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1 THERESE Y. CANNATA (SBN 88032)
MICHAEL M. CHING (SBN 209426)
2 VINCENT C. LEE (SBN 310313)
IRENE LEE (SBN 331485)
3 CANNATA, O’TOOLE & OLSON LLP
100 Pine Street, Suite 350
4 San Francisco, CA 94111
Telephone: (415) 409-8900
5 Facsimile: (415) 409-8904
Email: tcannata@cofolaw.com
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Attorneys for Plaintiffs
7 JOSEPH J. CREAM AND AMANDA CREAM
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SUPERIOR COURT OF THE STATE OF CALIFORNIA
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COUNTY OF SONOMA
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JOSEPH J. CREAM AND AMANDA Case No. 24CV00318
CANNATA, O’ TOOLE, & OLSON LLP
12 CREAM
DECLARATION OF JOSEPH J. CREAM
13 Plaintiffs, IN SUPPORT OF PLAINTIFFS JOSEPH J.
CREAM’S AND AMANDA CREAM’S
100 Pine Street, Suite 350
San Francisco, CA 94111
14 v. OPPOSITION TO DEFENDANT PAYNE
YARDS OF CALIFORNIA, LLC’S EX
15 PAYNE YARDS OF CALIFORNIA, LLC, PARTE APPLICATION
16 Defendants. Judge: Hon. Kenneth English
Courtroom: 12
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I, JOSEPH J. CREAM, declare as follows:
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1. I am one of the plaintiffs in the above-referenced action. I make this declaration
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based upon my personal knowledge, except when indicated upon information and belief. If called
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upon to testify as to the truth of the matters set forth herein, I could and would do so based upon
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my own personal knowledge, and as to those matters stated upon information and belief, I believe
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them to be true.
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2. On or about March 1, 2023, Defendant Payne Yards of California (“Defendant,”)
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and Cream’s Dismantling, Inc. entered into an agreement for the sale of the assets and stock of
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Cream’s Dismantling, Inc. to Defendant for $6 million. Defendant paid $2 million at the close of
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escrow, while the remainder of the balance would be paid pursuant to a promissory note.
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CREAM DECLARATION ISO PLAINTIFFS’ OPPOSITION TO DEFENDANT’S EX PARTE
APPLICATION
1 Defendant, Defendant’s owner LaJuan Payne (“Mr. Payne”), and I subsequently executed a
2 promissory note, in which Defendant and Mr. Payne granted to me a second position security
3 interest in all of the stock and assets purchased from Cream’s Dismantling, Inc. The list of such
4 property to which I have a security interest is located in Schedule A of the stock and asset
5 purchase agreement. Attached hereto as Exhibit A is a true and correct copy of the stock and
6 asset purchase agreement between Defendant and Cream’s Dismantling, Inc.
7 3. On March 27, 2024, this Court rendered a judgment in favor of me and Plaintiff
8 Amanda Cream, awarding possession of the subject premises located at 3621 Copperhill Lane in
9 Sonoma County.
10 4. Since the issuance of the judgment in this case, Defendant, through Mr. Payne, has
11 been damaging the premises at issue, including, but not limited to the following acts.
CANNATA, O’ TOOLE, & OLSON LLP
12 a. Defendant has placed approximately 100 to 125 motorhomes onto the
13 premises without processing them. In the past week, Defendant brought 5 motorhomes onto the
100 Pine Street, Suite 350
San Francisco, CA 94111
14 premises. I am informed and believe that these motorhomes contain waste, including tires. The
15 typical number of motorhomes brought to the yard for processing, at any given time, was between
16 five (5) and ten (10).
17 b. Defendant has placed approximately 400 tires on the premises without
18 processing them. I am informed and believe that this is far in excess of the number of tires
19 permitted to be on property.
20 c. Defendant has emptied large quantities of trash on the property from
21 approximately four onsite 40 cubic yard rolloff/debris boxes (which have since been removed
22 and/or sold).
23 d. There are no visible signs of business operations at the premises. Through
24 an external visual observation and based on information from ex-employees who were just
25 terminated, Defendant has removed all automobile inventory, engines, transmissions, the crusher,
26 the towing trucks, loaders, forklifts, all vehicles, air compressors, the tire machine, and the
27 processing racks from the premises.
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CREAM DECLARATION ISO PLAINTIFFS’ OPPOSITION TO DEFENDANT’S EX PARTE
APPLICATION
EXHIBIT A
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STOCK & ASSET PURCHASE AGREEMENT
THIS STOCK AND ASSET PURCHASE AGREEMENT (“Agreement”) is made and entered into
as of March 1st, 2023, by and between Cream’s Dismantling, Inc., a California corporation, with a
business address at 3621 Copperhill Lane, Santa Rosa, California 95403 (“Company”) and its sole
shareholder Joseph J. Cream (individually “Cream” and collectively “Seller”), and Payne Yards of
California, LLC, a California limited liability company, with a business address at 7700 Edgewater Drive,
Suite 606A, Oakland, California 94621, or a Buyer Assignee subject to Section 14.1, below (collectively
“Buyer”).
RECITALS
A. Seller is engaged in the business of vehicle dismantling and scrap metal operating at 3621 Copperhill
Lane, Santa Rosa, California (“Business”). Seller is selling all stock and assets of the Business.
C. Buyer desires to purchase from Seller all stock and the assets of Company related to the Business,
including the trucks, equipment, fixtures, tangible and intangible personal property, inventory, goodwill,
and other assets of the Business as listed in this Agreement.
D. Subject to the terms and conditions contained in this Agreement, Seller desires to sell to Buyer, and
Buyer agrees to purchase from Seller, all of the stock and the assets of Seller related to the Company.
NOW, THEREFORE, in consideration of the mutual covenants, representations, and warranties contained
in this Agreement, the parties agree as follows:
ARTICLE 1.
SALE OF STOCK AND ASSETS
1.1. Sale of Stock.
The Seller agrees to sell to Buyer, and the Buyer agrees to purchase from the Seller all 5,000 shares of the
common stock of the Corporation.
1.2 Sale of Assets.
Subject to Section 1.5 below, Seller agrees to sell to Buyer, and Buyer agrees to purchase from Seller, at
Closing (as defined below), all of Seller’s and Company’s right, title, and interest in the assets used by
Company in connection with the operation of the Business and listed in this Section 1.2 (the “Assets”),
including, without limitation, the following:
(a) The tangible personal property, trucks, furnishings, fixtures, equipment, machinery, parts,
accessories, inventory, and any other property listed on Schedule A to be sold “as is” as of the
Closing Date (the “Personal Property”);
(b) The contracts, agreements, equipment leases, warranties, and other rights or agreements,
whether written or oral, listed on Schedule B (the “Contracts”);
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(c) All of Seller’s right, title, and interest in and to certain trade names, logos, copyrights, service
marks, trademarks, patents, patent applications, licenses, and goodwill associated with the
Business listed on Schedule C (the “Intangible Property”).
1.3. Excluded Assets.
The Assets shall not include, and Buyer shall not acquire any interest in, the assets listed on Schedule D
(the “Excluded Assets”). Buyer agrees that the dismantler/scrap metal license issued by the State of
California in Seller’s name (“License”) shall be addressed as follows: (1) As soon as reasonably possible
after the Closing Date and to the extent legally possible, Seller will add Buyer as an additional party on
the License for a up to of three (3) years after the Closing Date (“Co-License Period”); (2) during such
Co-License Period, Seller shall have sole authority over all matters related to the License; (3) after such
Co-License Period, if Buyer is not in default under this Agreement or any related agreements associated
with this Agreement (including but not limited to the Promissory Note or Lease), Seller will remove
Seller’s name from the License in a legally appropriate manner; and (4) should Buyer be in default under
this Agreement or any such related agreements during the Co-License Period, Seller may, at Seller’s sole
discretion, remove Buyer’s name from the License. Notwithstanding the foregoing, Seller may remove
his name from the License at any time. Seller may remove Buyer’s name from the License should Buyer
default on this Agreement or any agreements attached hereto as an Exhibit.
1.4. Permitted Liens.
Seller shall convey title to the Assets to Buyer free and clear of all liens, security interests, and
encumbrances of any kind or nature, except those items listed on Schedule E (the “Permitted Liens”).
