SETTLEMENT AGREEMENT AND COVENANT NOT TO SUE

This Settlement Agreement and Covenant Not to Sue (“Agreement") is made and entered into on November 19, 2004, in San Francisco, California, by and between the San Francisco City Attorney's Office (“The City Attorney's Office”), on the one hand, and Pick Your Part Auto Wrecking, a California corporation (“PYP”) and RICKENBACKER GROUP, INC., a California corporation, (“Rickenbacker”) (collectively, “The PYP Parties”), on the other hand. The City Attorney's Office and The PYP Parties are sometimes hereinafter collectively referred to as “the Settling Parties.” RECITALS WHEREAS, from June 1987 through March 21, 2004, PYP contracted with the City and County of San Francisco (“San Francisco”) to tow and store abandoned and illegally parked vehicles from San Francisco's streets; WHEREAS, in May 2004, PYP contracted with Rickenbacker, a debt collections agency, to collect on consumer debts that PYP claimed that it was owed as a result of unpaid towing and storage charges arising out of its towing claims operations in San Francisco; WHEREAS, in July 2004, The City Attorney's Office contacted PYP and Rickenbacker and objected to PYP’s and Rickenbacker’s attempts to collect on the claimed debts; WHEREAS, PYP and Rickenbacker disputed The City Attorney's Office’s complaints about The PYP Parties' efforts to collect on those debts;

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WHEREAS, the Settling Parties wish to resolve the disputes that have arisen concerning The PYP Parties' efforts to collect on these claimed debts without resorting to litigation; AGREEMENT NOW THEREFORE, in consideration of the mutual promises set forth herein, the sufficiency of which is hereby acknowledged, the parties agree to settle their dispute regarding the above-referenced matters on the following terms: 1. The provisions of this Agreement apply to the collection of any

and all purported claims against an individual, entity, partnership, corporation or association that arise from towing and storage fees incurred as a result of PYP’s towing and/or storage of a vehicle by its City Tow business in San Francisco, which fees were not satisfied by the sale of those vehicles under Civil Code sections 3067-74 inclusive and the Vehicle Code sections 22850-22856 inclusive ("the Deficiency Claims"). PYP represents and warrants that the total number of Deficiency Claim accounts it had relating to tows made on all types of vehicles between 1999 and March 2004 was approximately 72,000 accounts. 2. The Settling Parties acknowledge that neither the execution of

this Agreement by the Settling Parties nor their compliance with its terms shall constitute an admission of liability by The PYP Parties. The PYP Parties have denied and continued to deny each and all of the complaints cited by The City Attorney's Office with respect to the Deficiency Claims. The PYP Parties have repeatedly asserted and continue to assert many defenses thereto, and have expressly denied and continue to deny any
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wrongdoing or legal liability arising out of the complaints cited by The City Attorney's Office. Furthermore, the Settling Parties agree that the making of this Agreement does not constitute an adjudication in favor of any of them on the merits of the collection of the Deficiency Claims. The Settling Parties agree that this Agreement shall not serve or be construed as evidence than any party has prevailed in this matter. 3. Within five business days of the date of this Agreement, PYP

shall pay to the City Attorney's Office the total sum of $40,000.00 in the form of a check made payable to “The San Francisco City Attorney's Office.” Within five business days of the date of this Agreement, Rickenbacker shall pay to The City Attorney's Office the total sum of $5,000.00 in the form of a check made payable to “The San Francisco City Attorney's Office.” Payment shall be delivered to The City Attorney’s Office, 1390 Market Street, 6th Floor, San Francisco, California 94102, Attention, Peter J. Keith, Deputy City Attorney. 4. The PYP Parties agree that they have abandoned attempts to

collect on any Deficiency Claims and shall not resume any collections activity on any Deficiency Claims except as provided for within the terms of this Agreement. DEFICIENCY CLAIMS ARISING PRIOR TO, AND INCLUDING, JUNE 30, 2003 ("THE ABANDONED DEFICIENCY CLAIMS") 5. Paragraphs 5 to 8 govern collections efforts related to

