Document:

Exhibit 10.1

 

EXECUTION COPY

 

STOCK PURCHASE AGREEMENT

 

by and among

 

LKQ Corporation

 

and

 

Glenn C. McElroy,

as Trustee of the Glenn C. McElroy Family
Trust,

Phillip B. McElroy,

Thomas C. Hutton,

John L. Neu,

Robert T. Neu and

Jeffrey P. Neu,

 

each individually as a Shareholder

and

collectively as the Shareholders,

 

and

 

Glenn C. McElroy, as an individual,

 

and

 

Pick-Your-Part Auto Wrecking

 

Dated as of August 15, 2008

 

 

EXECUTION COPY

 

TABLE OF
CONTENTS

 

	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
  Purchase and Sale of the Shares

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  Purchase Price

  	
   

  	
  1

  
	
   

  	
  2.1

  	
  Amount of the Purchase Price

  	
   

  	
  1

  
	
   

  	
  2.2

  	
  Valuation of LKQ Shares

  	
   

  	
  2

  
	
   

  	
  2.3

  	
  Calculation of the Purchase Price at the Closing

  	
   

  	
  2

  
	
   

  	
  2.4

  	
  Post-Closing Adjustment of the Purchase Price

  	
   

  	
  3

  
	
   

  	
  2.5

  	
  LKQ Shares Delivered to Neu Group

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  Closing

  	
   

  	
  7

  
	
   

  	
  3.1

  	
  Closing

  	
   

  	
  7

  
	
   

  	
  3.2

  	
  Procedure at the Closing

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  Representations and Warranties
  of the Shareholders

  	
   

  	
  8

  
	
   

  	
  4.1

  	
  Organization

  	
   

  	
  8

  
	
   

  	
  4.2

  	
  Ownership

  	
   

  	
  8

  
	
   

  	
  4.3

  	
  Authority

  	
   

  	
  9

  
	
   

  	
  4.4

  	
  No Conflict; Required Filings and Consents

  	
   

  	
  9

  
	
   

  	
  4.5

  	
  Brokers

  	
   

  	
  10

  
	
   

  	
  4.6

  	
  Spousal Consent

  	
   

  	
  10

  
	
   

  	
  4.7

  	
  Prospectus

  	
   

  	
  10

  
	
   

  	
  4.8

  	
  California Tax Returns

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  Representations and Warranties
  of the Company and the Shareholders

  	
   

  	
  10

  
	
   

  	
  5.1

  	
  Organization, Power and Authority of the Company

  	
   

  	
  10

  
	
   

  	
  5.2

  	
  Capital Stock of the Company

  	
   

  	
  11

  
	
   

  	
  5.3

  	
  Subsidiaries

  	
   

  	
  11

  
	
   

  	
  5.4

  	
  No Conflict; Required Filings and Consents

  	
   

  	
  11

  
	
   

  	
  5.5

  	
  Financial Statements

  	
   

  	
  12

  
	
   

  	
  5.6

  	
  Liabilities; Debt Amount

  	
   

  	
  13

  
	
   

  	
  5.7

  	
  Tax Matters

  	
   

  	
  13

  
	
   

  	
  5.8

  	
  Real Estate

  	
   

  	
  14

  
	
   

  	
  5.9

  	
  Title to and Condition of Assets

  	
   

  	
  17

  
	
   

  	
  5.10

  	
  Receivables

  	
   

  	
  17

  
	
   

  	
  5.11

  	
  Licenses and Permits

  	
   

  	
  18

  
	
   

  	
  5.12

  	
  Proprietary Rights

  	
   

  	
  18

  
	
   

  	
  5.13

  	
  Adequacy of Assets; Customers

  	
   

  	
  18

  
	
   

  	
  5.14

  	
  Certain Documents and Information

  	
   

  	
  19

  
	
   

  	
  5.15

  	
  Insurance

  	
   

  	
  20

  
	
   

  	
  5.16

  	
  Litigation

  	
   

  	
  21

  
	
   

  	
  5.17

  	
  Records

  	
   

  	
  21

  
	
   

  	
  5.18

  	
  No Material Adverse Change

  	
   

  	
  21

  
	
   

  	
  5.19

  	
  Absence of Certain Acts or Events

  	
   

  	
  21

  
	
   

  	
  5.20

  	
  Compliance with Laws

  	
   

  	
  22

  
	
   

  	
  5.21

  	
  Environmental Matters

  	
   

  	
  22

  

 

i

 

	
   

  	
  5.22

  	
  Labor Relations

  	
   

  	
  24

  
	
   

  	
  5.23

  	
  Employee Benefits

  	
   

  	
  25

  
	
   

  	
  5.24

  	
  Warranties

  	
   

  	
  26

  
	
   

  	
  5.25

  	
  Product Liability

  	
   

  	
  26

  
	
   

  	
  5.26

  	
  [Intentionally Omitted]

  	
   

  	
  26

  
	
   

  	
  5.27

  	
  Internal Controls

  	
   

  	
  26

  
	
   

  	
  5.28

  	
  Investment Bankers’ and Brokers’ Fees

  	
   

  	
  27

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  Representations and Warranties
  of LKQ

  	
   

  	
  27

  
	
   

  	
  6.1

  	
  Organization, Power and Authority of LKQ

  	
   

  	
  27

  
	
   

  	
  6.2

  	
  Due Authorization; Binding Obligation

  	
   

  	
  27

  
	
   

  	
  6.3

  	
  No Conflict; Required Filings and Consents

  	
   

  	
  27

  
	
   

  	
  6.4

  	
  Investment Bankers’ and Brokers’ Fees

  	
   

  	
  28

  
	
   

  	
  6.5

  	
  LKQ Common Stock

  	
   

  	
  28

  
	
   

  	
  6.6

  	
  SEC Matters

  	
   

  	
  28

  
	
   

  	
  6.7

  	
  Financing

  	
   

  	
  29

  
	
   

  	
  6.8

  	
  Investment Intent

  	
   

  	
  29

  
	
   

  	
  6.9

  	
  Access to Information; LKQ’s Own Investigation; No Other Representations
  or Warranties

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  Covenants

  	
   

  	
  30

  
	
   

  	
  7.1

  	
  Conduct of Business Prior to the Closing

  	
   

  	
  30

  
	
   

  	
  7.2

  	
  Covenants Regarding Information

  	
   

  	
  32

  
	
   

  	
  7.3

  	
  Notification of Certain Matters; Update of Disclosure
  Schedules

  	
   

  	
  32

  
	
   

  	
  7.4

  	
  Confidentiality

  	
   

  	
  33

  
	
   

  	
  7.5

  	
  Further Action; Reasonable Best Efforts

  	
   

  	
  33

  
	
   

  	
  7.6

  	
  Employee Matters

  	
   

  	
  35

  
	
   

  	
  7.7

  	
  Public Announcements

  	
   

  	
  36

  
	
   

  	
  7.8

  	
  Maintenance of Insurance

  	
   

  	
  36

  
	
   

  	
  7.9

  	
  Indemnification

  	
   

  	
  36

  
	
   

  	
  7.10

  	
  Broker Fees

  	
   

  	
  37

  
	
   

  	
  7.11

  	
  Termination of Shareholder Agreements

  	
   

  	
  37

  
	
   

  	
  7.12

  	
  Certain Assets of the Company

  	
   

  	
  37

  
	
   

  	
  7.13

  	
  Insurance Proceeds for Events Between
  Signing and Closing

  	
   

  	
  37

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  Termination

  	
   

  	
  37

  
	
   

  	
  8.1

  	
  Termination

  	
   

  	
  37

  
	
   

  	
  8.2

  	
  Notice of Termination

  	
   

  	
  38

  
	
   

  	
  8.3

  	
  Effect of Termination

  	
   

  	
  38

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  Conditions to the Obligations of
  LKQ

  	
   

  	
  39

  
	
   

  	
  9.1

  	
  Receipt of Necessary Consents

  	
   

  	
  39

  
	
   

  	
  9.2

  	
  No Restraint

  	
   

  	
  39

  
	
   

  	
  9.3

  	
  No Adverse Litigation

  	
   

  	
  39

  
	
   

  	
  9.4

  	
  Releases

  	
   

  	
  39

  
	
   

  	
  9.5

  	
  Corporate Documents

  	
   

  	
  39

  
	
   

  	
  9.6

  	
  Transfer of Title and Assets

  	
   

  	
  39

  
	
   

  	
  9.7

  	
  Leases

  	
   

  	
  39

  
	
   

  	
  9.8

  	
  HSR Act

  	
   

  	
  39

  

 

ii

 

	
   

  	
  9.9

  	
  Escrow Agreement

  	
   

  	
  40

  
	
   

  	
  9.10

  	
  Representations and Warranties

  	
   

  	
  40

  
	
   

  	
  9.11

  	
  Performance of Agreements

  	
   

  	
  40

  
	
   

  	
  9.12

  	
  Corporate Action

  	
   

  	
  40

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  Conditions to Obligation of the
  Shareholders

  	
   

  	
  40

  
	
   

  	
  10.1

  	
  Receipt of Necessary Consents

  	
   

  	
  40

  
	
   

  	
  10.2

  	
  No Restraint

  	
   

  	
  40

  
	
   

  	
  10.3

  	
  No Adverse Litigation

  	
   

  	
  40

  
	
   

  	
  10.4

  	
  Leases

  	
   

  	
  41

  
	
   

  	
  10.5

  	
  HSR Act

  	
   

  	
  41

  
	
   

  	
  10.6

  	
  Escrow Agreement; Indemnification Agreements

  	
   

  	
  41

  
	
   

  	
  10.7

  	
  Representations and Warranties

  	
   

  	
  41

  
	
   

  	
  10.8

  	
  Performance of Agreements

  	
   

  	
  41

  
	
   

  	
  10.9

  	
  Corporate Action

  	
   

  	
  41

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
  Survival and Indemnification

  	
   

  	
  41

  
	
   

  	
  11.1

  	
  Indemnification by the Shareholders

  	
   

  	
  41

  
	
   

  	
  11.2

  	
  Survival

  	
   

  	
  43

  
	
   

  	
  11.3

  	
  Indemnification by LKQ

  	
   

  	
  43

  
	
   

  	
  11.4

  	
  Additional Indemnification by LKQ

  	
   

  	
  43

  
	
   

  	
  11.5

  	
  Exclusivity; No Special Damages; Damages Net of Taxes

  	
   

  	
  45

  
	
   

  	
  11.6

  	
  Indemnification Procedures

  	
   

  	
  46

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
  Certain Additional Agreements

  	
   

  	
  47

  
	
   

  	
  12.1

  	
  Restrictive Covenants

  	
   

  	
  47

  
	
   

  	
  12.2

  	
  Tax Matters

  	
   

  	
  48

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
  Miscellaneous

  	
   

  	
  51

  
	
   

  	
  13.1

  	
  Amendment and Modification

  	
   

  	
  51

  
	
   

  	
  13.2

  	
  Expenses

  	
   

  	
  51

  
	
   

  	
  13.3

  	
  Certain Definitions

  	
   

  	
  51

  
	
   

  	
  13.4

  	
  Binding Effect

  	
   

  	
  58

  
	
   

  	
  13.5

  	
  Entire Agreement

  	
   

  	
  58

  
	
   

  	
  13.6

  	
  Headings

  	
   

  	
  58

  
	
   

  	
  13.7

  	
  Execution in Counterpart

  	
   

  	
  58

  
	
   

  	
  13.8

  	
  Notices

  	
   

  	
  58

  
	
   

  	
  13.9

  	
  Governing Law

  	
   

  	
  59

  
	
   

  	
  13.10

  	
  Venue and Submission to Jurisdiction

  	
   

  	
  59

  
	
   

  	
  13.11

  	
  Further Assurances

  	
   

  	
  60

  
	
   

  	
  13.12

  	
  Drafting

  	
   

  	
  60

  
	
   

  	
  13.13

  	
  Interpretation

  	
   

  	
  61

  
	
   

  	
  13.14

  	
  Attorneys’ Fees and Expenses

  	
   

  	
  61

  
	
   

  	
  13.15

  	
  Specific Performance

  	
   

  	
  61

  
	
   

  	
  13.16

  	
  Shareholder Representatives

  	
   

  	
  61

  
	
   

  	
  13.17

  	
  Legal Representation

  	
   

  	
  62

  
	
   

  	
  13.18

  	
  Forward-Looking Statements

  	
   

  	
  63

  
	
   

  	
  13.19

  	
  Obligations of G. McElroy

  	
   

  	
  63

  

 

iii

 

STOCK PURCHASE AGREEMENT

 

This Stock
Purchase Agreement (this “Agreement”) is made and entered into as of August 15, 2008,
by and among the following parties:  (i) LKQ
Corporation, a Delaware corporation (“LKQ”); (ii) Glenn C. McElroy,
as Trustee of the Glenn C. McElroy Family Trust dated October 14, 1992,
Phillip B. McElroy, Thomas C. Hutton, John L. Neu, Robert T. Neu and Jeffrey P.
Neu (each, a “Shareholder” and collectively, the “Shareholders”);
(iii) Glenn C. McElroy, as an individual (“G. McElroy”); and (iv) Pick-Your-Part Auto
Wrecking, a California corporation (the “Company”).  The closing of the transactions contemplated
by this Agreement is referred to herein as the “Closing.”

 

Recitals

 

The
Shareholders own all of the issued and outstanding shares of capital stock of
the Company.  The Shareholders desire to
sell such shares to LKQ, and LKQ desires to purchase such shares from the
Shareholders, all as herein provided and on the terms and conditions
hereinafter set forth.  Certain
capitalized terms used herein, and not otherwise defined or cross-referenced
where first used, are defined in Section 13.3.

 

Agreement

 

In
consideration of the mutual representations, warranties and covenants and
subject to the conditions contained herein, the parties hereto agree as
follows:

 

1.                                      Purchase and Sale
of the Shares

 

The
Shareholders agree to and will sell, transfer, assign and deliver to LKQ at the
Closing, and LKQ agrees to and will purchase and accept from the Shareholders,
on the terms and subject to the conditions set forth in this Agreement, an
aggregate of 1,582.22695 shares of Class A common stock, no par value, of
the Company and 14,245.042 shares of Class B common stock, no par value,
of the Company (collectively, the “Shares”).

 

2.                                      Purchase Price

 

2.1                               Amount
of the Purchase Price.  As
consideration for the Shares (the “Purchase Price”), LKQ agrees, subject
to the terms, conditions and limitations set forth in this Agreement:

 

2.1.1  At
the Closing, to pay to the Shareholders, in cash, thirty-five percent (35%) of the Closing Payment (as defined in
Section 2.3.2) minus $50,000, allocated among each of the
Shareholders as set forth on Schedule 2.1.1 hereto;

 

2.1.2  At
the Closing, to pay to the Shareholders sixty
percent (60%) of the Closing Payment, allocated among each of the
Shareholders as set forth on Schedule 2.1.1 hereto, payable in cash, shares of
common stock of LKQ (“LKQ Shares”) or a combination thereof (as
determined by LKQ in its sole discretion);

 

1

 

2.1.3  At
the Closing, to deliver to the Escrow Agent five percent (5%) of the Closing Payment to be held in the Escrow Account and $50,000 to be
held in the Representative Expense Account, in each case governed by the
Escrow Agreement (the form of which is attached hereto as Exhibit 2.1)
(the “Escrow Agreement”);

 

2.1.4  At
the Closing, to pay to the person identified on Schedule 2.1.4
hereto, in cash, the amount set forth opposite such person’s name on Schedule 2.1.4
hereto (the aggregate of such amounts, the “Non-Compete Payment Amount”);

 

2.1.5  At
the Closing or as soon thereafter as practicable, to cause the Company to pay
to the Company’s creditors identified on Schedule 2.1.5 hereto the
Debt Amount, allocated among such creditors as set forth on Schedule 2.1.5
hereto; provided,
however, that such allocation will be updated to reflect the amounts set
forth in the final payoff letters provided to the Company by such creditors;
and

 

2.1.6  At
the Closing, to pay on behalf of the Company to the Company’s officers
identified on Schedule 2.1.6 hereto, in cash, the Success Bonus
Amount (subject to applicable taxes,
withholdings and other required, normal or elected deductions as set forth in
the Success Bonus Agreements), allocated among such officers as set
forth on Schedule 2.1.6 hereto.

 

2.2                               Valuation
of LKQ Shares.  In the event that LKQ chooses to
pay any part of the amount due under Section 2.1.2 in LKQ Shares,
the value of each such share shall be equal to the average of the closing
prices of such shares on the Nasdaq Global Select Market (as reported in the Wall
Street Journal) on the ten (10) consecutive trading days ending
on the second (2nd) Business Day prior to the Closing Date (as defined in Section 3.1)
(such average, the “LKQ Share Value”). 
The number of LKQ Shares payable by LKQ to each Shareholder at the Closing shall equal:  (a) the aggregate dollar amount LKQ determines to pay in LKQ Shares under Section 2.1.2,
divided by (b) the LKQ Share Value, multiplied by (c) the
allocation percentage applicable to such Shareholder as set forth on Schedule 2.1.1;
provided that, to the extent the
foregoing calculation results in a fraction of an LKQ Share, LKQ shall not
deliver such fractional LKQ Share to the Shareholder but instead shall pay to
such Shareholder, in cash, an amount equal to the product of (i) such
fraction and (ii) the LKQ Share Value.  The number of LKQ Shares payable by LKQ to
the Shareholders in the Neu Group shall be further subject to the calculations and adjustments (to the extent applicable) set forth in Sections 2.5.1 through 2.5.3.

 

2.3                               Calculation
of the Purchase Price at the Closing.

 

2.3.1  At
least three (3) Business Days prior to the Closing, the Company shall
prepare and deliver to LKQ an estimated Closing Balance Sheet (as defined in Section 2.4.1),
setting forth, among other matters, good faith estimates of the Cash Amount and
the Working Capital Amount (together, the “Estimated Balance Sheet”), which Estimated Balance Sheet shall be to the
reasonable satisfaction of LKQ.

 

2.3.2  For
purposes of payment of the Purchase Price by LKQ at the Closing pursuant to Sections 2.1
and 3.2, the “Closing Payment” shall be:  (i) $72,880,000; plus (ii) the
Cash Amount; plus (iii) the Working Capital Difference, if the

 

2

 

Working Capital Amount equals or exceeds the Working Capital Target; minus
(iv) the Working Capital Difference, if the Working Capital Target exceeds
the Working Capital Amount; minus (v) the Non-Compete Payment
Amount; minus (vi) the Debt Amount; minus (vii) 60% of
the Success Bonus Amount.  The Cash
Amount and the Working Capital Amount set forth in the Estimated Balance Sheet
shall be used for purposes of the foregoing calculation of the Closing
Payment.  The Closing Payment shall be
subject to post-Closing adjustment as set forth in Section 2.4.

 

2.4                               Post-Closing
Adjustment of the Purchase Price.

 

2.4.1  Within
45 days after the Closing Date, the Shareholder Representatives (as
defined in Section 13.16.1) shall deliver to LKQ a consolidated
balance sheet of the Company and the Subsidiary, including all notes thereto,
dated as of the Closing Date (the “Closing Balance Sheet”), prepared in
accordance with GAAP and in a manner consistent with the preparation of the
Balance Sheet (as defined in Section 5.5) with no changes in
classifications, methods or accounting policies; provided, however, that no purchase
accounting adjustments in respect of the transactions contemplated by this
Agreement shall be made; and provided,
further, that the Closing Balance Sheet will reflect the transfer of
certain assets by Hayward Associates to the Company and the Company’s transfer
of all Owned Real Property, provided that such transferred assets and
Owned Real Property shall not be included in the calculation of the Working
Capital Amount.  The Company’s
inventory at Closing shall be valued in a manner consistent with the
preparation of the Balance Sheet with no changes in classifications, methods or
accounting policies.  With respect to all
other assets and liabilities of the Company, in the event of a conflict between
preparation in accordance with GAAP or on a basis consistent with the Balance
Sheet, the Closing Balance Sheet shall be prepared in accordance with
GAAP.  The Closing Balance Sheet shall
set forth, among other matters, the final Cash Amount and the final Working
Capital Amount, and the calculation thereof. 
All expenses of the Company relating to any period prior to the Closing
Date, including all California income and franchise taxes payable by the
Company for any period ending on or before the Closing Date, shall be accrued
for on the Closing Balance Sheet.

 

2.4.2  During
the 20 Business Day period following LKQ’s receipt of the Closing Balance
Sheet, the Shareholder Representatives shall provide LKQ and its
representatives with access to the working papers of the Shareholder
Representatives and their representatives relating to the Closing Balance
Sheet, and the Shareholder Representatives shall cooperate with LKQ and its
representatives to provide them with any other information used in preparing
the Closing Balance Sheet reasonably requested by LKQ and its
representatives.  The Closing Balance
Sheet shall become final and binding on the 20th Business Day following
delivery thereof, unless prior to the end of such period, LKQ delivers to the
Shareholder Representatives written notice of its disagreement (a “Notice of
Disagreement”) specifying the nature, amount and reasonable detail of any
disputed item.  LKQ shall be deemed to
have agreed with all items and amounts in the Closing Balance Sheet not
specifically referenced in the Notice of Disagreement, and such items and
amounts shall not be subject to review in accordance with Section 2.4.3.

 

2.4.3  During
the ten (10) Business Day period following delivery of a Notice of
Disagreement by LKQ to the Shareholder Representatives, the parties in good
faith shall seek to resolve any differences that they may have with respect to
the matters specified therein.  During
such ten (10) Business Day period, LKQ shall provide the Shareholder
Representatives and their 

 

3

 

representatives with access to the working papers of LKQ and its
representatives relating to such Notice of Disagreement, and LKQ and its representatives shall cooperate with
the Shareholder Representatives and their representatives to provide them with
any other information used in preparation of such Notice of Disagreement
reasonably requested by the Shareholder Representatives or their
representatives.  Any disputed items
resolved in writing between LKQ and the Shareholder Representatives within such
ten (10) Business Day period shall be final and binding with respect
to such items.  If LKQ and the
Shareholder Representatives have not resolved all such differences by the end
of such ten (10) Business Day period, LKQ and the Shareholder
Representatives shall submit, in writing, to an independent public accounting
firm (the “Independent Accounting Firm”) their briefs detailing their
views as to the correct nature and amount of each item remaining in dispute,
and the Independent Accounting Firm shall make a written determination as to
each such disputed item, which determination shall be final and binding on the
parties for all purposes hereunder.  The
Independent Accounting Firm shall be authorized to resolve only those items
remaining in dispute between the parties in accordance with the provisions of
this Section 2.4 within the range of the difference between the
Shareholder Representatives’ position with respect thereto and LKQ’s position
with respect thereto.  The determination
of the Independent Accounting Firm shall be accompanied by a certificate of the
Independent Accounting Firm that it reached such determination in accordance
with the provisions of this Section 2.4.  The Independent Accounting Firm shall be Moss
Adams LLP or, if such firm is unable or unwilling to act or is no longer
independent during the time the dispute is pending, such other independent
public accounting firm as shall be agreed in writing by LKQ and the Shareholder
Representatives.  LKQ and the Shareholder
Representatives shall use their commercially reasonable efforts to cause the Independent
Accounting Firm to render a written decision resolving the matters submitted to
it within 20 Business Days following the submission thereof.  Judgment may be entered upon the written
determination of the Independent Accounting Firm in any court referred to in Section 13.10.  The costs of any dispute resolution pursuant
to this Section 2.4.3, including the fees and expenses of the
Independent Accounting Firm and of any enforcement of the determination
thereof, shall be borne by the parties in inverse proportion as they may
prevail on the matters resolved by the Independent Accounting Firm, which
proportionate allocation shall be calculated on an aggregate basis based on the
relative dollar values of the amounts in dispute and shall be determined by the
Independent Accounting Firm at the time the determination of such firm is
rendered on the merits of the matters submitted.  The fees and disbursements of the
representatives of each party incurred in connection with their preparation or
review of the Closing Balance Sheet and preparation or review of any Notice of
Disagreement, as applicable, shall be borne by such party.

 

2.4.4  The
final Closing Payment shall be adjusted, upwards or downwards, as follows:

 

(i)  if the final Closing Payment as finally determined
pursuant to this Section 2.4 is greater than the Closing Payment as
determined pursuant to the Estimated Balance Sheet, the Closing Payment shall
be adjusted upwards in an amount equal to the difference between the former
amount and the latter amount;

 

(ii)  if the Closing Payment as determined pursuant to the
Estimated Balance Sheet is greater than the final Closing Payment as finally
determined pursuant to this

 

4

 

Section 2.4,
the Closing Payment shall be adjusted downwards in an amount equal to the
difference between the former amount and the latter amount; and

 

(iii)  if the final Closing Payment as finally determined
pursuant to this Section 2.4 is equal to the Closing Payment as
determined pursuant to the Estimated Balance Sheet, no adjustment shall be made to the Closing Payment.

 

In case of clause (i), (A) the
Shareholder Representatives shall deliver a joint written notice to LKQ, specifying the amount of the upward
adjustment of the Closing Payment, and (B) LKQ shall pay, in cash, to each
Shareholder such Shareholder’s allocable portion of the amount of such upward
adjustment of the Closing Payment
pursuant to the allocation set forth in Schedule 2.1.1 hereto.  In case of clause (ii), (A) LKQ shall deliver written notice
to the Shareholder Representatives,
specifying the amount of the downward adjustment of the Closing Payment, and (B) each
Shareholder shall pay, in cash, to LKQ such Shareholder’s allocable portion of
such downward adjustment of the Closing Payment pursuant to the allocation set forth in Schedule 2.1.1 hereto, provided
that the foregoing payment obligation of such Shareholder shall be joint
and several with all other Shareholders’ payment obligations under this Section 2.4.4.

 

2.4.5  Amounts
to be paid pursuant to Section 2.4.4 shall bear interest from the
Closing Date to the date of such payment at a rate equal to the rate of
interest from time to time announced publicly as the prime rate by the Wall Street Journal, calculated
on the basis of a year of 365 days and the number of days elapsed.

 

2.4.6  Notwithstanding
anything to the contrary in this Section 2.4, for purposes of
preparing the Closing Balance Sheet (including the calculation of the Working
Capital Amount), good faith estimates shall be used for the amounts of accounts
receivable attributable to converters and catalysts sold by the Company, with
respect to which sales totals have not been finalized at least five (5) Business
Days prior to the date on which the Shareholder Representatives are required to
deliver the Closing Balance Sheet pursuant to Section 2.4.1.  The parties agree that, upon finalization of
such sales totals, appropriate adjustments (if any) shall be made to the
Closing Payment generally pursuant to the procedures set forth elsewhere in
this Section 2.4.  To the
extent that the final aggregate amount of accounts receivable determined based
on the final sales totals exceeds the estimate thereof, LKQ shall promptly pay
to each Shareholder such Shareholder’s allocable portion of such excess amount pursuant to the allocation set forth in Schedule 2.1.1
hereto.  To the extent that the
final aggregate amount of accounts receivable determined based on the final
sales totals is less than the estimate thereof, each Shareholder shall pay, in
cash, to LKQ such Shareholder’s allocable portion of such shortfall pursuant to the allocation set forth in Schedule 2.1.1
hereto, provided that the foregoing payment obligation of such Shareholder
shall be joint and several with all other Shareholders’ payment obligations
under this Section 2.4.6.

 

2.5                               LKQ
Shares Delivered to Neu Group.

 

2.5.1  Subject to Section 2.5.5, to
the extent that LKQ elects to pay any amount of the Closing Payment in LKQ
Shares, the number of LKQ Shares payable by LKQ to each
Shareholder in the Neu Group at the Closing shall equal:  (a) the aggregate dollar amount LKQ

 

5

 

determines to pay in LKQ Shares under Section 2.1.2, divided
by (b) the LKQ Share Value, multiplied by (c) the allocation
percentage applicable to such Shareholder as set forth on Schedule 2.1.1, multiplied by (d) 97.5%; provided
that, to the extent the foregoing
calculation results in a fraction of an LKQ Share, LKQ shall not
deliver such fractional LKQ Share to the Shareholder but instead shall pay to
such Shareholder, in cash, an amount equal to the product of (i) such
fraction and (ii) the LKQ Share Value.  The LKQ Shares deliverable by
LKQ to the Shareholders in the Neu Group pursuant to the foregoing sentence are
referred to hereinafter as the “Neu Group Shares.”

 

2.5.2  During
the period beginning with the Closing and ending at the close of business on
the Business Day immediately following the Closing Date, any Shareholder in the
Neu Group may instruct a broker selected by the Shareholder Representative
representing the Shareholders in the Neu Group and consented to in writing by LKQ prior to the date hereof, which consent shall not be unreasonably withheld
or conditioned (the “Broker”), to cause any or all of the Neu
Group Shares allocable to him to be sold at not less than prevailing market
prices therefor through the Broker, provided that such sales must be completed
five (5) Business Days after the Closing Date (the “Section 2.5
Period”).  If the Broker determines
that sales requested by such Shareholder cannot be completed without adversely
affecting the price at which such sales occur or otherwise affecting the market
for LKQ Shares generally, the Section 2.5 Period shall automatically be
extended for a period not to exceed five (5) Business Days.

