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As filed with the Securities and Exchange Commission on July 28, 2003
Registration No. 333-          

SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549

FORM S-1
 REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

LKQ CORPORATION
 (Exact Name of Registrant as Specified in Its Charter)

Delaware
 (State or Other Jurisdiction of
Incorporation or Organization)	5015
 (Primary Standard Industrial
Classification Code Number)	36-4215970
 (I.R.S. Employer
Identification Number)	
120 North LaSalle Street, Suite 3300
Chicago, Illinois 60602
(312) 621-1950
 (Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant's Principal Executive Offices)

Victor M. Casini
Vice President, General Counsel and Secretary
LKQ Corporation
120 North LaSalle Street, Suite 3300
Chicago, Illinois 60602
(312) 280-3700
 (Name, Address, Including Zip Code, and Telephone
Number, Including Area Code, of Agent For Service)

Copies to:

J. Craig Walker
Bell, Boyd & Lloyd LLC
70 West Madison Street, Suite 3300
Chicago, Illinois 60602
(312) 372-1121
fax: (312) 372-2098	 	

and	 	Winthrop B. Conrad, Jr.
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
(212) 450-4890
fax: (212) 450-3890	

         Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.
        If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box.  o
        If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o
        If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o
        If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o
        If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box.  o

CALCULATION OF REGISTRATION FEE

Title of Each Class of
Securities to be Registered	 	Proposed
Maximum
Aggregate
Offering Price(1)	 	Amount of
Registration Fee	
	
Common Stock, par value $.01 per share	 	$75,000,000	 	$6,067.50	
	
(1)
Estimated solely for purposes of calculating the registration fee pursuant to Rule 457(o).

         The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted.
Preliminary Prospectus
Subject to Completion, July 28, 2003

      Shares of Common Stock

        This is our initial public offering of shares of our common stock. We are selling              shares of our common stock and the selling stockholders listed under "Principal and Selling Stockholders" are selling             shares of our common stock. We will not receive any of the proceeds from the shares sold by the selling stockholders. No public market currently exists for our common stock. The initial offering price of our common stock is expected to be between $            and $            per share.
        We will apply to list our common stock on the Nasdaq National Market under the symbol "LKQX."
        This investment involves risks. See "Risk Factors" beginning on page 7.

 	 	Per Share
	 	Total
	
Initial public offering price	 	$	 	 	$	 	
Underwriting discounts and commissions	 	$	 	 	$	 	
Proceeds, before expenses, to us	 	$	 	 	$	 	
Proceeds, before expenses, to selling stockholders	 	$	 	 	$	 	
        The underwriters may also purchase up to            shares of common stock from us at the public offering price, less underwriting discounts and commissions, to cover over-allotments, if any, within 30 days from the date of this prospectus.
        The underwriters are offering the common stock as set forth under "Underwriting." Delivery of the shares of common stock will be made on or about                        , 2003.
        Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

Robert W. Baird & Co.	Jefferies & Company, Inc.	
                       , 2003

[MAP/GRAPHICS]

 TABLE OF CONTENTS

 	 	Page
	
Special Note Regarding Forward-Looking Statements	 	i	
Prospectus Summary	 	1	
Risk Factors	 	7	
Use of Proceeds	 	14	
Dividend Policy	 	14	
Capitalization	 	15	
Dilution	 	16	
Selected Consolidated Historical Financial Data	 	18	
Management's Discussion and Analysis of Financial Condition and Results of Operations	 	21	
Industry Background	 	39	
Business	 	43	
Management	 	57	
Certain Relationships and Related Party Transactions	 	67	
Principal and Selling Stockholders	 	70	
Description of Capital Stock	 	73	
Shares Eligible for Future Sale	 	76	
Underwriting	 	78	
Legal Matters	 	82	
Experts	 	82	
Additional Information	 	82	
Index to Consolidated Financial Statements	 	F-1	
        You should rely only on the information contained in this prospectus. Neither we, the underwriters nor the selling stockholders have authorized anyone to provide you with information different from that contained in this prospectus. We and the selling stockholders are offering to sell, and seeking offers to buy, the shares only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of the shares.
        Until                     , 2003 (25 days after the date of this prospectus), all dealers effecting transactions in the common stock, whether or not participating in this offering, may be required to deliver a prospectus. This delivery requirement is in addition to the obligation of dealers to deliver a prospectus when acting as an underwriter and with respect to unsold allotments or subscriptions.

 SPECIAL NOTE REGARDING 
FORWARD-LOOKING STATEMENTS
       This prospectus contains forward-looking statements. These statements may be found throughout this prospectus, particularly under the headings "Prospectus Summary," "Risk Factors," "Dividend Policy," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business," among others. Forward-looking statements typically are identified by the use of terms such as "may," "will," "plan," "should," "expect," "anticipate," "believe," "if," "estimate," "intend" and similar words, although some forward-looking statements are expressed differently. You should consider statements that contain these and similar words carefully because they describe our expectations, plans, strategies, goals and beliefs concerning future business conditions, our results of operations, our financial position, and our business outlook, or state other "forward-looking" information based on currently available information. The factors listed under the heading "Risk Factors" and in the other sections of this prospectus provide examples of risks, uncertainties and events that could cause our actual results to differ materially from the expectations expressed in our forward-looking statements.
       The forward-looking statements made in this prospectus relate only to events as of the date on which the statements are made. We undertake no obligation, beyond that required by law, to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.
i

 PROSPECTUS SUMMARY
        The following information is qualified in its entirety by the more detailed information and the financial statements and notes thereto appearing elsewhere in this prospectus. Except as otherwise specified, all information in this prospectus assumes no exercise of the underwriters' over-allotment option. See "Underwriting."

 LKQ Corporation

 Introduction
       The repair of automobiles includes the purchase of automotive replacement parts. Buyers of replacement parts have the option to purchase primarily from three sources: new parts produced by original equipment manufacturers, which are commonly known as OEM parts; new parts produced by companies other than the OEMs, sometimes referred to generically as "aftermarket" parts; and recycled parts originally produced by OEMs, which we refer to as recycled OEM products. We participate in the market for recycled OEM products.

 Our Business
       We are the largest nationwide provider of recycled OEM products and related services, with 38 sales and processing facilities and 12 redistribution centers that reach most major markets in the United States. We procure salvage vehicles, primarily at auctions, using our locally based professionals and centralized procurement systems. Once we have received proper title for the vehicles, we dismantle them for recycled products. We then sell our recycled OEM products to our customers, which include automobile collision and mechanical repair shops and, indirectly, insurance companies and extended warranty companies. We also provide insurance companies a review of vehicle repair order estimates so they may assess the opportunity to increase usage of recycled OEM products in the repair process. We offer our customers a wide selection and availability of high quality and low cost alternatives to new OEM and aftermarket parts. We believe we are well positioned to take advantage of the trends supporting industry growth, including high frequency of collisions, high cost of vehicle repair and the desire of insurance companies to reduce their claims expenses. A significant factor in our success has been the talent and experience of both our senior management team and our five regional operating managers, who collectively have over 140 years of experience in the industry.
       The automotive recycling industry is highly fragmented, with very few multi-unit operators. We estimate there are more than 6,000 automotive recyclers in the United States. We believe approximately 93% of automotive recycling businesses have less than $3.0 million of annual revenue and approximately 50% have less than $0.5 million of annual revenue. The automotive products market (including accessories, service, repair and maintenance items) totaled $175.6 billion in 2002 and is estimated at $183.0 billion in 2003. The portions of the automotive products market that automotive recyclers primarily serve are the collision repair market, with approximately $32.4 billion of annual sales in 2002, and the mechanical repair market, with approximately $94.1 billion of annual sales in 2002. Estimates of the aggregate size of the automotive recycling industry in the United States range from $3.7 to $6.5 billion. Industry sources estimate that recycled OEM products account for approximately 12% of insured replacement parts sales and 4.7% of total insured collision repair costs. We believe that recycled OEM products can account for a larger percentage of the replacement parts market based on the
1

advantages offered by recycled OEM products and industry dynamics, including high frequency of collisions, high cost of vehicle repair and the desire of insurance companies to reduce their claims expenses. Like most other automotive recycling companies, we are not in the remanufacturing business.
       We have developed centralized systems and methodologies that we believe give us competitive advantages in procuring an attractive mix of recycled OEM products from auctions. These systems and methodologies allow us to identify and value the parts on a damaged vehicle at auction that can be recycled and to rapidly determine the maximum price we can pay for the vehicle in order to achieve our target margins on resale of the recycled OEM products. We focus on disciplined purchasing by balancing our regional inventory levels with forecasted demand and limiting our bids to provide profitable targeted margins. We seek to optimize the prices for our products by regularly analyzing such factors as recent demand, inventory quantity and new OEM part prices. Through our nationwide system of regional facilities, we believe we are uniquely positioned to provide a broad and deep range of cost effective products and services to our customers.
       We indirectly rely on insurance companies, which ultimately pay the collision repair shops for the repair of insured vehicles, as a source of business. These insurance companies exert significant influence in the vehicle repair decision and increasingly look to a nationwide source for consistency, quality and availability of replacement parts. Because of their importance to the process, we have formed key relationships with insurance companies such as Allstate Insurance Company, Farmers Insurance Group and Nationwide Insurance Company and with certain extended warranty providers, in order to be their preferred automotive recycling company. In addition, to provide alternative sources of salvage vehicles, we obtain some automobiles directly from insurance companies, automobile manufacturers and other suppliers.

 Our History
       We were the first recycler of automotive products to achieve a national network and presence. Since our formation in 1998, we have grown through both internal development and acquisitions. Until late 1999, we focused on growth through acquisitions. Since 1999, internal growth has been the principal driver of our revenue and operating results. Our acquisition strategy has been to target companies with strong management teams, a record of environmental compliance, solid growth prospects and a reputation for quality and customer service. We believe it is important for former owners to remain active in our business and have frequently used equity as a significant component of acquisitions. As of June 30, 2003, former owners of acquired companies employed in managerial positions, along with their affiliates, owned approximately 22% of our common stock.

 Our Strengths
       Our competitive strengths include the following:
•
We have key relationships with national insurance companies and extended warranty providers and we believe we provide a direct benefit to these companies by lowering the cost of repairs, decreasing the time required to return the repaired vehicle to the customer, and providing a replacement product that is of the same quality as the OEM part replaced;

•
Our national network would be difficult to replicate and provides us a competitive advantage;
2

•
We benefit from a local presence as well as a national network that allows us to maintain and develop our relationships with local repair shops, while providing nationwide service to insurance companies and national customers;

•
We have an effective procurement process and have developed information systems and methodologies that leverage our nationwide presence and use our centralized purchasing professionals to procure vehicles cost-effectively;

•
We have a broad and deep inventory of high quality recycled OEM products;

•
We have implemented professional management disciplines that include procurement, operating and financial systems; and

•
We have a demonstrated ability to generate internal growth.

 Our Strategies
       Our primary growth strategies are as follows:
•
Expand our national network through a combination of internal development and acquisitions. We estimate our current share of the automotive recycling market to be less than 10%;

•
Further develop key relationships with automobile insurance companies, extended warranty providers and other industry participants;

•
Continue to improve our operating results by applying our business approach to our most recently acquired facilities, further centralizing certain functions, and increasing revenue at our lower volume facilities;

•
Further develop our technology to allow us to better manage and analyze our inventory, to assist our sales people with up-to-date pricing and availability of our products, and to further enhance our procurement process; and

•
As an industry leader, raise industry standards in order to help promote the acceptability of the use of recycled OEM products and the growth of the automotive recycling industry.

 Risk Factors
       An investment in the common stock offered hereby involves a high degree of risk. See "Risk Factors."

 Our Corporate Information
       We were incorporated in Delaware in February 1998. Our principal executive headquarters are located at 120 North LaSalle Street, Suite 3300, Chicago, Illinois 60602. Our telephone number is 312-621-1950. Our website address is www.lkqcorp.com. The information found on our website is not a part of this prospectus.
3

 The Offering

Common stock offered by us	 	shares	 	 	

Common stock offered by the selling stockholders	
 	
shares	

 	

 	

Total shares offered	
 	
shares	

 	

 	

Common stock to be outstanding after the offering	
 	
shares	

Use of proceeds	
 	
To develop and acquire recycling businesses and redistribution facilities, expand and improve existing facilities, purchase property, equipment and inventory, and for working capital and general corporate purposes. Pending use of the proceeds for these purposes, we intend to pay down portions of our debt. See "Use of Proceeds."	

Proposed Nasdaq National Market symbol	
 	
LKQX	

       The number of shares of common stock to be outstanding after this offering is based on the number of shares of common stock outstanding as of the date of this prospectus and does not include:
•
3,548,250 shares issuable as of June 30, 2003 upon the exercise of outstanding options under our stock option plans, at a weighted average exercise price of $9.61 per share;

•
2,023,700 additional shares authorized and reserved for issuance as of June 30, 2003 upon the exercise of options that may be issued in the future pursuant to our stock option plans;

•
1,948,286 shares issuable as of June 30, 2003 upon the exercise of outstanding warrants issued to some of our stockholders in exchange for providing guaranties of our bank debt, which guaranties are no longer in effect, at an exercise price of $2.00 per share;

•
263,318 shares issuable as of June 30, 2003 upon the exercise of outstanding warrants issued in connection with acquisitions, at a weighted average price of $19.94 per share; and

•
shares that may be purchased by the underwriters to cover over-allotments, if any.
4

 Summary Consolidated Financial and Other Data
       The following table summarizes financial data regarding our business and should be read together with "Management's Discussion and Analysis of Financial Condition and Results of Operations," and our consolidated financial statements and the related notes included elsewhere in this prospectus.

 	 	Year Ended December 31,
	 	Six Months
Ended June 30,
	
 	 	1998(1)
	 	1999
	 	2000
	 	2001
	 	2002
	 	2002
	 	2003
	
 	 	(In thousands, except per share data)
	
Statements of Operations Data:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Revenue	 	$	30,628	 	$	178,147	 	$	226,304	 	$	250,462	 	$	287,125	 	$	144,101	 	$	160,273	
Gross margin	 	 	14,730	 	 	84,601	 	 	106,991	 	 	117,942	 	 	132,551	 	 	66,658	 	 	75,798	
Operating income	 	 	132	 	 	4,320	 	 	4,615	 	 	13,112	 	 	20,844	 	 	12,175	 	 	14,363	
Income (loss) before provision for income taxes and cumulative effect of change in accounting
principle	 	 	882	 	 	3,229	 	 	(241	)	 	8,169	 	 	18,268	 	 	10,607	 	 	13,333	
Income (loss) before cumulative effect of change in accounting principle	 	 	429	 	 	1,104	 	 	(878	)	 	4,230	 	 	11,005	 	 	6,367	 	 	8,059	
Cumulative effect of change in accounting principle	 	 	—	 	 	—	 	 	—	 	 	—	 	 	(49,899	)	 	(49,899	)	 	—	
Net income (loss)	 	$	429	 	$	1,104	 	$	(878	)	$	4,230	 	$	(38,894	)	$	(43,532	)	$	8,059	
 	 		 		 		 		 		 		 		
Basic earnings (loss) per share:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Income (loss) before cumulative effect of change in accounting principle	 	$	0.07	 	$	0.07	 	$	(0.05	)	$	0.24	 	$	0.62	 	$	0.36	 	$	0.51	
 	Net income (loss)	 	$	0.07	 	$	0.07	 	$	(0.05	)	$	0.24	 	$	(2.20	)	$	(2.47	)	$	0.51	
Diluted earnings (loss) per share:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Income (loss) before cumulative effect of change in accounting principle	 	$	0.07	 	$	0.07	 	$	(0.05	)	$	0.23	 	$	0.57	 	$	0.33	 	$	0.46	
 	Net income (loss)	 	$	0.07	 	$	0.07	 	$	(0.05	)	$	0.23	 	$	(2.00	)	$	(2.24	)	$	0.46	
Shares used in per share calculation basic(2)	 	 	6,224	 	 	15,988	 	 	17,601	 	 	17,656	 	 	17,654	 	 	17,653	 	 	15,896	
Shares used in per share calculation diluted(2)	 	 	6,276	 	 	16,185	 	 	17,601	 	 	18,742	 	 	19,399	 	 	19,414	 	 	17,623	

Other Financial Data:	

 	

 	

 	

 	

 	

 	

 	
Net cash provided by (used in) operating activities	 	$	(3,105	)	$	(14,309	)	$	(3,384	)	$	12,059	 	$	17,740	 	$	9,478	 	$	10,309	

Capital expenditures(3)	

18,701	

20,992	

8,453	

3,809	

8,402	

3,275	

6,248	

Depreciation and amortization	

969	

5,519	

7,541	

7,897	

5,014	

2,408	

2,745	

EBITDA(4)	

1,058	

10,067	

12,305	

21,148	

26,190	

14,678	

17,269	
       The following table contains a summary of our balance sheet as adjusted for the offering:

 	 	As of June 30, 2003
	
 	 	Actual
	 	As Adjusted
	
 	 	(In thousands)
	
Balance Sheet Data:	 	 	 	 	 	 	
Total assets	 	$	183,745	 	$	 	
Working capital	 	 	44,728	 	 	 	
Long-term obligations, including current portion	 	 	54,457	 	 	 	
Stockholders' equity	 	 	106,027	 	 	 	
5

(1)
The Company was formed on February 13, 1998. Information for 1998 is from inception through December 31, 1998.

(2)
The Company repurchased 2,000,000 shares of its common stock in February 2003 and repurchased an additional 1,557,498 shares of its common stock in May 2003. Accordingly, the shares used in the per share calculation for basic and diluted earnings per share in the six months ended June 30, 2003 do not fully reflect the impact of these purchases.

(3)
Includes cash used in acquisitions and non-cash property acquisitions.

(4)
EBITDA consists of income (loss) before provision for income taxes and cumulative effects of change in accounting principle plus depreciation and amortization and interest expense, less interest income. We have presented EBITDA information solely as a supplemental disclosure because we believe it provides a helpful analysis of our operating results. EBITDA should not be construed as an alternative to operating income, net income (loss) or net cash provided by (used in) operating activities, as determined in accordance with accounting principles generally accepted in the United States. In addition, not all companies that report EBITDA information calculate EBITDA in the same manner as we do and, accordingly, our calculation is not necessarily comparable to similarly entitled measures of other companies and may not be an appropriate measure for performance relative to other companies.
The following table reconciles EBITDA to Income (loss) before provision for income taxes and cumulative effect of change in accounting principle:

 	 	Year Ended December 31,
	 	Six Months
Ended June 30,
	
 	 	1998
	 	1999
	 	2000
	 	2001
	 	2002
	 	2002
	 	2003
	
 	 	(In thousands)
	
Income (loss) before provision for income taxes and cumulative effect of change in accounting principle	 	$	882	 	$	3,229	 	$	(241	)	$	8,169	 	$	18,268	 	$	10,607	 	$	13,333	
Depreciation and amortization	 	 	969	 	 	5,519	 	 	7,541	 	 	7,897	 	 	5,014	 	 	2,408	 	 	2,745	
Interest, net	 	 	(793	)	 	1,319	 	 	5,005	 	 	5,082	 	 	2,908	 	 	1,663	 	 	1,191	
 	 		 		 		 		 		 		 		
Earnings before interest, taxes, depreciation and amortization (EBITDA)	 	$	1,058	 	$	10,067	 	$	12,305	 	$	21,148	 	$	26,190	 	$	14,678	 	$	17,269	
 	 		 		 		 		 		 		 		
6

 RISK FACTORS
        You should carefully consider each of the risks described below and all of the other information in this prospectus before deciding to invest in our common stock. If any of the following risks actually occur, our business, financial condition or results of operations could be harmed. In such an event, the trading price of our common stock could decline and you may lose all or part of your investment.
Risks Relating to Our Business
We face intense competition from local, national and internet-based automotive products providers, and this competition could negatively affect our business.
       The automotive recycling industry is highly competitive and is served by local owner-operated companies, several large regional companies, internet-based parts providers and Greenleaf LLC, a national automotive products provider founded by Ford Motor Company in 1999, which Ford is reported to have sold. In certain regions of the country where we operate, local automotive recycling companies have formed cooperative efforts to compete in the industry. We could also face additional competition in the future from others entering the market, such as original equipment manufacturers, insurance companies, new parts producers other than original equipment manufacturers, sometimes referred to as "aftermarket" suppliers, and industry consolidators. Some of our current and potential competitors may have more operational expertise and greater financial, technical, manufacturing, distribution and other resources, longer operating histories, lower cost structures and better key relationships in the insurance and automotive industries. As a result, they may be able to provide their products at lower costs or to customers unavailable to us.
An adverse change in our relationships with auction companies or our suppliers could increase our expenses and hurt our relationships with our customers.
       Most of our inventory consists of vehicles offered at salvage auctions by several companies that own auction facilities in numerous locations across the United States. We do not have contracts with any auction companies. According to industry analysts, three companies control over 50% of the salvage auction market in the United States. In some localities, the automotive auction business may be even more highly concentrated. If an auction company prohibited us from participating in its auctions, or significantly raised its fees, our business could be adversely affected through higher costs or the resulting potential inability to service our customers. We also acquire some of our inventory directly from insurance companies, original equipment manufacturers and others. To the extent that these suppliers decide to discontinue these arrangements, our business could be adversely affected through higher costs or the resulting potential inability to service our customers.
We may not be able to sell our products due to existing or new laws prohibiting or restricting the sale of recycled automotive products.
       Some jurisdictions have enacted laws prohibiting or severely restricting the sale of certain recycled automotive products that we provide, such as airbags. Additional jurisdictions could enact similar laws or could prohibit additional automotive products we sell. Restrictions on the products we are able to sell could decrease our revenue and have an adverse effect on our business and operations.
7

If our key relationships with insurance companies end, we may lose important sales opportunities.
       We rely on key relationships with insurance companies such as Allstate Insurance Company, Farmers Insurance Group and Nationwide Insurance Company. These insurance companies encourage automotive repair facilities to use products we provide. Because we do not have written agreements with these companies, these relationships may terminate at any time. We rely on these relationships for sales to some collision repair shops, and a termination of these relationships may result in a loss of sales, which could adversely affect our results of operations.
We are subject to environmental regulations and incur costs relating to environmental matters.
       We are subject to various federal, state and local environmental protection and health and safety laws and regulations governing, among other things:
•
the emission and discharge of hazardous materials into the ground, air, or water;

•
the exposure to hazardous materials; and

•
the generation, handling, storage, use, treatment, identification, transportation and disposal of industrial by-products, waste water, storm water and hazardous materials.
       We are also required to obtain permits from governmental authorities for certain of our operations. If we violate or fail to obtain or comply with these laws, regulations or permits, we could be fined or otherwise sanctioned by regulators. We could also become liable if employees or other third parties are improperly exposed to hazardous materials.
       Under certain environmental laws, we could be held responsible for all of the costs relating to any contamination at, or migrating to or from, our or our predecessors' past or present facilities and at third party waste disposal sites. These laws often impose liability even if the owner or operator did not know of, or was not responsible for, the release of such hazardous substances.
       Environmental laws are complex, change frequently and have tended to become more stringent over time. Our costs of complying with current and future environmental and health and safety laws, and our liabilities arising from past or future releases of, or exposure to, hazardous substances may adversely affect our business, results of operations or financial condition. See "Business – Regulation."
Governmental agencies may refuse to grant or renew our operating licenses and permits.
       Our operating subsidiaries must receive certain licenses and permits from state and local governments to conduct their operations. When we develop or acquire a new facility, we must seek the approval of state and local units of government. Governmental agencies often resist the establishment of an automotive recycling facility in their communities. There can be no assurance that future approvals or transfers will be granted. In addition, there can be no assurance that we will be able to maintain and renew the licenses and permits our operating subsidiaries currently hold.
8

Proposed regulations under the National Stolen Passenger Motor Vehicle Information System could harm our business.
       In 1992, Congress enacted the Anti Car Theft Act to deter trafficking in stolen vehicles. This law included the establishment of the National Stolen Passenger Motor Vehicle Information System to track and monitor stolen automotive parts. In April 2002, the Department of Justice published for comment proposed regulations to implement this system. The proposed regulations require, among other things, that insurance companies, salvagers, dismantlers, recyclers and repairers inspect salvage vehicles for the purpose of collecting the vehicle identification number and the part number for any covered major part that possesses the vehicle identification number. The requirement to collect this information would place substantial burdens and costs on us that otherwise would not normally exist, and could discourage our customers from purchasing our products.
We could be subject to product liability claims.
       If customers of repair shops that purchase our products are injured or suffer property damage, we could be subject to product liability claims. The successful assertion of this type of claim could have an adverse effect on our business or financial condition.
We may lose business if recent litigation involving the use of parts that are not original equipment manufacturer parts results in insurance companies modifying arrangements affecting the use of recycled automotive products in the repair process.
       As a result of litigation against an insurance company for using parts manufactured by companies other than the original equipment manufacturer, some insurance companies have curtailed or eliminated their requirement that repair shops use automotive parts that are not OEM parts. Our products are primarily OEM parts, but litigation or restrictive insurance company repair policies could be extended to cover recycled OEM parts.
       In an Illinois lawsuit involving State Farm Mutual Automobile Insurance Company (" Avery v. State Farm "), a jury decided in October 1999 that State Farm breached certain insurance contracts with its policyholders by using non-OEM parts to repair damaged vehicles when use of such parts did not restore the vehicle to its "pre-loss condition." The jury found that State Farm misled its customers by not disclosing the use of non-OEM parts and the alleged inferiority of those parts. The jury assessed damages against State Farm of $456 million, and the judge assessed an additional $730 million of disgorgement and punitive damages for violations of the Illinois Consumer Fraud Act. In April 2001, the Illinois Appellate Court upheld the verdict but reduced the damage award by $130 million because of duplicative damage awards. In October 2002, the Illinois Supreme Court agreed to hear the case, but no decision has yet been rendered. Some insurance companies have reduced or eliminated their use of non-OEM parts as a result of this case. We sell recycled OEM automotive products to repair shops affiliated with insurance companies and these repair shops are an important source of revenue for us. The recycled OEM products we sell were not the subject of Avery v. State Farm , but our financial results would suffer if insurance companies modified or terminated the arrangements pursuant to which repair shops buy recycled automotive products from us due to a fear of similar claims with respect to recycled products. Alternatively, in the event the Avery v. State Farm case is overturned or other circumstances change, the use of non-OEM parts could become more acceptable again, which could adversely affect our business.
9

We may not be able to successfully acquire new operations or integrate future acquisitions, which could cause our business to suffer.
       We may not be able to successfully complete potential strategic acquisitions if we cannot reach agreement on acceptable terms or for other reasons. Future acquisitions may require us to obtain additional financing, and such additional financing, whether sought through public or private debt or equity financing, may not be available when needed or may not be available on terms acceptable to us, if at all. If we buy a company or a division of a company, we may experience difficulty integrating that company or division's personnel and operations, which could negatively affect our operating results. In addition:
•
the key personnel of the acquired company may decide not to work for us;

•
we may experience additional financial and accounting challenges and complexities in areas such as tax planning, treasury management and financial reporting;

•
we may be held liable for environmental risks and liabilities as a result of our acquisitions, some of which we may not have discovered during our due diligence;

•
our ongoing business may be disrupted or receive insufficient management attention; and

•
we may not be able to realize the cost savings or other financial benefits we anticipated.
       In connection with future acquisitions, we may assume the liabilities of the companies we acquire. These liabilities, including liabilities for environmental-related costs, could materially and adversely affect our business. We may have to incur debt or issue equity securities to pay for any future acquisition, the issuance of which would involve restrictive covenants or be dilutive to our existing stockholders.
Our existing credit facility imposes certain operating and financial restrictions on us and our subsidiaries and requires us to meet certain financial tests.
       Our credit facility contains certain operating and financial restrictions that limit or prohibit us from engaging in certain transactions, including the following:
•
incurring or guarantying additional debt;

•
paying dividends or other distributions to our stockholders or redeeming, repurchasing or retiring our capital stock or subordinated obligations;

•
making investments and capital expenditures;

•
creating liens on our assets;

•
selling, transferring, leasing, licensing or otherwise disposing of assets;

•
engaging in transactions with stockholders and affiliates;

•
engaging in mergers, consolidations or acquisitions;

•
engaging in any material line of business substantially different from, or unrelated to, those lines of business currently carried on by us; and
10

•
making changes to our equity capital structure or amending our certificate of incorporation, bylaws, or any stockholder rights agreement.
       The credit facility is collateralized by substantially all of our assets (including the stock of our subsidiaries). The credit facility also requires that we satisfy certain financial tests. The failure to comply with any of these covenants would cause a default under the credit facility. We expect that a default, if not waived, could result in acceleration of our debt, in which case the debt would become immediately due and payable and our lenders would have certain rights to enforce their liens on our assets. If this occurs, we may not be able to repay our debt or borrow sufficient funds to refinance it. Even if new financing were available, it may be on terms that are less attractive to us than our existing facility or it may not be on terms that are acceptable to us.
Our future capital needs may require that we seek debt financing or additional equity funding that, if not available, could cause our business to suffer.
       We may need to raise additional funds in the future to, among other things, fund our existing operations, to improve or expand our operations, to respond to competitive pressures or to make acquisitions. From time to time after this offering, we may raise additional funds through public or private financing, strategic alliances or other arrangements. If adequate funds are not available on acceptable terms, we may be unable to meet our business or strategic objectives or compete effectively. If we raise additional funds by issuing equity securities, stockholders may experience dilution of their ownership interests, and the newly issued securities may have rights superior to those of the common stock. If we raise additional funds by issuing debt, we may be subject to further limitations on our operations. If we fail to raise capital when needed, our business will be negatively affected.
Our annual and quarterly performance may fluctuate.
       Our revenue, cost of salvage vehicles and operating results have fluctuated on a quarterly and annual basis in the past and can be expected to continue to fluctuate in the future as a result of a number of factors, some of which are beyond our control. Future factors that may affect our operating results include, but are not limited to, the following:
•
fluctuations in the market value of salvage and used vehicles;

•
the availability of salvage vehicles at an attractive price;

•
variations in vehicle accident rates;

•
changes in state or federal laws or regulations affecting our business;

•
our ability to integrate and manage our acquisitions successfully;

•
severity of weather and seasonality of weather patterns;

•
the amount and timing of operating costs and capital expenditures relating to the maintenance and expansion of our business, operations and infrastructure; and

•
declines in asset values.
       Due to the foregoing factors, our operating results in one or more future periods can be expected to fluctuate and period-to-period comparisons of our results of operations should not be relied upon as
11

indications of future performance. These fluctuations in our operating results may cause our results to fall below the expectations of public market analysts and investors, which could cause our stock price to decline.
If we lose our key management personnel, we may not be able to successfully manage our business or achieve our objectives.
       Our future success depends in large part upon the leadership and performance of our executive management team and key employees at the operating level. If we lose the services of one or more of our executive officers or key employees, or if one or more of them decides to join a competitor or otherwise compete directly or indirectly with us, we may not be able to successfully manage our business or achieve our business objectives. If we lose the services of any of our key employees at the operating or regional level, we may not be able to replace them with similarly qualified personnel, which could harm our business.
If we experience problems with our fleet of trucks, our business could be harmed.
       We use a fleet of trucks to deliver vehicle parts. We are subject to the risks associated with providing trucking services, including inclement weather, disruptions in the transportation infrastructure, availability and price of fuel, and liabilities arising from accidents to the extent we are not covered by insurance. In addition, our failure to deliver parts in a timely and accurate manner could harm our reputation and brand, which could have a material adverse effect on our business.
Risks Relating to Our Common Stock and this Offering
Our executive officers, directors, their family members and affiliates hold a large percentage of our stock and their interests may differ from other stockholders.
       Our executive officers, directors, their family members and affiliates will, in the aggregate, beneficially own approximately            % of our common stock after this offering. If they were to act together, these stockholders would have significant influence over most matters requiring approval by stockholders, including the election of directors, any amendments to our certificate of incorporation, and certain significant corporate transactions. These stockholders may take these actions even if they are opposed by our other stockholders. In addition, without the consent of these stockholders, we could be delayed or prevented from entering into transactions that may be viewed as beneficial to us or our other stockholders.
Future sales of our common stock may depress our stock price.
       We and our stockholders may sell additional shares of common stock in subsequent offerings. We may also issue additional shares of common stock in connection with future acquisitions. Certain of our existing stockholders are parties to a registration rights agreement that provides such holders with the right to require us to effect the registration of their shares of common stock in specific circumstances. In addition, if after this offering we propose to register any of our common stock under the Securities Act of 1933, whether for our own account or otherwise, some existing stockholders may be entitled to include their shares of common stock in that registration. A significant number of our shares will also become freely tradable 180 days after completion of this offering. See "Shares Eligible for Future Sale." We cannot predict the size of future issuances of our common stock or the effect, if any, that future
12

issuances and sales of shares of our common stock will have on the value of our common stock. Sales of substantial amounts of common stock (including shares issued in connection with an acquisition), or the perception that such sales could occur, may cause the value of our common stock to fall.
Delaware law and our charter documents may impede or discourage a takeover, which could affect the value of our stock.
       The anti-takeover provisions of our certificate of incorporation and bylaws and Delaware law could, together or separately, impose various impediments to the ability of a third party to acquire control of us, even if a change in control would be beneficial to our existing stockholders. Our certificate of incorporation and bylaws have provisions that could discourage potential takeover attempts and make attempts by stockholders to change management more difficult. Our incorporation under Delaware law and these provisions could also impede a merger, takeover or other business combination involving us or discourage a potential acquiror from making a tender offer for our common stock, which, under certain circumstances, could reduce the value of our common stock. See "Description of Capital Stock – Anti-Takeover Effects of our Certificate of Incorporation and Bylaws."
We have broad discretion on the use of our offering proceeds, and the investment of these proceeds may not yield a favorable return.
       Our net proceeds from this offering are not allocated for specific purposes. Thus, our management has broad discretion over how these proceeds are used, and we could spend most of these proceeds in ways with which our stockholders may not agree. The proceeds may be invested in ways that do not yield favorable returns. See "Use of Proceeds" on page 14 for more information about how we plan to use our proceeds from this offering.
Our securities have no prior market, and our stock price may decline after the offering.
       Before this offering, there has not been a public market for our common stock. An active public market for our common stock may not develop or be sustained after this offering. The initial public offering price will be determined through negotiations between representatives of the underwriters and us. The trading prices of many companies' stocks have experienced significant declines from their initial offering price. The market price of our common stock may decline below our initial public offering price.
As a new investor, you will experience immediate and substantial dilution in the value of our common stock.
       If you purchase shares of our common stock in this offering, you will incur immediate and substantial dilution in net tangible book value per share of $                        . If the holders of outstanding options and warrants exercise those options or warrants, you will incur further dilution. See "Dilution" on page 16 for an explanation and calculation of the amount of dilution you will incur.
13

 USE OF PROCEEDS
       The net proceeds to us from this offering are estimated to be approximately $     million, or $     million if the underwriters' over-allotment option is exercised in full, based on the mid-point of the initial public offering price range shown on the cover page of this prospectus and net of underwriting discounts and estimated offering expenses paid by us. We will not receive any proceeds from the sale of shares of our common stock by the selling stockholders in this offering. We intend to use the net proceeds to develop and acquire recycling businesses and redistribution facilities, to expand and improve existing facilities, to purchase property, equipment and inventory, and for working capital. Initially, pending application of the proceeds as described above, we will use a portion of the net proceeds to pay down any one of the following or a combination thereof:
•
our revolving credit facility, which had an amount outstanding of $25,000,000 and a weighted average interest rate of 3.83% as of June 30, 2003 and matures on June 30, 2005;

•
our term loan, which had an amount outstanding of $16,250,000 and an interest rate of 3.67% as of June 30, 2003 and matures on June 30, 2005; and

•
our second term loan, which had an amount outstanding of $9,000,000 and an interest rate of 4.02% as of June 30, 2003 and matures on February 20, 2004.
       However, to the extent not so used, the remaining net proceeds of this offering will be used for general corporate purposes.
       Our management will have broad discretion to allocate our net proceeds from this offering. Pending such uses, the net proceeds to be received by us from this offering will be invested in investment-grade, short-term, interest-bearing investments.

 DIVIDEND POLICY
       We have not paid dividends on our common stock, and our board of directors intends to continue a policy of retaining earnings for use in our operations. Our current credit facility prohibits the payment of any cash dividends, and we do not anticipate paying any such dividends in the foreseeable future. See "Management's Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources."
14

 CAPITALIZATION
       The following table sets forth our cash and equivalents and capitalization as of June 30, 2003:
•
on an actual basis; and

•
on an as adjusted basis to give effect to:

•
the sale of the shares of common stock by us pursuant to this offering at the mid-point of the initial public offering price range shown on the cover page of this prospectus, net of underwriting discounts and estimated offering expenses; and

•
the application of our net proceeds as described under "Use of Proceeds."
       This table should be read in conjunction with our consolidated financial statements and the related notes included in this prospectus.

 	 	As of June 30, 2003
	
 	 	Actual
	 	As adjusted
	
 	 	(In thousands, except share data)
	
Cash and equivalents	 	$	2,120	 	$	—	
 	 		 		
Long-term obligations, including current portion	 	$	54,457	 	$	—	
 	 		 		
Redeemable common stock, $0.01 par value;	 	 	 	 	 	 	
 	50,000 shares issued and outstanding(1)	 	 	617	 	 	 	
 	 		 		
Stockholders' equity:	 	 	 	 	 	 	
 	Common stock, $0.01 par value; 100,000,000 shares authorized; 14,069,887 shares issued and outstanding;                shares issued and outstanding, as adjusted	 	 	140	 	 	 	
 	Additional paid-in capital	 	 	131,322	 	 	 	
 	Warrants	 	 	543	 	 	 	
 	Deferred compensation expense	 	 	(29	)	 	 	
 	Retained earnings (accumulated deficit)	 	 	(25,949	)	 	 	
 	 		 		
 	 	Total stockholders' equity	 	 	106,027	 	 	 	
 	 		 		
 	 	 	Total capitalization	 	$	161,101	 	$	 	

(1)
On January 1, 2003, in connection with a business acquisition, we issued 50,000 shares of our common stock, along with a put option with a single exercise date of January 1, 2007 at a price of $15.00 per share. In addition, we obtained a call option on those shares with a single exercise date of January 1, 2007 at a price of $22.50 per share. We recorded the issuance of this stock at a present value on January 1, 2003 of $617,027.
15

 DILUTION
       Our net tangible book value as of June 30, 2003 was $55.8 million, or $3.95 per share of common stock. Net tangible book value per share represents the amount of our total assets excluding goodwill and other intangibles, less our total liabilities excluding redeemable common stock, divided by the number of shares of common stock outstanding. Purchasers of shares in this offering will experience dilution in net tangible book value per share equal to the difference between the amount per share paid by those purchasers in this offering and the net tangible book value per share of our common stock immediately after this offering. After giving effect to our sale of                        shares of common stock in this offering, based upon an offering price of $            per share, the mid-point of the initial public offering price range set forth on the cover page of this prospectus, our net tangible book value as of June 30, 2003 would have been approximately $            million, or $            per share of common stock, after deducting underwriting discounts and estimated offering expenses payable by us. This represents an immediate increase in net tangible book value to existing stockholders of $            per share and an immediate dilution to new investors in this offering of $            per share.
       The following table illustrates the per share dilution in net tangible book value to new investors:

Assumed initial public offering price per share	 	 	 	 	$	 	
 	Net tangible book value per share as of June 30, 2003	 	$	3.95	 	 	 	
 	Increase in net tangible book value per share attributable
to new investors	 	 	 	 	 	 	
 	 		 	 	 	
 	Net tangible book value per share after this offering	 	 	 	 	 	 	
 	 	 	 	 		
Dilution per share to new investors	 	 	 	 	$	 	
 	 	 	 	 		
       The following table summarizes as of June 30, 2003, the differences between the number of shares of common stock purchased from us, the aggregate cash consideration paid to us and the average price per share paid by existing stockholders since our inception and by new investors purchasing shares of common stock in this offering. The calculation below is based on an offering price of $            per share, the mid-point of the initial public offering price range set forth on the cover page of this prospectus, before deducting underwriting discounts and estimated offering expenses payable by us:

 	 	Shares Purchased
	 	Total Consideration
	 	 	
 					 	Average Price
Per Share
	
 	 	Number
	 	Percent
	 	Amount
	 	Percent
			
Existing stockholders	 	14,119,887	 	 	%	$	132,079,443	 	 	%	$	9.35	
New public investors	 	 	 	 	 	 	 	 	 	 	 	 	
 	 		 		 		 		 	 	 	
Total	 	 	 	100	%	$	 	 	100	%	 	 	
 	 		 		 		 		 	 	 	
       The sale of shares by selling stockholders in this offering will have the following effects:
•
it will reduce the shares held by existing stockholders to                  shares, or        % of the total shares outstanding after this offering; and
16

•
it will increase the shares held by new investors to                  , or        % of the total shares outstanding after this offering.
The exercise of the underwriters' over-allotment option in full would have the following effects:
•
it will reduce the shares held by existing stockholders to                  shares, or        % of the total shares outstanding after this offering; and

•
it will increase the shares held by new investors to                  , or        % of the total shares outstanding after this offering.

       The above discussion and the table do not include:
•
3,548,250 shares of common stock issuable as of June 30, 2003 pursuant to the exercise of stock options under our stock option plans, at a weighted average exercise price of $9.61 per share;

•
2,023,700 additional shares authorized and reserved for issuance as of June 30, 2003 upon the exercise of options that may be issued in the future pursuant to our stock option plans;

•
1,948,286 shares issuable upon the exercise of warrants issued to some of our stockholders in exchange for providing guaranties of our bank debt, which guaranties are no longer in effect, at an exercise price of $2.00 per share;

•
263,318 shares issuable upon the exercise of warrants issued by us in connection with acquisitions, at a weighted average exercise price of $19.94 per share; and

•
shares that may be purchased by the underwriters to cover over-allotments, if any.
       To the extent that outstanding options or warrants are exercised in the future, there will be further dilution to investors. For more information about our capitalization and stock option plans, refer to "Capitalization" and "Management – Employee Benefit Plans." For more information about our outstanding warrants, refer to "Certain Relationships and Related Party Transactions – Fee Warrants" and "Description of Capital Stock – Warrants."
17

 SELECTED CONSOLIDATED HISTORICAL
FINANCIAL DATA
       The following table summarizes financial data regarding our business and should be read together with "Management's Discussion and Analysis of Financial Condition and Results of Operations," and our consolidated financial statements and the related notes included elsewhere in this prospectus. The selected consolidated balance sheet data as of December 31, 2001 and 2002 and the selected consolidated statements of operations data for each of the three years in the period ended December 31, 2002 have been derived from our audited consolidated financial statements that have been audited by Deloitte & Touche LLP, independent auditors, whose report is included elsewhere herein. The selected consolidated balance sheet data as of December 31, 1998, 1999 and 2000 and the selected consolidated statements of operations for the years ended December 31, 1998 and 1999 have been derived from our audited consolidated financial statements not included with this prospectus. The selected consolidated statements of operations data for the six months ended June 30, 2002 and 2003 are derived from our unaudited interim consolidated financial statements for the six months ended June 30, 2002 and 2003 that are included elsewhere in this prospectus, and the selected consolidated balance sheet and other data as of June 30, 2002 and 2003 are derived from our unaudited interim consolidated financial statements. Such interim financial statements, in the opinion of management, include all adjustments (consisting solely of normal recurring adjustments) necessary to present fairly the financial results for such periods. Interim results are not necessarily indicative of the results that may be expected for any other interim period or for a full year.
18

 	 	Year Ended December 31,
	 	Six Months Ended June 30,
	 	
 	 	1998(a)
	 	1999
	 	2000
	 	2001
	 	2002
	 	2002
	 	2003
	 	
 	 	(In thousands, except per share data)
	 	
Statements of Operations Data:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Revenue	 	$	30,628	 	$	178,147	 	$	226,304	 	$	250,462	 	$	287,125	 	$	144,101	 	$	160,273	 	
Cost of goods sold	 	 	15,898	 	 	93,546	 	 	119,313	 	 	132,520	 	 	154,574	 	 	77,443	 	 	84,475	 	
 	 		 		 		 		 		 		 		 	
Gross margin	 	 	14,730	 	 	84,601	 	 	106,991	 	 	117,942	 	 	132,551	 	 	66,658	 	 	75,798	 	
 	 		 		 		 		 		 		 		 	
Facility and warehouse expenses	 	 	(b	)	 	25,491	 	 	32,295	 	 	32,674	 	 	35,778	 	 	17,783	 	 	19,181	 	
Distribution expenses	 	 	(b	)	 	14,498	 	 	21,889	 	 	24,621	 	 	28,530	 	 	13,526	 	 	16,782	 	
Selling, general and administrative expenses	 	 	(b	)	 	31,568	 	 	40,095	 	 	39,638	 	 	42,385	 	 	20,765	 	 	22,726	 	
Depreciation and amortization	 	 	(b	)	 	5,519	 	 	7,541	 	 	7,897	 	 	5,014	 	 	2,408	 	 	2,745	 	
Asset impairment loss	 	 	—	 	 	3,205	 	 	556	 	 	—	 	 	—	 	 	—	 	 	—	 	

Total operating expenses	

14,598	

80,281	

102,376	

104,830	

111,707	

54,482	

61,434	

Operating income	 	 	132	 	 	4,320	 	 	4,615	 	 	13,112	 	 	20,844	 	 	12,175	 	 	14,363	 	
 	 		 		 		 		 		 		 		 	
Other (income) expense	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Interest, net	 	 	(793	)	 	1,319	 	 	5,005	 	 	5,082	 	 	2,908	 	 	1,663	 	 	1,191	 	
 	Other, net	 	 	43	 	 	(228	)	 	(149	)	 	(139	)	 	(332	)	 	(95	)	 	(161	)	
 	 		 		 		 		 		 		 		 	
Income (loss) before provision for income taxes and cumulative effect of change in accounting principle	 	 	882	 	 	3,229	 	 	(241	)	 	8,169	 	 	18,268	 	 	10,607	 	 	13,333	 	
Provision for income taxes	 	 	453	 	 	2,125	 	 	637	 	 	3,939	 	 	7,263	 	 	4,240	 	 	5,274	 	
 	 		 		 		 		 		 		 		 	
Income (loss) before cumulative effect of change in accounting principle	 	 	429	 	 	1,104	 	 	(878	)	 	4,230	 	 	11,005	 	 	6,367	 	 	8,059	 	
Cumulative effect of change in accounting principle	 	 	—	 	 	—	 	 	—	 	 	—	 	 	(49,899	)	 	(49,899	)	 	—	 	
 	 		 		 		 		 		 		 		 	
Net income (loss)	 	$	429	 	$	1,104	 	$	(878	)	$	4,230	 	$	(38,894	)	$	(43,532	)	$	8,059	 	
 	 		 		 		 		 		 		 		 	
Basic earnings (loss) per share:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Income (loss) before cumulative effect of change in accounting principle	 	$	0.07	 	$	0.07	 	$	(0.05	)	$	0.24	 	$	0.62	 	$	0.36	 	$	0.51	 	
 	Net income (loss)	 	$	0.07	 	$	0.07	 	$	(0.05	)	$	0.24	 	$	(2.20	)	$	(2.47	)	$	0.51	 	
Diluted earnings (loss) per share:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Income (loss) before cumulative effect of change in accounting principle	 	$	0.07	 	$	0.07	 	$	(0.05	)	$	0.23	 	$	0.57	 	$	0.33	 	$	0.46	 	
 	Net income (loss)	 	$	0.07	 	$	0.07	 	$	(0.05	)	$	0.23	 	$	(2.00	)	$	(2.24	)	$	0.46	 	
Shares used in per share calculation basic(c)	 	 	6,224	 	 	15,988	 	 	17,601	 	 	17,656	 	 	17,654	 	 	17,653	 	 	15,896	 	
Shares used in per share calculation diluted(c)	 	 	6,276	 	 	16,185	 	 	17,601	 	 	18,742	 	 	19,399	 	 	19,414	 	 	17,623	 	

Other Financial Data:	

 	

 	

 	

 	

 	

 	

 	
 	
Net cash provided by (used in) operating activities	 	$	(3,105	)	$	(14,309	)	$	(3,384	)	$	12,059	 	$	17,740	 	$	9,478	 	$	10,309	 	

Capital expenditures(d)	

18,701	

20,992	

8,453	

3,809	

8,402	

3,275	

6,248	

Depreciation and amortization	

969	

5,519	

7,541	

7,897	

5,014	

2,408	

2,745	

EBITDA(e)	

1,058	

10,067	

12,305	

21,148	

26,190	

14,678	

17,269	
 	
19

 	
 	
As of December 31,

As of June 30,
	
 	 	1998
	 	1999
	 	2000
	 	2001
	 	2002
	 	2002
	 	2003
	
Balance Sheet Data:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total assets	 	$	161,153	 	$	220,420	 	$	233,203	 	$	227,217	 	$	176,747	 	$	175,199	 	$	183,745	
Working capital	 	 	32,219	 	 	44,540	 	 	54,541	 	 	16,861	 	 	50,670	 	 	54,190	 	 	44,728	
Long-term obligations, including current portion	 	 	2,701	 	 	39,509	 	 	54,611	 	 	43,962	 	 	34,205	 	 	38,076	 	 	54,457	
Stockholders' equity	 	 	118,295	 	 	154,821	 	 	155,230	 	 	160,105	 	 	121,129	 	 	116,497	 	 	106,027	

(a)
The Company was formed on February 13, 1998. Information for 1998 is from inception through December 31, 1998.

(b)
Expense classification is not available for 1998, other than depreciation and amortization.

(c)
The Company repurchased 2,000,000 shares of its common stock in February 2003 and repurchased an additional 1,557,498 shares of its common stock in May 2003. Accordingly, the shares used in the per share calculation for basic and diluted earnings per share in the six months ended June 30, 2003 do not fully reflect the impact of these purchases.

(d)
Includes cash used in acquisitions and non-cash property additions.

(e)
EBITDA consists of income (loss) before provision for income taxes and cumulative effects of change in accounting principle plus depreciation and amortization and interest expense, less interest income. We have presented EBITDA information solely as a supplemental disclosure because we believe it provides a helpful analysis of our operating results. EBITDA should not be construed as an alternative to operating income, net income (loss) or net cash provided by (used in) operating activities, as determined in accordance with accounting principles generally accepted in the United States. In addition, not all companies that report EBITDA information calculate EBITDA in the same manner as we do and, accordingly, our calculation is not necessarily comparable to similarly entitled measures of other companies and may not be an appropriate measure for performance relative to other companies.

The following table reconciles EBITDA to Income (loss) before provision for income taxes and cumulative effect of change in accounting principle:

 	 	Year Ended December 31,
	 	Six Months
Ended June 30,
	
 	 	1998
	 	1999
	 	2000
	 	2001
	 	2002
	 	2002
	 	2003
	
 	 	(In thousands)
	
Income (loss) before provision for income taxes and cumulative effect of change in accounting principle	 	$	882	 	$	3,229	 	$	(241	)	$	8,169	 	$	18,268	 	$	10,607	 	$	13,333	

Depreciation and amortization	

969	

5,519	

7,541	

7,897	

5,014	

2,408	

2,745	
Interest, net	 	 	(793	)	 	1,319	 	 	5,005	 	 	5,082	 	 	2,908	 	 	1,663	 	 	1,191	
 	 		 		 		 		 		 		 		
Earnings before interest, taxes, depreciation and amortization (EBITDA)	 	$	1,058	 	$	10,067	 	$	12,305	 	$	21,148	 	$	26,190	 	$	14,678	 	$	17,269	
 	 		 		 		 		 		 		 		
20

 MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
       The following discussion should be read in conjunction with the consolidated financial statements and accompanying notes, which appear elsewhere in this prospectus. It contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed below and elsewhere in this prospectus, particularly under the heading "Risk Factors."
Overview
       Since our formation in 1998, we have grown through both internal development and acquisitions. For the first 18 months of our existence, we focused on growth through acquisitions. Our acquisition strategy has been to target companies with strong management teams, a record of environmental compliance, solid growth prospects and a reputation for quality and customer service. We believe it is important for former owners to remain active in our business and have frequently used equity as a significant component of acquisitions.
       Internal growth is an important driver of our revenue and operating results. Since 1999, we have focused primarily on growing our sales and operating results within our existing organization. We have done so by developing our regional distribution networks and by creating overnight product transfers between our facilities to better leverage our inventory investment and to increase our ability to fill customer demand. We acquire salvage vehicles for dismantling from several sources, including salvage auctions, insurance companies and OEMs. We acquire the majority of our salvage vehicles from salvage auctions. A critical component of our success is our ability to identify and value the recyclable parts on a damaged vehicle and rapidly determine the maximum price that we can pay for the salvage vehicle at auction in order to obtain our target margins on the resale of the recycled OEM products. Our ability to correctly assess the quality and ultimate sales prices for products when we purchase a salvage vehicle, as well as our ability to obtain the vehicle at a cost we determine to be reasonable in light of that assessment, directly impacts our profit margins in the periods subsequent to acquisition of the vehicles.
       Our revenue, cost of salvage vehicles and operating results have fluctuated on a quarterly and annual basis in the past and can be expected to continue to fluctuate in the future as a result of a number of factors, some of which are beyond our control. Factors that may affect our operating results include, but are not limited to:
•
fluctuations in the market value of salvage and used vehicles;

•
the availability and cost of salvage vehicles;

•
variations in vehicle accident rates;

•
changes in state or federal laws or regulations affecting our business;

•
our ability to integrate and manage our acquisitions successfully;

•
severity of weather and seasonality of weather patterns;
21

•
the amount and timing of operating costs and capital expenditures relating to the maintenance and expansion of our business, operations and infrastructure; and

•
declines in asset values.
       Due to the foregoing factors, our operating results in one or more future periods can be expected to fluctuate and period-to-period comparisons of our results of operations should not be relied upon as indications of future performance.
Sources of Revenue
       Since 2000 our revenue from the sale of recycled OEM products and related services has ranged between 88% and 91% of our total revenue. We sell the majority of our recycled OEM products to collision repair shops and mechanical repair shops. Our recycled OEM products include, for example, engines, transmissions, front-ends, doors and trunk lids. The demand for our products and services is influenced by several factors, including the number of vehicles in operation, the number of miles being driven, the frequency and severity of vehicle accidents, availability and pricing of new and aftermarket parts, seasonal weather patterns and local weather conditions. Additionally, automobile insurance companies exert significant influence over collision repair shops as to how an insured vehicle is repaired and the cost level of the products used in the repair process. Accordingly, we consider automobile insurance companies to be key demand drivers for our products. We provide insurance companies services that include the review of vehicle repair order estimates, as well as direct quotation services to their adjusters. There is no standard price for recycled OEM products, but rather a pricing structure that varies from day to day based upon such factors as product availability, quality, demand, new product prices and the age of the vehicle being repaired.
       When we obtain a mechanical product from a dismantled vehicle and determine it is damaged or when we have a surplus of a certain mechanical product types, we sell them in bulk to mechanical remanufacturers. Since 2000 these sales have ranged from 4.8% to 7.1% of our total revenue. The majority of these products are transferred to two of our facilities in Houston, Texas where a sorting by product and model type takes place. Examples of such products are engine blocks and heads, transmissions, starters, alternators, and air conditioner compressors. After we have recovered all the products we intend to resell, the remaining materials are crushed and sold to scrap processors. Our revenue from the sale of scrap accounts for less than 1.7% of our total revenue.
       We also sell extended warranty contracts for certain mechanical products. These contracts cover the cost of parts and labor and are sold for periods of six months, one year or two years. We defer the revenue from such contracts and recognize it ratably over the term of the contracts. These contracts account for approximately 1% of our total revenue.
Cost of Goods Sold
       Our cost of goods sold includes the price we pay for the salvage vehicle, as well as auction fees and towing, where applicable. Our cost of goods sold also includes labor and other costs we incur to acquire and dismantle such vehicles. Our labor costs related to buying and dismantling account for approximately 10% of our cost of goods sold. The acquisition and dismantling of salvage vehicles is a manual process and, as a result, energy costs are not material.
22

       Our revenue from products that we obtain from third party recyclers to sell to our customers, which we refer to as brokered product sales, generally ranges from 8.9% to 9.6% of our total revenue. We purchase these products when we do not have them available in our own inventory. The gross margin on brokered product sales as a percentage of revenue is generally less than half of what we achieve from sales of our own inventory because we must pay higher prices for these products.
       Some of our mechanical products are sold with a standard six month warranty against defects. We record the estimated warranty costs at the time of sale using historical warranty claim information to project future warranty claims activity and related expenses. Our warranty expense is less than 1% of our total cost of goods sold. Our warranty reserve is as follows:

Balance as of December 31, 2001	 	$	100,000	 	
Warranty expense	 	 	1,226,000	 	
Warranty claims	 	 	(1,170,000	)	
 	 		 	
Balance as of December 31, 2002	 	 	156,000	 	
Warranty expense	 	 	1,048,300	 	
Warranty claims	 	 	(978,300	)	
 	 		 	
Balance as of June 30, 2003	 	$	226,000	 	
 	 		 	
       We also sell separately priced extended warranty contracts for certain mechanical products. The expense related to extended warranty claims is recognized when the claim is made.
Expenses
       Our facility and warehouse expenses primarily include our costs to operate our processing and redistribution facilities. These costs include labor for both plant management and facility and warehouse personnel, facility rent, property and liability insurance, utilities and other occupancy costs.
       Our distribution expenses primarily include our costs to deliver our products to our customers. Included in our distribution expense category are labor costs for drivers, local delivery and transfer truck rental costs, vehicle repairs and maintenance, insurance and fuel.
       Our selling and marketing expenses primarily include our advertising, promotion and marketing costs, salary and commission expenses for sales personnel, sales training, telephone and other communication expenses and bad debt expense. Personnel costs account for approximately 80% of our selling and marketing expenses. Most of our sales personnel are paid primarily on a commission basis. The number and quality of our sales force is critical to our ability to respond to our customers' needs and increase our sales volume. We are continually evaluating our sales force, developing and implementing training programs and utilizing appropriate measurements to assess our selling effectiveness.
       Our general and administrative expenses include primarily the costs of our corporate office and three regional offices that provide corporate and field management, treasury, accounting, legal, payroll, human resources and information systems functions.
23

Seasonality
       Our operating results are subject to quarterly variations based on a variety of factors, influenced primarily by seasonal changes in weather patterns. During the winter months, we tend to have higher demand for our products. In addition, the cost of salvage vehicles tends to be lower as more weather related accidents occur generating a larger supply of total loss vehicles.
Critical Accounting Policies and Estimates
       Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, revenue and expenses and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, assumptions and judgments, including those related to revenue recognition, inventory valuation, allowance for doubtful accounts, goodwill impairments, self-insurance programs, contingencies, asset impairments and taxes. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. The results of these estimates form the basis for our judgments about the carrying values of assets and liabilities and our recognition of revenue that is not readily apparent from other sources. Actual results may differ from these estimates.
Revenue Recognition
       We recognize and report revenue from the sale of recycled automotive products when they are shipped and title has transferred, subject to a reserve for returns, discounts and allowances that management estimates based upon historical information. A collision repair product would ordinarily be returned within a few days of shipment, while a mechanical repair product may take longer to be returned. Discounts may be earned based upon sales volumes, or sales volumes coupled with prompt payment. Allowances are normally given within a few days following product shipment.
       We also sell separately priced extended warranty contracts for certain mechanical products. Revenue from these contracts is deferred and recognized ratably over the term of the contracts.
Inventory Accounting
       Inventory is recorded at the lower of cost or market. Our inventory cost is established based on the price we pay for a vehicle, and includes buying, dismantling and, where applicable, auction fees and towing. Inventory carrying value is determined using the average cost to sales percentage at each of our facilities and applying that percentage to the facility's inventory at expected selling prices. The average cost percentage is derived from each facility's historical vehicle sales, together with the costs for salvage vehicles purchased at auction or at contracted rates for salvage vehicles acquired under direct procurement arrangements. Our inventory carrying value is adjusted regularly to reflect the age and current and anticipated demand for our products. If actual demand differs from our estimates, an adjustment to our inventory carrying value would be necessary in the period such determination is made.
24

Allowance for Doubtful Accounts
       We maintain an allowance for doubtful accounts for estimated losses resulting from the inability of customers to make required payments. The allowance for doubtful accounts is based on our assessment of the collectibility of specific customer accounts, the aging of the accounts receivable and our historical experience. Our allowance for doubtful accounts at June 30, 2003 was approximately $1.5 million, which represents 6.8% of gross receivables. If actual defaults are higher than our historical experience, our allowance for doubtful accounts may be insufficient to cover the uncollectible receivables, which would have an adverse impact on our operating results in the period of occurrence. Our exposure to uncollectible accounts receivable is limited because we have a large number of smaller customers that are generally geographically dispersed. We control credit risk through credit approvals, credit limits and monitoring policies. We also have customers that pay for product at the time of shipment.
Goodwill Impairment
       We recorded goodwill as a result of our acquisitions. On January 1, 2002, we adopted Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets," which we refer to as SFAS 142, that requires us to analyze our goodwill for impairment at least annually. The determination of the value of goodwill requires us to make estimates and assumptions that affect our consolidated financial statements. In assessing the recoverability of our goodwill, we must make assumptions regarding estimated future cash flows and other factors to determine fair value of the respective assets. If these estimates or their related assumptions change in the future, we may be required to record impairment charges for these assets. We perform goodwill impairment tests on an annual basis and between annual tests whenever events may indicate that an impairment exists. In response to changes in industry and market conditions, we may be required to strategically realign our resources and consider restructuring, disposing of or otherwise exiting businesses, which could result in an impairment of goodwill.
       As a part of our adoption of SFAS 142, we utilize outside professionals in the valuation industry to validate the assumptions and overall methodology used to determine the fair value estimates. Valuations for some of our acquisitions have declined significantly since we made them due to a number of factors, including lower earnings multiples applied in the valuations of comparable companies. This resulted in the carrying values of certain reporting units exceeding the fair value of those reporting units as of January 1, 2002. As a result of adopting SFAS 142, we recorded a goodwill impairment of $49.9 million, net of tax of $16.1 million, as a cumulative effect of a change in accounting principle at January 1, 2002. As of June 30, 2003, we had $50.8 million in goodwill that will be subject to future impairment tests. If we were required to recognize goodwill impairments in future periods, we would report those impairment losses as part of our operating results and not as a change in accounting principle. We determined that no additional adjustments were necessary when we performed our annual impairment testing in the fourth quarter of 2002.
Impairment of Long-Lived Assets
       We review long-lived assets for possible impairment whenever events or circumstances indicate that the carrying value of such assets may not be recoverable. If our review indicates that the carrying value of long-lived assets is not recoverable, we reduce the carrying amount of the assets to fair value. We
25

have had no adjustments to the carrying value of long-lived assets in 2001, 2002 or 2003. We had an impairment loss in 2000 relating to certain application software licenses that we abandoned in 1999. These licenses were partially written down using market estimates in our December 31, 1999 balance sheet. We were unable to subsequently sell the licenses and we recorded an impairment loss of $0.5 million ($0.3 million after tax) in 2000. We also closed two satellite facilities during 2000, and recorded an impairment loss of $0.1 million in connection with these closures.
Self-Insurance Programs
       We self-insure a portion of employee medical benefits under the terms of our employee health insurance program. We purchase individual stop-loss insurance coverage that limits our exposure on specific claims as well as aggregate stop-loss insurance coverage that limits our total exposure to employee medical claims. We also self-insure for a portion of automobile, general liability and workers' compensation claims. We have purchased stop-loss insurance coverage that limits our exposure to both individual claims as well as our overall claims. The cost of the stop-loss insurance is expensed over the contract periods.
       We record an accrual for the claims expense related to our employee medical benefits, automobile, general liability and workers' compensation claims based upon the expected amount of all such claims. If actual claims are higher than what we anticipated, our accrual might be insufficient to cover our claims costs, which would have an adverse impact on our operating results in that period. If we were to incur claims up to our aggregate stop-loss insurance coverage, we would have an additional expense of approximately $3.0 million on an annual basis.
Contingencies
       We are subject to the possibility of various loss contingencies arising in the ordinary course of business. We consider the likelihood of loss or the incurrence of a liability, as well as our ability to reasonably estimate the amount of loss, in determining loss contingencies. We accrue an estimated loss contingency when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. We regularly evaluate current information available to us to determine whether the accruals should be adjusted. If the amount of an actual loss is greater than the amount we have accrued, this would have an adverse impact on our operating results in that period.
Accounting for Income Taxes
       We record a valuation allowance to reduce our deferred tax assets to the amount that we expect is more likely than not to be realized. We consider historical taxable income, expectations and risks associated with our estimates of future taxable income and ongoing tax planning strategies in assessing the need for a valuation allowance. We had a $0.1 million valuation allowance as of each of December 31, 2001 and 2002, and June 30, 2003, against our deferred tax assets. Should we determine that it is more likely than not that we would be able to realize all of our deferred tax assets in the future, an adjustment to the net deferred tax asset would increase income in the period such determination was made. Conversely, should we determine that it is more likely than not that we would not be able to realize all of our deferred tax assets in the future, an adjustment to the net deferred tax assets would decrease income in the period such determination was made.
26