Deficiency Claims relating to tows that occurred prior to, and including, June 30, 2003 ("the Abandoned Deficiency Claims"). Paragraphs 9 to 16 govern collections of Deficiency Claims relating to tows that occurred after
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June 30, 2003 (the "Reserved Deficiency Claims"). The PYP Parties warrant and represent that no collections notices have been mailed to any debtors for Reserved Deficiency Claims. Prior to or contemporaneously with the execution of this Agreement, Rickenbacker shall provide a certification on company letterhead signed by an executive or director setting forth: the number of collection notices previously sent to consumers regarding the Deficiency Claims; the time frame covered by the tows that were the subject of those collection notices; the number of those collection notices that were returned as undeliverable, the number returned as rejected by the recipient; and the funds collected to date as a result of the those collection notices, broken down by type (e.g., credit card, negotiated check, uncashed check). 6. The PYP Parties shall refund within 30 to 60 days of the date of

this Agreement any and all amounts collected to date as a result of Deficiency Claims. If The PYP Parties are unable, after exercising reasonable diligence, to locate and make a refund of those amounts to the specific consumer that paid those amounts, a list of those consumers and the amounts that were paid by each such consumer will be transmitted to The City Attorney's Office within 90 days of the date of this Agreement. After a period of twelve months of receiving no contact from the consumer, The PYP Parties will escheat to the state all unclaimed amounts in compliance with Code of Civ. Proc. § 1519.5 and related provisions of the Unclaimed Property Act. 7. Within 30 days from the date of this Agreement, The PYP

Parties shall send a letter, following the form of Exhibit A hereto, to all recipients of collections notices related to the Abandoned Deficiency
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Claims. Such letters shall be sent to those consumers whose notices were returned because of recipient refusals, but need not be sent to those recipients that the United States Post Office has indicated can not be found at the mailing address on the collection notice. 8. PYP represents and warrants that it has not contacted and

agrees that it will not contact any credit reporting agency concerning any of the alleged debts relating to the Abandoned Deficiency Claims. Rickenbacker represents and warrants that it has not contacted and agrees that it will not contact any credit reporting agency concerning any of the alleged debts relating to the Abandoned Deficiency Claims. If at any time in the future it appears that a credit reporting agency has obtained information relating to any Abandoned Deficiency Claim, The PYP Parties shall immediately notify that credit reporting agency that the debt is invalid. DEFICIENCY CLAIMS ARISING AFTER JUNE 30, 2003 (“THE RESERVED DEFICIENCY CLAIMS”) 9. Paragraphs 9 to 16 govern collections of Deficiency Claims

relating to tows that occurred after June 30, 2003 (the "Reserved Deficiency Claims"). The PYP Parties reserve the right to collect Reserved Deficiency Claims. However, The PYP Parties agree not to attempt to collect on any Reserved Deficiency Claim unless the following provisions are met. PYP represents and warrants that it has no more than 5,200 Reserved Deficiency Claim accounts relating to lien 2 and lien 3 cars. 10. Before March 1, 2005, The PYP Parties shall not send out the

invoices or questionnaires discussed in the next two paragraphs or engage in any collection activities on any Reserved Deficiency Claim. The PYP

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Parties shall not attempt to collect on any Reserved Deficiency Claims, unless the invoice and questionnaire described in the next two paragraphs are sent to the consumer prior to July 1, 2005. 11. The PYP Parties shall not engage in any collections activities

on any Reserved Deficiency Claim until they have notified the consumer of the nature of the debt claimed pursuant to an invoice that shall follow the form that is attached hereto as Exhibit B. The invoice shall be sent to the consumer with the following attachments: For Lien 2 cars, DMV Form 668 (Notice of Pending Lien Sale for Vehicle Valued $4,000 or Less); for Lien 3 cars, DMV Form 280 (Notice of Pending Lien Sale for Vehicle Valued Over $4,000 or From A Self-Service Storage Facility); and for both Lien 2 and Lien 3 cars, the auction bid sheet confirming that (1) the vehicle was offered for sale at auction on the date indicated in the notice of lien sale, and (2) the actual sales price that was received for the car at auction and which is credited against the towing and storage charges. Copies of all invoices (and their attachments) relating to Reserved Deficiency Claims shall be sent to the City Attorney's Office at the same time they are sent to consumers. 12. Along with the invoice described in Paragraph 11, The PYP