 

2.5.3  If
any Neu Group Shares are sold in accordance with Sections 2.5.1 and
2.5.2 during the Section 2.5 Period (as such period may have been
extended pursuant to Section 2.5.2) and the aggregate proceeds from
such sales (before deduction of any commissions, fees or expenses) to the
Shareholders of the Neu Group (the “Neu Group Proceeds Amount”) is less
than the product equal to (a) the number of such Neu Group Shares multiplied
by (b) the LKQ Share Value, then LKQ shall promptly deliver additional
cash to the Shareholders in the Neu Group to make up for the amount by which such product exceeds the Neu Group
Proceeds Amount (such excess amount, the “Neu Group
Shortfall Amount”).

 

2.5.4  The
Shareholders agree that from the date hereof until three (3) Business
Days following the Closing, they will not engage, directly or indirectly, in
any transactions in LKQ securities or any derivatives thereof other than sales
of the Neu Group Shares through one or more Brokers.

 

2.5.5  By
the close of business Central Time on the first (1st) Business Day prior
to the Closing Date, the Shareholder Representative representing the
Shareholders in the Neu Group may, at his
option, provide written notice to LKQ that the above provisions of this Section 2.5
shall no longer be applicable to some or all of the Neu Group Shares.

 

2.5.6  The
following is for illustrative purposes:

 

(a)  If
(i) the Closing Payment equals $73,000,000.00, (ii) LKQ elects to pay
the entire 60% of the Closing Payment (or $43,800,000.00) in LKQ Shares, (iii) the
LKQ Share Value equals $20.00 per share, and (iv) the Shareholders in the
Neu Group are entitled to receive 58.2997% of the proceeds (and thus, the
Shareholders not 

 

6

 

in the Neu Group are entitled to receive
41.7003% of the proceeds), then the Shareholders not in the Neu Group would be
entitled to receive 913,236 LKQ Shares at the Closing ($43,800,000.00, divided
by $20.00 per share, multiplied by 41.7003%), with an additional $11.40
being paid by LKQ in cash.

 

(b)  If
the Shareholder Representative representing the Shareholders in the Neu Group
exercises his
option with respect to all Neu Group Shares pursuant to Section 2.5.5,
then the Shareholders in the Neu Group would be entitled to receive 1,276,763 LKQ Shares at the
Closing ($43,800,000.00, divided by $20.00 per share, multiplied
by 58.2997%), with an additional $8.60 being paid by LKQ in cash.

 

(c)  If
the Shareholder Representative representing the Shareholders in the Neu Group
does not exercise his option pursuant to Section 2.5.5, then the
Shareholders in the Neu Group would be entitled to receive 1,244,844 LKQ Shares
at the Closing ($43,800,000.00, divided by $20.00 per share, multiplied
by 58.2997%, multiplied by 97.5%), with an additional $6.89 being paid
by LKQ in cash.  If (i) the Shareholders in
the Neu Group sell such LKQ Shares
through one or more Brokers pursuant to Section 2.5.2 and (ii) the Neu Group
Proceeds Amount resulting therefrom is
less than $24,896,880.00 (1,244,844 shares multiplied by $20.00 per
share), thus resulting in a Neu Group Shortfall Amount, then LKQ shall deliver
cash to such Shareholders in an amount equal to such Neu Group Shortfall Amount.

 

3.                                      Closing

 

3.1                               Closing.  Upon and subject to the terms of this
Agreement, the sale and purchase of the Shares shall take place at the Closing
to be held at the offices of Bell, Boyd & Lloyd LLP, 70 West Madison, Suite 3100,
Chicago, Illinois 60602, at 10:00 a.m. local time on the second (2nd)
Business Day following the satisfaction of all conditions to the obligations of
the parties set forth in Sections 9 and 10 hereof (other
than such conditions (i) that are waived in accordance with the terms of
this Agreement or (ii) as may, by their terms, only be satisfied at the
Closing or on the Closing Date), or at such other place or at such other time
or on such other date as the Shareholder Representatives and LKQ mutually may
agree in writing.  Throughout this
Agreement, such date is referred to as the “Closing Date.”  For the purposes of this Agreement, the
Closing shall be deemed to have occurred as of 11:59 p.m. on the Closing
Date.

 

3.2                               Procedure
at the Closing.  At the Closing, the
parties agree to take the following steps in the order listed below (provided,
however, that upon their completion all such steps shall be deemed to
have occurred simultaneously):

 

3.2.1  The
Shareholders shall deliver to LKQ the certificates, instruments and other
documents required to be delivered by the Shareholders pursuant to Section 9.

 

3.2.2  LKQ
shall deliver to the Shareholders the certificates, instruments and other
documents required to be delivered by LKQ pursuant to Section 10.

 

3.2.3  The
Shareholders shall deliver to LKQ certificates evidencing the Shares, duly
endorsed in blank or accompanied by duly executed stock powers.

 

7

 

3.2.4  LKQ
shall make the following payments:  (i) to
the Shareholders by wire transfer, in immediately available funds, of the
amounts contemplated by Section 2.1.1; (ii) to the
Shareholders by delivery of LKQ Shares or by wire transfer, in immediately
available funds, of amounts payable in cash, to the extent applicable, pursuant
to Section 2.1.2; (iii) to the Escrow Agent by wire transfer,
in immediately available funds, the amounts contemplated by Section 2.1.3; (iv) to the person
identified on Schedule 2.1.4 hereto by wire transfer, in
immediately available funds, of the amount contemplated by Section 2.1.4;
(v) to the Company’s creditors listed on Schedule 2.1.5
hereto, on behalf of the Company, by wire transfer, in immediately available
funds, the amounts contemplated by Section 2.1.5; and (vi) to the Company’s officers
listed on Schedule 2.1.6 hereto, on behalf of the Company, by wire
transfer, in immediately available funds, the amounts contemplated by Section 2.1.6.

 

3.2.5  LKQ
and the Shareholders shall execute and deliver a cross receipt acknowledging
receipt from the other, respectively, of the Shares and the Purchase Price.

 

4.                                      Representations
and Warranties of the Shareholders

 

Except as
specifically set forth in the Disclosure Schedules attached hereto
(collectively, the “Disclosure Schedules”), in order to induce LKQ to
enter into this Agreement and to consummate the transactions contemplated
hereby, each of the Shareholders makes the following representations and
warranties on a several but not joint basis. 
The Disclosure Schedules shall be arranged in sections and paragraphs
corresponding to the sections and paragraphs contained in Section 4
or Section 5, as the case may be. 
Notwithstanding the foregoing, the information and disclosures contained
in any section or paragraph of the Disclosure Schedules shall be deemed to be
disclosed and incorporated by reference in any other section or paragraph of
the Disclosure Schedules as though fully set forth in such section or paragraph
for which the applicability of such information and disclosure is reasonably
apparent on its face.  No reference to or
disclosure of any item or other matter in the Disclosure Schedules shall be
construed as an admission or indication that such item or other matter is
material or that such item or other matter is required to be referred to or
disclosed in the Disclosure Schedules. 
No disclosure in the Disclosure Schedules relating to any possible
breach or violation of any Contract or Law shall be construed as an admission
or indication that any such breach or violation occurred or exists.

 

4.1                               Organization.
 Such Shareholder is a natural person
residing in the applicable State as set forth in Section 4.1 of the Disclosure Schedules.

 

4.2                               Ownership.  Such Shareholder holds of record and owns
beneficially the number of Shares set forth next to his name in Section 4.2
of the Disclosure Schedules, free and clear of any Encumbrance (other than any
restrictions under the Securities Act and state securities laws).  Except as set forth in Section 4.2 of the Disclosure Schedules, such
Shareholder (i) is not a party to any option, warrant, purchase right or
other contract or commitment (other than this Agreement) that could require
such Shareholder to sell, transfer or otherwise dispose of any capital stock of
the Company, and (ii) is not a party to any voting trust, proxy or other
agreement or understanding with respect to the voting of any capital
stock.  Upon delivery to LKQ of
certificates for such Shares at the Closing, LKQ’s payment of the Purchase
Price and registration of such Shares in the name of LKQ in the stock records
of the Company, LKQ, assuming it shall have purchased such Shares without
notice of any adverse claim, shall acquire good and valid

 

8

 

title to such Shares, free and clear of any Encumbrance (other than any
restrictions under the Securities Act and state securities laws).

 

4.3                               Authority.  Such Shareholder has full power and authority
to execute and deliver this Agreement and each of the Ancillary Agreements to
which such Shareholder will be a party, to perform such Shareholder’s
obligations hereunder and thereunder, and to consummate the transactions
contemplated hereby and thereby.  The
execution and delivery by such Shareholder of this Agreement and each of the
Ancillary Agreements to which such Shareholder will be a party, and the
consummation by such Shareholder of the transactions contemplated hereby and
thereby, have been duly and validly authorized by all necessary action.  This Agreement has been, and upon execution
and delivery each of the Ancillary Agreements to which such Shareholder will be
a party will have been, duly executed and delivered by such Shareholder.  Assuming due authorization, execution and
delivery by the other parties, this Agreement constitutes, and upon execution
and delivery each of the Ancillary Agreements to which such Shareholder will be
a party will constitute, the legal, valid and binding obligation of such
Shareholder, enforceable against such Shareholder in accordance with their
respective terms, except as enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar Laws affecting
creditors’ rights generally and by general principles of equity (regardless of
whether considered in a proceeding in equity or at law).

 

4.4                               No
Conflict; Required Filings and Consents.

 

4.4.1  The
execution, delivery and performance by such Shareholder of this Agreement, and
the consummation of the transactions contemplated hereby, do not and will
not:  (i) conflict with or violate
any Law applicable to such Shareholder or by which any property or asset of
such Shareholder is bound or affected; (ii) conflict with, result in any
breach of, constitute a default (or an event that, with notice or lapse of time
or both, would become a default) under, result in the acceleration of, create
in any party the right to accelerate, suspend, terminate, modify, cancel or
require any notice or consent of any third party pursuant to, any contract,
agreement, lease, license, instrument or other arrangement to which such
Shareholder is a party (except as set forth in Section 4.4.1 of the Disclosure Schedules); or (iii) result
in the creation or imposition of any Encumbrance (other than any restrictions
under the Securities Act and state securities laws) with respect to the Shares;
except, with respect to clauses (i) and
(ii), for matters that would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect with respect to such
Shareholder or, with respect to
clauses (i), (ii) and (iii), for matters that arise as a
result of any action by LKQ or any of its affiliates.

 

4.4.2  Such
Shareholder is not required to file, seek or obtain any notice, authorization,
approval, order, permit or consent of or with any Governmental Authority in
connection with the execution, delivery and performance by such Shareholder of
this Agreement or the consummation of the transactions contemplated hereby,
except (i) for any filings required to be made under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the “HSR Act”), (ii) for
such filings as may be required by any applicable federal or state securities
or “blue sky” laws, and (iii) where failure to obtain such consent,
approval, authorization or action, or to make such filing or notification,
would not prevent or materially delay or impede performance by such Shareholder
of any of his obligations under this Agreement.

 

9

 

4.5                               Brokers.  Except for Sagent Advisors Inc., no broker,
finder or investment banker is entitled to any brokerage, finder’s or other fee
or commission from the Company in connection with the transactions contemplated
hereby based upon any arrangement made by or on behalf of such Shareholder.

 

4.6                               Spousal
Consent.  Unless the signature of
such Shareholder’s spouse appears on the spousal consent attached hereto as Exhibit 4.6,
such Shareholder is not married.

 

4.7                               Prospectus.  Such Shareholder acknowledges that he (a) received
prior to the date hereof a copy of
LKQ’s prospectus dated May 16, 2006 relating to the LKQ Shares (the “Prospectus”),
which incorporates by reference LKQ’s Reports on Form 10-K for the years
ended December 31, 2006 and 2007,
its Reports on Form 10-Q and Form 8-K filed after December 31,
2007 and prior to the date hereof and the
definitive proxy statements filed with the SEC for its annual meeting of
stockholders in 2007 and 2008 (collectively,
the “SEC Reports”), as filed pursuant to the Securities Exchange
Act of 1934 and the rules and regulations thereunder, as amended (the “Exchange
Act”); and (b) has reviewed and understands the Prospectus.

 

4.8                               California
Tax Returns.  Such Shareholder has
timely filed all California Tax Returns required to be filed by him and has
paid in full all California state and local Taxes that have become due, whether
or not shown on any such Tax Return.

 

5.                                      Representations
and Warranties of the Company and the Shareholders

 

Except as set
forth in the Disclosure Schedules, in order to induce LKQ to enter into this
Agreement and to consummate the transactions contemplated hereunder, the
Company and each of the Shareholders makes the following representations and
warranties with regard to the Company on a several but not joint basis:

 

5.1                               Organization,
Power and Authority of the Company.

 

5.1.1  The
Company is a corporation duly organized and validly existing in good standing
under the laws of the State of California with corporate power and authority
necessary to own, lease or operate its properties and to carry on its business
as it is now being conducted.  The
Company is duly qualified or licensed as a foreign corporation to do business,
and is in good standing, in each jurisdiction where the character of the
properties owned, leased or operated by it or the nature of its business makes
such qualification or licensing necessary, except, in each case, for any such
failures that would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect with respect to the Company.

 

5.1.2  The
Subsidiary is a limited liability company duly organized and validly existing
in good standing under the laws of the State of California with limited
liability company power and authority necessary to own or lease its properties
and to carry on its business as it is now being conducted.  The Subsidiary is duly qualified or licensed
as a foreign entity to do business, and is in good standing, in each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its business makes such qualification or licensing
necessary, except, in each case, for any such failures that would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect with respect to the Company.

 

10

 

5.1.3  The
Company has full power and authority to execute and deliver this Agreement and
the Ancillary Agreements to which the Company will be a party, to perform its
obligations hereunder and thereunder, and to consummate the transactions
contemplated hereby and thereby.  The
execution and delivery by the Company of this Agreement and each of the
Ancillary Agreements to which the Company will be a party and the consummation
by the Company of the transactions contemplated hereby and thereby have been
duly and validly authorized by all necessary corporate action.  This Agreement has been, and upon execution
and delivery each of the Ancillary Agreements to which the Company will be a
party will have been, duly executed and delivered by the Company.  Assuming due authorization, execution and
delivery by the other parties, this Agreement constitutes, and upon execution
each of the Ancillary Agreements to which the Company will be a party will
constitute, the legal, valid and binding obligations of the Company, enforceable
against it in accordance with their respective terms, except as enforcement may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar Laws affecting creditors’ rights generally and by general principles of
equity (regardless of whether considered in a proceeding in equity or at law).

 

5.2                               Capital
Stock of the Company.

 

5.2.1  The
authorized, issued and outstanding capital stock of the Company is set forth in
Section 5.2.1 of the Disclosure Schedules.  All of the Company’s outstanding capital
stock has been duly authorized and validly issued and is fully paid and
nonassessable.  The Shares constitute all
of the issued and outstanding capital stock of the Company.

 

5.2.2  Except
as set forth in Section 5.2.2
of the Disclosure Schedules:

 

(a)  all
voting rights in the Company are vested exclusively in its shares of common
stock, and there are no voting trusts, proxies or other agreements or
understandings with respect to the voting of the capital stock of the Company;

 

(b)  there
are no outstanding warrants, options or rights of any kind to acquire from the
Company or the Shareholders any shares of common stock of the Company or
securities of any kind, and there are no preemptive rights with respect to the
issuance or sale of shares of capital stock of the Company; and

 

(c)  the
Company does not have any obligation to acquire any of its issued and
outstanding shares of common stock or any other security issued by it from any
holder thereof.

 

5.3                               Subsidiaries.  Except for the Subsidiary and as set forth in
Section 5.3 of the Disclosure Schedules, the Company does not,
directly or indirectly, own any equity, partnership, membership or similar
interest in, or any interest convertible into, exercisable for the purchase of
or exchangeable for any such equity, partnership, membership or similar
interest in any person or entity.

 

5.4                               No
Conflict; Required Filings and Consents.

 

5.4.1  The
execution, delivery and performance by the Company of this Agreement and each
of the Ancillary Agreements to which the Company will be a party, and the

 

11

 

consummation of the
transactions contemplated hereby and thereby, do not and will not (i) conflict
with or violate the articles of incorporation or bylaws of the Company or any
equivalent organizational or governing documents of the Subsidiary; (ii) conflict
with or violate any Law applicable to the Company or the Subsidiary or by which
any property or asset of the Company or the Subsidiary is bound or affected; (iii) conflict
with, result in any breach of, constitute a default (or an event that, with
notice or lapse of time or both, would become a default) under, result in the
acceleration of, create in any party the right to accelerate, suspend,
terminate, modify, cancel or require any notice or consent of any third party
pursuant to, any contract, agreement, lease, license, instrument or other
arrangement to which the Company or the Subsidiary is a party or by which any
of their properties or assets are bound (except as set forth in Section 5.4.1 of the
Disclosure Schedules); or (iv) result in the creation or imposition of any
Encumbrance on any property or asset of the Company or the Subsidiary; except,
with respect to clauses (ii), (iii) and (iv), for matters that would
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect with respect to the Company or that arise as a result
of any action by LKQ or any of its affiliates.

 

5.4.2  Except
as set forth in Section 5.4.2 of the Disclosure Schedules, the
Company is not required to file, seek or obtain any notice, authorization,
approval, order, permit or consent of or with any Governmental Authority in
connection with the execution, delivery and performance by the Company of this
Agreement and each of the Ancillary Agreements to which the Company will be a
party, or the consummation of the transactions contemplated hereby or thereby,
except (i) for any filings required to be made under the HSR Act, (ii) for
such filings as may be required by any applicable federal or state securities
or “blue sky” laws, or (iii) where failure to obtain such consent,
approval, authorization or action, or to make such filing or notification,
would not (a) prevent or materially delay or impede performance by the
Company of any of its obligations under this Agreement or (b) individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect
with respect to the Company.

 

5.5                               Financial
Statements.  Copies of the audited
consolidated balance sheets of the Company and its subsidiaries as at December 31,
2006 and December 31, 2007, and the related audited consolidated
statements of income, retained earnings, stockholders’ equity and changes in
financial position of the Company and its subsidiaries, together with all
related notes and schedules thereto, accompanied by the reports thereon of the
Company’s independent auditors (collectively, the “Financial Statements”),
and the unaudited consolidated balance sheet of the Company and the Subsidiary
for the three months ended March 31, 2008 (the “Balance Sheet”) and
the related unaudited consolidated statements of income, retained earnings,
stockholders’ equity and changes in financial position of the Company and its
subsidiaries, together with, if any,
all related notes and schedules thereto (collectively, including the Balance
Sheet, the “Interim Financial Statements”) are attached hereto as Section 5.5
of the Disclosure Schedules.  Except as set forth in Section 5.5
of the Disclosure Schedules, each
of the Financial Statements and the Interim Financial Statements (i) has
been prepared based on the books and records of the Company and its
subsidiaries (except as may be indicated in the notes thereto), (ii) has
been prepared in accordance with GAAP applied on a consistent basis throughout
the periods indicated (except as may be indicated in the notes thereto), and (iii) fairly
presents, in all material respects, the consolidated financial position,
results of operations and cash flows of the Company and its subsidiaries as at
the respective dates thereof and for the respective periods indicated therein,
except as otherwise noted therein and subject, in the case of the Interim
Financial

 

12

 

Statements, to normal and
recurring year-end adjustments and the absence of notes that will not,
individually or in the aggregate, be material to the Company and the
Subsidiary, taken as a whole.

 

5.6                               Liabilities;
Debt Amount.  The Company has no
liabilities or obligations of any nature, either accrued, absolute, contingent
or otherwise, that would be required by GAAP to be reflected on a balance sheet
of the Company except:  (i) to the
extent reflected or taken into account in the Interim Financial Statements or
the notes thereto and not heretofore paid or discharged; (ii) to the
extent clearly disclosed and specifically set forth in or incorporated by
express reference in Section 5.6 of the Disclosure Schedules; (iii) normal
liabilities that are not past due and that were incurred in the ordinary course
of business, consistent with prior practice, since the date of the Balance
Sheet; and (iv) for Taxes.  The
creditors listed on Schedule 2.1.5 hereto represent all of the
creditors with respect to whom the Company has Debt as of June 30, 2008,
the amount of Debt (excluding interest accrued thereon) shown on such schedule
is accurate as of June 30, 2008, and Schedule 2.1.5, as
updated through the Closing as contemplated by Section 2.1.5, shall
contain a complete and accurate list of all creditors to whom the Company has
Debt, and the amount of such Debt (including interest accrued thereon), as of
the Closing Date.

 

5.7                              Tax
Matters.  Except as set forth in Section 5.7
of the Disclosure Schedules:

 

5.7.1  Each
of the Company and the Subsidiary has timely filed all Tax Returns required to
be filed by it and has paid in full all Taxes that have become due, whether or
not shown on any such Tax Return.  The
Company has not been a member of any affiliated group of corporations within
the meaning of Section 1504 of the Code or of any group that has filed a
combined, consolidated or unitary state or local Tax Return and the Company has
no liability for the Taxes of any other person under Treasury Regulation Section 1.1502-6
(or any similar provision of state, local or foreign law), as a transferee or
successor, by contract or otherwise.

 

5.7.2  The
Company has been a validly existing S corporation within the meaning of Code
Sections 1361 and 1362 at all times since 1987 and the Company will be an
S corporation up to and including the Closing Date.  The Shareholders have the authority to consent to the Section 338(h)(10) Election
(as defined in Section 12.2.4) and similar state elections with
respect to the purchase and sale of the Shares pursuant to this Agreement.  The Company will not be liable for any Tax
under Code Section 1374 in connection with the deemed sale of the Company’s
assets caused by the Section 338(h)(10) Election.  The Company has not, in the past 10 years, (A) acquired
assets from another corporation in a transaction in which the Company’s Tax
basis of the acquired assets was determined, in whole or in part, by reference
to the Tax basis of the acquired assets (or any other property) in the hands of
the transferor or (B) acquired the stock of any corporation that is a
qualified subchapter S subsidiary.

 

5.7.3  All
Taxes that the Company and the Subsidiary were required by law to withhold or
collect have been duly withheld and collected, and have been paid over to the
proper governmental entity or are being held by the Company for such payment.

 

5.7.4  There
is no Tax deficiency proposed or, to the knowledge of the Company, threatened
against the Company or the Subsidiary. 
None of the Tax Returns of the Company or

 

13

 

the Subsidiary is under audit
or examination by a Tax authority, and there are no outstanding agreements or
waivers extending the statute of limitations applicable to any Tax Return of
the Company for any period.  The Company
has not received any claim by a Tax authority in a jurisdiction where the
Company does not file Tax Returns that the Company is or may be subject to
taxation by that jurisdiction.

 

5.8                               Real
Estate.

 

5.8.1  Section 5.8.1
of the Disclosure Schedules accurately and completely sets forth the address
and description of each parcel of Owned Real Property.  Except as set forth in Section 5.8.1
of the Disclosure Schedules, with respect to each parcel of Owned Real Property:

 

(a)  the
Company has good and marketable indefeasible fee simple title, free and clear
of all Encumbrances, except Permitted Encumbrances;

 

(b)  neither
the Company nor the Subsidiary is presently leasing or otherwise has granted to
any Person the right, which is presently in effect or may become effective in
the future, to use or occupy such Owned Real Property or any portion thereof;
and

 

(c)  there
are no outstanding options, rights of first offer or rights of first refusal to
purchase such Owned Real Property or any portion thereof or interest therein.

 

5.8.2  Section 5.8.2
of the Disclosure Schedules accurately
and completely sets forth, with respect to every parcel of Leased Real
Property:  (i) the lessor and lessee
thereof and the date(s) of the lease (including any amendment(s) thereto)
governing such property; and (ii) the location, including address,
thereof.  The Company has previously made
available to LKQ accurate and complete copies of each of the Leases, and none
of such Leases has been amended or modified except to the extent that such
amendments or modifications are disclosed in such copies and in Section 5.8.2
of the Disclosure Schedules.  Except
as set forth in Section 5.8.2 of the Disclosure Schedules, with
respect to each of the Leases:

 

(a)  such
Lease is legal, valid, binding, enforceable and in full force and effect,
except as enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar Laws affecting creditors’ rights
generally and by general principles of equity (regardless of whether considered
in a proceeding in equity or at law), provided that the foregoing exception
shall apply only to the extent that the relevant bankruptcy, insolvency, reorganization, moratorium or
similar event occurs after the Closing Date;

 

(b)  the
Company or the Subsidiary has a valid leasehold interest in each Leased Real
Property, which leasehold interest is free and clear of all Encumbrances
(except for Permitted Encumbrances);

 

(c)  the
transactions contemplated by this Agreement do not require the consent of any
other party to such Lease, will not result in a breach of or default under such
Lease, and will not otherwise cause such Lease to cease to be legal, valid,
binding, enforceable and in full force and effect on identical terms following
the Closing;

 

14

 

(d)  neither
the Company’s nor the Subsidiary’s possession and quiet enjoyment of the Leased
Real Property under such Lease is currently being disturbed and there are no
pending disputes between the Company or its Subsidiary, on the one hand, and
the applicable lessor, on the other hand, with respect to such Lease;

 

(e)  neither
the Company nor the Subsidiary, nor to the knowledge of the Company, any other
party to the Lease is in breach of or default under such Lease, and to the
knowledge of the Company, no event has occurred or circumstance exists that,
with the delivery of notice, the passage of time or both, would constitute such
a breach or default, or permit the termination, modification or acceleration of
rent under such Lease, and the Company has no knowledge of any anticipated
breach by the other parties to any such Lease;

 

(f)  the
Company has not received written notice from any lessor under a Lease that any
security deposit or portion thereof deposited with respect to such Lease has
been applied in respect of a breach of or default under such Lease that has not
been re-deposited in full;

 

(g)  neither
the Company nor the Subsidiary owes, or will owe in the future, any brokerage
commissions or finder’s fees with respect to such Lease;

 

(h)  the
other party to such Lease is not an affiliate of, and otherwise does not have
any economic interest in, the Company or the Subsidiary;

 

(i)  neither
the Company nor the Subsidiary has subleased, licensed or otherwise granted to
any Person (in each case, where the sublease, license or grant is currently in
effect or may become effective in the future) the right to use or occupy the
Leased Real Property or any portion thereof; and

 

(j)  neither
the Company nor the Subsidiary has collaterally assigned or granted any other
Encumbrance in such Lease or any interest therein.

 

5.8.3  The
Owned Real Property identified in Section 5.8.1 of the Disclosure
Schedules and the Leased Real Property identified in Section 5.8.2
of the Disclosure Schedules (collectively, the “Real Property”),
comprise all of the real property used in or otherwise related to, the Company’s
and the Subsidiary’s business; and neither the Company nor the Subsidiary is a
party to any agreement or option to purchase any real property or interest
therein.

 

5.8.4  Except
as set forth in Section 5.8.4 of the Disclosure Schedules, the
structural elements of the buildings, structures and fixtures, including the roof,
bearing walls and foundation of any building on any parcel of Real Property,
are free from material defects, and the building systems, including heating,
ventilation, air conditioning, mechanical, electrical, plumbing, environmental
control, remediation and abatement systems, sewer, storm and waste water
systems, irrigation and other water distribution systems, parking facilities,
fire protection, security and surveillance systems, and telecommunications,
computer, wiring and cable installations, included in the Real Property (the “Improvements”)
are in working condition and are sufficient for the current operating needs of
the Company and the Subsidiary.’’

 

15

 

5.8.5  Except
as set forth in Section 5.8.5 of the Disclosure Schedules, neither
the Company nor the Subsidiary has received written notice of any condemnation,
expropriation or other proceeding in eminent domain, pending or threatened,
affecting any parcel of Real Property or any portion thereof or interest
therein, and to the knowledge of the Company, no proceeding is contemplated by
any Governmental Authority.  Except as
set forth in Section 5.8.5 of the Disclosure Schedules, there is no
injunction, decree, order, writ or judgment outstanding, or any claim,
litigation, administrative action or similar proceeding that is pending or, to
the knowledge of the Company, threatened, relating to the ownership, lease, use
or occupancy of the Real Property or any portion thereof, or the operation of
the Company’s or the Subsidiary’s business as currently conducted thereon.

 

5.8.6  Except
as set forth in Section 5.8.6 of the Disclosure Schedules, neither
the Company nor the Subsidiary has received any written notice of violation of
any applicable building, zoning, subdivision and other land use laws, which
violation has not heretofore been resolved; and, to the knowledge of the
Company, there is no basis for the issuance of any such notice or the taking of
any action for such violation, except as
would not reasonably be expected to result in material liability for the
Company or the Subsidiary.

 

5.8.7  Except
as set forth in Section 5.8.7 of the Disclosure Schedules, none of
the Shareholders, the Company or the Subsidiary has received any written notice
of the violation of any easement, covenant, condition, restriction or similar
provision in any instrument of record or other unrecorded agreement affecting
such Real Property (the “Encumbrance Documents”), which violation has
not heretofore been resolved, and to the knowledge of the Company, there is no
basis for the issuance of any such notice or the taking of any action for such
violation.  To the knowledge of the
Company, there is no pending or anticipated change in any Law that will
materially impair the ownership, lease, use or occupancy of any Real Property
or any portion thereof in the continued operation of the Company’s or the
Subsidiary’s business as currently conducted thereon.