Subsequent to the Closing Date, Buyer shall immediately notify and work with any lenders to immediately
assume full and complete responsibility for all Permitted Liens, including but not limited to loans on all
trucks and vehicles listed in Schedule A
1.5. Risk of Loss.
Seller assumes all risk of loss or damage to the Assets prior to the Closing. In the event there is any
material loss or damage to all or any portion of the Assets prior to the Closing, Buyer may either terminate
this Agreement pursuant to Article 12, or negotiate with Seller for a proportionate reduction in the
Purchase Price to reflect the loss or damage. For the purposes of this provision, the term “material loss or
damage” shall mean any loss or damage to the Assets with an aggregate cost of $10,000.00.
ARTICLE 2.
ASSUMPTION OF LIABILITIES
2.1. Assumption of Liabilities.
Effective as of the Closing Date (as defined below), and in addition to any other liabilities expressly
assumed by Buyer under this Agreement, Buyer shall assume responsibility for the performance and
satisfaction of all of the executory obligations and liabilities of Seller listed on Schedule F (the “Assumed
Liabilities”).
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2.2. Excluded Liabilities.
Except as expressly provided in this Agreement, Buyer shall not assume or become liable for any
obligations, commitments, or liabilities of Seller, whether known or unknown, absolute, contingent, or
otherwise, and whether or not related to the Assets, including, without limitation, any employment,
business, sales, or use tax relating to Seller’s operation of the Business and use and ownership of the
Assets prior to the Closing.
ARTICLE 3.
PURCHASE PRICE
3.1. Purchase Price.
The purchase price to be paid by Buyer to Seller for the Assets (the “Purchase Price”) shall be SIX
MILLION DOLLARS and zero cents ($6,000,000.00).
3.2. Payment of Purchase Price.
Buyer shall pay the Purchase Price to Joseph J. Cream, Jr. as follows:
(a) $2,000,000.00 at Closing in cash or immediately available funds; and
(b) $4,000,000.00 Promissory Note, with an interest rate of 6% for a term of twelve (12) years,
executed by Buyer in favor of Seller and attached hereto as Exhibit 1 along with a Security
Agreement (the “Promissory Note”).
3.3. Allocation of Purchase Price.
The Purchase Price shall be allocated as follows:
Corporation Individual
Trucks, Equipment and Inventory $1,343,500
Goodwill and Covenant Not To Compete $4,656,500
The Seller and Buyer declare that the values stated above were determined in good faith, through arms-
length negotiations. Both parties warrant and represent that they had the opportunity to consult a licensed
tax professional or accountant regarding this Agreement of Sale in order to obtain advice regarding this
allocation. Buyer understands and agrees that Seller makes no representations or warranties regarding the
allocation of the Purchase Price. The parties agree that the above allocation of the Purchase Price shall be
binding and that they will file all federal, state, and local tax returns and any other reports or returns of
any kind, including IRS Form 8594, on a basis consistent therewith.
3.4. Effect of Allocation.
The parties agree to abide by the allocation of the Purchase Price specified in this Agreement and agree
to report the transaction as so allocated for income tax purposes.
ARTICLE 4.
ESCROW and CLOSING
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4.1. Time and Place of Closing.
The closing for the purchase and sale of the Stock and Assets (the “Closing”) should be consummated at
the escrow office of OLD REPUBLIC TITLE COMPANY, located at 1000 Burnett Avenue, Suite #400
Concord, CA 94520, (“Escrow Holder”), on March 31, 2023 or on a date upon which the parties agree
in writing (the “Closing Date”), at which time and place, on payment to Joseph J. Cream, Jr. of the
Purchase Price described in this Agreement in the manner prescribed in this Agreement in Section 3.2,
above. At Closing, Seller shall transfer and convey title to the Stock and Assets to Buyer as provided in
this Agreement, subject only to the Permitted Liens.
4.2. Seller’s Closing Obligations.
At the Closing, Seller shall execute, acknowledge, and deliver, as appropriate, each of the following items:
(a) A duly executed bill of sale (the “Bill of Sale”), in substantially the form attached as Exhibit
2 and incorporated by reference, conveying all of Seller’s right, title, and interest in and to the
Personal Property to Buyer.
(b) As agreed to pursuant to Section 11.4, below, a duly executed employment agreement (the
“Employment Agreement”) pursuant to which Seller’s key officer, Joseph Cream, shall continue
to work in the Business after the Closing Date and in substantially the form attached as Exhibit 3
and incorporated by reference. Buyer understands that Joseph Cream has no obligation to continue
employment with Buyer and may unilaterally terminate employment pursuant to the terms of the
Employment Agreement.
(c) A duly executed real property lease (the “Real Property Lease”) in substantially the form
attached as Exhibit 4 and incorporated by reference, allowing Buyer to lease a portion of the real
property owned by Joseph Cream to maintain and operate the Assets under Buyer’s business.
(d) All other bills of sale, motor vehicle titles, assignments, endorsements, licenses, and other good
and sufficient instruments and documents of conveyance and transfer as shall be necessary and
effective to transfer, convey, and assign to Buyer at the Closing all of Seller’s right, title, and
interest in and to the Stock and Assets, free and clear of any liens or encumbrances other than the
Permitted Liens, as required by the terms of this Agreement.
4.3. Buyer’s Closing Obligations.
At the Closing, Buyer shall execute, acknowledge, and deliver, as appropriate, each of the following items:
(a) The amount of the Purchase Price in cash or immediately available funds, together with any
funds as may be necessary to comply with Buyer’s obligations regarding the payment of
prorations, costs, and expenses under this Agreement.
(b) Executed counterparts of any documents required to be signed by Buyer pursuant to this
Agreement, including, but not limited to, any Promissory Note or Security Agreement, Real
Property Lease, and an Employment Agreement.
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(c) All other instruments and documents necessary to consummate the transactions contemplated
by this Agreement.
4.4. Expenses of Closing.
The expenses of Closing shall be paid as follows:
(a) Seller shall pay all sales and use taxes arising out of the transfer of the Stock and Assets, if any.
(b) Except as otherwise expressly provided in this Agreement, all other Closing fees and costs,
including, but not limited to, legal fees, accounting fees, consulting fees, and other incidental
expenses in connection with the transactions contemplated by this Agreement shall be borne by
the party that incurs the expenses.
4.5. Proration of Expenses.
Except as otherwise expressly provided in this Agreement, all expenses associated with the Assets being
conveyed to Buyer, including, but not limited to, taxes, rent, insurance premiums, and utility charges, shall
be apportioned ratably between the parties as of the Closing Date on the basis of a 30-day month. This
obligation to make apportionments shall survive the Closing.
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES OF SELLER
5.1. Seller’s Representations and Warranties.
Seller makes the following representations and warranties to Buyer, each of which is true and correct as
of the date of this Agreement, and will be true and correct as of the Closing Date:
(a) Seller is a corporation, duly organized, validly existing, and in good standing under the laws of
the state of its organization, and is qualified to transact business in the State of California.
(b) Seller has full legal power and authority to enter into and perform this Agreement, and this
Agreement constitutes the valid and binding obligation of Seller, enforceable in accordance with
its terms.
(c) The execution and delivery of this Agreement does not conflict with, violate, or constitute a
default under the terms, conditions, or provisions of any agreement or instrument to which Seller
is a party, or any law, judgment, or order of which Seller is aware, and will not result in the creation
of any lien, security interest, or encumbrance on any of the Assets.
(d) There are no actions, suits, proceedings, or claims now pending, or, to the best of Seller’s
knowledge, threatened against Seller or the Assets that would affect Seller’s ability to fulfill its
obligations under this Agreement or that would impair the value of the Assets.
(e) Seller has, and will have at Closing, good and marketable title to the Assets free and clear of
all liens, charges, and encumbrances other than the Permitted Liens.
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(f) Seller has provided Buyer with true and correct copies of all Contracts. To Seller’s knowledge,
all of the Contracts are in full force and effect, have been duly executed by the parties, and neither
Seller nor any other party is in default under any Contract.
(g) Seller has provided Buyer with true and correct copies of all documents evidencing Seller’s
rights in the Intangible Property. To Seller’s knowledge, each agreement, instrument, or license
with respect to the Intangible Property is in full force and effect, and neither Seller nor any other
party is in default under any such agreements.
(h) Seller is not a party to, or otherwise bound by, any collective bargaining agreement, multi-
employer pension fund, or other labor union agreement with respect to any persons employed by
Seller in connection with its operation of the Business.
