the
Amended and Restated Operating Agreement
of
SUREHARVEST SERVICES, LLC

*Agreed value of the Units issued to SureHarvest pursuant to the Purchase Agreement.

Exhibit b
to the
Amended and Restated Operating Agreement
of
SUREHARVEST SERVICES, LLC

A California Limited Liability Company

Glossary of Terms

Many of the capitalized words and phrases used in this Agreement are defined below. Some defined terms used in this Agreement are applicable to only a particular Section of this Agreement or an Exhibit and are not listed below, but are defined in the Section or Exhibit in which they are used.

“ Act ” shall mean the provisions of the California Revised Uniform Limited Liability Company Act, as codified in California Corporations Code Sections 17701.01 – 17713.13, as the same may be amended from time to time.

“ Affiliate ” shall mean, with respect to any Person, (i) any Person directly or indirectly controlling, controlled by or under common control with such Person, (ii) any Person directly or indirectly owning or controlling ten percent (10%) or more of any class of outstanding equity interests of such Person or of any Person which such Person directly or indirectly owns or controls ten percent (10%) or more of any class of equity interests, (iii) any officer, director, general partner or trustee of such Person, or any Person of which such Person is an officer, director, general partner or trustee, or (iv) any Person who is an officer, director, general partner, trustee or holder of ten percent (10%) or more of the equity interests of any Person described in clauses (i) through (iii) of this sentence; provided, that in the case of a Person who is an individual, such terms shall also include members of such specified Person’s immediate family (as defined in Instruction 2 of Item 404(a) of Regulation S-K under the Securities Act).

“ Agreed Value ” shall mean with respect to any noncash asset of the LLC an amount determined and adjusted in accordance with the following provisions:

(a)       The initial Agreed Value of any noncash asset contributed to the capital of the LLC by any Member shall be its gross fair market value, as agreed to by the contributing Member and the LLC.

(b)       The initial Agreed Value of any noncash asset acquired by the LLC other than by contribution by a Member shall be its adjusted basis for federal income tax purposes.

(c)       The initial Agreed Value of all the LLC’s noncash assets, regardless of how those assets were acquired, shall be reduced by depreciation or amortization, as the case may be, determined in accordance with the rules set forth in Treasury Regulations § 1.704–1(b)(2)(iv)(f) and (g).

(d)      The initial Agreed Value of any noncash asset of the LLC distributed to any Member shall be adjusted to equal the gross fair market value of such asset on the date of distribution as determined by the Board.

(e)      The initial Agreed Value, as reduced by depreciation or amortization, of all noncash assets of the LLC, regardless of how those assets were acquired, shall be adjusted from time to time to equal their gross fair market values, as determined by the Board, as of the following times:

If, upon the occurrence of one of the events described in (i), (ii), (iii) or (iv) above the Board does not set the gross fair market value of the LLC’s assets, it shall be deemed that the fair market value of all the LLC’s assets equal their respective Agreed Values immediately prior to the occurrence of the event and thus no adjustment to those values shall be made as a result of such event.

“ Agreement ” shall mean this Amended and Restated Operating Agreement of SureHarvest Services, LLC (including all exhibits hereto), as amended from time to time.

“ Annual Adjusted Taxable Income ” shall mean the LLC’s cumulative items of income or gain less cumulative items of loss or deduction under the Code computed for the applicable calendar year, except that (i) gain or loss from a Capital Transaction shall be excluded, (ii) any allocation pursuant to Code § 704(c) and the Treasury Regulations promulgated thereunder shall be disregarded and (iii) the effects of any adjustment to basis under Code §§ 743 or 734 shall be excluded.

“ Annual EBITDA ” shall have the meaning set forth in Section 3.3.

“ Board ” shall mean the Board of Managers of the LLC.

“ Capital ” shall mean with respect to a Member holding Units (i) the amount set forth on the Information Exhibit under the heading “Capital” opposite such Member’s name, plus (ii) the aggregate amount of any additional Capital Contributions by such Member not reflected on the Information Exhibit less (iii) the amount of any distributions pursuant to Sections 3.2(a), 3.3(a) and 8.3(c) to such Member with respect to such Capital.

“ Capital Account ” shall mean with respect to each Member or assignee an account maintained and adjusted in accordance with the following provisions:

(a)       Each Person’s Capital Account shall be increased by such Person’s Capital Contributions, such Person’s distributive share of Profits, any items in the nature of income or gain that are allocated to such Person pursuant to the Regulatory Allocations and the amount of any LLC liabilities that are assumed by such Person or that are secured by LLC property distributed to such Person.

(b)       Each Person’s Capital Account shall be decreased by the amount of cash and the Agreed Value of any LLC property distributed to such Person pursuant to any provision of this Agreement, such Person’s distributive share of Losses, any items in the nature of loss or deduction that are allocated to such Person pursuant to the Regulatory Allocations, and the amount of any liabilities of such Person that are assumed by the LLC or that are secured by any property contributed by such Person to the LLC.

(c)       In the event all or any portion of an Interest is transferred in accordance with the terms of this Agreement, the transferee shall succeed to the Capital Account of the transferor to the extent it relates to the portion of the Interest so transferred.

In the event the Agreed Value of the LLC assets is adjusted pursuant to the definition of Agreed Value contained in this Agreement, the Capital Accounts of all Members shall be adjusted simultaneously to reflect the aggregate adjustments as if the LLC recognized gain or loss equal to the amount of such aggregate adjustment.

The foregoing provisions and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Treasury Regulations § 1.704–1(b), and shall be interpreted and applied in a manner consistent with such regulations.

“ Capital Contribution ” shall mean with respect to any Member, the amount of money and the initial Agreed Value of any property contributed to the LLC with respect to the Interest of such Member.

“ Capital Transaction ” shall mean the acquisition by any Person or Persons of all or substantially all of the assets of the LLC in one or a series of related transactions.

“ Code ” shall mean the Internal Revenue Code of 1986, as amended from time to time, or any successor federal revenue law.

“ Contribution ” shall have the meaning set forth in the Recitals.

“ C ontrol ” , when used with respect to any Person, shall mean the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “ controlling ” and “ controlled ” have the meanings correlative to the foregoing.

“ Co-Seller ” shall have the meaning set forth in Section 6.7.

“ Cumulative Adjusted Taxable Income ” shall mean the LLC’s cumulative items of income or gain less cumulative items of loss or deduction under the Code computed from the Effective Date through the applicable date, except that (i) gain or loss from a Capital Transaction shall be excluded, (ii) any allocation pursuant to Code § 704(c) and the Treasury Regulations promulgated thereunder shall be disregarded and (iii) the effects of any adjustment to basis under Code §§ 743 or 734 shall be excluded.

“ Current Net Positive Taxable Income ” shall have the meaning set forth in Section 3.1.

“ Default Rate ” shall mean a per annum rate of interest equal to the greater of (i) Prime Rate plus 500 basis points or (ii) twelve percent (12%), but in no event greater than the amount of interest that may be charged and collected under applicable law.