 

5.8.8  Except
as set forth in Section 5.8.8 of the Disclosure Schedules, each parcel of Real Property has
direct vehicular and pedestrian access to a public street adjoining the Real
Property, or has vehicular and pedestrian access to a public street via an
insurable, permanent, irrevocable and appurtenant easement benefiting such
parcel of Real Property, such access being sufficient for the current operation
of the Company’s or the Subsidiary’s business. 
Except as set forth in Section 5.8.8 of the Disclosure Schedules, none of the Improvements or any portion
thereof is dependent for its access, use or operation on any land, building,
improvement or other real property interest that is not included in the Real
Property.

 

5.8.9  Except
as set forth in Section 5.8.9 of the Disclosure Schedules, all water, gas, electrical, telecommunications, sewer, storm and
waste water systems and other utility services or systems for the Real Property
have been installed and are operational and sufficient for the current
operation of the Company’s or the Subsidiary’s business.  Except as set forth in Section 5.8.9 of the Disclosure Schedules, each
such utility service enters the Real Property from an adjoining public street
or valid private easement in favor of the supplier of such utility service or
appurtenant to such Real Property, and is not dependent for its access, use or
operation on any land, building, improvement or other real property interest
that is not included in the Real Property.

 

16

 

5.8.10  Except
as set forth in Section 5.8.10 of the Disclosure Schedules, the classification of each parcel of Real Property under applicable
zoning laws, ordinances and regulations (after giving effect to any zoning
variances and conditional use permits applicable to any parcel of Real
Property) permits the use and occupancy of such parcel and the operation of the
Company’s and the Subsidiary’s business as currently conducted thereon.  Except as set forth in Section 5.8.10 of the Disclosure Schedules,
there are sufficient parking spaces, loading docks and, to the knowledge of the Company, other facilities at such parcel
to comply with such zoning laws, ordinances and regulations.  To the
knowledge of the Company, except as set forth in Section 5.8.10
of the Disclosure Schedules, the Company’s and the Subsidiary’s use or
occupancy of the Real Property or any portion thereof or the operation of the
Company’s or the Subsidiary’s
business as currently conducted thereon is not dependent on a “permitted
non-conforming use” or “permitted non-conforming structure” or similar
variance, exemption or approval from any Governmental Authority.

 

5.8.11  Except
as set forth in Section 5.8.11 of the Disclosure Schedules, none of
the Improvements encroaches on any land that is not included in the Real
Property or on any easement affecting such Real Property, or violates any
building lines or set-back lines, and there are no encroachments onto the Real
Property, or any portion thereof, that would materially interfere with the use
or occupancy of such Real Property or the continued operation of the Company’s
or the Subsidiary’s business as currently conducted thereon.

 

5.8.12  Each
parcel of Real Property is a separate lot for real estate tax and assessment
purposes, and no other real property is included in such tax parcel.  There are no Taxes, assessments, fees,
charges or similar costs or expenses imposed by any governmental authority,
association or other entity having jurisdiction over the Real Property
(collectively, the “Real Estate Impositions”) with respect to any Real
Property or portion thereof that are delinquent.  Except as set forth in Section 5.8.12
of the Disclosure Schedules, to the knowledge of the Company, there is no
pending or threatened increase or special assessment or reassessment of any
Real Estate Impositions for such parcel.

 

5.8.13  Except
as set forth in Section 5.8.13 of the Disclosure Schedules, none of
the Real Property or any portion thereof is located in a “Special Flood Hazard
Area” designated by the Federal Emergency Management Agency (FEMA) as a “high
risk area” (as such term is defined by the
FEMA) as of the date of this Agreement.

 

5.9                               Title
to and Condition of Assets.  The Company and the Subsidiary have
good and marketable title to each of their respective assets (other than the Real Property) that has
a book value of more than $1,000, free and clear of all Encumbrances, except
Permitted Encumbrances and as set forth in Section 5.9 of the
Disclosure Schedules.  Each fixed asset
of the Company and the Subsidiary that has a book value of more than $1,000 is
in working condition, normal wear
and tear excepted.  Section 5.9
of the Disclosure Schedules sets forth the following information regarding each
such fixed asset owned by the Company or the Subsidiary as of the date of this
Agreement:  (i) a description of
each fixed asset; (ii) the date on which each fixed asset was acquired; and (iii) the original cost of each
fixed asset.

 

5.10                        Receivables.  The Company has previously made available to
LKQ a complete list of all receivables of the Company and the Subsidiary as of March 31,
2008, including the due

 

17

 

dates thereof.  Except as set forth in Section 5.10
of the Disclosure Schedules, all of the receivables listed thereon or set forth
or reflected in the Balance Sheet were, as of the dates as of which the
information was given therein, and as of the Closing Date all of the
receivables of the Company and the Subsidiary set forth or reflected in the Closing Balance
Sheet will be, valid accounts receivable which are or will be current
and collectible and which have been or will be, within 120 days after the
Closing Date, collected in full.

 

5.11                       Licenses
and Permits.  Except (a) as set
forth in Section 5.11 of the Disclosure Schedules, and (b) as
pertaining to Environmental Law
and Environmental Permits, each of the Company and the Subsidiary possesses each and every license, approval, permit, franchise, certificate,
waiver, consent, exemption, registration or authorization of any Governmental
Authority that is required for the Company or the Subsidiary, as the case
may be, to own, lease or operate its properties and to carry on its
business as it is now being conducted, except where the failure to have, or the
suspension or cancellation of, such license, approval, permit, franchise,
certificate, waiver, consents, exemption, registration or authorization would
not, in each individual case, reasonably be expected to have a
Material Adverse Effect with respect to the Company.  All such licenses, approvals,
permits, franchises, certificates, waivers, consents, exemptions, registrations
and authorizations are collectively referred to herein as the
“Permits.”  Section 5.11 of the Disclosure
Schedules contains an accurate and complete list of all Permits.  Except as set forth
in Section 5.11 of the Disclosure Schedules, the Permits are in
full force and effect, the Company and the Subsidiary are in compliance with
their requirements, and no proceeding is pending or, to the knowledge of the
Company, threatened to revoke or amend any of them.  Except as set forth in Section 5.11
of the Disclosure Schedules, none of the Permits are or will be impaired or in
any way affected by the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby.

 

5.12                        Proprietary
Rights.  The Company and the
Subsidiary possess all proprietary rights, including patents, trade secrets,
technology, know-how, copyrights, trademarks, trade names, assumed or “doing
business as” names, and rights to any of the foregoing, necessary to conduct
the Company’s and the Subsidiary’s business as currently being conducted
without, to the knowledge of the Company, conflict with valid proprietary
rights of others.  Section 5.12
of the Disclosure Schedules contains an accurate and complete list of all
registered patents, copyrights, trademarks, service marks, trade names and
assumed or “doing business as” names, in each case, that are owned or licensed
by the Company or the Subsidiary (but excluding shrink-wrap or click-wrap
licenses for commercially available software entered into in the ordinary
course of business at a cost of less than $25,000 per such software)
(collectively, the “Proprietary Rights”).  Except as set forth in Section 5.12
of the Disclosure Schedules, (i) the Company or the Subsidiary has a right
to use all of the Proprietary Rights, (ii) within the previous three (3) year
period, there have been no claims made against the Company or the Subsidiary
for the assertion of the invalidity, abuse, misuse or unenforceability of any
of such Proprietary Rights, and to the knowledge of the Company, there are no
grounds for the same, and (iii) the Company and the Subsidiary have not
received any written notice of conflict with the asserted rights of others
within the previous three (3) year period.

 

5.13                        Adequacy
of Assets; Customers.  Except as set forth in Section 5.13
of the Disclosure Schedules, the assets and properties of the Company
and the Subsidiary constitute, in the aggregate, all of the property necessary
for the conduct of the business of the Company

 

18

 

and the Subsidiary in the
manner in which and to the extent it has been conducted since December 31,
2007.  Except as set forth in Section 5.13
of the Disclosure Schedules, no current customer of the Company or the
Subsidiary that accounted for over two
percent (2%) of the total consolidated net sales of the Company and the Subsidiary for the
twelve (12) months ended December 31, 2007, and no current supplier to the Company or the Subsidiary of items
essential to the conduct of their business, which items cannot be replaced by
the Company or the Subsidiary at comparable cost, and the loss of which
customer or supplier would have a Material Adverse Effect with respect to the
Company, has notified the Company (whether
orally or in writing) within the 90 days prior to the date of this
Agreement that said customer or supplier will terminate its business
relationship with the Company or the Subsidiary.  None of the customer accounts of the Company
or the Subsidiary have been designated by the appropriate governmental
authorities as a “small business set-aside” contract.  None of the Shareholders or any officer or director or, to the knowledge of the Company, any employee of the Company or the Subsidiary, or any affiliate of
any of them, has any direct or indirect interest in any customer, supplier or
competitor of the Company or the Subsidiary or in any person from whom or to
whom the Company or the Subsidiary leases real or personal property, or in any
other person with whom the Company or the Subsidiary is doing business, except
as set forth in  Section 5.13
of the Disclosure Schedules.

 

5.14                        Certain
Documents and Information.

 

5.14.1  Section 5.14.1
of the Disclosure Schedules accurately and completely lists the following:  (i) each loan, credit agreement,
guarantee or security agreement to which the Company or the Subsidiary is a
party or by which it is bound; (ii) other than the Leases, any other agreement, contract or commitment
to which the Company or the Subsidiary is a party or by which it is bound that
involves a future commitment by the Company or the Subsidiary in excess of
$50,000 and which cannot be terminated without liability on ninety (90)
days or less notice; (iii) each power of attorney executed by or on behalf
of the Company or the Subsidiary, which power of attorney is currently in
effect; (iv)(A) the name and current annual compensation of each employee
of the Company or the Subsidiary whose current annual compensation is in excess
of $75,000 per annum, (B) any profit sharing, year-end bonus or any other
form of compensation (other than base compensation) paid or payable by the
Company or the Subsidiary to or for the benefit of each such person for the year
ending December 31, 2008 or any period thereafter, and (C) any
employment or other agreement of the Company or the Subsidiary with any of
their respective officers or employees; (v) any agreement with respect to
any joint venture or partnership arrangements or the purchase of any equity
interests in any other entity; (vi) any agreement that contains covenants
expressly limiting the ability of the Company or the Subsidiary to engage in
any line of business or to compete with any person or entity or operate in any
geographic location or for any period of time with respect to any line of
business; (vii) the name of each of the officers and directors of the
Company and the Subsidiary; and (viii) the name of each bank in which the
Company or the Subsidiary has an account or safe-deposit box, the name in which
the account or box is held and the names of all persons authorized to draw
thereon or to have access thereto.  The
Company has previously made available to LKQ an accurate and complete copy of
each such agreement, contract or commitment listed in Section 5.14.1
of the Disclosure Schedules (the “Contracts”).

 

19

 

5.14.2  Except
for matters that would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect with respect to the Company, (i) each
Contract is a valid and binding obligation of the Company or the Subsidiary, as
applicable, in full force and effect and enforceable against the Company or the
Subsidiary, as applicable, in accordance with its terms, except as enforcement
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar Laws affecting creditors’ rights generally and by general principles
of equity (regardless of whether considered in a proceeding in equity or at
law) (provided that the foregoing
exception shall apply only to the extent that the relevant bankruptcy, insolvency,
reorganization, moratorium or similar event occurs after the Closing Date), (ii) to the knowledge of the
Company, each Contract is a valid and binding obligation of the counterparty
thereto, in full force and effect and enforceable against such counterparty in
accordance with its terms, except as enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar Laws affecting
creditors’ rights generally and by general principles of equity (regardless of
whether considered in a proceeding in equity or at law) (provided that the foregoing exception shall apply only to
the extent that the relevant bankruptcy,
insolvency, reorganization, moratorium or similar event occurs after the
Closing Date), (iii) the
Company and the Subsidiary, and, to the knowledge of the Company, each other
party thereto, has performed in all material respects all obligations required
to be performed by it under each Contract (excluding performance obligations
not yet due), and (iv) neither the Company nor the Subsidiary has received
written notice of a default under any Contract or of any event or condition
that, after notice or lapse of time or both, will constitute a default on the
part of the Company or the Subsidiary under any Contract.

 

5.15                        Insurance.  Section 5.15 of the Disclosure
Schedules accurately and completely lists each policy of insurance in force
with respect to the Company, the
Subsidiary or their respective assets and properties, and
each of the performance or other surety bonds maintained by the Company or the
Subsidiary in the conduct of their businesses. 
All premiums and other payments that have become due under the policies
of insurance listed in Section 5.15 of the Disclosure Schedules
have been paid in full, all of such policies are now in full force and effect
and neither the Company nor the Subsidiary has received written notice from any
insurer, agent or broker of the cancellation of, or any material increase in
premium with respect to, any of such policies or bonds.  Section 5.15 of the Disclosure
Schedules sets forth the claims experience (including all open and closed claims)
of the Company and the Subsidiary over the last three (3) years, for
workers’ compensations claims, general liability claims, auto liability claims,
products liability claims and any other claims covered by any insurance policy.
 Except as set forth in Section 5.15
of the Disclosure Schedules, to
the knowledge of the Company, there has been no occurrence that would reasonably be expected to give rise to
any claim against any of the Company’s or
the Subsidiary’s insurers under any of such policies.  Except
as set forth in Section 5.15 of the Disclosure Schedules,
neither the Company nor the Subsidiary has received any written notification
from any insurer, agent or broker denying or disputing any claim made by either
of them or denying or disputing any coverage for any such claim or the amount
of any claim.

 

20

 

5.16                        Litigation.  Except as set forth in Section 5.16
of the Disclosure Schedules, as of the date hereof:

 

5.16.1  There
are no actions, suits, claims, governmental investigations or arbitration
proceedings pending or, to the knowledge of the Company, threatened, against or
affecting the Company or the Subsidiary or any of the assets or properties of
the Company or the Subsidiary and, to the knowledge of the Company, there is no
basis for any of the foregoing.

 

5.16.2  There
are no outstanding orders, decrees or stipulations issued by any U.S. federal,
state, local or foreign judicial or administrative authority in any proceeding
to which either of the Company or the Subsidiary is or was a party.

 

5.17                        Records.  The Company has previously made available to
LKQ copies of the Company’s articles of incorporation and bylaws and the
equivalent organizational or governing documents of the Subsidiary and all amendments
thereto to date, and such copies are correct and complete in all respects.  A record of all actions taken by the owners
and boards of directors of the Company and the Subsidiary and all minutes of
their meetings are contained in the minute books of the Company and the
Subsidiary and are accurate and complete in all material respects.  The record books, stock ledgers and
membership ledgers of the Company and the Subsidiary contain a materially
accurate and complete record of all issuances, transfers and cancellations of
shares of capital stock of the Company and the Subsidiary.

 

5.18                        No
Material Adverse Change.  Except as
set forth in Section 5.18 of the Disclosure Schedules, since December 31,
2007, there have not been any changes in the business or properties of the
Company or the Subsidiary, or in their financial condition, other than changes
occurring in the ordinary course of business which in the aggregate have not
had a Material Adverse Effect with respect to the Company.  There is not, to the knowledge of the
Company, any threatened event or condition that could reasonably be expected to
have a Material Adverse Effect with respect to the Company.

 

5.19                        Absence of
Certain Acts or Events.  Except for
the transactions contemplated hereby or as disclosed in Section 5.19  of the Disclosure Schedules, since December 31,
2007, each of the Company and the Subsidiary has, in all material respects,
conducted its business in the ordinary course consistent with past practice and
has not:  (i) authorized or issued
any of its shares of capital stock, units of membership interests or any other
securities (including any held in its treasury); (ii) declared or paid any
dividend or made any other distribution of or with respect to its shares of
capital stock or other securities or purchased or redeemed any shares of its
capital stock or other securities or paid any bonus to its employees; (iii) increased
the rate of compensation of any of its employees (except any regularly
scheduled annual pay increases consistent with past practices); (iv) sold,
leased, transferred or assigned any of its assets, other than in the ordinary
course of business; (v) made or obligated itself to make capital
expenditures aggregating more than $100,000; (vi) incurred any material
obligations or liabilities (including any indebtedness) or entered into any
material transaction; (vii) suffered any theft, damage, destruction or
casualty loss in excess of $100,000; (viii) deferred the payment of any
liabilities or accounts payable or deferred the acquisition of any inventory
outside the ordinary course of business or in a manner inconsistent with past
practices; or (ix) accelerated the collection of any accounts receivable
in a manner inconsistent with past practices. 
As of the Closing Date, none of 

 

21

 

the Company’s or the Subsidiary’s
accounts payable will be past due in any material respect.  All net cash generated by the Company and the
Subsidiary (after payment of their accounts payable and expenses consistent
with past practices) between December 31, 2007 and the Closing is or will
be deposited in a bank account registered in the name of the Company or the
Subsidiary, as applicable.

 

5.20                        Compliance
with Laws.  Except as set forth in Section 5.20
of the Disclosure Schedules:

 

5.20.1  Each
of the Company and the Subsidiary is in
compliance, in all material respects,
with all Laws (excluding Environmental Laws and Environmental Permits)
applicable to it, its assets, properties and business; provided, however,
that each Shareholder (other than the Glenn C. McElroy Family Trust dated October 14,
1992 (and its trustee)) makes the foregoing representation and warranty only to
the extent of his actual knowledge without investigation.

 

5.20.2  In
the past five (5) years, the Company and the Subsidiary have not received
written notification of any asserted past or present failure to comply with any
Laws (excluding Environmental Laws and Environmental Permits), which failure
has not heretofore been resolved, and, to the knowledge of the Company, no
proceeding with respect to any such violation is contemplated.

 

5.20.3  Neither
the Company nor the Subsidiary,
nor to the knowledge of the Company, any employee of the Company or the
Subsidiary, has made any payment of funds in connection with the business of
the Company or the Subsidiary prohibited by Law, and no funds have been set
aside to be used in connection with its business for any payment prohibited by
Law.

 

5.20.4  Notwithstanding the foregoing,
nothing in this Section 5.20 shall constitute a representation or
warranty with respect to any matter relating to Laws or Permits, or any
Governmental Authority in regard to the enforcement of such Laws or Permits, to
the extent that such matter is expressly covered by another representation or
warranty in this Section 5 (including Sections 5.4.1, 5.7,
5.8, 5.11, 5.21 and 5.22).

 

5.21                        Environmental
Matters.

 

5.21.1  For
purposes of this Agreement, the terms listed below shall mean the following:

 

“Tank” shall mean that term as defined
in 40 C.F.R. § 260.10, without regard to the character of Tank contents.

 

“Environmental Law” shall mean any federal, state, regional,
county and local administrative rules, statutes, codes, ordinances,
regulations, licenses, permits, approvals, plans, authorizations, directives,
rulings, injunctions, decrees, orders, judgments and any similar items in
effect on or prior to the Closing Date, relating to the protection of human
health, safety or the environment, and common law theories of nuisance,
trespass, waste, negligence and abnormally dangerous activities arising out of
or relating to the presence of any Hazardous Substance (as defined below) in
the environment or workplace.

 

22

 

“Environmental Permit” shall mean any approval, covenant,
waiver, exception, order, permit, authorization, site-specific limitation or
license of any Governmental Authority relating to any Environmental Law.

 

“Hazardous Substance” shall mean and be construed broadly
to include any gas, liquid or solid that is defined as a “hazardous waste,” “hazardous
material,” “hazardous substance,” “extremely hazardous substance,” “restricted
hazardous waste,” “pollutant,” “contaminant,” “toxic waste,” “toxic substance”
or “special waste” under any Environmental Law and includes petroleum,
petroleum by-products (including crude oil and any fraction thereof), waste
oils, any hydrocarbon-based substance, asbestos, asbestos-containing materials,
urea formaldehyde and polychlorinated biphenyls.

 

“Release” shall mean releasing, spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, disposing or dumping into the indoor or outdoor environment,
including the abandonment or discarding of barrels, drums, containers, tanks
and other receptacles containing or previously containing any Hazardous
Substance.

 

The representations and warranties in this Section 5.21
shall each be qualified as being to Actual Knowledge as defined in Section 13.3.1.  Notwithstanding anything herein to the
contrary, except for the representations and warranties contained in this Section 5.21,
the Shareholders and the Company do not make any representation or warranty of
any kind or nature (whether express, implied or otherwise) relating to any
matter involving any Environmental Law, Environmental Permit, Hazardous
Substance, Release or other environmental issue.

 

5.21.2  Except
as set forth in Section 5.21.2 of the Disclosure Schedules, neither
the Company nor the Subsidiary:  (i) has transported, stored, treated or
disposed, nor have they allowed or arranged for any third parties to transport,
store, treat or dispose any Hazardous Substance to or at any location or in a
manner that has resulted or could reasonably be expected to result
in a liability under any Environmental Law; or (ii) has disposed, or
allowed or arranged for any third parties to dispose, any Hazardous Substance
upon property owned or leased by them currently or in the past.

 

5.21.3  Except
as set forth in Section 5.21.3 of the Disclosure Schedules, there has not occurred, nor is
there currently occurring, a Release or threatened
Release of any Hazardous Substance on, into or beneath the surface of, or
adjacent to, any parcel of the Real Property.

 

5.21.4  Except as set forth in Section 5.21.4
of the Disclosure Schedules, neither  the
Company nor the Subsidiary has:  (i) received
any written notice that the Company or the Subsidiary is potentially
responsible for a response action or corrective action under any Environmental
Law; (ii) submitted or was required to submit any notice pursuant to Section 103(c) of
CERCLA; and (iii) received any request for information in connection with
any environmental response under any Environmental Law.

 

5.21.5  Except as set forth in Section 5.21.5
of the Disclosure Schedules, neither the Company nor the Subsidiary uses, nor
have they ever used, any Tanks on  the  Real Property nor has there been a Release
from any Tank on the Real Property.

 

23

 

5.21.6  Except
as set forth in Section 5.21.6 of the Disclosure Schedules, (i) the Company and the Subsidiary are
in compliance with all Environmental Laws governing the Real Property and the
operations of the Company and the Subsidiary; (ii) the Company and the
Subsidiary have obtained and maintained in effect all Environmental Permits
necessary for operation of their business; (iii) no action to revoke or
modify such Environmental Permits is pending; and (iv) the Company and the
Subsidiary are in compliance with such Environmental Permits.

 

5.21.7  The Company has made available to
LKQ all material written information in its possession, or materially accurate
written summaries of such information, that concerns the Company or the Subsidiary
with regard to:  (i) all
environmental audits, assessments or occupational health studies relating to
the assets, Real Property or business of the Company and the Subsidiary
undertaken by a Governmental Authority or the Company, the Subsidiary or any of
their agents; (ii) the results of any groundwater, soil, air or asbestos
monitoring undertaken with respect to the Real Property; (iii) any actual
or alleged violation of, or liability under, any Environmental Law or any
health and safety requirements; and (iv) any investigatory, remedial or
corrective obligations, including those assumed or undertaken with respect to
any other person, relating to any Real Property or any off-site location,
arising under any Environmental Law or health and safety requirements.

 

5.22                        Labor
Relations.  Except as set forth in Section 5.22
of the Disclosure Schedules:

 

5.22.1  The
Company and the Subsidiary are not a party to or bound by any collective
bargaining agreement or any other agreement with a labor union, and to the
knowledge of the Company, since December 31, 2004, there has been no
effort by any labor union to organize any employees of the Company or the
Subsidiary into one or more collective bargaining units.

 

5.22.2  There
is not any pending or, to the
knowledge of the Company, threatened labor dispute, strike or work stoppage involving
any of the employees of the Company or the Subsidiary that affects or that may
affect the business of the Company or the Subsidiary or that may interfere with
the Company’s continued operations.

 

5.22.3  Neither
the Company nor the Subsidiary nor, to the knowledge of the Company, any agent,
representative or employee of the Company or the Subsidiary committed any
unfair labor practice as defined in the National Labor Relations Act, as
amended, and there is not now any pending
or, to the knowledge of the Company, threatened charge or complaint against the
Company or the Subsidiary by or with the National Labor Relations Board or any
representative thereof.

 

5.22.4  There
has been no strike, walkout or work stoppage involving any of the
employees of the Company or the Subsidiary during the five-year period prior to
the date hereof.

 

5.22.5  The
Company is not aware that any executive or key employee or group of employees
has any plans to terminate his, her or their employment with the Company or the
Subsidiary.

 

24

 

5.23                        Employee
Benefits.

 

5.23.1  None
of the Company, the Subsidiary, nor any corporation or business that is now or
at the relevant time was a member of a controlled group of corporations or
trades or businesses including the Company, within the meaning of Section 414
of the Code, maintains or contributes to, or at any time since January 1,
1994 maintained or contributed to:  (i) any
non-qualified deferred compensation or retirement plans or arrangements; (ii) any
qualified defined contribution retirement plans or arrangements; (iii) any
qualified defined benefit pension plan; (iv) any other plan, program,
agreement or arrangement under which former employees of the Company, the
Subsidiary or their beneficiaries are entitled, or current employees of the
Company or the Subsidiary will be entitled following termination of employment,
to medical, health, life insurance or other benefits other than pursuant to
benefit continuation rights granted by state or federal law; or (v) any
other employee benefit, health, welfare, medical, disability, life insurance,
stock, stock purchase or stock option plan, program, agreement, arrangement or
policy, except in each case as described in Section 5.23.1 of the
Disclosure Schedules.  The plans
described in Section 5.23.1 of the Disclosure Schedules are
referred to herein as the “Plans.”

 

5.23.2  The
administration of the Plans complies in all material respects with the
requirements of the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”), and the Plans meet in all material respects any applicable
requirements for favorable tax treatment under the Code in both form and
operation.  All of the Plans that
constitute employee pension benefit plans or employee welfare plans subject to
ERISA and the trusts or other funding vehicles related to the Plans have been
maintained in compliance in both form and operation with the requirements of
ERISA.  The costs of administering the
Plans, including fees for the trustee and other service providers that are
customarily paid by the Company or the Subsidiary, have been paid or will be
paid prior to the Closing Date or will be
reflected in the Closing Balance
Sheet. There have been no non-exempt prohibited transactions as defined in Section 406
of ERISA or Section 4975 of the Code with respect to any of the Plans or
any parties in interest or disqualified persons with respect to the Plans.  There are no pending or, to the knowledge of
the Company, threatened claims, lawsuits or arbitrations that have been
asserted or instituted against the Plans, any fiduciaries thereof with respect
to their duties to the Plans or the assets of any of the trusts under any of
the Plans.

 

5.23.3  All
contributions to the Plans due and owing as of the Closing Date have been made or will be made prior to the Closing Date or
will be reflected in the Closing Balance
Sheet.  Vacation and all other applicable
benefit accruals with respect to the current Plan year are reflected in the
Balance Sheet or will be reflected in the
Closing Balance Sheet.  None of
the Plans is a pension plan subject to Title IV of ERISA.  None of the Plans is a multi-employer plan as
defined in Section 3(37) of ERISA. 
The Company and the Subsidiary have no plans, programs, agreements or
arrangements, and have not made any other commitments to their employees,
former employees or their beneficiaries, under which they have any obligation
to provide any retiree or other employee benefit payments that are not
adequately funded through a trust or other funding arrangement.

 

5.23.4  The
Company has made available to LKQ true and complete copies of:  (i) the Plans, amendments, and any
related trusts or funding vehicles, policies or contracts and the related
summary plan descriptions with respect to each Plan; (ii) the most recent 

 

25

 

determination letters received
from the Internal Revenue Service regarding the Plans; (iii) the latest
financial statements and Form 5500 annual reports for each of the Plans
and related trusts or funding vehicles, policies or contracts as of the end of
the most recent Plan year with respect to which the filing date for such information
has passed; (iv) the reports of the most recent actuarial valuations of
the Plans; (v) copies of communications from regulatory agencies regarding
audits, examinations and noncompliance with the applicable legal requirements; (vi) a
summary of the most recent nondiscrimination test results; and (vii) copies
of agreements with service providers to the Plans.

 

5.24                        Warranties.  No product manufactured, sold, leased or
delivered by the Company or the Subsidiary, or work performed by it, is subject
to any guaranty, warranty or other indemnity, except as described in Section 5.24
of the Disclosure Schedules.

 

5.25                        Product
Liability.  Except as set forth in Section 5.25 of the Disclosure Schedules, neither the Company nor the Subsidiary has any liability (and, to the knowledge of the Company, no
grounds exist for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand against them giving rise to
any liability) arising out of any injury to individuals or property as a result
of any third party’s ownership,
possession or use of any product manufactured, sold, leased or delivered by the
Company or the Subsidiary, or as a result of any work performed by the Company
or the Subsidiary.