Acquisitions
       We acquired three automotive recycling businesses in 2003 for an aggregate of $3.5 million in cash, $0.2 million of which will be paid subsequent to June 30, 2003, and 50,000 shares of our common stock, which are reflected as redeemable common stock on our balance sheet. These are the first companies we have acquired since 1999. We continue to target certain strategic markets that would enhance and extend our existing network, and expect to establish additional redistribution centers or open new sales and processing facilities in markets where acceptable acquisition targets cannot be located.
Segment Reporting
       All of our operations are conducted in the United States. We manage our operations geographically. Because approximately 95% of all revenue and 92% of all profits are derived from, and 95% of all assets are used in, our salvage operations, we have concluded that our business activities fall into one reportable segment.
Results of Operations
       The following table sets forth statement of operations data as a percentage of total revenue for the periods indicated:

 	 	Year Ended
December 31,
	 	Six Months
Ended June 30,
	 	
 	 	2000
	 	2001
	 	2002
	 	2002
	 	2003
	 	
Statement of Operations Data:	 	 	 	 	 	 	 	 	 	 	 	
Revenue	 	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	
Cost of goods sold	 	52.7	%	52.9	%	53.8	%	53.7	%	52.7	%	
 	 		 		 		 		 		 	
Gross margin	 	47.3	%	47.1	%	46.2	%	46.3	%	47.3	%	
Facility and warehouse expenses	 	14.3	%	13.0	%	12.5	%	12.3	%	12.0	%	
Distribution expenses	 	9.7	%	9.8	%	9.9	%	9.4	%	10.5	%	
Selling, general and administrative expense	 	17.7	%	15.8	%	14.8	%	14.4	%	14.2	%	
Depreciation and amortization	 	3.3	%	3.2	%	1.7	%	1.7	%	1.7	%	
Asset impairment loss	 	0.2	%	—	 	—	 	—	 	—	 	
 	 		 		 		 		 		 	
Operating income	 	2.0	%	5.2	%	7.3	%	8.4	%	9.0	%	
 	 		 		 		 		 		 	
Income (loss) before provision for income taxes and cumulative effect of change in accounting principle	 	(0.1)	%	3.3	%	6.4	%	7.4	%	8.3	%	
Cumulative effect of change in accounting principle	 	—	 	—	 	(17.4)	%	(34.6)	%	—	 	
 	 		 		 		 		 		 	
Net income (loss)	 	(0.4)	%	1.7	%	(13.5)	%	(30.2)	%	5.0	%	
 	 		 		 		 		 		 	
Six Months Ended June 30, 2003 Compared to Six Months Ended June 30, 2002
        Revenue.     Our revenue increased 11.2%, from $144.1 million for the six month period ended June 30, 2002 to $160.3 million for the comparable period of 2003. The increase in revenue is primarily
27

due to the higher volume of products we sold as we have added two redistribution centers since the first quarter of 2002 and increased the number of customers that we serve by approximately 4.9%. In addition, we continued to expand our services to the insured repair industry, and added delivery routes, which helped us to increase our market penetration. We also completed three business acquisitions during the first half of 2003. The revenue attributable to these business acquisitions, since the dates of acquisition, accounted for approximately $2.4 million.
        Cost of Goods Sold.     Our cost of goods sold increased 9.1%, from $77.4 million for the six month period ended June 30, 2002 to $84.5 million for the comparable period of 2003. As a percentage of revenue, cost of goods sold decreased from 53.7% to 52.7%. The increase in cost of goods sold was primarily due to the increased volume of products we sold.
        Gross Margin.     Our gross margin increased 13.7%, from $66.7 million for the six month period ended June 30, 2002 to $75.8 million for the comparable period for 2003. As a percentage of revenue, gross margin increased from 46.3% to 47.3%. The increase in gross margin is due primarily to higher revenue growth in our markets that historically have higher gross margins as a percentage of revenue, in particular our operations in the Midwest and Northeast, and our improving costs of salvage in our Western and Southeast operations.
        Facility and Warehouse Expenses.     Facility and warehouse expenses increased 7.9%, from $17.8 million for the six month period ended June 30, 2002 to $19.2 million for the comparable period for 2003. As a percentage of revenue, facility and warehouse expenses decreased from 12.3% to 12.0%. The increase in expenses is primarily due to higher workers' compensation, property insurance and property taxes during the first half of 2003.
        Distribution Expenses.     Distribution expenses increased 24.1%, from $13.5 million for the six month period ended June 30, 2002 to $16.8 million for the comparable period for 2003. As a percentage of revenue, distribution expenses increased from 9.4% to 10.5%. We have added two redistribution centers, and have added several additional transfer routes and local delivery trucks since the first quarter of 2002. In addition, higher fuel, repairs and maintenance and insurance costs accounted for a portion of the growth in distribution expenses.
        Selling, General and Administrative Expenses.     Selling, general and administrative expenses increased 9.4%, from $20.8 million for the six month period ended June 30, 2002 to $22.7 million for the comparable period for 2003. As a percentage of revenue, selling, general and administrative expenses decreased from 14.4% to 14.2%. The majority of the selling expense increase was due to labor or labor-related expenses. We increased our sales force on average by 25 positions, or 8.6%. In addition, the majority of our sales compensation is commission-based, and, accordingly, selling expenses tend to rise as revenue rises. Our general and administrative expenses increased moderately.
        Depreciation and Amortization.     Depreciation and amortization increased 14.0%, from $2.4 million for the six month period ended June 30, 2002 to $2.7 million for the comparable period for 2003. As a percentage of revenue, depreciation and amortization remained constant at 1.7%. Net property and equipment additions were approximately $7.6 million, primarily attributable to expansion of facilities and new information systems since the first half of 2002.
28

        Operating Income.     Our operating income increased 18.0%, from $12.2 million for the six month period ended June 30, 2002 to $14.4 million for the comparable period for 2003. As a percentage of revenue, operating income increased from 8.4% to 9.0%.
        Other (Income) Expense.     Net other expense decreased 34.3%, from $1.6 million for the six month period ended June 30, 2002 to $1.0 million for the comparable period for 2003. As a percentage of revenue, net other expense decreased from 1.1% to 0.6%. The decrease is primarily attributable to net interest expense, which totaled $1.7 million for the six month period ended June 30, 2002, versus $1.2 million for the comparable period in 2003. The decrease in net interest expense was a result of both lower average debt levels and interest rates during the 2003 period.
        Provision for Income Taxes.     The provision for income taxes increased 24.4%, from $4.2 million for the six month period ended June 30, 2002 to $5.3 million for the comparable period for 2003 due to our improved operating results. Our effective income tax rate was approximately 40% for both periods.
        Cumulative Effect of Change in Accounting Principle.     As described under "Critical Accounting Policies and Estimates – Goodwill Impairment," we recorded a goodwill impairment of $49.9 million, net of tax of $16.1 million, as a cumulative effect of a change in accounting principle at January 1, 2002. See the "Notes to Consolidated Financial Statements" for further discussion.
Year Ended December 31, 2002 Compared to Year Ended December 31, 2001
        Revenue.     Our revenue increased 14.6%, from $250.5 million in 2001 to $287.1 million in 2002. The increase in revenue was primarily due to higher volume of products sold as we added three redistribution centers and increased the number of customers that we serve by approximately 6%. We made no business acquisitions during 2002 or 2001.
        Cost of Goods Sold.     Our cost of goods sold increased 16.6%, from $132.5 million in 2001 to $154.6 million in 2002. As a percentage of revenue, cost of goods sold increased from 52.9% to 53.8%. Our costs increased primarily due to our increased volume, as well as higher auction fees.
        Gross Margin.     Our gross margin increased 12.4%, from $117.9 million in 2001 to $132.6 million in 2002. As a percentage of revenue, gross margin decreased from 47.1% to 46.2%. Our gross margin increased primarily due to increased volume, which was partially offset by higher auction fees.
        Facility and Warehouse Expenses.     Facility and warehouse expenses increased 9.5%, from $32.7 million in 2001 to $35.8 million in 2002. As a percentage of revenue, facility and warehouse expenses decreased from 13.0% to 12.5%. Our facility rent and occupancy costs for our redistribution centers increased as we added three such facilities in 2002. We also added payroll expense as a result of higher volumes.
        Distribution Expenses.     Distribution expenses increased 15.9%, from $24.6 million in 2001 to $28.5 million in 2002. As a percentage of revenue, distribution expenses increased from 9.8% to 9.9%. We added three additional redistribution centers, as well as several additional transfer routes and approximately 15% more local delivery trucks. In addition, higher fuel, repairs and maintenance and insurance costs accounted for a portion of the growth in distribution expenses.
        Selling, General and Administrative Expenses.     Selling, general and administrative expenses increased 6.9%, from $39.6 million in 2001 to $42.4 million in 2002. As a percentage of revenue, selling, general
29

and administrative expenses decreased from 15.8% to 14.8%. Our selling expenses increased due to higher payroll costs resulting from our increased revenue. Our general and administrative expenses increased due primarily to higher volume.
        Depreciation and Amortization.     Depreciation and amortization decreased 36.5%, from $7.9 million in 2001 to $5.0 million in 2002. As a percentage of revenue, depreciation and amortization decreased from 3.2% to 1.7%. Effective January 1, 2002, we adopted SFAS 142. SFAS 142 requires that goodwill and intangible assets with indefinite useful lives no longer be amortized. The decrease in depreciation and amortization expense was due primarily to the lack of goodwill amortization in 2002 in contrast to the goodwill amortization of $3.1 million in 2001.
        Operating Income.     Our operating income increased 59.0%, from $13.1 million in 2001 to $20.8 million in 2002. As a percentage of revenue, operating income increased from 5.2% to 7.3%.
        Other (Income) Expense.     Net other expense decreased 47.9%, from $4.9 million in 2001 to $2.6 million in 2002. As a percentage of revenue, net other expense decreased from 2.0% to 0.9%. Net interest expense decreased 42.8%, from $5.1 million in 2001 to $2.9 million in 2002. The decrease was the result of both lower debt levels and interest rates during 2002.
        Provision for Income Taxes.     Our provision for income taxes increased 84.4%, from $3.9 million in 2001 to $7.3 million in 2002 due to our improved operating results. Our effective rate decreased from 48.2% in 2001 to 39.8% in 2002 due primarily to the elimination of non-deductible goodwill amortization in 2002, as well as a reduction in effective state tax rates.
        Cumulative Effect of Change in Accounting Principle.     As described under "Critical Accounting Policies and Estimates – Goodwill Impairment," we recorded a goodwill impairment of $49.9 million, net of tax of $16.1 million, as a cumulative effect of a change in accounting principle at January 1, 2002. See the "Notes to Consolidated Financial Statements" for further discussion.
Year Ended December 31, 2001 Compared to Year Ended December 31, 2000
        Revenue.     Our revenue increased 10.7%, from $226.3 million in 2000 to $250.5 million in 2001. The increase in revenue is primarily due to higher volume as we added two redistribution centers and increased the number of transfer and local delivery trucks during 2001, all in our effort to continue expanding our network. In addition, we began to provide more services to the insurance industry in 2001, such as reviewing vehicle repair order estimates, in order to provide insurance companies more opportunities to increase usage of our recycled OEM products. We made no business acquisitions during 2001 or 2000.
        Cost of Goods Sold.     Our cost of goods sold increased 11.1%, from $119.3 million in 2000 to $132.5 million in 2001. As a percentage of revenue, cost of goods sold increased from 52.7% to 52.9%. Cost of goods sold increased as our revenue increased. In addition, cost of goods sold in 2000 included inventory impairments at three facilities that totaled $1.0 million. As a result of these impairments, we implemented more strict buying disciplines in 2001 and made selected personnel changes in order to improve inventory realization at these three facilities.
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        Gross Margin.     Our gross margin increased 10.2%, from $107.0 million in 2000 to $117.9 million in 2001. As a percentage of revenue, gross margin decreased from 47.3% to 47.1%.
        Facility and Warehouse Expenses.     Facility and warehouse expenses increased 1.2%, from $32.3 million in 2000 to $32.7 million in 2001. As a percentage of revenue, facility and warehouse expenses decreased from 14.3% to 13.0%. These expenses increased primarily due to our increased revenue. These expenses grew at a slower rate than revenue as a result of cost reduction efforts made in late 2000 and early 2001.
        Distribution Expenses.     Distribution expenses increased 12.5%, from $21.9 million in 2000 to $24.6 million in 2001. As a percentage of revenue, distribution expenses increased from 9.7% to 9.8%. We added two redistribution centers in 2001 to the nine that we had in 2000. Our distribution expenses also increased as we continued to add transfer and local delivery routes to expand our network. We increased the number of local delivery trucks in 2001 by approximately 9% over 2000.
        Selling, General and Administrative Expenses.     Selling, general and administrative expenses decreased 1.1%, from $40.1 million in 2000 to $39.6 million in 2001. As a percentage of revenue, selling, general and administrative expenses decreased from 17.7% to 15.8%. Our selling expenses decreased $0.4 million primarily because we cut less productive sales positions and modified our sales commission plans. Our general and administrative expenses remained at approximately the same level as in 2000. Increases in general and administrative expense due to our volume increase were offset by the elimination of one of our four regional offices and reduction of other infrastructure costs in 2001. Severance cost of $0.2 million was recorded in 2000 related to the elimination of certain corporate positions.
        Depreciation and Amortization.     Depreciation and amortization increased 4.7%, from $7.5 million in 2000 to $7.9 million in 2001. As a percentage of revenue, depreciation and amortization decreased from 3.3% to 3.2%. The increase was due to additional investments in property and equipment in 2000.
        Asset Impairment Loss.     Asset impairment losses totaled $0.6 million in 2000. We had no asset impairment losses in 2001. The majority of this loss resulted from our decision in 1999 to abandon implementation of certain operating and financial information systems.
        Operating Income.     Our operating income increased 184.1%, from $4.6 million in 2000 to $13.1 million in 2001. As a percentage of revenue, operating income increased from 2.0% to 5.2%.
        Other (Income) Expense.     Net other expense was $4.9 million in 2000 and 2001. Net interest expense increased 1.5%, from $5.0 million in 2000 to $5.1 million in 2001. As a percentage of revenue, net interest expense decreased from 2.2% to 2.0%. While we had lower debt levels in 2001, interest expense increased primarily due to an increase in amortization of debt issuance costs of $0.6 million related to amending our revolving credit facility discussed below. These debt issuance costs were amortized over the credit facility's remaining life to June 30, 2002.
        Provision for Income Taxes.     Our provision for income taxes increased 517.8%, from $0.6 million in 2000 to $3.9 million in 2001. Our effective rate was 48.2% in 2001. The increase was due to our improved operating results.
Quarterly Results of Operations
       The following table represents unaudited statement of operations data for our most recent 14 quarters. You should read the following table in conjunction with our consolidated financial statements
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and related notes appearing elsewhere in this prospectus. We have prepared this unaudited information on a basis consistent with the audited consolidated financial statements contained in this prospectus. The results of operations of any quarter are not necessarily indicative of the results that may be expected for any future period.

 	 	Three Months Ended
	
 	 	March 31,
	 	June 30,
	 	September 30,
	 	December 31,
	
 	 	(In thousands)
	
Revenue	 	 	 	 	 	 	 	 	 	 	 	 	
 	2000	 	$	56,698	 	$	55,794	 	$	55,981	 	$	57,831	
 	2001	 	 	64,147	 	 	61,187	 	 	61,085	 	 	64,043	
 	2002	 	 	71,314	 	 	72,787	 	 	71,860	 	 	71,164	
 	2003	 	 	79,256	 	 	81,017	 	 	—	 	 	—	
Gross Margin	 	 	 	 	 	 	 	 	 	 	 	 	
 	2000	 	 	26,588	 	 	27,710	 	 	25,343	 	 	27,350	
 	2001	 	 	30,140	 	 	29,135	 	 	28,824	 	 	29,843	
 	2002	 	 	32,958	 	 	33,700	 	 	33,145	 	 	32,748	
 	2003	 	 	37,453	 	 	38,345	 	 	—	 	 	—	
Operating Income	 	 	 	 	 	 	 	 	 	 	 	 	
 	2000	 	 	1,989	 	 	2,366	 	 	(963	)	 	1,223	
 	2001	 	 	4,080	 	 	2,952	 	 	2,661	 	 	3,419	
 	2002	 	 	6,230	 	 	5,945	 	 	4,682	 	 	3,987	
 	2003	 	 	7,020	 	 	7,344	 	 	—	 	 	—	
       Our operating results are subject to quarterly variations based on a variety of factors, influenced primarily by seasonal changes in weather patterns. During the winter months, we tend to have higher demand for our products. In addition, the cost of salvage vehicles tends to be lower as more weather related accidents occur generating a larger supply of total loss vehicles.
Liquidity and Capital Resources
       Our primary sources of liquidity are our cash flow from operations and our credit facility. At June 30, 2003, we had cash and equivalents amounting to $2.1 million. Our liquidity needs are primarily to fund working capital requirements, make scheduled debt repayments and expand our facilities and network. The procurement of salvage and other mechanical inventory is the largest use of our funds. We normally pay for salvage vehicles acquired at salvage auctions and under some direct procurement arrangements at the time that we take possession of the vehicles. We acquired approximately 53,000, 64,000 and 73,000 salvage vehicles in 2000, 2001 and 2002 respectively, and 36,000 and 37,000 salvage vehicles during the six month periods ended June 30, 2002 and 2003, respectively.
       We intend to continue to evaluate markets for growth through the internal development of redistribution centers and processing facilities, and selected business acquisitions. Our future liquidity and capital requirements will depend upon numerous factors, including the cost and timing of our internal development efforts and the success of those efforts, the costs and timing of expansion of our sales and marketing activities, and the costs and timing of future acquisitions.
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       Net cash provided by operating activities was $10.3 million for the six months ended June 30, 2003, versus $9.5 million for the comparable period of 2002. Cash was provided by net income adjusted for non-cash items. Working capital uses of cash included increases in receivables, inventory and prepaid expenses and other assets, partially offset by higher current liabilities and income taxes payable. Receivables and inventory increased seasonally over December 2002 levels. Current liabilities and income taxes payable increased due primarily to higher levels of business activity and taxable income. Prepaid expenses and other assets increased primarily due to costs of $0.4 million for our planned initial public offering that have been deferred. Other noncurrent liabilities increased primarily due to increases in employee deferred compensation liabilities.
       Net cash used in investing activities was $6.2 million for the six months ended June 30, 2003, compared to $2.2 million for the comparable period of 2002, as we invested $3.3 million of cash in three acquisitions, while net property and equipment purchases increased $0.7 million.
       Net cash used in financing activities was $2.6 million for the six months ended June 30, 2003, compared to $7.3 million in the comparable period of 2002. We repurchased 3,557,498 shares of our common stock in 2003 for $22.9 million, primarily funded by net borrowings under our credit facility totaling $20.5 million. We made net debt repayments of $6.8 million in 2002.
       Net cash provided by operating activities was $17.7 million in 2002, versus $12.1 million in 2001. Cash was provided by net income adjusted for non-cash items. Working capital uses of cash included increases in receivables and inventory, and a decrease in income taxes payable, offset by reductions in prepaid expenses and other assets, and increases in accrued expenses. Receivables and inventory increased as our business activity increased. Prepaid expenses and other assets decreased primarily due to income tax refunds. Income taxes payable decreased as overpayments from prior years were applied against current year taxes. Accrued expenses increased primarily due to higher salvage vehicle purchases made from non-auction sources. Deferred revenue increased primarily due to higher sales of extended warranty contracts. Other nonconcurrent liabilities increased primarily due to increases in employee deferred compensation liabilities.
       Net cash used in investing activities was $6.7 million in 2002, compared to $3.5 million in 2001, as net property and equipment purchases increased $3.6 million while cash used for acquisitions decreased $0.4 million. We continued to expand our facilities and upgraded our computer systems.
       Net cash used in financing activities was $12.0 million in 2002, compared to $11.1 million in 2001. We entered into a new credit facility with our bank group that introduced a term loan component in addition to a higher revolving credit facility. Debt issuance costs increased $0.2 million due to the new credit facility. We also received and retired $0.1 million of our common stock in connection with the settlement of a note receivable.
       Net cash provided by operating activities was $12.1 million for 2001, compared to cash used in operating activities of $3.4 million in 2000. Cash was provided by net income adjusted for non-cash items. Working capital uses of cash included an increase in inventory and a decrease in accounts payable, partially offset by increases in prepaid and other assets, and increases in accrued expenses and income taxes payable. Inventory increased as we continued to expand our network and grow our revenue. Prepaid expenses and other assets increased due primarily to prepaid and refundable income taxes. Income taxes payable increased due to higher taxable income in 2001.
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       Net cash used in investing activities was $3.5 million in 2001, compared to $8.3 million in 2000, as net property and equipment purchases decreased $4.7 million. We completed construction of facility additions at some locations in 2000 and operated in 2001 under tighter capital constraints.
       Net cash used in financing activities was $11.1 million in 2001, compared to net cash provided by financing activities of $14.9 million in 2000. We borrowed $38.5 million in 2000 that was partially used to pay acquisition-related notes of $22.8 million. We made net repayments of $10.0 million against the credit facility in 2001.
       On June 21, 2002, we entered into a new credit facility with our bank group. The proceeds under the new credit facility were used to pay off $35.0 million that was outstanding under our previous facility. The new facility consists of a revolving line of credit with a maximum availability of $40.0 million and a $20.0 million term loan. On February 20, 2003, the credit facility was amended to provide an additional term loan in the amount of $9.0 million. The credit facility is collateralized by substantially all of our assets (including the stock in our subsidiaries) and contains customary covenants, including, among other things, prohibitions on the payment of cash dividends, restrictions on the payment of other dividends and on purchases, redemptions and acquisitions of our stock, limitations on additional indebtedness, certain limitations on acquisitions, mergers, and consolidations, and the maintenance of certain financial ratios. At June 30, 2003 and at December 31, 2002, we were in compliance with all covenants. The revolving line of credit matures on June 30, 2005. The $20.0 million term loan requires scheduled quarterly repayments, which began December 31, 2002, with a final payment due on June 30, 2005. The $9.0 million term loan matures on February 20, 2004. Availability under the revolving line of credit was approximately $15.0 million and $26.0 million at June 30, 2003 and December 31, 2002, respectively, and is calculated monthly based upon the amount of eligible inventory and accounts receivable, as defined under the credit facility. Total availability under the revolving line of credit is also calculated based on a proforma calculation not to exceed a defined ratio of our senior funded debt to earnings before interest, taxes, depreciation, amortization, or EBITDA, and impairment of goodwill. The interest rate on advances under the revolving line of credit and $20.0 million term loan may be either the bank prime lending rate or the Interbank Offering Rate, or IBOR, at our option, plus an additional percentage ranging from 0.50% to 1.25% for prime rate loans, or 2.00% to 2.75% for IBOR-based loans. The percentage added to the prime lending rate or IBOR is dependent upon our total funded debt to EBITDA ratio for the trailing four quarters. The interest rate on advances under the $9.0 million term loan may be either the bank prime lending rate or IBOR, at our option, plus 1.25% for prime rate loans, or 2.75% for IBOR-based loans. The weighted-average interest rate on borrowings outstanding against the credit facility at December 31, 2002 and June 30, 2003 was 3.81% and 3.82%, respectively. Borrowings against the revolving line of credit totaled $11.0 million and $25.0 million at December 31, 2002 and June 30, 2003, respectively, and are classified as long-term obligations. We may refinance our existing bank credit facility in the latter half of 2003 to introduce a longer term-loan element, although there can be no assurance we will be able to complete a refinancing.
       During August 2002, as required by our bank credit facility, we entered into a two-year interest rate swap agreement with a total notional amount of $10.0 million and a fixed rate of 2.65%. The counterparty to the agreement is a member of our bank group. Under the terms of the agreement, we are required to make quarterly payments at the specified fixed rate and in return receive payments at variable rates. The estimated fair value of the interest rate swap is a loss of $0.2 million at both December 31, 2002 and June 30, 2003, and is included in Other Noncurrent Liabilities and Accrued
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expenses. In accordance with the provisions of Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities," as amended, the changes in the fair value of the interest rate swap are included in current period earnings, as the agreement has not been designated as a hedging instrument.
       In February 2003, we repurchased 2,000,000 shares of our common stock from existing stockholders, including 1,878,684 shares repurchased from AutoNation, Inc., our largest stockholder at the time, for a total of $12.0 million in cash. We partially funded the stock repurchase by obtaining a $9.0 million term loan, which matures on February 20, 2004. The remaining $3.0 million of the stock repurchase was funded from borrowings under our revolving credit facility.
       In May 2003, we repurchased 1,557,498 shares of our common stock from existing stockholders, including 1,500,000 shares repurchased from AutoNation, Inc., for a total of $10.9 million in cash. We partially funded the stock repurchase by borrowing an additional $9.0 million against our revolving credit facility.
       On February 28, 2003, in connection with a business acquisition, we issued two promissory notes totaling $0.2 million. The annual interest rate on the notes is 3.5% and interest is payable upon maturity. The first $0.1 million note matures on February 28, 2004 and the second $0.1 million note matures on February 28, 2005.
       We estimate that our capital expenditures for 2003 will be approximately $16.0 million, of which $6.2 million has already been expended through June 30, 2003, net of proceeds from sale of property and equipment. We expect the balance will be used for asset replacements, construction of two new facilities, and to expand current facilities.
       We believe that our current cash and equivalents, cash provided by operating activities, funds available under our existing credit facility, and the proceeds of this offering will be sufficient to meet our current operating and capital requirements. However, we may, from time to time, be required to raise additional funds through public or private financing, strategic relationships or other arrangements. There can be no assurance that additional funding, or refinancing of our current credit facility, if needed, will be available on terms attractive to us, or at all. Furthermore, any additional equity financing may be dilutive to stockholders, and debt financing, if available, may involve restrictive covenants. Our failure to raise capital if and when needed could have a material adverse impact on our business, operating results and financial condition.
Off-Balance Sheet Arrangements and Future Commitments
       We do not have any off-balance sheet arrangements, investments in special purpose entities or undisclosed borrowings or debt. Additionally, we have not entered into any derivative contracts other than our interest rate swap agreement discussed above, nor do we have any synthetic leases.
35

       The following table represents our future commitments under contractual obligations as of December 31, 2002:

 	 	Payments Due by Period
	
 	 	Total
	 	Less than
1 Year
	 	1-3
Years
	 	3-5
Years
	 	More than
5 Years
	
 	 	(In millions)
	
Contractual Obligations	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Long-term debt	 	$	30.8	 	$	6.1	 	$	24.0	 	$	0.5	 	$	0.2	
Capital lease obligations	 	 	3.4	 	 	0.3	 	 	1.7	 	 	0.8	 	 	0.6	
Operating leases	 	 	27.6	 	 	6.8	 	 	10.8	 	 	6.8	 	 	3.2	
Other long-term obligations	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Deferred compensation plans	 	 	1.2	 	 	—	 	 	—	 	 	—	 	 	1.2	
 	Interest rate swap	 	 	0.2	 	 	—	 	 	0.2	 	 	—	 	 	—	
 	 		 		 		 		 		
Totals	 	$	63.2	 	$	13.2	 	$	36.7	 	$	8.1	 	$	5.2	
 	 		 		 		 		 		
Related Party Transactions
       We have entered into a number of related party transactions that we believe are on terms no less favorable to us than otherwise could have been obtained from unaffiliated third parties.
       We sublease our corporate office space from an entity owned by Kevin F. Flynn, one of our principal stockholders, at a percentage of the rent that is charged to Mr. Flynn's entity. The sublease expires on June 30, 2004. We are currently evaluating office space in the Chicago area in connection with our lease expiration. The total amounts paid to Mr. Flynn's entity were approximately $259,000, $274,000, $263,000, $133,000 and $122,000 during the years ended December 31, 2000, 2001 and 2002 and the six month periods ended June 30, 2002 and 2003, respectively.
       A corporation owned by Donald F. Flynn, our Chairman of the Board and one of our principal stockholders, owns private aircraft that we use from time to time for business trips. We reimburse this corporation for out-of-pocket and other related flight expenses, as well as for other direct expenses incurred. The total amounts paid to this corporation were approximately $38,000, $76,000 and $12,800 during the periods ended December 31, 2000, 2001 and 2002, respectively, and $900 during the six month period ended June 30, 2002. We had no payments to this corporation during the six month period ended June 30, 2003.
       We sell products to various repair facilities owned by AutoNation, Inc., one of our principal stockholders. The amount of such sales totaled approximately $1.5 million, $1.7 million, $2.2 million, $1.1 million and $1.3 million during the years ended December 31, 2000, 2001 and 2002 and the six months ended June 30, 2002 and 2003, respectively. In February 2003 we repurchased 1,878,684 shares of our common stock and in May 2003 we repurchased 1,500,000 shares of our common stock from AutoNation, Inc., for a total of $21.8 million. These purchases were funded primarily by obtaining a $9.0 million term loan and borrowings under our existing credit facility.
       As part of a business acquisition in 1998, we entered into a procurement agreement with corporations owned by Leonard A. Damron, who became one of our principal stockholders as a result of the business acquisition and is currently also our Senior Vice President – Southeast Region. Under the
36

procurement agreement we agreed to purchase salvage products inventory from those corporations. The procurement agreement expired on May 31, 2001. The amount of such purchases totaled approximately $0.8 million during the year ended December 31, 2000 and $0.2 million during the five month period ended May 31, 2001.
       In connection with the acquisitions of several businesses during 1998 and 1999, we entered into agreements with several sellers of those businesses, who became stockholders as a result of those acquisitions, for the lease of certain properties used in our salvage operations. Typical lease terms include an initial term of five years, with three five-year renewal options and purchase options at various times throughout the lease periods. We also maintain the right of first refusal concerning the sale of the leased property. Lease payments to affiliates of Leonard A. Damron were approximately $0.7 million during each of the years ended December 31, 2000, 2001 and 2002, and approximately $0.4 million during each of the six month periods ended June 30, 2002 and 2003, respectively.
       On February 14, 2001, we issued warrants to purchase 1,961,112 shares of our common stock at an exercise price of $2.00 per share to certain stockholder guarantors, in connection with guaranties provided by the stockholders for a portion of our revolving credit agreement. The warrants became exercisable upon issuance and will expire on February 14, 2006. The warrants were valued at approximately $0.4 million at the date of grant.
Quantitative and Qualitative Disclosures About Market Risk
       We are exposed to interest rate fluctuations on our floating rate $66.5 million credit facility. As of June 30, 2003, we had $50.3 million outstanding related to this credit facility. Our credit facility required that we enter into an interest rate swap agreement to mitigate our interest rate risk on a portion of the balance outstanding. We do not however, as a matter of policy, enter into hedging contracts for trading or speculative purposes. The swap agreement has not been designated as a hedging instrument and, as a result, changes in the fair value of the swap agreement are included in current period earnings. Our interest rate swap agreement has a notional amount of $10.0 million under which we pay a fixed rate of interest of 2.65% and receive a LIBOR-based floating rate. We recorded a non-cash charge of $0.2 million in 2002 and $8,000 in the six month period ended June 30, 2003 related to the change in fair value of the interest rate swap agreement.
       Based upon our variable rate debt at December 31, 2002, a hypothetical 1% increase in interest rates would result in an annual increase in interest expense of approximately $0.1 million, including the effect on our interest rate swap.
Recently Issued Accounting Pronouncements
       In the following discussion, we refer to Statements of Financial Accounting Standards by reference to "SFAS" and the number of the statement. Effective January 1, 2001, we adopted the provisions of SFAS 133, "Accounting for Derivative Instruments and Hedging Activities," as amended. We have concluded that the adoption of these standards had no effect on our consolidated financial position, results of operations, or cash flows.
       In July 2001, the Financial Accounting Standards Board, or FASB, issued SFAS 141, "Business Combinations." SFAS 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001. SFAS 141 also specifies certain criteria that intangible assets acquired in a business combination must meet in order to be recognized and reported apart from
37

goodwill. We did not acquire any businesses in 2001 or 2002, and there was no significant impact on our 2003 acquisitions.
       Effective January 1, 2002, we adopted SFAS No. 142, "Goodwill and Other Intangible Assets," as discussed in "Results of Operations" above.
       We adopted the provisions of SFAS 144, "Accounting for the Impairment of Long-Lived Assets" as of January 1, 2002. SFAS 144 supercedes SFAS 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of" and the accounting and reporting requirements of Accounting Principles Board Opinion, or APB, No. 30, "Reporting the Results of Operations – Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary and Unusual and Infrequently Occurring Events and Transactions" for the disposal of a segment of a business. SFAS 144 resolves certain implementation issues related to SFAS 121 and establishes a single accounting model for long-lived assets to be disposed of by sale (whether individual assets or a component of a business). We have concluded that the adoption of these standards had no effect on our 2002 consolidated financial position, results of operations, or cash flows.
       In November 2002, FASB issued Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others," or FIN 45. FIN 45 elaborates on required disclosures by a guarantor in its financial statements about obligations under certain guaranties that it has issued and clarifies the need for a guarantor to recognize, at the inception of certain guaranties, a liability for the fair value of the obligation undertaken in issuing the guaranty. We reviewed the provisions of FIN 45 relating to the initial recognition and measurement of guarantor liabilities, which are effective for qualifying guaranties entered into or modified after December 31, 2002, but we do not expect it to have a material impact on our consolidated financial position, results of operations, or cash flows. The disclosure requirements of FIN 45 relative to our product warranty liability, which are effective for the year ended December 31, 2002, are included in the "Notes to Consolidated Financial Statements."
       In December 2002, FASB issued SFAS 148, "Accounting for Stock-Based Compensation – Transition and Disclosures," which amends SFAS 123, "Accounting for Stock-Based Compensation." SFAS 148 provides alternative methods of transition for a voluntary change to the fair value method of accounting for stock-based employee compensation and amends the disclosure requirements of SFAS 123 to require more prominent and more frequent disclosures in financial statements about the effects of stock-based employee compensation. We have elected to continue to account for stock-based compensation in accordance with APB No. 25, "Accounting for Stock Issued to Employees," and, as a result, do not expect this standard to have a material effect on our consolidated financial position, results of operations, or cash flows. SFAS 148 disclosure requirements are effective for fiscal years ending after December 15, 2002 and have been included in the "Notes to Consolidated Financial Statements."
       In May 2003, FASB issued SFAS 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity." SFAS 150 establishes standards for classification and measurement of certain financial instruments with characteristics of both liabilities and equity and will be effective for periods ending on or after December 15, 2003. We have reviewed the new standard and determined that its implementation will not impact our consolidated financial position or results of operations.
38

 INDUSTRY BACKGROUND
Overview
       Automotive recyclers, also known as salvage yards or automobile dismantlers, are in the business of procuring severely damaged or total loss vehicles and disassembling them for their salvage parts, other mechanical parts and scrap value. Automotive recycling is a process that involves:
•
the purchase and collection of damaged or obsolete motor vehicles, including domestic and foreign automobiles, light and heavy duty trucks, buses and motorcycles;

•
the dismantling or disassembly of collected vehicles and removal of reusable parts for resale or remanufacturing;

•
the removal of non-reusable but recyclable materials and parts, such as fluids, batteries, tires and catalytic converters; and

•
the disposal of vehicle hulks for shredding and the distribution of remaining waste to scrap processors and landfills.
       Wrecked vehicles are sold at salvage auctions held each weekday throughout the country. Salvage auctions provide an outlet for salvage vehicles to be sold primarily to automotive recyclers and rebuilders.
       A salvage automotive product is a used part suitable for sale as a replacement part. Other used mechanical parts are parts not suitable for sale as replacement parts without further remanufacturing work. In most cases, much of a salvaged vehicle is utilized for salvage parts, including engines, transmissions, body panels and assemblies, electrical equipment, wheels and, to a lesser extent, glass.
       The automotive recycling industry is highly fragmented, with very few multi-unit operators. We estimate there are more than 6,000 automotive recyclers in the United States. We believe approximately 93% of automotive recycling businesses have less than $3.0 million of annual revenue and approximately 50% have less than $0.5 million of annual revenue.
       The automotive products market (including accessories, service, repair and maintenance items) totaled $175.6 billion in 2002 and is estimated at $183.0 billion in 2003, according to the Automotive Aftermarket Industry Association, which we refer to as the AAIA. The portions of the automotive products market that automotive recyclers primarily serve are the collision repair market, with approximately $32.4 billion of annual sales in 2002 and the mechanical repair market, with approximately $94.1 billion of annual sales in 2002 according to the AAIA.
       Estimates of the aggregate size of the automotive recycling industry in the United States range from $3.7 to $6.5 billion. According to CCC Information Services, Inc., which we refer to as CCC, recycled OEM products account for approximately 12% of insured replacement parts sales and 4.7% of total insured collision repair costs. We believe that recycled OEM products can account for a larger percentage of the replacement parts market based on the advantages offered by recycled OEM products and industry dynamics, including high frequency of collisions, high cost of vehicle repair and the desire of insurance companies to reduce their claims expenses.
39

Repair Shops
       The collision repair and mechanical repair markets include sales of replacement parts. Buyers of replacement parts have the option to purchase primarily from three sources: new parts produced by OEMs, which are commonly known as OEM parts; new parts produced by companies other than the OEMs, often foreign companies, and sometimes referred to generically as "aftermarket" parts; and recycled parts originally produced by OEMs, which we refer to as recycled OEM products.
       Recycled OEM products are purchased by mechanical repair shops that service the mechanical aspects of vehicles, collision repair shops that work on the body parts of vehicles, remanufacturers of parts that require some restoration prior to use, and retail used parts customers. The automotive recycling industry sells primarily to mechanical and collision repair shops and to retail customers. The use of recycled OEM products in the repair process usually results in a lower cost of replacement parts to repair shops and retail customers than the use of new OEM parts. The purchasers of recycled OEM products are collectively referred to in this prospectus as repair shops.
       Repair shops are the direct buyers of replacement parts. However, the vast majority of the $32.4 billion of collision repair costs are paid by automobile insurance companies. In such cases, insurance companies can exert significant influence over the decision of which replacement part is purchased.
Insurance Companies
       The automobile insurance industry as a whole places emphasis on containing the cost and managing the severity of claims. As part of this emphasis, insurance companies, which include extended warranty providers, have entered into arrangements with repair shops to better manage the repair process. Insurance companies with these arrangements direct their repair work to the repair shops in their "network" in exchange for more control over the repair process. We believe that these arrangements can lead to a higher utilization of recycled OEM products.
       Many insurance companies have signed work agreements with repair shops that govern the rules the repair shop must follow when doing work for a particular insurance company, including the percentages of recycled OEM products the shop must use. In return, the insurance company designates the repair shop as one of its direct repair facilities and sends its repair work to that shop. Accordingly, in many instances when a vehicle is in an accident, the insurance company will designate the repair shops to which the vehicle can be taken for repair.
       We believe that recycled OEM products have advantages over new OEM parts and aftermarket parts. Our recycled OEM products are, with rare exceptions, less expensive than new OEM parts, often require less assembly or preparation work, and are of substantially the same quality as new OEM parts. Our recycled OEM products are often preferred by insurance companies and vehicle owners over aftermarket parts because of the quality and consistency of the product. Some insurance companies have curtailed or eliminated purchases of aftermarket parts in light of a lawsuit involving State Farm. See "Risk Factors – We may lose business if recent litigation involving the use of parts that are not original equipment manufacturer parts results in insurance companies modifying arrangements affecting the use of recycled automotive products in the repair process." We believe that the automobile insurance industry will direct the purchase of more recycled OEM products as a percentage of total replacement
40

part purchases as insurance companies recognize the cost and quality advantages of recycled OEM products.
Economics of the Industry
       The current insurance industry practice of reimbursing repair shops for replacement parts purchases differs for new OEM parts versus recycled OEM products. In general, we believe repair shops receive a discount of approximately 30% from the list price of new OEM parts and 25% from the list price of aftermarket parts. Automobile insurance companies then reimburse repair shops the full list price, resulting in a mark-up of over 40% for new OEM parts and 33% for aftermarket parts. With respect to recycled OEM products, we believe insurance companies generally reimburse repair shops the actual cost of the recycled OEM product plus a mark-up of 25%. Under the current system, the repair shops have an economic incentive to purchase new OEM parts or aftermarket parts instead of recycled OEM products because they enjoy a larger percentage mark-up by doing so.
       New OEM parts and aftermarket parts often require various degrees of assembly and preparation. The insurance company has to pay for the labor required for such assembly and preparation, as well as increased expenses incurred due to the additional time required, such as rental vehicle expenses. Recycled OEM products, on the other hand, are delivered to the repair shop in an assembled condition, reducing repair time and thus providing cost savings to insurance companies.
Accident and Repair Trends
       Vehicles involved in accidents contribute both to the supply of recycled OEM products available for resale and to the demand for repairs using recycled OEM products. The number of vehicles involved in collisions is influenced by a number of factors including the number of vehicles on the road, the number of miles driven, the ages of drivers, the use of cellular telephones by drivers, the congestion of traffic, the occurrence and severity of certain weather conditions, and the condition of the roadways.
       The following table sets forth the number of vehicles in operation in the United States and the number of vehicles involved in collisions each year.

 	 	1997
	 	1998
	 	1999
	 	2000
	 	2001
	 	2002
	
Number of vehicles in operation, according to NADA's Auto Exec Magazine (in millions)	 	201.1	 	205.0	 	209.5	 	213.3	 	216.7	 	221.0	
Number of vehicles in collisions annually, according to the AAIA (in millions)	 	24	 	21	 	18	 	25	 	21	 	N/A	
       The dollar volume of professional repairs, which excludes do-it-yourself repairs, in the United States is significant. The following table sets forth such dollar volumes for the years indicated, according to the AAIA.

 	 	1997
	 	1998
	 	1999
	 	2000
	 	2001
	 	2002
	
 	 	(In billions)
	
Professional collision repair	 	$	25.7	 	$	26.0	 	$	27.5	 	$	28.9	 	$	30.7	 	$	32.4	
Professional mechanical and electrical repair	 	$	77.7	 	$	80.5	 	$	82.3	 	$	85.5	 	$	90.0	 	$	94.1	
 	 		 		 		 		 		 		
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       According to CCC the percentage of vehicles categorized as "total loss" vehicles by the automobile insurance industry is rising. The percentage of vehicles involved in collisions annually that are categorized as total loss for the years listed is as follows:

Year
	 	%
	
1997	 	8.5	
1998	 	8.7	
1999	 	8.1	
2000	 	8.6	
2001	 	11.0	
2002	 	12.0	
       As a rule of thumb, a vehicle is categorized as a total loss when the cost to repair it exceeds the cost to replace it. The rise in the number of total loss vehicles is important because it increases the quantity of parts available and tends to reduce the procurement cost of salvage vehicles at auction. We expect that insurance companies will attempt to reduce the number of total loss vehicles by reducing the severity of claims generally. We believe that one of the key methods to reduce severity is to utilize less expensive recycled OEM products in the repair process.
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 BUSINESS
Overview
       We are the largest nationwide provider of recycled OEM automotive products and related services, with 38 sales and processing facilities and 12 redistribution centers that reach most major markets in the United States. We procure salvage vehicles, primarily at auctions, using our locally based professionals and centralized procurement systems. Once we have received proper title, which assures us that the vehicles have not been stolen, we dismantle them for recycled products. We also provide insurance company customers a review of vehicle repair order estimates so they may assess the opportunity to increase usage of recycled OEM products in the repair process. Our customers include collision and mechanical repair shops and, indirectly, insurance companies, including extended warranty companies. We offer our customers a wide selection and availability of high quality and low cost alternatives to new OEM and aftermarket parts. We believe we are well positioned to take advantage of the trends supporting industry growth, including high frequency of collisions, high cost of vehicle repair and the desire of insurance companies to reduce their claims expenses. A significant factor in our success has been the talent and experience of both our senior management team and our five regional operating managers, who collectively have over 140 years of experience in the industry.
       We have developed centralized systems and methodologies that we believe give us competitive advantages in procuring an attractive mix of recycled OEM products from auctions. These systems and methodologies allow us to identify and value the parts on a damaged vehicle at auction that can be recycled and to rapidly determine the maximum price we can pay for the vehicle in order to achieve our target margins on resale of the recycled OEM products. We focus on maintaining our disciplined purchasing by balancing our regional inventory levels with forecasted demand, and limiting our bids to provide profitable targeted margins. We seek to optimize the prices for our products by regularly analyzing such factors as location, recent demand, inventory quantity, inventory turnover, new OEM part prices, aftermarket part prices and remanufactured part prices. Through our nationwide system of regional facilities, we believe we are uniquely positioned to provide a broad and deep range of cost effective products and services to our customers.
       The majority of our products and services are sold to collision repair shops, also known as body shops, and mechanical repair shops. These customers benefit from our high quality recycled products, extensive product availability due to our regionally focused inventories, lower product costs than new OEM parts, and quick delivery. We provide benefits to repair shops and insurance companies because the lower costs for our products enable many vehicles to be repaired rather than declared a total loss. We indirectly rely on insurance companies, which ultimately pay the collision repair shops for the repair of insured vehicles, as a source of business. These insurance companies exert significant influence in the vehicle repair decision, and increasingly look to a nationwide source for consistency, quality and availability of replacement parts. Because of their importance to the process, we have formed key relationships with insurance companies such as Allstate Insurance Company, Farmers Insurance Group and Nationwide Insurance Company and with certain extended warranty providers, in order to be their preferred automotive recycling company. In addition, to provide alternative sources of salvage vehicles, we obtain some vehicles directly from insurance companies, automobile manufacturers and other suppliers.
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       Like most other automotive recycling companies, we are not in the product remanufacturing business.
Our History
       We were the first recycler of automotive products to achieve a national network and presence. Since our formation in 1998, we have grown through both internal development and acquisitions. Until late 1999, we focused on growth through acquisitions. Our acquisition strategy has been to target companies with strong management teams, a record of environmental compliance, solid growth prospects and a reputation for quality and customer service. We believe it is important for former owners to remain active in our business and have frequently used equity as a significant component of acquisitions. As of June 30, 2003, former owners of acquired companies employed in managerial positions, along with their affiliates, owned approximately 22% of our common stock.
       Internal growth is an important driver of our revenue and operating results. Since completing our initial acquisitions in 1998 and 1999 through which we established our national presence, we have focused primarily on growing our sales and operating results within our existing organization. We did so by developing our regional distribution networks and by creating overnight product transfers between our facilities to better leverage our inventory investment and to increase our ability to fill customer demand.
Our Strengths
We Provide Key Services to Insurance Companies and Extended Warranty Providers
       We believe that our nationwide presence gives us a unique ability to service the major automobile insurance companies and extended warranty providers. Insurance companies and extended warranty providers are generally national or regional and play a critical role in the repair process. We believe we provide a direct benefit to these companies by lowering the cost of repairs, decreasing the time required to return the repaired vehicle to the customer, and providing a replacement that is of the same quality as the OEM part replaced. Specifically, we assist insurance companies by purchasing insured total loss vehicles and by providing cost effective products through sales to collision repair shops, especially to repair shops that are part of their network. We also provide a review of vehicle repair order estimates to insurance companies so they may assess the opportunity to increase usage of recycled OEM products. For extended warranty providers, we provide a single national call desk to service their nationwide need for mechanical products.
Our National Network Would be Difficult to Replicate
       We believe that our national network provides a competitive advantage because it would be difficult to replicate. We have invested significant capital into our current network of service facilities. Since our founding, we have developed a national network of 38 sales and processing facilities and 12 redistribution centers servicing 30 out of 35 major metropolitan areas in the United States. We consider our national presence to be a key distinguishing factor. We have differentiated ourselves from our local competitors and made replication of a similar network difficult by developing our network using anchor companies that were among the largest companies in the industry with multiple locations. The difficulty and time required to obtain the proper zoning, as well as dismantling and other environmental permits
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necessary to operate a newly-sited facility, would make establishing new facilities difficult and expensive. In addition, there are difficulties associated with recruiting and hiring an experienced management team that has strong local relationships with customers.
We Benefit From a Local Presence as Well as a National Network
       We have developed a network of local facilities that allows us to maintain and develop our relationships with local repair shops, while providing a level of service to insurance companies and national customers that is made possible by our nationwide presence. Our local presence allows us to provide daily deliveries that our customers require, using drivers who routinely deliver to the same customers. Our sales force maintains and develops critical personal relationships with the local repair shops that benefit from access to our wide selection of products, which we are able to offer as a result of our regional inventory network. Finally, our national network allows us to enter adjacent markets by establishing redistribution facilities, which avoids the need for local dismantling capabilities and inventory. Using this method, we can enter new markets quickly.
We Have an Effective Procurement Process
       We have developed information systems and methodologies that leverage our nationwide presence and use our centralized purchasing professionals to procure vehicles cost-effectively. As our largest single expenditure, efficient procurement of salvage vehicles is critical to the growth, operating results and cash flow of our business. A critical component of our success is our ability to identify and value the parts that can be recycled on a damaged vehicle at auction and to rapidly determine the maximum price we can pay for the vehicle in order to achieve our target margins on resale of the recycled OEM products. We carefully analyze the market and obtain salvage vehicles of the type whose parts are in demand at prices that we believe will allow us to sell products profitably. We have also taken advantage of our relationships with insurance companies and automobile manufacturers to obtain salvage vehicles outside the auction process.
We Have a Broad and Deep Inventory of High Quality Products
       Our broad and deep inventory of high quality recycled OEM products allows us to service our customers by rapidly delivering popular products. We believe that our customers place a high value on availability of high quality recycled OEM products. We have therefore invested significant capital in our inventory and we have developed six regional trading zones, within which we make our inventory available to all of our local facilities. We manage our inventory and purchasing on a regional basis to enhance the availability of the recycled OEM products that we believe will be in the highest demand within each region. As we grow our business and financial resources, we will continue to increase our inventory and look for ways to improve our ability to consistently fill our customers' orders.
We Have Implemented Professional Management Disciplines
       We have developed and built procurement, operating and financial systems that have allowed us to grow and develop our national network. A significant factor in our success has been our ability to implement best practices utilizing professional management techniques and disciplines in an industry characterized by small companies with limited resources. As our business has grown, we have
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implemented programs to further employee development, support the sharing of best practices among employees, and attract and retain our valuable employees.
We Have a Demonstrated Ability to Generate Internal Growth
       Since completing our initial acquisitions in 1998 and 1999, through which we established our national presence, internal growth has been the principal driver of our revenue and operating results. Our revenue has increased at a compounded annual growth rate of 17.2%, from $178.1 million in 1999 to $287.1 million in 2002. During the same period, our operating margin increased from 2.4% in 1999 to 7.3% in 2002. We accomplished this by developing our regional distribution networks and by creating overnight product transfers between our facilities to better leverage our inventory investment and to increase our ability to fill customer demand.
Our Strategies
Expand our National Network
       We intend to continue to expand our market coverage through a combination of internal development and acquisitions. We currently service 30 out of 35 major metropolitan areas in the United States. We plan to establish a presence in additional major metropolitan markets and a number of smaller markets in the United States. We have a dedicated team of professionals who analyze our national network and look for opportunities to expand into new regions or into adjacent markets. We estimate our current share of the automotive recycling market to be less than 10%. Because the industry is characterized by a large number of small operators, we believe there is significant opportunity for growth. We are currently evaluating a number of acquisition candidates, and since January 2003 we have acquired three companies for an aggregate purchase price of $4.1 million in cash and equity. We have applied a rigorous and disciplined approach to our acquisition process and targeted companies with strong management teams, a record of environmental compliance, solid growth prospects and a reputation for quality and customer service. We intend to continue to apply the same disciplines to future acquisition opportunities.
Further Develop Key Relationships
       We intend to continue to develop key relationships with automobile insurance companies, extended warranty providers and other industry participants. We have developed programs to enhance our relationships with these key user groups. We believe that insurance companies and extended warranty providers will take a more active role in the selection of replacement products in the repair process and that they have significant incentives to increase the use of lower cost alternatives to new parts. On behalf of certain insurance company customers, we provide a review of vehicle repair order estimates so they may assess the opportunity to increase usage of recycled OEM products in the repair process. Our employees also provide quotes for our products to assist several insurance companies with their estimate and settlement processes. We work with insurance companies and vehicle manufacturers to procure salvage vehicles directly from them on a selected basis which provides us an additional source of supply as well as enhancing their recoveries on salvage vehicles. We believe we are positioned to take advantage of the increasing importance of these groups, and we will continue to look for ways to provide services to them in order to enhance our relationships.
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Continue to Improve our Operating Results
       We are working to improve our operating results by applying our business approach to our most recently acquired facilities, continuing to build our nationwide network, further centralizing certain functions, improving our use of technology, and increasing revenue at our lower volume facilities. Our higher volume facilities generally operate at a higher profitability level as a percentage of revenue. We believe we can improve the operating results at our lower volume facilities by achieving the economies of scale that we realize at our higher volume facilities. We are continually investing resources in procurement in an attempt to obtain our products at optimum prices. We are continuing to centralize the procurement function, which uses methodologies that analyze demand levels for our products, existing inventory levels, and projected margins on an individual vehicle basis.
Further Develop our Technology
       We continue to emphasize the use of technology in our processes to improve efficiency and to increase the standardization of our business. Our technology enhances procurement, pricing and inventory management. We continue to develop our technology to allow us to better manage and analyze our inventory, to assist our sales people with up-to-date pricing and availability of our products, and to further enhance our procurement process. We are implementing a program to migrate our regional servers to a more centralized system to improve efficiency and increase cost savings. We also intend to develop a hand-held wireless device to transmit bidding data from our scouts in the field to our centralized procurement personnel.
Raise Industry Standards by Being an Industry Leader
       Since our inception, we have successfully employed a professional approach to the automotive recycling business. We continue to seek new ways to improve our professionalism and to communicate our standards to our customers. We believe that, due to our status as a national industry leader, our competitors will seek to emulate our model. We further believe that, by elevating industry standards in areas such as customer service, integrity, product quality and availability, delivery time, warranty support, environmental compliance, and facilities appearance, we can help promote the acceptability of the use of recycled OEM products and the growth of the automotive recycling industry.
Our Process
       Our operations involve four primary components: procurement of materials, vehicle processing, sales and distribution. Our business is organized into six regions, which we call trading zones. We analyze each regional trading zone's inventory to determine which vehicles to acquire at salvage auctions. When we acquire a vehicle, we place its usable parts into our inventory for the trading zone where it was acquired. If a customer requests a part that is not available at our nearest facility, our sales staff will sell the part if it is located at another facility within the same trading zone. In such instances, our customers receive the same quality service because we operate daily intra-trading zone product transfers between our facilities to provide prompt delivery. On a nationwide basis, there are approximately 41 such daily transfers.
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Procurement of Materials
       Procurement is the acquisition of severely damaged or totaled vehicles for the purpose of obtaining recycled OEM products and other inventory. Wrecked vehicles are sold at salvage auctions held each weekday throughout the country. Salvage auctions provide an outlet for salvage vehicles to be processed and sold primarily to automotive recyclers and rebuilders. We acquired approximately 73,000 vehicles in 2002. We purchase the majority of our vehicles from salvage auctions. We pay third parties fees to tow the vehicles from the auction to our facilities. Salvage auctions charge fees both to the supplier of vehicles (primarily insurance companies) and to the purchaser (including us).
       For the vast majority of our procurements, we send a representative, whom we refer to as a "scout," in advance of each auction to investigate the vehicles we would be interested in buying. The scout obtains key information such as the model, mileage and damage assessment and determines which parts on the targeted vehicles are recyclable. This information is immediately forwarded to our bid specialists located in Akron, Ohio. The bid specialists analyze the data in light of current demand for the parts in question, the levels of our inventory with respect to such parts, and the projected margins expected for each vehicle. The specialists then set a maximum bid price which our bidders use to purchase the vehicle at auction. We believe that this system provides a disciplined approach for procurement.
       We also obtain salvage vehicles and parts from insurance companies, automobile manufacturers, abandoned vehicle programs and other salvage sources. Some of these arrangements allow us to acquire salvage, damaged or over-stock vehicles directly from the insurance company or automobile manufacturer at a cost calculated as a percentage of revenue, which is remitted as products are sold from these vehicles. These arrangements eliminate the fees we and the insurance company would otherwise pay to the salvage auction and provide us inventory with a lower initial expenditure of capital.
Vehicle Processing
       Vehicle processing involves converting a salvage vehicle into recycled OEM products ready for delivery. When a salvage vehicle arrives at one of our facilities, an inventory specialist identifies, catalogs and schedules the vehicle for dismantling. We do not dismantle any vehicle until we have received proper title documentation, thereby assuring that the vehicle is not stolen.
       The dismantler removes components that will become products for sale. We make these products available for sale as soon as possible, often within 24 hours of being checked into inventory. Products that are placed directly on inventory shelves generally include such items as the engine, transmission, hood, trunk lid, tail lamps, rear bumper and doors. We remove all non-reusable, recyclable items including fluids, freon, batteries, tires and catalytic converters. These items are sold to recyclers and reprocessors. Dismantlers also perform any required cutting of the vehicle frame or body.
       Each inventory item is entered into our inventory tracking system, inspected for quality, tagged for identification and prepared for storage and delivery to our customers. Mechanical products not in a condition to be sold as recycled products or that are in surplus supply are separated and sold in bulk to parts remanufacturers. The remaining vehicle hulks and components such as fabrics, rubber, plastics and glass are delivered to automobile shredders, crushers and scrap processors.
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Sales
       As of June 30, 2003, we employed approximately 319 full-time sales staff. Of these, approximately 289 were located at sales desks at our facilities and generally are responsible for accepting incoming calls from, and selling our inventory to, our customers. We put all of our sales personnel through a thorough training program. Most of our sales personnel are paid primarily on a commission basis. In addition, as of June 30, 2003, we had approximately 30 traveling sales staff who visit our customers on a daily basis and focus on business development in various markets.
       We employ teams dedicated to analyzing our pricing. For the majority of our facilities, this function is centralized at our procurement center in Akron, Ohio. These teams take into consideration factors such as location, recent demand, inventory quantity, inventory turnover, new OEM part prices, aftermarket part prices and remanufactured part prices with the goal of optimizing revenue. Prices are regularly reviewed and revised.
       The inventory base of each of our facilities, supplemented by the inventory sharing system within our regional trading zones, gives us what we believe to be a competitive advantage through our ability to meet our customers' requirements more frequently than smaller competitors.
Distribution
       Each sale results in the generation of a work order. We process orders by checking, cleaning, and packaging the applicable recycled product. A dispatcher is then responsible for ensuring parts accuracy, printing the final invoice, and including the parts on the appropriate truck route for delivery to the customer. We operate a fleet of approximately 300 local delivery trucks, most of which we lease. These trucks generally deliver products to our customers within their territory on a daily basis.
       Additionally, we have developed an internal distribution network to allow our sales representatives to sell from the inventory of nearby facilities within our six regional trading zones, thus improving our ability to fulfill customer requests and to improve inventory turnover. We operate approximately 41 daily product transfers between our facilities within our six regional trading zones.
Products
       When we procure salvage vehicles, we focus on vehicles for which insurance companies have the most recycled product demand. These tend to be popular types of vehicles such as sport utility vehicles and pickup trucks, and popular models, like the Accord, Taurus, Camry, Lumina and Explorer. These vehicles generally are a few model years old, as insurers tend to use new OEM parts on repairs of vehicles that are one to two years old. Similarly, insurers are less interested in vehicles more than ten model years old, as they are less likely to be repaired. Accordingly, we currently target models from the 1993 to 2001 model years. The degree of damage is not a significant factor in our process as we only assign value to the undamaged product when we prepare our bids.
       Our most popular items include engines, vehicle front end assemblies, doors, transmissions, trunk lids, bumper assemblies, wheels, tail and head lamp assemblies, mirrors, fenders and axles.
       We are not in the product remanufacturing business. When we obtain a mechanical product from a dismantled vehicle and determine that we have an excess supply of such product or it is defective, it is
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then sold in bulk to mechanical remanufacturers. The majority of these products are transferred to two of our facilities in Houston, Texas where we sort them by product and model type. Examples of such products are engine blocks and heads, transmissions, starters, alternators and air conditioner compressors.
Competition
       We operate in a highly competitive industry. We consider all suppliers of automotive products to be competitors, including other participants in the recycled OEM product market, OEMs and suppliers of aftermarket parts. We believe the principal areas of competition in our industry include pricing, product quality, service and availability of inventory.
       We compete with the more than 6,000 domestic automotive recyclers, most of which are single-unit operators. We believe approximately 93% of recyclers in the United States have less than $3.0 million in annual revenue and approximately 50% have less than $0.5 million in annual revenue. In some markets, smaller competitors have organized affiliations to share marketing and distribution resources.
       Greenleaf LLC, an automotive recycling business with a nationwide presence, started by Ford Motor Company, is our largest competitor. According to a published report, Ford Motor Company recently sold Greenleaf LLC to former Ford managers.
       Manufacturers of new original equipment parts sell the majority of automotive replacement products. We believe, however, that as the insurance and repair industries come to appreciate the advantages of recycled OEM products, they can account for a larger percentage of total automotive replacement product sales.
       We also compete with suppliers of aftermarket parts.
Customers
Insurance Companies
       We consider the insurance companies our customers, as they are a key demand driver for our products. Our products are delivered directly to the repair shop or installer, since automobile insurance companies and extended warranty providers generally do not actually receive our products. While automobile insurance companies do not pay for our products directly, the insurance company does ultimately pay for the repair of the insured vehicle. As a result, the insurance company exerts significant influence in the decision-making process as to how a damaged vehicle is repaired, and the cost level of the product used in the repair process. Insurance companies are also concerned with customer satisfaction with the repair process and the total time to return the repaired vehicle to its owner.
Repair Shops and Others
       We sell the majority of our products wholesale to collision repair shops and mechanical repair shops. The majority of these customers tend to be individually-owned small businesses, although over the last few years there has been a trend toward consolidation resulting in the formation of several national and regional repair companies. At certain locations we also sell recycled OEM products to individual retail customers.
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Remanufacturers
       A mechanical part that is not suitable for sale as a replacement part, or that is a product for which we have an excess supply, is shipped in bulk to mechanical remanufacturers. Examples of mechanical parts we sell in this manner are engine blocks and heads, transmissions, starters, alternators and air conditioner compressors. Remanufacturers usually are significantly larger companies than repair shops. Our sales to them tend to be large orders and are dependent on their production run for a certain product line.
Information Technology
       We use widely available third-party systems technology, including one of the three facility management systems available to the automotive recycling industry, as well as some proprietary applications.
       The major features of our facility management systems include inventory control, customer selling and billing, sales analysis, vehicle tracking and profitability reporting. These systems are primarily based at our individual operating locations. The systems also support an electronic exchange system for identifying and locating parts at other selected recyclers and facilitate brokered sales to fill customer orders for items not in stock.
       We have separate third party providers for our financial systems such as financial and budget reporting, general ledger accounting, accounts payable, payroll and fixed assets. We utilize the same common financial systems throughout our operations.
       During 2002, we converted to a single facility management system nationwide. We believe that converting to a single system should help with the continued implementation of standard operating procedures, training efficiency, employee transferability, access to a national inventory database, management reporting and data storage. It also eliminates the need to create multiple versions of proprietary applications and systems support processes.
       We currently protect our local customer and inventory data with daily backups at each of our facilities. In addition, all corporate consolidated data such as financial information, e-mail files and other user files are backed up daily and stored off site.
       We are in the process of consolidating our facility management systems onto regional system platforms. The hardware for such platforms will be co-located at a single data center. The center will be in a secured environment with around-the-clock monitoring, redundant power back up and multiple, diverse data and telecommunication routing. This data center will have daily off site back up to another hardware facility.
Employees
       As of June 30, 2003, we had approximately 92 corporate and regional employees and approximately 1,733 employees performing operational functions. None of our employees are members of unions or participate in other collective bargaining arrangements.
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Facilities
       Our corporate headquarters are located at 120 North LaSalle Street, Suite 3300, Chicago, Illinois 60602. The term of our sublease for this location expires on June 30, 2004 and we are currently evaluating available office space in the Chicago area. The primary functions performed at our corporate headquarters are financial, accounting, treasury, marketing, human resources, information systems support and legal.
       Our typical facility with processing, sales and redistribution operations has approximately 10 or more acres of real estate. The typical property has a large warehouse with multiple bays to dismantle vehicles, indoor and outdoor storage areas, and administrative and sales offices. Equipment typically used at each facility includes hydraulic lifts, forklifts and loaders and hand tools to dismantle vehicles.
       We conduct operations from 50 facilities, 38 of which include a combination of processing, sales and redistribution operations, and 12 of which are currently primarily redistribution facilities. The following 38 facilities include a combination of processing, sales and redistribution operations:

Location
	 	Area Served
	 	Approximate
Acreage
	 	Nature of
Occupancy

 	

 	

 	
Birmingham, AL	 	Alabama	 	10	 	Leased	

Crawfordsville, AR	
 	
Arkansas and Western Tennessee	
 	
15	
 	
Owned (10) and Leased (5)	

Fayetteville, AR	
 	
Arkansas and Eastern Oklahoma	
 	
7	
 	
Leased	

Phoenix, AZ	
 	
Arizona	
 	
9	
 	
Leased	

Bakersfield, CA	
 	
Central and Southern California	
 	
19	
 	
Owned (9) and Leased (10)	

Redding, CA	
 	
Northern California and Southern Oregon	
 	
22	
 	
Owned	

Santa Fe Springs, CA	
 	
Southern California	
 	
3	
 	
Leased	

Stockton, CA	
 	
North Central California	
 	
3	
 	
Leased	

Crystal River, FL	
 	
Florida	
 	
40	
 	
Leased	

Fort Myers, FL	
 	
Southwest Florida	
 	
12	
 	
Leased	

Gainesville, FL	
 	
Northern Florida	
 	
17	
 	
Leased	

Melbourne, FL	
 	
Eastern Florida	
 	
30	
 	
Leased	

Garden City, GA	
 	
Eastern Georgia and South Carolina	
 	
22	
 	
Leased	

Jenkinsburg, GA	
 	
Georgia	
 	
42	
 	
Leased	

Avon, IN	
 	
Indiana	
 	
8	
 	
Leased	
 	 	 	 	 	 	 	
52

Michigan City, IN	
 	
Northwest Indiana and Northeastern Illinois	
 	
13	
 	
Owned	

Lawrence, KS	
 	
Kansas and Northern Oklahoma	
 	
9	
 	
Leased	

Topeka, KS	
 	
Kansas	
 	
19	
 	
Leased	

Webster, MA	
 	
Massachusetts, Connecticut, New Hampshire, Maine, and Vermont	
 	
23	
 	
Leased	

Gorham, ME	
 	
Southern Maine and Northern Massachusetts	
 	
20	
 	
Leased	

Belleville, MI	
 	
Michigan	
 	
11	
 	
Leased	

Garner, NC	
 	
Eastern North Carolina	
 	
15	
 	
Leased	

Salisbury, NC	
 	
North Carolina	
 	
30	
 	
Leased	

Omaha, NE	
 	
Nebraska and Iowa	
 	
8	
 	
Leased	

North Las Vegas, NV	
 	
Southern Nevada	
 	
5	
 	
Leased	

Bronx, NY	
 	
New York, Connecticut, and New Jersey	
 	
6	
 	
Leased	

Stuyvesant, NY	
 	
Eastern New York, and Massachusetts	
 	
20	
 	
Owned	

Akron, OH	
 	
Ohio, Western New York, Western Pennsylvania, and Southeastern Michigan	
 	
17	
 	
Owned	

Harrisville, OH	
 	
Eastern Ohio, Western Pennsylvania, and West Virginia	
 	
21	
 	
Owned	

Sherwood, OR	
 	
Oregon and Washington	
 	
3	
 	
Leased	

Manchester, TN (1)	
 	
Tennessee	
 	
38	
 	
Leased	

Houston, TX (2)	
 	
Centralized Core Facility	
 	
8	
 	
Leased	

Houston, TX (2)	
 	
Centralized Core Facility	
 	
4	
 	
Leased	

Houston, TX (2)	
 	
South Texas	
 	
12	
 	
Leased	

Hutchins, TX	
 	
North Texas and Oklahoma	
 	
23	
 	
Owned (8) and Leased (15)	

53

Springville, UT	
 	
Utah	
 	
14	
 	
Owned	

Hustisford, WI	
 	
Wisconsin	
 	
22	
 	
Leased	

Janesville, WI	
 	
Wisconsin, Northern Illinois, and Eastern Iowa	
 	
18	
 	
Owned (3) and Leased (15)	

(1)
Under the terms of our capital lease, we are obligated to purchase this property by August 31, 2004.
(2)
We will acquire this property under our capital lease if we make all required lease payments through March 2009.
       Most of the leases covering the above properties give us options to purchase such properties.
       The following are primarily redistribution facilities:

Location
	 	Area Served
	 	Approximate
Size
	 	Nature of
Occupancy

 	

 	

 	
Bonifay, FL	 	Northern Florida	 	15 acres	 	Owned	

Pompano Beach, FL	
 	
Southeast Florida	
 	
3,200 sq. ft.	
 	