“ Depreciation ” means, for each Fiscal Year, an amount equal to the depreciation, amortization or other cost recovery deduction allowable for federal income tax purposes with respect to an asset for such Fiscal Year; provided , however , that if the Agreed Value of an asset differs from its adjusted basis for federal income tax purposes at the beginning of such Fiscal Year, Depreciation shall be an amount that bears the same ratio to such beginning Agreed Value as the federal income tax depreciation, amortization or other cost recovery deduction with respect to such asset for such Fiscal Year bears to such beginning adjusted tax basis; and, provided further, that if the federal income tax depreciation, amortization or other cost recovery deduction for such Fiscal Year is zero, Depreciation shall be determined with reference to such beginning Agreed Value using any reasonable method selected by the Board.

“ Drag-Along Notice ” shall have the meaning set forth in Section 6.8.

“ Drag-Along Transaction ” shall have the meaning set forth in Section 6.8.

“ Effective Date ” shall have the meaning set forth in Section 1.1.

“ Excess Annual EBITDA ” shall have the meaning set forth in Section 3.3.

“ Existing LLC Agreement ” shall mean the Operating Agreement of the LLC dated as of December ___, 2016, as in effect immediately prior to the effectiveness of this Agreement.

“ Fiscal Year ” shall mean the calendar year and, with respect to the last year of the LLC, the period beginning on the preceding January 1 and ending with the date of the final liquidating distributions.

“ Information Exhibit ” shall mean the Information Exhibit attached hereto as Exhibit A .

“ Interest ” shall mean all of the rights of a Member or assignee with respect to the LLC created under this Agreement or under the Act.

“ IRS Notice ” shall have the meaning set forth in Section 2.6.

“ LLC ” shall have the meaning set forth in the introductory paragraph.

“ Managers ” shall have the meaning set forth in Section 5.1(a).

“ Members ” shall refer collectively to the Persons listed on the Information Exhibit as Members and to any other Persons who are admitted to the LLC as Members or who become Members under the terms of this Agreement until such Persons have ceased to be Members under the terms of this Agreement. “Member” means any one of the Members.

“ New Securities ” shall have the meaning set forth in Section 2.2.

“ Officers ” shall mean the Officers of the LLC as designated by the Board pursuant to Section 5.1(b). “ Officer ” means any one of the Officers.

“ Other Securities ” shall have the meaning set forth in Section 2.2.

“ Person ” shall mean any natural person, partnership, trust, estate, association, limited liability company, corporation, custodian, nominee, governmental instrumentality or agency, body politic or any other entity in its own or any representative capacity.

“ Prime Rate ” as of a particular date shall mean the prime rate of interest as published on that date in the Wall Street Journal , and generally defined therein as “the base rate on corporate loans posted by at least 75% of the nation’s 30 largest banks.” If the Wall Street Journal is not published on a date for which the Prime Rate must be determined, the Prime Rate shall be the prime rate published in the Wall Street Journal on the nearest-preceding date on which the Wall Street Journal was published.

“ Profits and Losses ” shall mean, for each Fiscal Year or other period, an amount equal to the LLC’s taxable income or loss for such year or period, determined in accordance with Code § 703(a) (for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Code § 703(a)(l) shall be included in taxable income or loss), with the following adjustments:

(a)       Any income of the LLC that is exempt from federal income tax and not otherwise taken into account in computing Profits or Losses shall be added to such taxable income or subtracted from such loss;

(b)       Any expenditures of the LLC described in Code § 705(a)(2)(B) or treated as Code § 705(a)(2)(B) expenditures pursuant to Treasury Regulations § 1.704–1(b)(2)(iv)( i ), and not otherwise taken into account in computing Profits or Losses, shall be subtracted from such taxable income or added to such loss;

(c)       Gain or loss resulting from dispositions of LLC assets with respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to the Agreed Value of the property disposed of, notwithstanding that the adjusted tax basis of such property differs from its Agreed Value.

(d)       In the event the Agreed Value of any LLC asset is adjusted in accordance with paragraph (d) or paragraph (e) of the definition of “Agreed Value” above, the amount of such adjustment shall be taken into account as gain or loss from the disposition of such asset for purposes of computing Profits or Losses;

(e)       In lieu of the depreciation, amortization and other cost recovery deductions taken into account in computing such taxable income or loss, there shall be taken into account Depreciation for such Fiscal Year; and

(f)       Notwithstanding any other provision of this definition, any items that are specially allocated pursuant to this Agreement shall not be taken into account in computing Profits and Losses.

The amounts of the items of LLC income, gain, loss or deduction available to be specially allocated pursuant to this Agreement shall be determined by applying rules analogous to those set forth in subparagraphs (a) through (f) above.

“ Purchase Agreement ” shall have the meaning set forth in the Recitals.

“ Redemption ” shall have the meaning set forth in the Recitals.

“ Regulatory Allocations Exhibit ” shall mean the Exhibit attached hereto as Exhibit C.

“ Sale Notice ” shall have the meaning set forth in Section 6.6.

“ Section 704(c) Property ” shall have the meaning ascribed such term in Treasury Regulation § 1.704–3(a)(3) and shall include assets treated as Section 704(c) property by virtue of revaluations of LLC assets as permitted by Treasury Regulation § 1.704–1(b)(2)(iv)( f ).

“ Securities Act ” shall mean the Securities Act of 1933, as amended.

“ Selling Holder ” has the meaning set forth in Section 6.6.

“ Subsidiaries ” shall mean each of and any other person all or any portion of the equity interest of which is owned, directly or indirectly, by the LLC.

“ SureHarvest ” shall have the meaning set forth in the Recitals.

“ Tax Estimation Period ” shall mean (A) in the event that the Board elects to make quarterly tax distributions, (i) January, February and March, (ii) April and May, (iii) June, July and August, and (iv) September, October, November and December of each year during the term of the LLC, or other periods for which estimates of individual federal income tax liability are required to be made under the Code, and (B) in the event that the Board elects to make annual tax distributions, each fiscal year of the LLC; provided, that, the LLC’s first Tax Estimation Period shall begin on the Effective Date of this Agreement.

“ Transfer ” shall mean, directly or indirectly, any sale, assignment, transfer, conveyance, pledge, hypothecation or other disposition, voluntarily or involuntarily, by operation of law, with or without consideration or otherwise (including, without limitation, by way of intestacy, will, gift, bankruptcy, receivership, levy, execution, charging order or other similar sale or seizure by legal process or transfer of equity interests) of all or any portion of any Interest. “Transfer” shall also be deemed to include any sale, assignment, conveyance, pledge, hypothecation or other disposition of any equity interest in any Member (other than WFCF and SureHarvest) that is an entity.

“ Transfer Notice ” shall mean a written notice given to the LLC of all details of any proposed Transfer of any Interest including the name of the proposed transferee, the date of the proposed Transfer of the Interest, the portion of the Member’s Interest to be transferred, the price or other consideration, if any, to be received, and a complete description of all noncash consideration to be received.

“ Treasury Regulations ” shall mean the final and temporary Income Tax Regulations promulgated under the Code, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations).