 

5.26                        [Intentionally
Omitted]

 

5.27                        Internal
Controls.  Except as set forth in Section 5.27 of the
Disclosure Schedules, each of the Company and the Subsidiary maintains a system
of internal control over financial reporting sufficient to provide reasonable
assurance regarding the reliability of such entity’s financial reporting and
the preparation of financial statements for external purposes in accordance
with GAAP and to provide reasonable assurance that:  (i) records are maintained in reasonable
detail that accurately and fairly reflect the transactions and dispositions of
the assets of the Company and the Subsidiary; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
accordance with GAAP, and that receipts and expenditures of the Company and the
Subsidiary are being made only in accordance with authorizations of management
and the board of directors (or equivalent entity) of the Company or the
Subsidiary, as applicable; and (iii) unauthorized acquisition, use or
disposition of the Company’s or the Subsidiary’s assets that could have a
material effect on such entity’s financial statements are timely detected
and/or prevented.  Except as set forth in Section 5.27 of the
Disclosure Schedules, there have
been no changes in such system of internal control over financial reporting
during the preceding ninety (90) days that have materially affected, or
are reasonably likely to materially affect, such system of internal control
over financial reporting.  Except as set
forth in Section 5.27
of the Disclosure Schedules, there
are no significant deficiencies or material weaknesses in the design or
operation of such system of internal control over financial reporting that are
reasonably likely to adversely affect the ability of the Subsidiary or the
Company to record, process, summarize and report financial information.  Except as set forth in Section 5.27 of the Disclosure Schedules, there have been no instances of fraud,
whether or not material, that involve the Company’s or the Subsidiary’s
management or other employees who have a significant role in such entity’s
system of internal control over financial reporting.

 

26

 

5.28                        Investment
Bankers’ and Brokers’ Fees.  Except
for Sagent Advisors Inc., the Company does not have any obligation to pay any
fees or commissions to any investment banker, broker, finder or agent with
respect to the transactions contemplated by this Agreement.

 

6.                                      Representations
and Warranties of LKQ

 

In order to
induce the Shareholders and the Company to enter into this Agreement and to
consummate the transactions contemplated hereunder, LKQ makes the following
representations and warranties:

 

6.1                               Organization,
Power and Authority of LKQ.  LKQ is a
corporation duly organized and validly existing in good standing under the laws
of the State of Delaware.  LKQ has full
corporate power and authority to enter into this Agreement and to carry out the
transactions and agreements contemplated hereby.  LKQ has full corporate power and authority
necessary to own, lease or operate its properties and to carry on its business
as it is now being conducted.  LKQ is
duly qualified or licensed as a foreign corporation to do business, and is in
good standing, in each jurisdiction where the character of the properties
owned, leased or operated by it or the nature of its business makes such
qualification or licensing necessary, except, in each case, for any such
failures that would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect with respect to LKQ.  LKQ has full power and authority to execute
and deliver this Agreement and the Ancillary Agreements to which LKQ will be a
party, to perform its obligations hereunder and thereunder, and to consummate
the transactions contemplated hereby and thereby.

 

6.2                               Due
Authorization; Binding Obligation. 
The execution and delivery by LKQ of this Agreement and each of the
Ancillary Agreements to which LKQ will be a party and the consummation by LKQ
of the transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action. 
This Agreement has been, and upon execution and delivery each of the Ancillary
Agreements to which LKQ will be a party will have been, duly executed and
delivered by LKQ.  Assuming due
authorization, execution and delivery by the other parties, this Agreement
constitutes, and upon execution and delivery each of the Ancillary Agreements
to which LKQ will be a party will constitute, the legal, valid and binding
obligations of LKQ, enforceable against it in accordance with their respective
terms, except as enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar Laws affecting creditors’
rights generally and by general principles of equity (regardless of whether
considered in a proceeding in equity or at law).

 

6.3                               No
Conflict; Required Filings and Consents.

 

6.3.1  The
execution, delivery and performance by LKQ of this Agreement and each of the
Ancillary Agreements to which LKQ will be a party, and the consummation of the
transactions contemplated hereby and thereby, do not and will not (i) conflict
with or violate the certificate of incorporation or bylaws of LKQ; (ii) conflict
with or violate any Law applicable to LKQ or by which any property or asset of
LKQ is bound or affected; (iii) conflict with, result in any breach of,
constitute a default (or an event that, with notice or lapse of time or both,
would become a default) under, result in the acceleration of, create in any
party the right to accelerate, suspend, terminate, modify, cancel or require
any notice or consent of any third party pursuant 

 

27

 

to, any material contract,
agreement, lease, license, instrument or other arrangement to which LKQ is a
party or by which any of its properties or assets are bound; or (iv) result
in the creation or imposition of any Encumbrance on any property or asset of
LKQ; except, with respect to clauses (ii), (iii) and (iv), for
matters that would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect with respect to LKQ or that arise as
a result of any action by the Shareholders, the Company or any of their
affiliates.

 

6.3.2  LKQ
is not required to file, seek or obtain any notice, authorization, approval,
order, permit or consent of or with any Governmental Authority in connection
with the execution, delivery and performance by LKQ of this Agreement and each
of the Ancillary Agreements to which LKQ will be a party, or the consummation
of the transactions contemplated hereby or thereby, except (i) for any
filings required to be made under the HSR Act, (ii) for such filings as
may be required by any applicable federal or state securities or “blue sky”
laws, or (iii) where failure to obtain such consent, approval,
authorization or action, or to make such filing or notification, would not, (a) prevent
or materially delay or impede performance by LKQ of any of its obligations
under this Agreement or (b) individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect with respect to LKQ.

 

6.4                               Investment
Bankers’ and Brokers’ Fees.  LKQ has
no obligation to pay any fees or commissions to any investment banker, broker,
finder or agent with respect to the transactions contemplated by this
Agreement.

 

6.5                               LKQ
Common Stock.  The LKQ Shares, when
delivered at Closing, will be validly issued, fully paid and non-assessable and
will be issued in compliance with the registration and qualification
requirements of all applicable federal, state and foreign securities laws.  The LKQ Shares have been registered pursuant
to the Registration Statement on Form S-4 (File No. 333-133911) filed
by LKQ on May 9, 2006.  Upon
issuance as contemplated by this Agreement, the LKQ Shares will be free of any
restrictions on resale, other than as a result of any action by the Shareholders, including their ownership of shares
of common stock of LKQ (other than the
LKQ Shares) but excluding their acquisition and the resulting ownership of the
LKQ Shares pursuant to this Agreement.

 

6.6                               SEC
Matters.

 

6.6.1  LKQ
has delivered to each of the Shareholders a copy of the Prospectus, which
incorporates by reference the SEC Reports, as filed pursuant to the Exchange
Act.  The Prospectus was prepared in
accordance with the requirements of the Securities Act.  The SEC Reports were prepared in accordance
with the requirements of the Exchange Act. 
The Prospectus and the SEC Reports, when considered as a whole, do not
contain any untrue statement of a material fact, or omit to state a material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, except to the extent corrected by a
document subsequently filed by or on behalf of LKQ with the SEC on or prior to
the date of this Agreement.

 

6.6.2  Each
of the balance sheets contained in or incorporated by reference into the SEC
Reports (including the related notes and schedules thereto) fairly presents and
will fairly present the financial position of the entity or entities to which
such balance sheet relates as of its

 

28

 

date, and each of the
statements of income and changes in shareholders’ equity and cash flows or
equivalent statements in the SEC Reports (including any related notes and
schedules thereto) fairly presents and will fairly present the results of
operations, changes in shareholders’ equity and changes in cash flows, as the
case may be, of the entity or entities to which such statement relates for the
periods to which it relates, in each case in accordance with GAAP consistently
applied during the periods involved, except in each case as may be noted
therein, subject to normal year-end adjustments in the case of unaudited
statements.

 

6.6.3  LKQ
maintains a system of internal control over financial reporting sufficient to
provide reasonable assurance regarding the reliability of its financial
reporting and the preparation of financial statements for external purposes in
accordance with GAAP and to provide reasonable assurance that:  (i) records are maintained in reasonable
detail that accurately and fairly reflect the transactions and dispositions of
the assets of LKQ; (ii) transactions are recorded as necessary to permit
preparation of financial statements in accordance with GAAP, and that receipts
and expenditures of LKQ are being made only in accordance with authorizations
of management and the board of directors of LKQ; and (iii) unauthorized
acquisition, use or disposition of LKQ’s assets that could have a material
effect on its financial statements are timely detected and/or prevented.  There have been no changes in such system of
internal control over financial reporting during the preceding ninety (90)
days that have materially affected, or are reasonably likely to materially
affect, such system of internal control over financial reporting.  There are no significant deficiencies or
material weaknesses in the design or operation of such system of internal
control over financial reporting that are reasonably likely to adversely affect
the ability of LKQ to record, process, summarize and report financial information.  There have been no instances of fraud,
whether or not material, that involve LKQ’s management or other employees who
have a significant role in such entity’s system of internal control over
financial reporting.

 

6.7                               Financing.  LKQ has sufficient funds to permit it to
consummate the transactions contemplated by this Agreement and the Ancillary
Agreements.  LKQ has provided the
Shareholders with accurate and complete copies of documents and materials
reasonably satisfactory to the Shareholders evidencing LKQ’s possession of
sufficient funds for consummation of the transactions contemplated by this
Agreement and the Ancillary Agreements.

 

6.8                               Investment
Intent.  LKQ is acquiring the Shares
for its own account, for investment purposes only and not with a view to any
public distribution thereof or with any intention of selling, distributing or
otherwise disposing of the Shares in a manner that would violate the
registration or qualification requirements of the Securities Act or any
applicable state or foreign securities Laws. 
LKQ agrees that the Shares may not be sold, transferred, offered for
sale, pledged, hypothecated or otherwise disposed of without registration or
qualification under the Securities Act and any applicable state securities
Laws, except pursuant to an exemption from such registration or qualification
under the Securities Act and such Laws. 
LKQ is able to bear the economic risk of holding the Shares for an
indefinite period (including total loss of its investment) and (either alone or
together with its representatives) has sufficient knowledge and experience in
financial and business matters so as to be capable of evaluating the merits and
risks of its investment.

 

29

 

6.9                               Access
to Information; LKQ’s Own Investigation; No Other Representations or Warranties.

 

6.9.1  LKQ
is a sophisticated purchaser and has made its own investigation, review and
analysis regarding the Shares, the Company and the Subsidiary and the
transactions contemplated hereby, which investigation, review and analysis were
conducted by LKQ together with expert advisors that it has engaged for such
purpose.  Prior to the date hereof, LKQ
has reviewed or been afforded full opportunity to review all information
(including documents and other information at the Company’s facilities and in
electronic form) provided to it by the Shareholders, the Company and the
Subsidiary and their representatives and has had the opportunity to ask
questions of and receive answers to its satisfaction from the Shareholders, the
Company and their representatives concerning the Company and the Shares, and to
obtain any additional information reasonably requested by it.

 

6.9.2  LKQ
has relied solely on its own review of the Shares, the Company and the Subsidiary
and the representations and warranties made
in Sections 4 and 5 of this Agreement, and not on any other
representations or warranties made
by or on behalf of any of the Shareholders, the Company and their respective
affiliates and representatives.

 

6.9.3  EXCEPT
AS EXPRESSLY SET FORTH IN THE REPRESENTATIONS
AND WARRANTIES MADE IN SECTIONS 4 AND 5 OF THIS AGREEMENT OR IN ANY CERTIFICATE OR
SCHEDULE FURNISHED IN CONNECTION WITH SUCH
REPRESENTATIONS AND WARRANTIES, LKQ ACKNOWLEDGES AND AGREES THAT IT SHALL
AT THE CLOSING ACCEPT THE PROPERTY AND ASSETS OF THE COMPANY AND THE SUBSIDIARY
IN AN “AS IS” AND “WHERE IS” CONDITION WITH ALL FAULTS.  IN PARTICULAR, BUT WITHOUT LIMITATION, LKQ
ACKNOWLEDGES THAT, EXCEPT FOR THE EXPRESS REPRESENTATIONS AND
WARRANTIES MADE IN SECTIONS 4 AND 5 OF THIS AGREEMENT OR IN ANY CERTIFICATE OR
SCHEDULE FURNISHED IN CONNECTION WITH SUCH
REPRESENTATIONS AND WARRANTIES, THE
SHAREHOLDERS AND THE
COMPANY DO NOT MAKE, AND THE SHAREHOLDERS, THE COMPANY AND THEIR RESPECTIVE AFFILIATES
AND REPRESENTATIVES HAVE NOT MADE, ANY REPRESENTATIONS OR WARRANTIES OF ANY
KIND WHATSOEVER, EITHER EXPRESS OR IMPLIED, INCLUDING ANY REPRESENTATION OR
WARRANTY WHATSOEVER AS TO TITLE, MERCHANTABILITY, QUALITY, VALUE, CONDITION,
SAFETY, CONFORMITY OR FITNESS FOR ANY PARTICULAR USE OR PURPOSE OF ANY ASSETS
OR OTHER PROPERTIES OF THE COMPANY OR THE SUBSIDIARY.

 

7.                                      Covenants

 

7.1                               Conduct
of Business Prior to the Closing.  Between the date of this Agreement and
the Closing Date, except as set forth on Schedule 7.1
hereto or unless LKQ shall otherwise consent in writing (which consent
shall not be unreasonably withheld, delayed or conditioned) or as otherwise
permitted or contemplated by this Agreement, the Company will, and will cause
the Subsidiary, in all material respects to, conduct its business only in the
ordinary course consistent with past practice, and each of the Company and the Subsidiary shall use its commercially
reasonable efforts to preserve intact in all material respects its business
organization.  Without 

 

30

 

limiting the foregoing, between
the date of this Agreement and the Closing Date, except as set forth on Schedule 7.1
hereto or as otherwise permitted or contemplated by this Agreement, each of the
Company and the Subsidiary shall not do any of the following without the prior
written consent of LKQ (which consent shall not be unreasonably withheld,
delayed or conditioned):

 

(a)                                  amend
or otherwise change its articles of incorporation or bylaws or equivalent
organizational or governing documents;

 

(b)                                 issue,
deliver, sell, pledge or encumber, or authorize, any shares of capital stock,
or any options, warrants, convertible securities or other rights of any kind to
acquire any such shares;

 

(c)                                  declare,
set aside, make or pay any dividend or other distribution (whether payable in
cash, stock, property or a combination thereof) with respect to any of its
capital stock (other than dividends paid by the Subsidiary to the Company or
distributions to the Shareholders for income tax liabilities consistent with
past practice);

 

(d)                                 reclassify,
combine, split, subdivide or redeem, or purchase or otherwise acquire, directly
or indirectly, any of its capital stock;

 

(e)                                  acquire
or make any investment in any equity interests in any corporation, partnership,
limited liability company, other business organization or division thereof or
any assets, loans or debt securities thereof;

 

(f)                                    adopt
a plan of complete or partial liquidation, dissolution, merger, consolidation
or recapitalization or other reorganization;

 

(g)                                 incur
any indebtedness for borrowed money or assume, guarantee or endorse, or
otherwise become responsible for, the indebtedness of any other person or
entity for borrowed money, or issue any debt securities, except for trade
payables in the ordinary course of business;

 

(h)                                 grant
any Encumbrance on any of its material assets to secure any indebtedness for
borrowed money, except in connection with indebtedness permitted under Section 7.1(g);

 

(i)                                     enter
into any contract, agreement or arrangement that would be a Contract if it had
been entered into prior to the date hereof;

 

(j)                                     authorize,
or make any commitment with respect to, any single capital expenditure that is
in excess of $50,000 or capital expenditures that are, in the aggregate, in
excess of $250,000;

 

(k)                                  fail
to exercise any rights of renewal with respect to any material Leased Real
Property that by its terms would otherwise expire;

 

(l)                                     grant
or announce any increase or change in the salaries, bonuses or other benefits
payable by the Company to any of its employees, other than as required by
applicable

 

31

 

Law, pursuant to any plans,
programs or agreements existing on the date hereof or other ordinary increases
not inconsistent with the past practices of the Company or the Subsidiary;

 

(m)                               make
any change in any method of accounting or accounting practice or policy, except
as required by GAAP or applicable Law;

 

(n)                                 pay,
discharge, settle or satisfy any material claims, liabilities or obligations
(absolute, accrued, contingent or otherwise), other than (i) performance
of contractual obligations in accordance with their terms, (ii) payment,
discharge, settlement or satisfaction in the ordinary course of business or (iii) payment,
discharge, settlement or satisfaction in accordance with their terms, of
claims, liabilities or obligations that have been (a) disclosed in the
Interim Financial Statements (or the notes thereto) or (b) incurred since
the date of such financial statements in the ordinary course of business; or

 

(o)                                 knowingly
commit or agree to take any of the actions described in Sections 7.1(a) through
(n) above.

 

7.2                               Covenants
Regarding Information.  From the date hereof until the Closing
Date, upon reasonable notice, the Company and the Subsidiary shall afford LKQ
and its representatives reasonable access to the properties, offices and other
facilities, books and records of the Company and the Subsidiary, and the
Company and the Subsidiary shall furnish LKQ with such financial, operating and
other data and information as LKQ may reasonably request; provided, however,
that any such access or furnishing of information shall be during normal
business hours and in such a manner as not to interfere in any significant
manner with the normal operations of the Company and the Subsidiary.  Notwithstanding anything to the contrary in
this Agreement, the Company and the Subsidiary shall not be required to
disclose any information to LKQ or its representatives or provide LKQ or its
representatives access to the Company’s or the Subsidiary’s properties, offices
and other facilities if such disclosure or access would, in the Company’s
reasonable judgment, (i) jeopardize any attorney-client or other legal privilege
of the Shareholders, the Company or the Subsidiary, or (ii) contravene any
applicable Laws or binding Contract entered into prior to the date hereof.

 

7.3                               Notification
of Certain Matters;
Update of Disclosure Schedules.

 

7.3.1  From
and after the date of this Agreement until the earlier of the Closing Date or
the termination of this Agreement pursuant to Section 8.1, the
Company shall give prompt written notice to LKQ, and LKQ shall give prompt
written notice to the Company, of (i) any material notice or other
material communication received by such party from any Governmental Authority
in connection with this Agreement and the transactions contemplated hereby or
from any person alleging that the consent of such person is or may be required
in connection with this Agreement or the transactions contemplated hereby, (ii) any
material claims, actions, suits, proceedings or investigations commenced or, to
such party’s knowledge, threatened against, relating to or involving or
otherwise affecting such party or any of its subsidiaries that relate to this
Agreement or the transactions contemplated hereby, and (iii) any fact,
event or circumstance known to such party that would cause or constitute, or
would reasonably be expected to cause or constitute, a breach in any material
respect of such party’s representations, warranties, covenants or agreements
contained herein or would prevent, delay or 

 

32

 

impede, or would reasonably be
expected to prevent, delay or impede, the consummation of the transactions
contemplated by this Agreement.

 

7.3.2  Each
of the Shareholders and the Company shall have the right from time to time
prior to the Closing to supplement or amend the Disclosure Schedules (each, an “Update”)
with respect to (a) any matter hereafter arising or discovered that, if
existing or known as of the date of this Agreement, would have been required to
be set forth or described in such Disclosure Schedules and (b) events or
conditions arising after the date hereof and prior to the Closing.  If
any such Update would permit LKQ
to terminate this Agreement pursuant to Sections 8.1.2(b) or 8.1.3(b),
then LKQ may either:  (A) provide written notice to the
Shareholder Representatives within ten (10) days after receipt of the Update, that LKQ is electing not to waive the
matter(s) contained in the Update and has determined to terminate this
Agreement; provided that, in
the event such ten (10)-day period extends past the Termination Date (as
defined in Section 8.1.4),
the Termination Date shall automatically be extended to be the last day of such
ten (10)-day period; or (B) waive
the matter(s) contained in the Update and elect to proceed with the Closing; provided that, if LKQ fails
to provide written notice to the Shareholder Representatives as prescribed in the foregoing
clause (A), LKQ shall be deemed to have waived the matter(s) contained in the
Update and elected to proceed with the
Closing pursuant to the foregoing clause (B).  If
the Closing occurs pursuant to clause (B) above,
then such Update shall be effective to cure and correct
for all purposes any breach of any representation, warranty or covenant that
would have existed had the Company
not made such Update, except in the case of fraud or intentional misconduct,
and the Disclosure Schedules shall for all purposes be deemed to include the added
or corrected information contained in
such Update.  Other than the Update described in the
preceding sentence of this Section 7.3.2, Updates shall not cure any breach of any representation, warranty or covenant made by the Shareholders and/or the Company in Sections 4
and 5 of this Agreement or in any certificate or schedule furnished in connection with
such representations and warranties, or
limit or otherwise affect any remedies available to LKQ under this Agreement with respect to such breach.

 

7.4                               Confidentiality.  Subject
to applicable Law, each of the parties shall hold, and shall cause its
representatives to hold, in confidence all documents and information furnished
or made available to it by or on behalf of the other parties in connection with
the transactions contemplated hereby pursuant to the terms of the
Confidentiality Agreement, which shall continue in full force and effect until
the Closing Date, at which time such Confidentiality Agreement and the
obligations of the parties under this Section 7.4 shall terminate; provided,
however, that after the Closing Date, the Confidentiality Agreement
shall terminate only in respect of that portion of the Evaluation Material (as
defined in the Confidentiality Agreement) exclusively relating to the
transactions contemplated by this Agreement. 
If for any reason this Agreement is terminated prior to the Closing
Date, the Confidentiality Agreement shall nonetheless continue in full force
and effect in accordance with its terms.

 

7.5                               Further
Action; Reasonable Best Efforts.

 

7.5.1                     Reasonable
Best Efforts.  Both before and after the Closing, subject
to the terms and conditions of this Agreement, each party shall use its or his
reasonable best efforts to take, or cause to be taken, all actions, and to do,
or cause to be done, and to assist and cooperate with the other parties in
doing, all things necessary, proper or advisable under 

 

33

 

applicable Laws to consummate
and make effective the transactions contemplated under this Agreement,
including using reasonable best efforts to accomplish the following:  (i) preparing and filing as soon as
practicable (but in no event later than ten (10) Business Days after
the date of this Agreement in respect of any such filings required in
connection with the HSR Act) all forms, registrations and notices relating to
antitrust, competition, trade or other regulatory matters that are required by applicable
Law to be filed in order to consummate the transactions contemplated hereby and
the taking of such actions as are reasonably necessary to obtain any requisite
approvals, consents, orders, exemptions or waivers by, or to avoid an action or
proceeding by, a Governmental Authority relating to antitrust, competition,
trade or other regulatory matters (collectively, “Regulatory Approvals”),
including (a) filings pursuant to the HSR Act with the United States
Federal Trade Commission (the “FTC”) and with the Antitrust Division of
the United States Department of Justice (the “Antitrust Division”) and (b) preparing
and filing, as soon as practicable, any form or report required by any other
Governmental Authority relating to any Regulatory Approval, (ii)  taking
all actions necessary to cause all conditions set forth in Section 9
and Section 10 (including the prompt termination of any waiting
period under the HSR Act (including any extension of the initial 30-day waiting
period thereunder)) to be satisfied as soon as practicable, and (iii) executing
and delivering any additional instruments necessary to consummate the
transactions contemplated hereby and to fully carry out the purposes of this
Agreement.

 

7.5.2                     Regulatory
Matters.  Each party shall keep each
of the other parties reasonably apprised of the status of matters relating to
the completion of the transactions contemplated hereby and work cooperatively
in connection with obtaining all required approvals or consents of any
Governmental Authority.  In that regard,
each party shall without limitation:  (i) promptly
notify the others of, and if in writing, furnish the others with the copies of
(or, in the case of material oral communications, advise the others orally of)
any communications from or with any Governmental Authority with respect to the
transactions contemplated by this Agreement, (ii) permit the others to
review and discuss in advance, and consider in good faith the views of the
others in connection with, any proposed written (or any proposed material oral)
communication with any Governmental Authority, (iii) not participate in
any meeting with any Governmental Authority unless it consults with the others
in advance and to the extent permitted by such Governmental Authority gives the
others the opportunity to attend and participate thereat, (iv) furnish the
others with copies of all correspondence, filings and communications (and
memoranda setting forth the substance thereof) between it and any Governmental
Authority with respect to this Agreement, and (v) respond as promptly as
reasonably practicable to any inquiries received from the FTC or the Antitrust
Division and to all inquiries and requests received from any State Attorney
General or other Governmental Authority in connection with Regulatory Approvals
and antitrust matters. Notwithstanding anything to the contrary contained
herein, (i) nothing in this Agreement will require LKQ, whether pursuant
to an order of the FTC or the Antitrust Division or otherwise, to dispose of
any assets, lines of business or equity interests in order to obtain the
consent of the FTC or the Antitrust Division to the transactions contemplated
by this Agreement, and (ii) without the other parties’ consent (which
consent shall not be unreasonably withheld, delayed or conditioned), none of
the Company, LKQ or any of their affiliates shall (a) extend any waiting
period or agree to refile under the HSR Act or (b) enter into any
agreement with the FTC or the Antitrust Division agreeing to suspend
consummation of the transactions contemplated by this Agreement.

 

34

 

7.5.3                     Information.  Each party shall promptly notify the other
parties of:

 

(a)  any notice or other communication from any person or
entity alleging that the consent of such person or entity is or may be required
in connection with the transactions contemplated by this Agreement;

 

(b)  any notice or other communication from any Governmental
Authority in connection with the transactions contemplated by this Agreement;
and

 

(c)  any actions, suits, claims, investigations or
proceedings commenced or overtly threatened against, relating to or involving
or otherwise affecting such party or any of its subsidiaries that relate to the
consummation of the transactions contemplated by this Agreement.

 

7.6                               Employee
Matters.

 

7.6.1  To
the extent that any employee of the Company (other than those who agree with
LKQ on other employment arrangements prior to or upon Closing) (each an “Affected
Employee”) after the Closing becomes eligible to participate in any
employee benefit plan, program or arrangement maintained by LKQ or any of its
affiliates, LKQ shall use commercially reasonable efforts to cause the Affected
Employees to receive credit for all periods of employment and/or service with
the Company (including service with predecessor employers, where such credit
was provided by the Company) and any of its subsidiaries prior to the Closing
for all purposes (except for benefit accrual under a defined benefit pension
plan).  LKQ shall use commercially
reasonable efforts to honor, or cause to be honored, all unused vacation,
holiday, sickness and personal days accrued by the Affected Employees under the
policies and practices of the Company; provided, however, that
LKQ shall only be required to honor any unused vacation, holiday, sickness and
personal days that have been accrued in the Closing Balance Sheet.

 

7.6.2  In
the event that LKQ transfers an Affected Employee from a Company welfare
benefit plan to a different welfare benefit plan prior to December 31,
2008, LKQ shall use commercially reasonable efforts to cause all welfare
benefit plans (including medical, dental, life insurance and short- and
long-term disability benefit plans) in which such Affected Employee will
participate following the Closing to (i) waive all limitations as to
preexisting conditions, exclusions and waiting periods with respect to
participation and coverage requirements applicable to such Affected Employee
and his or her covered dependents under such plan (except to the extent that
such conditions, exclusions or waiting periods would apply under the Company’s
plans as in existence prior to the Closing) and (ii) provide such Affected
Employee and his or her covered dependents with credit for any co-payments and
deductibles paid prior to the Closing in satisfying any applicable deductible
or out-of-pocket requirements under such plans.

 

7.6.3  The
parties intend that, as soon as practicable after the Closing, the Company will
terminate its 401(k) Plan (the “401(k) Plan”) (including by
means of a merger of the 401(k) Plan with and into the 401(k) plan of
LKQ).  Accordingly, the parties will use
their reasonable best efforts to cause the Company to take all actions
necessary or appropriate to 

 

35

 

accomplish the termination of
the 401(k) Plan in connection with the foregoing intent, including the
execution of the appropriate board of directors resolutions, the termination of
any and all service provider agreements executed on behalf of the 401(k) Plan
and the taking of any and all other corporate action necessary to formally
terminate the 401(k) Plan.  The
parties will consult with each other, and provide reasonable advance notice to
the other parties, prior to taking any actions to terminate the 401(k) Plan.  The Shareholders will be responsible for any
and all costs and expenses incurred by LKQ or the Company, up to an aggregate
amount of $10,000, which are attributable to the above-described termination of
the 401(k) Plan, including costs associated with preparing the final Form 5500,
except those reflected in the Estimated Balance Sheet, and except for any costs
attributable to actions of LKQ to which the Shareholders shall have provided
reasonable objection to LKQ prior to such action being taken; provided
that, in the event the Shareholders are required by this Section 7.6.3
to reimburse or otherwise make a payment to the LKQ Indemnified Parties, such
reimbursement or payment shall be deemed to be as a result of a breach of a
covenant made by the Company and indemnifiable pursuant to Section 11.1.1
and shall be paid out of the Escrow Account.

 

7.7                               Public
Announcements.  On and after the date hereof and
through the Closing Date, the Shareholder Representatives and LKQ shall consult
with each other before issuing any press release or otherwise making any public
statements with respect to this Agreement or the transactions contemplated
hereby, and none of the parties shall issue any press release or make any public
statement prior to obtaining the other parties’ written approval, which
approval shall not be unreasonably withheld, delayed or conditioned; provided,
however, that if a party determines, based upon advice of counsel, that
a press release or public announcement is required by, or reasonably necessary
in order to comply with, applicable Law, such party may make such press release
or public announcement, in which case the disclosing party shall use its
reasonable best efforts to provide the other party reasonable time to comment
on such release or announcement in advance of such issuance.

 

7.8                               Maintenance
of Insurance.  Between the date hereof and through
the Closing Date, the Company shall use commercially reasonable efforts to
maintain in full force and effect all of its and the Subsidiary’s currently
existing policies of insurance or insurance comparable to the coverage afforded
by such policies.