Parties shall include a questionnaire to the consumer in the form attached hereto as Exhibit C. The PYP Parties shall also provide the consumer with a pre-addressed, postage paid envelope to return the questionnaire. If prior to the entry of default in a court proceeding a consumer indicates, in response to the questionnaire or otherwise, that he or she was not the registered owner at the time of the tow, or that he or she turned title of the vehicle over to PYP in exchange for a release from any obligation for towing and storage fees, or that he or she abandoned the car to PYP based on an oral
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representation that if the car was abandoned to PYP no towing or storage fees would be owed, The PYP Parties agree to release that consumer from any debt obligation and inform that consumer that The PYP Parties will not attempt any further collections activity with respect to that invoice. 13. The PYP Parties shall not attempt to collect on any Reserved

Deficiency Claim relating to: (1) any vehicle whose title was transferred by the vehicle's owner to PYP; (2) any vehicle that was not retrieved from PYP based on an oral representation that no towing or storage fees would be owed if the car's owner left the car with PYP; (3) any Lien 1 vehicle; (4) any vehicle that was stolen, (5) any vehicle that was sent to The City Tow pursuant to a police hold; or (6) any Lien 2 or Lien 3 vehicle that was not auctioned on the lien clear date. 14. Copies of the invoice and questionnaire described above will

contain a statement in Spanish and Chinese (Cantonese) that the consumer can obtain a copy of the invoice and questionnaire in Spanish or in Chinese upon request. 15. In the event PYP elects to seek to collect any Reserved

Deficiency Claim, PYP shall notify the San Francisco City Attorney's Office of its intent to proceed under this section at least 15 days prior to sending out any invoices and questionnaires. The PYP Parties agree to preserve all records relating to the validity of any Reserved Deficiency Claim for at least two years after the date of this Agreement. In the event that collections activity is undertaken with respect to any Reserved Deficiency Claim, The PYP Parties shall allow The City Attorney's Office to inspect any records that it deems, in its sole discretion, to be relevant to the validity or amount of

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any such claim. Further, The PYP Parties agree to preserve all records relating to their efforts to collect on the Reserved Deficiency Claims for at least two years after the date of this Agreement. OTHER TERMS 16. Within forty-five (45) days of the execution of this Agreement,

The PYP Parties shall verify the steps they have taken to comply with the representations and warranties and the requirements of this Agreement relating to the Abandoned Deficiency Claims. If The PYP Parties elect to attempt to collect on the Reserved Deficiency Claims, The PYP Parties shall verify the steps they have taken to comply with the representations and warranties and the requirements of this Agreement relating to the Reserved Deficiency Claims within 60 days of the date that they first mail or caused to be mailed any invoice relating to a Reserved Deficiency Claim. The PYP Parties' verifications will be in the form of a certification on company letterhead signed by an executive or director setting forth the specific steps that The PYP Parties have taken to comply with this Agreement and authenticating and attaching documents or electronic files that the City Attorney’s Office agrees is sufficient to demonstrate compliance. 17. In consideration for the promises made by The PYP Parties in this Agreement, The City Attorney's Office hereby covenants and agrees not to initiate any civil action or proceeding relating to any of The PYP Parties' collections activities that occurred prior to the date of this Agreement relating to the Deficiency Claims, provided that The PYP Parties abide by the terms of this Agreement. The City Attorney's Office agrees that this covenant not to sue shall be a complete defense to any civil action filed in

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violation of this agreement. The parties acknowledge and agree that the Agreement does not affect the rights or the remedies of any party in the currently pending case People of the State of California and the City and County of San Francisco v. Pick Your Part Auto Wrecking et al., S.F. Sup. Ct. No. 322-841, which case shall proceed independently of this Agreement. The PYP Parties acknowledge that no consumer is a party to this Agreement and that this Agreement does not waive any legal rights or remedies that any consumer may have relating to the Deficiency Claims. 18. In the event that any party to the Agreement contends that the