“ True Up Tax Distributions ” shall have the meaning set forth in Section 3.1

“ Units ” represent the basis on which Interests are denominated and the basis on which the Members’ relative rights, privileges, preferences and obligations are determined under this Agreement and the Act, and the total number and class of Units attributed to each Member shall be the number recorded on the Information Exhibit as of the relevant time.

“ Unsubscribed Securities ” shall have the meaning set forth in Section 2.2.

“ WFCF ” means Where Food Comes From, Inc., a Member.

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Exhibit C
to the
Amended and Restated Operating Agreement
of
SUREHARVEST SERVICES, LLC

A California Limited Liability Company

Regulatory Allocations Exhibit

This Exhibit contains special rules for the allocation of items of LLC income, gain, loss and deduction that override the basic allocations of Profits and Losses in Section 4.1 of the Agreement to the extent necessary to cause the overall allocations of items of LLC income, gain, loss and deduction to have substantial economic effect pursuant to Treasury Regulations § 1.704-1(b) and shall be interpreted in light of that purpose. Subsection (a) below contains special technical definitions. Subsections (b) through (h) contain the Regulatory Allocations themselves. Subsections (i) and (j) are special rules applicable in applying the Regulatory Allocations.

(a)        Definitions Applicable to Regulatory Allocations. For purposes of the Agreement, the following terms shall have the meanings indicated:

(i)       “ Adjusted Capital Account ” means, with respect to any Member or assignee, such Person’s Capital Account (as defined in Exhibit C) as of the end of the relevant Fiscal Year increased by any amounts which such Person is obligated to restore, or is deemed to be obligated to restore pursuant to the next to last sentences of Treasury Regulations §§ 1.704-2(g)(1) (share of minimum gain) and 1.704-2(i)(5) (share of member nonrecourse debt minimum gain).

(ii)      “ LLC Minimum Gain ” has the meaning of “partnership minimum gain” set forth in Treasury Regulations § 1.704-2(d), and is generally the aggregate gain the LLC would realize if it disposed of its property subject to Nonrecourse Liabilities in full satisfaction of each such liability and for no other consideration, with such other modifications as provided in Treasury Regulations § 1.704-2(d). In the case of Nonrecourse Liabilities for which the creditor’s recourse is not limited to particular assets of the LLC, until such time as there is regulatory guidance on the determination of minimum gain with respect to such liabilities, all such liabilities of the LLC shall be treated as a single liability and allocated to the LLC’s assets using any reasonable basis selected by the Board.

(iii)     “ Member Nonrecourse Deductions ” shall mean losses, deductions or Code § 705(a)(2)(B) expenditures attributable to Member Nonrecourse Debt under the general principles applicable to “partner nonrecourse deductions” set forth in Treasury Regulations § 1.704-2(i)(2).

(iv)     “ Member Nonrecourse Debt ” means any LLC liability with respect to which one or more but not all of the Members or related Persons to one or more but not all of the Members bears the economic risk of loss within the meaning of Treasury Regulations § 1.752-2 as a guarantor, lender or otherwise.

(v)      “ Member Nonrecourse Debt Minimum Gain ” shall mean the minimum gain attributable to Member Nonrecourse Debt as determined pursuant to Treasury Regulations § 1.704-2(i)(3). In the case of Member Nonrecourse Debt for which the creditor’s recourse against the LLC is not limited to particular assets of the LLC, until such time as there is regulatory guidance on the determination of minimum gain with respect to such liabilities, all such liabilities of the LLC shall be treated as a single liability and allocated to the LLC’s assets using any reasonable basis selected by the Board.

(vi)     “ Nonrecourse Deductions ” shall mean losses, deductions, or Code § 705(a)(2)(B) expenditures attributable to Nonrecourse Liabilities (see Treasury Regulations § 1.704-2(b)(1)). The amount of Nonrecourse Deductions for a Fiscal Year shall be determined pursuant to Treasury Regulations § 1.704-2(c), and shall generally equal the net increase, if any, in the amount of LLC Minimum Gain for that taxable year, determined generally according to the provisions of Treasury Regulations § 1.704-2(d), reduced (but not below zero) by the aggregate distributions during the year of proceeds of Nonrecourse Liabilities that are allocable to an increase in LLC Minimum Gain, with such other modifications as provided in Treasury Regulations § 1.704-2(c).

(vii)    “ Nonrecourse Liability ” means any LLC liability (or portion thereof) for which no Member bears the economic risk of loss under Treasury Regulations § 1.752-2.

(viii)   “ Regulatory Allocations ” shall mean allocations of Nonrecourse Deductions provided in Paragraph (b) below, allocations of Member Nonrecourse Deductions provided in Paragraph (c) below, the minimum gain chargeback provided in Paragraph (d) below, the member nonrecourse debt minimum gain chargeback provided in Paragraph (e) below, the qualified income offset provided in Paragraph (f) below, the gross income allocation provided in Paragraph (g) below, and the curative allocations provided in Paragraph (h) below.

(b)       Nonrecourse Deductions. All Nonrecourse Deductions for any Fiscal Year shall be allocated to the Members in proportion to the number of Units held by such Member during such Fiscal Year.

(c)       Member Nonrecourse Deductions. All Member Nonrecourse Deductions for any Fiscal Year shall be allocated to the Member who bears the economic risk of loss under Treasury Regulations § 1.752-2 with respect to the Member Nonrecourse Debt to which such Member Nonrecourse Deductions are attributable.

(d)       Minimum Gain Chargeback. If there is a net decrease in LLC Minimum Gain for a Fiscal Year, each Member shall be allocated items of LLC income and gain for such year (and, if necessary, subsequent years) in an amount equal to such Member’s share of such net decrease in LLC Minimum Gain, determined in accordance with Treasury Regulations § 1.704-2(g)(2) and the definition of LLC Minimum Gain set forth above. This provision is intended to comply with the minimum gain chargeback requirement in Treasury Regulations § 1.704-2(f) and shall be interpreted consistently therewith.

(e)        Member Nonrecourse Debt Minimum Gain Chargeback. If there is a net decrease in Member Nonrecourse Debt Minimum Gain attributable to a Member Nonrecourse Debt for any Fiscal Year, each Member who has a share of the Member Nonrecourse Debt Minimum Gain attributable to such Member Nonrecourse Debt as of the beginning of the Fiscal Year, determined in accordance with Treasury Regulations § 1.704-2(i)(5), shall be allocated items of LLC income and gain for such year (and, if necessary, subsequent years) in an amount equal to such Member’s share of the net decrease in Member Nonrecourse Debt Minimum Gain attributable to such Member Nonrecourse Debt, determined in accordance with Treasury Regulations §§ 1.704-2(i)(4) and (5) and the definition of Member Nonrecourse Debt Minimum Gain set forth above. This Paragraph is intended to comply with the member nonrecourse debt minimum gain chargeback requirement in Treasury Regulations § 1.704-2(i)(4) and shall be interpreted consistently therewith.