 

7.9                               Indemnification.  For
a period of six (6) years after
the Closing, the provisions in the articles of incorporation and by-laws
or equivalent charter documents or any other written agreements of the Company
or the Subsidiary with respect to indemnification, advancement of expenses and
exculpation of present and former directors, officers, employees and agents of the
Company will not be repealed or amended or otherwise modified in any manner
that would adversely affect the rights thereunder of the indemnified personnel,
except to the extent, if any, that such modification is required by applicable
Law. 
LKQ (i) shall, and shall cause the Company to, maintain, and (ii) shall
not, and shall cause the Company not to, terminate, amend or otherwise modify in
any manner that would adversely affect the rights of the indemnified personnel
thereunder, any officers’ and directors’
liability insurance policy in effect immediately prior to the Closing Date; provided,
however, that the foregoing obligation shall only apply until the date
through which the coverage under such insurance policy shall have been paid for
by the Company prior to the Closing.  At
the Closing, LKQ, on the one hand, and the officers and directors of the
Company, on the other hand, shall each execute and deliver to one another the 

 

36

 

Indemnification
Agreements (the form of
which is attached hereto as Exhibit 7.9) (the “Indemnification
Agreements”).

 

7.10                        Broker
Fees. 
The Shareholders shall be responsible for the payment of any
fees, commissions and expenses payable to Sagent Advisors Inc. in connection
with the transactions contemplated hereby. 
Notwithstanding the foregoing, the Shareholders may cause the Company to
pay such fees, commissions and expenses immediately prior to the Closing.

 

7.11                        Termination
of Shareholder Agreements.  The Company, G. McElroy and the
Shareholders hereby agree that the following agreements shall terminate and be
of no further force and effect as of immediately prior to the Closing:  (a) the Agreement of Shareholders dated December 7,
1984, as amended; and (b) the Agreement of Shareholders dated as of January 1,
2000, by and among Glenn C. McElroy, Tom Hutton, Phillip McElroy, John L. Neu,
Marjorie Neu, Robert T. Neu and Jeffrey P. Neu, as amended.  To the extent that the Company or any
Shareholder has any rights or claims under such agreements, which arise as a
result of this Agreement or the transactions contemplated hereby, each such
party hereby waives and relinquishes all such rights and claims, effective upon
the termination of such agreements.

 

7.12                        Certain
Assets of the Company.  Between the
date of this Agreement and the Closing Date, the Company will, and will cause
the Subsidiary to, comply with the rules set forth on Schedule 7.12
hereto.

 

7.13                        Insurance Proceeds for Events
Between Signing and Closing.  If, between the date of this Agreement
and the Closing Date, the Company or the
Subsidiary suffers any casualty (whether partial or total) with respect to any
of its assets or properties (other than Owned Real Property) and such casualty
is covered by an insurance policy maintained by the Company or the Subsidiary,
then LKQ shall be entitled to the proceeds paid or payable to the Company or
the Subsidiary under such insurance policy with respect to such casualty and
such proceeds shall not be included in the calculation of the Cash Amount; provided
that, if prior to the Closing, the Shareholders, the Company or the Subsidiary
shall have remedied such casualty (whether in whole or in part) to LKQ’s
reasonable satisfaction, then the Shareholders shall be entitled to the insurance
proceeds to the extent of the casualty so remedied.

 

8.                                      Termination

 

8.1                               Termination.  This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing as follows:

 

8.1.1  by
mutual written consent of LKQ and both of the Shareholder Representatives;

 

8.1.2  (a) by
either of the Shareholder
Representatives if LKQ breaches or fails to perform in any respect any of its
representations, warranties or covenants contained in this Agreement and such breach
or failure to perform (i) would give rise to the failure of a condition
set forth in Section 10, (ii) cannot be or has not been cured
within thirty (30) days following delivery of written notice of such
breach or failure to perform, and (iii) has not been waived by the
Shareholder Representatives; or (b) by LKQ, if any of the Shareholders or
the Company breach or fail to perform in any respect any of their respective
representations, warranties or 

 

37

 

covenants contained in this
Agreement and such breach or failure to perform (i) would give rise to the
failure of a condition set forth in Section 9, (ii) cannot be
or has not been cured within thirty (30) days following delivery of
written notice of such breach or failure to perform, and (iii) has not
been waived by LKQ;

 

8.1.3  (a) by
either of the Shareholder
Representatives if any of the conditions set forth in Section 10
shall have become incapable of fulfillment; or (b) by LKQ, if any of the
conditions set forth in Section 9 shall have become incapable of
fulfillment; provided that the right to terminate this Agreement
pursuant to this Section 8.1.3 shall not be available if the
failure of the party (in the case of the Shareholders, including for this purpose
the Company) so requesting termination to fulfill any obligation under this
Agreement shall have been the cause of such condition becoming incapable of
fulfillment;

 

8.1.4  by
either of the Shareholder
Representatives or LKQ if the Closing shall not have occurred by September 30, 2008 (the “Termination
Date”); provided that the right to terminate this Agreement under
this Section 8.1.4 shall not be available if the failure of the
party (in the case of the Shareholders, including for this purpose the Company)
so requesting termination to fulfill any obligation under this Agreement shall
have been the cause of the failure of the Closing to occur on or prior to the
Termination Date; or

 

8.1.5  by
either of the Shareholder
Representatives or LKQ in the event that any Governmental Authority shall have
issued an order, decree or ruling or taken any other action restraining,
enjoining or otherwise prohibiting the transactions contemplated by this
Agreement and such order, decree, ruling or other action shall have become
final and non-appealable; provided that the right to terminate this
Agreement under this Section 8.1.5 shall not be available if any
action of the party (in the case of the Shareholders, including for this
purpose the Company) so requesting termination, or failure of such party to
perform any of its obligations under this Agreement, has been the cause of, or
resulted in, the imposition of any such order, decree, ruling or other action
or the failure of such order, decree, ruling or other action to be appealed, as
applicable.

 

8.2                               Notice
of Termination.  The party seeking to
terminate this Agreement pursuant to this Section 8 (other than Section 8.1.1)
shall give prompt written notice of such termination to the other parties.

 

8.3                               Effect
of Termination.  In the event of
termination of this Agreement as provided in Section 8.1, there
shall be no further obligation on the part of any party hereto, except that:  (i) the
provisions of  Section 11.5
relating to limitation of punitive, consequential and other types of damages,
Section 13.2 relating to fees and expenses, Section 13.8
relating to notices, Section 13.9 relating to governing law, Section 13.10
relating to submission to jurisdiction, Section 13.14 relating to
attorneys’ fees and expenses and this Section 8 shall survive such termination; and (ii) nothing
herein shall relieve any party from liability for any breach of this Agreement
or any agreement made as of the date hereof or subsequent thereto pursuant to
this Agreement.

 

38

 

9.                                      Conditions to the
Obligations of LKQ

 

The obligation
of LKQ to purchase the Shares shall be subject to the fulfillment at or prior
to the Closing Date of each of the following conditions, any or all of which
may be waived in whole or in part by LKQ in its sole discretion to the extent
permitted by applicable law:

 

9.1                               Receipt
of Necessary Consents.  All necessary
consents or approvals of third parties to any of the transactions contemplated
hereby as listed on Schedule 9.1 hereto shall have been obtained.

 

9.2                               No
Restraint.  No court or Governmental
Authority of competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any statute, rule, regulation, judgment, decree, injunction
or other order (whether temporary, preliminary or permanent) or taken any
action that prohibits the consummation of the transactions contemplated by this
Agreement, and each party agrees to use all reasonable efforts to remove any
such prohibition on the consummation of the transactions contemplated by this
Agreement.

 

9.3                               No
Adverse Litigation.  There shall not be pending or
threatened any action or proceeding by or before any court or other
governmental body which shall seek
to restrain, prohibit or invalidate the sale of the Shares to LKQ or any other transaction
contemplated hereby, and which, in LKQ’s reasonable judgment based on the merits of the claims in such
action or proceeding, makes
it inadvisable to proceed with the purchase of the Shares.

 

9.4                               Releases
and Resignations.  Each of the
Company’s directors and officers shall have delivered to the Company and LKQ a
release and waiver of any claim that he or she may have against the Company and
a resignation, each in the form attached hereto as Exhibit 9.4.

 

9.5                               Corporate
Documents.  The Shareholder
Representatives shall have delivered to LKQ (i) a copy of the Articles of
Incorporation of the Company and the equivalent organizational documents of the
Subsidiary, as amended to date, certified by the Secretary of State of their
respective state of incorporation as true, complete and correct; and (ii) a
certified copy of a certificate from the appropriate Secretary of State
evidencing that each of the Company and the Subsidiary is in good standing
under the laws of the State of California.

 

9.6                               Transfer
of Title and Assets.  Immediately prior to the Closing, Hayward Associates shall
have transferred to the Company full and proper title to all assets (free and
clear of any Encumbrances), except real property, previously held by Hayward
Associates and used by the Company in the Company’s business, and all contracts
(including leases and promissory notes), other than those listed on Schedule 9.6
hereto, between Hayward Associates and the Company shall have been terminated.

 

9.7                               Leases.  The then-current owners of the properties
listed on Schedule 9.7 hereto shall have entered into a lease
agreement with the Company for each such property, in form and substance as set
forth in Exhibits 9.7(A) through 9.7(F).

 

9.8                               HSR
Act.  All applicable waiting periods (and any extensions thereof)
under the HSR Act shall have expired or otherwise been terminated.

 

39

 

9.9                               Escrow Agreement.  The Escrow Agreement shall have been duly
executed and delivered by the Shareholders and the Escrow Agent.

 

9.10                        Representations and Warranties.  The representations and warranties set forth
in Sections 4 and 5 shall be true and correct as of the date
of this Agreement and as of the Closing Date with the same force and effect as
if made on and as of the Closing Date (except to the extent expressly made as
of a specified date, in which case as of such date), except where the failure
to be so true and correct (without giving effect to any limitation or
qualification as to “materiality” or “Material Adverse Effect” set forth
therein) would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect with respect to the Company (it being understood
that, for purposes of determining
the accuracy of such representations and warranties, any update or modification to the Disclosure Schedules (including Updates) made or purported
to have been made without LKQ’s written consent thereto shall be disregarded).

 

9.11                        Performance of Agreements.  The Company and each Shareholder shall have
performed in all material respects all obligations and agreements and complied
in all material respects with all covenants contained in this Agreement or any
other Ancillary Agreement to be performed or complied with by him or it at or
prior to the Closing.

 

9.12                        Corporate
Action.  The Company shall have taken
all corporate action necessary to execute this Agreement and any Ancillary
Agreements to which the Company is a party, and shall have furnished LKQ with
certified copies of resolutions duly adopted by its board of directors (or a
committee thereof).

 

10.                               Conditions to
Obligations of the Shareholders

 

The obligation
of the Shareholders to sell the Shares shall be subject to the fulfillment at
or prior to the Closing Date of each of the following conditions, any or all of
which may be waived in whole or in part by the Shareholder Representatives in
their sole discretion to the extent permitted by applicable law:

 

10.1                        Receipt of
Necessary Consents.  All necessary consents
or approvals of third parties to any of the transactions contemplated hereby
shall have been obtained.

 

10.2                        No
Restraint.  No court or Governmental
Authority of competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any statute, rule, regulation, judgment, decree, injunction
or other order (whether temporary, preliminary or permanent) or taken any
action that prohibits the consummation of the transactions contemplated by this
Agreement, and each party agrees to use all reasonable efforts to remove any
such prohibition on the consummation of the transactions contemplated by this
Agreement.

 

10.3                        No Adverse
Litigation.  There shall not be pending or threatened any action or proceeding
by or before any court or other governmental body which shall seek to restrain, prohibit or
invalidate the sale of
the Shares to LKQ or any other transaction contemplated hereby, and which, in the Shareholder Representatives’ reasonable judgment based on the merits of the claims in such
action or proceeding, makes
it inadvisable to proceed with the sale of the Shares to LKQ.

 

40

 

10.4                        Leases.  The Company shall have entered into a lease
agreement with the then-current owners of the properties listed on Schedule 9.7
hereto for each such property, and LKQ shall have provided a guaranty with
respect to the Company’s obligations under each such lease, in each case in
form and substance as set forth in Exhibit 10.4.

 

10.5                        HSR Act.  All applicable
waiting periods (and any extensions thereof) under the HSR Act shall have
expired or otherwise been terminated.

 

10.6                        Escrow
Agreement; Indemnification
Agreements.  LKQ and the
Escrow Agent shall have duly executed and delivered the Escrow Agreement.  LKQ
shall have duly executed and delivered the Indemnification Agreements.

 

10.7                        Representations
and Warranties.  The representations
and warranties set forth in Section 6 shall be true and correct as
of the date of this Agreement and as of the Closing Date with the same force
and effect as if made on and as of the Closing Date (except to the extent
expressly made as of a specified date, in which case as of such date), except
where the failure to be so true and correct (without giving effect to any
limitation or qualification as to “materiality” or “Material Adverse Effect”
set forth therein) would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect with respect to LKQ (it being
understood that, for purposes of
determining the accuracy of such representations and warranties, any update or modification to the schedules referenced in Section 6 made or purported to have been
made without the written consent thereto
of each of the Shareholder
Representatives shall be disregarded).

 

10.8                        Performance of Agreements. 
LKQ shall have performed in all material respects all obligations and
agreements and complied in all material respects with all covenants contained
in this Agreement or any other Ancillary Agreement to be performed or complied
with by it at or prior to the Closing.

 

10.9                        Corporate
Action.  LKQ shall have taken all
corporate action necessary to effect the purchase of the Shares, and shall have
furnished the Shareholder Representatives with certified copies of resolutions
duly adopted by its board of directors (or a committee thereof).

 

11.                               Survival
and Indemnification

 

11.1                       Indemnification
by the Shareholders.

 

11.1.1  Subject
to the terms and conditions of this Section 11,
each of the Shareholders shall, from and
after the Closing Date, severally but not jointly indemnify, defend and hold harmless LKQ, its
officers, directors, employees, agents and its affiliates (each, an “LKQ
Indemnified Party” and together, the “LKQ Indemnified Parties”)
from, against, for and in respect of any and all expenses, losses, costs,
deficiencies, liabilities and damages (including related counsel fees and
expenses to the extent they are reasonable) (collectively, “Damages”)
incurred or suffered by any of them by reason of, resulting from, based upon or
arising out of (i) any breach of any representation or warranty contained or made in Section 5 or
in any certificate or schedule
furnished in connection with the
representations and warranties contained or made in Section 5,
(ii) any breach of any covenant or agreement made by the Company in this
Agreement or any Ancillary Agreement, or (iii) fraud or intentional
misconduct by the Company.

 

41

 

11.1.2  Subject
to the terms and conditions of this Section 11,  each of the Shareholders shall, from and after
the Closing Date, severally but not jointly indemnify,
defend and hold harmless the LKQ Indemnified Parties from, against, for and in
respect of any and all Damages incurred or suffered by any of them by reason
of, resulting from, based upon or arising out of (i) any
breach of any representation or warranty of such Shareholder contained or made
in Section 4, (ii) any breach of any covenant or
agreement made by such Shareholder
in this Agreement or any Ancillary Agreement, or (iii) fraud or
intentional misconduct by such
Shareholder.

 

11.1.3  The aggregate liability to all LKQ
Indemnified Parties as a whole pursuant to this Section 11.1 shall
be limited to the amount deposited into
the Escrow Account pursuant to Section 2.1.3 (the “Cap”), and any claim for
indemnification under Section 11.1.1 or 11.1.2 shall be made
first against the Escrow Account pursuant to the Escrow Agreement. 
The LKQ Indemnified Parties shall not be entitled to indemnification for any Damages with respect to any
claims made under this Section 11.1 until the aggregate of all
Damages exceeds $250,000 (the “Threshold”); provided, however,
that once such aggregate Damages exceed the Threshold, the LKQ Indemnified
Parties shall be entitled to indemnification for all Damages without regard to
the Threshold, including the $250,000 amount; and provided, further, that no Damages may be claimed by the LKQ Indemnified Parties or shall be indemnifiable by the Shareholders or shall be included in calculating
the aggregate Damages for purposes of this Section 11.1.3 other than Damages in excess of $10,000 (the “Mini-Threshold”) resulting from any single claim
or aggregated claims arising out of the same facts, events or
circumstances.  Notwithstanding the
foregoing, Damages based on (i) fraud or intentional misconduct, (ii) any
breach of any representation or warranty contained or made in Section 4.1,
4.2, 4.3, 5.1, 5.2 or 5.10, or in the last
sentence of Section 5.6 or the first sentence of Section 5.13,
or in Section 5.21.6 but only to the extent such breach is in
relation to the case People v. Pick-Your-Part Auto Wrecking dba Pick Your Part Help
Yourself, Case No. 8CA00018, filed with the Superior Court of the State of
California for the County of Los Angeles on July 9, 2008, or (iii) any breach of any covenant or agreement made
by the Company or any Shareholder in Section 2.4 or 7.12, or
the last sentence of Section 7.6.3, shall neither be limited to the Cap nor be subject to the Threshold or the Mini-Threshold;
provided that, notwithstanding anything herein to the contrary, in no
event shall a Shareholder’s aggregate liability hereunder exceed his allocable portion of the Purchase Price (including, for the avoidance of doubt, such
Shareholder’s pro rata share of the amount deposited into the Escrow Account).

 

11.1.4  The
Shareholders shall not be obligated to indemnify any LKQ Indemnified Party with
respect to any Damages to the extent that a specific accrual or reserve for the
amount of such Damages was reflected on the Closing Balance Sheet.

 

11.1.5  The
Shareholders shall not be obligated to indemnify any LKQ Indemnified Party with
respect to any Damages to the extent that LKQ received a benefit from the
reflection of such matter in the calculation of the adjustment of the Purchase
Price, if any, as determined pursuant to Section 2.3.

 

11.1.6  For all purposes of this Section 11,
the amount of Damages indemnifiable
hereunder shall be net of any insurance or other recoveries actually
received by an LKQ Indemnified Party (including,
in the case of Third Party Claims (as defined in Section 11.6.2), 

 

42

 

insurance
proceeds paid to third parties on behalf or to the benefit of such LKQ
Indemnified Party) in connection with the facts giving rise to
the right of indemnification.

 

11.1.7  In the
event that the Shareholders pay Damages
to any LKQ Indemnified Party as a result of a breach of Section 5.10,
LKQ shall immediately assign, or cause to be assigned, to the Shareholder Representatives the receivable(s) that
are the subject of such breach to the extent of such payment.

 

11.2                        Survival.
 Each of the representations and
warranties made in this Agreement or any other document delivered pursuant
hereto shall survive until the first (1st) anniversary of the Closing Date; provided,
however, that (i) any indemnification claim based on fraud or intentional
misconduct shall survive the Closing indefinitely; (ii) the
representations and warranties made
in Sections 4.1, 4.2, 4.3, 5.1, 5.2, 6.1,
and 6.2 shall in each case survive indefinitely; (iii) the
representations and warranties made in Section 5.21 shall in each
case survive until the second (2nd) anniversary of the Closing Date; and (iv) the
representations and warranties made in Section 5.7 shall in each
case survive until the first (1st) anniversary of the later of (A) the
date on which the applicable period of limitation on assessment or refund of
tax has expired, or (B) the date on which the applicable tax year (or
portion thereof) has been closed.  No
claim for the recovery of Damages based upon the breach of such representations
and warranties may be asserted after such representations and warranties shall
be thus extinguished pursuant to this Section 11.2; provided,
however, that claims first asserted in writing pursuant to Section 11.6 within the applicable period
shall not thereafter be barred.  The parties acknowledge and agree that the
survival periods set forth in this Section 11.2 and the limitation
on the parties’ right to make claims for recovery of Damages in connection
therewith are in lieu of all applicable statutes of limitations, except in the
case of clause (iv) above where the survival period and limitation
are expressly related to applicable Laws.

 

11.3                       Indemnification
by LKQ.  Subject to the terms and
conditions of this Section 11,
LKQ shall, from and after the
Closing Date, indemnify, defend and hold harmless the Shareholders, their
agents and their affiliates from, against, for and in respect of any and all
Damages incurred or suffered by any of them by reason of, resulting from, based
upon or arising out of:  (i) any
breach of any representation or warranty contained or made in Section 6
or in any certificate or schedule
furnished in connection with the
representations and warranties contained or made in Section 6;
(ii) any breach of any covenant or agreement made by LKQ in this Agreement or any Ancillary Agreement, or (iii) 
fraud or intentional misconduct by LKQ.

 

11.4                        Additional
Indemnification by LKQ.

 

11.4.1  From
and after the Closing Date, LKQ shall indemnify, defend and hold harmless the Shareholders, their affiliates and their respective owners, officers, directors,
employees, agents, successors and assigns (including initial and subsequent
transferees of the Real Property, but excluding any such transferees that
acquire the Real Property after the second (2nd) anniversary of the
date on which the Company or its successor, or an affiliate thereof, ceases to
be a lessee or occupant of such Real Property) (each, a “Shareholder Indemnified
Party” and together, the “Shareholder
Indemnified Parties”) from and against any and all Damages to the
extent resulting from, based upon or
arising out of any
claim or cause of action by any person arising before or after the Closing,
but excluding any portion of any such claim or

 

43

 

cause
of action which is principally based upon an event that occurs after the date
on which the Company or its successor (or an affiliate thereof, as applicable)
ceases to be a lessee or occupant of such Real Property, against
any Shareholder Indemnified Party with respect to:  (a) any claim or cause of action by any
person arising before or after the Closing against any Shareholder Indemnified
Party with respect to the Company’s or the Subsidiary’s compliance with or obligations under
Environmental Law or possession or status of any Environmental Permit; (b) any
violation or alleged violation of, or liability or alleged liability under, any
Environmental Law relating to or affecting the Real Property, the Company or
any other property now or previously owned, operated or leased by the Company; (c) the
presence, Release or threat of Release of, or exposure of persons (whether
workers or third parties) to any Hazardous Substance, on, in, under or
affecting all or any portion of the Real Property or any surrounding areas and
any other property now or previously owned, operated or leased by the Company; (d) any
transport, treatment, recycling, storage, disposal or arrangement therefor of
Hazardous Substances whether on the Real Property, originating from the Real Property,
or otherwise associated with the Company or any operations conducted on the
Real Property or any other property now or previously owned, operated or leased
by the Company; or (e) any environmental investigation, assessment, audit
or review conducted in connection with the Real Property or the operations
conducted at any time thereon, or on any other property now or previously
owned, operated or leased by the Company, including, the cost of assessment,
investigation, containment, removal and/or remediation of any and all Hazardous
Substances, the cost of any actions taken in response to the presence, Release
or threat of Release of any Hazardous Substances to prevent or minimize such
Release or threat of Release so that it does not migrate or otherwise cause or
threaten danger to present or future public health, safety, welfare or the
environment, and costs incurred to comply with Environmental Laws; provided,
however, that (i) if and to the extent such Damages were caused by the action, after the Closing, of any Shareholder
Indemnified Party (including applicable transferees
of the Real Property), LKQ shall not be required to indemnify any Shareholder
Indemnified Party (including applicable transferees of the Real Property) with
respect to such Damages caused by such action, after the Closing, pursuant to
this Section 11.4, provided
that, if the Shareholder Indemnified Party whose action caused the Damages was
an employee, agent, consultant or representative of LKQ or its affiliate at the
time of such action (whether or not the particular action was authorized by LKQ
or its affiliate or within the scope of the employment, agency, consultancy or
representation), then LKQ shall nevertheless be required to indemnify all Shareholder Indemnified Parties (including applicable transferees of the Real Property), other than such Shareholder Indemnified Party whose action caused the
Damages, with respect to such Damages pursuant to this Section 11.4,
and (ii) if and to the extent
such Damages resulted from, were based upon or arose out of a breach of any representation or
warranty contained or made in Section 5.21, with respect to which Damages the
Shareholders have an obligation to indemnify the LKQ Indemnified Parties under Sections 11.1
and 11.2, LKQ shall not be required to indemnify any Shareholder
Indemnified Party (other than applicable transferees of the
Real Property) with respect to such Damages pursuant to this Section 11.4.

 

11.4.2  LKQ
specifically acknowledges and agrees that the foregoing is, and shall be deemed
to constitute, a full and final release with respect to the matters
specifically addressed in Section 11.4.1 above, which shall be
effective as a bar to all actions, claims, counterclaims, obligations, causes
of action, losses, promises, damages, costs, expenses, liabilities and demands
of whatever character, nature and kind, known and unknown, suspected or
unsuspected, fixed or

 

44

 

contingent, hereinabove
specified to be so barred.  LKQ, having been
fully advised by its counsel, hereby expressly and voluntarily waives all
rights or benefits that it may have under the provisions of Section 1542
of the Civil Code of the State of California (or other similar law of any other
state), which provides as follows:

 

A GENERAL
RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT
TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH
THE DEBTOR.

 

11.5                        Exclusivity; No Special Damages; Damages
Net of Taxes.

 

11.5.1  After
the Closing, this Section 11
will provide the exclusive remedy against any Indemnified Party (as defined in Section 11.6.1) for
any breach of any representation, warranty, covenant or other claim arising out
of or relating to this Agreement or any Ancillary Agreement and/or the
transactions contemplated hereby or thereby, and LKQ (on behalf of itself and the other LKQ Indemnified
Parties) and the Shareholders (on behalf of themselves and the other
Shareholder Indemnified Parties) waive any other rights and claims they may respectively have against the
other, whether in law or equity, relating to the same;  provided
that nothing herein shall limit the liability of any party hereto for fraud or
intentional misconduct.

 

11.5.2  No
party shall have any liability under any provision of this Agreement for any
punitive, incidental, consequential, special or indirect damages, including
business interruption, loss of revenue, profits or income, or loss of business
reputation or opportunity relating to the breach or alleged breach of this
Agreement, except (i) any such amounts that an Indemnified Party is required to pay to a third party as a result of a Third Party Claim (as defined
in Section 11.6.2) in regard to a matter that is otherwise
indemnifiable hereunder and (ii) in
the case of fraud or intentional misconduct.

 

11.5.3  All indemnification payments made pursuant to
this Section 11 shall be made on an after-tax basis.  Accordingly, in determining the Damages
incurred or suffered by an Indemnified Party hereunder, the amount of such
Damages shall be (i) increased to take into account any additional Tax
cost incurred by such Indemnified Party arising from the receipt of applicable
indemnification payments hereunder and (ii) decreased to take into account
any deduction, credit or other Tax benefit actually realized by such
Indemnified Party with respect to the receipt of applicable indemnification
payments hereunder.  In computing the
amount of any such Tax cost or Tax benefit, the Indemnified Party shall be
deemed to recognize all other items of income, gain, loss, deduction or credit
before recognizing any item arising from the receipt of applicable
indemnification payments hereunder or the incurrence or payment relating to any
Damages; provided that, if any such Tax cost or Tax benefit is not
realized in the taxable period during which the Indemnifying Party (as defined
in Section 11.6.1) makes an indemnification payment or the Indemnified
Party incurs any Damages, the parties hereto shall thereafter make payments to
one another at the end of each subsequent taxable period to reflect the net Tax
costs or Tax benefits realized by the parties hereto in each such subsequent
taxable period.

 

45

 

11.6                        Indemnification Procedures.

 

11.6.1  In
order for an LKQ Indemnified Party or a Shareholder Indemnified Party (the “Indemnified
Party”) to be entitled to any indemnification provided for under this
Agreement as a result of Damages incurred
or suffered by such Indemnified Party,
other than in connection with a Third Party Claim (as defined in Section 11.6.2),
such Indemnified Party shall
promptly deliver notice thereof to the party against whom indemnity is
sought hereunder (the “Indemnifying
Party”), which (i) in the
case of a claim for indemnification by an LKQ Indemnified Party shall be
delivered to the Shareholder Representatives and (ii) in the case of a
claim for indemnification by a Shareholder Indemnified Party shall be delivered to LKQ, describing in reasonable detail
the facts giving rise to any claim for indemnification hereunder, the amount or
method of computation of the amount of such claim (if known) and such other
information with respect thereto as the indemnifying party may reasonably
request. 
The failure or delay to provide such notice, however, shall not
release the Indemnifying Party from any of its obligations under this Section 11 except to the extent that the
Indemnifying Party is prejudiced by such failure or delay.  The
Indemnified Party shall reasonably cooperate and assist the Indemnifying Party
in determining the validity of any claim for indemnification by the Indemnified Party and in otherwise resolving such
matters.  Such assistance and cooperation
shall include providing reasonable access to and copies of information, records
and documents relating to such matters
and to employees in connection with the investigation,
defense and resolution of such matters.

 

11.6.2  In
order for an Indemnified Party to
be entitled to any indemnification provided for under this Agreement as a
result of Damages incurred or
suffered by such Indemnified Party in connection with a claim or
demand made by any third party
against the Indemnified Party (a “Third Party Claim”), such Indemnified
Party shall deliver notice thereof to the Indemnifying Party promptly after receipt by such Indemnified Party
of written notice of the Third Party Claim, which (i) in the case of a
claim for indemnification by an LKQ Indemnified Party shall be delivered to the
Shareholder Representatives and (ii) in the case of a claim for
indemnification by a Shareholder Indemnified Party shall be delivered to LKQ, describing in reasonable detail
the facts giving rise to any claim for indemnification hereunder, the amount or
method of computation of the amount of such claim (if known) and such other
information with respect thereto as the Indemnifying Party may reasonably
request.  The failure or delay to provide
such notice, however, shall not release the Indemnifying Party from any of its
obligations under this Section 11 except to the extent that the
Indemnifying Party is prejudiced by such failure or delay.