Leased	

Dubuque, IA	
 	
Iowa	
 	
3,750 sq. ft.	
 	
Leased	

Slidell, LA	
 	
Eastern Louisiana	
 	
3,000 sq. ft.	
 	
Leased	

Dunkirk, NY	
 	
Western New York	
 	
5,000 sq. ft.	
 	
Leased	

Blacklick, OH	
 	
Central and Southern Ohio	
 	
7,000 sq. ft.	
 	
Leased	

Oklahoma City, OK	
 	
Central and Eastern Oklahoma	
 	
10,000 sq. ft.	
 	
Leased	

Newburg, PA	
 	
Central Pennsylvania and Maryland	
 	
800 sq. ft.	
 	
Leased	

Perkasie, PA (1)	
 	
Eastern Pennsylvania	
 	
9 acres	
 	
Leased; Purchase Pending	

Greenville, SC	
 	
South Carolina	
 	
3,500 sq. ft.	
 	
Leased	

Eau Claire, WI	
 	
Northern Wisconsin	
 	
2,500 sq. ft.	
 	
Leased	

Charleston, WV	
 	
West Virginia	
 	
500 sq. ft.	
 	
Leased	

(1)
Currently operating as primarily redistribution only, but under development to become a processing, sales and redistribution facility. We have signed an agreement to purchase this property.
54

       We also own 46 acres in York Haven, Pennsylvania that we are developing to become a processing, sales and redistribution facility to serve central Pennsylvania and Maryland. When completed, it will replace our Newburg, Pennsylvania redistribution facility.
Regulation
Environmental Compliance
       Our operations and properties, including our maintenance of a fleet of vehicles, are subject to extensive federal, state and local environmental protection and health and safety laws and regulations. These environmental laws govern, among other things:
•
the emission and discharge of hazardous materials into the ground, air, or water;

•
the exposure to hazardous materials; and

•
the generation, handling, storage, use, treatment, identification, transportation and disposal of industrial by-products, waste water, storm water and hazardous materials.
       We have made and will continue to make capital and other expenditures relating to environmental compliance. We have an environmental management process designed to facilitate and support our compliance with these requirements. We cannot assure you, however, that we will at all times be in complete compliance with such requirements.
       Although we presently do not expect to incur any capital or other expenditures relating to environmental controls or other environmental matters in amounts that would be material to us, we may be required to make such expenditures in the future. Environmental laws are complex, change frequently and have tended to become more stringent over time. Accordingly, we cannot assure you that environmental laws will not change or become more stringent in the future in a manner that could have a material adverse effect on our business.
       Contamination resulting from automotive recycling processes can include soil and ground water contamination from the release, storage, transportation or disposal of gasoline, motor oil, antifreeze, transmission fluid, CFCs from air conditioners, other hazardous materials, or metals such as aluminum, cadmium, chromium, lead and mercury. Contamination can migrate on-site or off-site which can increase the risk of, and the amount of, any potential liability.
       In addition, many of our facilities are located on or near properties with a history of industrial use which may have involved hazardous materials. As a result, some of our properties may be contaminated. Some environmental laws hold current or previous owners or operators of real property liable for the costs of cleaning up contamination, even if these owners or operators did not know of and were not responsible for such contamination. These environmental laws also impose liability on any person who disposes of, treats, or arranges for the disposal or treatment of hazardous substances, regardless of whether the affected site is owned or operated by such person, and at times can impose liability on companies deemed under law to be a successor to such person. Third parties may also make claims against owners or operators of properties, or successors to such owners or operators, for personal injuries and property damage associated with releases of hazardous or toxic substances.
55

       When we identify a potential material environmental issue during our acquisition due diligence process, we analyze the risks, and, when appropriate, we perform further environmental assessment to verify and quantify the extent of the potential contamination. Furthermore, where appropriate, we have established financial reserves for certain environmental matters. In addition, at times we, or one of the sellers from whom we purchased a business, have undertaken remediation projects. We do not anticipate, based on currently available information and current laws, that we will incur liabilities in excess of those reserves to address environmental matters. However, in the event we discover new information or if laws change, we may incur significant liabilities, which may exceed our reserves.
Title Laws
       The definition of a "salvage" vehicle is the subject of much debate. The definition is important to the automotive recycling industry because an increase in vehicles that qualify as salvage vehicles provides greater availability and typically lowers the price of such vehicles. Currently, the definition is a matter of state law. In 1992, the United States Congress commissioned an advisory committee to study problems relating to vehicle titling, registration and salvage. Since then, legislation has been introduced seeking to establish national uniform requirements in this area, including a uniform definition of a salvage vehicle. The automotive recycling industry will generally favor a uniform definition, since it will avoid inconsistencies across state lines, and one that expands the number of damaged vehicles that qualify as salvage. However, certain interest groups, including repair shops and some insurance associations, may generally oppose this type of legislation. National legislation has not yet been enacted in this area, and there can be no assurance that legislation will be enacted in the future.
National Stolen Passenger Motor Vehicle Information System
       In 1992, Congress enacted the Anti Car Theft Act to deter trafficking in stolen vehicles. This law included the establishment of the National Stolen Passenger Motor Vehicle Information System to track and monitor stolen automotive parts. In April 2002, the Department of Justice published for comment proposed regulations to implement the National Stolen Passenger Motor Vehicle Information System. The proposed regulations require, among other things, that insurance companies, salvagers, dismantlers, recyclers and repairers inspect salvage vehicles for the purpose of collecting the vehicle identification number and the part number for any "covered major part" that possesses the vehicle identification number. The requirement to collect this information would place substantial burdens on automotive recyclers, including us, that otherwise would not normally exist. It would place similar burdens on repair shops, which may further discourage the use by such shops of recycled products. The Department of Justice's comment period for the proposed regulations ended in June 2002, but final regulations have not been issued.
Legal Proceedings
       We are not a party to any legal proceedings pending or threatened against us that we expect would have a material effect on our financial condition, results of operations or cash flows.
56

 MANAGEMENT
Executive Officers and Directors
       The following table sets forth information regarding our executive officers and directors.

Name
	 	Age
	 	Position
	
Joseph M. Holsten	 	51	 	President, Chief Executive Officer and Director	
Mark T. Spears	 	46	 	Senior Vice President and Chief Financial Officer	
Stuart P. Willen	 	66	 	Senior Vice President – Midwest Region	
Leonard A. Damron	 	52	 	Senior Vice President – Southeast Region	
H. Bradley Willen	 	43	 	Vice President – Procurement and Product Pricing	
Frank P. Erlain	 	48	 	Vice President – Finance and Controller	
Victor M. Casini	 	41	 	Vice President, General Counsel and Secretary	
Donald F. Flynn	 	63	 	Director and Chairman	
A. Clinton Allen	 	59	 	Director	
Jonathan P. Ferrando	 	37	 	Director	
Paul M. Meister	 	50	 	Director	
John F. O'Brien	 	60	 	Director	
William M. Webster, IV	 	46	 	Director	
        Joseph M. Holsten joined us in November 1998 as our President and Chief Executive Officer. He was elected to the board of directors in February 1999. Prior to joining us, Mr. Holsten held various positions of increasing responsibility with North American and International operations of Waste Management, Inc. for approximately 17 years. From February 1997 until July 1998, Mr. Holsten served as Executive Vice President and Chief Operating Officer of Waste Management, Inc. From July 1995 until February 1997, he served as Chief Executive Officer of Waste Management International, plc where his responsibility was to streamline operating activities. Prior to working for Waste Management, Mr. Holsten was staff auditor at a public accounting firm.
        Mark T. Spears joined us in July 1999 as our Senior Vice President and Chief Financial Officer. From November 1997 until June 1998, Mr. Spears served as Vice President, Controller and Principal Accounting Officer of Waste Management, Inc. As a member of a newly-installed executive management team, Mr. Spears helped Waste Management work through certain difficulties related to the restatement of its financial statements through the period ended September 30, 1997. Upon the merger of Waste Management and USA Waste Services Inc. in July 1998, Mr. Spears continued to serve as a Vice President until June 1999. From 1988 to November 1997, Mr. Spears held various positions of increasing responsibility in the United States and Europe with Waste Management and its subsidiaries. Prior to his employment with Waste Management, Mr. Spears, a certified public accountant, worked in public accounting for approximately nine years.
        Stuart P. Willen has been our Senior Vice President – Midwest Region since June 2003 and our Vice President – Midwest Region since July 1998 when we acquired Triplett Auto Recyclers, Inc., an automotive recycling business operating primarily in Ohio and western New York. Prior thereto, Mr. Willen had owned and operated Triplett since 1957. Mr. Willen is the father of H. Bradley Willen.
57

        Leonard A. Damron has been our Senior Vice President – Southeast Region since June 2003 and our Vice President – Southeast Region since July 1998 when we acquired Damron Auto Parts, Inc. and its affiliated entities, an automotive recycling business operating primarily in Florida and Georgia. Mr. Damron had owned and operated that business since 1976.
        H. Bradley Willen has been our Vice President – Procurement and Product Pricing since June 2003. He has managed procurement and pricing for us since January 2001. He was in charge of procurement, pricing, and inventory management for Triplett from August 1988 until December 2000. Prior thereto, from September 1986 until July 1988, Mr. Willen was an Assistant Vice President of Operations for Thomson McKinnon, a brokerage firm. Mr. Willen is the son of Stuart P. Willen.
        Frank P. Erlain has been our Vice President – Finance and Controller since our inception in February 1998. Mr. Erlain served as a Vice President of Flynn Enterprises, Inc., a venture capital, hedging and consulting firm based in Chicago, Illinois, from 1995 to 1999. Prior to joining Flynn Enterprises, Mr. Erlain served as Vice President and Controller of Discovery Zone, Inc., an operator and franchisor of family entertainment centers, from September 1992 until May 1995 when Viacom Inc. acquired ownership and management control of Discovery Zone. Mr. Erlain remained as part of a transition team at Discovery Zone until August 1995. Discovery Zone filed for protection under Chapter 11 of the federal bankruptcy code in March 1996. Mr. Erlain served as Controller of Peterson Consulting from 1990 until 1992, and as Controller/Treasurer (from 1985 to 1988) and Director, Information Services (from 1988 to 1990) for Hammacher Schlemmer & Co., a national cataloger and retailer. Mr. Erlain joined Cadlinc, Inc., a start-up firm serving the computer-aided manufacturing market, as Controller in 1984. Prior to 1984, Mr. Erlain, a certified public accountant, worked in public accounting for more than nine years.
        Victor M. Casini has been our Vice President, General Counsel and Secretary since our inception in February 1998. Mr. Casini also has been Executive Vice President and General Counsel of Flynn Enterprises since July 1992. Mr. Casini currently divides his time between his position with us and with Flynn Enterprises, working approximately 50% for us and 50% for Flynn Enterprises. Mr. Casini served as Senior Vice President, General Counsel and Secretary of Discovery Zone from July 1992 until May 1995. Prior to July 1992, Mr. Casini practiced corporate and securities law with the law firm of Bell, Boyd & Lloyd in Chicago, Illinois for more than five years.
        Donald F. Flynn has been a director since our inception in February 1998 and Chairman since February 1999. Mr. Flynn is and has been the sole stockholder of Flynn Enterprises since its inception in March 1992. Mr. Flynn also was the Vice Chairman of Blue Chip Casino, Inc., an owner and operator of a riverboat gaming vessel in Michigan City, Indiana, from February 1997 until November 1999, when Blue Chip was sold to Boyd Gaming Corporation. Mr. Flynn was Chairman of the Board of Discovery Zone from July 1992 until May 1995, and remained a member of the Board until February 1996. He was also Chief Executive Officer of Discovery Zone from July 1992 to April 1995. From 1972 through 1990, Mr. Flynn held various positions at Waste Management, including Senior Vice President and Chief Financial Officer. Mr. Flynn was one of three investors who acquired control of Blockbuster Entertainment Corporation in 1987 and was a director thereof from February 1987 until September 1994 when Blockbuster was sold to Viacom Inc. Mr. Flynn also serves as a director of Psychemedics Corporation, a provider of drug testing services, and Extended Stay America, Inc., an owner and manager of extended stay lodging facilities, and as a member of the Board of Trustees of
58

Marquette University. Mr. Flynn is a director and major shareholder of Emerald Casino, Inc., an owner of a license to operate a riverboat casino in the State of Illinois. Kevin F. Flynn, Mr. Flynn's son and a former director of ours, was the Chief Executive Officer of Emerald from June 1999 to August 2002. In January 2001, the Illinois Gaming Board issued an initial decision, based on preliminary findings, to revoke Emerald's license based, among other things, on allegations that Donald Flynn and Kevin Flynn made certain misrepresentations to the Illinois Gaming Board in connection with investigations conducted by the Board and that two proposed minority investors in Emerald had ties to organized crime. Emerald and the Flynns deny the allegations, and Emerald appealed the decision to revoke the license. Subsequently, certain creditors filed an involuntary Chapter 7 bankruptcy petition against Emerald, which was converted by Emerald to a voluntary Chapter 11 case.
        A. Clinton Allen has been a director since May 29, 2003. Mr. Allen has held the executive officer positions of Chairman of Psychemedics Corporation since March 2002 and Vice Chairman of Psychemedics since October 1989. He also has been a director of Psychemedics from October 1989 to the present. Mr. Allen is a director of Steinway Musical Instruments, Inc., a manufacturer of musical instruments, a director and Chairman of Collector's Universe, Inc., a provider of services and products to dealers and collectors of high-end collectibles, and a director of Integrated Alarm Services Group, Inc., a wholesale alarm monitoring company, and Chairman of the board of directors of McKim & Company, a financial and business consulting firm.
        Jonathan P. Ferrando has been a director since April 2000. Since January 2000, Mr. Ferrando has been Senior Vice President, General Counsel and Secretary of AutoNation, Inc., the largest automotive retailer in the United States and a Fortune 100 company. Mr. Ferrando joined AutoNation in July 1996 and served in various capacities in AutoNation's Legal Department, including Senior Vice President and General Counsel of AutoNation's Automotive Retail Group from March 1998 until January 2000. Prior to joining AutoNation, he was a corporate attorney in Chicago, Illinois with Skadden, Arps, Slate, Meagher & Flom from 1991 until 1996.
        Paul M. Meister has been a director since February 1999. Mr. Meister is Vice Chairman of the Board of Fisher Scientific International, Inc., which provides products and services to research, healthcare, industrial, educational and government markets. He has been Vice Chairman of the Board of Fisher Scientific since March 2001 and was Vice Chairman, Executive Vice President and Chief Financial Officer of Fisher Scientific from March 1998 to February 2001. Prior to 1998, Mr. Meister served as Fisher Scientific's Senior Vice President and Chief Financial Officer. In addition, Mr. Meister is Vice Chairman of the Boards of The General Chemical Group Inc., a chemical manufacturer, and GenTek Inc., a technology driven manufacturer of telecommunication and other products, and a director of M&F Worldwide Corp., Minerals Technologies Inc. and National Waterworks, Inc.
        John F. O'Brien has been a director since July 21, 2003. From August 1989 to November 2002, Mr. O'Brien was President and Chief Executive Officer of Allmerica Financial Corporation, a public insurance company. From 1968 to 1989, Mr. O'Brien held several positions at Fidelity Investments, including Group Managing Director of FMR Corporation (from 1986 to 1989), Chairman of Institutional Services Company (from 1986 to 1989) and Chairman of Brokerage Services, Inc. (from 1984 to 1989). Mr. O'Brien is a director of Allmerica Financial Corporation, Cabot Corporation, a global specialty chemicals corporation, The TJX Companies, Inc., a discount retailer of apparel and home fashions, and Abiomed, Inc., a developer and manufacturer of cardiovascular products.
59

        William M. Webster, IV has been a director since June 5, 2003. In July 1997, he co-founded Advance America, Cash Advance Centers, Inc., a nationwide deferred deposit, payday advance lender. Mr. Webster is and has been the Chief Executive Officer and Chairman of Advance America, Cash Advance Centers, Inc. since its inception. Prior to founding Advance America, from May 1996 until May 1997, Mr. Webster served as Executive Vice President of Education Management Corporation, a provider of private post-secondary education in North America. Mr. Webster served as a member of the senior staff of the White House from October 1994 until October 1995.
Voting Agreement
       In connection with a capital raising transaction in June 1998, four of our major stockholders or affiliated stockholder groups entered into a Voting Agreement, which as amended provides that each party is committed to vote its shares in favor of two designees to the board of directors of each of the other parties if such party owns at least 15% of our outstanding capital stock, and one designee to the board of directors, if such party owns less than 15% of our outstanding capital stock. Currently, Mr. Ferrando is the designee of AutoNation; Donald Flynn is the designee of the Flynn family; and Mr. Meister is the designee of PMM LKQ Investments Limited Partnership and PMM LKQ Investments Limited Partnership II. No designee of Dean Buntrock is currently serving on the board. The Voting Agreement terminates upon completion of our initial public offering.
Terms of Office
       All directors hold office until their successor is duly elected and qualified or until that director's earlier resignation or removal. Executive officers are elected by the board of directors on an annual basis and serve until their successors have been duly elected and qualified.
Committees of the Board of Directors
       Our board of directors has a compensation committee and an audit committee. The board may also establish other committees to assist in the discharge of its responsibilities.
Compensation Committee
       The duties of the compensation committee are to provide a general review of our compensation and benefit plans to ensure that they meet corporate objectives. In addition, the compensation committee reviews the chief executive officer's recommendations on compensating our officers and adopting and changing major compensation policies and practices, and reports its recommendations to the whole board of directors for approval and authorization. The compensation committee also administers our employee benefit plans. Our compensation committee currently consists of Messrs. Allen and Webster.
Audit Committee
       The audit committee makes recommendations to the board of directors regarding the independent auditors to be nominated for election by the stockholders and reviews the independence of such auditors, approves the scope of the annual audit activities of the independent auditor, approves the audit fee payable to the independent auditor and reviews such audit results with the independent auditor. The audit committee is currently composed of Messrs. Allen, Meister and O'Brien. Deloitte & Touche LLP currently serves as our independent auditor.
60

Compensation Committee Interlocks and Insider Participation
       The members of our compensation committee are Messrs. Allen and Webster. None of the members of our compensation committee has at any time been one of our officers or employees. None of our executive officers serves as a director or compensation committee member of any entity that has one or more of its executive officers serving as one of our directors or on our compensation committee.
Limitations on Liability and Indemnification of Directors and Officers
       Our certificate of incorporation limits the liability of directors to the fullest extent permitted by the Delaware General Corporation Law. In addition, we have entered into indemnification agreements with our directors and officers containing provisions that are in some respects broader than the indemnification provisions contained in the Delaware General Corporation Law. The indemnification agreements require us to indemnify those individuals against liabilities that may arise by reason of their status or service as officers or directors (so long as they acted in good faith, in a manner not opposed to our best interest and with no reasonable cause to believe their conduct was unlawful), to advance their expenses incurred as a result of any proceedings against them as to which they could be indemnified, and to cover the indemnitee under directors' and officers' insurance. We have maintained directors' and officers' liability insurance as a private company and will reexamine our levels of coverage after this offering. We believe that these indemnification provisions and agreements and this insurance are necessary to attract and retain qualified directors and executive officers.
Compensation of Directors
       Our non-employee directors will receive annual compensation of $40,000 for serving on the board, which may be taken, at the option of the director, in cash or shares of our common stock. Directors are also reimbursed for their out-of-pocket expenses incurred in connection with such services.
Stock Option and Compensation Plan for Non-Employee Directors
       Our board of directors adopted our Stock Option and Compensation Plan for Non-Employee Directors in June 2003. We expect the Stock Option and Compensation Plan for Non-Employee Directors to be approved by our stockholders prior to the completion of this offering. We have reserved a total of 500,000 shares of common stock for issuance under the Stock Option and Compensation Plan for Non-Employee Directors.
       The option grants under the Stock Option and Compensation Plan for Non-Employee Directors are automatic, and the exercise price of the options is 100% of the fair market value of our common stock on the grant date.
       Only non-employee directors are eligible for grants under our Stock Option and Compensation Plan for Non-Employee Directors. The plan provides for an initial grant to each current non-employee director of an option to purchase 30,000 shares of common stock upon the consummation of this offering, with an exercise price equal to the initial public offering price. The plan also provides for an initial grant to a new non-employee director of an option to purchase 30,000 shares of common stock upon his or her initial election to the board of directors. Subsequent to the initial grants, each non-employee director will be automatically granted an option to purchase 10,000 shares of common stock on each anniversary of the granting of the initial stock option to that non-employee director.
61

       The initial term of the options granted under the Stock Option and Compensation Plan for Non-Employee Directors is ten years. If the optionee ceases to be a director of the Company for any reason, the options will expire upon the earlier of five years after termination of the optionee's status as a director or the expiration of the initial term. Each option will become exercisable with respect to all of the shares subject to the option six months after the date of its grant. If we engage in a merger, consolidation or reorganization with another company, each option to purchase a share of common stock will become exercisable for the number and kind of securities to which holders of our common stock will be entitled under the transaction.
       The Stock Option and Compensation Plan for Non-Employee Directors will terminate in June 2013, unless our board of directors terminates it sooner.
Compensation of Executive Officers
       The following table sets forth information concerning the compensation for the fiscal years indicated for our chief executive officer and the four other highest compensated executive officers who earned in excess of $100,000 for services rendered during our last fiscal year. For ease of reference, we collectively refer to these executive officers throughout this prospectus as our "named executive officers."

 Summary Compensation Table

Annual Compensation
	 	 	 	 	
Name and Principal Position
	 	Fiscal Year
	 	Salary ($)
	 	Bonus ($)
	 	Long Term Compensation Awards – Securities Underlying
Options (#)
	 	All Other
Compensation
($)
	
Joseph M. Holsten,
Chief Executive Officer	 	2002	 	393,750	 	230,344	 	76,250	 	9,547(1)	
Mark T. Spears,
Chief Financial Officer	 	2002	 	288,750	 	112,613	 	86,000	 	8,676(1)	
Stuart P. Willen,
Senior Vice President –
Midwest Region	 	2002	 	250,000	 	95,917	 	—	 	7,521(1)	
Leonard A. Damron,
Senior Vice President –
Southeast Region	 	2002	 	250,000	 	9,850	 	16,000	 	—	
H. Bradley Willen,
Vice President –
Procurement and
Product Pricing	 	2002	 	205,000	 	64,302	 	18,100	 	4,095(2)	

(1)
Amount paid as matching contribution under our supplemental plan.

(2)
Amount paid as matching contribution under our 401(k) plan.
62

Option Grants in Last Fiscal Year
       The following table sets forth information regarding stock options granted by us to the named executive officers during our last fiscal year. The percentage of total options set forth below is based on options to purchase an aggregate of 737,150 shares of common stock granted to employees in fiscal 2002. Stock options are generally granted at no less than 100% of the fair market value of our common stock as determined by the compensation committee on the date of grant. In reaching the determination of fair market value at the time of each grant, the compensation committee considers a range of factors, including our current financial position, our recent revenue, results of operations and cash flows, its assessment of our competitive position and prospects for the future, our marketing efforts, current valuations for comparable companies and, prior to our initial public offering, the illiquidity of an investment in our common stock. Each of the options listed below was granted under the 1998 Equity Incentive Plan described below and vests over a five year period with 10% of the shares subject to the option vesting on each six month anniversary of the date of grant. In accordance with the rules of the Securities and Exchange Commission, the table below sets forth the potential realizable value over the term of the option based upon assumed stock price appreciation of 5% and 10% compounded annually. These amounts do not represent our estimate of future stock price performance.

 Option Grants In Fiscal 2002
Individual Grants

 	 	 	 	 	 	 	 	 	 	Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation for Option Term
	
 	 	 	 	Percent of Total Options/SARs Granted to Employees in Fiscal Year
	 	 	 	 			
 	 	Number of Securities Underlying Options/SARs Granted
			 	 	 	 			
Name
					 	Exercise Price Per Share
	 	Expiration Date
			
									 	5%
	 	10%
	
Joseph M. Holsten	 	76,250	 	10.3	%	$	8.00	 	3/6/12	 	$	383,626	 	$	972,183	
Mark T. Spears	 	86,000	 	11.7	 	 	8.00	 	3/6/12	 	 	432,680	 	 	1,096,495	
Stuart P. Willen	 	—	 	—	 	 	—	 	—	 	 	—	 	 	—	
Leonard A. Damron	 	16,000	 	2.2	 	 	8.00	 	3/6/12	 	 	80,499	 	 	203,999	
H. Bradley Willen	 	18,100	 	2.5	 	 	8.00	 	3/6/12	 	 	91,064	 	 	230,774	
Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values
       The following table sets forth the number of shares acquired upon exercise of options and the number of securities underlying unexercised options held as of December 31, 2002 by the named executive officers.
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 Aggregate Option Exercises in Fiscal 2002 and Fiscal Year-End Option Values

 	 	 	 	 	 	Number of Securities Underlying Unexercised Options at December 31, 2002
	 	 	 	 	
 	 	 	 	 			 	Value of Unexercised In-the-Money Options at December 31, 2002
	
 	 	Shares Acquired on Exercise
	 	 					
Name
			 	Value Realized
					
					 	Exercisable
	 	Unexercisable
	 	Exercisable
	 	Unexercisable
	
Joseph M. Holsten	 	—	 	N/A	 	282,625	 	268,625	 	$	225,000	 	$	525,000	
Mark T. Spears	 	—	 	N/A	 	129,600	 	216,400	 	 	150,000	 	 	350,000	
Stuart P. Willen	 	—	 	N/A	 	6,000	 	14,000	 	 	30,000	 	 	70,000	
Leonard A. Damron	 	—	 	N/A	 	7,600	 	28,400	 	 	30,000	 	 	70,000	
H. Bradley Willen	 	—	 	N/A	 	9,910	 	29,190	 	 	22,500	 	 	52,500	
64

Employee Benefit Plans
1998 Equity Incentive Plan
       On February 13, 1998, our board of directors adopted and our stockholders approved the LKQ Corporation 1998 Equity Incentive Plan. The purpose of the equity incentive plan is to benefit us and our subsidiaries by enabling us to offer persons associated with us stock-based incentives.
       Under the equity incentive plan, we may grant stock options, awards of restricted stock, stock appreciation rights, performance shares and performance units. The compensation committee has the authority to administer the equity incentive plan and may make awards encompassing a total of not more than 5,000,000 shares of common stock. Shares subject to awards granted under the equity incentive plan, which shares are returned to us as payment for the exercise price or tax withholding amount relating to the award or with respect to which awards expire or are forfeited or are paid in cash, would again be available for grant under the equity incentive plan.
       Due to favorable tax and accounting treatment, we currently expect to utilize most of the shares of common stock subject to the equity incentive plan to issue stock options. The compensation committee has the power to set the terms and conditions to which each stock option is subject, including the times at which it is exercisable, except that the exercise price may not be less than the fair market value of the common stock on the date the option is granted.
       The vesting period of the options granted to our named executive officers is the same as the vesting period of options granted to all other participants under the equity incentive plan. Specifically, the options become exercisable with respect to 10% of the number of shares subject to the options on each six month anniversary of the date of grant over a total of five years.
       We do not now expect to grant awards of restricted stock, stock appreciation rights, performance shares or performance units under the equity incentive plan. However, in the event of changes in the tax or accounting treatment of such awards or other changed circumstances, we may grant such awards in the future.
       Upon a change in control, awards under the equity incentive plan become immediately exercisable, restrictions thereon lapse and maximum payout opportunities are deemed earned, as the case may be, as of the effective date of the change in control. The board of directors may amend or terminate the equity incentive plan in whole or in part at any time, subject to applicable law, rule or regulation. No amendment, modification or termination of the equity incentive plan can adversely affect in any material way any award previously granted, without the written consent of the participant.
CEO Plan
       On November 2, 1998, we adopted a separate equity incentive plan known as the CEO plan. The terms of the CEO plan are substantially the same as the terms of the 1998 Equity Incentive Plan except the board of directors administers the plan and the exercise price of options granted under the CEO plan may be less than the fair market value of the common stock on the date the option is granted. We granted 175,000 options under the CEO plan with an exercise price of $10.00 per share at a time when options under the equity incentive plan were granted with an exercise price of $12.50 per share. The difference between the fair market value and the option exercise price was recorded as deferred
65

compensation expense and is being charged against operating income over the term of the option. There are no additional shares available for award under the CEO plan.
Retirement Plans
       Effective August 1, 1999, we adopted a defined contribution 401(k) plan covering substantially all of our employees who have been employed for at least six months. The 401(k) plan allows participants to defer their salary in amounts up to the statutory limit each year. We currently make matching contributions equal to 50% of the portion of the participant's contributions that does not exceed 6% of the participant's salary. We, at our sole discretion, make annual profit-sharing contributions to participants, which may be different for participants employed by different operating subsidiaries. Each participant is fully vested in such participant's contributions and any earnings they generate. Each 401(k) participant becomes vested in our matching contributions, and any earnings they generate, in the amounts of 50%, 75% and 100% after two, three and four years of service, respectively. Each participant becomes vested in our profit sharing contributions, if any, and any earnings they generate, in the amounts of 25%, 50%, 75% and 100% after one, two, three and four years of service, respectively. In general, the 401(k) plans and profit-sharing plans maintained by companies previously acquired by us have been terminated or merged into our 401(k) plan.
       We also have a non-qualified plan that supplements the 401(k) plan for highly compensated employees, or HCEs. The tax laws impose a maximum percentage of salary that can be contributed each year by HCEs to the 401(k) plan depending on the participation level of non-HCEs. The supplemental plan operates similarly to the 401(k) plan except that contributions by HCEs to the supplemental plan are not subject to the statutory maximum percentage. The terms of the supplemental plan impose a maximum annual contribution on each participant of 50% of the HCE's salary and 100% of commissions and bonuses. In addition, the plan authorizes the Compensation Committee to set a maximum annual contribution amount, which is currently $50,000. Each quarter, we transfer from the supplemental plan to the 401(k) plan, on behalf of each HCE who so elects, the maximum amount that could have been contributed directly to the 401(k) plan. The balance remaining in each HCE's account in the supplemental plan is a general asset of ours, and in the event of our insolvency, the HCE would be a general, unsecured creditor with respect to such amount.
Severance Agreements
       On July 15, 1998, we entered into severance agreements with Stuart P. Willen and H. Bradley Willen. The severance agreements contain noncompetition, nonsolicitation and confidentiality clauses. They also contain severance payment provisions, requiring severance payments equal to twelve months salary to Stuart P. Willen and H. Bradley Willen if they are terminated for any reason other than cause or if they resign their positions for good reason. The severance payment provisions terminate upon the completion of our initial public offering. These severance agreements were negotiated on an arms-length basis in connection with our acquisition of the Willens' business.
66

 CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
       We have entered into a number of related party transactions that we believe are on terms no less favorable to us than otherwise could have been obtained from unaffiliated third parties.
Headquarters Lease
       We lease office space for our headquarters in Chicago, Illinois pursuant to a sublease with Emerald Ventures, Inc. Kevin F. Flynn, a stockholder, former director and son of Donald Flynn, is the sole owner of Emerald Ventures, Inc. The sublease is on substantially the same terms as the main lease between Emerald Ventures, Inc. and its lessor. The total amounts paid under this sublease were approximately $259,000, $274,000 and $263,000 during 2000, 2001 and 2002, respectively. We currently utilize approximately 70% of the occupied offices and work areas under the sublease and thus are responsible for approximately 70% of the rent payments. The percent of occupied offices and work areas we will utilize may fluctuate, but we believe the office space available to us under the sublease is sufficient to accommodate our reasonably foreseeable needs. The term of the sublease ends on June 30, 2004. We are currently evaluating office space in the Chicago area in connection with our lease expiration.
Facilities Leases
       We lease various properties where our facilities operate. Three of those properties are owned by affiliates of Leonard A. Damron, a named executive officer and stockholder. Our subsidiaries lease properties from these affiliates of Mr. Damron in Crystal River, Florida, Melbourne, Florida, and Jenkinsburg, Georgia. The aggregate annual rent under these three leases was approximately $714,000 in each of 2000, 2001 and 2002, respectively. Each of these leases was negotiated on an arms-length basis in connection with our acquisition of Mr. Damron's business.
Procurement Agreement
       Our subsidiaries that operate in the states of Florida and Georgia agreed pursuant to a procurement agreement to purchase their inventory requirements, if available, from certain corporations controlled by Mr. Damron. The term of the procurement agreement expired on May 31, 2001. We paid Mr. Damron's corporations $793,000 for inventory purchases in 2000 and $167,000 for inventory purchases from January 1, 2001 through May 31, 2001. The procurement agreement was also negotiated on an arms-length basis in connection with our acquisition of Mr. Damron's business.
AutoNation Arrangement
       Repair shops owned by AutoNation, Inc., one of our stockholders, purchase recycled OEM products from us. The product pricing to AutoNation is comparable to the pricing for other of our customers of similar usage. AutoNation paid us $1,455,000 for such purchases in 2000, $1,723,000 for such purchases in 2001, and $2,203,000 for such purchases in 2002.
Reimbursements to our Chairman
       Donald F. Flynn, the Chairman of the Board and a stockholder, is the sole owner of Flynn Enterprises. Mr. Flynn and certain employees of Flynn Enterprises incur expenses in connection with work they perform on our behalf. We reimburse Flynn Enterprises for such expenses. We also reimburse
67

Flynn Enterprises for the use of an airplane which we use from time to time for business trips. We reimbursed Flynn Enterprises approximately $38,000 in 2000, $76,000 in 2001 and $12,800 in 2002 for such expenses.
Registration Rights Agreement
       We are a party to a Registration Rights Agreement with certain of our initial investors. Pursuant to the agreement, stockholders owning at least 35% of the shares of common stock subject to the agreement can require us to register their shares of common stock under the Securities Act of 1933 at any time within one year after completion of our initial public offering. Stockholders can exercise these "demand" registration rights up to two times. In addition, after we complete our initial public offering and qualify for registration on Form S-3 under the 1933 Act, stockholders owning at least 15% of the shares of common stock subject to the agreement can require us to register their shares of common stock on Form S-3 once each year until five years after completion of our initial public offering. Stockholders also will be entitled to join in a registration of shares of common stock initiated by us, subject to certain exceptions including our initial public offering, registrations of shares to be used in mergers and acquisitions, and in connection with employee benefit plans. The agreement prohibits the grant of registration rights to any additional stockholders without the consent of at least 50% of the shares of common stock subject to the agreement (which must include the consent of each 15% stockholder), unless the additional stockholder received shares as consideration for an acquisition.
Fee Warrants
       Our financial results for the third quarter of 2000 caused us to breach certain covenants of our credit facility including the covenants relating to operating income and minimum required ratio of funded debt to earnings before interest, taxes, depreciation and amortization. On February 14, 2001, we entered into an amendment to the credit agreement with our banks that waived the breaches and modified certain of the covenants.
       As part of the amendment, the banks required that our stockholders guaranty $10 million of our debt, with the guaranties secured by letters of credit or other highly liquid collateral acceptable to the banks. All of our stockholders were given the opportunity to participate in this transaction. Thirty of our stockholders provided the guaranties, including the following persons: Donald F. Flynn, Chairman of the Board; Kevin F. Flynn, former director and son of Donald Flynn; Brian J. Flynn, son of Donald Flynn; Robert W. Flynn, brother of Donald Flynn; Dean L. Buntrock, former director; Stuart P. Willen, Senior Vice President – Midwest Region; H. Bradley Willen, Vice President – Procurement and Product Pricing and son of Stuart Willen; Todd D. Willen, son of Stuart Willen; and Leonard A. Damron, Senior Vice President – Southeast Region.
       In exchange for providing the guaranties, each guarantor received certain rights, including a guaranty fee. The guaranty fee consisted of each guarantor's pro rata portion of warrants, referred to herein as fee warrants, to purchase a total of 1,961,112 shares of our common stock (10% of our then outstanding equity interests on a fully diluted basis) at an exercise price of $2.00 per share. The number
68

of shares of common stock subject to the warrants received by each of the persons identified above is as follows:

Donald F. Flynn	 	218,244	
Kevin F. Flynn	 	218,244	
Brian J. Flynn	 	218,244	
Robert W. Flynn	 	98,056	
Dean L. Buntrock	 	163,684	
Stuart P. Willen	 	49,964	
H. Bradley Willen	 	31,018	
Todd D. Willen	 	30,313	
Leonard A. Damron	 	501,035	
Stockholders Agreement; Voting Agreement
       Each of our existing stockholders is a party to the LKQ Corporation Stockholders Agreement, which contains restrictions on the transfer of shares of common stock, provides for certain co-sale and preemptive rights, and contains restrictions on the voting of common stock in certain circumstances.
       The co-sale and preemptive rights do not apply to underwritten public offerings, and the stockholders agreement will terminate upon completion of our initial public offering.
       In connection with a capital raising transaction in June 1998, four of our major stockholders or affiliated stockholder groups entered into a Voting Agreement which as amended provides that each party is committed to vote its shares in favor of two designees to the board of directors of each of the other parties if such party owns at least 15% of our outstanding capital stock, and one designee to the board of directors, if such party owns less than 15% of our outstanding capital stock. Currently, Mr. Ferrando is the designee of AutoNation, Inc.; Donald Flynn is the designee of the Flynn family; and Mr. Meister is the designee of PMM LKQ Investments Limited Partnership and PMM LKQ Investments Limited Partnership II. No designee of Dean Buntrock is currently serving on the board. The Voting Agreement terminates upon completion of our initial public offering.
Repurchases from Stockholders
       In February 2003, we repurchased 2,000,000 shares of our common stock from existing stockholders, including 1,878,684 shares from AutoNation, Inc., 111,897 shares from PMM LKQ Investments Limited Partnership and 9,419 shares from PMM LKQ Investments Limited Partnership II, for a total of $12.0 million in cash. We partially funded the stock repurchases by obtaining a $9.0 million term loan, which matures on February 20, 2004.
       In May 2003, we repurchased 1,557,498 shares of our common stock from existing stockholders, including 1,500,000 shares from AutoNation, Inc., 49,284 shares from PMM LKQ Investments Limited Partnership and 8,214 shares from PMM LKQ Investments Limited Partnership II, for a total of $10,902,486 in cash. We partially funded the stock repurchases by borrowing against our existing revolving credit facility.
69

 PRINCIPAL AND SELLING STOCKHOLDERS
       The following table sets forth certain information regarding the beneficial ownership of our common stock as of June 30, 2003, by:
•
each stockholder known by us to be the beneficial owner of more than 5% of our outstanding common stock;

•
each of our directors and named executive officers;

•
all directors and executive officers as a group; and

•
each of the selling stockholders.
       We have determined beneficial ownership in the table below in accordance with the rules of the Securities and Exchange Commission. Except as specified below, we believe that the beneficial owners of the common stock listed below, based on information furnished by such owners, have sole voting and investment power with respect to such shares, subject to community property laws where applicable.
       The percentage of beneficial ownership for the following table is based on 14,119,887 shares of our common stock outstanding as of June 30, 2003. For purposes of calculating beneficial ownership after the offering, we have assumed that             shares of our common stock will be outstanding upon completion of the offering, assuming no exercise of the underwriters' over-allotment. In computing the number of shares beneficially owned by a person and the percentage ownership of that person we have deemed shares of common stock subject to options or warrants held by that person that are currently exercisable or will become exercisable within 60 days of June 30, 2003 to be outstanding, but we have not deemed these shares to be outstanding for computing the percentage ownership of any other person.
70

 	 	Shares Beneficially Owned Prior to this Offering
	 	 	 	Shares Beneficially Owned After this Offering
	
Name and Address of Beneficial Owner
			 	Number of Shares Offered
			
	 	Number
	 	Percent
			 	Number
	 	Percent
	
Donald F. Flynn (1)
c/o Flynn Enterprises, Inc.
676 North Michigan Avenue, Suite 4000
Chicago, Illinois 60611	 	2,135,862	 	14.9	 	 	 	 	 	 	
Dean L. Buntrock (2)
Oakbrook Terrace Tower
One Tower Lane, Suite 2242
Oakbrook Terrace, Illinois 60181	 	1,913,684	 	13.4	 	 	 	 	 	 	
Leonard A. Damron (3)
4950 W. Norvell
Bryant Highway
Crystal River, Florida 34429	 	1,764,235	 	12.1	 	 	 	 	 	 	
Paul M. Meister (4)
1 Liberty Lane
Hampton, New Hampshire 03842	 	1,571,186	 	11.1	 	 	 	 	 	 	
AutoNation, Inc.
110 S.E. Sixth Street
Fort Lauderdale, Florida 33301	 	1,367,673	 	9.7	 	 	 	 	 	 	
Kevin F. Flynn (5)
c/o Flynn Enterprises, Inc.
676 North Michigan Avenue, Suite 4000
Chicago, Illinois 60611	 	1,313,455	 	9.2	 	 	 	 	 	 	
Brian J. Flynn (6)
c/o Flynn Enterprises, Inc.
676 North Michigan Avenue, Suite 4000
Chicago, Illinois 60611	 	875,908	 	6.1	 	 	 	 	 	 	

A. Clinton Allen	
 	
0	
 	
*	

 	

 	
Jonathan P. Ferrando (7)	 	0	 	*	 	 	 	 	 	 	
John F. O'Brien	 	0	 	*	 	 	 	 	 	 	
William M. Webster, IV	 	0	 	*	 	 	 	 	 	 	
Joseph M. Holsten (8)	 	375,250	 	2.6	 	 	 	 	 	 	
Mark T. Spears (9)	 	195,200	 	1.4	 	 	 	 	 	 	
Stuart P. Willen (10)	 	509,791	 	3.6	 	 	 	 	 	 	
H. Bradley Willen (11)	 	327,996	 	2.3	 	 	 	 	 	 	
All directors and executive officers as a group (13 persons) (12)	 	7,045,790	 	45.1	 	 	 	 	 	 	
Selling stockholders:	 	 	 	 	 	 	 	 	 	 	

*
Less than 1 percent.

(1)
Includes 1,575,258 shares of common stock owned by DNB, L.P., a Delaware limited partnership wholly-owned by Mr. Flynn, 305,000 shares of common stock owned by QRP Investment Company, LLC and 37,360 shares of common stock owned by CSD Investments, LLC, each a Delaware limited liability company of which Flynn Enterprises is the sole manager, and 218,244 shares subject to a warrant Mr. Flynn received as consideration for guarantying a portion of our bank debt.

(2)
Includes 44,500 shares owned by DBE Limited Partnership, which is wholly owned by Mr. Buntrock and his wife, and 163,684 shares subject to a warrant Mr. Buntrock received as consideration for guarantying a portion of our bank debt.
footnotes continued on following page
71

(3)
Includes 1,250,000 shares of common stock owned by LD III Limited Partnership, an Alaska partnership indirectly wholly-owned by Mr. Damron, 13,200 shares of common stock subject to options granted under the equity incentive plan, which options are presently exercisable, and 501,035 shares subject to a warrant Mr. Damron received as consideration for guarantying a portion of our bank debt.

(4)
Represents 1,338,819 shares of common stock owned by PMM LKQ Investments Limited Partnership and 232,367 shares of common stock owned by PMM LKQ Investments Limited Partnership II, each a Delaware limited partnership of which Mr. Meister is the Manager-Member of the general partner and a limited partner. Mr. Meister disclaims beneficial ownership of these shares, except to the extent of his pecuniary interest therein.

(5)
Includes 1,095,211 shares of common stock owned by the Kevin F. Flynn June, 1992 Non-Exempt Trust, of which Mr. Flynn is the trustee and beneficiary, and 218,244 shares subject to a warrant Mr. Flynn received as consideration for guarantying a portion of our bank debt.

(6)
Includes 657,664 shares of common stock owned by the Brian J. Flynn June 1992 Non-Exempt Trust, of which Mr. Flynn is the trustee and beneficiary, and 218,244 shares subject to a warrant Mr. Flynn received as consideration for guarantying a portion of our bank debt.

(7)
Excludes the shares owned by AutoNation, Inc. of which Mr. Ferrando is an officer.

(8)
Includes 157,500 shares of common stock subject to options granted under the CEO plan and 195,250 shares of common stock subject to options granted under the equity incentive plan, which options are presently exercisable with respect to such shares.

(9)
Includes 195,200 shares of common stock subject to options granted under the equity incentive plan, which options are presently exercisable with respect to such shares.

(10)
Includes 10,000 shares of common stock subject to options granted under the equity incentive plan, which options are presently exercisable, and 49,964 shares subject to a warrant Mr. Willen received as consideration for guarantying a portion of our bank debt. Mr. Willen's remaining ownership is through Willen Investors Limited Partnership.

(11)
Includes 17,720 shares of common stock subject to options granted under the equity incentive plan, which options are presently exercisable, 31,018 shares subject to a warrant Mr. Willen received as consideration for guarantying a portion of our bank debt, and 19,029 shares of common stock held in trusts for his children of which Mr. Willen is the trustee. Mr. Willen's remaining ownership is through the H. Bradley Willen Grantor Trust.

(12)
See notes 1 through 11.
72

 DESCRIPTION OF CAPITAL STOCK
       We are authorized to issue up to 100,000,000 shares of common stock and, upon the completion of our initial public offering, we expect to increase our authorized number of shares of common stock to 500,000,000. Each share has a par value of $0.01. The following description summarizes various provisions of our capital stock. The summary is not complete and is subject to, and qualified in its entirety by, our certificate of incorporation and bylaws, copies of which have been filed as exhibits to the registration statement of which this prospectus is a part, and the provisions of applicable Delaware law.
Common Stock
       As of June 30, 2003, we had 14,119,887 shares of common stock outstanding, which were held of record by approximately 100 stockholders. Each share of our common stock entitles the holder to one vote on all matters submitted to a vote of stockholders, including the election of directors. The holders of common stock are entitled to receive dividends, if any, declared from time to time by the directors out of legally available funds. The payment of dividends is restricted by the terms of our credit facility. In the event of our liquidation, dissolution or winding up, the holders of common stock are entitled to share ratably in all assets remaining after the payment of liabilities.
       The common stock has no preemptive or conversion rights or other subscription rights other than pursuant to the stockholders agreement discussed above, which will terminate upon completion of our initial public offering. There are no redemption or sinking fund provisions applicable to the common stock. All outstanding shares of common stock are fully paid and nonassessable.
Warrants
       On March 31, 1999, in connection with a business acquisition, we issued warrants to purchase shares of common stock, with exercisability contingent upon the achievement by the acquired entity of certain operating results in 2000. These results were achieved and the warrants became exercisable on March 31, 2001. These warrants expire five years after they became exercisable. The warrants contain anti-dilution adjustment provisions in the event that we issue shares of our common stock or securities otherwise convertible into or exchangeable for shares of our common stock at a price less than $15.00 per share, and are currently exercisable for 113,318 shares at a price of $13.24 per share.
       On January 3, 2000, in connection with a business acquisition, we issued warrants to purchase 150,000 shares of our common stock at exercise prices ranging from $15.00 to $35.00 per share. The warrants were exercisable as of the date of issuance and expire on August 31, 2004.
       On February 14, 2001 we issued the fee warrants, which entitled the holders to purchase a total of 1,961,112 shares of common stock at an exercise price of $2.00 per share. The fee warrants became exercisable upon issuance and will expire on February 14, 2006. As of June 30, 2003, there were 1,948,286 fee warrants outstanding.
Options
       As of June 30, 2003, options to purchase a total of 3,548,250 shares of common stock were outstanding, of which 1,862,280 have vested. The exercise prices of the outstanding options range from $1.00 to $15.00, with a weighted average of $9.61.
73

Anti-Takeover Effects of Our Certificate of Incorporation and Bylaws
       Some provisions of our certificate of incorporation and bylaws may be deemed to have an anti-takeover effect and may delay or prevent a tender offer or takeover attempt that a stockholder might consider to be in its best interest. These provisions include:
Special Meetings of Stockholders
       Our certificate of incorporation provides that special meetings of our stockholders may be called only by the president or by a majority of the board of directors. As a result, stockholders must rely on the board of directors to call a special meeting or wait until the next annual meeting to hold a vote on extraordinary matters like a significant transaction and would have to comply with the notice provisions described below. The restriction on the ability of stockholders to call a special meeting means that a proposal to replace the board also could be delayed until the next annual meeting.
Advance Notice Procedure
       Our bylaws establish an advance notice procedure for stockholder proposals to be brought before an annual meeting of our stockholders, including proposed nominations of persons for election to the board of directors. Generally, the advance notice provisions require that written notice of the proposals or nominations must be given to our secretary no less than 60 days nor more than 90 days prior to the annual meeting. However, if notice or prior public disclosure of the annual meeting date is given less than 70 days prior to the meeting, the notice must be received by our secretary no later than the close of business on the tenth day following the day on which notice of the annual meeting date was mailed or public disclosure was made, whichever occurs first.
       At an annual meeting, stockholders may only consider proposals or nominations specified in the notice of meeting, brought before the meeting by or at the direction of the board of directors, or brought before the meeting by a stockholder who has complied with the notice provisions described above. Our bylaws may have the effect of precluding the conduct of certain business at a meeting if the proper procedures are not followed. These provisions may also discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer's own slate of directors or otherwise attempting to obtain control of us.
No Stockholder Action by Written Consent
       Delaware law provides that stockholders may take action by written consent in lieu of a stockholder meeting. However, Delaware law also allows us to eliminate stockholder actions by written consent. Elimination of written consents of stockholders may lengthen the amount of time required to take stockholder actions because actions by written consent are not subject to the minimum notice requirement of a stockholder's meeting. The elimination of stockholders' written consents may also deter hostile takeover attempts. Without the availability of stockholders' actions by written consent, a holder controlling a majority of our capital stock would not be able to amend our bylaws or remove directors without holding a stockholders meeting. The holder would have to obtain the consent of a majority of the board of directors to call a special stockholders' meeting or comply with the notice periods applicable
74

to annual meetings. We intend to amend our certificate of incorporation to provide for the elimination of actions by written consent of stockholders effective upon completion of our initial public offering.
Authorized but Unissued Shares
       The authorized but unissued shares of common stock will be available for future issuance without stockholder approval. These additional shares may be utilized for a variety of corporate purposes, including public offerings to raise additional capital, acquisitions and employee benefit plans. The existence of authorized but unissued shares of common stock could render more difficult or discourage an attempt to obtain control of a majority of our stock by means of a proxy contest, tender offer, merger or otherwise.
Material Provisions of Delaware Law
       Following the consummation of this offering, we will be subject to the provisions of Section 203 of the Delaware General Corporation Law. In general, such provisions prohibit a publicly-held Delaware corporation from engaging in any business combination transactions with any interested stockholder for a period of three years after the date of the transaction in which the person became an interested stockholder, unless:
•
the transaction is approved by the board of directors prior to the date the interested stockholder obtained that status;

•
upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the number of shares of voting stock outstanding those shares owned by (a) persons who are directors and also officers and (b) employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or

•
on or subsequent to such date, the business combination is approved by the board of directors and authorized at an annual or special meeting of stockholders by the affirmative vote of at least 66% of the outstanding voting stock which is not owned by the interested stockholder.
       A "business combination" is defined to include mergers, asset sales and other transactions resulting in financial benefit to a stockholder. In general, an "interested stockholder" is a person who, together with affiliates and associates, owns, or at any time in the previous three years owned, 15% or more of a corporation's voting stock. The statute could have the effect of prohibiting or delaying mergers or other takeover or change in control attempts.
Transfer Agent and Registrar
       The transfer agent and registrar for our common stock is LaSalle Bank National Association. Its address is 135 South LaSalle Street, Chicago, Illinois 60603.
Listing
       We will apply for quotation of our common stock on the Nasdaq National Market under the symbol "LKQX."
75

 SHARES ELIGIBLE FOR FUTURE SALE
       Prior to this offering, there was no market for our common stock. We can make no predictions as to the effect, if any, that sales of shares of common stock or the availability of shares of common stock for sale will have on the market price prevailing from time to time. Nevertheless, sales of significant amounts of our common stock in the public market, or the perception that such sales may occur, could adversely affect prevailing market prices.
Sale of Restricted Shares
       Upon completion of this offering, we will have                        shares of common stock outstanding, assuming no exercise of the underwriters' over-allotment option and no exercise after June 30, 2003 of outstanding options or warrants. Of these shares of common stock, the                        shares of common stock being sold in this offering, plus any shares issued upon exercise of the underwriters' over-allotment option, will be freely tradable without restriction under the Securities Act of 1933, except for any such shares which may be held or acquired by an "affiliate" of ours, as that term is defined in Rule 144 promulgated under the Securities Act of 1933, which shares will be subject to the volume limitations and other restrictions of Rule 144 described below. An aggregate of                        shares of common stock held by our existing stockholders upon completion of the offering will be "restricted securities," as that phrase is defined in Rule 144, and may not be resold in the absence of registration under the Securities Act of 1933 or pursuant to an exemption from such registration, including, among others, the exemptions provided by Rules 144, 144(k) or 701 under the Securities Act of 1933, which rules are summarized below. Taking into account the lockup agreements described below and the provisions of Rules 144, 144(k) and 701, additional shares will be eligible for sale in the public market as follows:
•
shares will be available for immediate sale on the date of this prospectus;

•
shares will be available for sale 180 days after the date of this prospectus, the expiration date for the lockup agreements, pursuant to Rules 144 and 144(k); and

•
shares will be available for sale 90 days after the date of this prospectus pursuant to Rule 144.
Rule 144
       In general, under Rule 144 as currently in effect, beginning 90 days after the date of this prospectus, a person (or persons whose shares are aggregated), who has beneficially owned restricted shares for at least one year, including persons who may be deemed to be our "affiliates," would be entitled to sell within any three-month period a number of shares that does not exceed the greater of:
•
1% of the number of shares of common stock then outstanding, which will equal approximately                        shares immediately after this offering; or

•
the average weekly trading volume of our common stock on the Nasdaq National Market during the four calendar weeks before a notice of the sale on Form 144 is filed.
       Sales under Rule 144 are also subject to certain manner of sale provisions and notice requirements, and to the availability of certain public information about us.
76

Rule 144(k)
       Under Rule 144(k), a person who is not deemed to have been one of our "affiliates" at any time during the 90 days preceding a sale, and who has beneficially owned the shares proposed to be sold for at least two years, including the holding period of any prior owner other than an "affiliate," is entitled to sell these shares without complying with the manner of sale, public information, volume limitation or notice provisions of Rule 144.
Rule 701
       Securities issued in reliance on Rule 701, such as shares of common stock acquired upon exercise of options granted under our equity incentive plans, are also restricted and, beginning 90 days after the effective date of this prospectus, may be sold by stockholders other than our affiliates subject only to the manner of sale provisions of Rule 144 and by affiliates under Rule 144 without compliance with its one-year holding period requirement.
Lock-Up Agreements
       Notwithstanding the foregoing, we, our directors, executive officers, the selling stockholders and holders of substantially all of our outstanding stock have agreed not to sell, offer to sell, contract or agree to sell, pledge, hypothecate, grant any option to purchase or otherwise dispose of, directly or indirectly, or file with the Securities and Exchange Commission a registration statement relating to, any shares of our common stock for a period of 180 days after the date of this prospectus without the prior written consent of Robert W. Baird & Co. Incorporated, except pursuant to the sale to the underwriters of shares in this offering, permitted transfers to related parties that agree to be bound by the foregoing restrictions, and issuances by us in connection with existing stock option and incentive plans, the exercise of outstanding options or warrants and future acquisitions subject to specified limits.
77

 UNDERWRITING
       Under an underwriting agreement dated                          , 2003, we and the selling stockholders have agreed to sell to the underwriters named below the indicated numbers of our common shares.

Underwriters
	 	Number
of Shares
	
Robert W. Baird & Co. Incorporated	 	 	
Jefferies & Company, Inc.	 	 	
 	 		