(f)        Qualified Income Offset. In the event any Member unexpectedly receives any adjustments, allocations, or distributions described in Treasury Regulations §§ 1.704-1(b)(2)(ii)( d )( 4 ), ( 5 ), or ( 6 ), items of LLC income and gain (consisting of a pro rata portion of each item of LLC income, including gross income, and gain for such year) shall be allocated to such Member in an amount and manner sufficient to eliminate any deficit in such Member’s Capital Account (as adjusted in accordance with such Treasury Regulations) created by such adjustments, allocations or distributions as quickly as possible. This provision is intended to constitute a “qualified income offset” within the meaning of Treasury Regulation § 1.704-1(b)(2)(ii)( d ) and shall be interpreted consistently therewith

(g)       Gross Income Allocation. In the event any Member has a deficit in its Adjusted Capital Account at the end of any Fiscal Year, each such Member shall be allocated items of LLC gross income and gain, in the amount of such Adjusted Capital Account deficit, as quickly as possible.

(h)       Curative Allocations. The allocations set forth in paragraphs (b) through (g) above (the “Regulatory Allocations”) are intended to comply with certain requirements of the Treasury Regulations. It is the intent of the Members that, to the extent possible, all Regulatory Allocations shall be offset either with other Regulatory Allocations or with special allocations of other items of LLC income, gain, loss or deduction pursuant to this paragraph (h). Therefore, notwithstanding any other provision of this Exhibit D (other than the Regulatory Allocations), the Board shall make such offsetting special allocations of LLC income, gain, loss or deduction in whatever manner it determines appropriate so that, after such offsetting allocations are made, each Member’s Capital Account balance is, to the extent possible, equal to the Capital Account balance such Member would have had if the Regulatory Allocations were not part of the Agreement and all LLC items were allocated pursuant to Section 4.1. In exercising its discretion under this paragraph (h), the Board shall take into account future Regulatory Allocations under paragraphs (d) and (e) above that, although not yet made, are likely to offset other Regulatory Allocations previously made under paragraphs (b) and (c) above.

(i)        Ordering. The allocations in this Exhibit to the extent they apply shall be made before the allocations of Profits and Losses under Section 4.1 and in the order in which they appear above.

(j)        Code Section 754 Adjustments. To the extent an adjustment to the adjusted tax basis of any LLC asset pursuant to Code § 734(b) or Code § 743(b) is required, pursuant to Treasury Regulations § 1.704-1(b)(2)(iv)( m ), to be taken into account in determining Capital Accounts, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis), and such gain or loss shall be specially allocated to the Members in a manner consistent with the manner in which their Capital Accounts are required to be adjusted pursuant to such Section of the Regulations.

(k)       Excess Nonrecourse Liabilities. For purposes of determining each Member’s share of Nonrecourse Liabilities, if any, of the LLC in accordance with Treasury Regulations § 1.752-3(a)(3), the Members’ interests in LLC profits shall be determined in the same manner as prescribed by paragraph (b) above.

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Where Food Comes From, Inc. - 8-K

EXHIBIT 2.3

EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT (“Agreement”) is entered into this 28th day of December 2016 (“Effective Date”) by and between SureHarvest Services, LLC (the “Company”), and Dr. Jeff Dlott (“Employee”). Employee and the Company are referred to individually as a “Party” and collectively as the “Parties.”

WHEREAS, the Parties desire to enter into this Agreement setting forth the terms and conditions for the employment relationship between Employee and the Company.

NOW, THEREFORE, in consideration of the mutual covenants, representations, warranties and agreements contained herein, and for other valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Parties agree as follows:

1.           Employment At-Will . Employee and the Company agree that Employee’s employment with the Company is “at-will,” which means that either Employee or the Company may terminate Employee’s employment at any time, with or without cause, and without further obligation of either Party hereunder, except as required by law or as set forth in this Agreement; provided, that either Employee or the Company will provide at least thirty (30) days’ notice prior to the termination of the employment relationship. Any decision by the Company to end Employee’s employment will be made by the Board of Managers of the Company. Upon notice of termination and for thirty (30) days thereafter, Employee agrees to exert reasonable efforts in assisting the Company transition the matters in which Employee was involved to other employees. Notwithstanding the foregoing, the Company may in its sole discretion elect to waive the foregoing notice period. Upon termination, Employee will be paid for Employee’s services through the later of Employee’s last date of work or thirty (30) days from termination of Employee’s employment.

2.           Position . In Employee’s role as President, Employee agrees to comply with Company policies and to devote Employee’s full business time, attentions, skills, and best efforts to the benefit of the Company to perform the reasonable duties and responsibilities assigned to Employee by the Company from time to time. The Company will have the power to determine Employee’s specific duties and the means and manner by which Employee is to perform those duties.

3.           Compensation . For all services rendered by Employee in any capacity to the Company, including without limitation all services rendered under and pursuant to this Agreement, the Company shall pay to Employee an annual salary of One Hundred Sixty-Seven Thousand Six Hundred Eighty Dollars ($167,680.00), less all required state and federal taxes and other applicable withholdings and deductions (the “Salary”), which shall be paid in accordance with the Company’s customary payroll practices, as may be amended from time to time. Employee’s Salary may be subject to change from time to time at the sole discretion of the Company.

4.           Welfare and Benefit Plans .

a.     In addition to any compensation payable to Employee, Employee will also be entitled to participate in all incentive, savings and retirement plans, practices, policies and programs of the Company. Employee and/or, as applicable, members of Employee’s immediate family shall be eligible to participate in, and shall receive all benefits under, all welfare benefit plans, practices, policies and programs provided by the Company, subject to the terms and conditions of any such plans. Except as provided herein, the Company shall not be required to establish or continue these plans or take any action to cause Employee to be eligible for any of these plans on a basis more favorable than that applicable to the Company’s employees generally.

b.     The Company reserves in its sole discretion the right to modify, suspend or discontinue any and all of the employee benefit plans, practices, policies and programs referenced in this Section at any time without recourse by Employee so long as such action is taken with respect to the Company’s employees generally.

5.           Paid Time Off . In addition to paid time off on the holidays recognized by the Company, Employee will be entitled to twenty-five (25) days of paid leave each calendar year period commencing on the Effective Date, subject to the terms and conditions of the Company’s policies as may be in effect from time to time. Employee’s paid leave will accrue pursuant to the Company’s policies applicable to all employees of the Company.

6.           Date of Termination . As stated above, either Employee or the Company may terminate Employee’s employment at any time for any reason. The date of Employee’s termination will be as follows: (a) if Employee’s termination results from Employee’s death, the date of Employee’s death; or (b) the date stated in the notice of termination or resignation.