Agreement has been breached by another party, that party shall provide written notice of the facts giving rise to the alleged breach of the Agreement to the party who has allegedly breached the Agreement. The party who is alleged to have breached the Agreement shall have fourteen (14) days to investigate and cure any such breach, that time to be computed from the actual receipt of the written notice of the facts giving rise to the alleged breach of the Agreement. No suit to enforce this Agreement shall be filed unless the breaching party fails to cure the alleged breach within this fourteen (14) day period. Any suit to enforce this Agreement shall be brought and maintained in the San Francisco Superior Court. 18.A. If suit is brought to enforce or interpret any provision of this Agreement, the prevailing party shall be entitled to recover its costs of suit, including reasonable attorneys fees. For purposes of this agreement, reasonable fees of attorneys of the City Attorney's Office shall be based on fees regularly charged by private attorneys with the equivalent number of years of experience in the subject matter of the law for which the City Attorney's services were rendered who practice in San Francisco in law
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firms with approximately the same number of attorneys as are employed by the Office of the City Attorney. 19. Any Notice required under this Agreement shall be sent by fax

to the following numbers and will be deemed received upon the date and time indicated and supported by a fax confirmation sheet: To PYP: To Plaintiffs: Maurice M. Suh (213) 892-2591 SF City Attorney’s Office, Peter J. Keith: (415) 554-3837 20. The failure of The City Attorney's Office to enforce any To Rickenbacker: Bradley Chibos (408) 292-7181

provision of this Agreement shall in no way be deemed a waiver of such provision or in any way affect the validity of the Agreement. 21. The Settling Parties intend that this Agreement, including the

attached Exhibits, shall be the final expression of their settlement agreement and may not be contradicted by evidence of any prior or contemporaneous written or oral agreements or understandings. The parties further intend that this Agreement shall constitute the complete and exclusive statement of its terms and that no extrinsic evidence whatsoever (including prior drafts and changes therefrom) may be introduced in any judicial, administrative or other legal proceeding involving this Agreement. 22. No provision of the Agreement may be changed, waived,

discharged or terminated, except by a written instrument signed by the party against which the enforcement of the change, waiver, discharge or termination is sought.

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23.

This Agreement shall bind and inure to the benefit of the parties

and their successors and assigns. 24. This Agreement has been negotiated at arm's length and

between persons sophisticated and knowledgeable in the matters dealt with herein and shall be interpreted to achieve the intents and purposes of the parties, without any presumption against the party responsible for drafting any part of this Agreement. The parties acknowledge that they have sought and received the advice of their counsel prior to entering into this Agreement. //

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25.

Each of the persons executing this agreement on behalf of any

one of the Settling Parties hereby covenants and warrants that that he or she is a duly authorized and existing entity, that that Settling Party has full right and authority to enter into this Agreement, and that each of the persons signing on behalf of that Settling Party is authorized to do so.

DENNIS J. HERRERA City Attorney JOANNE HOEPER Chief Trial Attorney OWEN CLEMENTS Chief of Special Litigation PETER J. KEITH Deputy City Attorney DATED: By:

DENNIS J. HERRERA

DATED:

____________________________ FOR PICK YOUR PART

DATED:

____________________________ FOR RICKENBACKER GROUP, INC.

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EXHIBIT A The following is the text of the letter to be sent to all consumers who previously received collection notices from The PYP Parties, pursuant to terms and conditions of the Agreement. The letter should be on Rickenbacker Collections letterhead, and include the same account information that was sent in the collections notices that Rickenbacker previously sent out. [DATE] Account No: [TO BE ADDED] Re: The City Tow Tag No: [TO BE ADDED] Amount: [TO BE ADDED] Interest: [TO BE ADDED] Other: [TO BE ADDED] Total: [Consumer Name and address information; [TO BE ADDED] Dear [Name of Consumer]: In June and July, 2004, Rickenbacker Collections mailed a collections notice to you concerning the above-referenced debt. Pick Your Part (doing business in San Francisco as "The City Tow") had contended that this debt was owed by you for unpaid towing and storage charges for a [Specify type of car, e.g. 90-Honda] that you had previously owned, and that was towed on [Specify Tow Date]. By Agreement with the Office of San Francisco City Attorney Dennis J. Herrera, Pick Your Part and Rickenbacker have suspended all collections activity relating to tows that occurred prior to July 1, 2003. Accordingly, you will not be held responsible for the debt that was claimed in our previous notice. If you paid any amount in response to the previous notice, your money will be refunded within the next fifteen days. The City Tow and Rickenbacker Collections have not contacted any credit reporting agencies about the debt previously claimed by The City Tow, and will not report the debt to any credit reporting agencies in the future. Pick Your Part and Rickenbacker Collections apologize for any inconvenience that was caused by the previous collections notice. If you have any questions about this cancellation notice, please call (800) 573-8774 for assistance. [TO BE ADDED] NOTICE OF CANCELLATION OF DEBT