 

11.6.3  The
Indemnifying Party shall have the right, upon written notice to the Indemnified
Party within 15 Business Days
of receipt of notice from the Indemnified Party of such Third Party Claim, to
assume the defense thereof at the expense of the Indemnifying Party with
counsel selected by the Indemnifying Party and reasonably satisfactory to the
Indemnified Party so long as:  (i) the notice to the Indemnified Party confirms that the
Indemnifying Party will indemnify the Indemnified Party from and against all Damages
indemnifiable under this Section 11 that the Indemnified Party may suffer
resulting from, arising out of, relating to, in the nature of or caused by the
Third Party Claim; (ii) the Indemnifying Party provides the Indemnified
Party with evidence reasonably acceptable to the Indemnified Party that the
Indemnifying Party will have the financial resources to defend against the
Third Party Claim and 

 

46

 

fulfill its indemnification
obligations hereunder; (iii) the Third Party Claim primarily involves money damages and does
not seek an injunction or other equitable relief which, if granted, would reasonably be expected to have a materially
adverse effect on the Indemnified Party’s ability to conduct its business in
the ordinary course; and (iv) the
Indemnifying Party conducts the defense of the Third-Party Claim actively and
diligently.

 

11.6.4  If
the Indemnifying Party assumes the defense of such Third Party Claim and is conducting the defense of the
Third Party Claim in accordance with Section 11.6.3:  (i) the
Indemnified Party shall have the right to employ separate counsel and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of the Indemnified Party; provided that, if in the reasonable opinion of
counsel for the Indemnified Party, there is a conflict of interest between the
Indemnified Party and the Indemnifying Party, the Indemnifying Party shall be
responsible for the reasonable fees and expenses of one counsel to such
Indemnified Party in connection with such defense; (ii) the Indemnified
Party shall cooperate with the Indemnifying Party in such defense and make
available to the Indemnifying Party all witnesses, pertinent records, materials
and information in the Indemnified Party’s possession or under the Indemnified
Party’s control relating thereto as is reasonably required by the Indemnifying
Party; (iii) the Indemnified Party shall not admit any liability with
respect to, or settle, compromise or discharge, or offer to settle, compromise
or discharge, such Third Party Claim without the Indemnifying Party’s prior
written consent, which consent shall not
be unreasonably withheld, delayed or conditioned; and (iv) the
Indemnifying Party shall not admit any liability with respect to, or settle,
compromise or discharge, or offer to settle, compromise or discharge, such
Third Party Claim without the Indemnified Party’s prior written consent, which consent shall not be unreasonable
withheld, delayed or conditioned.

 

11.6.5  In the event any of the conditions
in Section 11.6.3 is or becomes unsatisfied, the Indemnified Party may defend against, and consent to the entry
of any judgment on or enter into any settlement with respect to, the Third
Party Claim in any manner he, she or it may reasonably deem appropriate (and
the Indemnified Party need not consult with, or obtain any consent from, any
Indemnifying Party in connection therewith).

 

12.                               Certain
Additional Agreements

 

12.1                        Restrictive
Covenants.

 

12.1.1  In
order to assure that LKQ will realize the value and goodwill inherent in the
Company, each of the Shareholders (other than Thomas C. Hutton) and
G. McElroy (severally but not jointly) agrees with LKQ that he shall not,
and none of his affiliates that are
controlled by him shall, directly or indirectly, either for himself or
for any other person for a period of five (5) years following the Closing
Date:  (i) engage in, represent,
furnish consulting services to, be employed by or have any interest in (as
owner, principal, director, officer, partner, landlord, lender, agent,
consultant, shareholder or member)
any business that would be competitive with the Business anywhere within a
one-hundred (100) mile radius of the location of any of the operating
facilities of the Company existing as of the date hereof; provided, however,
that such Shareholders, G. McElroy and their affiliates may acquire and
hold an aggregate of up to two percent (2%) of the outstanding shares of any
corporation engaged in any such business if such shares are publicly traded in
an established securities market; (ii) induce 

 

47

 

any customer of the Company to
patronize any such competitive business or otherwise request or advise any such
customer to withdraw, curtail or cancel any of its business with the Company;
or (iii) solicit for employment or assist any other person in soliciting
for employment, any person employed by the Company, provided that
advertisements for employment in a publication circulated to the general public
in itself shall not be deemed to constitute solicitation by such Shareholders,
G. McElroy and their affiliates for purposes of this clause (iii);
and provided, further, that the foregoing restrictions contained
in clauses (i) and (ii) shall not apply to the extent set forth in
Schedule 12.1.1.

 

12.1.2  In order to assure that LKQ
will realize the value and goodwill inherent in the Company, Thomas C. Hutton
agrees with LKQ that he shall not, and none of his affiliates that are controlled by him shall,
directly or indirectly, for a period of two (2) years following the
Closing Date, engage in any business that is competitive with the Business
anywhere within a ten (10) mile radius of the any of the operating
facilities of the Company existing as of the date hereof; provided, however,
that the foregoing restriction shall not apply to the extent set forth in Schedule 12.1.2.

 

12.1.3  If
any provision of this Section 12.1, as applied to any party or to
any circumstance is adjudged by a court to be invalid or unenforceable, the
same shall in no way affect any other provision or any other part of this
Agreement, the application of such provision in any other circumstances or the
validity or enforceability of this Agreement. 
If any such provision, or any part thereof, is held to be unenforceable
because of the duration of such provision or the area covered thereby, the
parties agree that the court making such determination shall have the power to
reduce the duration and/or area of such provision, and/or to delete specific
words or phrases, and in its reduced form such provision shall then be
enforceable.  Upon breach of any
provision of this Section 12.1, LKQ shall be entitled to seek
injunctive relief, since the remedy at law would be inadequate and
insufficient.  In addition, LKQ shall be
entitled to such Damages against the breaching party as it can show it has
sustained by reason of such breach.

 

12.2                        Tax
Matters.

 

12.2.1  The
Shareholders shall prepare or cause to be prepared and file or cause to be
filed all Tax Returns for the Company and the Subsidiary for all periods ending
on or prior to the Closing Date that are filed after the Closing Date.  The Shareholders shall permit LKQ to review
and comment on each such Tax Return described in the preceding sentence prior
to filing.  All such Tax Returns shall be
prepared consistently with the allocation of the Purchase Price set forth in Exhibit 12.2
to this Agreement.  LKQ shall be
responsible for filing all other Tax Returns due after the Closing Date.  The Shareholders agree to provide access to
any books and records of the Company and the Subsidiary in their possession to
the extent necessary for the preparation of such Tax Returns.  The Shareholders shall be responsible for the
payment of any and all Taxes for periods ending on or before the Closing Date
or the Taxes with respect to the pre-Closing periods (including the Closing
Date) for any periods that include but do not end on the Closing Date (a “Straddle
Period”), including any Tax (i) imposed by Section 1374 of the
Code or (ii) arising out of the transactions contemplated by this
Agreement, including any state Tax imposed on the sale of the assets of a
subchapter S corporation (including any Taxes imposed on the Company as a
result of the transactions contemplated by this Agreement);

 

48

 

provided
that, notwithstanding anything herein to the contrary, LKQ (and not the
Shareholders) shall be responsible for all Taxes to the extent that such Taxes
are taken into account in calculating the Working Capital Difference under Section 2.4.  LKQ shall be responsible for all Taxes of the
Company and the Subsidiary due with respect to periods commencing after the
Closing Date and for the Taxes with respect to the post-Closing periods for
Straddle Periods.  LKQ shall not, and
shall not cause or permit the Company to, amend any Tax Return of the Company
with respect to any taxable year or period ending on or before the Closing
Date.  Each Shareholder shall prepare and
file all California Tax Returns required to be filed by him for all periods
ending on or prior to the Closing Date that are filed after the Closing Date
and will timely pay all California state and local Taxes that will become due
for all periods ending on or prior to the Closing Date, whether or not shown on
any such Tax Return.

 

12.2.2  Whenever
it is necessary to determine the liability for Taxes of the Company and its
subsidiaries for a Straddle Period, the determination of the Taxes for the
portion of the Straddle Period ending on and including, and the portion of the
Straddle Period beginning after, the Closing Date shall be determined by
assuming that the Straddle Period consisted of two (2) taxable years
or periods, one of which ended at the close of the Closing Date and the other
of which began at the beginning of the day following the Closing Date, and
items of income, gain, deduction, loss or credit, and state and local
apportionment factors of the Company and its subsidiaries for the Straddle
Period shall be allocated between such two (2) taxable years or
periods on a “closing of the books basis” by assuming that the books of the
Company and its subsidiaries were closed at the close of business on the
Closing Date; provided, however, that (i) exemptions,
allowances or deductions that are calculated on an annual basis, such as the
deduction for depreciation, and (ii) periodic taxes, such as real and
personal property taxes, shall be apportioned ratably between such periods on a
daily basis.

 

12.2.3  In
the event any Shareholder or such Shareholder’s affiliates, or LKQ or its
affiliates, receive notice of any pending or threatened Tax audits or
assessments or other disputes concerning Taxes with respect to which another
party may incur liability  under
this Agreement, the party in receipt of such notice shall promptly notify the
other parties of such matter in writing. 
The Shareholders shall have the right to defend on behalf of the Company
and the Subsidiary, and shall pay all professional fees and expenses incurred
in connection with, any audit, administrative appeal, dispute or other claim
(collectively, an “Audit”) by federal or state tax authorities with
respect to Tax Returns for periods ending on or before the Closing Date; provided,
however, that the Shareholder Representatives shall not file on behalf
of the Company or the Subsidiary any amended Tax Return or claim for refund for
any period without the prior written consent of LKQ, which consent shall not be
unreasonably withheld, delayed or conditioned. 
If any such Audit results in an additional Tax liability to the Company
or the Subsidiary, the Shareholders shall be responsible for the payment of the
liability, together with any interest or penalties.  The Shareholders shall provide LKQ, promptly
upon receipt thereof, copies of any information, correspondence, protests,
notices, decisions or any related information provided to or received from any
taxing authority with respect to such Audit and shall afford to LKQ the
opportunity from time to time to discuss the progress of the Audit with the tax
professionals retained by the Shareholders in connection with the Audit.

 

12.2.4  With
respect to the acquisition of the Shares of the Company by LKQ, each
Shareholder and LKQ shall jointly make a timely election provided for by

 

49

 

Section 338(h)(10) of
the Code (the “Section 338(h)(10) Election”) and the
applicable Treasury regulations (and any comparable election under state or
local laws). 
The Shareholders and LKQ agree to execute at Closing (or, if
requested by LKQ, as soon as reasonably possible thereafter) any and all forms
necessary to effectuate the Section 338(h)(10) Election (including
IRS Forms 8023 and 8883 and any similar forms under applicable state or local
law).  The Shareholders and LKQ shall
report and cause the Company to report the acquisition by LKQ of the Shares
pursuant to this Agreement consistent with the Section 338(h)(10) Election
and shall take no position contrary thereto or inconsistent therewith on any income,
transfer or gains Tax Return before any Governmental Authority charged with the
collection of any such Tax or in any judicial proceeding.  The Purchase Price allocation for the
purchase of the Shares as shown on Exhibit 12.2 shall be reported
on the Forms 8023 and 8883, and neither LKQ nor the Shareholders shall take a
position on any income, transfer or gains Tax Return, before any Governmental
Authority charged with the collection of any such Tax or in any judicial
proceedings that is in any manner inconsistent with any such allocation without
the written consent of the other in each instance.  If any U.S. federal, state, local or foreign
taxing authority challenges the allocation, the party receiving notice of such
challenge shall give the other parties hereto prompt written notice of such
challenge, and the parties shall cooperate in good faith in responding to it in
order to preserve the effectiveness of the allocation.  LKQ shall prepare and deliver to the Shareholders
the Forms 8023 and 8883 to be executed by the Shareholders at the Closing or
thereafter.  LKQ shall execute such forms
and file them no later than their due date.

 

12.2.5  LKQ
and the Shareholders shall each bear their own expenses and professional fees
in connection with the matters described in this Section 12.2.  All sales, use, transfer and other similar
Taxes, including any stock transfer stamp Taxes resulting from the sale of the
Shares, shall be borne fifty
percent (50%) by the Shareholders and fifty percent (50%)
by LKQ. 
For the avoidance of doubt, the Shareholder Representatives may pay such
Taxes on behalf of the Shareholders out of the Representative Expense Account
pursuant to the Escrow Agreement.

 

12.2.6  After
the Closing Date, each of the Shareholders and LKQ shall (and shall cause their
respective affiliates to):  (i) assist
the other party in preparing and filing any Tax Returns or reports that such
other party is responsible for preparing and filing in accordance with this
Agreement; (ii) cooperate fully in preparing for any audits of, or
disputes with taxing authorities regarding, any Tax Returns of the Company and
its subsidiaries; (iii) make available to the other and to any taxing
authority as reasonably requested all information, records and documents
relating to Taxes of the Company and its subsidiaries; (iv) provide timely
notice to the other in writing of any pending or threatened Tax audits or
assessments of the Company and its subsidiaries for taxable periods for which
the other may have a liability under this Agreement; and (v) furnish the
other with copies of all correspondence received from any taxing authority in
connection with any Tax audit or information request with respect to any such
taxable period.

 

12.2.7  Without limiting the requirements and obligations
set forth in Section 12.2.6, after the Closing Date, each of
the Shareholders, LKQ, the Company and the Subsidiary will preserve all
information, records or documents relating to liabilities for Taxes of the
Company and its subsidiaries until ninety (90) days after the expiration
of any applicable statute of limitations (including extensions thereof) with
respect to the assessment of such Taxes.

 

50

 

12.2.8  If
a party becomes aware that another party is entitled to a Tax refund, then such
party shall provide prompt notice thereof to such other party or parties.  Any Tax refunds that are received by LKQ, the
Company or the Subsidiary, and any amount credited against Tax to which LKQ,
the Company or the Subsidiary becomes entitled, that relate to the Tax periods
or portions thereof ending on or before the Closing Date shall be for the
account of the Shareholders, and LKQ shall pay to the Shareholders any such
refund or the amount of any such credit within fifteen (15) days after
receipt or entitlement thereto.

 

13.                               Miscellaneous

 

13.1                        Amendment
and Modification.  The parties hereto
may amend, modify and supplement this Agreement in such manner as may be agreed
upon by them in writing.

 

13.2                        Expenses.  Except as otherwise specifically provided in
this Agreement, the parties agree that whether or not the sale of the Shares is
consummated, LKQ will pay and bear all of the expenses incurred by it, and the
Shareholders will bear all of the expenses incurred by the Company and the
Shareholders in connection with the acquisition contemplated by this Agreement,
including legal, tax and accounting related expenses, except that all filing
fees under the HSR Act shall be shared equally by LKQ, on the one hand, and the
Shareholders, on the other hand. 
Notwithstanding the foregoing, the Shareholders may cause the Company to
pay such expenses prior to the Closing.

 

13.3                        Certain
Definitions.  For purposes of this
Agreement:

 

13.3.1  “Actual Knowledge,” for
purposes of Section 5.21 and Section 11.4 only, shall
consist of (i) anything that any of the Shareholders, G. McElroy or
Cindi Galfin actually knows without investigation and (ii) any information
in the documents relating to environmental matters and set forth in the electronic
data room of documents made available to LKQ by the Shareholders through
Intralinks, an electronic copy of which is contained on a DVD that has been
delivered to LKQ prior to the date hereof.

 

13.3.2  An
“affiliate” means with respect to any person, another person that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first person.  For the
avoidance of doubt, Hayward Associates is an affiliate of the Company and of
the Shareholders.

 

13.3.3  “Ancillary Agreements” means
the Escrow Agreement.

 

13.3.4  “Business” means the
self-service retail recycled vehicle products business and the processing and
distribution of recycled original equipment manufacturer products; provided, however, that
the definition of “Business” shall not include the purchase, collection, processing, recycling and sale of recyclable ferrous and non-ferrous metals or
products containing such metals, including automobiles and catalytic
converters.

 

13.3.5  “Business Day” means any day
that is not a Saturday, a Sunday or other day on which banks are required or
authorized by Law to be closed in Chicago, Illinois and Anaheim, California.

 

51

 

13.3.6  “Cash Amount” means the
aggregate amount of cash and cash
equivalents (including funds held
in money market accounts and flex CD accounts) of the Company at the
Closing, as determined in accordance with GAAP. 
For avoidance of doubt, when calculating the Cash Amount:  (i) all
checks that have been “cut” and mailed by the Company and are outstanding shall
be deducted from cash of the Company; and
(ii) all “cut” but uncashed checks received by the Company or other
deposits in transit that are outstanding shall be added to cash of the Company.

 

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

 

13.3.8  “Confidentiality Agreement”
means the Confidentiality Agreement dated September 19, 2007 between LKQ
and the Company.

 

13.3.9  “Current Assets” means, without
duplication, the current assets of the Company determined in accordance with
GAAP and in a manner consistent with the policies and principles used by the
Company in connection with the preparation of the Balance Sheet (but excluding
the Cash Amount), subject to the adjustments set forth in Schedule 13.3.40
hereto.

 

13.3.10  “Current Liabilities” means,
without duplication, the current liabilities of the Company determined in
accordance with GAAP and in a manner consistent with the policies and
principles used by the Company in connection with the preparation of the
Balance Sheet (but excluding all Debt,
including any current portion thereof,
and the obligations to pay the Success Bonus Amounts), subject to the
adjustments set forth in Schedule 13.3.40 hereto.

 

13.3.11  “Debt” means any amount owed by
the Company, or for which the Company is liable:  (i) for borrowed money; (ii) under
any reimbursement obligation relating to a letter of credit, bankers’
acceptance or note purchase facility; (iii) evidenced by a bond, note,
debenture or similar instrument (including a purchase money obligation); or (iv) for
the payment of money relating to a lease that is required to be classified as a
capitalized lease obligation in accordance with GAAP (but excluding all obligations
of the Company under the Vehicle
Lease Service Agreement, dated as of November 12, 2003, between Penske
Truck Leasing Co., L.P. and the Company, including schedules thereto).

 

13.3.12  “Debt Amount” means the
aggregate amount owed to the Company’s creditors listed on Schedule 2.1.5
hereto, as of immediately prior to the Closing, including any and all
outstanding principal and accrued but unpaid interest.

 

13.3.13  “Encumbrance” means any
mortgage, claim, lien, option, pledge, charge, security interest, equitable
interest, right of first refusal or preemptive right, condition or other
restriction of any kind, including any restriction on use, voting (in the case
of any security), transfer, receipt of income or exercise of any other
attribute of ownership.

 

13.3.14  “Escrow Account” means the
account with the Escrow Agent into which five percent (5%) of the Closing Payment is deposited pursuant to Sections 2.1.3
and 3.2.4 and the Escrow Agreement.

 

13.3.15  “Escrow Agent” means LaSalle
Bank National Association.

 

52

 

13.3.16  “Escrow Agreement” shall have
the meaning set forth in Section 2.1.3.

 

13.3.17  “GAAP” means United States
generally accepted accounting principles as in effect on the date hereof.

 

13.3.18  “Governmental Authority” means (i) any
government or political subdivision thereof whether foreign or domestic,
national, state, county, municipal or regional or any other governmental
entity, (ii) any agency or instrumentality of any such government,
political subdivision or other government entity, (iii) any court,
arbitral tribunal or arbitrator, and (iv) any non-governmental or
quasi-governmental regulating body, to the extent that the rules, regulations
or orders of such body have the force of law.

 

13.3.19  “Hayward Associates” means Hayward
Associates, a California general partnership.

 

13.3.20  The
“knowledge” of LKQ shall consist of everything that the officers and
members of the board of directors
of LKQ actually know without investigation; the “knowledge” of each
Shareholder shall consist of everything that such Shareholder actually knows
without investigation; and “knowledge” of the Company shall consist of
everything that the Shareholders, members
of the board of directors of the Company, and Cindi R. Galfin, H.
Michael Couch and Christopher Lee McElroy actually know without
investigation.  The foregoing definition
of “knowledge” shall apply to words of similar import such as “know” or “knows.”

 

13.3.21  “Law” means any domestic or
foreign statute, law, ordinance, regulation, rule, code, injunction, judgment,
decree or order of any Governmental Authority.

 

13.3.22  “Leases” means all leases, subleases,
licenses, concessions and other agreements (written or oral), including all
amendments, extensions, renewals, guaranties and other agreements with respect
thereto, pursuant to which the Company or its Subsidiary holds any Leased Real
Property, including the right to all security deposits and other amounts and
instruments deposited by or on behalf of the Company or its Subsidiary
thereunder.

 

13.3.23  “Leased Real Property” means all leasehold or subleasehold estates and other rights to
use or occupy any land, buildings, structures, improvements, fixtures or other
interest in real property held by the Company or its Subsidiary.

 

13.3.24  “Material Adverse Effect”
means:  (a) with respect to the
Company, any event, circumstance, effect or state of facts that is materially
adverse to (i) the business, assets, liabilities, condition (financial or
otherwise) or results of operations or business prospects of the Company and
the Subsidiary, taken as a whole, or (ii) the ability of the Company to
perform, in all material respects, its obligations under this Agreement or the
Ancillary Agreements to which it will be a party or to consummate the
transactions contemplated hereby or thereby, provided, however,
that (A) “Material Adverse Effect” shall not include the effect of any
event, change, circumstance, change or development arising out of or impacting (I) the
markets or industry in which the Company and the Subsidiary operate their
businesses generally, to the extent not having a disproportionate impact on the
Company, (II) general economic conditions, including such conditions as
are related to the businesses of the Company and the Subsidiary, (III) national

 

53

 

or international political or social conditions, including the
engagement by the United States in hostilities, whether or not pursuant to the
declaration of a national emergency or war, or the occurrence of any military
or terrorist attack upon the United States or any of its territories,
possessions or diplomatic or consular offices or upon any military
installation, equipment or personnel of the United States, or escalation of any
existing hostilities, (IV) financial, banking or securities markets
(including any disruption thereof and any decline in the price of any security
or any market index), (V) natural disasters, acts of God or other events
not within the reasonable control of the Company, (VI) any change in applicable Laws or
accounting rules, (VII) the taking of any action contemplated by
this Agreement or the Ancillary Agreements or consented to by LKQ, or (VIII) the
public announcement of the entering into of this Agreement or the transactions
contemplated by this Agreement, and (B) no “Material Adverse Effect” shall
be deemed to have occurred hereunder upon the occurrence of any one or more of
the following (or combination thereof):  (I) any
adverse change in or effect on the Company’s business or business prospects that is cured by the Shareholders or the
Company to the reasonable satisfaction of LKQ before the earlier of the Closing
Date or the Termination Date, or (II) the resignation of any employee of
the Company as a result of the transactions contemplated by this Agreement or
otherwise; and (b) with respect to any Shareholder or LKQ, any event,
change, circumstance, effect or state of facts that is materially adverse to
the ability of such Shareholder or LKQ, as applicable, to perform, in all
material respects, his or its obligations under this Agreement or the Ancillary
Agreements to which such Shareholder or LKQ, as applicable, will be a party or
to consummate the transactions contemplated hereby or thereby.

 

13.3.25  “Neu Group” means John L. Neu, Robert T. Neu
and Jeffrey P. Neu.

 

13.3.26  “Owned Real Property” means all land, together with all
buildings, structures, improvements and fixtures located thereon, including all
electrical, mechanical, plumbing and other building systems, fire protection,
security and surveillance systems, telecommunications, computer, wiring and
cable installations, utility installations, water distribution systems and landscaping, together with all easements and
other rights and interests appurtenant thereto (including air, oil, gas,
mineral and water rights), owned by the Company or its Subsidiary.

 

13.3.27  “Permitted Encumbrances” means
with respect to each parcel of Real Property: 
(a) real estate taxes, assessments and other governmental levies,
fees or charges imposed with respect to such Real Property that are (i) not
due and payable as of the Closing Date or (ii) being contested in good
faith and for which appropriate reserves have been established in accordance
with GAAP; (b) mechanics’ liens and similar liens for labor, materials or
supplies provided with respect to such Real Property incurred in the ordinary
course of business for amounts that are (i) not due and payable as of the
Closing Date or (ii) being contested in good faith and for which appropriate
reserves have been established in accordance with GAAP; (c) zoning,
building codes and other land use laws regulating the use or occupancy of such
Real Property or the activities conducted thereon that are imposed by any
Governmental Authority having jurisdiction over such Real Property and are not
violated by the current use or occupancy of such Real Property or the operation
of the Company’s or its Subsidiary’s business as currently conducted thereon;
and (d) easements, covenants, conditions, restrictions and other similar
matters of record affecting title to such Real Property that do not or would
not materially 

 

54

 

impair the use or occupancy of such Real Property in the operation of
the Company’s or its Subsidiary’s business as currently conducted thereon.

 

13.3.28  A
“person” shall include
an individual, corporation, partnership, joint venture, limited liability
company, association, trust, unincorporated organization or other entity.

 

13.3.29  “Representative Expense Account” means the account with the
Escrow Agent into which $50,000 is
deposited pursuant to Sections 2.1.3 and 3.2.4 and the
Escrow Agreement.

 

13.3.30  “SEC” means the Securities
and Exchange Commission of the United States.

 

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

 

13.3.32  “Shareholder Representatives”
means G. McElroy (who will act, for the purposes hereof, as the
Shareholder Representative of the Glenn C. McElroy Family Trust dated October 14,
1992 (and its trustee), Phillip B. McElroy and Thomas C. Hutton, as further set
forth in Section 13.16) and John L. Neu (who will act, for the
purposes hereof, as the Shareholder Representative of John L. Neu, Robert T.
Neu and Jeffrey P. Neu, as further set forth in Section 13.16).

 

13.3.33  “Subsidiary” means Charities
Automobile Recycling Enterprises, LLC, a California limited liability company
doing business as WeCARE.

 

13.3.34  “Success Bonus Agreements” means,
collectively:  (i) Success Bonus
Agreement, dated as of April 30, 2007, between the Company and Christopher
Lee McElroy, as amended pursuant to Amendment No. 1 to Success Bonus
Agreement, dated as of April 29, 2008, between the Company and Christopher
Lee McElroy and
Amendment No. 2 to Success Bonus Agreement, dated as of July 31,
2008, between the Company and Christopher Lee McElroy; (ii) Success
Bonus Agreement, dated as of April 30, 2007, between the Company and H.
Michael Couch, as amended pursuant to Amendment No. 1 to Success Bonus
Agreement, dated as of April 29, 2008, between the Company and H. Michael
Couch and Amendment No. 2
to Success Bonus Agreement, dated as of July 31, 2008, between the Company
and H. Michael Couch; and (iii) Success Bonus Agreement, dated as
of April 30, 2007, between the Company and Cindi R. Galfin, as amended
pursuant to Amendment No. 1 to Success Bonus Agreement, dated as of April 29,
2008, between the Company and Cindi R. Galfin and Amendment No. 2 to Success Bonus Agreement, dated
as of July 31, 2008, between the Company and Cindi R. Galfin.

 

13.3.35  “Success Bonus Amount” means
the $3,000,000 in the aggregate that the Company is
obligated to pay as of the Closing Date to the Company’s officers identified on
Schedule 2.1.6 under the Success Bonus Agreements, before deducting any applicable taxes and
withholdings or making other required, normal or elected deductions.

 

13.3.36  “Tax” or “Taxes” mean (i) any
net income, alternative or add-on minimum tax, gross income, gross receipts,
sales, use, ad valorem, value-added, consumption, transfer, franchise, profits,
license, withholding, payroll, employment, excise, severance, stamp, 

 

55

 

occupation, premium, property, environmental or windfall profit tax,
custom duty or other tax, governmental fee or other like assessment or charge
of any kind whatsoever, together with any interest or any penalty, addition to
tax or additional amount imposed by any Governmental Authority responsible for
the imposition of any such tax (domestic or foreign), (ii) any liability
for the payment of any amounts of the type described in clause (i) of
this sentence as a result of being a member of an affiliated, consolidated,
combined, unitary or aggregate group for any taxable period, and (iii) any
liability for the payment of any amounts of the type described in clause (i) or
(ii) of this sentence as a result of being a transferee of or successor to
any person or as a result of any obligation to indemnify any other person.

 

13.3.37  “Tax Return” means any return,
statement, report or form (including estimated tax returns and reports,
withholding tax returns and reports and information returns and reports)
required to be filed with respect to Taxes.

 

13.3.38  “Working Capital Amount” means
the amount equal to (a) the aggregate amount of Current Assets minus
(b) the aggregate amount of Current Liabilities, each calculated based on
the information contained in the Closing Balance Sheet.

 

13.3.39  “Working Capital Difference”
means the difference (in all cases, expressed as a positive number), if any, of
(a) the Working Capital Amount and (b) the Working Capital Target.

 

13.3.40  “Working Capital Target” means
the amount equal to (a) the aggregate amount of Current Assets minus
(b) the aggregate amount of Current Liabilities, each as of March 31, 2008 and as calculated and set forth on Schedule 13.3.40
hereto.