7.           Severance .

a.      In the event that the Company terminates Employee’s employment without Cause (defined below) or Employee resigns Employee’s employment with Good Reason (defined below), and contingent upon Employee’s continuing compliance with Employee’s obligations outlined in the Asset Purchase Agreement between SureHarvest, Inc., Where Food Comes From, Inc., and the Company, dated December 28, 2016 (“APA”) and the Employee’s execution, non-revocation, and delivery of a Confidential Severance and Release Agreement in a form substantially similar to Exhibit A of this Agreement (the “Release Agreement”), Employee will be entitled to receive severance benefits based upon Employee’s Salary in effect as of the date of termination (the “Severance Amount”). The Severance Amount will initially be equal to thirty-six (36) months of Employee’s Salary in effect as of the date of termination. The Severance Amount will be reduced by one month for each full month after the Effective Date that the Employee remains employed by the Company, until it has been reduced to twelve (12) months, at which point the Severance Amount will remain equal to twelve (12) months of Employee’s Salary in effect as of the date of termination for the rest of Employee’s employment under this Agreement (the “Severance”). If Employee is terminated for Cause or resigns without Good Reason, Employee will not be entitled to any additional severance payment.

b.     The Severance shall be paid pro rata, in installments in accordance with the Company’s customary payroll practices at the time of each installment. The Parties agree and acknowledge that each installment shall constitute a separate payment.

c.     Upon termination of Employee’s employment without Cause or with Good Reason, the first installment of the Severance shall be paid sixty (60) days after Employee’s termination, provided that Employee has executed and delivered the Release Agreement, and has not and can no longer revoke the Release Agreement on the date of the Severance payment.

d.     For purposes of this Agreement,

e.     Prior to receiving the Severance, Employee shall execute the Release Agreement on or before the date twenty-one (21) days after the last day of Employee’s employment, or within the time period prescribed in the Release Agreement, and shall not revoke such Release Agreement during any applicable revocation period.

f.      Employee shall forfeit and waive any right to the Severance in the event that Employee fails to timely execute and remit the Release Agreement or Employee revokes such Release Agreement.

g.     The Company will have no further obligations to Employee under this Agreement or otherwise after making any final Severance payment.

h.     Notwithstanding anything in this Agreement to the contrary, the Company has the right to terminate any Severance payment to Employee upon the Company’s discovery of any material breach by Employee of Employee’s continuing obligations under this Agreement, the APA, or the Release Agreement.

8.           Section 409A .

a.     This Agreement is intended to comply with Section 409A of the Internal Revenue Code (“Section 409A”) and shall be construed accordingly.

b.     Each payment provided for in this Agreement shall, to the extent permissible under Section 409A, be deemed a separate payment for purposes of Section 409A.

c.     All taxable expenses or other reimbursements or in-kind benefits under this Agreement shall be made on or prior to the last day of the taxable year following the taxable year in which such expenses were incurred by Employee. Any such taxable reimbursement or any taxable in-kind benefits provided in one calendar year shall not affect the expenses eligible for reimbursement or in-kind benefits to be provided in any other taxable year.

d.     Employee shall have no right to designate the date of any payment hereunder.

e.     Notwithstanding anything else herein, the definition of Good Reason is intended to constitute “good reason” as such term is used in Treasury Regulation Section 1.409A-1(n)(2) and shall be interpreted and construed accordingly, and to the maximum extent permitted by Section 409A and guidance thereunder, a termination for Good Reason shall be an “involuntary separation from service” as such term is used in Treasury Regulation Section 1.409A-1(n). For purposes of this Agreement, “termination” (or any similar term) when used in reference to Employee’s employment shall mean “separation from service” with the Company within the meaning of Section 409A(a)(2)(A)(i) of the Code and applicable administrative guidance issued thereunder, and Employee shall be considered to have terminated employment with the Company when, and only when, Employee incurs a “separation from service” with the Company within the meaning of Section 409A(a)(2)(A)(i) of the Code and applicable administrative guidance issued thereunder.

f.      Notwithstanding any other provision of this Agreement to the contrary, if (a) on the date of Employee’s separation from service (as such term is used or defined in Section 409A(a)(2)(A)(i) of the Code, Treasury Regulation Section 1.409A-1(h), or any successor law or regulation), any of the Company’s equity is publicly traded on an established securities market or otherwise (within the meaning of Section 409A(a)(2)(B)(i) of the Code) and (b) as a result of such separation from service, Employee would receive any payment that, absent the application of this sentence, would be subject to interest and additional tax imposed pursuant to Section 409A as a result of the application of Section 409A(2)(B)(i) of the Code, then, to the extent necessary to avoid the imposition of such interest and additional tax, such payment shall be deferred until the earlier of (i) six (6) months after Employee’s separation from service, (ii) Employee’s death, or (iii) such earlier time as may be permitted under Section 409A.

9.           Confidential Information .

a.      Employee understands and acknowledges that by virtue of Employee’s employment with the Company, Employee has access to and knowledge of Confidential Information (defined below), is in a position of trust and confidence with the Company, and benefits from the Company’s goodwill. Employee further understands and acknowledges that the Company invested significant time and expense in developing the Confidential Information and goodwill, that the confidentiality covenants below are necessary to protect the Company’s legitimate business interests in this investment, and that the Confidential Information is valuable, special, and a unique asset of the Company’s business.

b.     For purposes of this Agreement, “Confidential Information” includes without limitation all information, data, knowledge, and know-how relating, directly or indirectly, to the Company and its business, including, without limitation: (a) Intellectual Property (defined below) that is not publicly available; (b) business plans and strategies, prospect information, financial information, investment plans, marketing plans and strategies, financial plans and strategies; (c) confidential personnel or human resources data; (d) customer lists, customer information, pricing information, supplier/vendor lists, customer and supplier/vendor strategies and customer or vendor plans, contracts, agreements, and leases; (e) any other information having present or potential commercial value; (f) the whole or any portion or phase of any proprietary information or trade secrets; (g) ideas, methods, know-how, techniques, systems, processes, software programs, works of authorship, projects, or plans; and (h) confidential information of any kind in possession of the Company, whether developed for or by the Company (including information developed by Employee), received from a third party in confidence, or belonging to others and licensed or disclosed to the Company in confidence for use in any aspect of its business.

c.     The restrictions of this Agreement on the use and disclosure of Confidential Information shall not apply to information that: (a) is publicly known and available to the general public through legitimate origins (and other than as the result of unauthorized disclosures by or through Employee), as of the date such information becomes publicly known; (b) is rightfully obtained by Employee from third parties authorized to make such disclosure without restriction, as of the date such information is actually acquired by Employee; (c) is identified by the Company in writing as no longer proprietary or confidential, (d) becomes publicly known through no action of Employee subsequent to the time of the Company’s communication thereof to Employee or (e) is developed by Employee independently of and without reference to any of the Company’s Confidential Information or other information that the Company disclosed in confidence to any third party.

d.     Both during and after the term of Employee’s employment by the Company, Employee agrees that Employee will not, except in the ordinary course of Employee’s employment with the Company and for the benefit of the Company, use any Confidential Information for or disclose, divulge, communicate or otherwise directly or indirectly make available any Confidential Information to any person, firm, business, company, corporation, association, or any other entity for any reason or purpose whatsoever. Employee shall consider and treat as confidential all Confidential Information in any way relating to the Company’s business and affairs, whether created by Employee or otherwise coming into Employee’s possession before, during, or after the termination of Employee’s employment, regardless of whether it pertains to the Company or its customers and regardless of whether it is marked or designated as “confidential.” Employee shall secure and protect the Confidential Information in a manner designed to prevent all access and uses thereof contrary to the terms of this Agreement. Employee further agrees that Employee shall use Employee’s best efforts to assist the Company in identifying and preventing any use or disclosure of the Confidential Information contrary to this Agreement.