(i) Seller makes no representation, guarantee or warranty regarding the transferability or
assignability of any third-party contracts, or terms of such contracts, listed in Schedule B or
otherwise, or any licenses, use permits, land use entitlements, or any other licenses or permits
related to the operation of the Business or equipment related to the Business.
(j) Seller ‘s sole shareholder, Joseph J. Cream, Jr. hereby warrants that he is the owner of all
the issued and outstanding shares of Cream’s Dismantling, Inc., a California corporation and that
there are no liens of any kind encumbering said shares and that Seller is vested with all authority
to transfer said shares free of all encumbrances.
5.2. Correctness of Representations.
To the best of Seller’s knowledge, no representation or warranty of Seller in this Agreement or any other
information furnished by Seller pursuant to this Agreement contains any untrue statement of material fact
or fails to state any fact necessary in order to make the statements not misleading in any material respect.
To the best of Seller’s knowledge, all statements, representations, and other information provided by Seller
to Buyer shall be true and correct on and as of the Closing Date as though made on that date.
ARTICLE 6.
REPRESENTATIONS AND WARRANTIES OF BUYER
6.1. Buyer’s Representations and Warranties.
Buyer, and Buyer Assignee, makes the following representations and warranties to Seller, each of which
is true and correct as of the date of this Agreement and shall be true and correct as of the Closing Date:
(a) If Buyer Assignee is corporation, then such corporation is duly organized, validly existing, and
in good standing under the laws of the state of its organization, and is qualified to transact business
in the State of California.
(b) Buyer, or Buyer Assignee, has full legal power and authority to enter into and perform this
Agreement, and this Agreement constitutes the valid and binding obligation of Buyer, enforceable
in accordance with its terms.
(c) The execution and delivery of this Agreement does not conflict with, violate, or constitute a
default under the terms, conditions, or provisions of any agreement or instrument to which Buyer
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is a party, or any law, judgment, or order of which Buyer is aware, and will not result in the creation
of any lien, security interest, or encumbrance on any of the Assets.
(d) There is no action, proceeding, or claim pending, or, to Buyer’s knowledge, threatened, against
Buyer that would affect Buyer’s ability to consummate the transactions contemplated by this
Agreement.
(e) No consent, approval, or authorization of or declaration, filing, or registration with any
governmental or regulatory authority is required in connection with the execution, delivery, and
performance by Buyer of this Agreement or the consummation of the transactions contemplated
by the Agreement.
(f) Upon the Closing Date, Buyer will have completed any and all inspections and due diligence
necessary to satisfactorily evaluate and complete the purchase of the Assets pursuant to the terms
of this Agreement.
(g) Investment Intent – The Purchaser represents and warrants that the Purchaser is purchasing the
Stock of the Corporation for investment and not with a view to distribution.
(h) Securities Registration – The Purchaser understands that the stock of the Corporation being
purchased has not been registered under the Securities Act of 1933 in reliance upon an exemption
from registration. The Purchaser also understands that the stock of the Corporation must be held
indefinitely, unless it is later registered under the Securities Act of 1933 or unless an exemption
from registration is otherwise available, and that the Corporation has no obligation to register its
stock. The Purchaser agrees that the shares of stock of the Corporation purchased under this
agreement will not be offered, sold, transferred, pledged, or otherwise disposed of without
registration under the Securities Act of 1933 and applicable state securities laws or an opinion of
counsel acceptable to the Corporation that such registration is not required.
(i) Legend – The Purchaser understands and agrees that the certificate for the shares of stock of
the Corporation purchased under this agreement shall bear a legend that the shares shall not be
offered, sold, transferred, pledged, or otherwise disposed of without registration under the
Securities Act of 1933 and applicable state securities laws or an opinion of counsel acceptable to
the Corporation that such registration is not required.
(j) Buyer warrants and covenants that Buyer is fully aware that there is no guarantee to Buyer
being successful in Seller’s Business. Without limiting these intangibles, Buyer acknowledges the
following: Seller’s level of technical skills, Seller’s ability to communicate to both customers and
staff, Seller’s promotional skills, Seller’s management skills, Seller’s ability to delegate duties
within the Business, Seller’s desire to succeed, the level of teamwork that exists with the present
staff, the existing competition within towing communities in which the Business is located and
operates, and the existing economic climate. Buyer is fully aware that his purchase of Seller’s
Business constitutes a paramount change within the Business, with there being no guarantee that
these intangibles shall continue to remain the same. Buyer acknowledges that Buyer’s success in
Seller’s Business is entirely dependent upon those skills which Buyer brings into the Business
coupled with the stability of Buyer outside of the Business, along with external factors that cannot
be controlled, such as the economy, or third party payments (i.e.: private customers and
government agencies) as it concerns the Business. As such, Buyer acknowledges that Buyer is
relying solely on Buyer’s due diligence and that this purchase as a risk and accepts the
responsibility and results of this risk.
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6.2. Correctness of Representations.
To the best of Buyer’s knowledge, no representation or warranty of Buyer in this Agreement or any other
information furnished by Buyer pursuant to this Agreement contains any untrue statement of material fact
or fails to state any fact necessary in order to make the statements not misleading in any material respect.
To the best of Buyer’s knowledge, all statements, representations, exhibits, and other information provided
by Buyer to Seller shall be true and correct on and as of the Closing Date as though made on that date.
ARTICLE 7.
SELLER’S PRE-CLOSING OBLIGATIONS
7.1. Maintenance of Property Pending Closing.
At all times prior to the Closing Date, Seller shall continue to maintain the Assets and conduct its operation
of the Business in the same manner as they have been maintained and operated by Seller prior to the
execution of this Agreement.
7.2. Access and Information.
Seller shall promptly provide Buyer with all information concerning the Business and the Assets that
Buyer may reasonably request, and Buyer and its accountants and other representatives shall have access
during normal business hours to all of the Assets and to the books and records of the Business.
7.3. Consents.
On or before the Closing Date, Seller, at its expense, shall obtain all necessary consents required to assign
Seller’s interest in any of the Assets to Buyer as contemplated by this Agreement. In the event Seller is
unable to obtain any such consent on or before the Closing Date, Buyer may terminate this Agreement as
provided in Article 12.
7.4. Discharge of Liens.
All liens, claims, charges, security interests, pledges, assignments, or encumbrances relating to the Assets
that are not Permitted Liens shall be satisfied, terminated, and discharged by Seller on or prior to the
Closing Date and evidence reasonably satisfactory to Buyer and its counsel of the satisfaction, termination,
and discharge shall be delivered to Buyer at or prior to the Closing.
7.5. Termination of Employees.
Seller shall terminate all of its employees working in the Business effective as of the Closing Date. Seller
shall be responsible without exception for all compensation, taxes, insurance, and other benefits and
amounts relating to its employees and shall indemnify and hold Buyer harmless from any claims made
against Buyer with respect to the obligations. Buyer shall not assume or in any way become responsible
or liable for any compensation, taxes, insurance, or other benefits and amounts payable by Seller on
account of any of its employees.
ARTICLE 8.
MUTUAL COVENANTS
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8.1. Further Assurances Prior to Closing.
Seller and Buyer shall, prior to Closing, execute any and all documents and perform any and all acts
reasonably necessary, incidental, or appropriate to affect the transactions contemplated by this Agreement.
8.2. Notification of Changed Circumstances.
At any time after the Execution Date and prior to the Closing, if either party becomes aware of any fact
or circumstance that would materially change a representation or warranty made under this Agreement,
the party with knowledge of those facts shall notify the other in writing as soon as possible after the
discovery of the changed circumstances.
8.3. Employees.
As soon as possible after the Execution Date, Seller shall provide Buyer with a list (“Seller’s List”) of
those employees who will not be retained by Seller on Closing, together with the date of hire, the salary,
and a list of benefits of each employee named. At any time after the receipt of Seller’s List, Buyer may
negotiate with any of the named employees with respect to employment by Buyer following the Closing.
Seller and Buyer shall coordinate their efforts with respect to Seller’s termination and Buyer’s negotiations
with Seller’s employees so that the employees will receive notice of their termination by Seller and the
possibility of employment with Buyer at substantially the same time. Prior to the Closing, but without any
obligation to do so, Buyer shall endeavor to enter into employment agreements with all the employees
whom Buyer desires to employ following the Closing.