 	Total	 	 	
 	 		
       The underwriting agreement provides that the underwriters are obligated to purchase all the common shares in this offering if any are purchased, other than those shares covered by the over-allotment option we describe below. The underwriting agreement also provides that if an underwriter defaults, the purchase commitments of non-defaulting underwriters may be increased or this offering of our common shares may be terminated.
       The representatives have advised us and our selling stockholders that the underwriters propose to offer the shares of common stock to the public at the public offering price on the cover page of this prospectus. The underwriters may sell shares to dealers at that price less a concession of not in excess of $                   per share, of which $                  may be reallowed to other dealers. After this offering, the public offering price, concession and reallowance to dealers may be reduced by the representatives, but any reduction will not change the amount of proceeds to be received by us or selling stockholders. The common stock is offered by the underwriters on the terms discussed in this prospectus, subject to receipt and acceptance by them, and subject to their right to reject any order.
       The underwriters have advised us that they do not expect sales to discretionary accounts to exceed five percent of the total number of shares offered.
No Public Market
       Before this offering, there has been no public market for our common stock. Consequently, the public offering price for the common stock offered by this prospectus will be determined through negotiations among the representatives and us. We anticipate the material factors to be considered in these negotiations will be prevailing market conditions, our financial information, market valuations of other companies that we and the representatives believe to be comparable to us, estimates of our business potential and the present state of our development.
Over-Allotment Option
       We have granted to the underwriters an option, exercisable during the 30-day period after the date of this prospectus, to purchase up to                   additional shares of common stock solely to cover any over-allotments, at the public offering price less the underwriting discounts and commissions on the cover page of this prospectus. If the underwriters exercise their over-allotment option to purchase any of the additional                  shares of common stock, they have agreed, subject to specified conditions, to purchase approximately the same percentage of these additional shares as the number of shares to be
78

purchased by each of them bears to the total number of shares of common stock in this offering. We will be obligated to sell shares to the underwriters to the extent the over-allotment option is exercised.
       The following table summarizes the compensation we will pay the underwriters:

 	 	 	 	Total
	
 	 	Per Share
	 	Without
Over-
allotment
	 	With
Over-
allotment
	
Underwriting discounts and commissions payable by us	 	$	 	 	$	 	 	$	 	
Underwriting discounts and commissions payable by the selling stockholders	 	 	 	 	 	 	 	 	 	
       The underwriting fee will be an amount equal to the offering price per share to the public of the common stock, less the amount paid by the underwriters to us per share of common stock. The underwriters' compensation was determined through arms' length negotiations between us and the representatives.
       We estimate the expenses payable by us in connection with this offering, other than the underwriting discounts and commissions referred to above, will be approximately $                  . Expenses include the Securities and Exchange Commission and National Association of Securities Dealers, Inc. filing fees, Nasdaq National Market listing fees, printing, legal, accounting, and transfer agent and registrar fees, and other miscellaneous fees and expenses.
Indemnity
       The underwriting agreement contains covenants of indemnity among the underwriters and us against civil liabilities, including liabilities under the Securities Act of 1933.
Lock-Up Agreements
       Holders of substantially all of our outstanding stock and all of our directors, executive officers and the selling stockholders have signed lock up agreements with the underwriters. Under these agreements, these parties have agreed, during the period of 180 days after the date of this prospectus and subject to various exceptions, without the prior written consent of Robert W. Baird & Co. Incorporated, not to sell, offer to sell, contract or agree to sell, pledge, hypothecate, grant any option to purchase or otherwise dispose of, directly or indirectly, or file with the Securities and Exchange Commission a registration statement relating to, any shares of our common stock or any securities convertible into or exchangeable for shares of common stock, or warrants or other rights to purchase shares of common stock, enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of our common stock or any securities convertible into or exercisable or exchangeable for common stock, or warrants or other rights to purchase common stock, whether any such transaction is to be settled by delivery of common stock or such other securities, in cash or otherwise, or publicly announce an intention to effect any transaction described in this sentence. There are no existing agreements between the representatives and any of our stockholders who have executed a lock-up agreement providing consent to the sale of shares before the expiration of the lock-up period.
79

       In addition, we and the selling stockholders have agreed that during the lock-up period we will not, without the prior written consent of Robert W. Baird & Co. Incorporated, issue, sell, offer to sell, contract or agree to sell, hypothecate, pledge, grant any options to purchase or otherwise dispose of, directly or indirectly, any shares of common stock, or any securities convertible into, exercisable for or exchangeable for shares of common stock, or warrants or other rights to purchase shares of common stock or file or cause to be declared effective a registration statement relating to the offer and sale of any shares of our common stock or securities convertible into or exercisable or exchangeable for common stock or other rights to purchase common stock or any other securities that are substantially similar to our common stock. However, the following are examples of exceptions to this agreement:
•
our sale of shares in this offering;

•
the issuance of our common stock upon the exercise of outstanding options or warrants;

•
the issuance of options under existing stock option and incentive plans, provided that those options do not vest before the expiration of the lock-up period; and

•
the issuance of up to               shares of our common stock as consideration in connection with future acquisitions by us, so long as the recipients of such common stock agree to be bound by the terms of the lock-up agreement.
Listing
       We will apply to list our common stock on the Nasdaq National Market under the symbol "LKQX."
Stabilization
       The representatives have advised us that, under Regulation M of the Securities Exchange Act of 1934, some persons participating in the offering may engage in any of the following transactions:
•
stabilizing bids, which are bids for the purchase of common stock on behalf of the underwriters that are intended to fix or maintain the price of the common stock;

•
syndicate covering transactions, which are bids for the purchase of common stock on behalf of the underwriters to reduce a short position incurred by the underwriters in connection with the offering; a short position results when an underwriter sells more shares than it has committed to purchase; and

•
penalty bids, which are arrangements that permit the representatives to reclaim the selling concession otherwise accruing to an underwriter or syndicate member in connection with the offering if the common stock originally sold by the underwriter or syndicate member is purchased by the representatives in a syndicate covering transaction, and has not been effectively placed by this underwriter or syndicate member.
       These transactions may be effected on the Nasdaq National Market and, if commenced, may be discontinued at any time.
Directed Share Program
       At our request, the underwriters have reserved up to                  shares of common stock to be issued by us and offered for sale, at the initial public offering price, to our directors, officers, employees
80

and business associates. The number of shares of common stock available for sale to the general public will be reduced to the extent that these individuals purchase all or a portion of these reserved shares. Any reserved shares that are not purchased will be offered by the underwriters to the general public on the same terms as the shares of common stock offered in this offering.
81

 LEGAL MATTERS
       Certain legal matters with respect to the validity of the shares of common stock offered hereby will be passed upon for us by Bell, Boyd & Lloyd LLC, Chicago, Illinois. John T. McCarthy, a member of Bell, Boyd & Lloyd LLC, beneficially owns 12,000 shares of our common stock. Davis Polk & Wardwell, New York, New York, will pass upon certain legal matters for the underwriters.

 EXPERTS
       The financial statements as of December 31, 2001 and 2002 and for each of the three years in the period ended December 31, 2002 included in this prospectus and the related financial statement schedules included elsewhere in the registration statement have been audited by Deloitte & Touche LLP, independent auditors, as stated in their reports appearing herein and elsewhere in the registration statement (which reports express an unqualified opinion and the report on the financial statements includes an explanatory paragraph regarding the adoption of SFAS No. 142, "Goodwill and Other Intangible Assets"), and have been included in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing.

 ADDITIONAL INFORMATION
       We have filed with the Securities and Exchange Commission a registration statement on Form S-1 under the Securities Act of 1933 with respect to the common stock offered hereby. This prospectus, which constitutes a part of the registration statement, omits certain of the information contained in the registration statement and the exhibits and schedules thereto on file with the Securities and Exchange Commission pursuant to the Securities Act of 1933. For further information with respect to us and the common stock offered by this prospectus, we refer you to the registration statement and to the exhibits and schedules filed as a part of the registration statement. Statements made in this prospectus concerning the contents of any document referred to in this prospectus are not necessarily complete. With respect to each such document filed as an exhibit to the registration statement, reference is made to the exhibit for a more complete description of the matter involved. The registration statement and the exhibits may be inspected without charge at the public reference room maintained by the Securities and Exchange Commission at 450 Fifth Street, N.W., Washington, DC 20549. Please call the Securities and Exchange Commission at 1-800-SEC-0330 for further information on the operation of the public reference room. Copies of all or any part of the registration statement may be obtained from the Securities and Exchange Commission's offices upon payment of fees prescribed by the Securities and Exchange Commission. In addition, the Securities and Exchange Commission maintains a world wide web site from which you can electronically access the registration statement and the exhibits to the registration statement. The address of the site is www.sec.gov.
       As a result of this offering, we will become subject to the information and reporting requirements of the Securities Exchange Act of 1934, and, in accordance therewith, we will file periodic reports, proxy statements and other information with the Securities and Exchange Commission. We intend to furnish our stockholders with annual reports containing consolidated financial statements audited by our independent auditors.
82

 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Independent Auditors' Report	 	F-2	

Consolidated Financial Statements:	

Consolidated Balance Sheets at December 31, 2001 and 2002 and June 30, 2003 (unaudited)	
 	
F-3	

Consolidated Statements of Operations for the years ended December 31, 2000, 2001 and 2002 and for the six months ended June 30, 2002 and 2003 (unaudited)	
 	
F-4	

Consolidated Statements of Stockholders' Equity for the three years ended December 31, 2002 and for the six months ended June 30, 2003 (unaudited)	
 	
F-5	

Consolidated Statements of Cash Flows for the years ended December 31, 2000, 2001 and 2002 and for the six months ended June 30, 2002 and 2003 (unaudited)	
 	
F-6	

Notes to Consolidated Financial Statements	
 	
F-7	
F-1

INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
LKQ Corporation
       We have audited the accompanying consolidated balance sheets of LKQ Corporation and subsidiaries as of December 31, 2001 and 2002, and the related consolidated statements of operations, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2002. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
       We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
       In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of LKQ Corporation and subsidiaries at December 31, 2001 and 2002, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2002, in conformity with accounting principles generally accepted in the United States of America.
       As discussed in Note 2 to the consolidated financial statements, effective January 1, 2002, the Company changed its method of accounting for goodwill and intangible assets upon adoption of Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets.
/s/ DELOITTE & TOUCHE LLP
Chicago, Illinois
March 31, 2003
F-2

 
CONSOLIDATED BALANCE SHEETS

 	 	As of December 31,
	 	 	 	
 			 	As of
June 30,
2003
	 	
 	 	2001
	 	2002
			 	
 	 	 	 	 	 	(unaudited)
	 	
Assets	 	 	 	 	 	 	 	 	 	 	
Current Assets:	 	 	 	 	 	 	 	 	 	 	
 	Cash and equivalents	 	$	1,587,039	 	$	584,477	 	$	2,119,565	 	
 	Receivables, net	 	 	16,746,490	 	 	18,592,232	 	 	20,100,047	 	
 	Inventory	 	 	52,617,439	 	 	53,778,506	 	 	55,128,207	 	
 	Deferred income taxes	 	 	719,300	 	 	339,200	 	 	411,000	 	
 	Prepaid expenses	 	 	2,164,715	 	 	1,109,200	 	 	1,542,931	 	
 	 		 		 		 	
 	 	Total Current Assets	 	 	73,834,983	 	 	74,403,615	 	 	79,301,750	 	
Property and Equipment, net	 	 	36,785,774	 	 	39,861,133	 	 	40,512,363	 	
Intangibles	 	 	 	 	 	 	 	 	 	 	
 	Goodwill	 	 	115,044,444	 	 	49,263,443	 	 	50,764,845	 	
 	Other intangibles, net	 	 	119,573	 	 	64,195	 	 	53,171	 	
Deferred Income Taxes	 	 	—	 	 	11,712,600	 	 	11,053,000	 	
Other Assets	 	 	1,432,404	 	 	1,441,687	 	 	2,059,450	 	
 	 		 		 		 	
 	 	Total Assets	 	$	227,217,178	 	$	176,746,673	 	$	183,744,579	 	

Liabilities and Stockholders' Equity	

 	

 	

 	
 	
Current Liabilities:	 	 	 	 	 	 	 	 	 	 	
 	Accounts payable	 	$	4,389,684	 	$	4,535,537	 	$	4,850,945	 	
 	Accrued expenses	 	 	 	 	 	 	 	 	 	 	
 	 	Accrued payroll-related liabilities	 	 	4,292,336	 	 	4,172,935	 	 	3,925,930	 	
 	 	Accrued procurement liability	 	 	1,182,600	 	 	2,970,000	 	 	1,992,000	 	
 	 	Other accrued expenses	 	 	3,271,348	 	 	4,134,349	 	 	5,597,756	 	
 	Income taxes payable	 	 	1,749,032	 	 	108,392	 	 	296,321	 	
 	Deferred revenue	 	 	1,032,793	 	 	1,363,375	 	 	1,398,981	 	
 	Current portion of long-term obligations	 	 	41,055,787	 	 	6,449,438	 	 	16,511,925	 	
 	 		 		 		 	
 	 	Total Current Liabilities	 	 	56,973,580	 	 	23,734,026	 	 	34,573,858	 	
Long-Term Obligations, Excluding Current Portion	 	 	2,906,486	 	 	27,755,797	 	 	37,945,085	 	
Deferred Income Taxes	 	 	3,670,200	 	 	—	 	 	—	 	
Other Noncurrent Liabilities	 	 	3,561,490	 	 	4,127,797	 	 	4,581,932	 	
Redeemable Common Stock, $0.01 par value, 50,000 shares issued at June 30, 2003	 	 	—	 	 	—	 	 	617,027	 	
Commitments and Contingencies	 	 	 	 	 	 	 	 	 	 	
Stockholders' Equity:	 	 	 	 	 	 	 	 	 	 	
 	Common stock, $0.01 par value, 100,000,000 shares authorized, 17,658,259, 17,644,885 and 14,069,887 shares issued at December 31, 2001 and 2002, and June 30, 2003, respectively	 	 	176,583	 	 	176,449	 	 	140,699	 	
 	Additional paid-in capital	 	 	154,658,769	 	 	154,491,253	 	 	131,321,717	 	
 	Warrants	 	 	545,542	 	 	542,919	 	 	542,919	 	
 	Deferred compensation expense	 	 	(160,417	)	 	(72,917	)	 	(29,167	)	
 	Retained earnings (Accumulated deficit)	 	 	4,884,945	 	 	(34,008,651	)	 	(25,949,491	)	
 	 		 		 		 	
 	 	Total Stockholders' Equity	 	 	160,105,422	 	 	121,129,053	 	 	106,026,677	 	
 	 		 		 		 	
 	 	Total Liabilities and Stockholders' Equity	 	$	227,217,178	 	$	176,746,673	 	$	183,744,579	 	
 	 		 		 		 	
The accompanying notes are an integral part of the consolidated financial statements.
F-3

CONSOLIDATED STATEMENTS OF OPERATIONS

 	 	Year Ended December 31,
	 	Six Months Ended
June 30,
	 	
 	 	2000
	 	2001
	 	2002
	 	2002
	 	2003
	 	
 	 	 	 	 	 	 	 	(unaudited)
	 	
Revenue	 	$	226,303,760	 	$	250,462,449	 	$	287,125,301	 	$	144,100,804	 	$	160,273,075	 	
Cost of goods sold	 	 	119,313,195	 	 	132,520,842	 	 	154,573,805	 	 	77,442,908	 	 	84,475,439	 	
 	 		 		 		 		 		 	
 	Gross margin	 	 	106,990,565	 	 	117,941,607	 	 	132,551,496	 	 	66,657,896	 	 	75,797,636	 	
Facility and warehouse expenses	 	 	32,294,946	 	 	32,673,880	 	 	35,778,305	 	 	17,783,068	 	 	19,180,828	 	
Distribution expenses	 	 	21,888,606	 	 	24,621,181	 	 	28,529,835	 	 	13,526,321	 	 	16,781,886	 	
Selling, general and administrative expenses	 	 	40,094,260	 	 	39,637,013	 	 	42,385,286	 	 	20,765,403	 	 	22,726,374	 	
Depreciation and amortization	 	 	7,541,059	 	 	7,897,253	 	 	5,013,840	 	 	2,408,319	 	 	2,745,205	 	
Asset impairment loss	 	 	556,420	 	 	—	 	 	—	 	 	—	 	 	—	 	
 	 		 		 		 		 		 	
 	Operating income	 	 	4,615,274	 	 	13,112,280	 	 	20,844,230	 	 	12,174,785	 	 	14,363,343	 	
 	 		 		 		 		 		 	
Other (income) expense	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Interest, net	 	 	5,004,913	 	 	5,081,982	 	 	2,908,187	 	 	1,662,672	 	 	1,191,187	 	
 	Other income, net	 	 	(148,797	)	 	(138,422	)	 	(332,161	)	 	(94,661	)	 	(161,004	)	
 	 		 		 		 		 		 	
Total other expense	 	 	4,856,116	 	 	4,943,560	 	 	2,576,026	 	 	1,568,011	 	 	1,030,183	 	
 	 		 		 		 		 		 	
Income (loss) before provision for income taxes and cumulative effect of change in accounting principle	 	 	(240,842	)	 	8,168,720	 	 	18,268,204	 	 	10,606,774	 	 	13,333,160	 	
Provision for income taxes	 	 	637,600	 	 	3,939,000	 	 	7,263,000	 	 	4,240,000	 	 	5,274,000	 	
 	 		 		 		 		 		 	
Income (loss) before cumulative effect of change in accounting principle	 	 	(878,442	)	 	4,229,720	 	 	11,005,204	 	 	6,366,774	 	 	8,059,160	 	
Cumulative effect of change in accounting principle, net of tax (see Note 2)	 	 	—	 	 	—	 	 	(49,898,800	)	 	(49,898,800	)	 	—	 	
 	 		 		 		 		 		 	
Net income (loss)	 	$	(878,442	)	$	4,229,720	 	$	(38,893,596	)	$	(43,532,026	)	$	8,059,160	 	

Basic earnings (loss) per share:	

 	

 	

 	

 	

 	
 	
Income (loss) before cumulative effect of change in accounting principle	 	$	(0.05	)	$	0.24	 	$	0.62	 	$	0.36	 	$	0.51	 	
Cumulative effect of change in accounting principle, net of tax (see Note 2)	 	 	—	 	 	—	 	 	(2.82	)	 	(2.83	)	 	—	 	
 	 		 		 		 		 		 	
Net income (loss)	 	$	(0.05	)	$	0.24	 	$	(2.20	)	$	(2.47	)	$	0.51	 	

Diluted earnings (loss) per share:	

 	

 	

 	

 	

 	
 	
Income (loss) before cumulative effect of change in accounting principle	 	$	(0.05	)	$	0.23	 	$	0.57	 	$	0.33	 	$	0.46	 	
Cumulative effect of change in accounting principle, net of tax (see Note 2)	 	 	—	 	 	—	 	 	(2.57	)	 	(2.57	)	 	—	 	
 	 		 		 		 		 		 	
Net income (loss)	 	$	(0.05	)	$	0.23	 	$	(2.00	)	$	(2.24	)	$	0.46	 	
 	 		 		 		 		 		 	
The accompanying notes are an integral part of the consolidated financial statements.
F-4

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

 	 	Common Stock
	 	 	 	 	 	 	 	 	 	 	 	
 			 	 	 	 	 	 	 	Retained
Earnings/
(Accumulated
Deficit)
	 	 	 	
 	 	Shares
Issued
	 	Amount
	 	Additional
Paid-in Capital
	 	Warrants
	 	Deferred
Compensation
Expense
			 	Total
Stockholders'
Equity
	 	
Balance, January 1, 2000	 	17,349,709	 	$	173,497	 	$	153,449,745	 	$	—	 	$	(335,417	)	$	1,533,667	 	$	154,821,492	 	
 	Common stock issued in acquisitions	 	300,000	 	 	3,000	 	 	1,047,000	 	 	144,500	 	 	—	 	 	—	 	 	1,194,500	 	
 	Recognition of deferred compensation	 	—	 	 	—	 	 	—	 	 	—	 	 	87,500	 	 	—	 	 	87,500	 	
 	Exercise of stock options, including related tax benefits	 	300	 	 	3	 	 	4,497	 	 	—	 	 	—	 	 	—	 	 	4,500	 	
 	Net loss	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	(878,442	)	 	(878,442	)	
 	 		 		 		 		 		 		 		 	
Balance, December 31, 2000	 	17,650,009	 	$	176,500	 	$	154,501,242	 	$	144,500	 	$	(247,917	)	$	655,225	 	$	155,229,550	 	
 	 		 		 		 		 		 		 		 	
 	Equity-related compensation expense	 	—	 	 	—	 	 	64,860	 	 	—	 	 	—	 	 	—	 	 	64,860	 	
 	Issuance of warrants	 	—	 	 	—	 	 	—	 	 	401,042	 	 	—	 	 	—	 	 	401,042	 	
 	Recognition of deferred compensation	 	—	 	 	—	 	 	—	 	 	—	 	 	87,500	 	 	—	 	 	87,500	 	
 	Exercise of stock options, including related tax benefits	 	8,250	 	 	83	 	 	92,667	 	 	—	 	 	—	 	 	—	 	 	92,750	 	
 	Net income	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	4,229,720	 	 	4,229,720	 	
 	 		 		 		 		 		 		 		 	
Balance, December 31, 2001	 	17,658,259	 	$	176,583	 	$	154,658,769	 	$	545,542	 	$	(160,417	)	$	4,884,945	 	$	160,105,422	 	
 	 		 		 		 		 		 		 		 	
 	Retirement of common stock	 	(17,200	)	 	(172	)	 	(103,028	)	 	—	 	 	—	 	 	—	 	 	(103,200	)	
 	Repurchase of common stock	 	(15,000	)	 	(150	)	 	(119,850	)	 	—	 	 	—	 	 	—	 	 	(120,000	)	
 	Recognition of deferred compensation	 	—	 	 	—	 	 	—	 	 	—	 	 	87,500	 	 	—	 	 	87,500	 	
 	Exercise of warrants	 	12,826	 	 	128	 	 	28,147	 	 	(2,623	)	 	—	 	 	—	 	 	25,652	 	
 	Exercise of stock options, including related tax benefits	 	6,000	 	 	60	 	 	27,215	 	 	—	 	 	—	 	 	—	 	 	27,275	 	
 	Net loss	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	(38,893,596	)	 	(38,893,596	)	
 	 		 		 		 		 		 		 		 	
Balance, December 31, 2002	 	17,644,885	 	$	176,449	 	$	154,491,253	 	$	542,919	 	$	(72,917	)	$	(34,008,651	)	$	121,129,053	 	
 	 		 		 		 		 		 		 		 	
 	Retirement of common stock (unaudited)	 	(80,000	)	 	(800	)	 	(559,200	)	 	—	 	 	—	 	 	—	 	 	(560,000	)	
 	Repurchase of common stock (unaudited)	 	(3,557,498	)	 	(35,575	)	 	(22,866,911	)	 	—	 	 	—	 	 	—	 	 	(22,902,486	)	
 	Equity-related compensation expense (unaudited)	 	—	 	 	—	 	 	15,000	 	 	—	 	 	—	 	 	—	 	 	15,000	 	
 	Recognition of deferred compensation (unaudited)	 	—	 	 	—	 	 	—	 	 	—	 	 	43,750	 	 	—	 	 	43,750	 	
 	Exercise of stock options including related tax benefits (unaudited)	 	62,500	 	 	625	 	 	241,575	 	 	—	 	 	—	 	 	—	 	 	242,200	 	
 	Net income (unaudited)	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	8,059,160	 	 	8,059,160	 	
 	 		 		 		 		 		 		 		 	
Balance, June 30, 2003 (unaudited)	 	14,069,887	 	$	140,699	 	$	131,321,717	 	$	542,919	 	$	(29,167	)	$	(25,949,491	)	$	106,026,677	 	
 	 		 		 		 		 		 		 		 	
The accompanying notes are an integral part of the consolidated financial statements.
F-5

CONSOLIDATED STATEMENTS OF CASH FLOWS

 	 	Year Ended December 31,
	 	Six Months Ended
June 30,
	 	
 	 	2000
	 	2001
	 	2002
	 	2002
	 	2003
	 	
 	 	 	 	 	 	 	 	(unaudited)
	 	
CASH FLOWS FROM OPERATING ACTIVITIES:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Net income (loss)	 	$	(878,442	)	$	4,229,720	 	$	(38,893,596	)	$	(43,532,026	)	$	8,059,160	 	
 	Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Depreciation and amortization	 	 	7,541,059	 	 	7,897,253	 	 	5,013,840	 	 	2,408,319	 	 	2,745,205	 	
 	 	(Gain) loss on sale of property and equipment	 	 	34,671	 	 	(34,912	)	 	23,930	 	 	2,119	 	 	(76,730	)	
 	 	Equity-related compensation expense	 	 	—	 	 	64,860	 	 	—	 	 	—	 	 	15,000	 	
 	 	Deferred compensation expense	 	 	87,500	 	 	87,500	 	 	87,500	 	 	43,750	 	 	43,750	 	
 	 	Deferred income taxes	 	 	405,300	 	 	1,237,800	 	 	1,118,000	 	 	1,031,500	 	 	587,800	 	
 	 	Writedown of impaired assets	 	 	556,420	 	 	—	 	 	—	 	 	—	 	 	—	 	
 	 	Interest rate swap	 	 	—	 	 	—	 	 	159,718	 	 	—	 	 	7,803	 	
 	 	Cumulative effect of change in accounting principle	 	 	—	 	 	—	 	 	49,898,800	 	 	49,898,800	 	 	—	 	
 	Changes in operating assets and liabilities, net of effects from purchase transactions:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Receivables	 	 	(3,166,011	)	 	(202,267	)	 	(1,815,742	)	 	(3,074,555	)	 	(1,431,021	)	
 	 	Inventory	 	 	(5,961,039	)	 	(5,093,189	)	 	(1,161,067	)	 	471,952	 	 	(381,164	)	
 	 	Prepaid expenses and other assets	 	 	298,858	 	 	2,866,961	 	 	1,526,411	 	 	1,081,968	 	 	(584,739	)	
 	 	Accounts payable	 	 	(2,394,194	)	 	(347,470	)	 	145,853	 	 	812,290	 	 	292,347	 	
 	 	Accrued expenses	 	 	(1,165,535	)	 	430,020	 	 	2,531,000	 	 	184,788	 	 	246,760	 	
 	 	Income taxes payable	 	 	50,553	 	 	896,625	 	 	(1,631,365	)	 	(270,147	)	 	302,629	 	
 	 	Deferred revenue	 	 	872,176	 	 	160,617	 	 	330,582	 	 	188,392	 	 	35,606	 	
 	 	Other noncurrent liabilities	 	 	334,195	 	 	(134,519	)	 	406,589	 	 	231,246	 	 	446,332	 	
 	 		 		 		 		 		 	
 	 	 	Net cash provided by (used in) operating activities	 	 	(3,384,489	)	 	12,058,999	 	 	17,740,453	 	 	9,478,396	 	 	10,308,738	 	

CASH FLOWS FROM INVESTING ACTIVITIES:	

 	

 	

 	

 	

 	
 	
 	Purchases of property and equipment	 	 	(7,987,626	)	 	(3,396,902	)	 	(6,851,573	)	 	(2,225,088	)	 	(2,963,841	)	
 	Proceeds from sale of property and equipment	 	 	145,468	 	 	293,804	 	 	105,323	 	 	50,835	 	 	90,045	 	
 	Cash used in acquisitions	 	 	(465,580	)	 	(412,500	)	 	—	 	 	—	 	 	(3,284,526	)	
 	 		 		 		 		 		 	
 	 	Net cash used in investing activities	 	 	(8,307,738	)	 	(3,515,598	)	 	(6,746,250	)	 	(2,174,253	)	 	(6,158,322	)	

CASH FLOWS FROM FINANCING ACTIVITIES:	

 	

 	

 	

 	

 	
 	
 	Retirement of common stock	 	 	—	 	 	—	 	 	(103,200	)	 	—	 	 	—	 	
 	Proceeds from the sale of common stock	 	 	4,500	 	 	12,750	 	 	18,000	 	 	—	 	 	127,500	 	
 	Proceeds from exercise of warrants	 	 	—	 	 	—	 	 	25,652	 	 	—	 	 	—	 	
 	Debt issuance costs	 	 	(177,649	)	 	(424,588	)	 	(630,179	)	 	(530,694	)	 	(129,195	)	
 	Net borrowings (repayments) under line of credit	 	 	38,500,000	 	 	(10,000,000	)	 	(29,500,000	)	 	(26,500,000	)	 	14,000,000	 	
 	Borrowings under term loan	 	 	—	 	 	—	 	 	20,000,000	 	 	20,000,000	 	 	6,500,000	 	
 	Repayments under term loan	 	 	—	 	 	—	 	 	(1,250,000	)	 	—	 	 	—	 	
 	Payment of note issued in business acquisition	 	 	(22,750,000	)	 	—	 	 	—	 	 	—	 	 	—	 	
 	Repayments of long-term debt obligations	 	 	(648,367	)	 	(648,236	)	 	(557,038	)	 	(275,927	)	 	(211,147	)	
 	Repurchase of common stock	 	 	—	 	 	—	 	 	—	 	 	—	 	 	(22,902,486	)	
 	 		 		 		 		 		 	
 	 	Net cash provided by (used in) financing activities	 	 	14,928,484	 	 	(11,060,074	)	 	(11,996,765	)	 	(7,306,621	)	 	(2,615,328	)	

Net increase (decrease) in cash and equivalents	

3,236,257	

(2,516,673	
)	
 	
(1,002,562	
)	
 	
(2,478	
)	
 	
1,535,088	

Cash and equivalents, beginning of period	

867,455	

4,103,712	

1,587,039	

1,587,039	

584,477	

Cash and equivalents, end of period	
 	
$	
4,103,712	
 	
$	
1,587,039	
 	
$	
584,477	
 	
$	
1,584,561	
 	
$	
2,119,565	

Supplemental disclosure of cash flow information:	

 	

 	

 	

 	

 	
 	
 	Capital lease obligations incurred	 	$	—	 	$	—	 	$	1,050,000	 	$	1,050,000	 	$	—	 	
 	Note issued in connection with property acquisition	 	 	—	 	 	—	 	 	500,000	 	 	—	 	 	—	 	
 	Notes issued in connection with business acquisition	 	 	—	 	 	—	 	 	—	 	 	—	 	 	200,000	 	
 	Warrants issued in connection with revolving credit facility	 	 	—	 	 	401,042	 	 	—	 	 	—	 	 	—	 	
 	Common stock and warrants issued in connection with business acquisitions	 	 	1,194,500	 	 	—	 	 	—	 	 	—	 	 	—	 	
 	Redeemable common stock issued in connection with business acquisition	 	 	—	 	 	—	 	 	—	 	 	—	 	 	617,027	 	
 	Repurchase and retirement of common stock in exchange for cancellation of note receivable	 	 	—	 	 	—	 	 	(120,000	)	 	(120,000	)	 	—	 	
 	Repurchase and retirement of common stock in exchange for sale of assets	 	 	—	 	 	—	 	 	—	 	 	—	 	 	(560,000	)	
 	Cash paid for income taxes, net of refunds	 	 	122,919	 	 	(156,530	)	 	6,129,295	 	 	608,860	 	 	4,370,150	 	
 	Cash paid for interest	 	 	4,632,323	 	 	5,224,528	 	 	3,173,251	 	 	2,158,764	 	 	1,168,069	 	
The accompanying notes are an integral part of the consolidated financial statements.
F-6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1.    Description of Business
       LKQ Corporation was incorporated on February 13, 1998 in Delaware to create a national provider of recycled automotive parts. LKQ Corporation and its subsidiaries (the "Company") focus largely on the wholesale segment of this industry. The Company has grown through acquisitions of existing automotive recyclers, development of new automotive recycling facilities in selected markets, and expansion through distribution facilities into new markets.
Note 2.    Summary of Significant Accounting Policies
Principles of Consolidation
       The accompanying consolidated financial statements include the accounts of LKQ Corporation and its subsidiaries. All significant intercompany transactions and accounts have been eliminated.
Interim Financial Information
       The consolidated balance sheet as of June 30, 2003, the consolidated statement of stockholders' equity for the six months ended June 30, 2003 and the consolidated statements of operations and cash flows for the six months ended June 30, 2002 and 2003 and the related footnotes are unaudited and have been prepared in accordance with generally accepted accounting principles for interim financial information. However, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of management, the unaudited statements included herein contain all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the financial position, the cash flows and the results of operations for the periods then ended.
       The results of operations for interim periods presented are not necessarily indicative of the results that may be expected for any subsequent interim period or for the full year.
Use of Estimates
       The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Revenue Recognition
       The majority of the Company's revenue is derived from the sale of recycled automotive products. Revenue is recognized when the products are shipped and title has transferred, subject to a reserve for estimated returns, discounts and allowances that management estimates based upon historical information. The Company has recorded a reserve for estimated returns, discounts and allowances of
F-7

approximately $708,000, $780,000 and $904,000 at December 31, 2001 and 2002, and June 30, 2003 (unaudited), respectively. Revenue from the sale of separately-priced extended warranty contracts is reported as Deferred revenue and recognized ratably over the term of the contracts.
Shipping & Handling
       Revenue also includes amounts billed to customers related to shipping and handling of approximately $2,514,000, $3,082,000, and $3,575,000 during the years ended December 31, 2000, 2001 and 2002, and $1,641,000 and $2,853,000 during the six month periods ended June 30, 2002 and 2003 (unaudited), respectively. Distribution expenses in the accompanying consolidated statements of operations are the costs incurred to prepare and deliver products to customers.
Cash and Equivalents
       The Company considers all highly liquid investments with original maturities of 90 days or less to be cash equivalents. Cash equivalents are carried at cost, which approximates market value.
Receivables
       The Company has recorded a reserve for uncollectible accounts of approximately $974,000, $1,247,000 and $1,524,000 at December 31, 2001 and 2002, and June 30, 2003 (unaudited), respectively. The reserve is based on management's assessment of the collectibility of specific customer accounts, the aging of the accounts receivable and historical experience. Receivables include travel and other advances to employees of approximately $70,000, $51,000 and $41,000 at December 31, 2001 and 2002, and June 30, 2003 (unaudited), respectively.
Concentrations of Credit Risk
       Financial instruments that potentially subject the Company to significant concentration of credit risk consist primarily of cash and equivalents and accounts receivable. The majority of cash and equivalents are maintained with several major financial institutions. Concentrations of credit risk with respect to accounts receivable are limited because a large number of geographically diverse customers make up the Company's customer base. The Company controls credit risk through credit approvals, credit limits, and monitoring procedures.
Inventory
       Inventory is obtained primarily through organized auctions. The Company has also entered into certain arrangements whereby salvage vehicles are obtained directly from major insurance companies and automotive manufacturers, typically at a cost calculated as a percentage of the revenue generated from each vehicle.
       Inventory is recorded at the lower of cost or market. A salvage part is a used part suitable for sale as a replacement part. A core is a used mechanical part that is not suitable for sale as a replacement part without further remanufacturing work. For salvage parts and core inventory, management estimates the expected selling price of individual parts and systematically adjusts these estimates based upon analysis of recent sales data. An average cost percentage is then applied to the salvage parts and core inventory in
F-8

order to calculate inventory at cost. The average cost percentage is derived from the historical vehicle profitability for salvage vehicles purchased at auction or from contracted rates for salvage vehicles acquired under certain direct procurement arrangements. Average costs for buying, dismantling salvage vehicles and cores, and towing or freight, where applicable, are included in the cost applied to inventory.
       Inventory consists of the following:

 	 	December 31,
	 	 	
 			 	June 30,
2003
	
 	 	2001
	 	2002
			
 	 	 	 	 	 	(unaudited)
	
Salvage parts	 	$	47,236,234	 	$	49,699,502	 	$	51,422,503	
Core inventory	 	 	5,381,205	 	 	4,079,004	 	 	3,705,704	
 	 		 		 		
 	 	$	52,617,439	 	$	53,778,506	 	$	55,128,207	
 	 		 		 		
Property and Equipment
       Property and equipment are recorded at cost. Expenditures for major additions and improvements are capitalized. As property and equipment are sold or retired, the applicable cost and accumulated depreciation are removed from the accounts and any resulting gain or loss thereon is recognized. Construction in progress consists primarily of building and land improvements at existing Company facilities. Depreciation is calculated using the straight-line method over the estimated useful lives or, in the case of leasehold improvements, the term of the related lease, including renewal periods, if shorter. Other estimated useful lives are as follows:

Land improvements	 	20 years	
Buildings and improvements	 	20 - 40 years	
Furniture, fixtures and equipment	 	5 - 20 years	
Computer equipment and software	 	3 - 5 years	
Vehicles and trailers	 	3 - 10 years	
       Property and equipment consists of the following:

 	 	December 31,
	 	 	 	
 			 	June 30,
2003
	 	
 	 	2001
	 	2002
			 	
 	 	 	 	 	 	(unaudited)
	 	
Land and improvements	 	$	6,531,939	 	$	8,094,000	 	$	8,142,924	 	
Buildings and improvements	 	 	8,845,436	 	 	9,908,353	 	 	10,697,821	 	
Furniture, fixtures and equipment	 	 	12,736,874	 	 	14,597,959	 	 	15,218,002	 	
Computer equipment and software	 	 	4,591,479	 	 	6,528,778	 	 	6,748,855	 	
Vehicles and trailers	 	 	5,153,969	 	 	5,122,824	 	 	5,138,190	 	
Leasehold improvements	 	 	10,122,407	 	 	11,181,965	 	 	11,697,639	 	
 	 		 		 		 	
 	 	 	47,982,104	 	 	55,433,879	 	 	57,643,431	 	
Less-Accumulated depreciation	 	 	(11,791,900	)	 	(16,158,613	)	 	(18,511,055	)	
Construction in progress	 	 	595,570	 	 	585,867	 	 	1,379,987	 	
 	 		 		 		 	
 	 	$	36,785,774	 	$	39,861,133	 	$	40,512,363	 	
 	 		 		 		 	
F-9

Intangibles
       Intangible assets consist primarily of goodwill (the cost of purchased businesses in excess of the fair value of the net assets acquired) and covenants not to compete.
       On January 1, 2002, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 142, "Goodwill and Other Intangible Assets" (SFAS 142). SFAS 142 requires that goodwill and intangible assets with indefinite useful lives must be tested for impairment at least annually in accordance with the provisions of SFAS 142 and can no longer be amortized. Prior to the adoption of SFAS 142, the Company amortized goodwill over 40 years on a straight-line basis. Intangible assets with finite useful lives will continue to be amortized over their estimated useful lives.
       In connection with the transitional goodwill impairment evaluation, SFAS 142 required the Company, by June 30, 2002, to perform an assessment of whether there was an indication that goodwill was impaired as of the date of adoption. To accomplish this, the Company determined the carrying value of each of its reporting units as of January 1, 2002 and compared them to the fair value estimates of those reporting units. The fair values of the Company's reporting units were estimated using the expected present value of future cash flows and market comparables. Professionals in the valuation industry were utilized to validate the assumptions and overall methodology used to determine the fair value estimates. To the extent a reporting unit's carrying value exceeded its fair value estimate, an indication existed that the reporting unit's goodwill was impaired and the Company then had to perform the second step of the transitional impairment test. The second step of the impairment test, which had to be completed by December 31, 2002, required the Company to compare the implied fair value of the reporting unit's goodwill, determined by allocating the reporting unit's fair value to its individual assets and liabilities in a manner similar to a purchase price allocation in accordance with SFAS No. 141, "Business Combinations" (SFAS 141), to its carrying amount, both of which were measured as of the date of adoption. SFAS 142 required the transitional impairment loss to be recognized as a cumulative effect of a change in accounting principle in the Company's consolidated statement of operations.
       Valuations for some of the Company's acquisitions have declined significantly since the Company completed its acquisitions during 1998 and 1999 due to a number of factors, including lower earnings multiples applied in the valuations of comparable companies. As a result, the Company determined that the carrying value of certain reporting units exceeded the fair value of those reporting units at January 1, 2002, and recorded an impairment of goodwill in the amount of $49,898,800, net of tax of $16,120,700.
F-10

       The changes in the carrying amount of goodwill are as follows:

Balance as of January 1, 2001	 	$	118,333,214	 	
Amortization	 	 	(3,110,770	)	
Goodwill written off	 	 	(178,000	)	

Balance as of December 31, 2001	

115,044,444	
 	
Adjustment of previously recorded goodwill	 	 	238,499	 	
Impairment losses	 	 	(66,019,500	)	

Balance as of December 31, 2002	

49,263,443	
 	
Business acquisitions (unaudited)	 	 	1,501,402	 	

Balance as of June 30, 2003 (unaudited)	
 	
$	
50,764,845	

       Amortization expense was approximately $3,217,400, $3,182,800 and $55,400 during the years ended December 31, 2000, 2001 and 2002, and $36,000 and $11,000 during the six month periods ended June 30, 2002 and 2003 (unaudited), respectively. Included in 2000 and 2001 amortization expense was approximately $3,145,700 and $3,110,800, respectively, related to goodwill amortization. Covenants not to compete are amortized over the lives of the respective agreements on a straight-line basis. Estimated amortization expense for the year ended December 31, 2003 is approximately $17,300. Estimated annual amortization expense for the years ended December 31, 2004 through 2007 is approximately $7,800.
       Other intangible assets totaled approximately $371,700 at December 31, 2001 and 2002, and June 30, 2003 (unaudited). Accumulated amortization of other intangible assets at December 31, 2001 and 2002, and June 30, 2003 (unaudited), was approximately $252,100, $307,500 and $318,500, respectively.
       SFAS 142 requires transitional disclosure of the effect on net income and earnings per share had the Company adopted SFAS 142 for the years ended December 31, 2000 and 2001.

 	 	2000
	 	2001
	
Reported net income (loss)	 	$	(878,442	)	$	4,229,720	
Add: Goodwill amortization, net of tax	 	 	2,833,300	 	 	2,323,700	

Adjusted net income	
 	
$	
1,954,858	
 	
$	
6,553,420	

Basic earnings (loss) per share:	

 	

 	
 	Reported net earnings (loss)	 	$	(0.05	)	$	0.24	
 	Goodwill amortization, net of tax	 	 	0.16	 	 	0.13	

Adjusted basic earnings per share	
 	
$	
0.11	
 	
$	
0.37	

Diluted earnings (loss) per share:	

 	

 	
 	Reported net earnings (loss)	 	$	(0.05	)	$	0.23	
 	Goodwill amortization, net of tax	 	 	0.16	 	 	0.12	

Adjusted diluted earnings per share	
 	
$	
0.11	
 	
$	
0.35	
 	 		 		
F-11

Impairment of Long-Lived Assets
       Long-lived assets are reviewed for possible impairment whenever events or circumstances indicate that the carrying amount of such assets may not be recoverable. If such review indicates that the carrying amount of long-lived assets is not recoverable, the carrying amount of such assets is reduced to fair value. Except as noted in Note 10, there were no adjustments to the carrying value of long-lived assets in 2000, 2001 or 2002.
Fair Value of Financial Instruments
       SFAS No. 107, "Disclosures About Fair Value of Financial Instruments," requires disclosure of the fair value of certain financial instruments. The Company's financial instruments include cash and equivalents, trade receivables, accounts payable, debt and an interest rate swap. The carrying amounts of financial instruments included in current assets and liabilities, the interest rate swap, and long-term, variable-rate debt approximate fair value.
       The fair value of long-term, fixed-rate debt is estimated by using current interest rates for instruments with similar maturities. The estimated fair value of long-term, fixed-rate debt at December 31, 2001 and 2002, and June 30, 2003 (unaudited) was $3,648,900, $4,782,400 and $4,446,300, respectively, which differs from the carrying values of $3,462,273, $4,455,235 and $4,207,010, respectively, included in the consolidated balance sheets.
Accrued Expenses
       The Company has entered into certain arrangements whereby salvage vehicles are obtained directly from major insurance companies and automotive manufacturers at a cost calculated as a percentage of the revenue generated from each vehicle. Accrued expenses include an estimated liability of $1,182,600, $2,970,000 and $1,992,000 at December 31, 2001 and 2002, and June 30, 2003 (unaudited), respectively, for salvage inventory procured under such arrangements.
       The Company self-insures for a portion of employee medical benefits under the terms of its employee health insurance program. The Company has purchased stop-loss insurance coverage in order to limit its exposure to employee medical benefit claims. Other accrued expenses include an estimated liability of approximately $692,000, $870,000 and $976,000 at December 31, 2001 and 2002, and June 30, 2003 (unaudited), respectively, for expenses incurred but not yet paid under the program.
       The Company also self-insures for a portion of general liability and workers compensation claims under the terms of its current insurance program, which began on April 1, 2002. On April 1, 2003, the Company began self-insuring for a portion of automobile claims. The Company has purchased stop-loss insurance coverage in order to limit its exposure to automobile, general liability and workers' compensation claims. Other accrued expenses include an estimated liability of approximately $973,000 and $1,957,000, each net of a $300,000 claims deposit, at December 31, 2002 and June 30, 2003 (unaudited), respectively, for expenses incurred but not yet paid under the program.
F-12

Product Warranties
       The Company generally warrants certain mechanical parts against defects for a period of six months. Based on historical warranty claims, the Company accrues the estimated costs of the warranty coverage at the time of sale. A rollforward of the warranty reserve is as follows:

Balance as of December 31, 2001	 	$	100,000	 	
Warranty expense	 	 	1,226,000	 	
Warranty claims	 	 	(1,170,000	)	

Balance as of December 31, 2002	

156,000	
 	
Warranty expense (unaudited)	 	 	1,048,300	 	
Warranty claims (unaudited)	 	 	(978,300	)	

Balance as of June 30, 2003 (unaudited)	
 	
$	
226,000	

Other Noncurrent Liabilities
       Other Noncurrent Liabilities include approximately $780,000, $1,245,000 and $1,425,000 at December 31, 2001 and 2002, and June 30, 2003 (unaudited), respectively, related to employee deferred compensation plans as discussed in Note 6.
       Other Noncurrent Liabilities also include approximately $2,656,000 at December 31, 2001, and $2,610,000 at December 31, 2002 and June 30, 2003 (unaudited), respectively, related to unasserted claims that are deemed probable of assertion and have been recorded in accordance with generally accepted accounting principles. In the event the unasserted claims are asserted and resolved for amounts different than those accrued, or are determined to no longer be probable in future periods, the amounts so determined would be adjusted to income in the periods such determination is made.
Stock-Based Compensation
       The Company has three stock-based employee compensation plans, the LKQ Corporation Equity Incentive Plan (the "Equity Incentive Plan"), the Stock Option Plan for Non-Employee Directors (the "Director Plan"), and a separate stock option plan (the "CEO Plan"), which are described more fully in Note 4. The Company accounts for those plans under the recognition and measurement principles of Accounting Principles Board (APB) Opinion No. 25, "Accounting for Stock Issued to Employees," (APB 25) and related Interpretations. Under the CEO Plan, the difference between the fair market value of the options at the time granted in 1998 and the exercise price was recorded as deferred compensation expense and is being charged to operations over the vesting period of the options. No stock-based employee compensation cost is reflected in net income (loss) for the Equity Incentive Plan at the date of issuance of the options, as all options granted under this plan had an exercise price equal to or greater than the market value of the underlying common stock on the date of grant. No options have yet been granted under the Director Plan.
F-13

       The following table illustrates the effect on net income (loss) and earnings (loss) per share if the Company had applied the fair value recognition provisions of SFAS No. 123, "Accounting for Stock-Based Compensation" (SFAS 123), to the Equity Incentive Plan:

 	 	Year Ended December 31,
	 	Six Months Ended
June 30,
	 	
 	 	2000
	 	2001
	 	2002
	 	2002
	 	2003
	 	
 	 	 	 	 	 	 	 	(unaudited)
	 	
Net income (loss), as reported	 	$	(878,442	)	$	4,229,720	 	$	(38,893,596	)	$	(43,532,026	)	$	8,059,160	 	
Less: Total stock-based employee compensation expense determined using the Black-Scholes option pricing model, net of related tax effects	 	 	(1,011,558	)	 	(1,039,720	)	 	(1,140,395	)	 	(564,180	)	 	(624,219	)	

Pro forma net income (loss)	
 	
$	
(1,890,000	
)	
$	
3,190,000	
 	
$	
(40,033,991	
)	
$	
(44,096,206	
)	
$	
7,434,941	

Earnings (loss) per share:	

 	

 	

 	

 	

 	
 	
 	Basic – as reported	 	$	(0.05	)	$	0.24	 	$	(2.20	)	$	(2.47	)	$	0.51	 	
 	Basic – pro forma	 	$	(0.11	)	$	0.18	 	$	(2.27	)	$	(2.50	)	$	0.47	 	
 	
Diluted – as reported	
 	
$	
(0.05	
)	
$	
0.23	
 	
$	
(2.00	
)	
$	
(2.24	
)	
$	
0.46	
 	
 	Diluted – pro forma	 	$	(0.11	)	$	0.17	 	$	(2.06	)	$	(2.27	)	$	0.42	 	
       The fair value of options granted has been estimated at the date of grant using a Black-Scholes option pricing model with the following weighted average assumptions:

 	 	December 31,
	 	June 30,
	 	
 	 	2000
	 	2001
	 	2002
	 	2002
	 	2003
	 	
 	 	 	 	 	 	 	 	(unaudited)
	 	
Expected life (in years)	 	7.5	 	7.5	 	7.5	 	7.5	 	7.5	 	
Risk-free interest rate	 	5.81	%	5.67	%	5.39	%	5.40	%	5.22	%	
Volatility	 	—	 	—	 	—	 	—	 	—	 	
Dividend yield	 	0	%	0	%	0	%	0	%	0	%	
       The Black-Scholes option pricing model was developed for use in estimating the fair value of traded options that have no vesting provisions and are fully transferable. In addition, this and other valuation models require the use of highly subjective assumptions. The Company's employee stock options have characteristics significantly different from those of traded options and, in addition, changes in the subjective underlying assumptions can materially affect the fair value estimate. As a result, in the opinion of management, the existing option pricing models do not necessarily provide a reliable single measure of the fair value of the Company's employee stock options.
       Using a Black-Scholes option pricing model with the above assumptions, the weighted average estimated fair value of employee stock options granted in 2000, 2001, 2002 and 2003 (unaudited) was $4.70, $0.92, $2.15 and $1.52 per share, respectively. For purposes of pro forma disclosure, the estimated fair value of the options is amortized to expense over the options' vesting periods.
F-14

Earnings (Loss) per Share
       Basic earnings (loss) per share are computed using the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share incorporate the incremental shares issuable upon the assumed exercise of stock options and warrants. Certain of the Company's stock options and warrants were excluded from the calculation of diluted earnings (loss) per share because they were antidilutive, but these options and warrants could be dilutive in the future.
Segment Information
       All of the Company's operations are conducted in the United States. The Company manages its operations geographically. Because approximately 95% of all revenues and 92% of all profits are derived from and 95% of all assets are used in its salvage operations, the Company has concluded that its business activities fall into one reportable segment.
Recent Accounting Pronouncements
       Effective January 1, 2001, the Company adopted the provisions of SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" (SFAS 133), as amended. The Company has concluded that the adoption of these standards had no effect on the Company's consolidated financial position, results of operations, or cash flows.
       In July 2001, the Financial Accounting Standards Board (FASB) issued SFAS No. 141, "Business Combinations" (SFAS 141). SFAS 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001. SFAS 141 also specifies certain criteria that intangible assets acquired in a business combination must meet in order to be recognized and reported apart from goodwill. The Company did not acquire any businesses in 2001 or 2002 and there was no significant impact on its 2003 acquisitions.
       The Company adopted the provisions of SFAS No. 144, "Accounting for the Impairment of Long-Lived Assets" (SFAS 144), as of January 1, 2002. SFAS 144 supercedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of" (SFAS 121) and the accounting and reporting requirements of APB Opinion No. 30, "Reporting the Results of Operations – Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary and Unusual and Infrequently Occurring Events and Transactions" for the disposal of a segment of a business. SFAS 144 resolves certain implementation issues related to SFAS 121 and establishes a single accounting model for long-lived assets to be disposed of by sale (whether individual assets or a component of a business). The Company has concluded that the adoption of these standards had no effect on the Company's 2002 consolidated financial position, results of operations, or cash flows.
       In November 2002, the FASB issued Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others" (FIN 45). FIN 45 elaborates on required disclosures by a guarantor in its financial statements about obligations under certain guaranties that it has issued and clarifies the need for a guarantor to recognize, at the inception of certain guaranties, a liability for the fair value of the obligation undertaken in issuing the guaranty. The Company reviewed the provisions of FIN 45 relating to the initial recognition and measurement of guarantor liabilities, which are effective for qualifying guaranties entered into or modified after
F-15

December 31, 2002, but does not expect it to have a material impact on the Company's consolidated financial position, results of operations, or cash flows. The disclosure requirements of FIN 45 relative to the Company's product warranty liability, which are effective for the Company's year ended December 31, 2002, are included in "Product Warranties" above.
       In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based Compensation-Transition and Disclosures" (SFAS 148) which amends SFAS 123. SFAS 148 provides alternative methods of transition for a voluntary change to the fair value method of accounting for stock-based employee compensation and amends the disclosure requirements of SFAS 123 to require more prominent and more frequent disclosures in financial statements about the effects of stock-based employee compensation. The Company has elected to continue to account for stock-based compensation in accordance with APB 25 and, as a result, does not expect this standard to have a material effect on the Company's consolidated financial position, results of operations, or cash flows. SFAS 148 disclosure requirements are effective for fiscal years ending after December 15, 2002 and have been included in "Stock-Based Compensation" above.
       In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity" (SFAS 150). SFAS 150 establishes standards for classification and measurement of certain financial instruments with characteristics of both liabilities and equity and will be effective for periods ending on or after December 15, 2003. The Company has reviewed the new standard and determined that its implementation will not impact its consolidated financial position or results of operations.
Note 3.    Capital Structure
       On March 31, 1999, in connection with a business acquisition, the Company issued warrants to purchase 100,000 shares of its common stock at $15.00 per share, with exercisability contingent upon the achievement of certain operating results in 2000. These results were achieved and the warrants became exercisable on March 31, 2001. These warrants expire five years after they became exercisable. In accordance with the antidilution provisions of the warrant agreement, the total number of warrants issued and the exercise price were adjusted to 111,079 and $13.50, 112,434 and $13.34, and 113,318 and $13.24 per share, at December 31, 2001 and 2002, and June 30, 2003 (unaudited), respectively. On March 31, 1999, the Company contingently issued warrants to purchase 100,000 shares of its common stock at $15.00 per share, with exercisability dependant upon the achievement of certain operating results in 2001. Such results were not achieved and, as a result, these warrants were cancelled.
       The Company issued warrants on January 3, 2000 to purchase 150,000 shares of its common stock at exercise prices ranging from $15.00 to $35.00 per share, in connection with a business acquisition completed in 1999. The warrants were exercisable as of the date of issuance and will expire on August 31, 2004. The warrants were valued at $144,500 at the date of grant.
       On February 14, 2001, the Company issued warrants to purchase 1,961,112 shares of its common stock at an exercise price of $2.00 per share to certain stockholder guarantors, in connection with guaranties provided by the stockholders for a portion of the Company's revolving credit agreement. The warrants became exercisable upon issuance and will expire on February 14, 2006. The warrants were valued at approximately $401,000 at the date of grant.
F-16

       On January 1, 2003, in connection with a business acquisition, the Company issued 50,000 shares of its common stock. The Company granted a put option with a single exercise date of January 1, 2007 at a price of $15.00 per share and obtained a call option on those shares with a single exercise date of January 1, 2007 at a price of $22.50 per share. These shares are reflected as Redeemable Common Stock in the consolidated balance sheet as of June 30, 2003 (unaudited).
       In February 2003, the Company repurchased 2,000,000 shares of its common stock from existing stockholders, including 1,878,684 shares repurchased from AutoNation, Inc., the Company's largest stockholder, for a total of $12,000,000 in cash. The Company partially funded the stock repurchase by obtaining a $9,000,000 term loan (see Note 7), which matures on February 20, 2004.
       In May 2003, the Company repurchased 1,557,498 shares of its common stock from existing shareholders, including 1,500,000 shares repurchased from AutoNation, Inc., for a total of $10,902,486 in cash. The Company partially funded the stock repurchase by borrowing an additional $9,000,000 against the existing Revolving Facility (see Note 7).
       In June 2003, the Company sold certain assets no longer deemed pertinent to its operations to an existing stockholder in exchange for 80,000 shares of the Company's common stock. The shares, which were subsequently retired, were valued at $560,000.
       All of the Company's stockholders have executed a stockholders agreement. Pursuant to this agreement, all shares of the Company's common stock are subject to restrictions on transfer, except as expressly permitted by the agreement. The stockholders agreement terminates upon the earlier of i) the consent of the holders of a majority of the shares; ii) the acquisition of all shares by one stockholder; or iii) the closing of an initial public offering of the Company's common stock. In addition, shares issued in connection with acquisitions are subject to additional restrictions on transfer.
Note 4.    Equity Incentive Plans
       In February 1998, the Company adopted the Equity Incentive Plan to attract and retain employees and consultants. Under the Equity Incentive Plan, both qualified and nonqualified stock options, stock appreciation rights, restricted stock, performance shares and performance units may be granted. On March 6, 2002, the Company's stockholders approved an increase in the number of shares available under the Equity Incentive Plan from 3,000,000 to 5,000,000, subject to antidilution and other adjustment provisions.
       In November 1998, the Company also adopted the CEO Plan. The terms of the CEO Plan are substantially the same as the terms of the Equity Incentive Plan except that the exercise price of options granted under the CEO Plan may be less than the fair market value of the Company's common stock on the date the option is granted. During 1998, the Company granted 175,000 options under the CEO Plan with an exercise price of $10.00 per share at a time when the fair value of the Company's stock was $12.50 per share, thus creating deferred compensation expense. The difference between the fair market value and the option exercise price was recorded as deferred compensation expense and is being charged to operations over the vesting period of the options.
       In June 2003, the Company also adopted the Director Plan. Options granted under the Director Plan are automatic and nondiscretionary, and the exercise price of the options is 100% of the fair market
F-17

value of the Company's stock on the grant date. Only non-employee directors are eligible for grants under the Director Plan. The plan provides for an initial grant to each existing non-employee director of an option to purchase 30,000 shares of common stock upon the consummation of an initial public offering of the Company's common stock. The plan also provides for an initial grant to a new non-employee director of an option to purchase 30,000 shares of common stock upon election to the board of directors. Subsequent to the initial grants, each non-employee director will be automatically granted an option to purchase 10,000 shares of common stock on each anniversary of the granting of the initial stock option to that non-employee director. The Director Plan will terminate in June 2013, unless the board of directors terminates it sooner. The number of shares available under the Director Plan is 500,000, subject to antidilution and other adjustment provisions.
       A summary of stock option transactions is as follows:

 	 	Options
Available
for Grant
	 	Number of
Shares
Outstanding
	 	Weighted
Average
Exercise
Price
	
Balance, January 1, 2000	 	1,554,850	 	1,594,150	 	$	11.72	
 	
Granted	
 	
(506,000	
)	
506,000	

15.00	
 	Exercised	 	—	 	(300	)	 	15.00	
 	Cancelled	 	76,200	 	(76,200	)	 	13.47	

Balance, December 31, 2000	
 	
1,125,050	
 	
2,023,650	

12.47	
 	
Granted	
 	
(678,500	
)	
678,500	

3.00	
 	Exercised	 	—	 	(8,250	)	 	1.55	
 	Cancelled	 	106,000	 	(106,000	)	 	13.10	

Balance, December 31, 2001	
 	
552,550	
 	
2,587,900	

10.00	
 	
Additional shares reserved for issuance	
 	
2,000,000	
 	
—	

—	
 	Granted	 	(737,150	)	737,150	 	 	8.00	
 	Exercised	 	—	 	(6,000	)	 	3.00	
 	Cancelled	 	150,000	 	(150,000	)	 	9.66	

Balance, December 31, 2002	
 	
1,965,400	
 	
3,169,050	

9.56	
 	
Shares reserved for Director Plan (unaudited)	
 	
500,000	
 	
—	

—	
 	Granted (unaudited)	 	(464,200	)	464,200	 	 	8.75	
 	Exercised (unaudited)	 	—	 	(62,500	)	 	2.04	
 	Cancelled (unaudited)	 	22,500	 	(22,500	)	 	6.93	

Balance, June 30, 2003 (unaudited)	
 	
2,023,700	
 	
3,548,250	
 	
$	
9.61	
 	 		 		 		
F-18

       The following table summarizes information about outstanding and exercisable stock options at December 31, 2002:

 	 	 	Outstanding
	 	Exercisable
	
 	Exercise Price
	 	Shares
	 	Weighted
Average
Remaining
Contractual
Life (Yrs)
	 	Weighted
Average
Exercise Price
	 	Shares
	 	Weighted
Average
Exercise
Price
	
 	$	1.00	 	85,000	 	5.1	 	$	1.00	 	80,000	 	$	1.00	
 	 	3.00	 	615,250	 	8.1	 	 	3.00	 	192,800	 	 	3.00	
 	 	5.00	 	1,000	 	8.5	 	 	5.00	 	200	 	 	5.00	
 	 	8.00	 	714,150	 	9.2	 	 	8.00	 	65,515	 	 	8.00	
 	 	10.00	 	438,000	 	5.6	 	 	10.00	 	380,000	 	 	10.00	
 	 	12.50	 	584,000	 	5.9	 	 	12.50	 	494,450	 	 	12.50	
 	 	15.00	 	731,650	 	6.9	 	 	15.00	 	433,900	 	 	15.00	

 	

 	
3,169,050	
 	
7.2	
 	
$	
9.56	
 	
1,646,865	
 	
$	
10.73	
 	 	 	 		 	 	 	 	 	 		 	 	 	
       The following table summarizes information about outstanding and exercisable stock options at June 30, 2003 (unaudited):

 	 	 	Outstanding
	 	Exercisable
	
 	Exercise Price
	 	Shares
	 	Weighted
Average
Remaining
Contractual
Life (Yrs)
	 	Weighted
Average
Exercise Price
	 	Shares
	 	Weighted
Average
Exercise
Price
	
 	$	1.00	 	55,000	 	4.6	 	$	1.00	 	55,000	 	$	1.00	
 	 	3.00	 	573,750	 	7.6	 	 	3.00	 	220,050	 	 	3.00	
 	 	5.00	 	500	 	8.0	 	 	5.00	 	150	 	 	5.00	
 	 	8.00	 	706,150	 	8.7	 	 	8.00	 	140,630	 	 	8.00	
 	 	8.75	 	464,200	 	9.5	 	 	8.75	 	—	 	 	8.75	
 	 	10.00	 	438,000	 	5.1	 	 	10.00	 	418,000	 	 	10.00	
 	 	12.50	 	579,000	 	5.4	 	 	12.50	 	525,850	 	 	12.50	
 	 	15.00	 	731,650	 	6.4	 	 	15.00	 	502,600	 	 	15.00	

 	

 	
3,548,250	
 	
7.1	
 	
$	
9.61	
 	
1,862,280	
 	
$	
10.81	
 	 	 	 		 	 	 	 	 	 		 	 	 	
       At December 31, 2000 and 2001, options to purchase 628,160 and 1,219,350 shares of common stock, respectively, were exercisable pursuant to the Equity Incentive Plan and the CEO Plan with a weighted-average exercise price of $10.94 and $11.22, respectively.
       Stock options expire 10 years from the date they are granted. Options granted under the Equity Incentive Plan and the CEO Plan generally vest over a period of five years. Options granted under the Director Plan vest six months after the date of grant.
Note 5.    Related-Party Transactions
       The Company subleases its corporate office space from an entity owned by one of its principal stockholders for a percentage of the rent that is charged to that entity. The sublease expires on June 30,
F-19

2004. The total amounts paid to this entity were approximately $259,000, $274,000 and $263,000 during each of the years ended December 31, 2000, 2001 and 2002, and $133,000 and $122,000 during the six month periods ended June 30, 2002 and 2003 (unaudited), respectively.
       A corporation owned by the Company's Chairman of the Board, who is one of the Company's principal stockholders, owns private aircraft that the Company uses from time to time for business trips. The Company reimburses this corporation for out-of-pocket and other related flight expenses, as well as for other direct expenses incurred. The total amounts paid to this corporation were approximately $38,000, $76,000 and $12,800 during each of the years ended December 31, 2000, 2001 and 2002, respectively, and $900 during the six month period ended June 30, 2002 (unaudited). There were no payments to this corporation during the six month period ended June 30, 2003 (unaudited).
       The Company sells products to various repair facilities owned by one of its principal stockholders. The amount of such sales totaled approximately $1,455,000, $1,723,000 and $2,203,000 during the years ended December 31, 2000, 2001 and 2002, and $1,144,000 and $1,300,000 during the six months ended June 30, 2002 and 2003 (unaudited), respectively.
       As part of a business acquisition in 1998, the Company entered into a procurement agreement with corporations owned by the seller of those businesses, who became one of the Company's principal stockholders as a result of the business acquisition and who is currently an officer of the Company, whereby the Company agreed to purchase salvage products inventory from those corporations. The procurement agreement expired on May 31, 2001. The amount of such purchases totaled approximately $793,000 during the year ended December 31, 2000, and $167,000 during the five month period ended May 31, 2001.
       In connection with the acquisitions of several businesses during 1998 and 1999, the Company entered into agreements with several sellers of those businesses, who became stockholders as a result of those acquisitions, for the lease of certain properties used in its salvage operations. Typical lease terms include an initial term of five years, with three five-year renewal options and purchase options at various times throughout the lease periods. The Company also maintains the right of first refusal concerning the sale of the leased property. Lease payments to a principal stockholder who became an officer of the Company after the acquisition of his business were approximately $714,000 during each of the years ended December 31, 2000, 2001 and 2002 and $358,000 during each of the six month periods ended June 30, 2002 and 2003 (unaudited), respectively.
       On February 14, 2001, the Company issued warrants to purchase 1,961,112 shares of its common stock at an exercise price of $2.00 per share to certain stockholder guarantors. In June 2003, the Company sold certain assets no longer deemed pertinent to its operations to an existing stockholder in exchange for 80,000 shares of the Company's common stock. See Note 3 for further discussion.
       The Company believes that the related party transactions described above are comparable to those available from unaffiliated third parties.
Note 6.    Retirement Plans
       On August 1, 1999, the Company adopted the LKQ Corporation Employees' Retirement Plan, a qualified defined contribution plan covering substantially all full time employees. Employees may
F-20

contribute up to 15% of eligible compensation, subject to certain IRS limitations. The Company will match 50% of the portion of the employee's contributions that does not exceed 6% of the employee's salary. Matching Company contributions vest over a four year period and totaled $824,000, $884,000 and $895,000 in 2000, 2001 and 2002, and $440,000 and $471,000 during the six month periods ended June 30, 2002 and 2003 (unaudited), respectively. All contribution levels may be subject to further limits, under Internal Revenue Service guidelines.
       The Company also established a nonqualified deferred compensation plan on August 1, 1999, for eligible employees who, due to Internal Revenue Service guidelines, could not take full advantage of the LKQ Corporation Employees' Retirement Plan. The plan allows participants to defer up to 50% of eligible compensation, with a maximum deferral of $50,000 per year. The Company will match 50% of the portion of the employee's contributions that does not exceed 6% of the employee's salary. The deferred compensation, together with Company matching contributions and accumulated earnings, is accrued and is payable after retirement or termination of employment, subject to vesting provisions. Participants may also elect to receive amounts deferred in a given year on any plan anniversary five or more years subsequent to the year of deferral. Matching Company contributions vest over a four year period and totaled $24,000, $12,000 and $67,000 in 2000, 2001 and 2002, and $37,000 and $31,000 during the six month periods ended June 30, 2002 and 2003 (unaudited), respectively. The deferred compensation plan is funded under a trust agreement whereby the Company pays to the trust amounts necessary to pay premiums on life insurance policies carried to meet the obligations under the deferred compensation plan. The cash surrender value of these policies was approximately $418,000, $677,000 and $955,000 at December 31, 2001 and 2002, and June 30, 2003 (unaudited), respectively, and is included in Other Assets in the accompanying balance sheets. Total deferred compensation liabilities were approximately $688,000, $968,000 and $1,152,000 at December 31, 2001 and 2002, and June 30, 2003 (unaudited), respectively, and are included in Accrued payroll-related liabilities and Other Noncurrent Liabilities in the accompanying balance sheets.
       A subsidiary of the Company has a nonqualified retirement plan that the Company agreed to continue when the subsidiary was acquired in 1998. The plan is funded by the Company through premium payments on Company-owned life insurance policies that are carried to meet the obligations under the plan. The cash surrender value of these policies was approximately $122,000, $96,000 and $122,000 at December 31, 2001 and 2002, and June 30, 2003 (unaudited), respectively, and is included in Other Assets in the accompanying balance sheets. The annual expense for this plan is approximately $30,000. Total obligations were approximately $322,000, $327,000 and $342,000 at December 31, 2001 and 2002, and June 30, 2003 (unaudited), respectively, and are included in Other Noncurrent Liabilities in the accompanying balance sheets.
F-21