e.     Employee further agrees that Employee shall not use the Company’s trade secrets to directly or indirectly solicit the customers or clients of the Company, or to interrupt, disturb or interfere with the relationships of the Company with its customers or clients.

f.      Notwithstanding the foregoing, Employee may disclose Confidential Information (a) to federal, state, and local government officials, or to an attorney, for the sole purpose of reporting or investigating a suspected violation of law; (b) when required to do so by a court of competent jurisdiction, by any governmental agency having authority over Employee or the business of the Company or by any administrative body or legislative body (including a committee thereof) with jurisdiction to order Employee to divulge, disclose or make accessible such information; or (c) in a document filed in a lawsuit or other proceeding, but only if the filing is made under seal and protected from public disclosure. Nothing in this Agreement is intended to conflict with 18 U.S.C. § 1833(b) or create liability for disclosures of trade secrets that are expressly allowed by 18 U.S.C. § 1833(b).

g.     Employee and the Company understand and acknowledge that the foregoing confidentiality covenants are not intended to and do not limit or abridge Employee’s right to disclose such information under federal law.

h.     Employee represents and warrants that, upon separation of employment, and without any request by the Company, Employee will return to the Company any and all property, documents, and files (including all recorded media, such as papers, computer disks, drives, or other data storage devices, copies, photographs, and maps) that contain Confidential Information or relate in any way to the Company or its business. Employee agrees to delete any files, data, or information relating in any way to the Company or its business on any personal computer, device, or account in Employee’s possession (and will retain no copies in any form). Employee also will return any Company tools, equipment, calling cards, credit cards, access cards or keys, any keys to any filing cabinets, vehicles, vehicle keys, and all other Company property in any form prior to the last date of employment.

10.         Intellectual Property .

a.      “Intellectual Property” means any and all original works of authorship, developments, concepts, improvements, designs, discoveries, ideas, trademarks, service marks, or trade secrets, or inventions, whether or not patentable or registrable under copyright or similar laws, which Employee may solely or jointly conceive or develop or reduce to practice, or cause to be conceived or developed or reduced to practice, during the period of time Employee is employed by the Company.

b.     For the consideration set forth in this agreement, Employee hereby assigns to the Company, or its designee, all of Employee’s right, title, and interest in and to all Intellectual Property, except where prohibited by law, so that the Company is the exclusive owner of the Intellectual Property. Employee acknowledges that all works of authorship that Employee makes (solely or jointly with others) within the scope of and during the period of Employee’s employment with the Company and which are protectable by copyright are “works made for hire” as that term is defined in 17 U.S.C. § 101, and that such works made for hire will constitute part of the Intellectual Property. Employee will not use any Intellectual Property except for the exclusive benefit of the Company. Employee agrees to assist the Company, or its designee, at the Company’s expense, in every proper way to secure or enforce the Company’s rights in any Intellectual Property.

c.      Employee warrants and represents that there are no original works of authorship, developments, concepts, improvements, designs, discoveries, ideas, trademarks, service marks, or trade secrets, or inventions which Employee made or acquired prior to Employee’s employment by the Company, which Employee partially or wholly owns and relate to the business, or the Company’s proposed business, and which are not assigned to the Company.

11.        Equitable Remedies . The services Employee is to render and the Confidential Information entrusted to Employee as a result of Employee’s employment by the Company are of a unique and special character, and, notwithstanding any other provision in this Agreement, Employee’s breach of this Agreement would cause the Company immediate and irreparable injury, for which monetary relief would be inadequate or difficult to quantify. The Company will be entitled to, in addition to all other available remedies, injunctive relief, specific performance, or any other equitable relief to prevent a breach and to secure enforcement of the provisions of this Agreement.

12.         Representations and Warranties . Employee represents and warrants to the Company as follows:

a.       Employee’s employment with the Company will not (i) conflict with or result in a breach of any of the provisions of, (ii) constitute a default under, (iii) result in the violation of, (iv) give any third party the right to terminate or to accelerate any obligation under, or (v) require any authorization, consent, approval, execution, or other action by or notice to any court or other governmental body under the provisions of any other agreement or instrument to which Employee is a party;

b.       Employee has not previously and will not in the future disclose to the Company any proprietary information, trade secrets, or other confidential information belonging to any previous employer or other third party to whom Employee has an ongoing obligation of confidentiality, and Employee has not previously and will not bring onto the premises of the Company or use any unpublished documents or any property belonging to any former employer or other third party to whom Employee has an ongoing obligation of confidentiality, unless consented to in writing by that former employer or person; and

c.       Employee will notify Employee’s business partners and Employee’s future employers of Employee’s obligations under this Agreement, and Employee consents to such notification by the Company.

13.         Waivers and Amendments . The respective rights and obligations of Employee and the Company under this Agreement may be waived (either generally or in a particular instance, either retroactively or prospectively, and either for a specified period of time or indefinitely) or amended only with the written consent of Employee and a duly authorized representative of the Company. The waiver by either Employee or the Company of a breach of any provision of this Agreement by the other Party shall not operate or be construed as a waiver of any subsequent breach by such other Party. The failure of either Employee or the Company to insist upon strict performance of any of the terms or conditions of this Agreement shall not constitute a waiver of any of such Employee’s or the Company’s rights hereunder.

14.         Successors and Assigns . The provisions of this Agreement shall be to the benefit of, and be binding upon and assignable to, successors of the Company by way of merger, consolidation or sale. Employee may not assign or delegate to any third person Employee’s obligations under this Agreement. Employee’s rights and benefits under this Agreement are personal to Employee, and no such right or benefit shall be subject to voluntary or involuntary alienation, assignment or transfer.

15.         Entire Agreement . This Agreement, including Exhibit A , constitutes the full and entire understanding and agreement of Employee and the Company with regard to the subjects hereof and supersedes in its entirety all other or prior or contemporaneous agreements regarding the subject matter herein, whether oral or written, with respect thereto, except that this Agreement does not supersede and is in addition to the APA.

16.         Notices . Any notices, consents, or other communication required to be sent or given hereunder shall in every case be in writing and shall be deemed properly served if (a) delivered personally, (b) sent by registered or certified mail, in all such cases with first class postage prepaid, return receipt requested, or (c) delivered by a nationally recognized overnight courier service to the Employee and/or the Company, as applicable, at the addresses set forth below:

If to Employee, to the current address listed in the Company’s records.

17.         Severability . If any provision of this Agreement is held illegal, invalid, or unenforceable, such holding shall not affect any other provisions hereof. In the event any provision is held illegal, invalid, or unenforceable, such provision shall be limited so as to effect the intent of the Parties to the fullest extent permitted by applicable law. Any claim by Employee against the Company shall not constitute a defense to enforcement by the Company.