8.4. Compliance With Bulk Sales Law.
If necessary, Buyer shall give notice, in compliance with Division 6 of the California Uniform Commercial
Code, of the bulk sale contemplated by this Agreement and Seller shall furnish Buyer with all information
necessary for Buyer to prepare the notice, including all names and business addresses used by Seller within
the past 3 years and the location of all of the Assets to be transferred to Buyer under this Agreement.
8.5. Broker’s Fees.
Each party represents and warrants that no broker, finder, or any other person or entity has any claim for
any brokerage commissions or fees in connection with any of the transactions contemplated by this
Agreement. Each party shall indemnify the other against any claim or loss suffered as a result of any claim
for brokerage commissions or fees payable, or claimed to be payable, on the basis of any actions in
connection with this Agreement.
8.6 Confidentiality.
(a) Without the prior written consent of Seller, Buyer shall not, directly or indirectly, disclose
(and will direct their representatives not to disclose) any Confidential Information. The term
“Confidential Information” means any information of or relating to Seller, the Assets or the
Assumed Liabilities not generally known to the public (other than as a result of disclosure in
violation of this Agreement) in spoken, printed, electronic or any other form or medium, including,
but not limited to, business processes, practices, methods, policies, plans, publications, documents,
research, operations, services, strategies, techniques, agreements, contracts, transactions, potential
transactions, know-how, trade secrets, databases, manuals, records, supplier information, financial
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information, accounting information, legal information, marketing information, pricing
information, payroll information, personnel information, customer/agency information,
customer/agency lists and supplier lists.
(b) Except as and to the extent required by applicable Law, without the prior written consent
of the other party, no Party will make (and each will direct their representatives not to make,
directly or indirectly) any public comment, statement or communication with respect to, or
otherwise to disclose or to permit the disclosure of the existence of this Agreement or the
transaction between the Parties or any of the terms, conditions or other aspects of the transaction
set forth in this Agreement. If a Party is required by applicable Law to make any such disclosure,
it must first provide to the other Party the content of the proposed disclosure, the reasons that such
disclosure is required by applicable Law and the time and place that the disclosure will be made.
ARTICLE 9.
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
9.1. Buyer’s Conditions.
The obligation of Buyer to consummate the transactions contemplated by this Agreement shall be subject
to the satisfaction, on or before the Closing Date, of each of the following conditions:
(a) The representations and warranties of Seller set forth in Article 5 shall be true and correct, to
the best of Seller’s knowledge, as of the Closing Date.
(b) Seller shall have performed and complied with all of the agreements, covenants, and conditions
required of Seller by this Agreement on or before the Closing Date.
(c) No action, suit, or proceeding before any court or any governmental body or authority that
would in any way affect the Assets or the ability of the parties to consummate the transactions
contemplated by this Agreement shall have been instituted or threatened on or before the Closing
Date.
(d) The Assets shall be in substantially the same condition on the Closing Date as on the Execution
Date and any equipment shall be operating at California Department of Transportation standards,
and there shall be no loss or damage to the property prior to the Closing.
(e) Seller shall have obtained all necessary agreements and consents of any parties required to
consummate the transactions contemplated by this Agreement.
(f) Buyer shall have received corporation tax clearance certificates from the State Board of
Equalization (with respect to Seller’s sales and use tax liabilities) and the Employment
Development Department (with respect to Seller’s employment tax obligations), as of a date not
more than five (5) days prior to the Closing Date for Seller.
(g) Buyer shall have received a Certificate of Release from the California Employment
Development Department stating that, as of a date not more than five (5) days prior to the Closing
Date, no contributions, interest, or penalties are due from Seller.
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(h) Due Diligence: Buyer’s due diligence shall include the following: (1) the satisfactory review
of Seller’s financial information and federal tax returns for the years 2019, 2020 and 2021, along
with a financial statement for year to date 2022 completed by Seller’s accountant; (2) the
satisfactory review of Seller’s equipment and Assets to be conveyed to Buyer by this Agreement
as such equipment, if applicable, shall be operating at California Department of Transportation
standards but otherwise shall be accepted by Buyer on the Closing Date in its “as is” condition;
(3) the satisfactory inspection of the Leased Premises; (4) the satisfactory review of three months
of wage and compensation statements for the Business employee. Without prior written notice of
Buyer’s objection received by Seller, the foregoing due diligence items shall expire on the Closing
Date and shall thereafter be deemed satisfied.
9.2. Failure to Satisfy Buyer’s Conditions.
Any of Buyer’s conditions precedent may be waived in whole or in part by Buyer in writing at any time
on or before the Closing Date. In the event all Buyer’s conditions precedent have not been waived by
Buyer or satisfied in full on or before the Closing Date, Buyer may elect to terminate this Agreement as
provided in Article 12.
ARTICLE 10.
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
10.1. Seller’s Conditions.
The obligation of Seller to consummate the transactions contemplated by this Agreement shall be subject
to the satisfaction, on or before the Closing Date, of each of the following conditions:
(a) Seller shall have received the required amount of the Purchase Price in cash or immediately
available funds at Closing.
(b) The representations and warranties of Buyer set forth in Article 6 shall be true and correct, to
the best of Buyer’s knowledge, as of the Closing Date.
(c) Buyer shall have performed and complied with all of the agreements, covenants, and conditions
required of Seller by this Agreement on or before the Closing Date, including but not limited to
the execution of all Exhibits attached hereto and made a part hereof.
10.2. Failure to Satisfy Seller’s Conditions.
Any of Seller’s conditions precedent may be waived in whole or in part by Seller in writing at any time
on or before the Closing Date. In the event all Seller’s conditions precedent have not been waived by
Seller or satisfied in full on or before the Closing Date, Seller may elect to terminate this Agreement as
provided in Article 12.
ARTICLE 11.
POST-CLOSING OBLIGATIONS
11.1. Additional Assurances.
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Each party agrees to do all acts and things and to make, execute, and deliver such written instruments as
shall be reasonably necessary to carry out the terms and provisions of this Agreement. This covenant of
further assurances shall survive the Closing.
11.2. Covenant Not to Compete.
Seller agrees that it shall not engage, directly or indirectly, in any business that is the same as or similar
to the Business, within a radial distance of seventy five (75) miles of the Business location at 3621
Copperhill Lane, Santa Rosa, California (“Covenant Restriction Area”), for a period of twenty five (25)
years (“CNC”). In the event that any provision of this covenant not to compete is deemed unenforceable
the term shall be changed to the maximum area which is enforceable and the maximum number of years
which are enforceable however such maximum number of years shall not be less than twenty five (25)
years.
11.3. Exceptions to Covenant Not to Compete.
The CNC shall not apply to the following: Joseph Cream’s involvement in consulting for any other towing
service companies in the Santa Rosa area; Joseph Cream’s present and future operation of other towing
service companies so long as they are not listed on Schedule B and they are outside of the current towing
rotation zone of the Business; and Joseph Creams ownership and involvement in All Star Auto Recycling
located at 22521 Capay Road, Corning, California 96021.
11.4 Transitional Consulting Services
In order to ensure an effective transfer of the Business Assets, Joseph J. Cream, Jr. agrees to work in the
Business as an employee pursuant to the terms of the Employment Agreement, which shall include terms
for Joseph J. Cream, Jr. working without compensation for the first ten (10) hours of each week for the
first three (3) months after the Closing Date for the purposes of consulting with the Buyer relative to the
operation of the Business and any other functions that may reasonably be helpful to Buyer related to the
Business.
11.5 Buyer Limitations on Towing Services
Buyer shall not engage in providing “for hire” towing services within the Covenant Restriction Area, and
Buyer shall only provide rotation towing for entities listed on Schedule B.
ARTICLE 12.
TERMINATION
12.1. Termination.
This Agreement may be terminated as follows:
(a) By the mutual consent of Buyer and Seller at any time prior to the Closing.
(b) By Buyer at any time prior to the Closing as expressly provided in this Agreement, or if any
condition precedent to Buyer’s obligations set forth in Article 9 has not been satisfied in full or
previously waived by Buyer in writing, at or prior to the Closing.