Note 7.    Long-Term Obligations
       Long-Term Obligations consist of the following:

 	 	December 31,
	 	 	 	
 			 	June 30,
2003
	 	
 	 	2001
	 	2002
			 	
 	 	 	 	 	 	(unaudited)
	 	
Revolving credit facility	 	$	40,500,000	 	$	11,000,000	 	$	25,000,000	 	
Term loan, payable quarterly through June 2005	 	 	—	 	 	18,750,000	 	 	16,250,000	 	
Term loan due February 20, 2004	 	 	—	 	 	—	 	 	9,000,000	 	
Capital lease obligations, payable in monthly installments through March 2009, interest at 7.64% to 10.4%	 	 	2,657,506	 	 	3,367,472	 	 	2,981,046	 	
Notes payable to individuals in monthly installments through November 2010, interest at 3.5% to 10%	 	 	635,029	 	 	1,050,692	 	 	1,209,864	 	
Various equipment notes, payable in monthly installments through March 2004, interest at various rates up to 9.99%, secured by related equipment	 	 	94,738	 	 	37,071	 	 	16,100	 	
Note payable to an individual in semi-annual installments through November 2002, interest at 6%	 	 	75,000	 	 	—	 	 	—	 	
 	 		 		 		 	
 	 	 	43,962,273	 	 	34,205,235	 	 	54,457,010	 	
Less current maturities	 	 	(41,055,787	)	 	(6,449,438	)	 	(16,511,925	)	
 	 		 		 		 	
 	 	$	2,906,486	 	$	27,755,797	 	$	37,945,085	 	
 	 		 		 		 	
       The scheduled maturities of long-term obligations outstanding at December 31, 2002 are as follows:

2003	 	$	6,449,438	
2004	 	 	8,994,534	
2005	 	 	16,725,538	
2006	 	 	512,965	
2007	 	 	816,684	
Thereafter	 	 	706,076	
 	 		
 	 	$	34,205,235	
 	 		
       The scheduled maturities of long-term obligations outstanding at June 30, 2003 (unaudited) are as follows:

Six months ending December 31, 2003	 	$	3,700,704	
Years ending December 31:	 	 	 	
 	2004	 	 	18,060,636	
 	2005	 	 	30,786,965	
 	2006	 	 	468,298	
 	2007	 	 	487,438	
 	2008	 	 	745,230	
 	Thereafter	 	 	207,739	
 	 		
 	 	$	54,457,010	
 	 		
       On June 21, 2002, the Company entered into a new credit facility with its bank group. The proceeds under the new credit facility were used to pay off $35,000,000 that was outstanding under the Company's previous bank credit facility. The new facility consists of a revolving line of credit (the "Revolving Facility") with a maximum availability of $40,000,000 and a $20,000,000 million term loan ("Term Loan A"). On February 20, 2003, the credit facility was amended to provide an additional term loan ("Term Loan B") in the amount of $9,000,000. The credit facility is secured by substantially all assets of the Company and contains customary covenants, including, among other things, prohibitions on the payment of cash dividends, restrictions on the payment of other dividends and on purchases, redemptions and acquisitions of its stock, limitations on additional indebtedness, certain limitations on acquisitions, mergers, and consolidations, and the maintenance of certain financial ratios. At
F-22

December 31, 2002 and June 30, 2003, (unaudited) the Company was in compliance with all covenants. The Revolving Facility matures on June 30, 2005. Term Loan A requires scheduled quarterly repayments, beginning December 31, 2002, with a final payment due on June 30, 2005. Term Loan B matures on February 20, 2004. Availability under the Revolving Facility was approximately $26,000,000 and $15,000,000 at December 31, 2002 and June 30, 2003 (unaudited), respectively, and is calculated monthly based upon the amount of eligible inventory and accounts receivable, as defined. Total availability under the credit facility is also predicated on a proforma calculation not to exceed 2.50 times (2.75 times through December 31, 2003) the ratio of senior funded debt to earnings before interest, taxes, depreciation, amortization ("EBITDA") and impairment of goodwill. The interest rate on advances under the Revolving Facility and Term Loan A may be either the bank prime lending rate or the Interbank Offering Rate ("IBOR"), at the Company's option, plus 0.50% to 1.25% for prime rate loans, or 2.00% to 2.75% for IBOR-based loans. The percentage added to the prime lending rate or IBOR is dependent upon the Company's total funded debt to EBITDA ratio for the trailing four quarters. The interest rate on advances under Term Loan B may be either the bank prime lending rate or IBOR, at the Company's option, plus 1.25% for prime rate loans, or 2.75% for IBOR-based loans. The weighted-average interest rate on borrowings outstanding against the credit facility at December 31, 2001 and 2002, and June 30, 2003 (unaudited) was 7.36%, 3.81% and 3.82%, respectively. Borrowings against the Revolving Facility totaled $11,000,000 and $25,000,000 at December 31, 2002 and June 30, 2003 (unaudited), respectively, and are classified as long-term obligations.
       Stockholder guaranties totaling $10,000,000 related to the previous credit facility were cancelled when the outstanding amount under the previous credit facility was paid off. The new credit facility requires no stockholder guaranties.
       During August 2002, the Company entered into a two-year interest rate swap agreement with a total notional amount of $10,000,000 and a fixed rate of 2.65%. The counterparty to the agreement is a member of the Company's bank group. Under the terms of the agreement, the Company is required to make quarterly payments at the specified fixed rate and in return receives payments at variable rates. The estimated fair value of the interest rate swap at December 31, 2002 and June 30, 2003 (unaudited) is a loss of $173,385 and $182,363, respectively, and is included in Other Noncurrent Liabilities and Accrued expenses. In accordance with the provisions of SFAS 133, as amended, the changes in the fair value of the interest rate swap are included in current period earnings, as the agreement has not been designated as a hedging instrument.
       On August 31, 1999, in connection with an acquisition, the Company issued a promissory note in the amount of $22,750,000. The annual interest rate on the note was 4.77% and the note matured on January 4, 2000. The note was secured by an irrevocable standby letter of credit issued in favor of the seller. This note was paid on January 4, 2000, and the standby letter of credit was cancelled.
Note 8.    Commitments and Contingencies
       The Company is obligated under noncancelable operating leases for corporate office space, warehouse and distribution facilities, trucks and certain equipment.
F-23

       The future minimum lease commitments under these leases at December 31, 2002 are as follows:

Years ending December 31:	 	 	 	
  	2003	 	$	6,777,000	
 	2004	 	 	5,939,000	
 	2005	 	 	4,910,000	
 	2006	 	 	3,613,000	
 	2007	 	 	3,219,000	
 	Thereafter	 	 	3,172,000	
 	 		
 	 	$	27,630,000	
 	 		
       The future minimum lease commitments under these leases at June 30, 2003 (unaudited) are as follows:

Six months ending December 31, 2003	 	$	3,843,000	
Years ending December 31:	 	 	 	
 	2004	 	 	6,784,000	
 	2005	 	 	5,625,000	
 	2006	 	 	4,255,000	
 	2007	 	 	3,617,000	
 	2008	 	 	2,803,000	
 	Thereafter	 	 	477,000	
 	 		
 	 	$	27,404,000	
 	 		
       Rental expense for operating leases was approximately $6,087,000, $6,730,000 and $7,431,000 during the years ended December 31, 2000, 2001 and 2002, and $3,726,000 and $3,837,000 during the six month periods ended June 30, 2002 and 2003 (unaudited), respectively.
       The Company has leased certain land and facilities under agreements which are classified as capital leases. Assets recorded under capital leases consist of:

 	 	December 31,
	 	 	 	
 			 	June 30,
2003
	 	
 	 	2001
	 	2002
			 	
 	 	 	 	 	 	(unaudited)
	 	
Land and improvements	 	$	1,282,243	 	$	1,863,202	 	$	1,560,099	 	
Buildings and improvements	 	 	1,986,183	 	 	2,216,725	 	 	2,147,264	 	
Equipment	 	 	—	 	 	—	 	 	14,493	 	
 	 		 		 		 	
 	 	 	3,268,426	 	 	4,079,927	 	 	3,721,856	 	
Accumulated depreciation	 	 	(264,824	)	 	(418,129	)	 	(461,017	)	
 	 		 		 		 	
Net assets under capital leases	 	$	3,003,602	 	$	3,661,798	 	$	3,260,839	 	
 	 		 		 		 	
F-24

       Commitments for minimum rentals under these agreements at December 31, 2002 are as follows:

Years ending December 31:	 	 	 	
 	2003	 	$	548,119	
 	2004	 	 	1,572,119	
 	2005	 	 	470,119	
 	2006	 	 	470,119	
 	2007	 	 	470,119	
 	Thereafter	 	 	587,649	
 	 		
 	 	 	4,118,244	
 	Less amount representing interest	 	 	750,772	
 	 		
 	Present value of net minimum lease payments	 	$	3,367,472	
 	 		
       Commitments for minimum rentals under these agreements at June 30, 2003 (unaudited) are as follows:

Six months ending December 31, 2003	 	$	249,548	
Years ending December 31:	 	 	 	
 	2004	 	 	1,523,096	
 	2005	 	 	419,024	
 	2006	 	 	416,123	
 	2007	 	 	416,123	
 	2008	 	 	416,123	
 	Thereafter	 	 	104,030	
 	 		
 	 	 	3,544,067	
 	Less amount representing interest	 	 	563,021	
 	 		
 	Present value of net minimum lease payments	 	$	2,981,046	
 	 		
       The Company guaranties the residual values of the majority of its truck and equipment operating leases. The residual values decline over the lease terms to a defined percentage of original cost. In the event the lessor does not realize the residual value when a piece of equipment is sold, the Company would be responsible for a portion of the shortfall. Similarly, if the lessor realizes more than the residual value when a piece of equipment is sold, the Company would be paid the amount realized over the residual value. Had the Company terminated all of its operating leases subject to these guaranties at June 30, 2003 (unaudited), the guarantied residual value would have totaled approximately $5,900,000.
       The Company also has certain other contingent liabilities resulting from litigation, claims and other commitments and is subject to a variety of environmental and pollution control laws and regulations incident to the ordinary course of business. Management believes that the probable resolution of such contingencies will not materially affect the financial position, results of operations or cash flows of the Company.
F-25

Note 9.    Earnings (Loss) Per Share
       The following chart sets forth the computation of earnings (loss) per share:

 	 	Year Ended December 31,
	 	Six Months Ended
June 30,
	
 	 	2000
	 	2001
	 	2002
	 	2002
	 	2003
	
 	 	 	 	 	 	 	 	(unaudited)
	
Income (loss) before cumulative effect of change in accounting principle	 	$	(878,442	)	$	4,229,720	 	$	11,005,204	 	$	6,366,774	 	$	8,059,160	
Cumulative effect of change in accounting principle, net of tax	 	 	—	 	 	—	 	 	(49,898,800	)	 	(49,898,800	)	 	—	
 	 		 		 		 		 		
Net income (loss)	 	$	(878,442	)	$	4,229,720	 	$	(38,893,596	)	$	(43,532,026	)	$	8,059,160	
 	 		 		 		 		 		
Denominator for basic earnings (loss) per share –	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Weighted-average shares outstanding	 	 	17,600,942	 	 	17,655,692	 	 	17,653,792	 	 	17,653,204	 	 	15,896,198	
Effect of dilutive securities:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Employee stock options	 	 	—	 	 	156,221	 	 	277,299	 	 	289,819	 	 	265,188	
 	Warrants	 	 	—	 	 	929,884	 	 	1,467,671	 	 	1,470,834	 	 	1,461,215	
 	 		 		 		 		 		
Denominator for diluted earnings (loss) per share –	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Adjusted weighted-average shares outstanding	 	 	17,600,942	 	 	18,741,797	 	 	19,398,762	 	 	19,413,857	 	 	17,622,601	

Earnings (loss) per share, basic	

 	

 	

 	

 	

 	
 	Income (loss) before cumulative effect of change in accounting principle	 	$	(0.05	)	$	0.24	 	$	0.62	 	$	0.36	 	$	0.51	
 	Cumulative effect of change in accounting principle, net of tax	 	 	—	 	 	—	 	 	(2.82	)	 	(2.83	)	 	—	
 	 		 		 		 		 		
Earnings (loss) per share, basic	 	$	(0.05	)	$	0.24	 	$	(2.20	)	$	(2.47	)	$	0.51	
 	 		 		 		 		 		
Earnings (loss) per share, diluted	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Income (loss) before cumulative effect of change in accounting principle	 	$	(0.05	)	$	0.23	 	$	0.57	 	$	0.33	 	$	0.46	
 	Cumulative effect of change in accounting principle, net of tax	 	 	—	 	 	—	 	 	(2.57	)	 	(2.57	)	 	—	

Earnings (loss) per share, diluted	
 	
$	
(0.05	
)	
$	
0.23	
 	
$	
(2.00	
)	
$	
(2.24	
)	
$	
0.46	
 	 		 		 		 		 		
F-26

       The following chart sets forth the number of employee stock options and warrants outstanding but not included in the computation of diluted earnings (loss) per share because their effect would have been antidilutive:

 	 	December 31,
	 	June 30,
	
 	 	2000
	 	2001
	 	2002
	 	2002
	 	2003
	
 	 	 	 	 	 	 	 	(unaudited)
	
Antidilutive securities:	 	 	 	 	 	 	 	 	 	 	
 	Employee stock options	 	1,998,950	 	1,834,650	 	2,467,800	 	2,461,800	 	2,919,000	
 	Warrants	 	350,000	 	261,089	 	262,434	 	261,089	 	263,318	
Note 10.    Asset Impairment Loss
       The Company owned certain licenses related to application software it abandoned in 1999. These licenses were written down to $500,000 using market estimates and were included in Other Assets at December 31, 1999. The Company was unable to sell these licenses during 2000 despite marketing efforts, and believed it would be unable to recover the carrying costs in subsequent years. Accordingly, a $500,000 ($300,000 after tax) impairment loss was recorded in 2000. Included in Other accrued expenses at December 31, 2001 is approximately $63,000 in amounts paid in 2002 related to commitments associated with the abandonment of this project.
       The Company also closed two satellite facilities during 2000. An asset impairment loss of approximately $56,000 was recorded in 2000 in connection with these closures.
Note 11.    Business Combinations (unaudited)
       During 2003, the Company acquired three automotive recycling businesses, located in upstate New York, California and Nevada, for an aggregate of $3,485,000 in cash, of which $200,000 is to be paid subsequent to June 30, 2003, and 50,000 redeemable shares of the Company's common stock. The business combinations enable the Company to serve new market areas. The Company did not complete any acquisitions during the years ended December 31, 2000, 2001 or 2002.
       The acquisitions are being accounted for under the purchase method of accounting and are included in the Company's financial statements from the dates of acquisition. The purchase price was preliminarily allocated to the net assets acquired based upon estimated fair market values at the dates of acquisition, pending final determination of certain acquired assets and liabilities.
F-27

       The preliminary purchase price allocation for the acquisitions completed during the six months ended June 30, 2003 are as follows:

Receivables, net	 	$	76,794	 	
Inventory	 	 	1,002,582	 	
Prepaid expenses	 	 	26,921	 	
Property and equipment	 	 	1,217,499	 	
Goodwill	 	 	1,501,402	 	
Other assets	 	 	310,639	 	
Current liabilities assumed	 	 	(23,061	)	
Long-term obligations assumed	 	 	(11,223	)	
Purchase price payable at March 31, 2003	 	 	(200,000	)	
Redeemable common stock issued	 	 	(617,027	)	
 	 		 	
Cash used in acquisitions, net of cash acquired	 	$	3,284,526	 	
 	 		 	
Note 12.    Income Taxes
       The Company accounts for income taxes in accordance with SFAS No. 109, "Accounting for Income Taxes." Accordingly, deferred income taxes have been provided to show the effect of temporary differences between the recognition of revenue and expenses for financial and income tax reporting purposes and between the tax basis of assets and liabilities and their reported amounts in the financial statements. A valuation allowance is provided for deferred tax assets if it is more likely than not that these items will either expire before the Company is able to realize their benefit, or that future deductibility is uncertain.
       Prepaid expenses include approximately $1,669,800 and $25,000 at December 31, 2001 and 2002, respectively, in tax payments made by the Company, which are to be refunded or applied to the Company's future income tax liabilities.
       The federal statutory rate is reconciled to the effective tax rate as follows:

 	 	Year Ended
December 31,
	 	Six Months
Ended June 30,
	 	
 	 	2000
	 	2001
	 	2002
	 	2002
	 	2003
	 	
 	 	 	 	 	 	 	 	(unaudited)
	 	
Federal statutory rate	 	35.0	 %	35.0	%	35.0	%	35.0	%	35.0	%	
State income taxes, net of federal tax impact	 	(33.6	)	5.4	 	3.3	 	3.8	 	3.7	 	
Non-deductible acquisition related expenses	 	(214.9	)	5.1	 	—	 	—	 	—	 	
Non-deductible meals and entertainment expenses	 	(48.8	)	1.2	 	0.5	 	0.4	 	0.3	 	
Other, net	 	(2.4	)	1.5	 	1.0	 	0.8	 	0.6	 	
 	 		 		 		 		 		 	
Effective tax rate	 	(264.7	)%	48.2	%	39.8	%	40.0	%	39.6	%	
 	 		 		 		 		 		 	
F-28

       The provision for income taxes consists of the following components:

 	 	Year Ended December 31,
	 	Six Months Ended
June 30,
	
 	 	2000
	 	2001
	 	2002
	 	2002
	 	2003
	
 	 	 	 	 	 	 	 	(unaudited)
	
Current:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Federal	 	$	368,600	 	$	1,131,700	 	$	5,060,000	 	$	2,740,500	 	$	4,005,500	
 	State	 	 	(136,300	)	 	1,569,500	 	 	1,085,000	 	 	468,000	 	 	680,700	
 	 		 		 		 		 		
 	 	 	232,300	 	 	2,701,200	 	 	6,145,000	 	 	3,208,500	 	 	4,686,200	
Deferred	 	 	405,300	 	 	1,237,800	 	 	1,118,000	 	 	1,031,500	 	 	587,800	
 	 		 		 		 		 		
 	Provision for income taxes	 	$	637,600	 	$	3,939,000	 	$	7,263,000	 	$	4,240,000	 	$	5,274,000	
 	 		 		 		 		 		
       The significant components of the Company's deferred tax assets and liabilities are as follows:

 	 	December 31,
	 	 	 	
 			 	June 30,
2003
	 	
 	 	2001
	 	2002
			 	
 	 	 	 	 	 	(unaudited)
	 	
Deferred Tax Assets:	 	 	 	 	 	 	 	 	 	 	
 	Accounts receivable	 	$	622,200	 	$	840,400	 	$	899,300	 	
 	Inventory	 	 	561,000	 	 	776,000	 	 	759,000	 	
 	Goodwill	 	 	—	 	 	10,637,400	 	 	9,134,100	 	
 	Accrued expenses	 	 	1,835,000	 	 	1,300,200	 	 	1,177,100	 	
 	Net operating loss carryforwards	 	 	1,454,600	 	 	1,850,300	 	 	1,981,500	 	
 	Other	 	 	259,400	 	 	667,700	 	 	788,000	 	
 	 		 		 		 	
 	 	 	4,732,200	 	 	16,072,000	 	 	14,739,000	 	
 	Less valuation allowance	 	 	(86,600	)	 	(113,600	)	 	(123,300	)	
 	 		 		 		 	
Total deferred tax assets	 	$	4,645,600	 	$	15,958,400	 	$	14,615,700	 	
 	 		 		 		 	
Deferred Tax Liabilities:	 	 	 	 	 	 	 	 	 	 	
 	Property and equipment	 	$	3,886,400	 	$	3,875,500	 	$	3,123,000	 	
 	Goodwill	 	 	3,680,400	 	 	—	 	 	—	 	
 	Other	 	 	29,700	 	 	31,100	 	 	28,700	 	
 	 		 		 		 	
Total deferred tax liabilities	 	$	7,596,500	 	$	3,906,600	 	$	3,151,700	 	
 	 		 		 		 	
 	Net deferred tax asset (liability)	 	$	(2,950,900	)	$	12,051,800	 	$	11,464,000	 	
 	 		 		 		 	
       Deferred tax assets and liabilities are reflected on the Company's consolidated balance sheets as follows:

 	 	December 31,
	 	 	
 			 	June 30,
2003
	
 	 	2001
	 	2002
			
 	 	 	 	 	 	(unaudited)
	
Current deferred tax assets	 	$	719,300	 	$	339,200	 	$	411,000	
Noncurrent deferred tax assets	 	 	—	 	 	11,712,600	 	 	11,053,000	
Noncurrent deferred tax liabilities	 	 	(3,670,200	)	 	—	 	 	—	
       In connection with the adoption of SFAS 142, the Company recorded a deferred tax asset totaling $16,120,700 during 2002. At December 31, 2002, the Company had net operating loss carryforwards for certain of its state tax jurisdictions, the tax benefits of which total $1,850,300. A valuation allowance
F-29

has been established for a portion of these deferred tax assets. The tax benefits expire over the period from 2004 through 2022. While the Company expects to realize the deferred tax assets net of valuation allowances, changes in estimates of future taxable income or in tax laws may alter this expectation.
Note 13.    Other (Income) Expense
       Other (income) expense was comprised of the following:

 	 	Year Ended December 31,
	 	Six Months Ended
June 30,
	 	
 	 	2000
	 	2001
	 	2002
	 	2002
	 	2003
	 	
 	 	 	 	 	 	 	 	(unaudited)
	 	
Interest expense	 	$	5,121,774	 	$	5,244,717	 	$	3,073,766	 	$	1,808,360	 	$	1,202,449	 	
Interest income	 	 	(116,861	)	 	(162,735	)	 	(165,579	)	 	(145,688	)	 	(11,262	)	
Other income, net	 	 	(148,797	)	 	(138,422	)	 	(332,161	)	 	(94,661	)	 	(161,004	)	
Note 14.    Selected Quarterly Data (unaudited)
       The following table represents unaudited selected quarterly financial data for the two years ended December 31, 2002 and the quarters ended March 31, 2003 and June 30, 2003. The operating results for any quarter are not necessarily indicative of the results for any future period.
       (In thousands, except per share data)

Quarter Ended
	 	Mar. 31
	 	Jun. 30
	 	Sep. 30
	 	Dec. 31
	
2001	 	 	 	 	 	 	 	 	 	 	 	 	
Revenue	 	$	64,147	 	$	61,187	 	$	61,085	 	$	64,043	
Gross margin	 	 	30,140	 	 	29,135	 	 	28,824	 	 	29,843	
Operating income	 	 	4,080	 	 	2,952	 	 	2,661	 	 	3,419	
Income before cumulative effect of change in accounting principle	 	 	1,343	 	 	929	 	 	819	 	 	1,139	
Net income	 	 	1,343	 	 	929	 	 	819	 	 	1,139	
Basic earnings per share:(1)	 	 	 	 	 	 	 	 	 	 	 	 	
 	Income before cumulative effect of change in accounting principle	 	$	0.08	 	$	0.05	 	$	0.05	 	$	0.06	
 	Basic earnings per share	 	 	0.08	 	 	0.05	 	 	0.05	 	 	0.06	
Diluted earnings per share:(1)	 	 	 	 	 	 	 	 	 	 	 	 	
 	Income before cumulative effect of change in accounting principle	 	 	0.08	 	 	0.05	 	 	0.04	 	 	0.06	
 	Diluted earnings per share	 	 	0.08	 	 	0.05	 	 	0.04	 	 	0.06	
F-30

       (In thousands, except per share data)

Quarter Ended
	 	Mar. 31
	 	Jun. 30
	 	Sep. 30
	 	Dec. 31
	
2002	 	 	 	 	 	 	 	 	 	 	 	 	
Revenue	 	$	71,314	 	$	72,787	 	$	71,860	 	$	71,164	
Gross margin	 	 	32,958	 	 	33,700	 	 	33,145	 	 	32,748	
Operating income	 	 	6,230	 	 	5,945	 	 	4,682	 	 	3,987	
Income before cumulative effect of change in accounting principle	 	 	3,151	 	 	3,216	 	 	2,359	 	 	2,279	
Net income (loss)(2)	 	 	(46,748	)	 	3,216	 	 	2,359	 	 	2,279	
Basic earnings (loss) per share:(1)	 	 	 	 	 	 	 	 	 	 	 	 	
 	Income before cumulative effect of change in accounting principle	 	$	0.18	 	$	0.18	 	$	0.13	 	$	0.13	
 	Basic earnings (loss) per share	 	 	(2.65	)	 	0.18	 	 	0.13	 	 	0.13	
Diluted earnings (loss) per share:(1)	 	 	 	 	 	 	 	 	 	 	 	 	
 	Income before cumulative effect of change in accounting principle	 	 	0.16	 	 	0.17	 	 	0.12	 	 	0.12	
 	Diluted earnings (loss) per share	 	 	(2.41	)	 	0.17	 	 	0.12	 	 	0.12	
       (In thousands, except per share data)

Quarter Ended
	 	Mar. 31
	 	Jun. 30
	 	 	 	 	
2003	 	 	 	 	 	 	 	 	 	 	
Revenue	 	$	79,256	 	$	81,017	 	 	 	 	
Gross margin	 	 	37,453	 	 	38,345	 	 	 	 	
Operating income	 	 	7,020	 	 	7,344	 	 	 	 	
Income before cumulative effect of change in accounting principle	 	 	3,940	 	 	4,119	 	 	 	 	
Net income	 	 	3,940	 	 	4,119	 	 	 	 	
Basic earnings per share(1):	 	 	 	 	 	 	 	 	 	 	
 	Income before cumulative effect of change in accounting principle	 	$	0.23	 	$	0.27	 	 	 	 	
 	Basic earnings per share	 	 	0.23	 	 	0.27	 	 	 	 	
Diluted earnings per share(1):	 	 	 	 	 	 	 	 	 	 	
 	Income before cumulative effect of change in accounting principle	 	 	0.21	 	 	0.25	 	 	 	 	
 	Diluted earnings per share	 	 	0.21	 	 	0.25	 	 	 	 	

(1)
The sum of the quarters may not equal the total of the respective year's earnings per share on either a basic or diluted basis due to changes in the weighted average shares outstanding throughout the year.

(2)
As more fully described in Note 2 in the notes to the consolidated financial statements, the Company recorded an impairment of goodwill in the amount of $49,898,800, net of tax of $16,120,700, during the quarter ended March 31, 2002. In accordance with the provisions of SFAS 142, this impairment was reflected as a cumulative effect of a change in accounting principle.
F-31

 PART II
Information not required in the prospectus
Item 13. Other Expenses of Issuance and Distribution.
       The following table sets forth the estimated costs and expenses, other than underwriting discounts and commissions, payable by the registrant in connection with the registration, sale, and distribution of the securities being registered hereby, including the shares offered for sale by the selling stockholders. All amounts shown are estimates except the Securities and Exchange Commission registration fee, the National Association of Securities Dealers, Inc. filing fee and the Nasdaq National Market listing fee.

SEC Registration Fee	 	$	6,067	
NASD Filing Fee	 	$	8,000	
Nasdaq National Market Listing Fee	 	$	100,000	
Accounting Fees and Expenses	 	$	*	
Legal Fees and Expenses	 	$	*	
Printing and Engraving Expenses	 	$	*	
Blue Sky Fees and Expenses	 	$	*	
Transfer Agent and Registrar's Fees and Expenses	 	$	*	
Miscellaneous	 	$	*	
 	 		
Total	 	$	*	

*
To be filed by amendment.
Item 14. Indemnification of Directors and Officers.
       The registrant is organized under the Delaware General Corporation Law (DGCL), which empowers Delaware corporations to indemnify any director or officer, or former director or officer, who was or is a party, or is threatened to be made a party, to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that such person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement, actually and reasonably incurred in connection with such action, suit or proceeding, provided that such director or officer acted in good faith in a manner reasonably believed to be in, or not opposed to, the best interests of the corporation, and, with respect to any criminal action or proceeding, provided further that such director or officer has no reasonable cause to believe his conduct was unlawful.
       The DGCL also empowers Delaware corporations to provide similar indemnity to any director or officer, or former director or officer, for expenses, including attorneys' fees, actually and reasonably incurred by the person in connection with the defense or settlement of actions or suits by or in the right of the corporation if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the interests of the corporation, except in respect of any claim, issue or matter as to which such director or officer shall have been adjudged to be liable to the corporation unless and
II-1

only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability, but in view of all of the circumstances of the case, such director or officer is fairly and reasonably entitled to indemnity for such expenses that the Court of Chancery or such other court shall deem proper.
       The DGCL further provides that (i) to the extent a present or former director or officer of a corporation has been successful in the defense of any action, suit or proceeding described above or in the defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by such person, in connection therewith, and (ii) indemnification and advancement of expenses provided by, or granted pursuant to, the DGCL shall not be deemed exclusive of any other rights to which the indemnified party may be entitled.
       The DGCL permits a Delaware corporation to purchase and maintain, on behalf of any director or officer, insurance against liabilities incurred in such capacities. The DGCL also permits a corporation to pay expenses incurred by a director or officer in advance of the final disposition of an action, suit or proceeding, upon receipt of an undertaking by the director or officer to repay such amount if it is determined that such person is not entitled to indemnification.
       As permitted by the DGCL, the registrant's certificate of incorporation eliminates the personal liability of a director to the corporation or its stockholders for monetary damages for violations of the director's fiduciary duty except, to the extent provided by applicable law, (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, (iii) pursuant to Section 174 of the DGCL (providing for liability of directors for unlawful payment of dividends or unlawful stock purchases or redemptions) or (iv) for any transaction from which a director derived an improper personal benefit. In addition, the registrant's certificate of incorporation provides that it is required to indemnify its directors and officers to the fullest extent permitted by the DGCL for any expenses, liabilities or other matters, that such indemnification is not exclusive of any other right to indemnification that such person may be entitled to otherwise, and that the right to such indemnification is available for current and former directors and officers, and inures to the benefit of their heirs, executors and administrators. The registrant's amended and restated bylaws also contain provisions for indemnification of its directors and officers consistent with the provisions of the DGCL.
       The registrant has also entered into an indemnification agreement with each of its directors and officers which provides for certain rights to indemnification and payment of expenses in addition to and in furtherance of the indemnification provisions in our certificate of incorporation.
       The foregoing statements are subject to the detailed provisions of the DGCL, the registrant's certificate of incorporation, amended and restated bylaws and the form of indemnification agreement which is filed as an exhibit to this Registration Statement.
       The registrant has obtained insurance policies indemnifying its directors and officers against certain civil liabilities and related expenses.
       The registrant also expects to enter into an underwriting agreement with the several underwriters and the selling stockholders, which will provide for cross-indemnification between the registrant, its
II-2

directors, officers, and controlling persons, the selling stockholders and the underwriters against certain liabilities, including liabilities arising under the Securities Act of 1933.
Item 15. Recent Sales of Unregistered Securities.
       During the last three years, the registrant has issued unregistered securities in the transactions described below. These securities were offered and sold by the registrant in connection with acquisitions in reliance upon the exemptions provided for in Section 4(2) of the Securities Act of 1933, relating to sales not involving any public offering and Rule 506 of the Securities Act of 1933 relating to sales to accredited investors, and, with respect to the option grants and exercises described below, in reliance upon the exemption provided for in Rule 701 of the Securities Act of 1933 relating to a compensatory benefit plan. The sales were made without the use of an underwriter and the certificates representing the securities sold contain a restrictive legend that prohibits transfer without registration or an applicable exemption.
       On January 3, 2000, in connection with a business acquisition, the registrant issued warrants to purchase 150,000 shares of common stock at exercise prices ranging from $15.00 to $35.00 per share. The warrants were exercisable upon issuance and will expire on February 14, 2006.
       On January 3, 2000, the registrant issued 200,000 shares of common stock as consideration for the acquisition of assets of Hunts Point Auto Wreckers, Inc.
       On January 12, 2000, the registrant granted options to purchase 433,000 shares of common stock to certain of its employees at an exercise price of $15.00 per share pursuant to the registrant's 1998 equity incentive plan. During the remainder of 2000, the registrant granted additional options to purchase 73,000 shares of common stock to certain of its employees at an exercise price of $15.00 per share pursuant to its 1998 equity incentive plan.
       On February 1, 2000, the registrant issued 300 shares of common stock to an employee upon exercise of options under the registrant's 1998 equity incentive plan at $15.00 per share.
       On January 22, 2001, the registrant granted options to purchase 677,500 shares of common stock to certain of its employees at an exercise price of $3.00 per share pursuant to the registrant's 1998 equity incentive plan. During the remainder of 2001, the registrant granted additional options to purchase 1,000 shares of common stock to certain of its employees at an exercise price of $5.00 per share pursuant to its 1998 equity incentive plan.
       On February 13, 2001, the registrant issued 6,000 shares of common stock to an employee upon exercise of options under the registrant's 1998 equity incentive plan at $1.00 per share.
       On February 14, 2001, the registrant issued warrants to purchase 1,961,112 shares of common stock at an exercise price of $2.00 per share to certain stockholder guarantors in connection with guaranties provided by the stockholders for a portion of the registrant's revolving credit agreement. The warrants were valued at $401,000 at the date of their issue.
       On September 14, 2001, the registrant issued 750 shares of common stock to an employee upon exercise of options under the registrant's 1998 equity incentive plan at $3.00 per share.
II-3

       On September 28, 2001, the registrant issued 500 shares of common stock to an employee upon exercise of options under the registrant's 1998 equity incentive plan at $3.00 per share.
       On December 19, 2001, the registrant issued 1,000 shares of common stock to an employee upon exercise of options under the registrant's 1998 equity incentive plan at $3.00 per share.
       On March 6, 2002, the registrant granted options to purchase 670,150 shares of common stock to certain of its employees at an exercise price of $8.00 per share pursuant to the registrant's 1998 equity incentive plan. During the remainder of 2002, the registrant granted additional options to purchase 67,000 shares of common stock to certain of its employees at an exercise price of $8.00 per share pursuant to its 1998 equity incentive plan.
       On August 20, 2002, the registrant issued 1,500 shares of common stock to an employee upon exercise of options under the registrant's 1998 equity incentive plan at $3.00 per share.
       On September 2, 2002, the registrant issued 12,826 shares of common stock to a stockholder guarantor upon exercise of one of the registrant's fee warrants at $2.00 per share, for an aggregate purchase price of $25,652.
       On October 25, 2002, the registrant issued 4,500 shares of common stock to an employee upon exercise of options under the registrant's 1998 equity incentive plan at $3.00 per share.
       On January 1, 2003, the registrant issued 50,000 shares of common stock in connection with a business acquisition, along with a put option with a single exercise date of January 1, 2007 at a price of $15 per share. In addition, the registrant obtained a call option with a single exercise date of January 1, 2007 at a price of $22.50 per share.
       On January 14, 2003, the registrant granted options to purchase 464,200 shares of common stock to certain of its employees at an exercise price of $8.75 per share pursuant to the registrant's 1998 equity incentive plan.
       On May 12, 2003, the registrant issued 22,500 shares of common stock to an employee upon exercise of options under the registrant's 1998 equity incentive plan at $3.00 per share.
       On May 14, 2003, the registrant issued an aggregate of 30,000 shares of common stock to an employee upon exercise of options under the registrant's 1998 equity incentive plan at prices ranging from $1.00 to $3.00, for an aggregate consideration of $50,000.
       On June 4, 2003, the registrant issued 10,000 shares of common stock to an employee upon exercise of options under the registrant's 1998 equity incentive plan at $1.00 per share.
Item 16. Exhibits and Financial Statement Schedules.
(a)
Exhibits

 	EXHIBIT NO.
	 	DESCRIPTION
	
 	1.1*	 	Form of Underwriting Agreement.	
 	 	 	 	
II-4

 	
3.1(i)+	
 	
Certificate of Incorporation of LKQ Corporation dated February 13, 1998, and as amended on May 20, 1998, June 15, 1998, August 17, 2000, and February 22, 2001.	

3.1(ii)+	
 	
Conformed copy of Certificate of Incorporation of LKQ Corporation, as amended to date.	

3.2+	
 	
Amended and Restated Bylaws of LKQ Corporation.	

4.1*	
 	
Specimen of common stock certificate.	

5.1*	
 	
Opinion of Bell, Boyd & Lloyd LLC as to the legality of the securities being registered.	

10.1+	
 	
Voting Agreement by and among Republic Industries, Inc., the Flynn Group, Dean L. Buntrock and Paul M. Montrone dated June 19, 1998.	

10.2+	
 	
Amendment to Voting Agreement by and among AutoNation, Inc., the Flynn Group, Dean L. Buntrock, PMM LKQ Investments Limited Partnership and PMM LKQ Investments Limited Partnership II dated May 20, 2003.	

10.3+	
 	
Stockholders Agreement by and among LKQ Corporation and certain stockholders signatories thereto dated June 19, 1998.	

10.4+	
 	
Registration Rights Agreement by and among LKQ Corporation and certain stockholders signatories thereto dated June 19, 1998.	

10.5+	
 	
Amended and Restated Credit Agreement, dated as of June 21, 2002, by and among LKQ Corporation, Bank of America, N.A., as Administrative Agent, LaSalle Bank National Association, as Co-Syndication Agent, Fleet National Bank, as Co-Syndication Agent and certain other financial institutions party thereto.	

10.6+	
 	
First Amendment to Amended and Restated Credit Agreement, dated as of February 20, 2003, by and among LKQ Corporation, Bank of America, N.A., as Administrative Agent, LaSalle Bank National Association, as Co-Syndication Agent, Fleet National Bank, as Co-Syndication Agent and certain other financial institutions party thereto.	

10.7+	
 	
Second Amendment to Amended and Restated Credit Agreement, dated as of May 20, 2003, by and among LKQ Corporation, Bank of America, N.A., as Administrative Agent, LaSalle Bank National Association, as Co-Syndication Agent, Fleet National Bank, as Co-Syndication Agent and certain other financial institutions party thereto.	

10.8+	
 	
Form of Fee Warrant Agreement.	

10.9+	
 	
Swap Transaction Letter Agreement, dated August 20, 2002, by and between LKQ Corporation and LaSalle Bank National Association.	

II-5

 	
10.10+	
 	
Office Sublease for 120 N. LaSalle, Suite 3300, Chicago, Illinois, 60602 by and between Blue Chip Casino, Inc., as Sublessor, and LKQ Corporation, as Sublessee, dated June 1, 1998.	

10.11+	
 	
Industrial Building Lease between Leonard A. Damron, III, LLC, as Landlord, and Damron Auto Parts, L.P., as Tenant, dated July 29, 1998 for Jenkinsburg, Georgia facility.	

10.12+	
 	
Industrial Building Lease between Damron Auto Parts East, Inc., as Landlord, and Damron Holding Company, as Tenant, dated July 29, 1998 for Melbourne, Florida facility.	

10.13+	
 	
Industrial Building Lease between Damron Family Limited Partnership, as Landlord, and Damron Auto Parts, Inc., as Tenant, dated July 29, 1998 for Crystal River, Florida facility.	

10.14+	
 	
Stock Repurchase Agreement, dated as of February 20, 2003, between LKQ Corporation and AutoNation, Inc.	

10.15+	
 	
Stock Repurchase Agreement, dated as of February 20, 2003, between LKQ Corporation and PMM LKQ Investments Limited Partnership.	

10.16+	
 	
Stock Repurchase Agreement, dated as of February 20, 2003, between LKQ Corporation and PMM LKQ Investments Limited Partnership II.	

10.17+	
 	
Stock Repurchase Agreement, dated as of May 20, 2003, between LKQ Corporation and AutoNation, Inc.	

10.18+	
 	
Stock Repurchase Agreement, dated as of May 21, 2003, between LKQ Corporation and PMM LKQ Investments Limited Partnership.	

10.19+	
 	
Stock Repurchase Agreement, dated as of May 21, 2003, between LKQ Corporation and PMM LKQ Investments Limited Partnership II.	

10.20+	
 	
Proposed Form of LKQ Corporation 2003 Stock Option and Compensation Plan for Non-Employee Directors.	

10.21+	
 	
LKQ Corporation CEO Stock Option Plan.	

10.22+	
 	
LKQ Corporation 1998 Equity Incentive Plan.	

10.23+	
 	
LKQ Corporation 401(k) Plus Plan.	

10.24+	
 	
Amendment to LKQ Corporation 401(k) Plus Plan.	

10.25+	
 	
Trust for LKQ Corporation 401(k) Plus Plan.	

10.26+	
 	
LKQ Corporation Employees' Retirement Plan.	

10.27+	
 	
First Amendment to LKQ Corporation Employees' Retirement Plan.	
 	 	 	 	
II-6

 	
10.28+	
 	
Second Amendment to LKQ Corporation Employees' Retirement Plan.	

10.29+	
 	
LKQ Corporation Employees' Retirement Plan Non-Discretionary Trust Agreement.	

10.30+	
 	
Form of Indemnification Agreements between directors and officers of LKQ Corporation and LKQ Corporation.	

10.31+	
 	
Severance Agreement, dated as of July 15, 1998, between H. Bradley Willen, Triplett Auto Recyclers, Inc. and LKQ Corporation.	

10.32+	
 	
Severance Agreement, dated as of July 15, 1998, between Stuart P. Willen, Triplett Auto Recyclers, Inc. and LKQ Corporation.	

21.1+	
 	
List of subsidiaries, jurisdiction and assumed names.	

23.1+	
 	
Consent of Deloitte & Touche LLP.	

23.2*	
 	
Consent of Bell, Boyd & Lloyd LLC (included as part of Exhibit 5.1 hereto).	

24.1+	
 	
Power of Attorney (included in the signature pages).	

+
Filed herewith.

*
To be filed by amendment.

(b)
Financial Statement Schedules
Independent Auditors' Report
       To the Board of Directors and Stockholders of
LKQ Corporation
       We have audited the consolidated financial statements of LKQ Corporation and subsidiaries as of December 31, 2001 and 2002, and for each of the three years in the period ended December 31, 2002, and have issued our report thereon dated March 31, 2003 (which report, included elsewhere in this Registration Statement, expresses an unqualified opinion and includes an explanatory paragraph relating to the adoption of Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" as of January 1, 2002). Our audits also included the financial statement schedule listed in Item 16(b) of this Registration Statement. This financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.
/s/ DELOITTE & TOUCHE LLP
Chicago, Illinois
March 31, 2003
II-7

Schedule II – Valuation and Qualifying Accounts and Reserves

Descriptions
	 	Balance at
Beginning
of Period
	 	Additions
Charged to
Costs and
Expenses
	 	Deductions
	 	Balance at
End of
Period
	
 	 	(in thousands)
	
ALLOWANCE FOR DOUBTFUL ACCOUNTS:	 	 	 	 	 	 	 	 	 	 	 	 	
 	Year ended December 31, 2000	 	$	723	 	$	900	 	$	(787	)	$	836	
 	Year ended December 31, 2001	 	 	836	 	 	1,179	 	 	(1,041	)	 	974	
 	Year ended December 31, 2002	 	 	974	 	 	1,097	 	 	(824	)	 	1,247	
RESERVE FOR ESTIMATED RETURNS, DISCOUNTS AND ALLOWANCES:	 	 	 	 	 	 	 	 	 	 	 	 	
 	Year ended December 31, 2000	 	$	395	 	$	31,625	 	$	(31,483	)	$	537	
 	Year ended December 31, 2001	 	 	537	 	 	42,269	 	 	(42,098	)	 	708	
 	Year ended December 31, 2002	 	 	708	 	 	46,818	 	 	(46,746	)	 	780	
       Schedules not listed above have been omitted because the information required to be set forth therein is not applicable or is shown in the consolidated financial statements or notes thereto.
Item 17. Undertakings.
       The undersigned registrant hereby undertakes to provide to the Underwriters at the closing specified in the Underwriting Agreement, certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.
       Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.
       The undersigned registrant hereby undertakes that:
(1)
For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act of 1933 shall be deemed to be part of this registration statement as of the time it was declared effective.

(2)
For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
II-8

 SIGNATURES
       Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Chicago, State of Illinois, on July 28, 2003.

 	 	LKQ CORPORATION	

 	
By:	
 	
/s/   JOSEPH M. HOLSTEN       

Joseph M. Holsten
 President, Chief Executive Officer and Director	

 POWER OF ATTORNEY
       KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Joseph M. Holsten and Mark T. Spears and each of them acting individually, as his true and lawful attorneys-in-fact and agents, each with full power of substitution, for him in any and all capacities, to execute any and all amendments to this Registration Statement, including post-effective amendments or any abbreviated registration statement and any amendments thereto filed pursuant to Rule 462(b) increasing the number of securities for which registration is sought, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, and hereby ratify and confirm all that said attorneys-in-fact and agents, or his or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
       Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed below by the following persons in the capacities indicated on July 28, 2003.

Signature
	 	Title

 	

 	
 	
Principal Executive Officer:	 	 	 	 	

/s/   JOSEPH M. HOLSTEN       

Joseph M. Holsten	
 	
President, Chief Executive Officer and Director	

Principal Financial Officer:	

 	

/s/   MARK T. SPEARS       

Mark T. Spears	
 	
Senior Vice President and Chief Financial Officer	

Principal Accounting Officer:	

 	

/s/   FRANK P. ERLAIN       

Frank P. Erlain	
 	
Vice President – Finance and Controller	

 	 	 	 	 	

II-9

Majority of Directors:	

 	

/s/   DONALD F. FLYNN       

Donald F. Flynn	
 	
Director	

/s/   A. CLINTON ALLEN       

A. Clinton Allen	
 	
Director	

/s/   JONATHAN P. FERRANDO       

Jonathan P. Ferrando	
 	
Director	

/s/   PAUL M. MEISTER       

Paul M. Meister	
 	
Director	

/s/   JOHN F. O'BRIEN       

John F. O'Brien	
 	
Director	

/s/   WILLIAM M. WEBSTER, IV       

William M. Webster, IV	
 	
Director	

II-10

 EXHIBIT INDEX
       The following exhibits are filed with this Registration Statement on Form S-1:

 	EXHIBIT NO.
	 	DESCRIPTION
	
 	1.1*	 	Form of Underwriting Agreement.	

3.1(i)+	
 	
Certificate of Incorporation of LKQ Corporation dated February 13, 1998, and as amended on May 20, 1998, June 15, 1998, August 17, 2000, and February 22, 2001.	

3.1(ii)+	
 	
Conformed copy of Certificate of Incorporation of LKQ Corporation, as amended to date.	

3.2+	
 	
Amended and Restated Bylaws of LKQ Corporation.	

4.1*	
 	
Specimen of common stock certificate.	

5.1*	
 	
Opinion of Bell, Boyd & Lloyd LLC as to the legality of the securities being registered.	

10.1+	
 	
Voting Agreement by and among Republic Industries, Inc., the Flynn Group, Dean L. Buntrock and Paul M. Montrone dated June 19, 1998.	

10.2+	
 	
Amendment to Voting Agreement by and among AutoNation, Inc., the Flynn Group, Dean L. Buntrock, PMM LKQ Investments Limited Partnership and PMM LKQ Investments Limited Partnership II dated May 20, 2003.	

10.3+	
 	
Stockholders Agreement by and among LKQ Corporation and certain stockholders signatories thereto dated June 19, 1998.	

10.4+	
 	
Registration Rights Agreement by and among LKQ Corporation and certain stockholders signatories thereto dated June 19, 1998.	

10.5+	
 	
Amended and Restated Credit Agreement, dated as of June 21, 2002, by and among LKQ Corporation, Bank of America, N.A., as Administrative Agent, LaSalle Bank National Association, as Co-Syndication Agent, Fleet National Bank, as Co-Syndication Agent and certain other financial institutions party thereto.	

10.6+	
 	
First Amendment to Amended and Restated Credit Agreement, dated as of February 20, 2003, by and among LKQ Corporation, Bank of America, N.A., as Administrative Agent, LaSalle Bank National Association, as Co-Syndication Agent, Fleet National Bank, as Co-Syndication Agent and certain other financial institutions party thereto.	

II-11

 	
10.7+	
 	
Second Amendment to Amended and Restated Credit Agreement, dated as of May 20, 2003, by and among LKQ Corporation, Bank of America, N.A., as Administrative Agent, LaSalle Bank National Association, as Co-Syndication Agent, Fleet National Bank, as Co-Syndication Agent and certain other financial institutions party thereto.	

10.8+	
 	
Form of Fee Warrant Agreement.	

10.9+	
 	
Swap Transaction Letter Agreement, dated August 20, 2002, by and between LKQ Corporation and LaSalle Bank National Association.	

10.10+	
 	
Office Sublease for 120 N. LaSalle, Suite 3300, Chicago, Illinois, 60602 by and between Blue Chip Casino, Inc., as Sublessor, and LKQ Corporation, as Sublessee, dated June 1, 1998.	

10.11+	
 	
Industrial Building Lease between Leonard A. Damron, III, LLC, as Landlord, and Damron Auto Parts, L.P., as Tenant, dated July 29, 1998 for Jenkinsburg, Georgia facility.	

10.12+	
 	
Industrial Building Lease between Damron Auto Parts East, Inc., as Landlord, and Damron Holding Company, as Tenant, dated July 29, 1998 for Melbourne, Florida facility.	

10.13+	
 	
Industrial Building Lease between Damron Family Limited Partnership, as Landlord, and Damron Auto Parts, Inc., as Tenant, dated July 29, 1998 for Crystal River, Florida facility.	

10.14+	
 	
Stock Repurchase Agreement, dated as of February 20, 2003, between LKQ Corporation and AutoNation, Inc.	

10.15+	
 	
Stock Repurchase Agreement, dated as of February 20, 2003, between LKQ Corporation and PMM LKQ Investments Limited Partnership.	

10.16+	
 	
Stock Repurchase Agreement, dated as of February 20, 2003, between LKQ Corporation and PMM LKQ Investments Limited Partnership II.	

10.17+	
 	
Stock Repurchase Agreement, dated as of May 20, 2003, between LKQ Corporation and AutoNation, Inc.	

10.18+	
 	
Stock Repurchase Agreement, dated as of May 21, 2003, between LKQ Corporation and PMM LKQ Investments Limited Partnership.	

10.19+	
 	
Stock Repurchase Agreement, dated as of May 21, 2003, between LKQ Corporation and PMM LKQ Investments Limited Partnership II.	

10.20+	
 	
Proposed form of LKQ Corporation 2003 Stock Option and Compensation Plan for Non-Employee Directors.	

10.21+	
 	
LKQ Corporation CEO Stock Option Plan.	
 	 	 	 	
II-12

 	
10.22+	
 	
LKQ Corporation 1998 Equity Incentive Plan.	

10.23+	
 	
LKQ Corporation 401(k) Plus Plan.	

10.24+	
 	
Amendment to LKQ Corporation 401(k) Plus Plan.	

10.25+	
 	
Trust for LKQ Corporation 401(k) Plus Plan.	

10.26+	
 	
LKQ Corporation Employees' Retirement Plan.	

10.27+	
 	
First Amendment to LKQ Corporation Employees' Retirement Plan.	

10.28+	
 	
Second Amendment to LKQ Corporation Employees' Retirement Plan.	

10.29+	
 	
LKQ Corporation Employees' Retirement Plan Non-Discretionary Trust Agreement.	

10.30+	
 	
Form of Indemnification Agreements between directors and officers of LKQ Corporation and LKQ Corporation.	

10.31+	
 	
Severance Agreement, dated as of July 15, 1998, between H. Bradley Willen, Triplett Auto Recyclers, Inc. and LKQ Corporation.	

10.32+	
 	
Severance Agreement, dated as of July 15, 1998, between Stuart P. Willen, Triplett Auto Recyclers, Inc. and LKQ Corporation.	

21.1+	
 	
List of subsidiaries, jurisdiction and assumed names.	

23.1+	
 	
Consent of Deloitte & Touche LLP.	

23.2*	
 	
Consent of Bell, Boyd & Lloyd LLC (included as part of Exhibit 5.1 hereto).	

24.1+	
 	
Power of Attorney (included in the signature pages).	

+
Filed herewith.

*
To be filed by amendment.
II-13

QuickLinks
TABLE OF CONTENTS
 SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
 PROSPECTUS SUMMARY
LKQ Corporation
Introduction
Our Business
Our History
Our Strengths
Our Strategies
Risk Factors
Our Corporate Information
The Offering
 Summary Consolidated Financial and Other Data
 RISK FACTORS
 USE OF PROCEEDS
DIVIDEND POLICY
CAPITALIZATION
DILUTION
 SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA
 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 INDUSTRY BACKGROUND
 BUSINESS
 MANAGEMENT
Summary Compensation Table
Option Grants In Fiscal 2002 Individual Grants
Aggregate Option Exercises in Fiscal 2002 and Fiscal Year-End Option Values
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
PRINCIPAL AND SELLING STOCKHOLDERS
 DESCRIPTION OF CAPITAL STOCK
SHARES ELIGIBLE FOR FUTURE SALE
 UNDERWRITING
 LEGAL MATTERS
EXPERTS
ADDITIONAL INFORMATION
 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 PART II Information not required in the prospectus
 SIGNATURES
POWER OF ATTORNEY
 EXHIBIT INDEX

Exhibit 3.1(i)
CERTIFICATE OF INCORPORATION
OF
LKQ CORPORATION
FIRST: The name of the corporation is LKQ Corporation.
SECOND: The address of its registered office in the State of Delaware is 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company.
THIRD: The purpose of the corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware.
FOURTH: The total number of shares of all classes of capital stock which the corporation shall have authority to issue is ten thousand (10,000) shares of common stock, par value $.01 per share.
FIFTH: Meetings of stockholders may be held within or outside the State of Delaware, as the bylaws may provide. Special meetings of the stockholders of the corporation may be called only by the President of the corporation or by a resolution adopted by the affirmative vote of a majority of the board of directors.
SIXTH: The number of directors constituting the board of directors shall be that number as shall be fixed by the bylaws of the corporation. Election of directors need not be by written ballot unless the bylaws of the corporation so provide.
SEVENTH: The board of directors of the corporation is expressly authorized to adopt, amend or repeal the bylaws of the corporation. The stockholders shall also have the power to adopt, amend or repeal the bylaws of the corporation.
EIGHTH: No director of the corporation shall be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent provided by applicable law
(i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involved intentional misconduct or a knowing violation of law, (iii) pursuant to Section 174 of the General Corporation Law of Delaware, or (iv) for any transaction from which the director derived an improper personal benefit.
NINTH: The corporation shall, to the fullest extent permitted by Section 145 of the General Corporation Law of Delaware, as the same may be amended and supplemented, indemnify any and all persons whom it shall have power to indemnify under said section from and against any and all of the expenses, liabilities or other matters referred to in or covered by said section, and the indemnification provided for herein shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his

official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.
TENTH: The books of the corporation may be kept outside the State of Delaware at such place or places as may be designated from time to time by the board of directors or in the bylaws of the corporation.
ELEVENTH: The corporation reserves the right to amend, alter, change or repeal any provision contained in the Certificate of Incorporation, in the manner now or hereafter prescribed by the laws of the State of Delaware and this Certificate of Incorporation, and all rights and powers conferred herein upon stockholders are granted subject to this reservation.
TWELFTH: The name and mailing address of the incorporator is as follows:

NAME                              MAILING ADDRESS
----                              ---------------
Victor M. Casini                  676 North Michigan Avenue
                                  Suite 4000
                                  Chicago, Illinois  60611	

IN WITNESS WHEREOF, the undersigned has executed and acknowledged this Certificate of Incorporation of LKQ Corporation this 13th day of February, 1998.

/s/  Victor M. Casini
-----------------------------------
Victor M. Casini	

2

CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
LKQ Corporation, a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of said corporation adopted a resolution proposing and declaring advisable the following amendment to the Certificate of Incorporation of said corporation:
RESOLVED, that the Certificate of Incorporation of LKQ Corporation be amended by changing the Fourth Article thereof so that, as amended, said Article shall be and read as follows:
The total number of shares of all classes of capital stock which the corporation shall have authority to issue is fifteen million (15,000,000) shares of common stock, par value $.01 per share.
RESOLVED, that the Certificate of Incorporation of LKQ Corporation be amended by changing the Fifth Article thereof so that, as amended, said Article shall be and read as follows:
Meetings of the stockholders may be held within or outside the State of Delaware, as the bylaws may provide. Special meetings of the stockholders of the corporation may be called only by the Chairman of the Board of the corporation or by a resolution adopted by the affirmative vote of a majority of the board of directors.
SECOND: That in lieu of a meeting and vote of stockholders, the stockholders have given written consent to said amendments in accordance with the provisions of Section 228 of the General Corporation Law of the State of Delaware.
THIRD: That the aforesaid amendments were duly adopted in accordance with the applicable provisions of Sections 242 and 228 of the General Corporation Law of the State of Delaware.

IN WITNESS WHEREOF, said LKQ Corporation has caused this certificate to be signed by Victor M. Casini, its Vice President, this 18th day of May, 1998.

LKQ CORPORATION

By:  /s/  Victor M. Casini
     -----------------------------------
     Name:  Victor M. Casini
     Title:  Vice President	

2

CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
LKQ Corporation, a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of said corporation adopted a resolution proposing and declaring advisable the following amendment to the Certificate of Incorporation of said corporation:
RESOLVED, that the Certificate of Incorporation of LKQ Corporation be amended by changing the Fourth Article thereof so that, as amended, said Article shall be and read as follows:
The total number of shares of all classes of capital stock which the corporation shall have authority to issue is one hundred million (100,000,000) shares of common stock, par value $.01 per share.
SECOND: That in lieu of a meeting and vote of stockholders, the stockholders have given written consent to said amendments in accordance with the provisions of Section 228 of the General Corporation Law of the State of Delaware.
THIRD: That the aforesaid amendments were duly adopted in accordance with the applicable provisions of Sections 242 and 228 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, said LKQ Corporation has caused this certificate to be signed by Victor M. Casini, its Vice President, this 12th day of June, 1998.
LKQ CORPORATION

By:  /s/  Victor M. Casini
     ------------------------------------
     Name:  Victor M. Casini
     Title:  Vice President	

CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
LKQ Corporation, a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of said corporation adopted a resolution proposing and declaring advisable the following amendment to the Certificate of Incorporation of said corporation:
RESOLVED, that the Certificate of Incorporation of LKQ Corporation be amended by changing the Fourth Article thereof so that, as amended, said Article shall be and read as follows:
The total number of shares of all classes of capital stock which the corporation shall have authority to issue is twenty five million (25,000,000) shares of common stock, par value $.01 per share.
SECOND: That in lieu of a meeting and vote of stockholders, the stockholders have given written consent to said amendment in accordance with the provisions of Section 228 of the General Corporation Law of the State of Delaware.
THIRD: That the aforesaid amendment was duly adopted in accordance with the applicable provisions of Sections 242 and 228 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, said LKQ Corporation has caused this certificate to be signed by Victor M. Casini, its Vice President, this 17th day of August, 2000.
LKQ CORPORATION

By:  /s/  Victor M. Casini
     -----------------------------------
     Name:  Victor M. Casini
     Title:  Vice President	

CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
LKQ Corporation, a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of said corporation adopted a resolution proposing and declaring advisable the following amendment to the Certificate of Incorporation of said corporation:
RESOLVED, that the Certificate of Incorporation of LKQ Corporation be amended by changing the Fourth Article thereof so that, as amended, said Article shall be and read as follows:
The total number of shares of all classes of capital stock which the corporation shall have authority to issue is one hundred million (100,000,000) shares of common stock, par value $.01 per share.
SECOND: That in lieu of a meeting and vote of stockholders, the stockholders have given written consent to said amendment in accordance with the provisions of Section 228 of the General Corporation Law of the State of Delaware.
THIRD: That the aforesaid amendment was duly adopted in accordance with the applicable provisions of Sections 242 and 228 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, said LKQ Corporation has caused this certificate to be signed by Victor M. Casini, its Vice President, this 21st day of February, 2001
LKQ CORPORATION

By:  /s/  Victor M. Casini
     -----------------------------------
     Name:  Victor M. Casini
     Title:  Vice President	

Exhibit 3.1(ii)
CONFORMED COPY OF
CERTIFICATE OF INCORPORATION
OF
LKQ CORPORATION,
AS AMENDED TO DATE
[Conformed copy giving effect to all amendments since the date of the filing of the original Certificate of Incorporation on February 13, 1998.]
FIRST: The name of the corporation is LKQ Corporation.
SECOND: The address of its registered office in the State of Delaware is 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company.
THIRD: The purpose of the corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware.
FOURTH: The total number of shares of all classes of capital stock which the corporation shall have authority to issue is one hundred million (100,000,000) shares of common stock, par value $.01 per share.
FIFTH: Meetings of the stockholders may be held within or outside the State of Delaware, as the bylaws may provide. Special meetings of the stockholders of the corporation may be called only by the Chairman of the Board of the corporation or by a resolution adopted by the affirmative vote of a majority of the board of directors.
SIXTH: The number of directors constituting the board of directors shall be that number as shall be fixed by the bylaws of the corporation. Election of directors need not be by written ballot unless the bylaws of the corporation so provide.
SEVENTH: The board of directors of the corporation is expressly authorized to adopt, amend or repeal the bylaws of the corporation. The stockholders shall also have the power to adopt, amend or repeal the bylaws of the corporation.
EIGHTH: No director of the corporation shall be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent provided by applicable law
(i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involved intentional misconduct or a knowing violation of law, (iii) pursuant to Section 174 of the General Corporation Law of Delaware, or (iv) for any transaction from which the director derived an improper personal benefit.