18.         Venue and Applicable Law . This Agreement shall be interpreted and construed in accordance with the laws of the State of California, without regard to its conflicts of law provisions. Venue and jurisdiction will be in the California state or federal courts.

IN WITNESS WHEREOF, the Parties have executed this Employment Agreement on the dates written below.

EMPLOYEE

COMPANY

SureHarvest Services , LLC 

Exhibit A to Employment Agreement

Form of Confidential Severance and Release Agreement

CONFIDENTIAL SEVERANCE AND RELEASE AGREEMENT

This Confidential Severance and Release Agreement (“Agreement”) is made between (i) ________________ (“Employee”) and (ii) SureHarvest Services, LLC (the “Company”). Employee and the Company are referred to individually as a “Party” and collectively as the “Parties.”

RECITALS

WHEREAS, the Parties entered into an Employment Agreement dated [DATE] (the “Employment Agreement”);

WHEREAS, Employee’s employment with the Company ended effective [DATE] (the “Separation Date”);

WHEREAS, the Parties wish to resolve fully and finally potential disputes regarding Employee’s employment with the Company; and

WHEREAS, in order to accomplish this end, the Parties are willing to enter into this Agreement.

NOW, THEREFORE, in consideration of the mutual promises and undertakings contained herein, the Parties to this Agreement agree as follows:

TERMS

1.           Effective Date . This Agreement shall become effective on the eighth day after Employee signs this Agreement (the “Effective Date”), so long as Employee does not revoke this Agreement pursuant to Paragraph 6(h) below. Employee must elect to execute this Agreement within twenty-one (21) days of the Separation Date. In the event Employee does not sign the Agreement within the twenty-one (21) day period, the terms of this Agreement are null and void and without effect.

2.           Consideration .

a.       Within sixty days following termination of Employee’s employment with the Company and on the express condition that Employee has not revoked this Agreement, the Company will commence payments to Employee for severance in the amount of $ [AMOUNT OF SEVERANCE], less applicable withholdings and deductions, to be paid in installments in accordance with the Company’s customary payroll practices at the time of each installment.

b.       Reporting of and withholding on any payment or consideration under this Paragraph for tax purposes shall be at the discretion of the Company in conformance with applicable tax laws. If a claim is made against the Company for any additional tax or withholding in connection with or arising out of any payment or consideration set forth in subparagraph (a) above, Employee shall pay any such claim within thirty (30) days of being notified by the Company and agrees to indemnify the Company and hold it harmless against such claims, including, but not limited to, any taxes, attorneys’ fees, penalties, and/or interest, which are or become due from the Company.

3.           General Release .

a.       Employee, for Employee and for Employee’s affiliates, successors, heirs, subrogees, assigns, principals, agents, partners, employees, associates, attorneys, and representatives, voluntarily, knowingly, and intentionally releases and discharges the Company and each of its predecessors, successors, parents, subsidiaries, affiliates, and assigns and each of their respective officers, directors, principals, shareholders, board members, committee members, employees, agents, and attorneys from any and all claims, actions, liabilities, demands, rights, damages, costs, expenses, and attorneys’ fees (including, but not limited to, any claim of entitlement for attorneys’ fees under any contract, statute, or rule of law allowing a prevailing party or plaintiff to recover attorneys’ fees) of every kind and description from the beginning of time through the Effective Date (the “Released Claims”).

b.       The Released Claims include, but are not limited to, those which arise out of, relate to, or are based upon: (i) Employee’s employment with the Company or the termination thereof; (ii) statements, acts, or omissions by the Parties whether in their individual or representative capacities; (iii) express or implied agreements between the Parties (except as provided herein) and claims under any severance plan; (iv) any stock or stock option grant, agreement, or plan (except as set forth herein); (v) all federal, state, and municipal statutes, ordinances, and regulations, including, but not limited to, claims of discrimination based on race, color, national origin, age, sex, sexual orientation, religion, disability, veteran status, whistleblower status, public policy, or any other characteristic of Employee under the Age Discrimination in Employment Act, the Older Workers Benefit Protection Act, the Americans with Disabilities Act, the Equal Pay Act, Title VII of the Civil Rights Act of 1964 (as amended), the Employee Retirement Income Security Act of 1974, the Rehabilitation Act of 1973, Family and Medical Leave Act, the Worker Adjustment and Retraining Notification Act or any other federal, state, or municipal law prohibiting discrimination or termination for any reason; (vi) common law; (vii) the failure of this Agreement, or of any other employment, severance, profit sharing, bonus, equity incentive or other compensatory plan to which Employee and the Company are or were parties, to comply with, or to be operated in compliance with, Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), or any similar provision of state or local income tax; and (viii) any claim which was or could have been raised by Employee.

4.           Unknown Facts . This Agreement includes claims of every nature and kind, known or unknown, suspected or unsuspected. Employee hereby acknowledges that Employee may hereafter discover facts different from, or in addition to, those which Employee now knows or believes to be true with respect to this Agreement, and Employee agrees that this Agreement and the releases contained herein shall be and remain effective in all respects, notwithstanding such different or additional facts or the discovery thereof.

5.           No Admission of Liability . The Parties agree that nothing contained herein, and no action taken by any Party with regard to this Agreement, shall be construed as an admission by any Party of liability or of any fact that might give rise to liability for any purpose whatsoever.

6.           Warranties . Employee warrants and represents as follows:

a.       Employee has read this Agreement, and Employee agrees to the conditions and obligations set forth in it.

b.       Employee voluntarily executes this Agreement (i) after having been advised to consult with legal counsel, (ii) after having had opportunity to consult with legal counsel, and (iii) without being pressured or influenced by any statement or representation or omission of any person acting on behalf of the Company including, without limitation, the officers, directors, board members, committee members, employees, agents, and attorneys for the Company.

c.       Employee has no knowledge of the existence of any lawsuit, charge, or proceeding against the Company or any of its officers, directors, board members, committee members, employees, successors, affiliates, or agents arising out of or otherwise connected with any of the matters herein released. In the event that any such lawsuit, charge, or proceeding has been filed, Employee immediately will take all actions necessary to withdraw or terminate that lawsuit, charge, or proceeding, unless the requirement for such withdrawal or termination is prohibited by applicable law.

d.       Employee acknowledges and understands that this Agreement does not prohibit or prevent Employee from filing a charge with the Equal Employment Opportunity Commission, or equivalent state agency, or from participating in a federal or state agency investigation. Notwithstanding the foregoing, Employee waives any right to any monetary recovery or other relief should any party, including, without limitation, any federal, state or local governmental entity or administrative agency, pursue any claims on Employee’s behalf arising out of, relating to, or in any way connected with the Released Claims.

e.       Employee has not previously disclosed any information which would be a violation of the confidentiality provisions set forth below if such disclosure were to be made after the execution of this Agreement.

f.       Employee has full and complete legal capacity to enter into this Agreement.