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(c) By Seller at any time prior to the Closing as expressly provided in this Agreem
Preview
1 THERESE Y. CANNATA (SBN 88032) MICHAEL M. CHING (SBN 209426) 2 VINCENT C. LEE (SBN 310313) IRENE LEE (SBN 331485) 3 CANNATA, O’TOOLE & OLSON LLP 100 Pine Street, Suite 350 4 San Francisco, CA 94111 Telephone: (415) 409-8900 5 Facsimile: (415) 409-8904 Email: tcannata@cofolaw.com 6 Attorneys for Plaintiffs 7 JOSEPH J. CREAM AND AMANDA CREAM 8 SUPERIOR COURT OF THE STATE OF CALIFORNIA 9 COUNTY OF SONOMA 10 11 JOSEPH J. CREAM AND AMANDA Case No. 24CV00318 CANNATA, O’ TOOLE, & OLSON LLP 12 CREAM DECLARATION OF JOSEPH J. CREAM 13 Plaintiffs, IN SUPPORT OF PLAINTIFFS JOSEPH J. CREAM’S AND AMANDA CREAM’S 100 Pine Street, Suite 350 San Francisco, CA 94111 14 v. OPPOSITION TO DEFENDANT PAYNE YARDS OF CALIFORNIA, LLC’S EX 15 PAYNE YARDS OF CALIFORNIA, LLC, PARTE APPLICATION 16 Defendants. Judge: Hon. Kenneth English Courtroom: 12 17 18 I, JOSEPH J. CREAM, declare as follows: 19 1. I am one of the plaintiffs in the above-referenced action. I make this declaration 20 based upon my personal knowledge, except when indicated upon information and belief. If called 21 upon to testify as to the truth of the matters set forth herein, I could and would do so based upon 22 my own personal knowledge, and as to those matters stated upon information and belief, I believe 23 them to be true. 24 2. On or about March 1, 2023, Defendant Payne Yards of California (“Defendant,”) 25 and Cream’s Dismantling, Inc. entered into an agreement for the sale of the assets and stock of 26 Cream’s Dismantling, Inc. to Defendant for $6 million. Defendant paid $2 million at the close of 27 escrow, while the remainder of the balance would be paid pursuant to a promissory note. 28 1 CREAM DECLARATION ISO PLAINTIFFS’ OPPOSITION TO DEFENDANT’S EX PARTE APPLICATION 1 Defendant, Defendant’s owner LaJuan Payne (“Mr. Payne”), and I subsequently executed a 2 promissory note, in which Defendant and Mr. Payne granted to me a second position security 3 interest in all of the stock and assets purchased from Cream’s Dismantling, Inc. The list of such 4 property to which I have a security interest is located in Schedule A of the stock and asset 5 purchase agreement. Attached hereto as Exhibit A is a true and correct copy of the stock and 6 asset purchase agreement between Defendant and Cream’s Dismantling, Inc. 7 3. On March 27, 2024, this Court rendered a judgment in favor of me and Plaintiff 8 Amanda Cream, awarding possession of the subject premises located at 3621 Copperhill Lane in 9 Sonoma County. 10 4. Since the issuance of the judgment in this case, Defendant, through Mr. Payne, has 11 been damaging the premises at issue, including, but not limited to the following acts. CANNATA, O’ TOOLE, & OLSON LLP 12 a. Defendant has placed approximately 100 to 125 motorhomes onto the 13 premises without processing them. In the past week, Defendant brought 5 motorhomes onto the 100 Pine Street, Suite 350 San Francisco, CA 94111 14 premises. I am informed and believe that these motorhomes contain waste, including tires. The 15 typical number of motorhomes brought to the yard for processing, at any given time, was between 16 five (5) and ten (10). 17 b. Defendant has placed approximately 400 tires on the premises without 18 processing them. I am informed and believe that this is far in excess of the number of tires 19 permitted to be on property. 20 c. Defendant has emptied large quantities of trash on the property from 21 approximately four onsite 40 cubic yard rolloff/debris boxes (which have since been removed 22 and/or sold). 23 d. There are no visible signs of business operations at the premises. Through 24 an external visual observation and based on information from ex-employees who were just 25 terminated, Defendant has removed all automobile inventory, engines, transmissions, the crusher, 26 the towing trucks, loaders, forklifts, all vehicles, air compressors, the tire machine, and the 27 processing racks from the premises. 28 2 CREAM DECLARATION ISO PLAINTIFFS’ OPPOSITION TO DEFENDANT’S EX PARTE APPLICATION EXHIBIT A DocuSign Envelope ID: E90E6305-1625-45BC-AF42-DBA268408606 STOCK & ASSET PURCHASE AGREEMENT THIS STOCK AND ASSET PURCHASE AGREEMENT (“Agreement”) is made and entered into as of March 1st, 2023, by and between Cream’s Dismantling, Inc., a California corporation, with a business address at 3621 Copperhill Lane, Santa Rosa, California 95403 (“Company”) and its sole shareholder Joseph J. Cream (individually “Cream” and collectively “Seller”), and Payne Yards of California, LLC, a California limited liability company, with a business address at 7700 Edgewater Drive, Suite 606A, Oakland, California 94621, or a Buyer Assignee subject to Section 14.1, below (collectively “Buyer”). RECITALS A. Seller is engaged in the business of vehicle dismantling and scrap metal operating at 3621 Copperhill Lane, Santa Rosa, California (“Business”). Seller is selling all stock and assets of the Business. C. Buyer desires to purchase from Seller all stock and the assets of Company related to the Business, including the trucks, equipment, fixtures, tangible and intangible personal property, inventory, goodwill, and other assets of the Business as listed in this Agreement. D. Subject to the terms and conditions contained in this Agreement, Seller desires to sell to Buyer, and Buyer agrees to purchase from Seller, all of the stock and the assets of Seller related to the Company. NOW, THEREFORE, in consideration of the mutual covenants, representations, and warranties contained in this Agreement, the parties agree as follows: ARTICLE 1. SALE OF STOCK AND ASSETS 1.1. Sale of Stock. The Seller agrees to sell to Buyer, and the Buyer agrees to purchase from the Seller all 5,000 shares of the common stock of the Corporation. 1.2 Sale of Assets. Subject to Section 1.5 below, Seller agrees to sell to Buyer, and Buyer agrees to purchase from Seller, at Closing (as defined below), all of Seller’s and Company’s right, title, and interest in the assets used by Company in connection with the operation of the Business and listed in this Section 1.2 (the “Assets”), including, without limitation, the following: (a) The tangible personal property, trucks, furnishings, fixtures, equipment, machinery, parts, accessories, inventory, and any other property listed on Schedule A to be sold “as is” as of the Closing Date (the “Personal Property”); (b) The contracts, agreements, equipment leases, warranties, and other rights or agreements, whether written or oral, listed on Schedule B (the “Contracts”); 1 DocuSign Envelope ID: E90E6305-1625-45BC-AF42-DBA268408606 (c) All of Seller’s right, title, and interest in and to certain trade names, logos, copyrights, service marks, trademarks, patents, patent applications, licenses, and goodwill associated with the Business listed on Schedule C (the “Intangible Property”). 1.3. Excluded Assets. The Assets shall not include, and Buyer shall not acquire any interest in, the assets listed on Schedule D (the “Excluded Assets”). Buyer agrees that the dismantler/scrap metal license issued by the State of California in Seller’s name (“License”) shall be addressed as follows: (1) As soon as reasonably possible after the Closing Date and to the extent legally possible, Seller will add Buyer as an additional party on the License for a up to of three (3) years after the Closing Date (“Co-License Period”); (2) during such Co-License Period, Seller shall have sole authority over all matters related to the License; (3) after such Co-License Period, if Buyer is not in default under this Agreement or any related agreements associated with this Agreement (including but not limited to the Promissory Note or Lease), Seller will remove Seller’s name from the License in a legally appropriate manner; and (4) should Buyer be in default under this Agreement or any such related agreements during the Co-License Period, Seller may, at Seller’s sole discretion, remove Buyer’s name from the License. Notwithstanding the foregoing, Seller may remove his name from the License at any time. Seller may remove Buyer’s name from the License should Buyer default on this Agreement or any agreements attached hereto as an Exhibit. 1.4. Permitted Liens. Seller shall convey title to the Assets to Buyer free and clear of all liens, security interests, and encumbrances of any kind or nature, except those items listed on Schedule E (the “Permitted Liens”). Subsequent to the Closing Date, Buyer shall immediately notify and work with any lenders to immediately assume full and complete responsibility for all Permitted Liens, including but not limited to loans on all trucks and vehicles listed in Schedule A 1.5. Risk of Loss. Seller assumes all risk of loss or damage to the Assets prior to the Closing. In the event there is any material loss or damage to all or any portion of the Assets prior to the Closing, Buyer may either terminate this Agreement pursuant to Article 12, or negotiate with Seller for a proportionate reduction in the Purchase Price to reflect the loss or damage. For the purposes of this provision, the term “material loss or damage” shall mean any loss or damage to the Assets with an aggregate cost of $10,000.00. ARTICLE 2. ASSUMPTION OF LIABILITIES 2.1. Assumption of Liabilities. Effective as of the Closing Date (as defined below), and in addition to any other liabilities expressly assumed by Buyer under this Agreement, Buyer shall assume responsibility for the performance and satisfaction of all of the executory obligations and liabilities of Seller listed on Schedule F (the “Assumed Liabilities”). 