NINTH: The corporation shall, to the fullest extent permitted by Section 145 of the General Corporation Law of Delaware, as the same may be amended and supplemented, indemnify any and all persons whom it shall have power to indemnify under said section from and against any and all of the expenses, liabilities or other matters referred to in or covered by said section, and the indemnification provided for herein shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.
TENTH: The books of the corporation may be kept outside the State of Delaware at such place or places as may be designated from time to time by the board of directors or in the bylaws of the corporation.
ELEVENTH: The corporation reserves the right to amend, alter, change or repeal any provision contained in the Certificate of Incorporation, in the manner now or hereafter prescribed by the laws of the State of Delaware and this Certificate of Incorporation, and all rights and powers conferred herein upon stockholders are granted subject to this reservation.
TWELFTH: The name and mailing address of the incorporator is as follows:

Name                              Mailing Address
----                              ---------------

Victor M. Casini                  676 North Michigan Avenue
                                  Suite 4000
                                  Chicago, Illinois  60611	

IN WITNESS WHEREOF, the undersigned has executed and acknowledged this Conformed Copy of the Certificate of Incorporation of LKQ Corporation this 6th day of June, 2003.
LKQ CORPORATION

By:  /s/  Victor M. Casini
   --------------------------------------
     Name:  Victor M. Casini
     Title:  Vice President, General
     Counsel and Secretary	

2

EXHIBIT 3.2
AMENDED AND RESTATED
BYLAWS
OF
LKQ CORPORATION
ARTICLE I
CORPORATE OFFICES
SECTION 1. DELAWARE REGISTERED OFFICE. The registered office of the corporation in the State of Delaware shall be in the City of Wilmington, County of New Castle.
SECTION 2. OTHER OFFICES. The corporation may also have offices at such other places, both within and outside the State of Delaware, as the board of directors may from time to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. TIME AND PLACE. A meeting of stockholders for any purpose may be held at such time and place, within or outside the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof.
SECTION 2. ANNUAL MEETINGS. A meeting of the stockholders shall be held annually for the election of directors and for the transaction of such other business as may properly come before the meeting. To be properly brought before the annual meeting, business must be either (i) specified in the notice of annual meeting (or any supplement or amendment thereto) given by or at the direction of the board of directors, (ii) otherwise brought before the annual meeting by or at the direction of the board of directors, or (iii) otherwise properly brought before the annual meeting by a stockholder. In addition to any other applicable requirements, for business to be properly brought before an annual meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the Secretary of the corporation. To be timely, a stockholder's notice must be delivered to or mailed and received at the principal executive offices of the corporation not less than sixty (60) days nor more than ninety (90) days prior to the meeting; provided, however, that in the event that less than seventy (70) days notice or prior public disclosure of the date of the annual meeting is given or made to stockholders, notice by a stockholder, to be timely, must be received no later than the close of business on the tenth (10th) day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure was made, whichever first occurs. A stockholder's notice to the Secretary shall set forth (a) as to each matter the stockholder proposes to bring before the annual meeting (i) a

brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, and
(ii) any material interest of the stockholder in such business, and (b) as to the stockholder giving the notice (i) the name and record address of the stockholder and (ii) the class, series and number of shares of capital stock of the corporation that are beneficially owned by the stockholder. Notwithstanding anything in these bylaws to the contrary, no business shall be conducted at the annual meeting except in accordance with the procedures set forth in this Article II, Section 2. The officer of the corporation presiding at an annual meeting shall, if the facts warrant, determine and declare to the annual meeting that business was not properly brought before the annual meeting in accordance with the provisions of this Article II, Section 2, and if such officer should so determine, such officer shall so declare to the annual meeting and any such business not properly brought before the meeting shall not be transacted. The date, place and time of said annual meeting of the stockholders shall be determined by the board of directors.
SECTION 3. SPECIAL MEETINGS. Special meetings of stockholders, for any purpose or purposes, unless otherwise prescribed by law or by the certificate of incorporation, may be called by the president and shall be called by the president or corporate secretary pursuant to a resolution adopted by the affirmative vote of a majority of the entire board of directors. Such resolution shall state the purpose or purposes of the proposed meeting. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the resolution.
SECTION 4. NOTICE. Written notice of a meeting, annual or special, stating the place, date and hour of the meeting, and in the case of a special meeting stating the purpose or purposes for which the meeting is called, shall be given to each stockholder entitled to vote at such meeting, not less than ten nor more than 60 days, or if a vote of stockholders on a merger or consolidation is one of the stated purposes of the meeting, not less than 20 nor more than 60 days before the date of the meeting.
SECTION 5. STOCKHOLDER LIST. The officer who has charge of the stock ledger of the corporation shall prepare or cause to be prepared and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof and may be inspected by any stockholder who is present.
SECTION 6. QUORUM. The holders of a majority of the stock outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at any meeting of stockholders for the transaction of business, except as otherwise required by law or by the certificate of incorporation. Abstentions shall be counted as present in person or represented by proxy for purposes of determining the existence of a quorum for purposes of this Section. If, however, such quorum shall not be present or represented at a meeting of
2

stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have the power to adjourn the meeting from time to time, without notice other than announcement at the meeting of the place, date and hour of the adjourned meeting, until a quorum shall be present or represented by proxy. At such adjourned meeting at which a quorum shall be present or represented by proxy, any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.
SECTION 7. REQUIRED VOTE. When a quorum is present at any meeting of stockholders, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy, excluding, however, any shares where the holder has expressly indicated that the holder is abstaining from voting on the matter, shall decide any question (other than the election of directors which shall be determined by a plurality vote) brought before such meeting, unless the question is one upon which by express provision of law or statute or of the certificate of incorporation or of these bylaws, a different vote is required, in which case such express provision shall govern and control the decision of such question.
SECTION 8. VOTING. Except as otherwise required by law or by the provisions of the certificate of incorporation or by the resolution or resolutions of the board of directors providing for the issue of any class or series of preferred stock of the corporation, the holders of the common stock of the corporation shall have sole voting power. No proxy shall be voted on after three years from its date, unless the proxy provides for a longer period. A duly executed proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power, regardless of whether the interest with which it is coupled is an interest in the stock itself or an interest in the corporation generally. A stockholder may revoke any proxy which is not irrevocable by attending the meeting and voting in person or by filing with the corporate secretary an instrument in writing revoking the proxy or another duly executed proxy bearing a later date.
SECTION 9. MEETING PROCEDURE. Meetings of stockholders shall be presided over by the president, or in the absence of the president by a vice president, or in the absence of the foregoing persons by a chairman designated by the board of directors, or in the absence of such designation by a chairman chosen at the meeting. The corporate secretary, or in the absence of the corporate secretary an assistant corporate secretary, shall act as secretary of the meeting, but in the absence of the corporate secretary and any assistant corporate secretary, the chairman of the meeting may appoint any person to act as secretary of the meeting.
The order of business at each such meeting shall be as determined by the chairman of the meeting. The chairman of the meeting shall have the right and authority to prescribe such rules, regulations and procedures and to do all such acts and things as are necessary or desirable for the proper conduct of the meeting, including, without limitation, the establishment of procedures for the maintenance of order and safety, limitations on the time allotted to questions or comments on the affairs of the corporation, restrictions on entry to such meeting after the time prescribed for the commencement thereof and the opening and closing of the voting polls. The chairman of any meeting of stockholders shall have full and complete
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authority over the interpretation of any rules, regulations or procedures prescribed in connection with such meeting, and there shall be no appeal from the ruling of the chairman. The chairman may ask or require anyone who is not a bona fide stockholder or holder of a valid proxy, or who is disrupting or inhibiting the orderly conduct of the meeting, to leave the meeting. If disorder or any other event should arise which prevents continuation of the legitimate business of the meeting, the chairman may announce the adjournment of the meeting; and upon his or her doing so, the meeting will be immediately adjourned until such later time as the chairman may determine, without notice other than the announcement at the meeting of the place, date and hour of the adjourned meeting. At such adjourned meeting at which a quorum shall be present or represented by proxy, any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.
SECTION 10. INSPECTORS. Prior to any meeting of stockholders, the board of directors or the president shall appoint one or more inspectors to act at such meeting and make a written report thereof and may designate one or more persons as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is able to act at the meeting of stockholders, the chairman of the meeting shall appoint one or more inspectors to act at the meeting. Each inspector, before entering upon the discharge of his or her duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his or her ability. The inspectors shall ascertain the number of shares outstanding and the voting power of each, determine the shares represented at the meeting and the validity of proxies and ballots, count all votes and ballots, determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the inspectors and certify their determination of the number of shares represented at the meeting and their count of all votes and ballots. The inspectors may appoint or retain other persons to assist them in the performance of their duties. The date and time of the opening and closing of the polls for each matter upon which the stockholders will vote at a meeting shall be announced at the meeting. No ballot, proxy or vote, nor any revocation thereof or change thereto, shall be accepted by the inspectors after the closing of the polls. In determining the validity and counting of proxies and ballots, the inspectors shall be limited to an examination of the proxies, any envelopes submitted therewith, any information provided by a stockholder who submits a proxy by telegram, cablegram or other electronic transmission from which it can be determined that the proxy was authorized by the stockholder, the ballots and the regular books and records of the corporation, and the inspectors may also consider other reliable information for the limited purpose of reconciling proxies and ballots submitted by or on behalf of banks, brokers, their nominees or similar persons which represent more votes than the holder of a proxy is authorized by the record owner to cast or more votes than the stockholder holds of record. If the inspectors consider other reliable information for such purpose, they shall, at the time they make their certification, specify the precise information considered by them, including the person or persons from whom they obtained the information, when the information was obtained, the means by which the information was obtained and the basis for the inspectors' belief that such information is accurate and reliable.
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ARTICLE III
DIRECTORS
SECTION 1. NUMBER AND TERM. The number of directors constituting the whole board shall be fixed from time to time by resolution adopted by the affirmative vote of a majority of the entire board of directors. Directors shall be elected at annual meetings of stockholders, except as provided in Section 2 of this Article III, and each director shall hold office until a successor is elected and qualified or until that director's earlier resignation or removal. Directors need not be stockholders. Nominations of persons for election to the board of directors of the corporation at a meeting of stockholders of the Corporation may be made at such meeting by or at the direction of the board of directors, by any committee or persons appointed by the board of directors or by any stockholder of the corporation entitled to vote for the election of directors at the meeting who complies with the notice procedures set forth in this Article III, Section 1. Such nominations by any stockholder shall be made pursuant to timely notice in writing to the Secretary of the corporation. To be timely, a stockholder's notice shall be delivered to or mailed and received at the principal executive offices of the corporation not less than sixty (60) days nor more than ninety (90) days prior to the meeting; provided however, that in the event that less than seventy (70) days notice or prior public disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder, to be timely, must be received no later than the close of business on the tenth (10th) day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made, whichever first occurs. Such stockholder's notice to the Secretary shall set forth (i) as to each person whom the stockholder proposes to nominate for election or re-election as a director, (a) the name, age, business address and residence address of the person, (b) the principal occupation or employment of the person,
(c) the class and number of shares of capital stock of the corporation that are beneficially owned by the person, and (d) any other information relating to the person that is required to be disclosed in solicitations for proxies for election of directors pursuant to the Rules and Regulations of the Securities and Exchange Commission under Section 14 of the Securities Exchange Act of 1934, as amended, and (ii) as to the stockholder giving the notice (a) the name and record address of the stockholder and (b) the class and number of shares of capital stock of the corporation that are beneficially owned by the stockholder. The corporation may require any proposed nominee to furnish such other information as may reasonably be required by the corporation to determine the eligibility of such proposed nominee to serve as a director of the corporation. No person shall be eligible for election as a director of the corporation unless nominated in accordance with the procedures set forth herein. The officer of the corporation presiding at an annual meeting shall, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the foregoing procedure, and if he should so determine, he shall so declare to the meeting and the defective nomination shall be disregarded.
SECTION 2. NEWLY CREATED DIRECTORSHIPS AND VACANCIES. Except as otherwise required by law or by the certificate of incorporation, any newly created directorships resulting from any increase in the number of directors and any vacancies on the board of directors resulting from death, resignation, disqualification, removal or other cause shall be filled by the affirmative vote of a majority of the directors then in office, even though less than a quorum, or by the sole remaining director, as the case may be. If there are no directors in office, then an election of
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directors may be held in the manner provided by law. Any additional director of any class elected to fill a newly created directorship or vacancy in such class shall hold office for a term that shall coincide with the remaining term of that class. A director shall hold office until the annual meeting for the year in which such director's term expires and until such director's successor shall have been elected and qualified, or until such director's earlier death, resignation, disqualification or removal. No decrease in the number of directors constituting the board of directors shall shorten the term of any incumbent director.
SECTION 3. POWERS. The business and affairs of the corporation shall be managed by or under the direction of the board of directors, which may exercise all such powers of the corporation and do all such lawful acts and things as are not by law or by the certificate of incorporation or by these bylaws directed or required to be exercised or done by the stockholders.
SECTION 4. PLACE OF MEETINGS. The board of directors of the corporation may hold meetings, both regular and special, either within or outside the state of Delaware.
SECTION 5. REGULAR MEETINGS. A regular meeting of the board of directors may be held without other notice than this bylaw immediately following and at the same place as the annual meeting of stockholders. In the event such meeting is not held at the time and place specified in the preceding sentence, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the board or as shall be specified in written waivers signed by all of the directors. Other regular meetings of the board may be held without notice at such time and at such place as shall from time to time be determined by the board.
SECTION 6. SPECIAL MEETINGS. Special meetings of the board of directors may be called by the chairman of the board and shall be called by the chairman of the board or corporate secretary on the written request of two directors, on not less than two days notice to each director.
SECTION 7. QUORUM. At any meeting of the board of directors a majority of the total number of directors then constituting the whole board of directors shall constitute a quorum for the transaction of business, and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as otherwise required by law or by the certificate of incorporation or these bylaws. If there is not a quorum at a meeting of the board, a majority of the directors present may adjourn the meeting from time to time without further notice.
SECTION 8. ACTION BY WRITTEN CONSENT. Unless otherwise restricted by the certificate of incorporation or these bylaws, any action required or permitted to be taken at a meeting of the board of directors or of any committee thereof may be taken without a meeting, if all members of the board or committee, as the case may be, consent thereto in writing and the writing or writings are filed with the minutes of proceedings of the board or committee.
SECTION 9. PARTICIPATION WITH COMMUNICATIONS EQUIPMENT. Unless otherwise restricted by law or by the certificate of incorporation or these bylaws, members of the board of directors, or of any committee designated by the board of directors, may participate in a meeting
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of the board of directors, or of any committee, by conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting by such means shall constitute presence at the meeting.
SECTION 10. COMMITTEES OF DIRECTORS. The board of directors may, by resolution passed by the affirmative vote of a majority of the entire board of directors, designate one or more committees, each committee to consist of one or more of the directors of the corporation. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the board of directors. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or she or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member; provided that at any such meeting, the committee shall not revise or rescind any previous action of the committee without the affirmative vote of a majority of the regular members present. Any such committee, to the extent provided in the resolution of the board of directors, shall have and may exercise all of the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require the seal; but no such committee shall have the power or authority in reference to amending the certificate of incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the bylaws of the corporation; and, unless the resolution designating such committee or the certificate of incorporation expressly so provides, no such committee shall have the power or authority to declare a dividend, to authorize the issuance of stock or to adopt a certificate of ownership and merger. The member of a committee of one or a majority of the members of any other committee shall constitute a quorum for the transaction of business at a meeting thereof, and action by any committee must be authorized by the affirmative vote of the member of a committee of one or of a majority of the members of any other committee present at a meeting at which a quorum is present. Each committee shall have a chairman, appointed by the board of directors, who shall preside at all meetings of such committee. Each committee shall keep regular minutes of its meetings and shall furnish them to the board of directors when required.
Special meetings of any committee of the board may be called by the chairman of the board or the chairman of the committee on not less than two days notice to each member of the committee. Special meetings of any committee of the board at which members participate by means of conference telephone or similar communications equipment as provided by Section 9 of this Article III, and at which at least a majority of the members of the committee participate, may be called by the chairman of the board on not less than six hours notice to each member of the committee.
SECTION 11. COMPENSATION OF DIRECTORS. Unless otherwise restricted by the certificate of incorporation, the board of directors shall have the authority to fix the compensation of directors. The receipt of such compensation shall not preclude any director from serving the
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corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. The directors may be reimbursed for any expenses of attending meetings of the board of directors and of committees of the board.
SECTION 12. RESIGNATION OF DIRECTORS. A resignation of a director shall be effective upon receipt by the chairman of the board of a signed written notice of such resignation, or, should such notice contain a specified date of resignation, at such specified date. No acceptance by the board of directors is required for such resignation to be effective.
ARTICLE IV
NOTICES
SECTION 1. METHOD OF GIVING NOTICE. Whenever notice is required to be given to any director or stockholder pursuant to any provision of law, the certificate of incorporation, these bylaws or the resolutions or other governing provisions relating to a committee of the board of directors, such notice shall be in writing and delivered by hand, by overnight courier delivery service or by certified mail, return receipt requested, postage prepaid. Notices shall be deemed given when actually received, which shall be deemed to be not later than the next business day if sent by overnight courier or after five business days if sent by mail. Notices shall be addressed to each director or stockholder at that person's address as it appears on the records of the corporation. Notice to directors may also be given by facsimile transmission to such number as shall appear on the records of the corporation, which facsimile notice shall be deemed to be given at the time of transmission thereof.
SECTION 2. WAIVER OF NOTICE. Whenever notice is required to be given pursuant to any provision of law, the certificate of incorporation, these bylaws or the resolutions or other governing provisions relating to a committee of the board of directors, a written waiver of such notice, signed by the person or persons entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to such notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends the meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened.
ARTICLE V
OFFICERS
SECTION 1. OFFICES. The officers of the corporation shall be elected by the board of directors and shall be a president, one or more vice presidents (the number and designation thereof to be determined by the board of directors), a corporate secretary, a treasurer, a controller and such assistant corporate secretaries, assistant treasurers, assistant controllers and other subordinate officers as may be elected or appointed by the board of directors. Any number of offices may be held by the same person, unless the certificate of incorporation or these bylaws otherwise provide.
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SECTION 2. ADDITIONAL OFFICERS. The board of directors may appoint such other officers and agents as it shall deem necessary, who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board.
SECTION 3. COMPENSATION OF OFFICERS. The compensation of all officers of the corporation shall be fixed by or under the direction of the board of directors.
SECTION 4. TERM OF OFFICE AND VACANCY. Each officer shall hold office until a successor is chosen and qualifies or until the officer's earlier resignation or removal. Any officer elected or appointed by the board of directors may be removed at any time by or under the direction of the board of directors. Any vacancy occurring in any office of the corporation shall be filled by the board of directors.
SECTION 5. PRESIDENT. The president shall (a) be the chief executive officer of the corporation, (b) have immediate supervision and control over the business and operations of the corporation, subject to the direction of the board of directors, (c) see that all orders and resolutions of the board of directors are carried into effect and (d) have the power to execute bonds, mortgages and other contracts, agreements and instruments, except where required or permitted by law to be otherwise signed and executed or where the signing and execution thereof shall be expressly delegated by the board of directors to some other officer or agent of the corporation.
SECTION 6. VICE PRESIDENTS. In the absence of the president or in the event of the disability of the president, the vice president (or if there be more than one, first, the executive vice presidents (if any), then the senior vice presidents (if any), then the vice presidents, within each category in the order designated by the board of directors, or in the absence of any designation, then in the order of their most recent election) shall perform the duties of the president and when so acting shall have all the powers of and be subject to all the restrictions upon the president. The vice presidents shall perform such other duties and have such other powers as the board of directors or the president may from time to time prescribe.
SECTION 7. CORPORATE SECRETARY. The corporate secretary shall (a) attend all meetings of the board of directors and all meetings of the stockholders and record all of the proceedings of the meetings of the board of directors and of the stockholders in a book to be kept for that purpose and perform like duties for the standing committees when required, (b) give, or cause to be given, notice of all special meetings of the board of directors and all meetings of the stockholders and (c) perform such other duties as may be prescribed by the board of directors or the president. The corporate secretary shall have custody of the corporate seal of the corporation and shall have authority to affix it to any instrument requiring the seal, and when so affixed, the seal may be attested by the signature of such officer. The board of directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by signature.
SECTION 8. ASSISTANT CORPORATE SECRETARIES. The assistant corporate secretary (or if there be more than one, the assistant corporate secretaries in the order determined by the board
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of directors, or if there be no such determination, then in the order of their most recent election or appointment) shall, in the absence of the corporate secretary or in the event of the disability of the corporate secretary, perform the duties and exercise the powers of the corporate secretary and shall perform such other duties and have such other powers as the board of directors or the president may from time to time prescribe.
SECTION 9. TREASURER. The treasurer shall (a) have custody of the corporate funds and securities, (b) deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the board of directors, (c) disburse the funds of the corporation as may be ordered by the board of directors, taking proper vouchers for such disbursements, (d) keep full and accurate records of such receipts, deposits, and disbursements in books belonging to the corporation, (e) render to the president and the board of directors, at its regular meetings, or when the board of directors so requests, an account of all the transactions of the treasurer, and (f) perform such other duties and have such other powers as the board of directors or the president may from time to time prescribe.
SECTION 10. ASSISTANT TREASURERS. The assistant treasurer (or if there shall be more than one, the assistant treasurers in the order determined by the board of directors, or if there be no such determination, then in the order of their most recent election or appointment) shall, in the absence of the treasurer or in the event of the disability of the treasurer, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the board of directors or the president may from time to time prescribe.
SECTION 11. CONTROLLER. The controller shall (a) be the principal accounting officer of the corporation, (b) supervise the preparation and maintenance of the accounting books, records and reports of the Company, (c) render to the president and the board of directors, at its regular meetings, or when the board of directors so requests, an account of all the transactions of the controller and of the financial condition of the corporation, and (d) perform such other duties and have such other powers as the board of directors or the president may from time to time prescribe.
SECTION 12. ASSISTANT CONTROLLERS. The assistant controller (or if there shall be more than one, the assistant controllers in the order determined by the board of directors, or if there be no such determination, then in the order of their most recent election or appointment) shall, in the absence of the controller or in the event of the disability of the controller, perform the duties and exercise the powers of the controller and shall perform such other duties and have such other powers as the board of directors or the president may from time to time prescribe.
ARTICLE VI
STOCK CERTIFICATES
SECTION 1. RIGHT OF HOLDER TO CERTIFICATE. Each holder of stock in the corporation shall be entitled to have a certificate signed by or in the name of the corporation by the president or a vice president and by the corporate secretary or an assistant corporate secretary, or the treasurer or an assistant treasurer of the corporation, certifying the number of shares owned by
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him or her and sealed with the seal or a facsimile of the seal of the corporation. Any of or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, such certificate may be issued by the corporation with the same effect as if such former officer, transfer agent or registrar were such officer, transfer agent or registrar at the date of issue.
SECTION 2. MORE THAN ONE CLASS OR SERIES OF STOCK. If the corporation shall be authorized to issue more than one class of stock or more than one series of any class of stock, the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and rights shall be set forth in full or summarized on the face or back of the certificate that the corporation shall issue to represent such class or series of stock, provided that, except as otherwise provided in Section 202 of the General Corporation Law of the State of Delaware, in lieu of the foregoing requirements, there may be set forth on the face or back of the certificate a statement that the corporation will furnish, without charge to each stockholder who so requests, the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences or rights.
SECTION 3. UNCERTIFICATED SHARES. The board of directors of the corporation may provide by resolution that some or all of any or all classes and series of its shares shall be uncertificated shares, and may provide an election by individual stockholders to receive certificated or uncertificated shares and the conditions of such election, provided that such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the corporation. Within a reasonable time after the registration of issuance or transfer of uncertificated shares, the corporation shall send to the registered owner thereof a written notice containing the information required to be set forth or stated on certificates pursuant to the General Corporation Law of the State of Delaware or these bylaws. Except as otherwise expressly provided by law, the rights and obligations of the holders of uncertificated shares and rights and obligations of the holders of certificates representing shares of the same class and series shall be identical.
SECTION 4. LOST CERTIFICATES. The board of directors or any two officers of the corporation authorized to sign a stock certificate as provided in Section 1 of this Article VI may authorize the issuance of a new certificate in lieu of a certificate alleged by the holder thereof to have been lost, stolen or destroyed, upon compliance by such holder, or such holder's representatives, with such requirements as the board of directors or such officers may impose or authorize. Any authorization by the board of directors or the officers contemplated by the preceding sentence may be general or confined to specific instances.
SECTION 5. REGISTRATION OF TRANSFERS. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, the corporation or its transfer agent shall cancel the old certificate, record the transaction upon its stock records, and either issue a new certificate to the person entitled thereto or credit the proper number of shares to an
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account of the person entitled thereto maintained on the books of the corporation. Upon request the corporation or transfer agent shall issue a certificate for all or any part of the shares held in such an account.
SECTION 6. RECORD DATE. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the board of directors may fix a record date, which shall not precede the date upon which the resolution fixing the record date is adopted by the board of directors, and which shall not be more than 60 nor less than ten days before the date of such meeting. If no record date is fixed by the board of directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the board of directors may fix a new record date for the adjourned meeting.
In order that the corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the board of directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than 60 days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the board of directors adopts the resolution relating thereto.
SECTION 7. REGISTERED STOCKHOLDERS. The corporation shall be entitled to recognize the exclusive right of a person registered in its stock records as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise required by law.
ARTICLE VII
OTHER PROVISIONS
SECTION 1. DIVIDENDS. Dividends upon the capital stock of the corporation, subject to the provisions of the certificate of incorporation, if any, may be declared by the board of directors at any regular or special meeting, pursuant to applicable law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the certificate of incorporation and requirements of applicable law.
SECTION 2. SIGNATURES ON CHECKS AND NOTES. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the board of directors may from time to time designate.
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SECTION 3. FISCAL YEAR. The fiscal year of the corporation shall end on December 31 in each year.
SECTION 4. INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHERS. Each person who is or was a director or officer of the corporation and each person who serves or served at the request of the corporation as a director or officer (or equivalent) of another corporation, partnership, joint venture, trust or other enterprise (and the heirs, executors, administrators and estates of any such persons), shall be indemnified by the corporation in accordance with, and to the fullest extent authorized by, the provisions of the General Corporation Law of the State of Delaware as it may from time to time be amended, except as to any action, suit or proceeding brought by or on behalf of the director or officer of the corporation without prior approval of the board of directors. Each person who is or was an employee or agent of this corporation, and each person who serves or has served at the request of the corporation as an employee or agent of another corporation, partnership, joint venture, trust or other enterprise, may be similarly indemnified at the discretion of the board of directors. Expenses incurred by an officer or director in defending a civil or criminal action, suit or proceeding shall be paid by the corporation in advance of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that such director or officer is not entitled under applicable law to be indemnified by the corporation as authorized in this Section. Such expenses incurred by other employees and agents may be so paid upon such terms and conditions, if any, as the board of directors deems appropriate. The indemnification and advancement of expenses provided by, or granted pursuant to, this Section shall not be deemed exclusive of any other rights to which a person seeking indemnification or advancement of expenses may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in such person's official capacity and as to action in another capacity while holding such office. Any amendment or repeal of this bylaw shall not limit the right of any person to indemnity with respect to actions taken or omitted to be taken by such person prior to such amendment or repeal.
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CERTIFICATE BY SECRETARY
OF
ADOPTION OF AMENDED
AND
RESTATED BYLAWS
OF
LKQ CORPORATION
The undersigned hereby certifies that he is the duly elected, qualified and acting Secretary of LKQ Corporation and that the foregoing Amended and Restated Bylaws, comprising 13 pages, were adopted as the Bylaws of the corporation on June 5, 2003 by the Board of Directors of the corporation.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on June 5, 2003.

/s/ Victor M. Casini
Victor M. Casini, Secretary	

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EXHIBIT 10.1
VOTING AGREEMENT
This Voting Agreement (this "Agreement") is made as of the 19th day of June, 1998 by and among Republic Industries, Inc. ("RII"), the Flynn Group, Dean L. Buntrock ("Buntrock"), and Paul M. Montrone ("Montrone").
RECITALS
The parties hereto are stockholders of LKQ Corporation, a Delaware corporation (the "Company") and are parties to a Stockholders Agreement of even date herewith (the "Stockholders Agreement") and a Registration Rights Agreement of even date herewith (the "Registration Rights Agreement"). Capitalized terms used herein and not otherwise defined (including the Flynn Group) shall have the same meanings as in the Stockholders Agreement.
The parties hereto desire to set forth their agreement regarding certain matters with respect to which they have voting or approval rights by virtue of their ownership of the common stock of the Company (the "Common Stock"), all on the terms and subject to the conditions set forth herein.
COVENANTS
1. BOARD MEMBERSHIP. As long as any of RII, the Flynn Group, Buntrock or Montrone (or its or his Affiliates) beneficially owns capital stock of the Company having at least 15.0% of the voting power of the Company (a "15% Stockholder"), each party hereto agrees to vote all of its shares of capital stock of the Company in favor of the election of two designees of each 15% Stockholder to the Board of Directors of the Company. As long as any of RII, the Flynn Group, Buntrock or Montrone (or its or his Affiliates) beneficially owns capital stock of the Company having less than 15.0% but at least 7.5% of the voting power of the Company (a "7.5% Stockholder"), each party hereto agrees to vote all of its shares of capital stock of the Company in favor of the election of one designee of each 7.5% Stockholder to the Board of Directors of the Company.
2. ADDITIONAL PARTIES. The parties hereto agree to consent to the addition as parties to the Stockholders Agreement and the Registration Rights Agreement all of the equity holders of each of the first two entities (a "Target") acquired by the Company on or after the date of this Agreement, provided that the consideration paid by the Company in each such acquisition includes shares of capital stock of the Company having a value (as determined by the Board of Directors) at the time of such acquisition at least equal to $5,000,000.
3. TERMINATION. This Agreement shall terminate and have no further force or effect upon the closing of the initial public offering of the Common Stock.

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

By:      /s/ Thomas W. Hawkins
   ------------------------------------------
Name:    Thomas W. Hawkins
Title:   Senior Vice President
           Corporate Development

/s/ Donald F. Flynn
---------------------------------------------
Donald F. Flynn, on behalf of himself and on
   behalf of each member of the Flynn Group

/s/ Dean L. Buntrock
---------------------------------------------
Dean L. Buntrock

/s/ Paul M. Montrone
---------------------------------------------
Paul M. Montrone	

2

EXHIBIT 10.2
AMENDMENT
TO
VOTING AGREEMENT
This Amendment is made as of the 20th day of May, 2003 by and among AutoNation, Inc. ("AN"), the Flynn Group, Dean L. Buntrock ("Buntrock"), and PMM LKQ Investment Limited Partnership and PMM LKQ Investment Limited Partnership II (collectively, "PMM").
RECITALS
The parties hereto (AN as successor in interest of Republic Industries, Inc. and PMM as the investment vehicle of Paul M. Montrone) are parties to the Voting Agreement dated as of June 19, 1998 (a copy of which is attached hereto as Exhibit A) (the "Voting Agreement"). The parties desire to amend the Voting Agreement on the terms and subject to the conditions set forth herein. Each capitalized term used herein and not otherwise defined shall have the same meaning as in the Stockholders Agreement.
COVENANTS
1. The second sentence of Section 1 of the Voting Agreement shall be amended to read as follows: As long as any of RII, the Flynn Group, Buntrock or PMM (or its or his Affiliates) beneficially owns any capital stock of the Company (a "Stockholder"), each party hereto agrees to vote all of its shares of capital stock of the Company in favor of the election of one designee of each Stockholder to the Board of Directors of the Company.
2. All other terms and conditions shall remain unchanged and in full force and effect.

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

By: /s/ Thomas W. Hawkins

/s/ Donald F. Flynn
Donald F. Flynn, on behalf of himself and on
   behalf of each member of the Flynn Group

/s/ Dean L. Buntrock
Dean L. Buntrock

/s/ Paul M. Meister
Paul M. Meister, on behalf of PMM	

EXHIBIT 10.3
STOCKHOLDERS AGREEMENT
This Stockholders Agreement (this "Agreement") is made as of the 19th day of June, 1998, by and among LKQ Corporation, a Delaware corporation (the "Company"), and the parties identified as the Stockholders on the signature page of this Agreement (the "Stockholders").
RECITALS
Each of the Stockholders owns shares of common stock, par value $.01 per share ("Common Stock"), of the Company. The Company and the Stockholders desire to promote their mutual interests by providing for certain restrictions with respect to transferring shares of Common Stock and other corporate matters, all as hereinafter set forth.
COVENANTS
1. DEFINITIONS. As used in this Agreement, the following terms shall have the following meanings:
(a) "Affiliate" shall mean, with respect to any specified Person, any Person that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, the Person specified.
(b) "Co-Sale Pro Rata Share" shall mean the ratio that (i) the sum of the number of shares of Common Stock then held by a Stockholder bears to (ii) the sum of the total number of shares of Common Stock then held by all Stockholders.
(c) "Electing Purchaser" shall mean each Stockholder that agrees to purchase Shares from a Transferring Stockholder pursuant to Section 3.
(d) "Flynn Group" shall mean Donald F. Flynn and any Member of the Immediate Family of Donald F. Flynn and any Affiliate of any such Persons. For purposes of calculating the percentage of Capital Stock owned by each Stockholder under this Agreement, all members of the Flynn Group shall be deemed to be one Stockholder.
(e) "Member of the Immediate Family" shall mean, with respect to any individual, each spouse, parent, brother, sister, or child of such individual, each spouse of any such person, each child of any of the aforementioned persons, each trust or partnership created solely for the benefit of one or more of the aforementioned persons and each custodian or guardian of any property of one or more of the aforementioned persons in his capacity as such custodian or guardian.
(f) "New Securities" shall mean any Common Stock or other class of stock of the Company with voting rights (collectively, the "Capital Stock"), whether now authorized or not, and rights, options, or warrants to purchase the Capital Stock, and securities of any type whatsoever that are, or may become, convertible into the Capital Stock; provided, however, that "New Securities" does not include (i) securities offered to the public pursuant to a registration statement filed under the Securities Act of 1933 pursuant to approval of the Board of Directors of the Company; (ii) securities issued pursuant to the acquisition of another corporation or entity by the Company by

merger, purchase of substantially all of the assets or other reorganization;
(iii) shares of Capital Stock (or related options) issued to employees, officers, directors or consultants of the Company pursuant to any employee stock offering, plan or arrangement approved by the Board of Directors; (iv) shares of Capital Stock issued in connection with any stock split, stock dividend or recapitalization by the Company; (v) securities issued pursuant to and in consideration of the acquisition of a license or other rights, assets or technology from third parties or by third parties from the Company (provided that such issuances are primarily for other than equity financing purposes), or in connection with any lease financings relating to the Company assets, on the condition that such issuance and acquisition is approved by the incumbent Board of Directors; or (vi) securities offered to a Person in connection with a strategic business relationship, as approved by the Board of Directors of the Company.
(g) "Person" shall mean any individual, partnership, corporation, limited liability company, association, trust, joint venture, unincorporated organization or entity, or any government, governmental department or agency or political agency or political subdivision thereof.
(h) "Pre-Emptive Pro Rata Share" shall mean the ratio that (i) the sum of the number of shares of Common Stock then held by a Stockholder bears to (ii) the sum of the total number of issued and outstanding shares of Common Stock.
(i) "Shares" shall mean all shares of Common Stock or any other Capital Stock beneficially owned by the Stockholders at the time of execution of this Agreement or thereafter acquired by the Stockholders.
(j) "Stockholder's Pro Rata Share" shall mean the ratio that (i) the sum of the number of shares of Common Stock then held by the Stockholder bears to
(ii) the sum of the total number of shares of Common Stock then held by all Stockholders (other than the Transferring Stockholder).
(k) "Transfer" shall mean any transfer or assignment, voluntarily or involuntarily, by operation of law or otherwise, to any Person, including a sale, gift, pledge, encumbrance, hypothecation, mortgage, exchange or other form of disposition.
2. RESTRICTIONS ON TRANSFER. Each Stockholder agrees that it will not Transfer any interest in any or all of its Shares, except as expressly permitted by this Agreement. No Transfer or purported Transfer of Shares in contravention of this Agreement shall be effective for any purpose or confer upon any transferee or purported transferee any rights whatsoever. Notwithstanding the foregoing, a Transfer shall not be prohibited or restricted and shall not require compliance with Section 3 or 4 of this Agreement if made to a Member of the Immediate Family of such Stockholder or, if such Stockholder is not a natural person, then to an Affiliate of such Stockholder (each such person being herein called a "Permitted Transferee"); provided, however, that in the event of any such Transfer, the Permitted Transferee shall take such transferred Shares subject to the provisions of this Agreement.
2

3. RIGHT OF FIRST REFUSAL.
(a) In the event that a Stockholder (a "Transferring Stockholder") proposes to Transfer any Shares pursuant to a bona fide offer from a third party which is not an Affiliate of the Transferring Stockholder, the Transferring Stockholder shall give the Company written notice of the price, terms and conditions of the proposed sale. The Company shall have ten days from the date of receipt of any such notice to agree to purchase up to all of such securities, for the price and upon the terms and conditions specified in the notice, by giving written notice to the Transferring Stockholder stating therein the quantity of securities to be purchased up to all of such securities.
(b) In the event that the Company determines not to purchase all of the Shares that the Transferring Stockholder proposes to transfer within the ten day period specified in subsection (a), the Transferring Stockholder shall then give each other Stockholder written notice of the price, terms and conditions of the proposed sale (which shall be the same price, terms and conditions specified in the notice to the Company pursuant to subsection (a)). Each such other Stockholder shall have ten days from the date of receipt of any such notice to agree to purchase up to the Stockholder's Pro Rata Share of such securities, for the price and upon the terms and conditions specified in the notice, by giving written notice to the Transferring Stockholder stating therein the quantity of securities to be purchased up to such Stockholder's Pro Rata Share. If a Stockholder desires to purchase more than such Stockholder's Pro Rata Share, the Stockholder's notice shall so indicate. If less than all of the Shares that the Transferring Stockholder proposes to Transfer (other than Shares the Company agreed to purchase) have been subscribed for by the Electing Purchasers, the remaining available Shares shall be allocated among any over-subscribing Electing Purchasers pro rata according to the number of Shares then held by each such over-subscribing Electing Purchaser divided by the sum of the total number of Shares then held by all over-subscribing Electing Purchasers.
(c) Subject to the provisions of Section 4, in the event the Stockholders fail to exercise their right of first refusal with respect to all of the Shares within the time period specified in subsection (b), the Transferring Stockholder shall have 60 days thereafter to sell the Shares not elected to be purchased at a price and upon terms and conditions no more favorable to the purchasers of such securities than specified in the notice to the Company pursuant to subsection (a). In the event the Transferring Stockholder has not sold such Shares within the 60 day period, the Transferring Stockholder shall not thereafter sell any of its Shares without first complying again with this
Section 3.
4. CO-SALE RIGHTS.
(a) A Stockholder shall not Transfer any of its Shares (other than Shares which have been elected to be purchased by the Company or the other Stockholders pursuant to Section 3) until each of the other Stockholders shall have been given the opportunity, exercisable within ten days from the date of the notice to them as specified in Section 3, to sell to the proposed transferee or transferees, upon the same terms and conditions offered to the Transferring Stockholder, its Co-Sale Pro Rata Share of the shares proposed to be sold. The Stockholders participating in any such sale shall each pay a pro rata share of the reasonable expenses incurred by the Transferring Stockholder in connection therewith. To the extent one or more of the other Stockholders exercise such right of participation in accordance with the terms and conditions set forth below, the number of shares of Common Stock which the Transferring Stockholder may sell pursuant to Section 3 shall be
3

correspondingly reduced. Stockholders who fail to notify the Transferring Stockholder within ten days after the notice given pursuant to Section 3 shall be deemed to have waived their rights under this Section 4. Any Transfer made pursuant to this Section 4 shall be consummated within 60 days of the date of the notice given pursuant to Section 3 and shall be conditioned upon the agreement of the Transferring Stockholder or proposed transferee or transferees that such Transferring Stockholder or proposed transferee or transferees will purchase each Stockholder's Co-Sale Pro Rata Share of the Shares proposed to be sold. The right of participation of each of the Stockholders (other than the Transferring Stockholder) shall be subject to delivery by a participating Stockholder to the Transferring Stockholder of one or more certificates, properly endorsed for transfer, which represent the number of Shares which the Stockholder elects to sell pursuant to this Section 4.
(b) The stock certificates which the other Stockholders deliver to the Transferring Stockholder pursuant to subsection (a) shall be transferred by the Transferring Stockholder to the proposed transferee or transferees in consummation of the sale of the Shares pursuant to the terms and conditions specified in the Section 3 notice to the Stockholders, and the Transferring Stockholder shall promptly thereafter remit to each Stockholder that portion of the sale proceeds to which the Stockholder is entitled by reason of its participation in such sale.
(c) The exercise or nonexercise of the rights of the Stockholders hereunder to participate in one or more sales of Shares made by a Transferring Stockholder shall not adversely affect their rights to participate in subsequent sales of Shares by a Transferring Stockholder.
5. EXCEPTIONS. The restrictions set forth in Sections 3 and 4 shall not pertain or apply to (i) with respect to Section 4 only, ten percent of the Shares held by the Transferring Stockholder as of the date of such Stockholder's execution of this Agreement, (ii) any pledge of Common Stock made by the Transferring Stockholder which creates a mere security interest, provided the pledgee shall furnish the Company with a written agreement to be bound by and comply with all provisions of this Agreement applicable to the Transferring Stockholder, (iii) any transfer in connection with a merger, consolidation, reorganization or any other similar corporate transaction involving the Company, which transaction is approved by the Board of Directors of the Company, and (iv) any transfer in connection with an underwritten public offering of the Common Stock registered under the Securities Act of 1933.
6. PRE-EMPTIVE RIGHTS.
(a) The Company hereby grants to each of the Stockholders the right of first refusal to purchase such Stockholder's Pre-Emptive Pro-Rata Share of any New Securities that the Company may, from time to time, propose to sell and issue. In the event that the Company proposes to undertake an issuance of New Securities, it shall give each Stockholder written notice of its intention, describing the type of New Securities, the price and the general terms upon which the Company proposes to issue the same. Each Stockholder shall have 15 days from the effective date of any such notice to agree to purchase up to its Pre-Emptive Pro Rata Share of such New Securities for the price and upon the general terms specified in the notice by delivering written notice to the Company and stating therein the quantity of New Securities to be purchased. If a Stockholder desires to purchase more than its Pre-Emptive Pro Rata Share of such New Securities, it shall so indicate in the notice. If less than all of the New Securities are subscribed for by the Stockholders,
4

the remaining available New Securities shall be allocated among any over-subscribing Stockholders pro rata according to the number of Shares then held by each such Stockholder divided by the sum of the total number of Shares then held by all over-subscribing Stockholders.
(b) In the event that the Stockholders fail to exercise in full the right of first refusal within said 15 day period, the Company shall have 90 days thereafter to sell the New Securities with respect to which the Stockholders' rights were not exercised, at a price and upon general terms no more favorable to the purchasers thereof than specified in the Company's notice. In the event the Company has not sold the New Securities within such 90 day period, the Company shall not thereafter issue or sell any New Securities without first offering such securities to the Stockholders in the manner provided in this
Section 6.
7. FINANCIAL INFORMATION. The Company will furnish the following reports to each of the Stockholders for so long as such Stockholder beneficially owns at least 5% of the issued and outstanding shares of Capital Stock:
(a) As soon as practicable after the end of each fiscal year, a consolidated balance sheet of the Company and its subsidiaries, if any, as of the end of such fiscal year, and a consolidated statement of income and consolidated statement of changes in financial position of the Company and its subsidiaries, if any, for such year, prepared in accordance with generally accepted accounting principles, audited and certified by independent public accountants of nationally recognized standing selected by the Company, and setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail.
(b) As soon as practicable after the end of the first, second and third quarterly accounting periods in each fiscal year of the Company (commencing with the third quarter of 1998), a consolidated balance sheet of the Company and its subsidiaries, if any, as of the end of each such quarterly period, and a consolidated statement of income and consolidated statement of changes in financial condition of the Company and its subsidiaries for such period, and for the current fiscal year to date, prepared in accordance with generally accepted accounting principles, all in reasonable detail and signed, subject to changes resulting from year-end audit adjustments, by the principal financial or accounting officer of the Company.
8. LEGEND ON CERTIFICATES. All certificates evidencing shares of Common Stock now or hereinafter issued to the Stockholders will bear legends substantially as follows:
The shares represented by this certificate and any transfer thereof, whether voluntary or by operation of law, are subject to a Stockholders Agreement dated as of June 19, 1998, between LKQ Corporation and its stockholders, a copy of which is on file with the Secretary of LKQ Corporation. Any transfer hereof in conflict therewith, or in derogation thereof, is void and of no legal force and effect or validity whatsoever.
5

The shares represented by this certificate were issued in reliance on exemptions from the registration requirements of the Securities Act of 1933 (the "Act"), and may not be sold, assigned, pledged, or otherwise transferred in the absence of an effective registration under the Act covering the transfer, or an opinion of counsel, satisfactory to the Company, that registration under the Act is not required.
9. VOTING AGREEMENTS. (a) Each Stockholder shall vote all Capital Stock held by such Stockholder, execute and deliver such further documents and take such further action, all as shall be necessary to carry out the purposes and intent of this Agreement.
(b) Each Stockholder shall vote the Capital Stock owned by such Stockholder in favor of an amendment to the bylaws of the Company only if each Stockholder which beneficially owns Capital Stock of the Company having at least 15% of the voting power of the Company votes in favor of such amendment.
(c) Each Stockholder represents that it is not a party to and agrees that it shall not become a party to any voting agreement as described in Section 218(c) of the Delaware General Corporation Law, except as otherwise set forth in this Agreement and the Voting Agreement dated as of June 19, 1998 by and among Republic Industries, Inc., Donald F. Flynn and his family members and their affiliates, Dean L. Buntrock and Paul M. Montrone.
10. POOLING TRANSACTIONS. Each Stockholder agrees that it will vote all of its Shares in favor of a transaction involving the sale of the Company intended to qualify as a pooling-of-interests transaction (whether in the form of a merger, consolidation or similar corporate transaction, a stock-for-stock transaction, or a sale of all or substantially all of the assets of the Company) if (a) more than 80% of the outstanding shares of Capital Stock of the Company are voted in favor of such transaction, and (b) each Stockholder which beneficially owns Capital Stock of the Company having at least 15% of the voting power of the Company votes in favor of such transaction.
11. TERM OF THIS AGREEMENT. This Agreement shall continue in full force and effect until (a) terminated by the consent of the Stockholders beneficially owning at least a majority of the Shares (which must include the consent of each Stockholder which beneficially owns Capital Stock of the Company having at least 15% of the voting power of the Company); (b) any one Stockholder acquires all of the Shares; or (c) the closing of the initial public offering of the Capital Stock of the Company.
12. THIS AGREEMENT GOVERNS. In the event of any inconsistency between this Agreement and any of the bylaws or resolutions of the board of directors or the stockholders of the Company whether now existing or hereafter adopted, this Agreement shall prevail and govern in the matter, and each of the Stockholders hereby agrees that it will not, whether as a stockholder, director or officer, cause the Company to take any action inconsistent with this Agreement. No shares of Capital Stock will be transferred on the books of the Company, nor will any Transfer be effective, nor shall any additional shares or any rights or options to acquire any shares be valid or effective, unless and until such action is in compliance with all of the terms and conditions of this Agreement.
6

13. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and shall inure to the benefit of the respective parties hereto, and to the extent permitted hereby, their respective successors, personal representatives, spouses, legatees, heirs and assigns, but the foregoing does not imply, nor is it intended to modify the obligations of the parties hereto with respect to transferring or acquiring shares of Capital Stock or any interest therein, except in accordance with the terms of this Agreement.
14. ASSURANCES. The Stockholders, by the signing hereof, hereby agree to execute and deliver such other documents and agreements, including but not limited to assignments, bills of sale, stock powers, or resolutions, as may be reasonably necessary, desirable or convenient in order to effectuate the purposes of this Agreement.
15. HEADINGS. All section headings and paragraph titles or captions contained in this Agreement are for convenience of reference only and shall not be deemed to modify, describe, limit, extend or define the terms hereof, or the scope of this Agreement, nor are they relevant to the intent of any provision hereof.
16. PRONOUNS. All pronouns and any variations thereof shall be deemed to refer to the neutral, masculine, feminine, singular and plural as the identity of that person referred to requires.
17. NOTICE. All notices, requests, demands, consents and other communications required or permitted to be given pursuant to this Agreement shall be in writing and delivered by hand, by overnight courier delivery service or by certified mail, return receipt requested, postage prepaid. Notices shall be deemed given when actually received, which shall be deemed to be not later than the next business day if sent by overnight courier or after five business days if sent by mail. Notice to Stockholders shall be made to the address listed on the stock transfer records of the Company. Any notice to a party to this Agreement may include a provision stating that failure to respond to the notice within ten business days of receipt thereof (or such longer period of time as otherwise provided in this Agreement with respect to a specified notice) shall be deemed to be the consent of such party to the matter set forth in such notice, and all other parties to this Agreement shall be entitled to rely and act on such consent.
18. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
19. VALIDITY. If any provision in this Agreement shall be held to be invalid, illegal or unenforceable in any respect, such invalid, illegal or unenforceable provision shall not affect any other provision hereof, and this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein.
20. AMENDMENTS. It is mutually understood and agreed that this Agreement sets forth the entire agreement and understanding between the parties hereto with respect to the subject matter hereof, and that this Agreement supersedes all prior agreements and understandings among the parties hereto and shall not be supplemented, modified or amended except by a written instrument, dated subsequent to the date hereof, signed by (a) a duly authorized officer of the
7

Company; and (b) Stockholders beneficially owning at least a majority of the Shares (which concurrence must include each Stockholder which beneficially owns Capital Stock having at least 15% of the voting power of the Company).
21. REMEDIES. The parties hereto acknowledge the Capital Stock is a unique chattel and possesses a special, unique and extraordinary character, which would make it difficult to assess the monetary damage which any party hereto would sustain in the event of a breach of this Agreement. The parties hereto expressly recognize and agree that irreparable injury would be caused to any party to this Agreement by a breach of any of the terms or conditions of this Agreement, and therefore agree that the equitable remedies of specific performance or preliminary or injunctive relief would be appropriate in the event of a breach of this Agreement, provided that such remedies shall not be exclusive of other remedies available.
22. APPLICABLE LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware (without regard to the conflict laws thereof).
* * *
8

IN WITNESS WHEREOF, the parties hereto have executed this Agreement or caused this Agreement to be executed as of the day and year first above written.
STOCKHOLDERS:
LKQ CORPORATION

/s/Dean L. Buntrock               By: /s/Thomas B. Raterman
---------------------------           ------------------------------------------
Dean L. Buntrock                  Name:  Thomas B. Raterman
                                  Title: Senior V.P. & Chief Financial Officer

/s/John J. Cull
------------------------------------
John J. Cull	

W.F. DOOLEY TRUST U/A DATED MAY 1, 1973
F/B/O W.F. DOOLEY

/s/W.F. Dooley, Trustee
------------------------------------
Name:  W.F. Dooley
Title: Trustee

/s/Edwin Falkman
------------------------------------
Edwin Falkman	

BRIAN J. FLYNN JUNE, 1992
NON-EXEMPT TRUST

By: /s/Brian J. Flynn
    ----------------------------------------
Name:  Brian J. Flynn
Title: Trustee	

9

DONALD F. FLYNN 1993 TRUST

By: /s/Donald F. Flynn
    --------------------------------
Name:  Donald F. Flynn
Title: Trustee	

FLYNN 1998 GRANDCHILDREN'S TRUST

By: /s/Kevin F. Flynn
    --------------------------------
Name:  Kevin F. Flynn
Title: Co-Trustee

By: /s/Brian J. Flynn
    ----------------------------------------
Name:  Brian J. Flynn
Title: Co-Trustee	

FLYNN 1995 REVOCABLE TRUST

By: /s/Robert W. Flynn
    --------------------------------
Name:  Robert W. Flynn
Title: Trustee	

KEVIN F. FLYNN JUNE, 1992
NON-EXEMPT TRUST

By: /s/Kevin F. Flynn
    --------------------------------
Name:  Kevin F. Flynn
Title: Trustee	

10

MICHAEL R. FLYNN 1994 EXEMPT TRUST

By: /s/Michael R. Flynn
    --------------------------------
Name:  Michael R. Flynn
Title: Co-Trustee	

PATRICK F. FLYNN 1994 EXEMPT TRUST

By: /s/Patrick F. Flynn
    --------------------------------
Name:  Patrick F. Flynn
Title: Trustee

/s/Jeffrey Klein
------------------------------------
Jeffrey Klein

/s/John T. McCarthy
------------------------------------
John T. McCarthy

/s/Paul M. Meister
------------------------------------
Name:  Paul M. Meister
Title: Vice President & Treasurer

/s/Mark Pytosh
------------------------------------
Mark Pytosh	

QRP INVESTMENT COMPANY, LLC

By: /s/Donald F. Flynn
    --------------------------------
Name:  Donald F. Flynn
Title: As sole stockholder of Flynn Enterprises, Inc.,
       sole manager of Subscriber	

11

REPUBLIC INDUSTRIES, INC.

By: /s/Thomas W. Hawkins
    --------------------------------
Name:  Thomas W. Hawkins
Title: Senior Vice President of Corporate Development

/s/Gerald E. Seegers
-------------------------------------
Gerald E. Seegers

/s/Rodger Welker
-------------------------------------
Rodger Welker	

12

ADDENDUM
TO
STOCKHOLDERS AGREEMENT
Reference is made to the Stockholders Agreement dated as of June 19, 1998 among LKQ Corporation (the "Company") and the stockholders of the Company, a copy of which is attached hereto. The entities set forth below under STOCKHOLDERS (hereinafter, the "Stockholders") are parties to a transaction pursuant to which the Stockholders will become owners of shares of common stock of the Company. The addition of the Stockholders as parties to the Stockholders Agreement is a condition to the obligations of the Stockholders and the Company to consummate such transaction. Each of the Stockholders acknowledges that it has read the Stockholders Agreement in its entirety. By its signature below, each of the Stockholders agrees to be bound by all of the terms and conditions of, and the Company agrees that the Stockholder shall be entitled to all of the rights and benefits of, the Stockholders Agreement, as if the Stockholder was a "Stockholder" (as defined in the Stockholders Agreement) from the date it was originally made.
This Addendum is dated as of the 15th day of July, 1998.

LKQ CORPORATION                       STOCKHOLDERS:

By: /s/Thomas B. Raterman             /s/H. Bradley Willen, Trustee
    -------------------------------   ------------------------------------------
Name:    Thomas B. Raterman           H. Bradley Willen, Trustee of the Stuart
Title:   Senior Vice President and    Willen Irrevocable Trust f/b/o Jacob
         Chief Financial Officer      Leonard Willen dated December 31, 1996

                                      /s/H. Bradley Willen, Trustee
                                      ------------------------------------------
                                      H. Bradley Willen, Trustee of the Stuart
                                      Willen Irrevocable Trust f/b/o Thomas V.
                                      Willen dated December 31, 1996

                                      /s/H. Bradley Willen, Trustee
                                      ------------------------------------------
                                      H. Bradley Willen, Trustee of the Stuart
                                      Willen Irrevocable Trust f/b/o Claudia
                                      Rae Willen dated December 31, 1996

                                      /s/Todd David Willen, Trustee
                                      ------------------------------------------
                                      Todd David Willen, Trustee of the Stuart
                                      Willen Irrevocable Trust f/b/o Allison
                                      Lynn Willen dated December 31, 1996

                                      /s/Todd D. Willen, Trustee
                                      ------------------------------------------
                                      Todd D. Willen, Trustee of the Stuart
                                      Willen Irrevocable Trust f/b/o Emily
                                      Victoria Willen dated December 31, 1996

                                       13	

                                      /s/Stuart P. Willen, Trustee
                                      ------------------------------------------
                                      Stuart P. Willen, Trustee of the Stuart P.
                                      Willen Grantor Trust dated July 1, 1998

                                      /s/H. Bradley Willen, Trustee
                                      ------------------------------------------
                                      H. Bradley Willen, Trustee of the
                                      H. Bradley Willen Grantor Trust dated
                                      July 1, 1998

                                      /s/Todd D. Willen
                                      ------------------------------------------
                                      Todd D. Willen, Trustee of the Todd D.
                                      Willen Grantor Trust dated July 1, 1998	

14

ADDENDUM
TO
STOCKHOLDERS AGREEMENT
Reference is made to the Stockholders Agreement dated as of June 19, 1998 among LKQ Corporation (the "Company") and the stockholders of the Company, a copy of which is attached hereto. Leonard A. Damron III (hereinafter, the "Stockholder") is a party to a transaction pursuant to which the Stockholder will become an owner of shares of common stock of the Company. The addition of the Stockholder, as a party to the Stockholders Agreement is a condition to the obligations of the Stockholder and the Company to consummate such transaction. The Stockholder acknowledges that he has read the Stockholders Agreement in its entirety. By his signature below, the Stockholder agrees to be bound by all of the terms and conditions of, and the Company agrees that the Stockholder shall be entitled to all of the rights and benefits of, the Stockholders Agreement, as if the Stockholder was a "Stockholder" (as defined in the Stockholders Agreement) from the date it was originally made.
This Addendum is dated as of the 29th day of July, 1998.
LKQ CORPORATION

By: /s/Thomas B. Raterman                     /s/Leonard A. Damron III
    -----------------------------             ----------------------------------
Name:                                         Leonard A. Damron III	

Title:
15

ADDENDUM
TO
STOCKHOLDERS AGREEMENT
Reference is made to the Stockholders Agreement dated as of June 19, 1998 among LKQ Corporation (the "Company") and the stockholders of the Company, a copy of which is attached hereto. Gary F. Middleton (hereinafter, the "Stockholder") is a party to a transaction pursuant to which the Stockholder will become an owner of shares of common stock of the Company. The addition of the Stockholder, as a party to the Stockholders Agreement is a condition to the obligations of the Stockholder and the Company to consummate such transaction. The Stockholder acknowledges that he has read the Stockholders Agreement in its entirety. By his signature below, the Stockholder agrees to be bound by all of the terms and conditions of, and the Company agrees that the Stockholder shall be entitled to all of the rights and benefits of, the Stockholders Agreement, as if the Stockholder was a "Stockholder" (as defined in the Stockholders Agreement) from the date it was originally made.
This Addendum is dated as of the 31st day of July, 1998.
LKQ CORPORATION

By: /s/Thomas B. Raterman                     /s/Gary F. Middleton, President
    ---------------------------               ----------------------------------
Name:                                         Gary F. Middleton	

Title:
16

ADDENDUM
TO
STOCKHOLDERS AGREEMENT
Reference is made to the Stockholders Agreement dated as of June 19, 1998 among LKQ Corporation (the "Company") and the stockholders of the Company, a copy of which is attached hereto. Mark A. Pirtle (hereinafter, the "Stockholder") is a party to a transaction pursuant to which the Stockholder will become an owner of shares of common stock of the Company. The addition of the Stockholder, as a party to the Stockholders Agreement is a condition to the obligations of the Stockholder and the Company to consummate such transaction. The Stockholder acknowledges that he has read the Stockholders Agreement in its entirety. By his signature below, the Stockholder agrees to be bound by all of the terms and conditions of, and the Company agrees that the Stockholder shall be entitled to all of the rights and benefits of, the Stockholders Agreement, as if the Stockholder was a "Stockholder" (as defined in the Stockholders Agreement) from the date it was originally made.
This Addendum is dated as of the 31st day of July, 1998.
LKQ CORPORATION

By: /s/Thomas B. Raterman                   /s/Mark A. Pirtle
    --------------------------              ------------------------------------
Name:                                       Mark A. Pirtle	

Title:
17

ADDENDUM
TO
STOCKHOLDERS AGREEMENT
Reference is made to the Stockholders Agreement dated as of June 19, 1998 among LKQ Corporation (the "Company") and the stockholders of the Company, a copy of which is attached hereto. Gary L. Ackerman (hereinafter, the "Stockholder") is a party to a transaction pursuant to which the Stockholder will become an owner of shares of common stock of the Company. The addition of the Stockholder, as a party to the Stockholders Agreement is a condition to the obligations of the Stockholder and the Company to consummate such transaction. The Stockholder acknowledges that he has read the Stockholders Agreement in its entirety. By his signature below, the Stockholder agrees to be bound by all of the terms and conditions of, and the Company agrees that the Stockholder shall be entitled to all of the rights and benefits of, the Stockholders Agreement, as if the Stockholder was a "Stockholder" (as defined in the Stockholders Agreement) from the date it was originally made.
This Addendum is dated as of the 7th day of August, 1998.
LKQ CORPORATION

By: /s/Thomas B. Raterman                   /s/Gary L. Ackerman
    --------------------------              ------------------------------------
Name:                                       Gary L. Ackerman	

Title:
18

ADDENDUM
TO
STOCKHOLDERS AGREEMENT
Reference is made to the Stockholders Agreement dated as of June 19, 1998 among LKQ Corporation (the "Company") and the stockholders of the Company, a copy of which is attached hereto. Robert H. Ackerman (hereinafter, the "Stockholder") is a party to a transaction pursuant to which the Stockholder will become an owner of shares of common stock of the Company. The addition of the Stockholder, as a party to the Stockholders Agreement is a condition to the obligations of the Stockholder and the Company to consummate such transaction. The Stockholder acknowledges that he has read the Stockholders Agreement in its entirety. By his signature below, the Stockholder agrees to be bound by all of the terms and conditions of, and the Company agrees that the Stockholder shall be entitled to all of the rights and benefits of, the Stockholders Agreement, as if the Stockholder was a "Stockholder" (as defined in the Stockholders Agreement) from the date it was originally made.
This Addendum is dated as of the 7th day of August, 1998.
LKQ CORPORATION

By: /s/Thomas B. Raterman               /s/Robert H. Ackerman
    --------------------------          ----------------------------------------
Name:                                   Robert H. Ackerman	

Title:
19

ADDENDUM
TO
STOCKHOLDERS AGREEMENT
Reference is made to the Stockholders Agreement dated as of June 19, 1998 among LKQ Corporation (the "Company") and the stockholders of the Company, a copy of which is attached hereto. Lunn-LKQ, LLC (hereinafter, the "Stockholder") is a party to a transaction pursuant to which the Stockholder will become an owner of shares of common stock of the Company. The addition of the Stockholder, as a party to the Stockholders Agreement is a condition to the obligations of the Stockholder and the Company to consummate such transaction. By its signature below, the Stockholder agrees to be bound by all of the terms and conditions of, and the Company agrees that the Stockholder shall be entitled to all of the rights and benefits of, the Stockholders Agreement, as if the Stockholder was a "Stockholder" (as defined in the Stockholders Agreement) from the date it was originally made.
This Addendum is dated as of the 23rd day of December, 1998.