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EXHIBIT B In the event that The PYP Parties elect to attempt to collect on any Reserved Deficiency Claim pursuant to the Agreement, The PYP Parties shall send an invoice in the form set forth below to each consumer from whom The PYP Parties attempt to collect a Reserved Deficiency Claim. [Consumer Name and address information]; Dear [Name of Consumer]: Pick Your Part Auto Wrecking, which formerly did business in San Francisco under the trade name “The City Tow”, contends that you are the responsible party for a [specify car type and license plate number or VIN] towed on [specify tow date]. This vehicle was sold at auction on [Lien Sale Date]. The sales price for the vehicle did not cover all of the towing and storage expenses. The towing and storage charges that Pick Your Part contends are owed on this vehicle are as follows: Towing Charges: $ ________ Storage Charges: $_________ Storage charge is for [X days] beginning on [FIRST DATE] at [$ RATE] per day. Other Charges: Credit for Sale: $ $_________ [Specify by each item]

Net Amount Owed: $________ We have also enclosed a questionnaire that will help determine whether you owe the debt claimed above. Please fill out the questionnaire and return it to us in the enclosed, postage pre-paid envelope. If you have any questions about this invoice, please contact [GIVE CONTACT PHONE NUMBER] for assistance. [THE FOLLOWING PARAGRAPH WILL BE SET FORTH IN both SPANISH AND IN CHINESE:] This is a bill claiming that you owe money for towing and storage fees as a result of a vehicle that was towed by The City Tow in San Francisco. If you would like to receive a copy of this bill in [Spanish / Chinese], please contact [Spanish language / Chinese language contact number].
LEGAL NOTICE PURSUANT TO THE FAIR DEBT PRACTICES ACT You are hereby notified that this is an attempt to collect a debt. Any information obtained will be used for that purpose.

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The state Rosenthal Fair Debt Collection Practices and the federal Fair Debt Collection Practices Act require that, except under unusual circumstances, collectors may not contact you before 8 a.m. or after 9 p.m. They may not harass you by using threats of violence or arrest or by using obscene language. Collectors may not use false or misleading statements or call you at work if they know or have reason to know that you may not receive personal calls at work. For the most part, collectors may not tell another person, other than your attorney or spouse, about your debt. Collectors may contact another person to confirm your location or enforce a judgment. For more information about debt collection activities, you may contact the Federal Trade Commission at 1-877-FTC-HELP or www.ftc.gov.

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EXHIBIT C The following is the text of the questionnaire that will be sent to consumers in the event that The PYP Parties elect to attempt to collect on any Reserved Deficiency Claim pursuant to the Agreement. Dear Sir or Madam: In order to help determine whether the debt claimed by The City Tow is valid, please respond to the questions set forth below. Once you have filled out this questionnaire, please return it to [Rickenbacker Collections] in the envelope that was provided. 1. Were you either the registered owner of the vehicle at the time of the tow referenced in the enclosed invoice, or had you purchased the vehicle and not yet registered it at the time of the tow? YES 2. NO If not, to whom did you sell or transfer this vehicle? ________________________________________

3. Did you turn over title to your vehicle to The City Tow to The City Tow in exchange for a release from payment of any towing and storage fees? YES NO

4. Was there any other reason that you did not retrieve your vehicle from The City Tow? _______________________________________________________ _______________________________________________________

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