 

13.3.41  The
following terms have the respective meanings set forth in the location
referenced below:

 

	
  Definition

  	
   

  	
  Location

  
	
   

  	
   

  	
   

  
	
  401(k) Plan

  	
   

  	
  Section 7.6.3

  
	
  Affected Employee

  	
   

  	
  Section 7.6.1

  
	
  Agreement

  	
   

  	
  Preamble

  
	
  Antitrust Division

  	
   

  	
  Section 7.5.1

  
	
  Audit

  	
   

  	
  Section 12.2.3

  
	
  Balance Sheet

  	
   

  	
  Section 5.5

  
	
  Broker

  	
   

  	
  Section 2.5.2

  
	
  Cap

  	
   

  	
  Section 11.1.3

  
	
  Charges

  	
   

  	
  Section 13.16.3

  
	
  Closing

  	
   

  	
  Preamble

  
	
  Closing Balance Sheet

  	
   

  	
  Section 2.4.1

  
	
  Closing Date

  	
   

  	
  Section 3.1

  
	
  Closing Payment

  	
   

  	
  Section 2.3.2

  
	
  Company

  	
   

  	
  Preamble

  
	
  Contracts

  	
   

  	
  Section 5.14.1

  
	
  Damages

  	
   

  	
  Section 11.1.1

  

 

56

 

	
  Disclosure Schedules

  	
   

  	
  Section 4

  
	
  Encumbrance Documents

  	
   

  	
  Section 5.8.7

  
	
  Environmental Law

  	
   

  	
  Section 5.21.1

  
	
  Environmental Permit

  	
   

  	
  Section 5.21.1

  
	
  ERISA

  	
   

  	
  Section 5.23.2

  
	
  Escrow Agreement

  	
   

  	
  Section 2.1.3

  
	
  Estimated Balance Sheet

  	
   

  	
  Section 2.3.1

  
	
  Exchange Act

  	
   

  	
  Section 4.7

  
	
  Financial Statements

  	
   

  	
  Section 5.5

  
	
  Forward-Looking Statements

  	
   

  	
  Section 13.18.1

  
	
  FTC

  	
   

  	
  Section 7.5.1

  
	
  G. McElroy

  	
   

  	
  Preamble

  
	
  Hazardous Substance

  	
   

  	
  Section 5.21.1

  
	
  HSR Act

  	
   

  	
  Section 4.4.2

  
	
  Improvements

  	
   

  	
  Section 5.8.4

  
	
  Indemnification Agreements

  	
   

  	
  Section 7.9.

  
	
  Indemnified Party

  	
   

  	
  Section 11.6.1

  
	
  Indemnifying Party

  	
   

  	
  Section 11.6.1

  
	
  Independent Accounting Firm

  	
   

  	
  Section 2.4.3

  
	
  Interim Financial Statements

  	
   

  	
  Section 5.5

  
	
  LKQ

  	
   

  	
  Preamble

  
	
  LKQ Indemnified Party

  	
   

  	
  Section 11.1.1

  
	
  LKQ Share Value

  	
   

  	
  Section 2.2

  
	
  LKQ Shares

  	
   

  	
  Section 2.1.2

  
	
  Mini-Threshold

  	
   

  	
  Section 11.1.3

  
	
  Neu Group Proceeds Amount

  	
   

  	
  Section 2.5.3

  
	
  Neu Group Shares

  	
   

  	
  Section 2.5.1

  
	
  Neu Group Shortfall Amount

  	
   

  	
  Section 2.5.3

  
	
  Non-Compete Payment Amount

  	
   

  	
  Section 2.1.4

  
	
  Notice of Disagreement

  	
   

  	
  Section 2.4.2

  
	
  Permits

  	
   

  	
  Section 5.11

  
	
  Plans

  	
   

  	
  Section 5.23.1

  
	
  Proprietary Rights

  	
   

  	
  Section 5.12

  
	
  Prospectus

  	
   

  	
  Section 4.7

  
	
  Purchase Price

  	
   

  	
  Section 2.1

  
	
  Real Estate Impositions

  	
   

  	
  Section 5.8.12

  
	
  Real Property

  	
   

  	
  Section 5.8.3

  
	
  Regulatory Approvals

  	
   

  	
  Section 7.5.1

  
	
  Release

  	
   

  	
  Section 5.21.1

  
	
  SEC Reports

  	
   

  	
  Section 4.7

  
	
  Section 2.5 Period

  	
   

  	
  Section 2.5.2

  
	
  Section 338(h)(10) Election

  	
   

  	
  Section 12.2.4

  
	
  Shareholder

  	
   

  	
  Preamble

  
	
  Shareholder Indemnified Party

  	
   

  	
  Section 11.4

  
	
  Shares

  	
   

  	
  Section 1

  
	
  Straddle Period

  	
   

  	
  Section 12.2.1

  

 

57

 

	
  Tank

  	
   

  	
  Section 5.21.1

  
	
  Termination Date

  	
   

  	
  Section 8.1.4

  
	
  Third Party Claim

  	
   

  	
  Section 11.6.2

  
	
  Threshold

  	
   

  	
  Section 11.1.3

  
	
  Update

  	
   

  	
  Section 7.3.2

  

 

13.4                        Binding
Effect.  This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors, assigns, heirs and legal representatives.

 

13.5                        Entire
Agreement.  This instrument, the
Exhibits and Schedules attached hereto, the Disclosure Schedules and any other
written agreements executed and delivered by the parties hereto on the Closing
Date contain the entire agreement of the parties hereto with respect to the
sale of the Shares and the other transactions contemplated herein, and
supersede all prior understandings and agreements of the parties with respect
to the subject matter hereof.  Any
reference herein to this Agreement shall be deemed to include the Exhibits and
Schedules attached hereto and the Disclosure Schedules.

 

13.6                        Headings.  The descriptive headings (including those in
any table of contents) in this Agreement or in any Exhibit or Schedule or
the Disclosure Schedules are inserted for convenience only and shall not affect
in any way the meaning or interpretation of this Agreement.

 

13.7                        Execution
in Counterpart.  This Agreement may
be executed in any number of counterparts, each of which shall be deemed an
original.

 

13.8                        Notices.  All notices and other communications
hereunder shall be in writing and shall be deemed duly given (a) on the
date of delivery if delivered personally, or if by facsimile, upon written
confirmation of receipt by facsimile, e-mail or otherwise, (b) on the
first (1st) Business Day following the date of dispatch if delivered utilizing
a next-day service by a recognized next-day courier, provided that such courier’s
records indicate that the delivery was completed, or (c) on the earlier of
confirmed receipt or the fifth (5th) Business Day following the date of mailing
if delivered by registered or certified mail, return receipt requested, postage
prepaid.  All notices hereunder shall be
delivered to the addresses set forth below, or pursuant to such other
instructions as may be designated in writing by the party to receive such
notice:

 

If to any
Shareholder (or the Shareholder Representatives) or, prior to the Closing, the
Company, to:

 

Pick-Your-Part Auto Wrecking

1301 East Orangewood Avenue

Anaheim, CA  92805

Attention:  Glenn C. McElroy

Facsimile:  (714) 634-0520

 

and

 

58

 

John L. Neu

120 Fifth Avenue, Suite 600

New York, NY 10011

Facsimile:  (646) 467-6737

 

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

 

Hugo Neu Corporation

120 Fifth Avenue, Suite 600

New York, NY  10011

Attention:  Andrew Feuerstein, General
Counsel

Facsimile:  (646) 467-6727

 

Gibson, Dunn & Crutcher LLP

3161 Michelson, 12th Floor

Irvine, CA  92612

Attention:  Mark W. Shurtleff, Esq.

Facsimile:  (949) 451-4220

 

If to LKQ:

 

LKQ Corporation

120 North LaSalle Street, Suite 3300

Chicago, Illinois  60602

Attention:  General Counsel

Fax:  (312) 621-1969

 

13.9                        Governing
Law.  This Agreement shall be
governed by and construed in accordance with the laws of the State of Delaware applicable to contracts made and
to be performed wholly therein.

 

13.10                 Venue and
Submission to Jurisdiction.

 

13.10.1  To
the maximum extent possible under applicable law and rules of civil
procedure, each of the parties agrees that any action brought by the Company, the Shareholders or G. McElroy to enforce their
rights under this Agreement or any of the other agreements contemplated hereby
shall be brought in the United States District Court for the Northern District
of Illinois (Eastern Division) or in the Circuit Court of Cook County,
Illinois.

 

13.10.2  In
order to facilitate the ability of the Company, the Shareholders and G. McElroy
to enforce their rights under this Agreement and other agreements contemplated
hereby in accordance with Section 13.10.1, each of the parties
hereby (i) expressly submits himself or itself, as the case may be, for
such purpose only, to the personal jurisdiction of the United States District
Court for the Northern District of Illinois (Eastern Division) and the Circuit
Court of Cook County, Illinois and (ii) expressly agrees that service of
process may be had upon such person pursuant to the rules pertaining to
service of process contained in the 

 

59

 

Illinois Long-Arm Statute,
Chap. 735 Paragraph 5/2-209 Ill. Comp. Stat. (1997) and the Rules of the
Court pertaining thereto.

 

13.10.3  To
the maximum extent possible under applicable law and rules of civil
procedure, each of the parties agrees that any action brought by LKQ to enforce
its rights under this Agreement or any of the other agreements contemplated
hereby shall be brought in the United States District Court for the Central District of California (Southern Division) or in the Superior Court of California, County of Orange; provided, however,
that any action brought by LKQ to enforce its rights under Sections 12.1.1
and 12.1.2 shall be brought as
provided in Section 13.10.5.

 

13.10.4  In
order to facilitate the ability of LKQ to enforce its rights under this
Agreement and the other agreements contemplated hereby in accordance with Section 13.10.3,
each of the parties hereby (i) expressly submits himself or itself, as the
case may be, for such purpose only, to the personal jurisdiction of the United
States District Court for the Central District
of California (Southern Division)
or in the Superior Court of California, County of Orange and (ii) expressly
agrees that the service of process may be had upon such person pursuant to the rules pertaining
to service of process contained in the applicable California Long-Arm Statute.

 

13.10.5  To the
maximum extent possible under applicable law and rules of civil procedure,
each of the parties agrees that any action brought by a party with respect to Sections 12.1.1 and 12.1.2
of this Agreement shall be brought in the United States District Court for the
District of Delaware or in the Delaware Court of Chancery.

 

13.10.6  In
order to facilitate the ability of the Company, the Shareholders and G. McElroy
or LKQ, as the case may be, to enforce their rights under this Agreement and
other agreements contemplated hereby in accordance with Section 13.10.5, each of the parties hereby (i) expressly
submits himself or itself, as the case may be, for such purpose only, to the
personal jurisdiction of the United States District Court for the District of Delaware or in the Delaware Court of Chancery and (ii) expressly
agrees that the service of process may be had upon such person pursuant to the rules pertaining
to service of process contained in the applicable Delaware Long-Arm Statute.

 

13.11                 Further
Assurances.  In the event that at any
time after the Closing Date further action is necessary or appropriate to carry
out the purposes of this Agreement, the parties shall take all such necessary
or appropriate action, including executing such documents, instruments or
conveyances and taking such actions as may be reasonably requested by the
counsel of any of the parties, their respective affiliates and their respective
representatives, and otherwise cooperating
in a reasonable manner with each of the other parties, their respective
affiliates and their respective representatives in connection with any action
that may be necessary or advisable to carry out the provisions hereof or
transactions contemplated hereby or
related hereto (including the transfer of the Owned Real Property).

 

13.12                 Drafting.  This Agreement is deemed to have been drafted
jointly by the parties and any uncertainty or ambiguity shall not be construed
for or against any party as a result of the attribution of drafting to any
party.

 

60

 

13.13                 Interpretation.  When reference is made in this Agreement to a
Section, Exhibit or Schedule, such reference shall be to a Section, Exhibit or
Schedule of or to this Agreement unless otherwise indicated.  Any reference to the male gender herein shall
not be interpreted as excluding the female or neuter.  Any capitalized terms used in any Exhibit,
Schedule or Disclosure Schedule but not otherwise defined therein shall have
the meanings as defined in this Agreement. 
All Exhibits, Schedules and Disclosure Schedules annexed hereto or
referred to herein are hereby incorporated in and made a part of this Agreement
as if set forth herein.  The word “including”
and words of similar import when used in this Agreement will mean “including,
without limitation,” unless otherwise specified.

 

13.14                 Attorneys’ Fees
and Expenses.  In the event any party
brings an action to enforce any rights under this Agreement or the transactions
contemplated by this Agreement, the non-prevailing party in such action shall,
promptly after the entry of a final and nonappealable court order relating to
such action, pay to the prevailing party all costs and expenses (including
reasonable attorney fees and expenses) incurred by such prevailing party in
such action.

 

13.15                 Specific
Performance.  Each party acknowledges and agrees that the
other parties would be damaged irreparably in the event any provision of this
Agreement is not performed in accordance with its specific terms or otherwise
is breached, so that a party shall be entitled to injunctive relief to prevent
breaches of this Agreement and to enforce specifically this Agreement and the
terms and provisions hereof in addition to any other remedy to which such party
may be entitled, at law or in equity.

 

13.16                 Shareholder
Representatives.

 

13.16.1  Each Shareholder Representative is hereby
constituted and appointed as agent for and on behalf of those Shareholders for
whom such Shareholder Representative acts as identified in the definition of
the term “Shareholder Representatives” in Section 13.3.32.  No Shareholder Representative shall incur any
liability to the Shareholders with respect to any action taken or suffered by
such Shareholder Representative in reliance upon any note, direction,
instruction, consent, statement or other documents believed by such Shareholder
Representative to be genuinely and duly authorized, nor for other action or
inaction except such Shareholder Representative’s own willful misconduct or
gross negligence.  The Shareholder
Representatives may, in all questions arising under this Agreement, rely on the
advice of counsel and the Shareholder Representatives shall not be liable to
the Shareholders for anything done, omitted or suffered in good faith by the
Shareholder Representatives based on such advice.  A Shareholder Representative may resign at
any time upon giving 30 Business Days’ prior notice of such resignation to LKQ
and each other Shareholder.  In the event
of a Shareholder Representative’s death or permanent disability, he shall be
automatically removed as the Shareholder Representative without any action on
the part of any other Shareholder or LKQ. 
In the event of the death or permanent disability of either of the
Shareholder Representatives or a Shareholder Representative’s resignation from
such position, a successor Shareholder Representative shall be elected within
ten (10) Business Days as follows: 
(i) with respect to the Shareholder Representative representing the
Glenn C. McElroy Family Trust dated October 14, 1992 (and its
trustee), Phillip B. McElroy and Thomas C. Hutton, by a majority vote of such Shareholders or their

 

61

 

respective
successors; and (ii) with respect to the Shareholder Representative
representing John L. Neu, Robert T. Neu and Jeffrey P. Neu, by a majority vote of such Shareholders or
their respective successors.  Each
successor Shareholder Representative shall have all of the power, authority,
rights and privileges conferred by this Agreement upon the original Shareholder
Representative, and the term “Shareholder Representative” as used herein shall
be deemed to include any successor Shareholder Representative.

 

13.16.2  Each Shareholder Representative
shall have full power and authority to represent the Shareholders for whom such
Shareholder Representative acts and their respective successors, with respect
to all matters in regard to which this Agreement contemplates such Shareholder
Representative to act, including: 
(i) take any action contemplated to be taken by the Shareholders
under this Agreement or any Ancillary Agreement, including pursuant to Sections 4, 8, 9, 11 and 12.2 and the Escrow Agreement;
(ii) negotiate, determine, defend and settle any disputes that may arise
under or in connection with this Agreement or any Ancillary Agreement; and (iii) make,
execute, acknowledge and deliver any releases, assurances, receipts, requests,
instructions, notices, agreements, certificates and any other instruments, and
generally do any and all things and take any and all actions that may be
requisite, proper or advisable in connection with this Agreement or any
Ancillary Agreement.  All actions taken by such Shareholder
Representative hereunder shall be binding upon the Shareholders and their
successors, as if expressly confirmed and ratified in writing by each of
them.  A decision, act, consent or
instruction of a Shareholder Representative that is contemplated by this
Agreement shall constitute a decision of all the Shareholders for whom such
Shareholder Representative acts, and LKQ shall be entitled to rely on any such
decision, act, consent or instruction of such Shareholder Representative.

 

13.16.3  The Shareholder Representatives
shall have the right to recover from the Representative Expense Account the out-of-pocket expenses
incurred in serving in their
capacity as representatives of the
Shareholders, including fees payable to accountants and attorneys (the “Charges”). 
The Shareholder Representatives
shall seek payment or reimbursement of the Charges from the Representative
Expense Account by submitting a joint written instruction to the Escrow Agent
pursuant to the Escrow Agreement.  In
the event the Representative Expense Account is insufficient to satisfy the
Charges, each Shareholder shall be
obligated to pay such Shareholder’s share
of the Charges in excess of such amounts
based on the allocation set forth on Schedule 2.1.1 hereto.

 

13.17                 Legal
Representation.  In any dispute or proceeding arising
under or in connection with this Agreement, any one or more of the Shareholders or G. McElroy shall have the
right, at their election, to retain the firm of Gibson, Dunn &
Crutcher LLP to represent them in such matter and each of LKQ and the Company,
for itself and its affiliates, successors and assigns, hereby consents to any
such representation in any such matter and irrevocably waives its right to
object or assert a claim of conflict of interest with respect to such
representation.  Each of LKQ and the
Company acknowledges that the foregoing provision shall apply whether or not
Gibson, Dunn & Crutcher LLP provides legal services to the Company, LKQ or their affiliates after the Closing Date.  Each of LKQ and the Company, for itself and
its affiliates, successors and
assigns, hereby irrevocably acknowledges and agrees that all communications
between the Shareholders and G. McElroy
and their respective counsel,
including Gibson, Dunn & Crutcher LLP, made in connection with the
negotiation, preparation, execution, delivery and closing under, or any dispute
or proceeding arising under or in connection with, this Agreement or any
Ancillary Agreement, or any matter relating to any of the foregoing, are
privileged 

 

62

 

communications between the
Shareholders and G. McElroy
and their respective counsel and
neither LKQ nor the Company and the Subsidiary, nor any person purporting to
act on behalf of or through LKQ or the Company and the Subsidiary, will seek to
obtain the same by any process.

 

13.18                 Forward-Looking
Statements.

 

13.18.1  In
connection with LKQ’s investigation of the Company and the Subsidiary and the
transactions contemplated by this Agreement, LKQ may have received from the
Company or a Shareholder various forward-looking statements (e.g., budgets, estimates, assumptions,
projections, forecasts and plans) regarding such matters, including with respect to future revenues, future results of
operations, future cash flows and future financial condition of the business of
the Company and the Subsidiary (the “Forward-Looking Statements”).  LKQ acknowledges and agrees:  (i) there are inherent uncertainties in
attempting to make the Forward-Looking Statements; (ii) LKQ is familiar
with such uncertainties; and (iii) LKQ
is taking full responsibility for making its own investigation, examination and
evaluation of the Company and the Subsidiary and the transactions contemplated
by this Agreement, relying, as necessary, on the assistance of LKQ’s
advisors.  Accordingly, LKQ is taking
full responsibility for making its own evaluation of the adequacy and accuracy
of all Forward-Looking Statements and is not relying on any Forward-Looking
Statement in any manner whatsoever, and LKQ agrees hereby that it shall have no
claim against the Company or any of the Shareholders with respect to any
Forward-Looking Statements that LKQ may have received, except to the extent set
forth in this Agreement or any schedule or exhibit furnished in connection
herewith.

 

13.18.2  The
Company makes no representation or warranty with respect to any Forward-Looking
Statements, or with respect to the reasonableness of the assumptions underlying
any such statements, including those statements, if any, (i) contained in
the electronic data room of documents made available to LKQ by the Shareholders
through Intralinks, an electronic copy of which is contained on a DVD that has
been delivered to LKQ prior to the date hereof, any management presentation,
any supplemental due diligence information or in any other information or
documents delivered or made available to LKQ or its advisors or (ii) made
in connection with LKQ’s discussions with the Company’s management or any
Shareholder, negotiations leading to this Agreement or any other circumstance,
except to the extent set forth in this Agreement or any schedule or exhibit
furnished in connection herewith.

 

13.19                 Obligations of
G. McElroy.  G. McElroy
hereby guarantees, and agrees that he shall be responsible for, the performance
and satisfaction of all obligations and liabilities of the Glenn C. McElroy
Family Trust dated October 14, 1992 (and its trustee) under this
Agreement.

 

[Remainder of page intentionally
left blank.]

 

63

 

IN WITNESS
WHEREOF, the parties hereto have caused this Agreement to be duly executed as
of the day and year first above written.

 

 

	
   

  	
  LKQ CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Walter P. Hanley

  
	
   

  	
  Name:

  	
  Walter P. Hanley

  
	
   

  	
  Title:

  	
  Senior Vice President

  
					

 

 

	
   

  	
  PICK-YOUR-PART AUTO WRECKING

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Glenn C. McElroy

  
	
   

  	
  Name:

  	
  Glenn C. McElroy

  
	
   

  	
  Title:

  	
  President, CEO

  
					

 

 

	
   

  	
  /s/ Glenn C. McElroy

  
	
   

  	
  GLENN C. MCELROY

  

 

 

	
   

  	
  /s/ Glenn C. McElroy

  
	
   

  	
  GLENN C. MCELROY, AS TRUSTEE OF 

  THE GLENN C. MCELROY FAMILY 

  TRUST DATED OCTOBER 14, 1992

  

 

 

	
   

  	
  /s/ Phillip
  B. McElroy

  
	
   

  	
  PHILLIP B. MCELROY

  

 

 

	
   

  	
  /s/ Thomas
  C. Hutton

  
	
   

  	
  THOMAS C. HUTTON

  

 

 

SIGNATURE PAGE

TO

STOCK PURCHASE AGREEMENT

 

 

	
   

  	
  /s/ John
  L. Neu

  
	
   

  	
  JOHN L. NEU

  

 

 

	
   

  	
  /s/ Robert
  T. Neu

  
	
   

  	
  ROBERT T. NEU

  

 

 

	
   

  	
  /s/ Jeffrey
  P. Neu

  
	
   

  	
  JEFFREY P. NEU

  

 

 

SIGNATURE PAGE

TO

STOCK PURCHASE AGREEMENTExhibit 4.1

 

PRICING INSTRUMENT

 

WHEREAS, the parties named herein desire to enter into
certain Program Documents (as defined herein) contained herein, each such
document (unless otherwise specified in such document) dated as of August 18,
2008, relating to the issuance by Genworth Global Funding Trust 2008-44  (the “Trust”) of Notes to investors under the
secured notes program sponsored by Genworth Life and Annuity Insurance Company
(“GLAIC”), the terms of such Notes as specified in the pricing supplement attached
to this Pricing Instrument as Exhibit C (the “Pricing Supplement”);

 

WHEREAS, the Trust is a trust and will be organized
under and its activities will be governed by the provisions of the Trust
Agreement (set forth in Section A of this Pricing Instrument), dated as of
August 18, 2008, by and between the parties thereto indicated in Section E
herein;

 

WHEREAS, certain expense and indemnification
arrangements between GLAIC and the Trustee, on behalf of itself and on behalf
of the Trust, are governed pursuant to the provisions of the Expense and
Indemnity Agreement dated as of October 1, 2006 by and between GLAIC and
the Trustee;

 

WHEREAS, certain licensing arrangements between the
Trust and Genworth Financial, Inc. will be governed pursuant to the provisions
of the License Agreement dated as of October 28, 2005, by and between the
Trust and Genworth Financial, Inc.;

 

WHEREAS, certain custodial arrangements for the
Funding Agreement will be governed pursuant to the provisions of the Custodial
Agreement (the “Custodial Agreement”) dated as of December 7, 2005 by and
among SunTrust Bank, acting as custodian (the “Custodian”), the Indenture
Trustee and the Trust;

 

WHEREAS, the Notes will be issued pursuant to the
Indenture (set forth in Section B of this Pricing Instrument), dated as of
the Original Issue Date, by and between the parties thereto indicated in Section E
herein;

 

WHEREAS, the sale of the Notes will be governed by the
Terms Agreement (set forth in Section C of this Pricing Instrument), dated
as of August 18, 2008, by and among the parties thereto indicated in Section E
herein; and

 

WHEREAS, certain agreements relating to the Notes and
the Funding Agreement are set forth in the Coordination Agreement (set forth in
Section D of this Pricing Instrument), dated as of August 18, 2008,
by and among the parties thereto indicated in Section E herein.

 

All capitalized terms used herein and not otherwise
defined will have the meanings set forth in the Indenture.

 

1

 

SECTION A

 

TRUST AGREEMENT

 

This TRUST AGREEMENT (this “Trust Agreement”), dated
as of August 18, 2008, is entered into by and between GSS Holdings II, Inc.,
a Delaware corporation, as trust beneficial owner (the “Trust Beneficial Owner”),
and U.S. Bank National Association, a national banking association, as Trustee
(the “Trustee”).

 

References in the Standard
Trust Terms to JPMorgan Chase Bank, N.A. shall refer to The Bank of
New York Mellon Trust Company, N.A. and its permitted successors and assigns.

 

W I T
N E S S E T H:

 

WHEREAS, the Trust Beneficial Owner and the Trustee
desire to authorize the issuance of a Trust Beneficial Interest and a series of
Notes in connection with the entry into this Trust Agreement;

 

WHEREAS, all things necessary to make this Trust
Agreement a valid and legally binding agreement of the Trustee and the Trust
Beneficial Owner, enforceable in accordance with its terms, have been done;

 

WHEREAS, the parties intend to provide for, among
other things, (i) the issuance and sale of the Notes (pursuant to the
Indenture, the Distribution Agreement and the related Terms Agreement) and the
Trust Beneficial Interest, (ii) the use of the proceeds of the sale of the
Notes and Trust Beneficial Interest to acquire the Funding Agreement, and (iii) all
other actions deemed necessary or desirable in connection with the transactions
contemplated by this Trust Agreement; and

 

WHEREAS, the parties hereto desire to incorporate by
reference those certain Standard Trust Terms, dated as of December 8,
2005, and attached to the Pricing Instrument as Exhibit A
(the “Standard Trust Terms”).

 

NOW, THEREFORE, in consideration of the agreements and
obligations set forth herein and for other good and valuable consideration, the
sufficiency of which are hereby acknowledged, each party hereby agrees as
follows:

 

ARTICLE 1

 

Section 1.01           Incorporation by Reference.  All terms, provisions and agreements set
forth in the Standard Trust Terms (except to the extent expressly modified
herein) are hereby incorporated herein by reference with the same force and
effect as though fully set forth herein. 
All capitalized terms not otherwise defined herein (including the
recitals hereof) shall have the meanings set forth in the Standard Trust Terms
(the Standard Trust Terms and this Trust Agreement, collectively, the “Trust
Agreement”).  To the extent that the
terms set forth in Article 2 of this Trust Agreement are inconsistent with
the terms of the Standard Trust Terms, the terms set forth in Article 2
herein shall apply.

 

A-1

 

ARTICLE 2

 

Section 2.01           Name.  The
Trust created and governed by this Trust Agreement shall be the trust specified
in the Pricing Instrument.  The name of
the Trust shall be the name specified in the first paragraph of the Pricing
Instrument, as such name may be modified from time to time by the Trustee
following written notice to the Trust Beneficial Owner.

 

Section 2.02           Jurisdiction. 
The Trust is hereby organized in, and formed under and pursuant to, the
laws of the jurisdiction specified in the Pricing Supplement.

 

Section 2.03           Initial Capital Contribution and Ownership.  The Trust Beneficial Owner has paid or has
caused to be paid to, or to an account at the direction of, the Trustee, on the
date hereof, the sum of $15 (or, in the case of Notes issued with original
issue discount, such amount multiplied by the issue price of the Notes as
specified in the Pricing Supplement). 
The Trustee hereby acknowledges receipt in trust from the Trust Beneficial
Owner, as of the date hereof, of the foregoing contribution, which shall be
used along with the proceeds from the sale of the series of Notes to purchase
the Funding Agreement.  Upon the creation
of the Trust and the registration of the Trust Beneficial Interest in the
Securities Register (as defined in the Trust Agreement) by the Trust Registrar
in the name of the Trust Beneficial Owner, the Trust Beneficial Owner shall be
the sole beneficial owner of the Trust.

 

Section 2.04           Acknowledgment. 
The Trustee, on behalf of the Trust, expressly acknowledges its duties
and obligations set forth in the Standard Trust Terms incorporated herein by
reference.

 

Section 2.05           Additional Terms. 
Section 5.01(a) of the Standard Trust Terms is hereby replaced
with the following: “it is a national banking association duly organized,
validly existing and in good standing under the laws of the United States of
America and it is a “bank” within the meaning of Section 581 of the Code;”.

 

Section 2.06           Pricing Instrument; Execution and Incorporation of Terms.

 

The parties hereto will enter into the Trust Agreement
by executing the Pricing Instrument.

 

By executing the Pricing Instrument, the Trustee and
the Trust Beneficial Owner hereby agree that the Trust Agreement will constitute
a legal, valid and binding agreement between the Trustee and the Trust
Beneficial Owner.