LKQ CORPORATION                             LUNN-LKQ, LLC

By: /s/Thomas B. Raterman                   /s/Robert J. Lunn
    --------------------------------        ------------------------------------
     Thomas B. Raterman                     Name:  Robert J. Lunn
     Senior Vice President and Chief        Title: Managing Member of Lunn
                                                   Partners, LLC	

20

ADDENDUM
TO
STOCKHOLDERS AGREEMENT
Reference is made to the Stockholders Agreement dated as of June 19, 1998 among LKQ Corporation (the "Company") and the stockholders of the Company, a copy of which is attached hereto. The undersigned (hereinafter, the "Stockholder") is a party to a transaction pursuant to which the Stockholder will become an owner of shares of common stock of the Company. The Stockholder acknowledges that he has read the Stockholders Agreement in its entirety. By the Stockholder's signature below, the Stockholder agrees to be bound by all of the terms and conditions of, and the Company agrees that the Stockholder shall be entitled to all of the rights and benefits of, the Stockholders Agreement, as if the Stockholder was a "Stockholder" (as defined in the Stockholders Agreement) from the date it was originally made.
This Addendum is dated as of the 16th day of December, 1998.
LKQ CORPORATION

By: /s/Thomas B. Raterman                   /s/Jerome D. Girsch
    ------------------------------------    ------------------------------------
     Thomas B. Raterman                     Jerome D. Girsch
     Senior Vice President and Chief
     Financial Officer	

21

ADDENDUM
TO
STOCKHOLDERS AGREEMENT
Reference is made to the Stockholders Agreement dated as of June 19, 1998 among LKQ Corporation (the "Company") and the stockholders of the Company, a copy of which is attached hereto. The undersigned (hereinafter, the "Stockholder") is a party to a transaction pursuant to which the Stockholder will become an owner of shares of common stock of the Company. The Stockholder acknowledges that he has read the Stockholders Agreement in its entirety. By the Stockholder's signature below, the Stockholder agrees to be bound by all of the terms and conditions of, and the Company agrees that the Stockholder shall be entitled to all of the rights and benefits of, the Stockholders Agreement, as if the Stockholder was a "Stockholder" (as defined in the Stockholders Agreement) from the date it was originally made.
This Addendum is dated as of the 16th day of December, 1998.
LKQ CORPORATION

By: /s/Thomas B. Raterman                    /s/Bradley J. Girsch
    -----------------------------------      ----------------------------------
    Thomas B. Raterman                       Bradley J. Girsch
    Senior Vice President and Chief
    Financial Officer	

22

ADDENDUM
TO
STOCKHOLDERS AGREEMENT
Reference is made to the Stockholders Agreement dated as of June 19, 1998 among LKQ Corporation (the "Company") and the stockholders of the Company, a copy of which is attached hereto. The undersigned (hereinafter, the "Stockholder") is a party to a transaction pursuant to which the Stockholder will become an owner of shares of common stock of the Company. The Stockholder acknowledges that he has read the Stockholders Agreement in its entirety. By the Stockholder's signature below, the Stockholder agrees to be bound by all of the terms and conditions of, and the Company agrees that the Stockholder shall be entitled to all of the rights and benefits of, the Stockholders Agreement, as if the Stockholder was a "Stockholder" (as defined in the Stockholders Agreement) from the date it was originally made.
This Addendum is dated as of the 16th day of December, 1998.
LKQ CORPORATION

By: /s/Thomas B. Raterman                    /s/Rebecca M. Girsch
    -----------------------------------      ----------------------------------
    Thomas B. Raterman                       Rebecca M. Girsch
    Senior Vice President and Chief
    Financial Officer	

23

ADDENDUM
TO
STOCKHOLDERS AGREEMENT
Reference is made to the Stockholders Agreement dated as of June 19, 1998 among LKQ Corporation (the "Company") and the stockholders of the Company, a copy of which is attached hereto. The undersigned (hereinafter, the "Stockholder") is a party to a transaction pursuant to which the Stockholder will become an owner of shares of common stock of the Company. The Stockholder acknowledges that he has read the Stockholders Agreement in its entirety. By the Stockholder's signature below, the Stockholder agrees to be bound by all of the terms and conditions of, and the Company agrees that the Stockholder shall be entitled to all of the rights and benefits of, the Stockholders Agreement, as if the Stockholder was a "Stockholder" (as defined in the Stockholders Agreement) from the date it was originally made.
This Addendum is dated as of the 16th day of December, 1998.
LKQ CORPORATION

By: /s/Thomas B. Raterman                    /s/Michael J. Girsch
    -----------------------------------      ----------------------------------
    Thomas B. Raterman                       Michael J. Girsch
    Senior Vice President and Chief
    Financial Officer	

24

ADDENDUM
TO
STOCKHOLDERS AGREEMENT
Reference is made to the Stockholders Agreement dated as of June 19, 1998 among LKQ Corporation (the "Company") and the stockholders of the Company, a copy of which is attached hereto. The undersigned (hereinafter, the "Stockholder") is a party to a transaction pursuant to which the Stockholder will become an owner of shares of common stock of the Company. The Stockholder acknowledges that he has read the Stockholders Agreement in its entirety. By the Stockholder's signature below, the Stockholder agrees to be bound by all of the terms and conditions of, and the Company agrees that the Stockholder shall be entitled to all of the rights and benefits of, the Stockholders Agreement, as if the Stockholder was a "Stockholder" (as defined in the Stockholders Agreement) from the date it was originally made.
This Addendum is dated as of the 16th day of December, 1998.
LKQ CORPORATION

By: /s/Thomas B. Raterman                    /s/Gregory J. Girsch
    -----------------------------------      ----------------------------------
    Thomas B. Raterman                       Gregory J. Girsch
    Senior Vice President and Chief
    Financial Officer	

25

ADDENDUM
TO
STOCKHOLDERS AGREEMENT
Reference is made to the Stockholders Agreement dated as of June 19, 1998 among LKQ Corporation (the "Company") and the stockholders of the Company, a copy of which is attached hereto. The undersigned (hereinafter, the "Stockholder") is a party to a transaction pursuant to which the Stockholder will become an owner of shares of common stock of the Company. The Stockholder acknowledges that he has read the Stockholders Agreement in its entirety. By the Stockholder's signature below, the Stockholder agrees to be bound by all of the terms and conditions of, and the Company agrees that the Stockholder shall be entitled to all of the rights and benefits of, the Stockholders Agreement, as if the Stockholder was a "Stockholder" (as defined in the Stockholders Agreement) from the date it was originally made.
This Addendum is dated as of the 16th day of December, 1998.
LKQ CORPORATION

By: /s/Thomas B. Raterman                    /s/Leslie M. Girsch
    -----------------------------------      ----------------------------------
    Thomas B. Raterman                       Leslie M. Girsch
    Senior Vice President and Chief
    Financial Officer	

26

ADDENDUM
TO
STOCKHOLDERS AGREEMENT
Reference is made to the Stockholders Agreement dated as of June 19, 1998 among LKQ Corporation (the "Company") and the stockholders of the Company, a copy of which is attached hereto. Donald Egelseer (hereinafter, the "Stockholder") is a party to a transaction pursuant to which the Stockholder will become an owner of shares of common stock of the Company. The addition of the Stockholder, as a party to the Stockholders Agreement is a condition to the obligations of the Stockholder and the Company to consummate such transaction. The Stockholder acknowledges that he has read the Stockholders Agreement in its entirety. By his signature below, the Stockholder agrees to be bound by all of the terms and conditions of, and the Company agrees that the Stockholder shall be entitled to all of the rights and benefits of, the Stockholders Agreement, as if the Stockholder was a "Stockholder" (as defined in the Stockholders Agreement) from the date it was originally made.
This Addendum is dated as of the 31st day of December, 1998.

LKQ CORPORATION                              SHAREHOLDER

By: /s/Thomas B. Raterman                    /s/Donald Egelseer
    -----------------------------------      ----------------------------------
Name:    Thomas B. Raterman                  Donald Egelseer
Title: Senior Vice President and
       Chief Financial Officer	

27

ADDENDUM
TO
STOCKHOLDERS AGREEMENT
Reference is made to the Stockholders Agreement dated as of June 19, 1998 among LKQ Corporation (the "Company") and the stockholders of the Company, a copy of which is attached hereto. Alan Egelseer (hereinafter, the "Stockholder") is a party to a transaction pursuant to which the Stockholder will become an owner of shares of common stock of the Company. The addition of the Stockholder, as a party to the Stockholders Agreement is a condition to the obligations of the Stockholder and the Company to consummate such transaction. The Stockholder acknowledges that he has read the Stockholders Agreement in its entirety. By his signature below, the Stockholder agrees to be bound by all of the terms and conditions of, and the Company agrees that the Stockholder shall be entitled to all of the rights and benefits of, the Stockholders Agreement, as if the Stockholder was a "Stockholder" (as defined in the Stockholders Agreement) from the date it was originally made.
This Addendum is dated as of the 31st day of December, 1998.

LKQ CORPORATION                              SHAREHOLDER

By: /s/Thomas B. Raterman                    /s/Alan Egelseer
    -----------------------------------      ----------------------------------
Name:    Thomas B. Raterman                  Alan Egelseer
Title: Senior Vice President and
       Chief Financial Officer	

28

ADDENDUM
TO
STOCKHOLDERS AGREEMENT
Reference is made to the Stockholders Agreement dated as of June 19, 1998 among LKQ Corporation (the "Company") and the stockholders of the Company, a copy of which is attached hereto. Ronald Egelseer (hereinafter, the "Stockholder") is a party to a transaction pursuant to which the Stockholder will become an owner of shares of common stock of the Company. The addition of the Stockholder, as a party to the Stockholders Agreement is a condition to the obligations of the Stockholder and the Company to consummate such transaction. The Stockholder acknowledges that he has read the Stockholders Agreement in its entirety. By his signature below, the Stockholder agrees to be bound by all of the terms and conditions of, and the Company agrees that the Stockholder shall be entitled to all of the rights and benefits of, the Stockholders Agreement, as if the Stockholder was a "Stockholder" (as defined in the Stockholders Agreement) from the date it was originally made.
This Addendum is dated as of the 31st day of December, 1998.

LKQ CORPORATION                              SHAREHOLDER

By: /s/Thomas B. Raterman                    /s/Ronald Egelseer
    -----------------------------------      ----------------------------------
Name:    Thomas B. Raterman                  Ronald Egelseer
Title: Senior Vice President and
       Chief Financial Officer	

29

ADDENDUM
TO
STOCKHOLDERS AGREEMENT
Reference is made to the Stockholders Agreement dated as of June 19, 1998 among LKQ Corporation (the "Company") and the stockholders of the Company, a copy of which is attached hereto. Randy Wittig (hereinafter, the "Stockholder") is a party to a transaction pursuant to which the Stockholder will become an owner of shares of common stock of the Company. The addition of the Stockholder, as a party to the Stockholders Agreement is a condition to the obligations of the Stockholder and the Company to consummate such transaction. The Stockholder acknowledges that he has read the Stockholders Agreement in its entirety. By his signature below, the Stockholder agrees to be bound by all of the terms and conditions of, and the Company agrees that the Stockholder shall be entitled to all of the rights and benefits of, the Stockholders Agreement, as if the Stockholder was a "Stockholder" (as defined in the Stockholders Agreement) from the date it was originally made.
This Addendum is dated as of the 31st day of December, 1998.

LKQ CORPORATION                              SHAREHOLDER

By: /s/Thomas B. Raterman                    /s/Randy Wittig
    -----------------------------------      ----------------------------------
Name:    Thomas B. Raterman                  Randy Wittig
Title: Senior Vice President and
       Chief Financial Officer	

30

ADDENDUM
TO
STOCKHOLDERS AGREEMENT
Reference is made to the Stockholders Agreement dated as of June 19, 1998 among LKQ Corporation (the "Company") and the stockholders of the Company, a copy of which is attached hereto. Archie H. Wright and E. Kathleen Wright, as joint tenants (hereinafter, collectively, the "Stockholder") are parties to a transaction pursuant to which the Stockholder will become an owner of shares of common stock of the Company. The addition of the Stockholder, as a party to the Stockholders Agreement is a condition to the obligations of the Stockholder and the Company to consummate such transaction. The Stockholder acknowledges that it has read the Stockholders Agreement in its entirety. By the signatures below, the Stockholder agrees to be bound by all of the terms and conditions of, and the Company agrees that the Stockholder shall be entitled to all of the rights and benefits of, the Stockholders Agreement, as if the Stockholder was a "Stockholder" (as defined in the Stockholders Agreement) from the date it was originally made.
This Addendum is dated as of the 31st day of December, 1998.

LKQ CORPORATION                              SHAREHOLDER

By: /s/Thomas B. Raterman                    /s/Archie H. Wright
    -----------------------------------      ----------------------------------
Name:    Thomas B. Raterman                  Archie H. Wright
Title: Senior Vice President and
       Chief Financial Officer
                                             /s/E. Kathleen Wright
                                             ----------------------------------
                                             E. Kathleen Wright	

31

ADDENDUM
TO
STOCKHOLDERS AGREEMENT
Reference is made to the Stockholders Agreement dated as of June 19, 1998 among LKQ Corporation (the "Company") and the stockholders of the Company, a copy of which is attached hereto. D&R Auto Parts, Inc. (hereinafter, the "Stockholder") is a party to a transaction pursuant to which the Stockholder will become an owner of shares of common stock of the Company. The addition of the Stockholder, as a party to the Stockholders Agreement is a condition to the obligations of the Stockholder and the Company to consummate such transaction. The Stockholder acknowledges that it has read the Stockholders Agreement in its entirety. By the signature below, the Stockholder agrees to be bound by all of the terms and conditions of, and the Company agrees that the Stockholder shall be entitled to all of the rights and benefits of, the Stockholders Agreement, as if the Stockholder was a "Stockholder" (as defined in the Stockholders Agreement) from the date it was originally made.
This Addendum is dated as of the 31st day of December, 1998.

LKQ CORPORATION                              SHAREHOLDER

                                             D&R AUTO PARTS, INC.

By: /s/Thomas B. Raterman                    /s/Darrell A. Ibach, Sr.
    -----------------------------------      ----------------------------------
Name:    Thomas B. Raterman                  Name:  Darrell A. Ibach, Sr.
Title:   Senior Vice President and           Title: President
       Chief Financial Officer	

32

ADDENDUM
TO
STOCKHOLDERS AGREEMENT
Reference is made to the Stockholders Agreement dated as of June 19, 1998 among LKQ Corporation (the "Company") and the stockholders of the Company, a copy of which is attached hereto. Barry Lieberman and Lillian L. Lieberman, Co-Trustees of The Lieberman Family Turst Dated March 15, 1994 (hereinafter, the "Stockholder") is a party to a transaction pursuant to which the Stockholder will become an owner of shares of common stock of the Company. The addition of the Stockholder as a party to the Stockholders Agreement is a condition to the obligations of the Stockholder and the Company to consummate such transaction. The Stockholder acknowledges that he has read the Stockholders Agreement in its entirety. By the signature below, the Stockholder agrees to be bound by all of the terms and conditions of, and the Company agrees that the Stockholder shall be entitled to all of the rights and benefits of, the Stockholders Agreement, as if the Stockholder was a "Stockholder" (as defined in the Stockholders Agreement) from the date it was originally made.
This Addendum is dated as of the 31st day of December, 1998.

LKQ CORPORATION                              SHAREHOLDER

By: /s/Michael Mattes                        /s/Barry Lieberman
    -----------------------------------      ----------------------------------
Name:    Michael Mattes                      Barry Lieberman, Co-Trustee of The
Title:   Vice President                      Lieberman Family Trust, Dated
                                             March 15, 1994

By: /s/Victor M. Casini                      /s/Lillian L. Lieberman
    -----------------------------------      ----------------------------------
Name:    Victor M. Casini                    Lillian L. Lieberman, Co-Trustee of
Title:   Secretary                           The Lieberman Family Trust, Dated
                                             March 15, 1994	

33

ADDENDUM
TO
STOCKHOLDERS AGREEMENT
Reference is made to the Stockholders Agreement dated as of June 19, 1998 among LKQ Corporation (the "Company") and the stockholders of the Company, a copy of which is attached hereto. Alex Lieberman and Katie R. Lieberman, Co-Trustees of The Lieberman Family Trust Dated February 25, 1997 (hereinafter, the "Stockholder") is a party to a transaction pursuant to which the Stockholder will become an owner of shares of common stock of the Company. The addition of the Stockholder as a party to the Stockholders Agreement is a condition to the obligations of the Stockholder and the Company to consummate such transaction. The Stockholder acknowledges that he has read the Stockholders Agreement in its entirety. By the signature below, the Stockholder agrees to be bound by all of the terms and conditions of, and the Company agrees that the Stockholder shall be entitled to all of the rights and benefits of, the Stockholders Agreement, as if the Stockholder was a "Stockholder" (as defined in the Stockholders Agreement) from the date it was originally made.
This Addendum is dated as of the 31st day of December, 1998.

LKQ CORPORATION                              SHAREHOLDER

By: /s/Michael Mattes                        /s/Alex Lieberman
    -----------------------------------      ----------------------------------
Name:    Michael Mattes                      Alex Lieberman, Co-Trustee of The
Title:   Vice President                      Lieberman Family Trust, Dated
                                             February 25, 1997

By: /s/Victor M. Casini                      /s/Katie R. Lieberman
    -----------------------------------      ----------------------------------
Name:    Victor M. Casini                    Katie R. Lieberman, Co-Trustee of
Title:   Secretary                           The Lieberman Family Trust, Dated
                                             February 25, 1997	

34

ADDENDUM
TO
STOCKHOLDERS AGREEMENT
Reference is made to the Stockholders Agreement dated as of June 19, 1998 among LKQ Corporation (the "Company") and the stockholders of the Company, a copy of which is attached hereto. Herb Lieberman, Trustee of The Lieberman Living Trust Dated July 8, 1996 (hereinafter, the "Stockholder") is a party to a transaction pursuant to which the Stockholder will become an owner of shares of common stock of the Company. The addition of the Stockholder as a party to the Stockholders Agreement is a condition to the obligations of the Stockholder and the Company to consummate such transaction. The Stockholder acknowledges that he has read the Stockholders Agreement in its entirety. By the signature below, the Stockholder agrees to be bound by all of the terms and conditions of, and the Company agrees that the Stockholder shall be entitled to all of the rights and benefits of, the Stockholders Agreement, as if the Stockholder was a "Stockholder" (as defined in the Stockholders Agreement) from the date it was originally made.
This Addendum is dated as of the 31st day of December, 1998.

LKQ CORPORATION                              SHAREHOLDER

By: /s/Michael Mattes                        /s/Herb Lieberman
    -----------------------------------      ----------------------------------
Name:    Michael Mattes                      Herb Lieberman, Trustee of The
Title:   Vice President                      Lieberman Living Trust, Dated
                                             July 8, 1996

By: /s/Victor M. Casini
    -----------------------------------
Name:    Victor M. Casini
Title:   Secretary	

35

ADDENDUM
TO
STOCKHOLDERS AGREEMENT
Reference is made to the Stockholders Agreement dated as of June 19, 1998 among LKQ Corporation (the "Company") and the stockholders of the Company, a copy of which is attached hereto. JJ&D, Inc., an Alabama corporation (hereinafter, the "Stockholder") is a party to a transaction pursuant to which the Stockholder will become an owner of shares of common stock of the Company. The addition of the Stockholder, as a party to the Stockholders Agreement is a condition to the obligations of the Stockholder and the Company to consummate such transaction. The Stockholder acknowledges that it has read the Stockholders Agreement in its entirety. By its signature below, the Stockholder agrees to be bound by all of the terms and conditions of, and the Company agrees that the Stockholder shall be entitled to all of the rights and benefits of, the Stockholders Agreement, as if the Stockholder was a "Stockholder" (as defined in the Stockholders Agreement) from the date it was originally made.
This Addendum is dated as of the 31st day of December, 1998.

LKQ CORPORATION                              JJ&D, INC.

By: /s/Thomas B. Raterman                    /s/Johnny W. Davis
    -----------------------------------      ----------------------------------
Name:    Thomas B. Raterman                  Name:  Johnny W. Davis
Title:   Senior Vice President and           Title: President
       Chief Financial Officer	

36

ADDENDUM
TO
STOCKHOLDERS AGREEMENT
Reference is made to the Stockholders Agreement dated as of June 19, 1998 among LKQ Corporation (the "Company") and the stockholders of the Company, a copy of which is attached hereto. Steven Jones (hereinafter, the "Stockholder") is a party to a transaction pursuant to which the Stockholder will become an owner of shares of common stock of the Company. The addition of the Stockholder, as a party to the Stockholders Agreement is a condition to the obligations of the Stockholder and the Company to consummate such transaction. The Stockholder acknowledges that he has read the Stockholders Agreement in its entirety. By the signature below, the Stockholder agrees to be bound by all of the terms and conditions of, and the Company agrees that the Stockholder shall be entitled to all of the rights and benefits of, the Stockholders Agreement, as if the Stockholder was a "Stockholder" (as defined in the Stockholders Agreement) from the date it was originally made.
This Addendum is dated as of the 28th day of February, 1999.

LKQ CORPORATION                              SHAREHOLDER

By: /s/Thomas B. Raterman                    /s/Steven Jones
    -----------------------------------      ----------------------------------
Name:    Thomas B. Raterman                  Steven Jones
Title: Senior Vice President and
       Chief Financial Officer	

37

ADDENDUM
TO
STOCKHOLDERS AGREEMENT
Reference is made to the Stockholders Agreement dated as of June 19, 1998 among LKQ Corporation (the "Company") and the stockholders of the Company, a copy of which is attached hereto. Mark Fitzgibbons (hereinafter, the "Stockholder") is a party to a transaction pursuant to which the Stockholder will become an owner of shares of common stock of the Company. The addition of the Stockholder, as a party to the Stockholders Agreement is a condition to the obligations of the Stockholder and the Company to consummate such transaction. The Stockholder acknowledges that he has read the Stockholders Agreement in its entirety. By the signature below, the Stockholder agrees to be bound by all of the terms and conditions of, and the Company agrees that the Stockholder shall be entitled to all of the rights and benefits of, the Stockholders Agreement, as if the Stockholder was a "Stockholder" (as defined in the Stockholders Agreement) from the date it was originally made.
This Addendum is dated as of the 28th day of February, 1999.

LKQ CORPORATION                              SHAREHOLDER

By: /s/Thomas B. Raterman                    /s/Mark Fitzgibbons
    -----------------------------------      ----------------------------------
Name:    Thomas B. Raterman                  Mark Fitzgibbons
Title: Senior Vice President and
       Chief Financial Officer	

38

ADDENDUM
TO
STOCKHOLDERS AGREEMENT
Reference is made to the Stockholders Agreement dated as of June 19, 1998 among LKQ Corporation (the "Company") and the stockholders of the Company, a copy of which is attached hereto. William Kikendall (hereinafter, the "Stockholder") is a party to a transaction pursuant to which the Stockholder will become an owner of shares of common stock of the Company. The addition of the Stockholder, as a party to the Stockholders Agreement is a condition to the obligations of the Stockholder and the Company to consummate such transaction. The Stockholder acknowledges that he has read the Stockholders Agreement in its entirety. By the signature below, the Stockholder agrees to be bound by all of the terms and conditions of, and the Company agrees that the Stockholder shall be entitled to all of the rights and benefits of, the Stockholders Agreement, as if the Stockholder was a "Stockholder" (as defined in the Stockholders Agreement) from the date it was originally made.
This Addendum is dated as of the 28th day of February, 1999.

LKQ CORPORATION                              SHAREHOLDER

By: /s/Jerome D. Girsch                      /s/William G. Kikendall
    -----------------------------------      ----------------------------------
Name:  Jerome D. Girsch                      William G. Kikendall
Title: Senior Vice President-Development	

39

ADDENDUM
TO
STOCKHOLDERS AGREEMENT
Reference is made to the Stockholders Agreement dated as of June 19, 1998 among LKQ Corporation (the "Company") and the stockholders of the Company, a copy of which is attached hereto. Ronald L. Kikendall (hereinafter, the "Stockholder") is a party to a transaction pursuant to which the Stockholder will become an owner of shares of common stock of the Company. The addition of the Stockholder, as a party to the Stockholders Agreement is a condition to the obligations of the Stockholder and the Company to consummate such transaction. The Stockholder acknowledges that he has read the Stockholders Agreement in its entirety. By the signature below, the Stockholder agrees to be bound by all of the terms and conditions of, and the Company agrees that the Stockholder shall be entitled to all of the rights and benefits of, the Stockholders Agreement, as if the Stockholder was a "Stockholder" (as defined in the Stockholders Agreement) from the date it was originally made.
This Addendum is dated as of the 28th day of February, 1999.

LKQ CORPORATION                              SHAREHOLDER

By: /s/Jerome D. Girsch                      /s/Ronald L. Kikendall
    -----------------------------------      ----------------------------------
Name:  Jerome D. Girsch                      Ronald L. Kikendall
Title: Senior Vice President-Development	

40

ADDENDUM
TO
STOCKHOLDERS AGREEMENT
Reference is made to the Stockholders Agreement dated as of June 19, 1998 among LKQ Corporation (the "Company") and the stockholders of the Company, a copy of which is attached hereto. The undersigned (hereinafter, the "Stockholder") is a party to a transaction pursuant to which the Stockholder will become an owner of shares of common stock of the Company. The Stockholder acknowledges that he has read the Stockholders Agreement in its entirety. By the Stockholder's signature below, the Stockholder agrees to be bound by all of the terms and conditions of, and the Company agrees that the Stockholder shall be entitled to all of the rights and benefits of, the Stockholders Agreement, as if the Stockholder was a "Stockholder" (as defined in the Stockholders Agreement) from the date it was originally made.
This Addendum is dated as of the 9th day of February, 1999.
LKQ CORPORATION

By: /s/Joseph M. Holsten                     /s/Thomas B. Raterman
    -----------------------------------      ----------------------------------
    Joseph M. Holsten                        Thomas B. Raterman
    President and Chief Executive Officer	

41

ADDENDUM
TO
STOCKHOLDERS AGREEMENT
Reference is made to the Stockholders Agreement dated as of June 19, 1998 among LKQ Corporation (the "Company") and the stockholders of the Company, a copy of which is attached hereto. The undersigned (hereinafter, the "Stockholder") is a party to a transaction pursuant to which the Stockholder will become an owner of shares of common stock of the Company. The Stockholder acknowledges that he has read the Stockholders Agreement in its entirety. By the Stockholder's signature below, the Stockholder agrees to be bound by all of the terms and conditions of, and the Company agrees that the Stockholder shall be entitled to all of the rights and benefits of, the Stockholders Agreement, as if the Stockholder was a "Stockholder" (as defined in the Stockholders Agreement) from the date it was originally made.
This Addendum is dated as of the 12th day of February, 1999.
LKQ CORPORATION

By: /s/Joseph M. Holsten                     /s/Frank P. Erlain
    -----------------------------------      ----------------------------------
    Joseph M. Holsten                        Frank P. Erlain
    President and Chief Executive Officer	

42

ADDENDUM
TO
STOCKHOLDERS AND MERGER AGREEMENT
Reference is made to the Stockholders Agreement dated as of June 19, 1998 (the "Stockholders Agreement") among LKQ Corporation (the "Company") and the stockholders of the Company, a copy of which is attached hereto. Reference is also made to the Agreement and Plan of Merger dated as of August 7, 1998 (the "Merger Agreement") among the Company, Gary L. Ackerman ("Ackerman"), and others. Ackerman proposes to transfer the shares of common stock of the Company to the undersigned (hereinafter, the Stockholder"). The Stockholder acknowledges that he/she has read the Stockholders Agreement and Section 10.2 of the Merger Agreement in their entirety. By his/her signature below, the Stockholder agrees
(i) to be bound by all of the terms and conditions of, and the Company agrees that the Stockholder shall be entitled to all of the rights and benefits of, the Stockholders Agreement, as if the Stockholder was a "Stockholder" (as defined in the Stockholders Agreement) from the date it was originally made; and (ii) to be bound by all of the terms and conditions of Section 10.2 of the Merger Agreement.
This Addendum is dated as of the 22nd day of December, 1998.
LKQ CORPORATION

By: /s/Victor M. Casini                          /s/Sherri S. Ackerman
    ---------------------------------------      -------------------------------
Name:    Victor M. Casini                        Name:  Sherri S. Ackerman
Title:   Vice President and General Counsel	

43

ADDENDUM
TO
STOCKHOLDERS AND MERGER AGREEMENT
Reference is made to the Stockholders Agreement dated as of June 19, 1998 (the "Stockholders Agreement") among LKQ Corporation (the "Company") and the stockholders of the Company, a copy of which is attached hereto. Reference is also made to the Agreement and Plan of Merger dated as of August 7, 1998 (the "Merger Agreement") among the Company, Gary L. Ackerman ("Ackerman"), and others. Ackerman proposes to transfer the shares of common stock of the Company to the undersigned (hereinafter, the Stockholder"). The Stockholder acknowledges that he/she has read the Stockholders Agreement and Section 10.2 of the Merger Agreement in their entirety. By his/her signature below, the Stockholder agrees
(i) to be bound by all of the terms and conditions of, and the Company agrees that the Stockholder shall be entitled to all of the rights and benefits of, the Stockholders Agreement, as if the Stockholder was a "Stockholder" (as defined in the Stockholders Agreement) from the date it was originally made; and (ii) to be bound by all of the terms and conditions of Section 10.2 of the Merger Agreement.
This Addendum is dated as of the 22nd day of December, 1998.
LKQ CORPORATION

By: /s/Victor M. Casini                        /s/Rebecca S. Ackerman
    ---------------------------------------    ---------------------------------
Name:    Victor M. Casini                      Name:  Rebecca S. Ackerman
Title:   Vice President and General Counsel	

44

ADDENDUM
TO
STOCKHOLDERS AND MERGER AGREEMENT
Reference is made to the Stockholders Agreement dated as of June 19, 1998 (the "Stockholders Agreement") among LKQ Corporation (the "Company") and the stockholders of the Company, a copy of which is attached hereto. Reference is also made to the Agreement and Plan of Merger dated as of August 7, 1998 (the "Merger Agreement") among the Company, Gary L. Ackerman ("Ackerman"), and others. Ackerman proposes to transfer the shares of common stock of the Company to the undersigned (hereinafter, the Stockholder"). The Stockholder acknowledges that he/she has read the Stockholders Agreement and Section 10.2 of the Merger Agreement in their entirety. By his/her signature below, the Stockholder agrees
(i) to be bound by all of the terms and conditions of, and the Company agrees that the Stockholder shall be entitled to all of the rights and benefits of, the Stockholders Agreement, as if the Stockholder was a "Stockholder" (as defined in the Stockholders Agreement) from the date it was originally made; and (ii) to be bound by all of the terms and conditions of Section 10.2 of the Merger Agreement.
This Addendum is dated as of the 22nd day of December, 1998.
LKQ CORPORATION

By: /s/Victor M. Casini                        /s/Gary L. Ackerman
    ---------------------------------------    ---------------------------------
Name:    Victor M. Casini                      Name:   Gary L. Ackerman
Title:   Vice President and General Counsel	

45

ADDENDUM
TO
STOCKHOLDERS AND MERGER AGREEMENT
Reference is made to the Stockholders Agreement dated as of June 19, 1998 (the "Stockholders Agreement") among LKQ Corporation (the "Company") and the stockholders of the Company, a copy of which is attached hereto. Reference is also made to the Agreement and Plan of Merger dated as of August 7, 1998 (the "Merger Agreement") among the Company, Sherri S. Ackerman ("Ackerman"), and others. Ackerman proposes to transfer the shares of common stock of the Company to the undersigned (hereinafter, the Stockholder"). The Stockholder acknowledges that he/she has read the Stockholders Agreement and Section 10.2 of the Merger Agreement in their entirety. By his/her signature below, the Stockholder agrees
(i) to be bound by all of the terms and conditions of, and the Company agrees that the Stockholder shall be entitled to all of the rights and benefits of, the Stockholders Agreement, as if the Stockholder was a "Stockholder" (as defined in the Stockholders Agreement) from the date it was originally made; and (ii) to be bound by all of the terms and conditions of Section 10.2 of the Merger Agreement.
This Addendum is dated as of the 22nd day of December, 1998.
LKQ CORPORATION

By: /s/Victor M. Casini                        /s/Rebecca S. Ackerman
    ---------------------------------------    ---------------------------------
Name:    Victor M. Casini                      Name:  Rebecca S. Ackerman
Title:   Vice President and General Counsel	

46

ADDENDUM
TO
STOCKHOLDERS AND MERGER AGREEMENT
Reference is made to the Stockholders Agreement dated as of June 19, 1998 (the "Stockholders Agreement") among LKQ Corporation (the "Company") and the stockholders of the Company, a copy of which is attached hereto. Reference is also made to the Agreement and Plan of Merger dated as of August 7, 1998 (the "Merger Agreement") among the Company, Robert H. Ackerman ("Ackerman"), and others. Ackerman proposes to transfer the shares of common stock of the Company to the undersigned (hereinafter, the Stockholder"). The Stockholder acknowledges that he/she has read the Stockholders Agreement and Section 10.2 of the Merger Agreement in their entirety. By his/her signature below, the Stockholder agrees
(i) to be bound by all of the terms and conditions of, and the Company agrees that the Stockholder shall be entitled to all of the rights and benefits of, the Stockholders Agreement, as if the Stockholder was a "Stockholder" (as defined in the Stockholders Agreement) from the date it was originally made; and (ii) to be bound by all of the terms and conditions of Section 10.2 of the Merger Agreement.
This Addendum is dated as of the 22nd day of December, 1998.
LKQ CORPORATION

By: /s/Victor M. Casini                        /s/Daniel L. Evenson
    ---------------------------------------    ---------------------------------
Name:    Victor M. Casini                      Name:  Daniel L. Evenson
Title:   Vice President and General Counsel	

47

ADDENDUM
TO
STOCKHOLDERS AND MERGER AGREEMENT
Reference is made to the Stockholders Agreement dated as of June 19, 1998 (the "Stockholders Agreement") among LKQ Corporation (the "Company") and the stockholders of the Company, a copy of which is attached hereto. Reference is also made to the Agreement and Plan of Merger dated as of August 7, 1998 (the "Merger Agreement") among the Company, Gary L. Ackerman. ("Ackerman"), and others. Ackerman proposes to transfer the shares of common stock of the Company to the undersigned (hereinafter, the Stockholder"). The Stockholder acknowledges that he/she has read the Stockholders Agreement and Section 10.2 of the Merger Agreement in their entirety. By his/her signature below, the Stockholder agrees
(i) to be bound by all of the terms and conditions of, and the Company agrees that the Stockholder shall be entitled to all of the rights and benefits of, the Stockholders Agreement, as if the Stockholder was a "Stockholder" (as defined in the Stockholders Agreement) from the date it was originally made; and (ii) to be bound by all of the terms and conditions of Section 10.2 of the Merger Agreement.
This Addendum is dated as of the 22nd day of December, 1998.
LKQ CORPORATION

By: /s/Victor M. Casini                        /s/Daniel L. Evenson
    ---------------------------------------    ---------------------------------
Name:    Victor M. Casini                      Name:  Daniel L. Evenson
Title:   Vice President and General Counsel	

48

ADDENDUM
TO
STOCKHOLDERS AND MERGER AGREEMENT
Reference is made to the Stockholders Agreement dated as of June 19, 1998 (the "Stockholders Agreement") among LKQ Corporation (the "Company") and the stockholders of the Company, a copy of which is attached hereto. Reference is also made to the Agreement and Plan of Merger dated as of August 7, 1998 (the "Merger Agreement") among the Company, Robert H. Ackerman ("Ackerman"), and others. Ackerman proposes to transfer the shares of common stock of the Company to the undersigned (hereinafter, the Stockholder"). The Stockholder acknowledges that he/she has read the Stockholders Agreement and Section 10.2 of the Merger Agreement in their entirety. By his/her signature below, the Stockholder agrees
(i) to be bound by all of the terms and conditions of, and the Company agrees that the Stockholder shall be entitled to all of the rights and benefits of, the Stockholders Agreement, as if the Stockholder was a "Stockholder" (as defined in the Stockholders Agreement) from the date it was originally made; and (ii) to be bound by all of the terms and conditions of Section 10.2 of the Merger Agreement.
This Addendum is dated as of the 22nd day of December, 1998.
LKQ CORPORATION

By: /s/Victor M. Casini                        /s/Mark W. Sievert
    ---------------------------------------    ---------------------------------
Name:    Victor M. Casini                      Name:  Mark W. Sievert
Title:   Vice President and General Counsel	

49

ADDENDUM
TO
STOCKHOLDERS AND MERGER AGREEMENT
Reference is made to the Stockholders Agreement dated as of June 19, 1998 (the "Stockholders Agreement") among LKQ Corporation (the "Company") and the stockholders of the Company, a copy of which is attached hereto. Reference is also made to the Agreement and Plan of Merger dated as of August 7, 1998 (the "Merger Agreement") among the Company, Gary L. Ackerman ("Ackerman"), and others. Ackerman proposes to transfer the shares of common stock of the Company to the undersigned (hereinafter, the Stockholder"). The Stockholder acknowledges that he/she has read the Stockholders Agreement and Section 10.2 of the Merger Agreement in their entirety. By his/her signature below, the Stockholder agrees
(i) to be bound by all of the terms and conditions of, and the Company agrees that the Stockholder shall be entitled to all of the rights and benefits of, the Stockholders Agreement, as if the Stockholder was a "Stockholder" (as defined in the Stockholders Agreement) from the date it was originally made; and (ii) to be bound by all of the terms and conditions of Section 10.2 of the Merger Agreement.
This Addendum is dated as of the 22nd day of December, 1998.
LKQ CORPORATION

By: /s/Victor M. Casini                        /s/Mark W. Sievert
    ---------------------------------------    ---------------------------------
Name:    Victor M. Casini                      Name:  Mark W. Sievert
Title:   Vice President and General Counsel	

50

ADDENDUM
TO
STOCKHOLDERS AND MERGER AGREEMENT
Reference is made to the Stockholders Agreement dated as of June 19, 1998 (the "Stockholders Agreement") among LKQ Corporation (the "Company") and the stockholders of the Company, a copy of which is attached hereto. Reference is also made to the Agreement and Plan of Merger dated as of August 7, 1998 (the "Merger Agreement") among the Company, Sherri S. Ackerman ("Ackerman"), and others. Ackerman proposes to transfer the shares of common stock of the Company to the undersigned (hereinafter, the Stockholder"). The Stockholder acknowledges that he/she has read the Stockholders Agreement and Section 10.2 of the Merger Agreement in their entirety. By his/her signature below, the Stockholder agrees
(i) to be bound by all of the terms and conditions of, and the Company agrees that the Stockholder shall be entitled to all of the rights and benefits of, the Stockholders Agreement, as if the Stockholder was a "Stockholder" (as defined in the Stockholders Agreement) from the date it was originally made; and (ii) to be bound by all of the terms and conditions of Section 10.2 of the Merger Agreement.
This Addendum is dated as of the 22nd day of December, 1998.
LKQ CORPORATION

By: /s/Victor M. Casini                        /s/Sarah J. Ackerman
    ---------------------------------------    ---------------------------------
Name:    Victor M. Casini                      Name:   Sarah J. Ackerman
Title:   Vice President and General Counsel	

51

ADDENDUM
TO
STOCKHOLDERS AND MERGER AGREEMENT
Reference is made to the Stockholders Agreement dated as of June 19, 1998 (the "Stockholders Agreement") among LKQ Corporation (the "Company") and the stockholders of the Company, a copy of which is attached hereto. Reference is also made to the Agreement and Plan of Merger dated as of August 7, 1998 (the "Merger Agreement") among the Company, Gary L. Ackerman ("Ackerman"), and others. Ackerman proposes to transfer the shares of common stock of the Company to the undersigned (hereinafter, the Stockholder"). The Stockholder acknowledges that he/she has read the Stockholders Agreement and Section 10.2 of the Merger Agreement in their entirety. By his/her signature below, the Stockholder agrees
(i) to be bound by all of the terms and conditions of, and the Company agrees that the Stockholder shall be entitled to all of the rights and benefits of, the Stockholders Agreement, as if the Stockholder was a "Stockholder" (as defined in the Stockholders Agreement) from the date it was originally made; and (ii) to be bound by all of the terms and conditions of Section 10.2 of the Merger Agreement.
This Addendum is dated as of the 22nd day of December, 1998.
LKQ CORPORATION

By: /s/Victor M. Casini                        /s/Sarah J. Ackerman
    ---------------------------------------    ---------------------------------
Name:    Victor M. Casini                      Name:   Sarah J. Ackerman
Title:   Vice President and General Counsel	

52

ADDENDUM
TO
STOCKHOLDERS AND MERGER AGREEMENT
Reference is made to the Stockholders Agreement dated as of June 19, 1998 (the "Stockholders Agreement") among LKQ Corporation (the "Company") and the stockholders of the Company, a copy of which is attached hereto. Reference is also made to the Agreement and Plan of Merger dated as of August 7, 1998 (the "Merger Agreement") among the Company, Robert H. Ackerman ("Ackerman"), and others. Ackerman proposes to transfer the shares of common stock of the Company to the undersigned (hereinafter, the Stockholder"). The Stockholder acknowledges that he/she has read the Stockholders Agreement and Section 10.2 of the Merger Agreement in their entirety. By his/her signature below, the Stockholder agrees
(i) to be bound by all of the terms and conditions of, and the Company agrees that the Stockholder shall be entitled to all of the rights and benefits of, the Stockholders Agreement, as if the Stockholder was a "Stockholder" (as defined in the Stockholders Agreement) from the date it was originally made; and (ii) to be bound by all of the terms and conditions of Section 10.2 of the Merger Agreement.
This Addendum is dated as of the 28th day of December, 1998.
LKQ CORPORATION

By: /s/Victor M. Casini                        /s/Tara A. Ackerman
    ---------------------------------------    ---------------------------------
Name:    Victor M. Casini                      Name:  Tara A. Ackerman
Title:   Vice President and General Counsel	

53

ADDENDUM
TO
STOCKHOLDERS AND MERGER AGREEMENT
Reference is made to the Stockholders Agreement dated as of June 19, 1998 (the "Stockholders Agreement") among LKQ Corporation (the "Company") and the stockholders of the Company, a copy of which is attached hereto. Reference is also made to the Agreement and Plan of Merger dated as of August 7, 1998 (the "Merger Agreement") among the Company, Robert H. Ackerman ("Ackerman"), and others. Ackerman proposes to transfer the shares of common stock of the Company to the undersigned (hereinafter, the Stockholder"). The Stockholder acknowledges that he/she has read the Stockholders Agreement and Section 10.2 of the Merger Agreement in their entirety. By his/her signature below, the Stockholder agrees
(i) to be bound by all of the terms and conditions of, and the Company agrees that the Stockholder shall be entitled to all of the rights and benefits of, the Stockholders Agreement, as if the Stockholder was a "Stockholder" (as defined in the Stockholders Agreement) from the date it was originally made; and (ii) to be bound by all of the terms and conditions of Section 10.2 of the Merger Agreement.
This Addendum is dated as of the 28th day of December, 1998.
LKQ CORPORATION

By: /s/Victor M. Casini                        /s/Robert H. Ackerman
    ---------------------------------------    ---------------------------------
Name:    Victor M. Casini                      Name:  Robert H. Ackerman
Title:   Vice President and General Counsel	

54

ADDENDUM
TO
STOCKHOLDERS AND MERGER AGREEMENT
Reference is made to the Stockholders Agreement dated as of June 19, 1998 (the "Stockholders Agreement") among LKQ Corporation (the "Company") and the stockholders of the Company, a copy of which is attached hereto. Reference is also made to the Agreement and Plan of Merger dated as of August 7, 1998 (the "Merger Agreement") among the Company, Robert H. Ackerman ("Ackerman"), and others. Ackerman proposes to transfer the shares of common stock of the Company to the undersigned (hereinafter, the Stockholder"). The Stockholder acknowledges that he/she has read the Stockholders Agreement and Section 10.2 of the Merger Agreement in their entirety. By his/her signature below, the Stockholder agrees
(i) to be bound by all of the terms and conditions of, and the Company agrees that the Stockholder shall be entitled to all of the rights and benefits of, the Stockholders Agreement, as if the Stockholder was a "Stockholder" (as defined in the Stockholders Agreement) from the date it was originally made; and (ii) to be bound by all of the terms and conditions of Section 10.2 of the Merger Agreement.
This Addendum is dated as of the 22nd day of December, 1998.
LKQ CORPORATION

By: /s/Victor M. Casini                        /s/Tiffany S. Ackerman
    ---------------------------------------    ---------------------------------
Name:    Victor M. Casini                      Name:   Tiffany S. Ackerman
Title:   Vice President and General Counsel	

55

ADDENDUM
TO
STOCKHOLDERS AND MERGER AGREEMENT
Reference is made to the Stockholders Agreement dated as of June 19, 1998 (the "Stockholders Agreement") among LKQ Corporation (the "Company") and the stockholders of the Company, a copy of which is attached hereto. Reference is also made to the Agreement and Plan of Merger dated as of August 7, 1998 (the "Merger Agreement") among the Company, Robert H. Ackerman ("Ackerman"), and others. Ackerman proposes to transfer the shares of common stock of the Company to the undersigned (hereinafter, the Stockholder"). The Stockholder acknowledges that he/she has read the Stockholders Agreement and Section 10.2 of the Merger Agreement in their entirety. By his/her signature below, the Stockholder agrees
(i) to be bound by all of the terms and conditions of, and the Company agrees that the Stockholder shall be entitled to all of the rights and benefits of, the Stockholders Agreement, as if the Stockholder was a "Stockholder" (as defined in the Stockholders Agreement) from the date it was originally made; and (ii) to be bound by all of the terms and conditions of Section 10.2 of the Merger Agreement.
This Addendum is dated as of the 22nd day of December, 1998.
LKQ CORPORATION

By: /s/Victor M. Casini                        /s/Travis J. Ackerman
    ---------------------------------------    ---------------------------------
Name:    Victor M. Casini                      Name:   Travis J. Ackerman
Title:   Vice President and General Counsel	

56

ADDENDUM
TO
STOCKHOLDERS AND MERGER AGREEMENT
Reference is made to the Stockholders Agreement dated as of June 19, 1998 (the "Stockholders Agreement") among LKQ Corporation (the "Company") and the stockholders of the Company, a copy of which is attached hereto. Reference is also made to the Agreement and Plan of Merger dated as of July 29, 1998 (the "Merger Agreement") among the Company, Leonard A. Damron ("Damron"), and others. Damron proposes to transfer the shares of common stock of the Company to LD III Limited Partnership (hereinafter, the Stockholder"). The Stockholder acknowledges that it has read the Stockholders Agreement and Section 10.2 of the Merger Agreement in their entirety. By its signature below, the Stockholder agrees (i) to be bound by all of the terms and conditions of, and the Company agrees that the Stockholder shall be entitled to all of the rights and benefits of, the Stockholders Agreement, as if the Stockholder was a "Stockholder" (as defined in the Stockholders Agreement) from the date it was originally made; and
(ii) to be bound by all of the terms and conditions of Section 10.2 of the Merger Agreement.
This Addendum is dated as of the 24th day of December, 1998.

LKQ CORPORATION                              LD III LIMITED PARTNERSHIP

By: /s/Thomas B. Raterman                    /s/Leonard A. Damron III
    ---------------------------------------  ----------------------------------
Name:    Thomas B. Raterman                  Name:  Leonard A. Damron III
Title:   Senior Vice President and           Title:
       Chief Financial Officer	

57

ADDENDUM
TO
STOCKHOLDERS AGREEMENT
Reference is made to the Stockholders Agreement dated as of June 19, 1998, (the "Stockholders Agreement") among LKQ Corporation (the "Company") and the stockholders of the Company, a copy of which is attached hereto. The undersigned (hereinafter, the "Stockholder") is a party to a transaction pursuant to which the Stockholder will become an owner of shares of common stock of the Company. By the signatures below, the Stockholder agrees to be bound by all of the terms and conditions of, and the Company agrees that the Stockholder shall be entitled to all of the rights and benefits of, the Stockholders Agreement, as if the Stockholder was a "Stockholder" (as defined in the Stockholders Agreement) from the date it was originally made.
This Addendum is dated as of the 18th day of August, 1999.

LKQ CORPORATION                              LUNN-LKQ #2, LLC

By: /s/Victor M. Casini                      /s/Robert J. Lunn
    ---------------------------------------  -----------------------------------
Name:  Victor M. Casini                      Name:  Robert J. Lunn
Title: Vice President and General Counsel    Title: Manager
                                                    Lunn Partners, LLC	

58

ADDENDUM
TO
STOCKHOLDERS AGREEMENT
Reference is made to the Stockholders Agreement dated as of June 19, 1998, (the "Stockholders Agreement") among LKQ Corporation (the "Company") and the stockholders of the Company, a copy of which is attached hereto. The undersigned (hereinafter, the "Stockholder") is a party to a transaction pursuant to which the Stockholder will become an owner of shares of common stock of the Company. By the signatures below, the Stockholder agrees to be bound by all of the terms and conditions of, and the Company agrees that the Stockholder shall be entitled to all of the rights and benefits of, the Stockholders Agreement, as if the Stockholder was a "Stockholder" (as defined in the Stockholders Agreement) from the date it was originally made.
This Addendum is dated as of the 18th day of August, 1999.

LKQ CORPORATION                              PMM LKQ INVESTMENTS
                                             LIMITED PARTNERSHIP II

By: /s/Victor M. Casini                      /s/Paul M. Meister
    ---------------------------------------  -----------------------------------
Name:  Victor M. Casini                      Name:  Paul M. Meister
Title: Vice President and General Counsel    Title: Manager-Member, PMM LKQI GP,
                                             LLC (the general partner of PMM
                                             LKQ Investments Limited
                                             Partnership II)	

59

EXHIBIT 10.4
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made as of the 19th day of June, 1998 by and among LKQ Corporation, a Delaware corporation (the "Company"), and the parties identified as the Stockholders on the signature page of this Agreement (the "Stockholders").
RECITALS
Each of the Stockholders is a party to a transaction pursuant to which the Stockholder is purchasing shares (the "Shares") of common stock, par value $.01 per share (the "Common Stock"), of the Company. In order to induce the Stockholders to purchase the Common Stock, the Company has agreed to provide to the Stockholders the registration rights set forth in this Agreement.
COVENANTS
1. DEFINITIONS. As used in this Agreement, the following terms shall have the following meanings:
(a) "Affiliate" shall mean with respect to any specified Person, any Person that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, the Person specified.
(b) "Business Day" shall mean any day on which The New York Stock Exchange is open for trading.
(c) "Eligible Registration" shall mean any of the first three occasions the Company proposes to register any shares of the Common Stock in any manner which would permit registration of Eligible Securities for public sale under the Securities Act pursuant to the terms and conditions of Section 3 hereof. If the Company terminates any Eligible Registration prior to its effectiveness or if the Selling Stockholders are unable to sell at least 90% of the Eligible Securities they requested to sell in the Eligible Registration, such registration shall not count as an Eligible Registration.
(d) "Eligible Securities" shall mean all or any portion of the Common Stock owned by the Stockholders and all other securities issued with respect thereto by reason of dividends, stock splits, combinations or similar transactions. Securities shall cease to be Eligible Securities when (i) a registration statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been disposed of pursuant to such registration statement, (ii) such securities are permitted to be sold within a three-month period without compliance with the registration requirements of the Securities Act pursuant to Rule 144, (iii) such securities shall have been otherwise transferred pursuant to an applicable exemption under the Securities Act, new certificates for such securities not bearing a legend restricting further transfer shall have been delivered by the Company and such securities shall be freely transferable to the public without registration under the Securities Act, (iv) a written opinion of counsel of the

Company addressed to the Stockholders to the effect that the securities may be sold without registration under the Securities Act has been delivered, or (v) seven years after the IPO.
(e) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC thereunder, all as the same shall be in effect at the relevant time.
(f) "Flynn Group" shall mean Donald F. Flynn and any Member of the Immediate Family of Donald F. Flynn and any Affiliate of any such Persons. For purposes of calculating the percentage of capital stock owned by each Stockholder under this Agreement, all members of the Flynn Group shall be deemed to be one Stockholder.
(g) "Member of the Immediate Family" shall mean, with respect to any individual, each spouse, parent, brother, sister, or child of such individual, each spouse of any such person, each child of any of the aforementioned persons, each trust or partnership created solely for the benefit of one or more of the aforementioned persons and each custodian or guardian of any property of one or more of the aforementioned persons in his capacity as such custodian or guardian.
(h) "IPO" shall mean the initial public offering of the Common Stock.
(i) "Material Adverse Event" shall mean an occurrence having a consequence that either (a) is materially adverse to the business, properties or financial condition of the Company and its subsidiaries taken as a whole, or (b) is reasonably foreseeable and has a reasonable likelihood of occurring, and if it were to occur has a reasonable likelihood of materially adversely affecting the business, properties or financial condition of the Company and its subsidiaries taken as a whole.
(j) "Person" shall mean an individual, a partnership (general or limited), corporation, limited liability company, joint venture, business trust, cooperative, association or other form of business organization, whether or not regarded as a legal entity under applicable law, a trust (inter vivos or testamentary), an estate of a deceased, insane or incompetent person, a quasi-governmental entity, a government or any agency, authority, political subdivision or other instrumentality thereof, or any other entity.
(k) "Registration Expenses" shall mean all expenses incident to the performance of or compliance with the registration requirements set forth in this Agreement including, without limitation, the following: (i) the fees, disbursements and expenses of the Company's counsel, accountants and experts in connection with the registration of Eligible Securities to be disposed of under the Securities Act; (ii) all expenses in connection with the preparation, printing and filing of the registration statement, any preliminary prospectus or final prospectus, any other offering document and amendments and supplements thereto and the mailing and delivering of copies thereof to the underwriters, underwriting agreements and blue sky or legal investment memoranda, any selling agreements and any other documents in connection with the offering, sale or delivery of Eligible Securities to be disposed of; (iv) SEC or blue sky registration fees attributable to Eligible Securities; (v) all expenses in connection with the qualification of Eligible Securities to be disposed of for offering and sale under state securities laws, including the fees and disbursements of counsel for the underwriters in connection with such qualification and in connection with any blue sky and legal investment surveys;
(vi) the filing fees incident to securing any required review by the National Association of Securities Dealers, Inc. of the terms of the sale of Eligible Securities to be disposed
2

of; and (vii) fees and expenses incurred in connection with the listing of Eligible Securities on each securities exchange on which securities of the same class are then listed; PROVIDED, HOWEVER, that Registration Expenses shall not include Selling Expenses.
(l) "SEC" shall mean the Securities and Exchange Commission.
(m) "Securities Act" shall mean the Securities Act of 1933, as amended, and the rules and regulations of the SEC thereunder, all as the same shall be in effect at the relevant time.
(n) "Selling Expenses" shall mean underwriting discounts or commissions attributable to Eligible Securities, transfer taxes applicable to Eligible Securities, and fees and expenses of counsel to the Stockholders.
(o) "Selling Stockholder" shall mean any Stockholder requesting the registration of Eligible Securities pursuant to this Agreement.
2. DEMAND REGISTRATIONS. (a) At any time after either (x) three years after the date of this Agreement if the Company has not completed the IPO, or (y) one year following completion by the Company of the IPO, Stockholders owning at least 35% of the Eligible Securities owned by all Stockholders (the "Initiating Stockholders") may request the Company to register under the Securities Act all or any portion of the Eligible Securities held by such requesting holder or holders, which request shall specify the number of Eligible Securities to be registered and the intended method of disposition thereof. The Company shall give prompt written notice of the proposed registration to all other Stockholders, and upon the written request of each such Stockholder delivered to the Company within ten Business Days after the giving of any such notice by the Company (which request shall specify the number of Eligible Securities intended to be disposed of by the Stockholder) the Company shall use all reasonable efforts to effect the registration under the Securities Act of all Eligible Securities which the Company has been so requested to register by the Stockholders, to the extent required to permit the public sale of the Eligible Securities in such registration, PROVIDED that:
(i) The Company shall not be required to effect any registration of Eligible Securities under this Section 2(a) unless in the reasonable opinion of the Company the anticipated proceeds to all such requesting Stockholders, net of underwriting discounts and commissions, would likely exceed (x) in the case of the IPO, $25,000,000, and (y) in any other offering, $10,000,000.
(ii) The Company shall not be required to effect any registration of Eligible Securities under this Section 2(a) during the period commencing with the date 30 days prior to the Company's good faith estimate of the date of filing of a registration statement covering either (x) the IPO or (y) a firm commitment underwritten public offering in which Stockholders have been entitled to join pursuant to this Agreement (subject to notice to the Stockholders of such estimated date on or prior thereto), and ending on the number of days after the effective date of such registration equal to the number of days set forth in the underwriting agreement relating to such offering during which the Company agrees not to sell the Common Stock (other than sales made pursuant to customary exceptions thereto), provided that the Company is actively employing in good faith all reasonable efforts to cause such registration statement to become effective.
3

(iii) The Company shall not be required to effect any registration of Eligible Securities under this Section 2(a) after the Company has effected two such registrations and such registrations have been declared effective.
(iv) The Company shall not be required to effect any registration of Eligible Securities under this Section 2(a) if (x) the Initiating Stockholders propose to dispose of Eligible Securities which may be immediately registered on Form S-3 pursuant to a request made under Section 2(b), (y) the Initiating Stockholders do not request that such offering be firmly underwritten, or (z) the Company and the Initiating Stockholders are unable to obtain a commitment of an underwriter to firmly underwrite the offering.
(v) If the Company shall furnish to all Selling Stockholders a certificate signed by the President of the Company stating that, in the good faith judgment of the Board of Directors of the Company, it would be detrimental to the Company for any registration to be effected as requested under this Section 2(a), the Company shall have the right, exercisable only once with respect to each such request, to defer filing of a registration statement with respect to such offering until the earlier of (x) 180 days after receipt of the request of the Initiating Stockholders and (y) the date upon which the Board of Directors determines in good faith that a registration effected under this Section 2(a) would no longer be detrimental to the Company.
(vi) The Company shall be entitled to include in any registration statement filed pursuant to this Section 2(a) shares of Common Stock or other securities to be sold by the Company for its own account, subject to the allocation provisions set forth below.
(b) After the IPO, the Company shall use all reasonable efforts to qualify for registration on Form S-3 under the Securities Act or any comparable or successor form. After the Company has qualified for the use of Form S-3, in addition to the other registration rights set forth in this Section 2, Stockholders owning at least 15% of the Eligible Securities owned by all Stockholders (the "Initiating Stockholders") shall have the right to request registrations on Form S-3, which request shall specify the number of Eligible Securities to be registered and the intended method of disposition thereof. The Company shall give prompt written notice of the proposed registration to all other Stockholders, and upon the written request of each such Stockholder delivered to the Company within ten Business Days after the giving of any such notice by the Company (which request shall specify the number of Eligible Securities intended to be disposed of by the Stockholder) the Company shall use all reasonable efforts to effect the registration under the Securities Act of all Eligible Securities which the Company has been so requested to register by the Stockholders, to the extent required to permit the public sale of the Eligible Securities in such registration, PROVIDED that:
(i) The Company shall not be required to effect any registration of Eligible Securities under this Section 2(b) if (x) the Stockholders propose to sell Eligible Securities that at the time registration is requested do not have an aggregate market value of at least $5,000,000, (y) in the preceding 12-month period, the Company has effected one such registration, or (z) the registration is to be effected more than five years after the IPO.
4

(ii) The Company shall not be required to effect any registration of Eligible Securities under this Section 2(b) during the period commencing with the date 30 days prior to the Company's good faith estimate of the date of filing of a registration statement covering a firm commitment underwritten public offering in which Stockholders have been entitled to join pursuant to this Agreement (subject to notice to the Stockholders of such estimated date on or prior thereto), and ending on the number of days after the effective date of such registration equal to the number of days set forth in the underwriting agreement relating to such offering during which the Company agrees not to sell the Common Stock (other than sales made pursuant to customary exceptions thereto), provided that the Company is actively employing in good faith all reasonable efforts to cause such registration statement to be effective.
(iii) If the Company shall furnish to all Selling Stockholders a certificate signed by the President of the Company stating that, in the good faith judgment of the Board of Directors of the Company, it would be detrimental to the Company for any registration to be effected as requested under this Section 2(b), the Company shall have the right, exercisable only once with respect to each such request, to defer filing of a registration statement with respect to such offering until the earlier of (x) 180 days after receipt of the request of the Initiating Stockholders and (y) the date upon which the Board of Directors determines in good faith that a registration effected under this Section 2(b) would no longer be detrimental to the Company.
(iv) The Company shall be entitled to include in any registration statement filed pursuant to this Section 2(b) shares of Common Stock or other securities to be sold by the Company for its own account, subject to the allocation provisions set forth below.
(c) If the Initiating Stockholders intend to distribute the Eligible Securities covered by their request by means of an underwriting, they shall so advise the Company as part their request pursuant to this Section 2, and the Company shall include such information in the written notice to the other Stockholders. The right of any Selling Stockholder to participate in a registration pursuant to this Section 2 shall be conditioned upon such Stockholder's agreement to participate in such underwriting as provided in
Section 5 and the inclusion of such Stockholder's Eligible Securities in the underwriting, PROVIDED that:
(i) The Initiating Stockholders shall have the right to select the underwriter or underwriters for an offering pursuant to this Section 2, subject to the approval of the Company (which approval shall not be unreasonably withheld).
(ii) In the event the managing underwriter advises the Initiating Stockholders in writing that the number of securities requested to be included in a registration pursuant to this Section 2 exceeds the largest number of securities which can be sold without having an adverse effect on such offering, including the price at which such securities can be sold (the "Maximum Offering Size"), the securities to be included in such registration shall be allocated in the following manner:
5

(x) first, all Eligible Securities requested to be registered by the Selling Stockholders (allocated, if necessary for the offering not to exceed the Maximum Offering Size, pro rata among such Selling Stockholders on the basis of the relative number of Eligible Securities so requested to be included in such registration); and
(y) second, any shares of Common Stock or other securities proposed to be registered by the Company.
3. PIGGYBACK REGISTRATIONS. (a) If the Company proposes to register any shares of Common Stock for public sale under the Securities Act in an Eligible Registration, the Company shall give prompt written notice to each of the Stockholders of its intention to do so, and upon the written request of each Stockholder delivered to the Company within ten Business Days after the giving of any such notice by the Company (which request shall specify the number of Eligible Securities intended to be disposed of by the Stockholder) the Company shall use all reasonable efforts to effect, in connection with the registration of its Common Stock in such Eligible Registration, the registration under the Securities Act of all Eligible Securities which the Company has been so requested to register by the Stockholders, to the extent required to permit the public sale of the Eligible Securities in such registration, PROVIDED that:
(i) If, at any time after giving such written notice of its intention to register the Common Stock and prior to the effective date of the registration statement filed in connection therewith, the Company shall determine for any reason not to register the Common Stock, the Company may, at its election, give written notice of such determination to the Stockholders and thereupon the Company shall be relieved of its obligation to register such Eligible Securities in connection with the registration of such Common Stock (but not from its obligation to pay Registration Expenses to the extent incurred in connection therewith as provided in Section 7).
(ii) The Company shall not be required to effect any registration of Eligible Securities under this Section 3 incidental to
(x) the registration of any of its securities in connection with mergers, acquisitions, exchange offers, subscription offers, dividend reinvestment plans, or stock options or other employee benefit plans,
(y) the IPO or (z) the filing of a registration statement for an offering to be made on a delayed or continuous basis pursuant to Rule 415 under the Securities Act or any similar rule that may be adopted by the SEC.
(iii) In no event shall the Company be required to include Eligible Securities in any registration under this Section 3 unless the Eligible Securities requested to be included in such registration have an aggregate market value of at least $1,000,000 at the time such inclusion is requested.
(b) If the registration of which the Company gives notice is for a registered public offering involving an underwriting, the Company shall so advise the Stockholders as part of the written notice given pursuant to this
Section 3. The right of any Selling Stockholder to participate in a registration pursuant to this Section 3 shall be conditioned upon such Stockholder's agreement to participate in such underwriting as provided in Section 5 and the inclusion of such Stockholder's Eligible Securities in the underwriting, PROVIDED that:
6

(i) The Selling Stockholders shall have no right to participate in the selection of the underwriter or underwriters for an offering pursuant to this Section 3.
(ii) In the event the managing underwriter advises the Company in writing that the number of securities requested to be included in a registration pursuant to this Section 3 exceeds the Maximum Offering Size, the securities to be included in such registration shall be allocated in the following manner:
(x) first, so much of the Common Stock or other securities of the Company, as the case may be, proposed to be registered by the Company as would not cause the offering to exceed the Maximum Offering Size; and
(y) second, all Eligible Securities requested to be included in such registration by any Stockholder (allocated, if necessary for the offering not to exceed the Maximum Offering Size, pro rata among such Stockholders on the basis of the relative number of Eligible Securities so requested to be included in such registration).
4. REGISTRATION PROCEDURES. (a) If and whenever the Company is required to use reasonable efforts to effect the registration of any Eligible Securities under the Securities Act pursuant to this Agreement, the Company shall as promptly as is practicable register the Eligible Securities under the Securities Act and use reasonable efforts to cause the registration statement to become effective.
(b) The Company shall prepare and file with the SEC such amendments and supplements to any registration statement registering Eligible Securities and the prospectus used in connection therewith as may be necessary to keep such registration statement effective, and comply with the provisions of the Securities Act with respect to the disposition of all Eligible Securities, until the earlier of (i) such time as all of such Eligible Securities have been disposed of in accordance with the intended methods of disposition by the Stockholders as set forth in the registration statement, or (ii) the expiration of 90 days after such registration statement has become effective (or, if such registration statement relates to an underwritten offering, such longer period as in the opinion of counsel for the underwriters a prospectus is required by law to be delivered in connection with sales of Eligible Securities by an underwriter or dealer); PROVIDED, HOWEVER, that in the event that the Company shall notify the Selling Stockholders of the happening of any event which would cause the prospectus included as part of such registration statement, as then in effect, to include an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, such Selling Stockholder shall thereafter not sell Eligible Securities under such registration statement until the Company has filed, and delivered to the Selling Stockholder, an amendment or supplement to the prospectus to cause the prospectus not to include an untrue statement of a material fact or omit to state any material facts required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and the Company shall be obligated to promptly amend or supplement the prospectus so that the prospectus does not include an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. Notwithstanding the foregoing, the Company may prohibit sales of Eligible Securities by the Selling Stockholders under
7

such registration statement if in the opinion of the Board of Directors of the Company securities laws applicable to such sales would require the Company to disclose material nonpublic information and the disclosure of such information would adversely affect the Company. In the event of such deferral, the Company will notify the Selling Stockholders promptly upon disclosure of such material nonpublic information in a filing with the SEC, disclosure to the public (other than through the actions of a Stockholder) or that such information has ceased to be material to the Company. Upon such notice by the Company, the Selling Stockholders shall again be entitled to sell Eligible Securities as provided herein and the 90-day period set forth in subsection (ii) above shall be increased by the number of days of such deferral.
(c) The Company will use its reasonable efforts to register or qualify such Eligible Securities under the blue sky laws of such jurisdictions as any Selling Stockholder reasonably requests and to do any and all acts which may be reasonably necessary to enable such Selling Stockholder to consummate the disposition in such jurisdictions of the Eligible Securities owned by such Selling Stockholder (provided that the Company will not be required to (i) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this subsection, (ii) subject itself to taxation in any such jurisdiction, or (iii) consent to general service of process in any such jurisdiction).
(d) The Company may require the Selling Stockholders to furnish to the Company such information regarding the Selling Stockholders and the distribution of the Eligible Securities as the Company may from time to time reasonably request in writing and as shall be required by law or by the SEC in connection with any registration.
(e) The Company shall provide to each Selling Stockholder an opportunity to review the registration statement prior to the filing of the registration statement with the SEC.
(f) The Company shall provide to each Selling Stockholder such number of copies of such registration statement, each amendment and supplement thereto, the prospectus included in such registration statement (including each preliminary prospectus), and such other documents as such Selling Stockholder may reasonably request in order to facilitate the disposition of the Eligible Securities registered pursuant to such registration statement.
(g) The Company will provide a transfer agent and registrar for all Eligible Securities not later than the effective date of the registration statement.
5. UNDERWRITING ARRANGEMENTS. (a) No Person may participate in any underwritten public offering hereunder unless such Person (i) agrees to sell such Person's securities on the basis provided in any underwriting arrangements approved by the Persons hereunder entitled to approve the underwriter or underwriters, and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements and the provisions of this Agreement.
(b) If any Selling Stockholder disapproves of the terms of the underwriting, such person may elect to withdraw therefrom by written notice to the Company and to the managing underwriter, delivered at least 14 days prior to the effective date of the Registration Statement. The securities so withdrawn shall also be withdrawn from the registration statement.
8