g.       Employee received a copy of this Agreement on or before the Separation Date and has had at twenty-one (21) days in which to consider the terms of this Agreement. In the event that Employee executes this Agreement in less time, it is with the full understanding that Employee had the full twenty-one (21) days if Employee so desired and that Employee was not pressured by the Company or any of its representatives or agents to take less time to consider the Agreement. In such event, Employee expressly intends such execution to be a waiver of any right Employee had to review the Agreement for a full twenty-one (21) days.

h.       Employee has been informed and understands that (i) to the extent that this Agreement waives or releases any claims Employee might have under the Age Discrimination in Employment Act, Employee may rescind Employee’s waiver and release within seven (7) calendar days of Employee’s execution of this Agreement and (ii) any such rescission must be in writing and e-mailed and hand delivered to [NAME AND CONTACT INFO W/EMAIL ADDRESS], within the seven-day period.

i.        Employee recognizes that Employee is specifically releasing, among other claims, any claims under the Age Discrimination in Employment Act of 1967 and all amendments thereto.

j.        Employee admits, acknowledges, and agrees that (i) Employee is not otherwise entitled to the amount and other consideration set forth in Paragraph and (ii) that amount and consideration is good and sufficient consideration for this Agreement.

k.       Employee admits, acknowledges, and agrees that Employee has been fully and finally paid or provided all wages, compensation, vacation, bonuses, leave, stocks, stock options, or other benefits from the Company which are or could be due to Employee under the terms of Employee’s employment with the Company, or otherwise.

7.           Confidential Information .

a.       Except as herein provided, all discussions regarding this Agreement, including, but not limited to, the amount of consideration, offers, counteroffers, or other terms or conditions of the negotiations or the agreement reached shall be kept confidential by Employee from all persons and entities other than the Parties. Employee may disclose the amount received in consideration of the Agreement only if necessary (i) for the limited purpose of making disclosures required by law to agents of the local, state, or federal governments; (ii) for the purpose of enforcing any term of this Agreement; or (iii) in response to compulsory process, and only then after giving the Company ten (10) days advance notice of the compulsory process and affording the Company the opportunity to obtain any necessary or appropriate protective orders. Otherwise, in response to inquiries about Employee’s employment and this matter, Employee shall state, “My employment with the Company has ended” and nothing more.

b.       Employee shall not use, nor disclose to any third party, any of the Company’s business, personnel, or financial information that Employee learned during Employee’s employment with the Company. Employee hereby expressly acknowledges that any breach of this Paragraph 7 shall result in a claim for injunctive relief and/or damages against Employee by the Company, and possibly by others.

8.           Section 409A . This Agreement is intended to comply with or be exempt from Section 409A of the Code and Treasury Regulations promulgated thereunder (“Section 409A”) and shall be construed accordingly. It is the intention of the Parties that payments or benefits payable under this Agreement not be subject to the additional tax or interest imposed pursuant to Section 409A. To the extent such potential payments or benefits are or could become subject to Section 409A, the Parties shall cooperate to amend this Agreement with the goal of giving Employee the economic benefits described herein in a manner that does not result in such tax or interest being imposed; provided, however , that in no event shall the Company or anyone other than Employee have any liability to Employee for any taxes, interest, or penalties due as a result of the application of Section 409A to an any payments or benefits provided hereunder. Employee shall, at the request of the Company, take any reasonable action (or refrain from taking any action) required to comply with any correction procedure promulgated pursuant to Section 409A. Each payment to be made under this Agreement shall be a separate payment, and a separately identifiable and determinable payment, to the fullest extent permitted under Section 409A.

9.           Non-Disparagement . Employee agrees not to make to any person any statement that disparages the Company or reflects negatively on the Company, including, but not limited to, statements regarding the Company’s financial condition, employment practices, or officers, directors, board members, committee members, employees, successors, affiliates, or agents.

10.         Return of Property and Information . Employee represents and warrants that, prior to Employee’s execution of this Agreement, Employee will return to the Company any and all property, documents, and files as required by the Employment Agreement.

11.         No Application . Employee agrees that Employee will not apply for any job or position as an employee, consultant, independent contractor, or otherwise, with the Company or its subsidiaries or affiliates. Employee warrants that no such applications are pending at the time this Agreement is executed.

12.         Severability . If any provision of this Agreement is held illegal, invalid, or unenforceable, such holding shall not affect any other provisions hereof. In the event any provision is held illegal, invalid, or unenforceable, such provision shall be limited so as to effect the intent of the Parties to the fullest extent permitted by applicable law. Any claim by Employee against the Company shall not constitute a defense to enforcement by the Company.

13.         Assignments . The Company may assign its rights under this Agreement. No other assignment is permitted except by written permission of the Parties.

14.         Enforcement . The releases contained herein do not release any claims for enforcement of the terms, conditions, or warranties contained in this Agreement. The Parties shall be free to pursue any remedies available to them to enforce this Agreement.

15.         Survival of Restrictive Covenants and Other Provisions . The Parties expressly acknowledge and agree that notwithstanding Paragraph 16 of this Agreement, Sections 9 (Confidential Information), 10 (Intellectual Property), and 11 (Equitable Remedies), and Sections 12–18 (to the extent required to interpret, enforce, and give effect to Sections 9–11) of the Employment Agreement will continue in full force and effect; provided, however , that any provisions of the Employment Agreement that expire by their terms shall no longer have any force or effect.

16.         Entire Agreement . Except as provided in Paragraph 15, this Agreement is the entire agreement between the Parties. Except as provided herein, this Agreement supersedes any and all prior oral or written promises or agreements between the Parties. Employee acknowledges that Employee has not relied on any promise, representation, or statement other than those set forth in this Agreement. This Agreement cannot be modified except in writing signed by all Parties.

17.         Interpretation . The determination of the terms of, and the drafting of, this Agreement has been by mutual agreement after negotiation, with consideration by and participation of all Parties. Accordingly, the Parties agree that rules relating to the interpretation of contracts against the drafter of any particular clause shall not apply in the case of this Agreement. The term “Paragraph” shall refer to the enumerated paragraphs of this Agreement. The headings contained in this Agreement are for convenience of reference only and are not intended to limit the scope or affect the interpretation of any provision of this Agreement.

18.         Choice of Law and Venue . This Agreement shall be construed and interpreted in accordance with the laws of the State of California, without regard to its conflict of laws rules. Venue shall be in the California state or federal courts.

19.         Waiver . The failure of any Party to insist upon strict performance of any of the terms or conditions of this Agreement shall not constitute a waiver of any of such Party’s rights hereunder.

20.         Counterparts . This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Counterparts of this Agreement (or applicable signature pages hereof) that are manually signed and delivered by facsimile or electronic transmission shall be deemed to constitute signed original counterparts hereof and shall bind the Parties signing and delivering in such manner.

[ Signature Page Follows ]

IN WITNESS WHEREOF, the Parties have executed this Confidential Severance and Release Agreement on the dates written below.

IN WITNESS WHEREOF, the Parties have executed this Employment Agreement on the dates written below.

EMPLOYEE

COMPANY

SureHarvest Services, LLC 

[Signature Page to Confidential Severance and Release Agreement]