2 DocuSign Envelope ID: E90E6305-1625-45BC-AF42-DBA268408606 2.2. Excluded Liabilities. Except as expressly provided in this Agreement, Buyer shall not assume or become liable for any obligations, commitments, or liabilities of Seller, whether known or unknown, absolute, contingent, or otherwise, and whether or not related to the Assets, including, without limitation, any employment, business, sales, or use tax relating to Seller’s operation of the Business and use and ownership of the Assets prior to the Closing. ARTICLE 3. PURCHASE PRICE 3.1. Purchase Price. The purchase price to be paid by Buyer to Seller for the Assets (the “Purchase Price”) shall be SIX MILLION DOLLARS and zero cents ($6,000,000.00). 3.2. Payment of Purchase Price. Buyer shall pay the Purchase Price to Joseph J. Cream, Jr. as follows: (a) $2,000,000.00 at Closing in cash or immediately available funds; and (b) $4,000,000.00 Promissory Note, with an interest rate of 6% for a term of twelve (12) years, executed by Buyer in favor of Seller and attached hereto as Exhibit 1 along with a Security Agreement (the “Promissory Note”). 3.3. Allocation of Purchase Price. The Purchase Price shall be allocated as follows: Corporation Individual Trucks, Equipment and Inventory $1,343,500 Goodwill and Covenant Not To Compete $4,656,500 The Seller and Buyer declare that the values stated above were determined in good faith, through arms- length negotiations. Both parties warrant and represent that they had the opportunity to consult a licensed tax professional or accountant regarding this Agreement of Sale in order to obtain advice regarding this allocation. Buyer understands and agrees that Seller makes no representations or warranties regarding the allocation of the Purchase Price. The parties agree that the above allocation of the Purchase Price shall be binding and that they will file all federal, state, and local tax returns and any other reports or returns of any kind, including IRS Form 8594, on a basis consistent therewith. 3.4. Effect of Allocation. The parties agree to abide by the allocation of the Purchase Price specified in this Agreement and agree to report the transaction as so allocated for income tax purposes. ARTICLE 4. ESCROW and CLOSING 3 DocuSign Envelope ID: E90E6305-1625-45BC-AF42-DBA268408606 4.1. Time and Place of Closing. The closing for the purchase and sale of the Stock and Assets (the “Closing”) should be consummated at the escrow office of OLD REPUBLIC TITLE COMPANY, located at 1000 Burnett Avenue, Suite #400 Concord, CA 94520, (“Escrow Holder”), on March 31, 2023 or on a date upon which the parties agree in writing (the “Closing Date”), at which time and place, on payment to Joseph J. Cream, Jr. of the Purchase Price described in this Agreement in the manner prescribed in this Agreement in Section 3.2, above. At Closing, Seller shall transfer and convey title to the Stock and Assets to Buyer as provided in this Agreement, subject only to the Permitted Liens. 4.2. Seller’s Closing Obligations. At the Closing, Seller shall execute, acknowledge, and deliver, as appropriate, each of the following items: (a) A duly executed bill of sale (the “Bill of Sale”), in substantially the form attached as Exhibit 2 and incorporated by reference, conveying all of Seller’s right, title, and interest in and to the Personal Property to Buyer. (b) As agreed to pursuant to Section 11.4, below, a duly executed employment agreement (the “Employment Agreement”) pursuant to which Seller’s key officer, Joseph Cream, shall continue to work in the Business after the Closing Date and in substantially the form attached as Exhibit 3 and incorporated by reference. Buyer understands that Joseph Cream has no obligation to continue employment with Buyer and may unilaterally terminate employment pursuant to the terms of the Employment Agreement. (c) A duly executed real property lease (the “Real Property Lease”) in substantially the form attached as Exhibit 4 and incorporated by reference, allowing Buyer to lease a portion of the real property owned by Joseph Cream to maintain and operate the Assets under Buyer’s business. (d) All other bills of sale, motor vehicle titles, assignments, endorsements, licenses, and other good and sufficient instruments and documents of conveyance and transfer as shall be necessary and effective to transfer, convey, and assign to Buyer at the Closing all of Seller’s right, title, and interest in and to the Stock and Assets, free and clear of any liens or encumbrances other than the Permitted Liens, as required by the terms of this Agreement. 4.3. Buyer’s Closing Obligations. At the Closing, Buyer shall execute, acknowledge, and deliver, as appropriate, each of the following items: (a) The amount of the Purchase Price in cash or immediately available funds, together with any funds as may be necessary to comply with Buyer’s obligations regarding the payment of prorations, costs, and expenses under this Agreement. (b) Executed counterparts of any documents required to be signed by Buyer pursuant to this Agreement, including, but not limited to, any Promissory Note or Security Agreement, Real Property Lease, and an Employment Agreement. 4 DocuSign Envelope ID: E90E6305-1625-45BC-AF42-DBA268408606 (c) All other instruments and documents necessary to consummate the transactions contemplated by this Agreement. 4.4. Expenses of Closing. The expenses of Closing shall be paid as follows: (a) Seller shall pay all sales and use taxes arising out of the transfer of the Stock and Assets, if any. (b) Except as otherwise expressly provided in this Agreement, all other Closing fees and costs, including, but not limited to, legal fees, accounting fees, consulting fees, and other incidental expenses in connection with the transactions contemplated by this Agreement shall be borne by the party that incurs the expenses. 4.5. Proration of Expenses. Except as otherwise expressly provided in this Agreement, all expenses associated with the Assets being conveyed to Buyer, including, but not limited to, taxes, rent, insurance premiums, and utility charges, shall be apportioned ratably between the parties as of the Closing Date on the basis of a 30-day month. This obligation to make apportionments shall survive the Closing. ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF SELLER 5.1. Seller’s Representations and Warranties. Seller makes the following representations and warranties to Buyer, each of which is true and correct as of the date of this Agreement, and will be true and correct as of the Closing Date: (a) Seller is a corporation, duly organized, validly existing, and in good standing under the laws of the state of its organization, and is qualified to transact business in the State of California. (b) Seller has full legal power and authority to enter into and perform this Agreement, and this Agreement constitutes the valid and binding obligation of Seller, enforceable in accordance with its terms. (c) The execution and delivery of this Agreement does not conflict with, violate, or constitute a default under the terms, conditions, or provisions of any agreement or instrument to which Seller is a party, or any law, judgment, or order of which Seller is aware, and will not result in the creation of any lien, security interest, or encumbrance on any of the Assets. (d) There are no actions, suits, proceedings, or claims now pending, or, to the best of Seller’s knowledge, threatened against Seller or the Assets that would affect Seller’s ability to fulfill its obligations under this Agreement or that would impair the value of the Assets. (e) Seller has, and will have at Closing, good and marketable title to the Assets free and clear of all liens, charges, and encumbrances other than the Permitted Liens. 5 DocuSign Envelope ID: E90E6305-1625-45BC-AF42-DBA268408606 (f) Seller has provided Buyer with true and correct copies of all Contracts. To Seller’s knowledge, all of the Contracts are in full force and effect, have been duly executed by the parties, and neither Seller nor any other party is in default under any Contract. (g) Seller has provided Buyer with true and correct copies of all documents evidencing Seller’s rights in the Intangible Property. To Seller’s knowledge, each agreement, instrument, or license with respect to the Intangible Property is in full force and effect, and neither Seller nor any other party is in default under any such agreements. (h) Seller is not a party to, or otherwise bound by, any collective bargaining agreement, multi- employer pension fund, or other labor union agreement with respect to any persons employed by Seller in connection with its operation of the Business. (i) Seller makes no representation, guarantee or warranty regarding the transferability or assignability of any third-party contracts, or terms of such contracts, listed in Schedule B or otherwise, or any licenses, use permits, land use entitlements, or any other licenses or permits related to the operation of the Business or equipment related to the Business. (j) Seller ‘s sole shareholder, Joseph J. Cream, Jr. hereby warrants that he is the owner of all the issued and outstanding shares of Cream’s Dismantling, Inc., a California corporation and that there are no liens of any kind encumbering said shares and that Seller is vested with all authority to transfer said shares free of all encumbrances. 