 

All terms relating to the Trust or the series of Notes
not otherwise included herein will be as specified in the Pricing Instrument or
Pricing Supplement, as indicated herein.

 

Section 2.07           Governing Law. 
This Trust Agreement will be governed by, and construed in accordance
with, the laws of the jurisdiction specified in the Pricing Supplement.

 

A-2

 

Section 2.08           Counterparts. 
The Trust Agreement, through the Pricing Instrument, may be executed in
any number of counterparts, each of which counterparts shall be deemed to be an
original, and all of which counterparts shall constitute but one and the same
instrument.

 

A-3

 

SECTION B

 

INDENTURE

 

This INDENTURE (this “Indenture”) is entered into as
of the Original Issue Date by and between the Genworth Global Funding Trust
specified in the Pricing Instrument (the “Trust”) and The Bank of New York
Mellon Trust Company, N.A., as the indenture trustee (the “Indenture Trustee”).

 

The Bank of New York Mellon Trust Company, N.A., in
its capacity as Indenture Trustee, hereby accepts its role as Registrar, Paying
Agent, Transfer Agent and Calculation Agent hereunder.

 

References herein to “Indenture Trustee,” “Registrar,”
“Transfer Agent,” “Paying Agent” or “Calculation Agent” shall include the
permitted successors and assigns of any such entity from time to time and
references in the Standard Indenture Terms to The Bank of New York  shall refer to U.S. Bank National Association
and its permitted successors and assigns.

 

W I T
N E S S E T H:

 

WHEREAS, the Trust has duly authorized the execution
and delivery of this Indenture to provide for the issuance of Notes;

 

WHEREAS, all things necessary to make this Indenture a
valid and legally binding agreement of the Trust and the other parties to this
Indenture, enforceable in accordance with its terms, have been done, and the
Trust proposes to do all things necessary to make the Notes, when executed by
the Trust and authenticated and delivered pursuant hereto, valid and legally
binding obligations of the Trust as hereinafter provided; and

 

WHEREAS, the parties hereto desire to incorporate by
reference those certain Standard Indenture Terms, dated as of December 8,
2005, and attached to the Pricing Instrument as Exhibit B
(the “Standard Indenture Terms”).

 

NOW, THEREFORE, for and in consideration of the
premises and the purchase of the Notes by the Holders thereof, it is mutually
covenanted and agreed by each of the parties hereto as follows:

 

ARTICLE 1

 

Section 1.01           Incorporation by Reference.  All terms, provisions and agreements set
forth in the Standard Indenture Terms (except to the extent expressly modified
herein) are hereby incorporated herein by reference with the same force and
effect as though fully set forth herein. 
All capitalized terms not otherwise defined herein (including the
recitals hereof) shall have the meanings set forth in the Standard Indenture
Terms (the Standard Indenture Terms and this Indenture, collectively, the “Indenture”).  To the extent that the terms set forth in Article 2
of this Indenture are inconsistent with the terms of the Standard Indenture
Terms, the terms set forth in Article 2 herein shall apply.

 

B-1

 

ARTICLE 2

 

Section 2.01           Agreement to be
Bound.  Each of the Trust, the Indenture Trustee, the
Registrar, the Transfer Agent, the Paying Agent and the Calculation Agent
hereby agrees to be bound by all of the terms, provisions and agreements set
forth in the Indenture, with respect to all matters contemplated in the
Indenture, including, without limitation, those relating to the issuance of the
below-referenced Notes.

 

Section 2.02           Designation of the Trust, the Notes and the Funding
Agreement.  The Trust created
by the Trust Agreement specified in the Pricing Instrument and referred to
herein is the Genworth Global Funding Trust specified in the Pricing Instrument.  The Notes issued by the Trust and governed by
the Indenture shall be the Notes specified in the Pricing Supplement.  The Funding Agreement designated hereby is
the Funding Agreement designated in the Pricing Supplement, effective as of the
Original Issue Date, between the Trust and Genworth Life and Annuity Insurance
Company.

 

Section 2.03           Additional Terms. Notwithstanding anything to the
contrary in Section 2.04(c) of the Standard Indenture Terms, the
Indenture Trustee will give written notice of redemption to the Holders in
accordance with Section 1.06 of the Standard Indenture Terms not more than
seventy-five (75) calendar days and not less than thirty (30) calendar days
prior to the date set for such redemption. Notwithstanding anything to the
contrary in Section 2.04(f) of the Standard Indenture Terms, the
Indenture Trustee shall treat as satisfactory to it thirty-five (35) calendar
days’ notice from the Trust (or from GLAIC on behalf of the Trust) of a
redemption date for the Notes; provided that there are at least three Business
Days between the receipt by it of such notice and the deadline for giving
notice of such redemption under Section 2.04(c); provided further that the
Notes are in the form of Global Notes and the redemption is in whole.  The initial principal amount of the Notes
shall be $2,702,000.00.

 

Section 2.04           Pricing Instrument; Execution and Incorporation of Terms.

 

The parties hereto will enter into this Indenture by
executing the Pricing Instrument.

 

By executing the Pricing Instrument, the Indenture
Trustee, the Registrar, the Transfer Agent, the Paying Agent, the Calculation
Agent and the Trust hereby agree that the Indenture will constitute a legal,
valid and binding agreement between the Indenture Trustee, the Registrar, the
Transfer Agent, the Paying Agent, the Calculation Agent and the Trust.

 

All terms relating to the Trust or the Notes not
otherwise included herein will be as specified in the Pricing Instrument or
Pricing Supplement, as indicated herein.

 

Section 2.05           Counterparts. 
This Indenture, through the Pricing Instrument, may be executed in any
number of counterparts, each of which counterparts shall be deemed to be an
original, and all of which counterparts shall constitute one and the same
instrument.

 

[Remainder of Page Left
Intentionally Blank]

 

B-2

 

SECTION C

 

TERMS AGREEMENT

 

This TERMS AGREEMENT (this “Terms Agreement”) is
entered into as of August 18, 2008 by and among Genworth Life and Annuity
Insurance Company (“GLAIC”), the Genworth Global Funding Trust specified in the
Pricing Instrument (the “Trust”) and the Agent specified in the Pricing
Supplement (the “Agent”).

 

W I T
N E S S E T H:

 

WHEREAS, GLAIC and the Agent have entered into that
certain Distribution Agreement dated December 9, 2005 (the “Distribution
Agreement”).

 

NOW, THEREFORE, in consideration of the mutual
promises set forth herein and other good and valuable consideration, the
sufficiency and receipt of which are hereby acknowledged, each of the parties
hereby agrees as follows:

 

ARTICLE 1

 

Section 1.01           Incorporation by Reference.  The provisions of the Distribution Agreement
and the related definitions (unless otherwise specified herein) are
incorporated by reference herein and shall be deemed to have the same force and
effect as if set forth in full herein.

 

ARTICLE 2

 

Section 2.01           Addition of Trust as Party to Distribution Agreement.

 

Pursuant to Section 1 of the Distribution
Agreement, each of the undersigned parties hereby acknowledges and agrees that
the Trust, upon execution hereof by the Trust and the other parties to this
Terms Agreement, shall become a Trust for purposes of the Distribution
Agreement in accordance with the terms thereof, in respect of the Notes, with
all the authority, rights, powers, duties and obligations of a Trust under the
Distribution Agreement.  The Trust
confirms that any agreement, covenant, acknowledgment, representation or
warranty under the Distribution Agreement applicable to the Trust is made by
the Trust at the date hereof, unless another time or times are specified in the
Distribution Agreement, in which case such agreement, covenant, acknowledgment,
representation or warranty shall be deemed to be confirmed by the Trust at such
specified time or times.

 

All references to Section 9 (Indemnification) of
the Distribution Agreement to “solely with respect to the applicable Agent(s) or
Co-Agent(s)” will include all of such Agent’s or Co-Agent’s directors and
officers and each person, if any, who controls such Agent or Co-Agent within
the meaning of Section 15 of the Securities Act of 1933, as amended or Section 20
of the Securities Exchange Act of 1934, as amended.  All references in the Distribution Agreement
to the “Registration Statement”, the “Institutional Base Prospectus”, the “Retail
Base Prospectus”, any “preliminary prospectus”, the “Time of Sale Prospectus”
and the “Prospectus” shall also be deemed to include all documents incorporated
by reference therein.

 

C-1

 

Section 2.02           Purchase of Notes as Principal.

 

(a)           Subject
in all respects to the terms and conditions of the Distribution Agreement, the
Trust hereby agrees to sell to the Agent and the Agent hereby agrees to
purchase the Notes having the terms specified in the Pricing Supplement
relating to such Notes. The initial principal amount of the Notes is
$2,702,000.00.

 

(b)           In
connection with any purchase of Notes from the Trust by the Agent as principal,
the parties agree that the items specified on Schedule I of the Pricing
Instrument will be delivered as of the Settlement Date.

 

Section 2.03           Termination. 
Upon the termination of this Terms Agreement pursuant to Section 13(b) of
the Distribution Agreement the undersigned parties hereby agree to allocate the
expenses reasonably incurred prior to or in connection with such termination as
follows:

 

The expenses will be borne by GLAIC.

 

Section 2.04           Applicable
Time.  For purposes of the
Distribution Agreement, the Applicable Time shall be 4:05 pm EST, August 18,
2008.

 

Section 2.05           Governing Law. 
This Terms Agreement shall be governed by and construed in accordance
with the laws of the State of New York without regard to the principles of
conflicts of laws thereof.

 

Section 2.06           Notices. For purposes of Section 14 of the
Distribution Agreement, the Trust’s communications details are as set forth in Section D
of the Pricing Instrument.

 

Section 2.07           Additional Terms. 
The Agent represents, warrants and covenants with or to (as the case may
be) the Trust and the Company that it has not offered, sold or delivered and it
will not offer, sell or deliver, any of the Notes, in or from any jurisdiction
except under circumstances that are reasonably designed to result in compliance
with the applicable securities laws and regulations thereof.

 

Section 2.08           Pricing Instrument; Execution and Incorporation of Terms.

 

The parties hereto will enter into this Terms
Agreement by executing the Pricing Instrument.

 

By executing the Pricing Instrument, each party hereto
agrees that this Terms Agreement will constitute a legal, valid and binding
agreement by and among such parties.

 

All terms relating to the Trust or the Notes not
otherwise included in this Terms Agreement will be as specified in the Pricing
Instrument or Pricing Supplement, as indicated herein.

 

Section 2.09           Counterparts. 
This Terms Agreement, through the Pricing Instrument, may be executed in
any number of counterparts, each of which counterparts shall be deemed to be an
original, and all of which counterparts shall constitute but one and the same
instrument.

 

C-2

 

SECTION D

 

COORDINATION
AGREEMENT

 

This COORDINATION AGREEMENT (this “Coordination
Agreement”), dated as of August 18, 2008, is entered into by and among Genworth
Life and Annuity Insurance Company (“GLAIC”), the Genworth Global Funding Trust
specified in the Pricing Instrument (the “Trust”), SunTrust Bank, in its
capacity as custodian of the Funding Agreement (“Custodian”) and The Bank of
New York Mellon Trust Company, N.A., as the indenture trustee (the “Indenture
Trustee”).

 

W I T
N E S S E T H

 

WHEREAS, the Trust will enter into the Funding
Agreement with GLAIC, effective as of the Original Issue Date specified in the
Pricing Supplement;

 

WHEREAS, the Agents (as defined in the Distribution
Agreement) will sell the Notes in accordance with the Registration Statement;

 

WHEREAS, the Trust intends to issue the Notes in
accordance with the Indenture, to collaterally assign to, and grant a security
interest in, the Funding Agreement to and in favor of the Indenture Trustee in
accordance with the Indenture to secure payment of the Notes; and

 

WHEREAS, the Custodian will hold the Funding Agreement
on behalf of the Indenture Trustee pursuant to the terms of the Custodial
Agreement.

 

NOW, THEREFORE, to give effect to the agreements and
arrangements established under the Terms Agreement included in the Pricing
Instrument, as applicable, the Trust Agreement, the Indenture and the Notes,
and in consideration of the agreements and obligations set forth herein and for
other good and valuable consideration, the sufficiency of which are hereby
acknowledged, each party hereby agrees as follows:

 

ARTICLE 1

 

Section 1.01           Delivery of the Funding Agreement.  The Trust hereby authorizes the Custodian, on
behalf of the Indenture Trustee, to receive the Funding Agreement from GLAIC
pursuant to the assignment of the Funding Agreement (the “Assignment”), to be
entered into on the Original Issue Date, included in the closing instrument dated
as of the Original Issue Date (the “Closing Instrument”).

 

Section 1.02           Issuance and Purchase of the Notes.

 

(a)           Delivery
of the Funding Agreement to the Custodian, on behalf of the Indenture Trustee,
pursuant to the Assignment or execution of the cross-receipt contained in the
Closing Instrument shall be confirmation of payment by the Trust for the
Funding Agreement.

 

(b)           The
Trust hereby directs the Indenture Trustee, upon receipt of the Funding
Agreement by the Custodian, on behalf of the Indenture Trustee and pursuant to
the Assignment, 

 

D-1

 

(i) to authenticate the certificates representing the Notes (the “Certificates”)
in accordance with the Indenture and (ii) to (A) deliver each
relevant Certificate to the clearing system or systems identified in each such
Certificate, or to the nominee of such clearing system, or the custodian
thereof, for credit to such accounts as the Agent may direct, or (B) deliver
each relevant Certificate to the purchasers thereof as identified by the Agent.

 

ARTICLE 2

 

Section 2.01           Directions Regarding Periodic Payments.  As registered owner of the Funding Agreement
as collateral securing payments on the Notes, the Indenture Trustee will
receive payments on the Funding Agreement on behalf of the Trust.  The Trust hereby directs the Indenture
Trustee to use such funds to make payments on behalf of the Trust pursuant to
the Trust Agreement and the Indenture.

 

Section 2.02           Maturity of the Funding Agreement.  Upon the maturity of the Funding Agreement
and the return of funds thereunder, the Trust hereby directs the Indenture
Trustee to set aside from such funds an amount sufficient for the repayment of
the outstanding principal on the Notes and Trust Beneficial Interest when due.

 

ARTICLE 3

 

Section 3.01           Officer’s Certificates.  GLAIC hereby agrees to deliver an Officer’s
Certificate, a copy of which is attached hereto as Exhibit D,
on a quarterly basis to any rating agency currently rating the Program.  The Trust hereby agrees to deliver an Officer’s
Certificate, a copy of which is attached to the Pricing Instrument as Exhibit E, on a quarterly basis to any
rating agency currently rating the Program.

 

Section 3.02           Filings. 
GLAIC hereby covenants to file, or cause to be filed, in a timely manner
on behalf of the Trust all reports, certifications or similar filings required
under the Securities Exchange Act of 1934, as amended.

 

ARTICLE 4

 

Section 4.01           No Additional Liability.  Nothing in this Coordination Agreement shall
impose any liability or obligation on the part of any party to this
Coordination Agreement to make any payment or disbursement in addition to any
liability or obligation such party has under the Program Documents, except to
the extent that a party has actually received funds which it is obligated to
disburse pursuant to this Coordination Agreement.

 

Section 4.02           No Conflict. 
This Coordination Agreement is intended to be in furtherance of the
agreements reflected in the documents related to the Program Documents, and not
in conflict.  To the extent that a
provision of this Coordination Agreement conflicts with the provisions of one
or more Program Documents, the provisions of such Program Documents shall
govern.

 

Section 4.03           Governing Law. 
This Coordination Agreement shall be governed by and construed in
accordance with the laws of the State of New York without regard to the
principles of conflicts of laws thereof.

 

D-2

 

Section 4.04           Severability. 
If any provision in this Coordination Agreement shall be invalid,
illegal or unenforceable, such provision shall be deemed severable from the
remaining provisions of this Coordination Agreement and shall in no way affect
the validity or enforceability of such other provisions of this Coordination
Agreement.

 

Section 4.05           Notices. 
All demands, notices and communications under this Coordination
Agreement shall be in writing and shall be deemed to have been duly given upon
receipt at the addresses set forth below:

 

To the Trust:

 

Genworth Global Funding Trust 2008-44 

c/o U.S. Bank National Association

Corporate Trust Services

209 S. LaSalle Street, Suite 300

Chicago, Illinois 60604

Attention:  Patricia Child, VP

Facsimile: (312) 325-8905

 

To the Indenture Trustee:

 

The
Bank of New York Mellon Trust Company, N.A.

2 North LaSalle Street, Suite 1020

Chicago, Illinois 60602

Attention: Corporate Finance

Facsimile: (312) 827-8542

 

To GLAIC:

 

Genworth
Life and Annuity Insurance Company

6610 West Broad Street

Richmond, Virginia 23230

Attention: Treasurer

Facsimile: (804) 662-7777

 

with a
copy to:

 

Genworth
Life and Annuity Insurance Company

6610 West Broad Street

Richmond, Virginia 23230

Attention: Heather Harker, Esq.

Facsimile: (804) 281-6005

 

To the Custodian:

 

SunTrust Bank

919 East Main Street

Richmond, Virginia 23219

Attention: Retirement Services

Facsimile: (804) 782-7439

 

D-3

 

or at
such other address as shall be designated by any such party in a written notice
to the other parties.

 

ARTICLE 5

 

Section 5.01           Pricing Instrument; Execution and Incorporation of Terms.

 

The parties to this Coordination Agreement will enter
into this Coordination Agreement by executing the Pricing Instrument.

 

By executing the Pricing Instrument, each party hereto
agrees that this Coordination Agreement will constitute a legal, valid and
binding agreement by and among the Trust, GLAIC, the Custodian and the
Indenture Trustee.

 

All terms relating to the Trust or the Notes not
otherwise included in this Coordination Agreement will be as specified in the
Pricing Instrument or Pricing Supplement, as indicated herein.

 

Section 5.02           Counterparts. 
This Coordination Agreement, through the Pricing Instrument, may be
executed in any number of counterparts, each of which counterparts shall be
deemed to be an original, and all of which counterparts shall constitute but
one and the same instrument.

 

Section 5.03           Capitalized Terms.  All capitalized terms used herein and not
otherwise defined in this Coordination Agreement will have the meanings set
forth in the Indenture.

 

[Remainder of Page Left
Intentionally Blank]

 

D-4

 

SECTION E

 

MISCELLANEOUS AND
EXECUTION PAGES

 

This Pricing Instrument may be executed by each of the
parties hereto in any number of counterparts, and by each of the parties hereto
on separate counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same instrument.

 

Each signatory, by its execution hereof, does hereby
become a party to each of the agreements or indenture identified for such party
as of the date specified in such agreements or indenture.

 

IN WITNESS WHEREOF, the undersigned have executed this
Pricing Instrument with respect to the Notes as of the date first written
above.

 

 

	
   

  	
  GENWORTH LIFE AND ANNUITY INSURANCE COMPANY (in executing below
  agrees and becomes a

  party to (i) the Terms Agreement set forth in Section C

  herein and (ii) the Coordination Agreement set forth in

  Section D herein)

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Pamela C. Asbury

  
	
   

  	
   

  	
  Name: Pamela C. Asbury

  
	
   

  	
   

  	
  Title:  Vice
  President

  

 

E-1

 

	
   

  	
  THE GENWORTH GLOBAL FUNDING TRUST

  DESIGNATED IN THIS PRICING INSTRUMENT (in

  executing below agrees and becomes a party to (i) the

  Indenture set forth in Section B herein, (ii) the Terms

  Agreement set forth in Section C herein and (iii) the

  Coordination Agreement set forth in Section D herein)

  
	
   

  	
   

  
	
   

  	
  By: U.S. BANK NATIONAL ASSOCIATION, not in its

  individual capacity but solely in its capacity as Trustee of

  the Trust

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Patricia M. Child

  
	
   

  	
   

  	
  Name: Patricia M. Child

  
	
   

  	
   

  	
  Title:  Vice
  President

  

 

	
   

  	
  U.S. BANK NATIONAL ASSOCIATION (in executing

  below agrees and becomes a party to the Trust

  Agreement set forth in Section A herein), as Trustee

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Patricia M. Child

  
	
   

  	
   

  	
  Name: Patricia M. Child

  
	
   

  	
   

  	
  Title:  Vice
  President

  

 

	
   

  	
  U.S. BANK NATIONAL ASSOCIATION (in executing

  below acknowledges and agrees to Section 5.01 of the

  Trust Agreement as set forth in and amended by Section

  A herein), in its individual capacity

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Patricia M. Child

  
	
   

  	
   

  	
  Name: Patricia M. Child

  
	
   

  	
   

  	
  Title:  Vice
  President

  

 

	
   

  	
  GSS HOLDINGS II, INC. (in executing below agrees

  and becomes a party to the Trust Agreement set forth in

  Section A herein), as Trust Beneficial Owner

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Bernard J. Angelo

  
	
   

  	
   

  	
  Name: Bernard J. Angelo

  
	
   

  	
   

  	
  Title:  Vice
  President

  

 

E-2

 

	
   

  	
  THE BANK OF NEW YORK MELLON TRUST

  COMPANY, N.A. (in executing below agrees and

  becomes a party to (i) the Indenture set forth in Section B

  herein, as Indenture Trustee, Registrar, Transfer Agent,

  Paying Agent and Calculation Agent and (ii) the

  Coordination Agreement set forth in Section D herein),

  as Indenture Trustee, Registrar, Transfer Agent, Paying

  Agent and Calculation Agent

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ R. Tarnas

  
	
   

  	
   

  	
  Name: R. Tarnas

  
	
   

  	
   

  	
  Title:  Vice
  President

  

 

	
   

  	
  SUNTRUST BANK (in executing below agrees and

  becomes a party to the Coordination Agreement set forth

  in Section D herein), as Custodian

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Richard J. Owens, III

  
	
   

  	
   

  	
  Name: Richard J. Owens, III

  
	
   

  	
   

  	
  Title:  VP/Trust
  Officer

  

 

	
   

  	
  INCAPITAL, LLC (in executing below agrees and

  becomes a party to the Terms Agreement set forth in

  Section C herein)

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Brian Walker

  
	
   

  	
   

  	
  Name: Brian Walker

  
	
   

  	
   

  	
  Title:  Managing
  Director

  

 

E-3

 

EXHIBIT A

Standard Trust Terms

 

As filed as Exhibit 4.5 to the Registration
Statement on Form S-3 (File No. 333-128718), filed by Genworth Life
and Annuity Insurance Company with the Securities and Exchange Commission (the “Commission”)
on September 30, 2005, as amended by Amendment No. 1, filed with the
Commission on December 8, 2005.

 

A-1

 

EXHIBIT B

Standard Indenture Terms

 

As filed as Exhibit 4.1 to the Registration
Statement on Form S-3 (File No. 333-128718), filed by Genworth Life
and Annuity Insurance Company with the Securities and Exchange Commission (the “Commission”)
on September 30, 2005, as amended by Amendment No. 1, filed with the
Commission on December 8, 2005.

 

B-1

 

EXHIBIT C

Pricing Supplement

 

As filed with the Securities and Exchange Commission
pursuant to Rule 424(b) under the Securities Act, dated as of August 11,
2008, with respect to the Notes to be issued by the Trust.

 

C-1

 

EXHIBIT D

Genworth Life and Annuity Insurance Company

 

Officer’s
Certificate

 

The undersigned, an officer of Genworth Life and
Annuity Insurance Company, a stock life insurance company operating under a
charter granted by the Commonwealth of Virginia (“GLAIC”), does hereby certify
to Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc., in such capacity and on behalf of GLAIC, to the knowledge
of the undersigned and after reasonable inquiry, that:

 

1.                                       each of the representations and
warranties of GLAIC contained in each Expense and Indemnity Agreement entered
into in connection with the Registration Statement (defined below), and each
Funding Agreement issued in connection with the Program (the “Specified
Agreements”) (other than any representation or warranty expressly made as of a
date prior to the date hereof) are true and correct on and as of the date
hereof, with the same effect as though such representation or warranty had been
made on and as of the date hereof;

 

2.                                       no default under any of the Specified
Agreements and no event or any condition which, with notice or lapse of time or
both, would become a default, has occurred and is continuing as of the date
hereof;

 

3.                                       GLAIC has performed and complied with, in
all material respects, all of the agreements, covenants, obligations and
conditions applicable to GLAIC required by the Specified Agreements to be
performed or complied with by GLAIC on or before the date hereof;

 

4.                                       the Registration Statement filed on Form S-3
(File No. 333-128718) (the “Registration Statement”) by GLAIC has been
declared effective by the Securities and Exchange Commission (the “Commission”)
under the Securities Act of 1933, as amended (the “Act”) and no stop order
suspending the effectiveness of the Registration Statement has been issued and
no proceedings for that purpose have been commenced by or are pending before or
contemplated by the Commission;

 

5.                                       all filings, if any, required by Rule 424
and Rule 430A under the Act have been made in a timely manner;

 

6.                                       since [·](1),
the Trusts organized in connection with the program contemplated by the
Registration Statement have issued the following series of Notes:

 

[List each series of Notes]  [(collectively, the “Designated Notes”)]; and

 

7.                                       the Funding Agreements issued in
connection with the Designated Notes have been executed and delivered by GLAIC
in accordance with the terms and conditions of the Program Documents.

 

(1) This certificate to be signed quarterly.

 

D-1

 

Capitalized terms used herein and not otherwise
defined herein shall have the meanings set forth in the Standard Indenture
Terms attached as Exhibit 4.1 to the Registration Statement.

 

IN WITNESS WHEREOF, the undersigned has executed this
Certificate as of the [·] day of [·]
200[·].

 

	
   

  	
  [Name], in [his/her]
  capacity as an authorized officer of

  Genworth Life and Annuity Insurance Company

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

D-2

 

EXHIBIT E 

Genworth Global Funding Trusts

 

Trustee
Officer’s Certificate

 

U.S. Bank National Association, not in its individual
capacity but solely in its capacity as trustee acting on behalf of each common
law trust organized under the laws of the State of Illinois (in such capacity,
the “Trustee,” and each such common law trust being referred to herein as a “Trust”)
in connection with the program contemplated by the Registration Statement filed
on Form S-3 (File No. 333-128718) by Genworth Life and Annuity
Insurance Company with the Securities and Exchange Commission (the “Commission”)
on September 30, 2005, as amended by Amendment No. 1, filed with the
Commission on December 8, 2005 (the “Registration Statement”), does hereby
certify to Standard & Poor’s Ratings Services, a division of The
McGraw-Hill Companies, Inc., in such capacity and on behalf of each Trust,
to the knowledge of the Trustee without any independent investigation, that; as
of October 1, 2006:

 

1.                                       each of the representations and
warranties of each Trust contained in the Notes issued in connection with the
Program, each Indenture entered into in connection with the Registration
Statement and the Expense and Indemnity Agreement concerning the Trusts (the “Specified
Agreements”) (other than any representation or warranty expressly made as of a
date prior to the date hereof) are true and correct on and as of the date
hereof, with the same effect as though such representation or warranty had been
made on and as of the date hereof;

 

2.                                       no default under any of the Specified
Agreements and no event or any condition which, with notice or lapse of time or
both, would become a default, has occurred and is continuing as of the date
hereof;

 

3.                                       each Trust has performed and complied
with, in all material respects, all of the agreements, covenants, obligations
and conditions applicable to such Trust required by the Specified Agreements to
be performed or complied with by such Trust on or before the date hereof;

 

4.                                       the Notes issued in connection with the
Program have been issued, in all material respects, in accordance with the
terms and conditions of the Program Documents; and

 

5.                                       each Funding Agreement has been executed
and delivered by the related Trust in accordance with the terms and conditions
of the Program Documents.

 

Capitalized terms used herein and not otherwise
defined herein shall have the meanings set forth in the Standard Indenture
Terms attached as Exhibit 4.1 to the Registration Statement. In no event
shall U.S. Bank National Association in its personal corporate capacity (or any
officer of the Trustee in his or her personal capacity) have any liability for
any of the certifications or statements contained in this Trustee Officer’s
Certificate, such liability being solely that of each Trust.

 

E-1

 

IN WITNESS WHEREOF, the undersigned has executed this
Certificate as of the [·] day of [·],
200[·].

 

	
   

  	
  U.S. Bank National
  Association, not in its individual

  capacity but solely in its capacity as Trustee acting on

  behalf of each Trust

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

E-2

 

SCHEDULE
I

 

Terms
Agreement Specifications

 

In
connection with Section 3(a)(iv) of the Distribution Agreement, the
Program under which the Notes are issued is rated Aa3 by Moody’s Investors
Service, Inc. (“Moody’s”) and AA- by Standard & Poor’s Rating
Services, a division of The McGraw-Hill Companies, Inc. (“S&P”).  Genworth Life and Annuity Insurance Company (“GLAIC”)
expects that the Notes will be rated Aa3 by Moody’s and AA- by S&P.  GLAIC’s financial strength rating is Aa3 by
Moody’s and AA- by S&P.

 

In
accordance with Section 2.02(b) of the Terms Agreement and in
connection with the purchase of Notes from the Trust by the Agent, the
following items will be delivered on or prior to the Settlement Date to the
Agent:  None.

 

All capitalized terms used herein and not otherwise
defined herein will have the meanings set forth in the Distribution Agreement.

 

I-1

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