5.2. Correctness of Representations. To the best of Seller’s knowledge, no representation or warranty of Seller in this Agreement or any other information furnished by Seller pursuant to this Agreement contains any untrue statement of material fact or fails to state any fact necessary in order to make the statements not misleading in any material respect. To the best of Seller’s knowledge, all statements, representations, and other information provided by Seller to Buyer shall be true and correct on and as of the Closing Date as though made on that date. ARTICLE 6. REPRESENTATIONS AND WARRANTIES OF BUYER 6.1. Buyer’s Representations and Warranties. Buyer, and Buyer Assignee, makes the following representations and warranties to Seller, each of which is true and correct as of the date of this Agreement and shall be true and correct as of the Closing Date: (a) If Buyer Assignee is corporation, then such corporation is duly organized, validly existing, and in good standing under the laws of the state of its organization, and is qualified to transact business in the State of California. (b) Buyer, or Buyer Assignee, has full legal power and authority to enter into and perform this Agreement, and this Agreement constitutes the valid and binding obligation of Buyer, enforceable in accordance with its terms. (c) The execution and delivery of this Agreement does not conflict with, violate, or constitute a default under the terms, conditions, or provisions of any agreement or instrument to which Buyer 6 DocuSign Envelope ID: E90E6305-1625-45BC-AF42-DBA268408606 is a party, or any law, judgment, or order of which Buyer is aware, and will not result in the creation of any lien, security interest, or encumbrance on any of the Assets. (d) There is no action, proceeding, or claim pending, or, to Buyer’s knowledge, threatened, against Buyer that would affect Buyer’s ability to consummate the transactions contemplated by this Agreement. (e) No consent, approval, or authorization of or declaration, filing, or registration with any governmental or regulatory authority is required in connection with the execution, delivery, and performance by Buyer of this Agreement or the consummation of the transactions contemplated by the Agreement. (f) Upon the Closing Date, Buyer will have completed any and all inspections and due diligence necessary to satisfactorily evaluate and complete the purchase of the Assets pursuant to the terms of this Agreement. (g) Investment Intent – The Purchaser represents and warrants that the Purchaser is purchasing the Stock of the Corporation for investment and not with a view to distribution. (h) Securities Registration – The Purchaser understands that the stock of the Corporation being purchased has not been registered under the Securities Act of 1933 in reliance upon an exemption from registration. The Purchaser also understands that the stock of the Corporation must be held indefinitely, unless it is later registered under the Securities Act of 1933 or unless an exemption from registration is otherwise available, and that the Corporation has no obligation to register its stock. The Purchaser agrees that the shares of stock of the Corporation purchased under this agreement will not be offered, sold, transferred, pledged, or otherwise disposed of without registration under the Securities Act of 1933 and applicable state securities laws or an opinion of counsel acceptable to the Corporation that such registration is not required. (i) Legend – The Purchaser understands and agrees that the certificate for the shares of stock of the Corporation purchased under this agreement shall bear a legend that the shares shall not be offered, sold, transferred, pledged, or otherwise disposed of without registration under the Securities Act of 1933 and applicable state securities laws or an opinion of counsel acceptable to the Corporation that such registration is not required. (j) Buyer warrants and covenants that Buyer is fully aware that there is no guarantee to Buyer being successful in Seller’s Business. Without limiting these intangibles, Buyer acknowledges the following: Seller’s level of technical skills, Seller’s ability to communicate to both customers and staff, Seller’s promotional skills, Seller’s management skills, Seller’s ability to delegate duties within the Business, Seller’s desire to succeed, the level of teamwork that exists with the present staff, the existing competition within towing communities in which the Business is located and operates, and the existing economic climate. Buyer is fully aware that his purchase of Seller’s Business constitutes a paramount change within the Business, with there being no guarantee that these intangibles shall continue to remain the same. Buyer acknowledges that Buyer’s success in Seller’s Business is entirely dependent upon those skills which Buyer brings into the Business coupled with the stability of Buyer outside of the Business, along with external factors that cannot be controlled, such as the economy, or third party payments (i.e.: private customers and government agencies) as it concerns the Business. As such, Buyer acknowledges that Buyer is relying solely on Buyer’s due diligence and that this purchase as a risk and accepts the responsibility and results of this risk. 7 DocuSign Envelope ID: E90E6305-1625-45BC-AF42-DBA268408606 6.2. Correctness of Representations. To the best of Buyer’s knowledge, no representation or warranty of Buyer in this Agreement or any other information furnished by Buyer pursuant to this Agreement contains any untrue statement of material fact or fails to state any fact necessary in order to make the statements not misleading in any material respect. To the best of Buyer’s knowledge, all statements, representations, exhibits, and other information provided by Buyer to Seller shall be true and correct on and as of the Closing Date as though made on that date. ARTICLE 7. SELLER’S PRE-CLOSING OBLIGATIONS 7.1. Maintenance of Property Pending Closing. At all times prior to the Closing Date, Seller shall continue to maintain the Assets and conduct its operation of the Business in the same manner as they have been maintained and operated by Seller prior to the execution of this Agreement. 7.2. Access and Information. Seller shall promptly provide Buyer with all information concerning the Business and the Assets that Buyer may reasonably request, and Buyer and its accountants and other representatives shall have access during normal business hours to all of the Assets and to the books and records of the Business. 7.3. Consents. On or before the Closing Date, Seller, at its expense, shall obtain all necessary consents required to assign Seller’s interest in any of the Assets to Buyer as contemplated by this Agreement. In the event Seller is unable to obtain any such consent on or before the Closing Date, Buyer may terminate this Agreement as provided in Article 12. 7.4. Discharge of Liens. All liens, claims, charges, security interests, pledges, assignments, or encumbrances relating to the Assets that are not Permitted Liens shall be satisfied, terminated, and discharged by Seller on or prior to the Closing Date and evidence reasonably satisfactory to Buyer and its counsel of the satisfaction, termination, and discharge shall be delivered to Buyer at or prior to the Closing. 7.5. Termination of Employees. Seller shall terminate all of its employees working in the Business effective as of the Closing Date. Seller shall be responsible without exception for all compensation, taxes, insurance, and other benefits and amounts relating to its employees and shall indemnify and hold Buyer harmless from any claims made against Buyer with respect to the obligations. Buyer shall not assume or in any way become responsible or liable for any compensation, taxes, insurance, or other benefits and amounts payable by Seller on account of any of its employees. ARTICLE 8. MUTUAL COVENANTS 8 DocuSign Envelope ID: E90E6305-1625-45BC-AF42-DBA268408606 8.1. Further Assurances Prior to Closing. Seller and Buyer shall, prior to Closing, execute any and all documents and perform any and all acts reasonably necessary, incidental, or appropriate to affect the transactions contemplated by this Agreement. 8.2. Notification of Changed Circumstances. At any time after the Execution Date and prior to the Closing, if either party becomes aware of any fact or circumstance that would materially change a representation or warranty made under this Agreement, the party with knowledge of those facts shall notify the other in writing as soon as possible after the discovery of the changed circumstances. 8.3. Employees. As soon as possible after the Execution Date, Seller shall provide Buyer with a list (“Seller’s List”) of those employees who will not be retained by Seller on Closing, together with the date of hire, the salary, and a list of benefits of each employee named. At any time after the receipt of Seller’s List, Buyer may negotiate with any of the named employees with respect to employment by Buyer following the Closing. Seller and Buyer shall coordinate their efforts with respect to Seller’s termination and Buyer’s negotiations with Seller’s employees so that the employees will receive notice of their termination by Seller and the possibility of employment with Buyer at substantially the same time. Prior to the Closing, but without any obligation to do so, Buyer shall endeavor to enter into employment agreements with all the employees whom Buyer desires to employ following the Closing. 8.4. Compliance With Bulk Sales Law. If necessary, Buyer shall give notice, in compliance with Division 6 of the California Uniform Commercial Code, of the bulk sale contemplated by this Agreement and Seller shall furnish Buyer with all information necessary for Buyer to prepare the notice, including all names and business addresses used by Seller within the past 3 years and the location of all of the Assets to be transferred to Buyer under this Agreement. 8.5. Broker’s Fees. Each party represents and warrants that no broker, finder, or any other person or entity has any claim for any brokerage commissions or fees in connection with any of the transactions contemplated by this Agreement. Each party shall indemnify the other against any claim or loss suffered as a result of any claim for brokerage commissions or fees payable, or claimed to be payable, on the basis of any actions in connection with this Agreement. 8.6 Confidentiality. (a) Without the prior written consent of Seller, Buyer shall not, directly or indirectly, disclose (and will direct their representatives not to disclose) any Confidential Information. The term “Confidential Information” means any information of or relating to Seller, the Assets or the Assumed Liabilities not generally known to the public (other than as a result of disclosure in violation of this Agreement) in spoken, printed, electronic or any other form or medium, including, but not limited to, business processes, practices, methods, policies, plans, publications, documents, research, operations, services, strategies, techniques, agreements, contracts, transactions, potential transactions, know-how, trade secrets, databases, manuals, records, supplier information, financial 9 DocuSign Envelope ID: E90E6305-1625-45BC-AF42-DBA268408606 information, accounting information, legal information, marketing information, pricing information, payroll information, personnel information, customer/agency information, customer/agency lists and supplier lists. (b) Except as and to the extent required by applicable Law, without the prior written consent of the other party, no Party will make (and each will direct their representatives not to make, directly or indirectly) any public comment, statement or communication with respect to, or otherwise to disclose or to permit the disclosure of the existence of this Agreement or the transaction between the Parties or any of the terms, conditions or other aspects of the transaction set forth in this Agreement. If a Party is required by applicable Law to make any such disclosure, it must first provide to the other Party the content of the proposed disclosure, the reasons that such disclosure is required by applicable Law and the time and place that the disclosure will be made. ARTICLE 9. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER 9.1. Buyer’s Conditions. The obligation of Buyer to consummate the transactions contemplated by this Agreement shall be subject to the satisfaction, on or before the Closing Date, of each of the following conditions: (a) The representations and warranties of Seller set forth in Article 5 shall be true and correct, to the best of Seller’s knowledge, as of the Closing Date. (b) Seller shall have performed and complied with all of the agreements, covenants, and conditions required of Seller by this Agreement on or before the Closing Date. (c) No action, suit, or proceeding before any court or any governmental body or authority that would in any way affect the Assets or the ability of the parties to consummate the transactions contemplated by this Agreement shall have been instituted or threatened on or before the Closing Date. (d) The Assets shall be in substantially the same condition on the Closing Date as on the Execution Date and any equipment shall be operating at California Department of Transportation standards, and there shall be no loss or damage to the property prior to the Closing. (e) Seller shall have obtained all necessary agreements and consents of any parties required to consummate the transactions contemplated by this Agreement. (f) Buyer shall have received corporation tax clearance certificates from the State Board of Equalization (with respect to Seller’s sales and use tax liabilities) and the Employment Development Department (with respect to Seller’s employment tax obligations), as of a date not more than five (5) days prior to the Closing Date for Seller. (g) Buyer shall have received a Certificate of Release from the California Employment Development Department stating that, as of a date not more than five (5) days prior to the Closing Date, no contributions, interest, or penalties are due from Seller. 10 DocuSign Envelope ID: E90E6305-1625-45BC-AF42-DBA268408606 (h) Due Diligence: Buyer’s due diligence shall include the following: (1) the satisfactory review of Seller’s financial information and federal tax returns for the years 2019, 2020 and 2021, along with a financial statement for year to date 2022 completed by Seller’s accountant; (2) the satisfactory review of Seller’s equipment and Assets to be conveyed to Buyer by this Agreement as such equipment, if applicable, shall be operating at California Department of Transportation standards but otherwise shall be accepted by Buyer on the Closing Date in its “as is” condition; (3) the satisfactory inspection of the Leased Premises; (4) the satisfactory review of three months of wage and compensation statements for the Business employee. Without prior written notice of Buyer’s objection received by Seller, the foregoing due diligence items shall expire on the Closing Date and shall thereafter be deemed satisfied. 9.2. Failure to Satisfy Buyer’s Conditions. Any of Buyer’s conditions precedent may be waived in whole or in part by Buyer in writing at any time on or before the Closing Date. In the event all Buyer’s conditions precedent have not been waived by Buyer or satisfied in full on or before the Closing Date, Buyer may elect to terminate this Agreement as provided in Article 12. ARTICLE 10. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER 10.1. Seller’s Conditions. The obligation of Seller to consummate the transactions contemplated by this Agreement shall be subject to the satisfaction, on or before the Closing Date, of each of the following conditions: (a) Seller shall have received the required amount of the Purchase Price in cash or immediately available funds at Closing. (b) The representations and warranties of Buyer set forth in Article 6 shall be true and correct, to the best of Buyer’s knowledge, as of the Closing Date. (c) Buyer shall have performed and complied with all of the agreements, covenants, and conditions required of Seller by this Agreement on or before the Closing Date, including but not limited to the execution of all Exhibits attached hereto and made a part hereof. 10.2. Failure to Satisfy Seller’s Conditions. Any of Seller’s conditions precedent may be waived in whole or in part by Seller in writing at any time on or before the Closing Date. In the event all Seller’s conditions precedent have not been waived by Seller or satisfied in full on or before the Closing Date, Seller may elect to terminate this Agreement as provided in Article 12. ARTICLE 11. POST-CLOSING OBLIGATIONS 11.1. Additional Assurances. 11 DocuSign Envelope ID: E90E6305-1625-45BC-AF42-DBA268408606 Each party agrees to do all acts and things and to make, execute, and deliver such written instruments as shall be reasonably necessary to carry out the terms and provisions of this Agreement. This covenant of further assurances shall survive the Closing. 11.2. Covenant Not to Compete. Seller agrees that it shall not engage, directly or indirectly, in any business that is the same as or similar to the Business, within a radial distance of seventy five (75) miles of the Business location at 3621 Copperhill Lane, Santa Rosa, California (“Covenant Restriction Area”), for a period of twenty five (25) years (“CNC”). In the event that any provision of this covenant not to compete is deemed unenforceable the term shall be changed to the maximum area which is enforceable and the maximum number of years which are enforceable however such maximum number of years shall not be less than twenty five (25) years. 11.3. Exceptions to Covenant Not to Compete. The CNC shall not apply to the following: Joseph Cream’s involvement in consulting for any other towing service companies in the Santa Rosa area; Joseph Cream’s present and future operation of other towing service companies so long as they are not listed on Schedule B and they are outside of the current towing rotation zone of the Business; and Joseph Creams ownership and involvement in All Star Auto Recycling located at 22521 Capay Road, Corning, California 96021. 11.4 Transitional Consulting Services In order to ensure an effective transfer of the Business Assets, Joseph J. Cream, Jr. agrees to work in the Business as an employee pursuant to the terms of the Employment Agreement, which shall include terms for Joseph J. Cream, Jr. working without compensation for the first ten (10) hours of each week for the first three (3) months after the Closing Date for the purposes of consulting with the Buyer relative to the operation of the Business and any other functions that may reasonably be helpful to Buyer related to the Business. 11.5 Buyer Limitations on Towing Services Buyer shall not engage in providing “for hire” towing services within the Covenant Restriction Area, and Buyer shall only provide rotation towing for entities listed on Schedule B. ARTICLE 12. TERMINATION 12.1. Termination. This Agreement may be terminated as follows: (a) By the mutual consent of Buyer and Seller at any time prior to the Closing. (b) By Buyer at any time prior to the Closing as expressly provided in this Agreement, or if any condition precedent to Buyer’s obligations set forth in Article 9 has not been satisfied in full or previously waived by Buyer in writing, at or prior to the Closing. 12 DocuSign Envelope ID: E90E6305-1625-45BC-AF42-DBA268408606 (c) By Seller at any time prior to the Closing as expressly provided in this Agreem