6. HOLDBACK AGREEMENTS. (a) Each Stockholder agrees not to effect any public sale or distribution of equity securities of the Company, including any public sale pursuant to Rule 144 under the Securities Act, or any securities convertible into or exchangeable or exercisable for such securities, or to engage in any derivative securities transaction involving equity securities of the Company, during the seven days prior to and the 90-day period beginning on the effective date of any underwritten registration in which Eligible Securities are included (except as part of such underwritten registration), unless the managing underwriter otherwise agrees.
(b) The Company agrees not to effect any public sale or distribution of its equity securities, or any securities convertible into or exchangeable or exercisable for such securities, during the seven days prior to and the 90-day period beginning on the effective date of any underwritten registration in which Eligible Securities are included (except as part of such underwritten registration or pursuant to registrations in connection with mergers, acquisitions, exchange offers, subscription offers, dividend reinvestment plans, conversions of convertible securities, or stock options or other employee benefit plans), unless the managing underwriter otherwise agrees.
7. EXPENSES. All Registration Expenses incurred in connection with two registrations pursuant to Section 2 and all registrations pursuant to
Section 3 shall be borne by the Company. Notwithstanding the above, the Company shall not be required to pay for the expenses of any registration proceeding begun pursuant to Section 2 if the registration request is subsequently withdrawn at the request of the holders of a majority of the Eligible Securities to be registered (which holders shall bear such expenses), unless the holders of a majority of the Eligible Securities agree to forfeit their right to one demand registration pursuant to Section 2(a); provided further, however, that if such withdrawal by the holders is based upon a Material Adverse Event either (i) not known to the holders at the time of their request, or (ii) not made known to the holders within 15 days after their request, then the holders shall not be required to pay any Registration Expenses and shall retain their rights pursuant to Section 2. All Selling Expenses in connection with any registration statement filed pursuant to this Agreement shall be borne by the Selling Stockholders in proportion to the number of securities sold by each.
8. INDEMNIFICATION. (a) In the event of any registration of any Eligible Securities hereunder, the Company will enter into the customary indemnification arrangements to indemnify and hold harmless each Stockholder who exercises its registration rights hereunder and, to the extent applicable, its directors and officers, its partners, its trustees and each Person who controls any of such Persons, each Person who participates as an underwriter in the offering or sale of any Eligible Securities, and each Person, if any, who controls such underwriter within the meaning of the Securities Act against any losses, claims, damages, liabilities and expenses, joint or several, to which such Person may be subject under the Securities Act or otherwise insofar as such losses, claims, damages, liabilities or expenses (or actions or proceedings in respect thereof ) arise out of or are based upon (i) any untrue statement or alleged untrue statement of any material fact contained in any registration statement under which such securities were registered under the Securities Act, any final prospectus included therein, or any amendment or supplement thereto, or any document incorporated by reference therein, or (ii) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and the Company will promptly reimburse each such Person for any legal or any other expenses reasonably incurred by such Person in connection with investigating or defending any such loss, claim, damage, liability, action or proceeding; PROVIDED that the Company shall not be liable in any such case to the extent that any such
9

loss, claim, damage, liability or expense (or action or proceeding in respect thereof) arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in such registration statement, any final prospectus, amendment or supplement in reliance upon and in conformity with written information furnished to the Company or such underwriter by the Selling Stockholders expressly for use in the registration statement; PROVIDED, FURTHER, that the Company shall not be liable in any such case to the extent that any such loss, claim, damage, liability or expense (or action or proceeding in respect thereof) arises out of or is based upon the fact that the Selling Stockholder, or any underwriter, broker, dealer or market maker participating in the offering or sale of Eligible Securities on such Selling Stockholder's behalf, sold Eligible Securities to a Person to whom there was not sent or given a copy of the current prospectus for such offering or sale in compliance with the applicable securities laws (if the Company had previously furnished copies thereof to such Selling Stockholder). Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Selling Stockholders or any such Person and shall survive the transfer of such securities by the Selling Stockholders and the expiration of this Agreement.
(b) The Selling Stockholders, by virtue of exercising their registration rights hereunder, agree and undertake to enter into customary indemnification arrangements to severally and not jointly indemnify and hold harmless (in the same manner and to the same extent as set forth in subsection
(a) of this Section 8) the Company, each director of the Company, each officer of the Company who shall sign such registration statement, and each Person who participates as an underwriter in the offering or sale of such securities, and each Person, if any, who controls the Company or any such underwriter within the meaning of the Securities Act, with respect to any statement in or omission from such registration statement, any final prospectus included therein, or any amendment or supplement thereto, but only to the extent that the losses, claims, damages, liabilities or expenses (or actions or proceedings in respect thereof) arise out of or are based upon a statement or omission that was made in reliance upon and in conformity with written information furnished by such Selling Stockholders to the Company expressly for use in the registration statement or to the extent such losses, claims, damages, liabilities or expenses (or actions or proceedings in respect thereof) arise out or are based upon the fact that the Selling Stockholder, or any underwriter, broker, dealer or market maker participating in the offering or sale of Eligible Securities on such Selling Stockholder's behalf, sold Eligible Securities to a Person to whom there was not sent or given a copy of the current prospectus for such offering or sale in compliance with the applicable securities laws (if the Company had previously furnished copies thereof to such Selling Stockholder). Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Company or any such director, officer or any such underwriter or controlling Persons and shall survive the transfer of the registered securities by the Selling Stockholders and the expiration of this Agreement.
(c) Indemnification similar to that specified in the preceding subsections of this Section 8 (with appropriate modifications) shall be given by the Company and the Selling Stockholders with respect to any required registration or other qualification of such Eligible Securities under any federal or state law or regulation of governmental authority other than the Securities Act.
10

9. REPORTS UNDER THE EXCHANGE ACT. With a view to making available to the Stockholders the benefits of Rule 144 and any other rule or regulation of the SEC that may at any time permit a Stockholder to sell securities of the Company to the public without registration, the Company agrees to:
(i) make and keep public information available, as those terms are defined in Rule 144, at all times after 90 days after the effective date of the first registration statement filed by the Company for the offering of its securities to the general public;
(ii) file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and
(iii) furnish to any Stockholder, so long as such Stockholder owns any Eligible Securities, forthwith upon request (i) a written statement by the Company that it has complied with the reporting requirements of Rule 144 (at any time after 90 days after the effective date of the first registration statement filed by the Company), the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements), (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company with the SEC, and
(iii) such other information as may be reasonably requested in availing any Stockholder of any rule or regulation of the SEC which permits the selling of any such securities without registration.
10. OTHER REGISTRATION RIGHTS. From and after the date of this Agreement, the Company shall not enter into any agreement with any holder or prospective holder of any securities of the Company granting to such holder any registration rights, except that additional holders may be added as parties to this Agreement with regard to any or all securities of the Company held by them:
(a) with the consent of the holders of at least 50% of the aggregate of the Eligible Securities then outstanding (which must include the consent of each Stockholder which beneficially owns capital stock of the Company having at least 15% of the voting power of the Company), or (b) such holders acquire their securities as consideration for an acquisition by the Company of such holders' business in a transaction approved by the Board of Directors of the Company. Any such additional parties shall execute a counterpart of this Agreement. Upon execution of the counterpart by the additional party and by the Company, the additional party shall be considered a Stockholder for all purposes of this Agreement.
11. TRANSFER OF RIGHTS. The rights under this Agreement may be assigned by any Stockholder to a transferee or assignee of any Eligible Securities not sold to the public acquiring at least 100,000 shares of Common Stock (subject to adjustment for any stock dividend, stock split or similar transaction); provided, however, that (i) the Company must receive written notice prior to the time of said transfer, stating the name and address of said transferee or assignee and identifying the securities with respect to which such rights are being assigned, and must receive the written agreement of such transferee or assignee to comply with this Agreement, and (ii) the transferee or assignee of such rights must not be a person deemed by the Board of Directors of the Company, in its best judgment, to be a competitor or potential competitor of the Company. Notwithstanding the limitation set forth in the foregoing sentence respecting the minimum number of shares that must be transferred, a Stockholder may transfer its rights to such Stockholder's Affiliates without restriction as to the number or percentage of shares acquired by any such Affiliate.
11

12. MISCELLANEOUS. (a) The captions or headings in this Agreement are for convenience and reference only, and in no way define, describe, extend or limit the scope or intent of this Agreement.
(b) If any clause, provision or section of this Agreement shall be invalid or unenforceable, the invalidity or unenforceability of such clause, provision or section shall not affect the enforceability or validity of any of the remaining clauses, provisions or sections hereof to the extent permitted by applicable law.
(c) This Agreement shall be construed and enforced in accordance with the internal laws of the State of Illinois, without reference to its rules as to conflicts or choice of laws.
(d) This Agreement may not be changed, modified, discharged or amended, except by an instrument signed by the Company and the holders of at least 50% of the aggregate of the Eligible Securities then outstanding (which must include the consent of each Stockholder which beneficially owns capital stock of the Company having at least 15% of the voting power of the Company).
(e) This Agreement may be executed in counterparts, each of which shall be an original, but all of which together shall constitute one and the same instrument.
(f) This Agreement constitutes the entire agreement and understanding among the parties and supersedes any prior understandings and/or written or oral agreements among them respecting the subject matter herein.
(g) All notices, requests, demands, consents and other communications required or permitted to be given pursuant to this Agreement shall be in writing and delivered by hand, by overnight courier delivery service or by certified mail, return receipt requested, postage prepaid. Notices shall be deemed given when actually received, which shall be deemed to be not later than the next Business Day if sent by overnight courier or after five Business Days if sent by mail. Notice to Stockholders shall be made to the address listed on the stock transfer records of the Company. Any notice to a party to this Agreement may include a provision stating that failure to respond to the notice within ten business days of receipt thereof (or such longer period of time as otherwise provided in this Agreement with respect to a specified notice) shall be deemed to be the consent of such party to the matter set forth in such notice, and all other parties to this Agreement shall be entitled to rely and act on such consent.
(h) Subject to Section 11, all covenants and agreements in this Agreement by or on behalf of any of the parties hereto will bind and inure to the benefit of the respective successors and assigns of the parties hereto whether so expressed or not.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement or caused this Agreement to be executed as of the day and year first above written.
* * *
12

STOCKHOLDERS:
LKQ CORPORATION

/s/Dean L. Buntrock                 By: /s/Thomas B. Raterman
------------------------------          ----------------------------------------
Dean L. Buntrock                    Name:  Thomas B. Raterman
                                    Title: Senior V.P. & Chief Financial Officer

/s/John J. Cull
--------------------
John J. Cull	

W.F. DOOLEY TRUST U/A DATED MAY 1, 1973
F/B/O W.F. DOOLEY

By: /s/ William Dooley, Trustee
   ----------------------------
Name:    William Dooley
Title:   Trustee

/s/ Edwin Falkman
------------------------------
Edwin Falkman	

BRIAN J. FLYNN JUNE, 1992
NON-EXEMPT TRUST

By: /s/ Brian J. Flynn
    --------------------------
Name:  Brian J. Flynn
Title: Trustee	

DONALD F. FLYNN 1993 TRUST

By: /s/ Donald F. Flynn
    --------------------------
Name:  Donald F. Flynn
Title: Trustee	

13

FLYNN 1998 GRANDCHILDREN'S TRUST

By: /s/ Kevin F. Flynn
    --------------------------
Name:  Kevin F. Flynn
Title: Co-Trustee

By: /s/ Brian J. Flynn
    --------------------------
Name:  Brian J. Flynn
Title: Co-Trustee	

FLYNN 1995 REVOCABLE TRUST

By: /s/ Robert W. Flynn
    --------------------------
Name:  Robert W. Flynn
Title:	

KEVIN F. FLYNN JUNE, 1992
NON-EXEMPT TRUST

By: /s/ Kevin F. Flynn
    --------------------------
Name:  Kevin F. Flynn
Title: Trustee	

MICHAEL R. FLYNN 1994 EXEMPT TRUST

By: /s/ Michael R. Flynn
    --------------------------
Name:  Michael R. Flynn
Title: Co-Trustee	

PATRICK F. FLYNN 1994 EXEMPT TRUST

By: /s/ Patrick F. Flynn
    --------------------------
Name:  Patrick F. Flynn
Title: Trustee

/s/ Jeffrey Klein
------------------------------
Jeffrey Klein	

14

/s/ John T. McCarthy
------------------------------
John T. McCarthy	

PMM LKQ INVESTMENT LIMITED PARTNERSHIP

By: /s/ Paul M. Meister
    --------------------------
Name:  Paul M. Meister
Title: Vice President & Treasurer

/s/ Mark Pytosh
------------------------------
Mark Pytosh	

QRP INVESTMENT COMPANY, LLC
By: Donald F. Flynn
 Name: Donald F. Flynn
Title: As sole stockholder of Flynn Enterprises, Inc., sole manager of Subscriber
REPUBLIC INDUSTRIES, INC.

By: /s/ Thomas W. Hawkins
    --------------------------
Name:  Thomas W. Hawkins
Title: Senior Vice President of Corporate Development

/s/ Gerald E. Seegers
------------------------------
Gerald E. Seegers

/s/ Rodger Welker
------------------------------
Rodger Welker	

15

ADDENDUM
TO
REGISTRATION RIGHTS AGREEMENT
Reference is made to the Registration Rights Agreement dated as of June 19, 1998 among LKQ Corporation (the "Company") and the stockholders of the Company, a copy of which is attached hereto. The entities set forth below under STOCKHOLDERS (hereinafter, the "Stockholders") are parties to a transaction pursuant to which the Stockholders will become owners of shares of common stock of the Company. The addition of the Stockholders as parties to the Registration Rights Agreement is a condition to the obligations of the Stockholders and the Company to consummate such transaction. Each of the Stockholders acknowledges that it has read the Registration Rights Agreement in its entirety. By its signature below, each of the Stockholders agrees to be bound by all of the terms and conditions of, and the Company agrees that the Stockholder shall be entitled to all of the rights and benefits of, the Registration Rights Agreement, as if the Stockholder was a "Stockholder" (as defined in the Registration Rights Agreement) from the date it was originally made.
This Addendum is dated as of the 15th day of July, 1998.

LKQ CORPORATION                      STOCKHOLDERS:

By: /s/ Thomas B. Raterman           /s/ H. Bradley Willen, Trustee
    ------------------------------   -------------------------------------------
Name:  Thomas B. Raterman            H. Bradley Willen, Trustee of the Stuart
Title: Senior Vice President and     Willen Irrevocable Trust f/b/o Jacob
       Chief Financial Officer       Leonard Willen dated December 31, 1996

                                     /s/ H. Bradley Willen, Trustee
                                     -------------------------------------------
                                     H. Bradley Willen, Trustee of the Stuart
                                     Willen Irrevocable Trust f/b/o Thomas V.
                                     Willen dated December 31, 1996

                                     /s/ H. Bradley Willen, Trustee
                                     -------------------------------------------
                                     H. Bradley Willen, Trustee of the Stuart
                                     Willen Irrevocable Trust f/b/o Claudia Rae
                                     Willen dated December 31, 1996

                                     /s/ Todd David Willen, Trustee
                                     -------------------------------------------
                                     Todd David Willen, Trustee of the Stuart
                                     Willen Irrevocable Trust f/b/o Allison Lynn
                                     Willen dated December 31, 1996	

                                   /s/ Todd D. Willen, Trustee
                                   ---------------------------------------------
                                   Todd D. Willen, Trustee of the Stuart
                                   Willen Irrevocable Trust f/b/o Emily Victoria
                                   Willen dated December 31, 1996

                                   /s/ Stuart P. Willen, Trustee
                                   ---------------------------------------------
                                   Stuart P. Willen, Trustee of the Stuart P.
                                   Willen Grantor Trust dated July 1, 1998

                                   /s/ H. Bradley Willen, Trustee
                                   ---------------------------------------------
                                   H. Bradley Willen, Trustee of the H. Bradley
                                   Willen Grantor Trust dated July 1, 1998

                                   /s/ Todd D. Willen, Trustee
                                   ---------------------------------------------
                                   Todd D. Willen, Trustee of the Todd D.
                                   Willen Grantor Trust dated July 1, 1998	

                                    ADDENDUM
                                       TO	

REGISTRATION RIGHTS AGREEMENT
Reference is made to the Registration Rights Agreement dated as of June 19, 1998 among LKQ Corporation (the "Company") and the stockholders of the Company, a copy of which is attached hereto. Leonard A. Damron III (hereinafter, the "Stockholder") is a party to a transaction pursuant to which the Stockholder will become an owner of shares of common stock of the Company. The addition of the Stockholder, as a party to the Registration Rights Agreement is a condition to the obligations of the Stockholder and the Company to consummate such transaction. The Stockholder acknowledges that he has read the Registration Rights Agreement in its entirety. By his signature below, the Stockholder agrees to be bound by all of the terms and conditions of, and the Company agrees that the Stockholder shall be entitled to all of the rights and benefits of, the Registration Rights Agreement, as if the Stockholder was a "Stockholder" (as defined in the Registration Rights Agreement) from the date it was originally made.
This Addendum is dated as of the 29th day of July, 1998.

LKQ CORPORATION                                   STOCKHOLDERS:

By: /s/ Thomas B. Raterman                        /s/ Leonard A. Damron III
    -------------------------------               ------------------------------
Name:  Thomas B. Raterman                         Leonard A. Damron III
Title: Senior Vice President and
       Chief Financial Officer	

                                    ADDENDUM
                                       TO	

REGISTRATION RIGHTS AGREEMENT
Reference is made to the Registration Rights Agreement dated as of June 19, 1998 among LKQ Corporation (the "Company") and the stockholders of the Company, a copy of which is attached hereto. Gary L. Ackerman (hereinafter, the "Stockholder") is a party to a transaction pursuant to which the Stockholder will become an owner of shares of common stock of the Company. The addition of the Stockholder, as a party to the Registration Rights Agreement is a condition to the obligations of the Stockholder and the Company to consummate such transaction. The Stockholder acknowledges that he has read the Registration Rights Agreement in its entirety. By his signature below, the Stockholder agrees to be bound by all of the terms and conditions of, and the Company agrees that the Stockholder shall be entitled to all of the rights and benefits of, the Registration Rights Agreement, as if the Stockholder was a "Stockholder" (as defined in the Registration Rights Agreement) from the date it was originally made.
This Addendum is dated as of the 7th day of August, 1998.

LKQ CORPORATION                                   STOCKHOLDERS:

By: /s/ Thomas B. Raterman                        /s/ Gary L. Ackerman
    -------------------------------               ------------------------------
Name:  Thomas B. Raterman                         Gary L. Ackerman
Title: Senior Vice President and
       Chief Financial Officer	

                                    ADDENDUM
                                       TO	

REGISTRATION RIGHTS AGREEMENT
Reference is made to the Registration Rights Agreement dated as of June 19, 1998 among LKQ Corporation (the "Company") and the stockholders of the Company, a copy of which is attached hereto. Robert H. Ackerman (hereinafter, the "Stockholder") is a party to a transaction pursuant to which the Stockholder will become an owner of shares of common stock of the Company. The addition of the Stockholder, as a party to the Registration Rights Agreement is a condition to the obligations of the Stockholder and the Company to consummate such transaction. The Stockholder acknowledges that he has read the Registration Rights Agreement in its entirety. By his signature below, the Stockholder agrees to be bound by all of the terms and conditions of, and the Company agrees that the Stockholder shall be entitled to all of the rights and benefits of, the Registration Rights Agreement, as if the Stockholder was a "Stockholder" (as defined in the Registration Rights Agreement) from the date it was originally made.
This Addendum is dated as of the 7th day of August, 1998.

LKQ CORPORATION                                   STOCKHOLDERS:

By: /s/ Thomas B. Raterman                        /s/ Robert H. Ackerman
    -------------------------------               ------------------------------
Name:  Thomas B. Raterman                         Robert H. Ackerman
Title: Senior Vice President and
       Chief Financial Officer	

                                    ADDENDUM
                                       TO	

REGISTRATION RIGHTS AGREEMENT
Reference is made to the Registration Rights Agreement dated as of June 19, 1998 among LKQ Corporation (the "Company") and the stockholders of the Company, a copy of which is attached hereto. Hunts Point Auto Wreckers, Inc. ("Hunts Point") and Joseph Simone, the sole shareholder of Hunts Point ("Simone" and together with Hunts Point, the "Shareholders") are parties to a transaction pursuant to which they will become owners of shares of common stock of the Company. The addition of the Shareholders as parties to the Registration Rights Agreement is a condition to the obligations of Hunts Point and the Company to consummate such transaction. The Shareholders acknowledge that they have read the Registration Rights Agreement in its entirety. By their signatures below, the Shareholders agree, effective as of January 3, 2000, to be bound by all of the terms and conditions of, and the Company agrees, effective as of January 3, 2000, that the Shareholders shall be entitled to all of the rights and benefits of, the Registration Rights Agreement, as if the Shareholders were "Stockholders" (as defined in the Registration Rights Agreement) from the date it was originally made.
This Addendum is dated as of the 31st day of August, 1999.
LKQ CORPORATION

By: /s/ Jerome Girsch
    -------------------------------
Name:
Title:	

HUNTS POINT AUTO WRECKERS, INC.

By: /s/ Joseph Simone
    -------------------------------
Name:
Title:

/s/ Joseph Simone
-----------------------------------
Joseph Simone	

EXHIBIT 10.5

AMENDED AND RESTATED
CREDIT AGREEMENT
DATED AS OF JUNE 21, 2002
AMONG
LKQ CORPORATION,
BANK OF AMERICA, N.A.
AS ADMINISTRATIVE AGENT,
LASALLE BANK NATIONAL ASSOCIATION,
AS CO-SYNDICATION AGENT,
FLEET NATIONAL BANK,
AS CO-SYNDICATION AGENT,
AND
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO

TABLE OF CONTENTS

                                                                                             PAGE
ARTICLE I DEFINITIONS...........................................................................1
     1.1.    Defined Terms......................................................................1
     1.2.    Other Interpretive Provisions.....................................................26
             (a)    Defined Terms..............................................................26
             (b)    The Agreement..............................................................26
             (c)    Certain Common Terms.......................................................26
             (d)    Performance; Time..........................................................27
             (e)    Contracts..................................................................27
             (f)    Laws.......................................................................27
             (g)    Captions...................................................................27
             (h)    Independence of Provisions.................................................27
             (i)    Interpretation.............................................................27
     1.3.    Accounting Principles.............................................................28

ARTICLE II THE CREDITS.........................................................................28
     2.1.    Amounts and Terms of Commitments..................................................28
             (a)    The Term Commitments.......................................................28
             (b)    The Revolving Commitments..................................................29
     2.2.    Notes.............................................................................29
     2.3.    Procedure for Borrowing and Issuance of Letters of Credit.........................30
     2.4.    Conversion and Continuation Elections.............................................31
     2.5.    Voluntary Termination or Reduction of Revolving Commitments.......................33
     2.6.    Optional Prepayments..............................................................33
     2.7.    Mandatory Prepayments of Loans for Asset Dispositions.............................34
     2.8.    Repayment.........................................................................34
             (a)    The Term Loan..............................................................34
             (b)    The Revolving Loans........................................................35
     2.9.    Interest..........................................................................35
     2.10....Fees .............................................................................36
             (a)    Fee Letters................................................................36
             (b)    Non-Use Fee................................................................36
             (c)    Letter of Credit Fees......................................................37
     2.11....Computation of Fees and Interest..................................................37
     2.12....Payments by the Company...........................................................38
     2.13....Payments by the Lenders to the Administrative Agent...............................39
     2.14....Sharing of Payments, Etc..........................................................39
     2.15....Certain Letter of Credit Provisions...............................................40

ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY.............................................43
     3.1.    Taxes.............................................................................43
     3.2.    Illegality........................................................................46	

-i-

     3.3.    Increased Costs and Reduction of Return...........................................47
     3.4.    Funding Losses....................................................................47
     3.5.    Inability to Determine Rates......................................................48
     3.6.    Certificates of the Lenders.......................................................48
     3.7.    Replacement of Certain Lenders....................................................49
     3.8.    Survival..........................................................................49

ARTICLE IV CONDITIONS PRECEDENT................................................................49
     4.1.    Conditions of Initial Loans.......................................................49
             (a)    Credit Agreement and Notes.................................................49
             (b)    Resolutions; Incumbency....................................................50
             (c)    Articles of Incorporation; By-laws and Good Standing.......................50
             (d)    Collateral Documents.......................................................50
             (e)    Legal Opinions.............................................................51
             (f)    Payment of Fees............................................................51
             (g)    Closing Certificate........................................................52
             (h)    Financial Statements.......................................................52
             (i)    Consents ..................................................................52
             (j)    Due Diligence..............................................................52
             (k)    Fee Letters................................................................52
             (l)    Closing Date Borrowing Certificate.........................................52
             (m)    Field Examination..........................................................53
             (n)    Release of Certain Collateral..............................................53
             (o)    Other Documents............................................................53
     4.2.    Conditions to All Borrowings and Issuance of Letters of Credit....................53
             (a)    Notice of Borrowing or Continuation/Conversion.............................53
             (b)    Continuation of Representations and Warranties.............................53
             (c)    No Existing Default........................................................54
             (d)    Overadvance................................................................54

ARTICLE V REPRESENTATIONS AND WARRANTIES.......................................................54
     5.1.    Corporate Existence and Power.....................................................54
     5.2.    Corporate Authorization; No Contravention.........................................55
     5.3.    Governmental Authorization........................................................55
     5.4.    Binding Effect....................................................................55
     5.5.    Litigation........................................................................55
     5.6.    No Default........................................................................56
     5.7.    Intentionally Omitted.............................................................56
     5.8.    Use of Proceeds; Margin Regulations...............................................56
     5.9.    Title to Properties...............................................................56
     5.10....Taxes.............................................................................56
     5.11....Financial Condition...............................................................57
     5.12....Environmental Matters.............................................................57
     5.13....Regulated Entities................................................................58
     5.14....No Burdensome Restrictions........................................................58	

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     5.15....Solvency .........................................................................58
     5.16....Labor Relations. .................................................................58
     5.17....Copyrights, Patents, Trademarks and Licenses, etc.................................58
     5.18....Subsidiaries; Capitalization......................................................59
     5.19....Broker's; Transaction Fees........................................................59
     5.20....Insurance. .......................................................................59
     5.21....Business and Collateral Locations.................................................60
     5.22....Full Disclosure. .................................................................60
     5.23....ERISA Matters. ...................................................................60

ARTICLE VI AFFIRMATIVE COVENANTS...............................................................61
     6.1.    Financial Statements..............................................................61
     6.2.    Certificates; Other Information...................................................62
     6.3.    Notices...........................................................................63
     6.4.    Preservation of Corporate Existence, Etc..........................................65
     6.5.    Maintenance of Property...........................................................65
     6.6.    Insurance.........................................................................65
     6.7.    Payment of Obligations............................................................67
     6.8.    Compliance with Laws..............................................................67
     6.9.    Inspection of Property and Books and Records......................................68
     6.10....Environmental Laws................................................................68
     6.11....Use of Proceeds...................................................................68
     6.12....Solvency..........................................................................69
     6.13....Subsidiaries......................................................................69
     6.14....Further Assurances................................................................69
     6.15....Interest Rate Protection..........................................................70
     6.16....Depository Accounts...............................................................70

ARTICLE VII NEGATIVE COVENANTS.................................................................70
     7.1.    Limitation on Liens...............................................................70
     7.2.    Disposition of Assets.............................................................72
     7.3.    Consolidations and Mergers........................................................72
     7.4.    Loans and Investments.............................................................72
     7.5.    Limitation on Indebtedness........................................................73
     7.6.    Transactions with Affiliates......................................................74
     7.7.    Use of Proceeds...................................................................74
     7.8.    Contingent Obligations............................................................74
     7.9.    Joint Ventures....................................................................74
     7.10....Unconditional Purchase Options....................................................74
     7.11....Intentionally Omitted.............................................................75
     7.12....Restricted Payments...............................................................75
     7.13....Consolidated Net Worth............................................................75
     7.14....Fixed Charge Coverage Ratio.......................................................76
     7.15....Senior Funded Debt to EBITDA Ratio................................................76
     7.16....Total Funded Debt to EBITDA Ratio.................................................76	

-iii-

     7.17....Intentionally Omitted.............................................................76
     7.18....Change in Business................................................................76
     7.19....Change in Structure...............................................................76
     7.20....Accounting Changes................................................................76
     7.21....Other Contracts...................................................................76
     7.22....Management Fees...................................................................77
     7.23....Subsidiaries......................................................................77
     7.24....Pension Plans.....................................................................77
     7.25....Amendment of Documents............................................................77

ARTICLE VIII EVENTS OF DEFAULT.................................................................77
     8.1.    Event of Default..................................................................77
             (a)    Non-Payment................................................................77
             (b)    Representation or Warranty.................................................78
             (c)    Specific Defaults..........................................................78
             (d)    Other Defaults.............................................................78
             (e)    Cross-Default..............................................................78
             (f)    Insolvency; Voluntary Proceedings..........................................79
             (g)    Involuntary Proceedings....................................................79
             (h)    Monetary Judgments.........................................................79
             (i)    Non-Monetary Judgments.....................................................79
             (j)    Collateral.................................................................79
             (k)    Change of Control..........................................................80
             (l)    Adverse Change.............................................................80
             (m)    Loan Party Defaults........................................................80
             (n)    ERISA Liabilities..........................................................80
             (o)    Flynn Stock Ownership......................................................81
     8.2.    Remedies..........................................................................81
     8.3.    Rights Not Exclusive..............................................................81

ARTICLE IX   THE AGENTS........................................................................81
     9.1.    Appointment and Authorization.....................................................81
     9.2.    Delegation of Duties..............................................................82
     9.3.    Liability of the Administrative Agent.............................................82
     9.4.    Reliance by the Administrative Agent..............................................83
     9.5.    Notice of Default.................................................................83
     9.6.    Credit Decision...................................................................84
     9.7.    Indemnification...................................................................84
     9.8.    Agents in Their Individual Capacity...............................................85
     9.9.    Successor Administrative Agent....................................................85
     9.10....Collateral Matters................................................................86
     9.11....Co-Syndication Agents.............................................................87

ARTICLE X    MISCELLANEOUS.....................................................................87
     10.1....Amendments and Waivers............................................................87
     10.2....Notices...........................................................................88	

-iv-

10.3....No Waiver; Cumulative Remedies....................................................89
10.4....Costs and Expenses................................................................89
10.5....Indemnity.........................................................................89
        (a)    General Indemnity..........................................................90
        (b)    Environmental Indemnity....................................................90
        (c)    Survival; Defense..........................................................91
10.6....Marshalling; Payments Set Aside...................................................91
10.7....Successors and Assigns............................................................91
10.8....Assignments, Participations, etc..................................................91
10.9....Set-off...........................................................................94
10.10...Collateral Account................................................................94
10.11...Notification of Addresses, Lending Offices, Etc...................................95
10.12...Counterparts......................................................................95
10.13...Severability......................................................................96
10.14...No Third Parties Benefited........................................................96
10.15...Time..............................................................................96
10.16...Governing Law and Jurisdiction....................................................96
10.17...Waiver of Jury Trial..............................................................97
10.18...Automatic Debits of Fees..........................................................97
10.19...Entire Agreement..................................................................97	

-v-

AMENDED AND RESTATED
CREDIT AGREEMENT
This AMENDED AND RESTATED CREDIT AGREEMENT is entered into as of June 21, 2002, among LKQ Corporation, a Delaware corporation (the "Company"), the financial institutions from time to time party to this Agreement (collectively, the "Lenders"; individually, a "Lender"), Bank of America, N.A., as Administrative Agent for the Lenders, LaSalle Bank National Association, as Co-Syndication Agent for the Lenders and Fleet National Bank, as Co-Syndication Agent for the Lenders. This Agreement shall amend, restate, supersede and replace in its entirety that certain Credit Agreement dated as of November 12, 1999, as amended or otherwise modified through the date hereof, by and among the Company, Lenders, Administrative Agent, LaSalle Bank National Association, as syndication agent for the Lenders, and Banc of America Securities LLC, as arranger (the "Original Credit Agreement").
WHEREAS, pursuant to the Original Credit Agreement, the Lenders made available a revolving credit facility upon the terms and conditions set forth therein; and
WHEREAS, the Lenders and the Company have agreed to amend and restate the Original Credit Agreement in order to provide for a revolving credit facility and a term loan upon the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.1. DEFINED TERMS.
In addition to the terms defined elsewhere in this Agreement, the following terms have the following meanings:
"Account Debtor" means any Person who is or who may become obligated to any Loan Party, under, with respect to, or on account of an Account Receivable, General Intangible or other Collateral.
"Account Receivable" means any "account" (as defined in the UCC) of each Loan Party and other rights of each Loan Party to payment for goods sold or leased or for services rendered, which are not evidenced by an instrument or chattel paper and whether or not earned by performance.
"Acquisition" means the acquisition by the Company or any of its Subsidiaries of all or substantially all of the Properties of any Person or a division or business of any Person, or all or substantially all of the stock or other ownership interests of any Person, including, without limitation, by means of a merger or other combination.

"Administrative Agent" means BOA in its capacity as administrative agent for the Lenders hereunder, and any successor administrative agent.
"Administrative Agent-Related Persons" means BOA and any successor administrative agent arising under Section 9.9, together with Affiliates of BOA or any such successor administrative agent, and the officers, directors, employees, agents and attorneys-in-fact of such Persons and Affiliates.
"Administrative Agent's Payment Office" means the address for payments set forth on the signature page hereto in relation to the Administrative Agent or such other address as the Administrative Agent may from time to time specify in accordance with Section 10.2.
"Affiliate" means, as to any Person, any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. A Person shall be deemed to control another Person if the controlling Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of the other Person, whether through the ownership of voting securities, by contract or otherwise. Without limitation, any director, executive officer or beneficial owner of 5% or more of the equity of a Person shall for the purposes of this Agreement, be deemed to control the other Person. Notwithstanding the foregoing, no Lender shall be deemed an "Affiliate" of the Company or of any other Loan Party.
"Agents" means, collectively, the Administrative Agent and the Co-Syndication Agents.
"Aggregate Commitment" means the combined Aggregate Revolving Commitment and the Aggregate Term Commitment.
"Aggregate Revolving Commitment" means the combined Revolving Commitments of the Lenders, in the initial aggregate principal amount of Forty Million Dollars ($40,000,000), as such amount may be reduced from time to time pursuant to this Agreement.
"Aggregate Term Commitment" means the combined Term Commitments of the Lenders, in the initial aggregate principal amount of Twenty Million Dollars ($20,000,000), as such amount may be reduced from time to time pursuant to this Agreement.
"Agreement" means this Credit Agreement.
"Alternate Base Rate" means, for any day, the higher of: (a) the Base Rate and (b) the Federal Funds Rate PLUS .50%.
"Applicable Margin" means at any time (a) with respect to the unpaid principal amount of each IBOR Loan, the applicable percentage set forth below in the column entitled "Applicable Margin for IBOR Loans" opposite the Total Funded Debt to
-2-

EBITDA Ratio in effect at such time; (b) with respect to the unpaid principal amount of each Base Rate Loan, the applicable percentage set forth below in the column entitled "Applicable Margin for Base Rate Loans" opposite the Total Funded Debt to EBITDA Ratio in effect at such time; and (c) with respect to the non-use fees described in subsection 2.10(b), the applicable percentage set forth below in the column entitled "Applicable Margin for Non-Use Fees" opposite the Total Funded Debt to EBITDA Ratio in effect at such time, as follows:

        Total Funded Debt               Applicable Margin          Applicable Margin          Applicable Margin
         to EBITDA Ratio                  for IBOR Loans          For Base Rate Loans          For Non-Use Fees
         ---------------                  --------------          -------------------          ----------------
Less than or equal to 1.0 : 1.0                2.00%                      0.50%                      0.25%

Greater than 1.00 : 1.0 but less               2.25%                      0.75%                      0.30%
than or equal to 1.50 : 1.0

Greater than 1.50 : 1.0 but less               2.50%                      1.00%                      0.35%
than or equal to 2.00 : 1.0

Greater than 2.00 : 1.0                        2.75%                      1.25%                      0.40%	

The initial Applicable Margin for IBOR Loans, Base Rate Loans, and Non-Use Fees shall be based on the above table and the Total Funded Debt to EBITDA Ratio as set forth in the Company's unaudited financial statements for the fiscal quarter, and related Compliance Certificate with respect to the 12 month period, ending March 31, 2002; and each initial Applicable Margin shall remain in effect until the delivery of the Company's unaudited financial statements with respect to the fiscal quarter, and related Compliance Certificate with respect to the 12 month period, ending June 30, 2002. Thereafter, the Applicable Margin shall be based on the Total Funded Debt to EBITDA Ratio in effect as set forth in the Compliance Certificate most recently delivered by the Company to the Administrative Agent. Changes in the Applicable Margin resulting from a change in the Total Funded Debt to EBITDA Ratio shall become effective upon delivery by the Company to the Administrative Agent of a new Compliance Certificate pursuant to subsection 6.2(b). If the Company shall fail to deliver a Compliance Certificate within 45 days after the end of any fiscal quarter (or within 60 days after the end of any fiscal quarter that is the last fiscal quarter in any fiscal year) as required pursuant to subsection 6.2(b), the Applicable Margin from and including the 46th day after the end of such fiscal quarter (or the 61st day after the end of such fiscal quarter for any fiscal quarter that is the last fiscal quarter in any fiscal year), to but not including the date the Company delivers to the Administrative Agent a Compliance Certificate shall conclusively be presumed to equal the highest Applicable Margin specified in the above chart for the type of loan or fee. Whenever a change in the Total Funded Debt to EBITDA Ratio results in an adjustment to the Applicable Margin, the Company shall deliver to the Administrative Agent, together with the required Compliance Certificate, a Pricing Change Certificate.
"Assignee" has the meaning specified in subsection 10.8(a).
"Assignment and Acceptance" has the meaning specified in subsection 10.8(a).
-3-

"Attorney Costs" means and includes all reasonable disbursements and reasonable fees of any law firm or other external counsel, the reasonable allocated cost of internal legal services and all reasonable disbursements of internal counsel.
"Bankruptcy Code" means the Federal Bankruptcy Reform Act of 1978 (11 U.S.C. Section 101, ET SEQ.).
"Base Rate" means, for any day the rate of interest in effect for such day as publicly announced from time to time by BOA in Chicago, Illinois, as its "reference rate" (such rate set by BOA based upon various factors including BOA's costs and desired return, general economic conditions and other factors, and used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate). Any change in the reference rate announced by BOA shall take effect at the opening of business on the day specified in the public announcement of such change.
"Base Rate Loan" means a Loan that bears interest based on the Alternative Base Rate.
"BOA" means Bank of America, NA., a national banking association.
"Borrowing" means a borrowing hereunder consisting of Loans made to the Company on the same day by the Lenders pursuant to Article II.
"Borrowing Base" means an amount equal to the sum of (a) 80% of the net amount of Eligible Accounts Receivable, PLUS (b) 50% of the value (at the lower of cost or market) of Eligible Inventory consisting of automobiles and automobile parts, LESS (c) the LC Amount and LESS (d) such reserves (including without limitation reserves for rebates) as the Administrative Agent elects to establish on the Closing Date or from time to time thereafter (i) in its reasonable credit judgment exercised in good faith, based on the results of field examinations performed pursuant to Section 6.9 with a methodology consistent with that employed in the field examination completed prior to the date hereof, and that reflects a material adverse change to Borrower's Accounts Receivable or Inventory or (ii) otherwise during the existence of an Event of Default. Such reserves shall not be established with respect to any matters that have been taken into account in determining Eligible Accounts Receivable or Eligible Inventory.
"Borrowing Base Certificate" means a certificate in the form of EXHIBIT J attached hereto, executed and certified as accurate by a Responsible Officer.
"Business Day" means any day other than a Saturday, Sunday or other day on which commercial banks in Chicago or San Francisco are authorized or required by law to close; PROVIDED, that with respect to all notices, determinations, continuances, conversions, fundings and payments in connection with IBOR Loans, a Business Day shall not include any day on which trading by and between banks in Dollar deposits may not be carried on in the applicable interbank market.
-4-

"Capital Adequacy Regulation" means any guideline, request or directive of any central bank or other Governmental Authority, or any other law, rule or regulation, whether or not having the force of law, in each case, regarding capital adequacy of any bank or of any corporation controlling a bank.
"Capital Expenditures" means, for any period and with respect to any Person, the aggregate of all expenditures paid by such Person and its Subsidiaries for the acquisition or leasing of fixed or capital assets or additions to equipment (including replacements, capitalized repairs and improvements during such period) which should be capitalized under GAAP on a consolidated balance sheet of such Person and its Subsidiaries.
"Capital Lease" means, with respect to any Person, any leasing or similar arrangement which, in accordance with GAAP, is classified as a capital lease on a consolidated balance sheet of such Person.
"Capital Lease Obligations" means, with respect to any Person, without duplication, the principal component of all monetary obligations of such Person or any of its Subsidiaries under Capital Leases of such Person or any such Subsidiary.
"Cash Equivalents" means:
(a) securities issued or fully guaranteed or insured by the United States Government or any agency thereof and backed by the full faith and credit of the United States having maturities of not more than six months from the date of acquisition;
(b) certificates of deposit, time deposits, Eurodollar time deposits, repurchase agreements, reverse repurchase agreements, or bankers' acceptances, having in each case a tenor of not more than six months, issued by any bank, or by any U.S. commercial bank or any branch or agency of a non-U.S. bank licensed to conduct business in the U.S. having combined capital and surplus of not less than One Hundred Million Dollars ($100,000,000) whose short term securities are rated at least A-1 by Standard & Poor's Corporation and P-1 by Moody's Investors Service Inc., and not subject to any right of setoff by such issuer (other than any such issuer that is also a Lender); and
(c) commercial paper of an issuer rated at least A-1 by Standard & Poor's Corporation or P-1 by Moody's Investors Service Inc. and in either case having a tenor of not more than six months.
"CERCLA" has the meaning specified in the definition of "Environmental Laws."
"Change of Control" means that any Person that is not currently a shareholder of the Company acquires, in one or more transactions, 51% or more, in the aggregate, of the issued and outstanding voting stock of the Company.
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"Closing Date" means the date on which all conditions precedent set forth in Section 4.1 are satisfied or waived by the Administrative Agent and all the Lenders.
"Closing Date Outstandings" means the outstanding principal balance on the Closing Date of the loans made under the Original Credit Agreement.
"Code" means the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder.
"Collateral" means all property and interests in property and proceeds thereof now owned or hereafter acquired by the Company or any other Loan Party in or upon which a Lien now or hereafter exists in favor of any Lender, or the Administrative Agent for the benefit of the Agents and the Lenders, whether under this Agreement, the Collateral Documents or under any other documents.
"Collateral Account" has the meaning specified in Section 10.10.
"Collateral Documents" means the Company Security Agreement, the Loan Party Security Agreement, the Loan Party Guaranty, the Company Pledge Agreement, and all other security agreements, mortgages, deeds of trust, patent and trademark assignments, lease assignments, guarantees and other similar agreements executed by the Company or any other Loan Party in connection with granting a Lien in favor of any Lender, or any Agent, for the benefit of the Agents and the Lenders, and all financing statements (or comparable documents now or hereafter filed in accordance with the UCC or comparable law) against the Company or any other Loan Party as debtor in favor of any Lender or any Agent, for the benefit of the Agents and the Lenders, as secured party.
"Commitment" means, for each Lender, the aggregate of its Revolving Commitment and its Term Commitment.
"Commitment Percentage" means, as to any Lender, the percentage equivalent of the sum of such Lender's Revolving Commitment and Term Commitment, divided by the Aggregate Commitment.
"Company" has the meaning specified in the introductory clause hereto.
"Company Pledge Agreement" means the Pledge Agreement executed by the Company and delivered to the Administrative Agent on the Original Closing Date, as amended to date and from time to time hereafter.
"Company Security Agreement" means the Security Agreement executed by the Company and delivered to the Administrative Agent on the Original Closing Date, as amended to date and from time to time hereafter.
"Compliance Certificate" means a certificate duly completed and executed by a Responsible Officer of the Company, substantially in the form of EXHIBIT A hereto.
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"Consolidated Net Cash Interest Expense" means, as to any Person for any period, gross consolidated cash interest expense payable by such Person during such period (including all commissions, discounts, fees and other charges paid in connection with standby letters of credit and similar instruments) in respect of all Indebtedness (including without limitation Subordinated Debt) for such Person, PLUS (a) the portion of the upfront costs and expenses for Rate Contracts (to the extent not included in gross consolidated interest expense) of such Person fairly allocated to such Rate Contracts as expenses and payable by such Person during such period, PLUS (b) fees payable by such Person pursuant to
Section 2.10 (to the extent not included in gross consolidated interest expense) during such period, PLUS (c) the portion of any payments made by such Person in respect of Capital Leases of such Person allocated to interest expense (to the extent not included in gross consolidated interest expense) during such period, LESS (d) interest income of such Person for such period and Rate Contracts payments received by such Person during such period; LESS (e) in the case of the Company, fees paid by the Company during such period pursuant to Section 2.10(a); all as determined in accordance with GAAP for such Person and its Subsidiaries.
"Contingent Obligation" means, as to any Person, (a) any Guaranty Obligation of that Person; and (b) any direct or indirect obligation or liability, contingent or otherwise, of that Person, (i) in respect of any Surety Instrument issued for the account of that Person or as to which that Person is otherwise liable for reimbursement of drawings or payments, (ii) to purchase any materials, supplies or other Property from, or to obtain the services of, another Person if the relevant contract or other related document or obligation requires that payment for such materials, supplies or other Property, or for such services, shall be made regardless of whether delivery of such materials, supplies or other Property is ever made or tendered, or such services are ever performed or tendered, or (iii) in respect of any Rate Contract that is not entered into in connection with a bona fide hedging operation that provides benefits to such Person. The amount of any Contingent Obligation shall (subject, in the case of Guaranty Obligations, to the last sentence of the definition of "Guaranty Obligation") be deemed equal to the maximum reasonably anticipated liability in respect thereof, and shall, with respect to item (b)(iii) of this definition, be marked to market on a current basis.
"Contractual Obligations" means, as to any Person, any obligation or liability under any security issued by such Person or of any agreement, undertaking, contract, indenture, mortgage, deed of trust or other instrument, document or agreement to which such Person is a party or by which it or any of its property is bound.
"Conversion Date" means any date on which the Company converts a Base Rate Loan to an IBOR Loan, or an IBOR Loan to a Base Rate Loan.
"Co-Syndication Agent" means each of LaSalle and Fleet, each in its capacity as a co-syndication agent for the Lenders hereunder.
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"Default" means any event or circumstance which, with the giving of notice, the lapse of time, or both, would (if not cured or otherwise remedied during such time) constitute an Event of Default.
"Disbursement Date" has the meaning specified in subsection 2.15(b).
"Disposition" means (i) the sale, lease, conveyance or other disposition of Property, other than sales or other dispositions expressly permitted under subsection 7.2(a) or 7.2(b), and (ii) the sale or transfer by the Company or any Subsidiary of the Company of any equity securities issued by any Subsidiary of the Company to any Person other than the Company or any Subsidiary of the Company.
"Dollars", "dollars" and "$" each mean lawful money of the United States.
"Domestic Lending Office" means, with respect to each Lender, the office of that such Lender designated as such in the signature pages hereto or such other office of such Lender as it may from time to time specify to the Company and the Administrative Agent.
"EBITDA" means, for any period, for any Person, determined for such Person and its Subsidiaries on a consolidated basis and in accordance with GAAP, the sum of (a) the net income (or net loss) for such period, PLUS (b) all amounts treated as expenses for depreciation and interest and the amortization of intangibles of any kind to the extent included in the determination of such net income (or loss), PLUS (c) all accrued taxes on or measured by income to the extent included in the determination of such net income (or loss) PLUS (d) any other non-cash charges; PLUS (e) the effect of financial accounting standard 142 related to goodwill; PROVIDED, HOWEVER, that net income (or loss) shall be computed for these purposes without giving effect to extraordinary losses or extraordinary gains; PROVIDED, FURTHER, that EBITDA of the Company and its Subsidiaries for any period shall include pro forma EBITDA, for such period, of the target of any Permitted Acquisition consummated during such period, including any add-backs to EBITDA listed on SCHEDULE 1.1(a) and any other add-backs to EBITDA approved by all Lenders.
"EBITDAR" means, for any period, for any Person, determined for such Person and its Subsidiaries on a consolidated basis and in accordance with GAAP, EBITDA for such period PLUS all rental payments made by the Company during such period.
"Eligible Account Receivable" means an Account Receivable which meets the following requirements:
(a) it is genuine and in all respects what it purports to be;
(b) it arises from either (i) the performance of services by a Loan Party, which services have been fully performed and acknowledged and/or accepted by the Account Debtor with respect thereto or (ii) the sale or lease of goods by a Loan Party; and if it arises from the sale or lease of goods, (A) such goods comply in all material respects with such
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Account Debtor's specifications (if any) and have been shipped to, or delivered to and accepted by, such Account Debtor and the applicable Loan Party does not have knowledge that the Account Debtor has failed to accept delivery of all or a portion of such goods, and (B) a Loan Party has possession of shipping and delivery receipts evidencing such shipment, delivery and acceptance;
(c) it is evidenced by an invoice rendered to the Account Debtor with respect thereto which (i) is dated not earlier than the date of shipment or performance, and (ii) is not unpaid on the date that is 90 days after the due date of the invoice evidencing the Account Receivable;
(d) it is not owing by an Account Debtor with respect to which 25% or more of the aggregate Accounts Receivable owing by such Account Debtor to the Loan Parties taken together are not Eligible Accounts Receivable for any reason;
(e) it is not subject to any assignment, claim or Lien, other than
(i) a first priority Lien in favor of the Administrative Agent, for the benefit of itself, Issuer and the Lenders and (ii) a Lien permitted under Section 7.1;
(f) it is a valid, legally enforceable and unconditional obligation of the Account Debtor with respect thereto, and is not subject to a contra, setoff, counterclaim, claim denying liability thereunder, credit or allowance (except any contra, setoff, counterclaim, claim denying liability thereunder, credit or allowance which has been deducted in computing the net amount of the applicable invoice as shown in the original schedule or Borrowing Base Certificate furnished to the Administrative Agent identifying or including such Account Receivable) or material adjustment by the Account Debtor with respect thereto, and such Account Debtor has not offered or attempted to return any of such goods;
(g) there are no proceedings or actions which are then pending against the Account Debtor with respect thereto or to which such Account Debtor is a party which are reasonably likely to result in any material adverse change in such Account Debtor's ability to pay any Account Receivable in full when due;
(h) it does not arise out of a contract which, by its terms, forbids, restricts or makes void or unenforceable the assignment by the applicable Loan Party to the Administrative Agent, for the benefit of itself, Issuer, and the Lenders, of the Account Receivable arising with respect thereto;
(i) the Account Debtor with respect thereto is not an Affiliate of any Loan Party or a director, manager, officer, employee or agent of any Loan Party or an Affiliate of any Loan Party, unless the applicable Loan Party's decision to extend credit to such Account Debtor is determined by the standards such Loan Party employs to extend credit to Account Debtors that are not Affiliates and such Account Receivable has terms no less favorable to the Company than the standard terms of Accounts Receivable owing by Account Debtors that are not Affiliates;
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(j) the Account Debtor with respect thereto is a resident or citizen of, and is located within, the United States of America, unless the Account Receivable is fully covered by a letter of credit, banker's acceptance or other credit support on terms reasonably satisfactory to the Administrative Agent, and which credit support has been assigned to the Administrative Agent in a manner reasonably satisfactory to the Administrative Agent;
(k) it is not an Account Receivable arising from a "sale on approval," "sale or return" or "consignment," or subject to any other repurchase or return agreement;
(l) it is not an Account Receivable with respect to which possession and/or control of the goods sold giving rise thereto is held, maintained or retained by any Loan Party, any Affiliate of any Loan Party (or by any agent or custodian of any Loan Party or any Affiliate of any Loan Party) for the account of or subject to further and/or future direction from the Account Debtor thereof;
(m) it is not an Account Receivable which in any way fails to meet or violates any warranty, representation or covenant in any material respect contained in this Agreement relating directly to Accounts Receivable;
(n) it arises in the ordinary course of a Loan Party's business;
(o) if the Account Debtor is the United States of America or any state or local governmental entity, or any department, agency or instrumentality thereof, the applicable Loan Party has assigned its rights to payment of such Account Receivable to the Administrative Agent, for the benefit of itself, Issuer and the Lenders, pursuant to the Assignment of Claims Act of 1940, as amended, or pursuant to any similar state or local law, regulation or requirement;
(p) it is not owing by any single Account Debtor whose aggregate obligations to the Loan Parties with respect to Accounts Receivable already exceed 20% of all Accounts Receivable of the Loan Parties in the aggregate; and
(q) the Account Receivable is not evidenced by chattel paper or an instrument.
"Eligible Inventory" means Inventory which meets the following requirements:
(a) it is owned by a Loan Party and is not subject to any prior assignment, claim or Lien, other than (i) a first priority Lien in favor of the Administrative Agent, for the benefit of itself, Issuer and the Lenders and (ii) a Lien permitted under Section 7.1;
(b) it is in saleable condition and held for sale;
(c) except as provided in clause (d) below or as the Administrative Agent may otherwise consent, it is in the possession and control of a Loan Party or its agents;
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(d) if it is in the possession or control of a bailee, warehouseman, processor, consignee or other Person other than a Loan Party, the Administrative Agent is in possession of such agreements, instruments and documents as the Administrative Agent may reasonably require (each in form and content reasonably acceptable to the Administrative Agent and duly executed, as appropriate, by the bailee, warehouseman, processor, consignee or other Person in possession or control of such Inventory, as applicable), and if the Administrative Agent so requests warehouse receipts in the Administrative Agent's name, for the benefit of itself, Issuer and the Lenders, covering such Inventory;
(e) it is not Inventory produced in violation of the Fair Labor Standards Act and subject to the "hot goods" provisions contained in Title 29 U.S.C. Section 215 or any successor statute or section;
(f) it is not (i) packaging or shipping materials, (ii) goods used in connection with maintenance or repair of a Loan Party's properties or assets or (iii) general supplies;
(g) it is not Inventory which in any way fails to meet or violates any warranty, representation or covenant in any material respect contained in this Agreement relating directly to Inventory;
(h) the Administrative Agent has not determined in its reasonable discretion that it is unacceptable due to age, type, category, quality and/or quantity based on the criteria set forth on EXHIBIT A attached hereto; and
(i) it is not Inventory the use of which by the applicable Loan Party or the manufacture or sale thereof by the applicable Loan Party, is subject to any licensing, patent, royalty, trademark, tradename or copyright agreement of any other Person which would materially adversely affect the ability of the Administrative Agent to sell or otherwise dispose of such Inventory during the continuance of any Event of Default.
"Environmental Claims" means all claims, however asserted, by any Governmental Authority or other Person alleging potential liability or responsibility for violation of any Environmental Law, or for release or injury to the environment or threat to public health, personal injury (including sickness, disease or death), property damage, natural resources damage, or otherwise alleging liability or responsibility for damages (punitive or otherwise), cleanup, removal, remedial or response costs, restitution, civil or criminal penalties, injunctive relief, or other type of relief, resulting from or based upon the presence, placement, discharge, emission or release (including intentional and unintentional, negligent and non-negligent, sudden or non-sudden, accidental or non-accidental, placement, spills, leaks, discharges, emissions or releases) of any Hazardous Material at, in, or from Property, whether or not owned by the Company or any of its Subsidiaries.
"Environmental Laws" means all federal, state or local laws, statutes, common law duties, rules, regulations, ordinances and codes, together with all
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administrative orders, licenses, authorizations and permits of, and agreements with, any Governmental Authorities, in each case relating to environmental, health, safety and land use matters; including the Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), the Clean Air Act, the Federal Water Pollution Control Act of 1972, the Solid Waste Disposal Act, the Federal Resource Conservation and Recovery Act, the Toxic Substances Control Act, the Emergency Planning and Community Right-to-Know Act.
"Environmental Permits" has the meaning specified in subsection 5.12(b).
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder.
"ERISA Affiliate" means any corporation, partnership, or other trade or business (whether or not incorporated) that is, along with the Company, a member of a controlled group of corporations or a controlled group of trades or businesses, as described in Sections 414(b) and 414(c), respectively, of the Code or Section 4001 of ERISA, or a member of the same affiliated service group within the meaning of Section 414(m) of the Code.
"Eurodollar Reserve Percentage" means for any day for any Interest Period the maximum reserve percentage (expressed as a decimal, rounded upward to the nearest 1/100th of 1%) in effect on such day (whether or not applicable to any Lender) under regulations issued from time to time by the Federal Reserve Board for determining the maximum reserve requirement (including any emergency, supplemental or other marginal reserve requirement) with respect to Eurocurrency funding (currently referred to as "Eurocurrency liabilities" under Regulation D of the Federal Reserve Board) having a term comparable to such Interest Period.
"Event of Default" means any of the events or circumstances specified in Section 8.1.
"Event of Loss" means, with respect to any Property, any of the following: (a) any loss, destruction or damage of such Property; or (b) any actual condemnation, seizure or taking, by exercise of the power of eminent domain or otherwise, of such Property, or confiscation of such Property or the requisition of the use of such Property.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and the regulations promulgated thereunder.
"Existing Letters of Credit" has the meaning specified in subsection 2.3(g).
"Federal Funds Rate" means, for any day, the rate per annum set forth in the weekly statistical release designated as H.15(519), or any successor publication, published by the Federal Reserve Board (including any such successor, "H.15(519)") for such day (or, if such day is not a Business Day, for the Business Day preceding such day) opposite the caption "Federal Funds (Effective)". If on any day upon which the Federal Funds Rate
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is to be determined the rate for such day (or, if such day is not a Business Day, for the Business Day preceding such day) is not yet published in H.15(519), the rate for such day, for purposes of such determination, will be the rate set forth in the daily statistical release designated as the Composite 3:30 p.m. Quotations for U.S. Government Securities, or any successor publication, published by the Federal Reserve Bank of New York (including any such successor, the "Composite 3:30 p.m. Quotation") for such day (or, if such day is not a Business Day, for the Business Day preceding such day) under the caption "Federal Funds Effective Rate." If on any day upon which the Federal Funds Rate is to be determined the rate for such day (or, if such day is not a Business Day, for the Business Day preceding such day) is not yet published in either H.15(519) or the Composite 3:30 p.m. Quotations, the rate for such day, for purposes of such determination, will be the arithmetic mean as determined by the Administrative Agent of the rates for the last transaction in overnight Federal funds arranged prior to 9:00 a.m. (New York time) on that day (or, if such day is not a Business Day, on the Business Day preceding such day) by each of three leading brokers of Federal funds transactions in New York City selected by the Administrative Agent.
"Federal Reserve Board" means the Board of Governors of the Federal Reserve System, or any entity succeeding to any of its principal functions.
"Fee Letter" has the meaning specified in subsection 2.10(a).
"Fixed Charge Coverage Ratio" means, for any period, the ratio of (a) EBITDAR for the Company for such period TO (b) Fixed Charges for such period.
"Fixed Charges" means, with respect to any fiscal period of the Company on a consolidated basis, without duplication, Consolidated Net Cash Interest Expense of the Company during such period, Maintenance Capital Expenditures of the Company during such period, scheduled principal payments of Indebtedness of the Company (excluding mandatory prepayments of the Loans pursuant to Section 2.7) during such period, rent payments made by the Company during such period, and federal, state, local and foreign income taxes of the Company during such period, excluding deferred taxes; provided, that for purposes of determining Fixed Charges for each of the 12 month periods ending September 30, 2002 and December 31, 2002, the aggregate amount of scheduled principal payments of Indebtedness in respect of the Loans under the Original Credit Agreement shall be deemed to be $5,000,000.
"Fleet" means Fleet National Bank, a national banking association.
"Form W-8BEN" has the meaning specified in subsection 3.1(f).
"Form W-8ECI" has the meaning specified in subsection 3.1(f).
"Funded Debt" means, at any time, for any Person, determined for such Person and its Subsidiaries on a consolidated basis and in accordance with GAAP, the sum of the following, without duplication: (i) Indebtedness for borrowed money, (ii) Capital
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Lease Obligations and (iii) purchase money Indebtedness; but shall specifically exclude unsecured guaranties acceptable to the Administrative Agent.
"GAAP" means generally accepted accounting principles set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the accounting profession), or in such other statements by such other entity as may be in general use by significant segments of the U.S. accounting profession, which are applicable to the circumstances as of the date of determination.
"General Intangible" has the meaning specified in the Company Security Agreement.
"Governmental Authority" means any nation or government, any state or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing.
"Guaranty Obligation" means, as applied to any Person, any direct or indirect liability of that Person with respect to any Indebtedness, lease, dividend, Surety Instrument or other obligation (the "primary obligations") of another Person (the "primary obligor"), including any obligation of that Person, whether or not contingent, (a) to purchase, repurchase or otherwise acquire such primary obligations or any property constituting direct or indirect security therefor, or (b) to advance or provide funds (i) for the payment or discharge of any such primary obligation, or (ii) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency or any balance sheet item, level of income or financial condition of the primary obligor, or (c) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation, or (d) otherwise to assure or hold harmless the holder of any such primary obligation against loss in respect thereof; in each case (a), (b), (c) or (d), including arrangements wherein the rights and remedies of the holder of the primary obligation are limited to repossession or sale of certain property of such Person. The amount of any Guaranty Obligation shall be deemed equal to the stated or determinable amount of the primary obligation in respect of which such Guaranty Obligation is made or, if not stated or if indeterminable, the maximum reasonably anticipated liability in respect thereof.
"Hazardous Materials" means all those substances which are regulated by, or which may form the basis of liability under, any Environmental Law, including all substances identified under any Environmental Law as a pollutant, contaminant, hazardous
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waste, hazardous constituent, special waste, hazardous substance, hazardous material, or toxic substance, or petroleum or petroleum derived substance or waste.
"IBOR" means, for each Interest Period in respect of IBOR Loans comprising part of the same Borrowing, an interest rate per annum (rounded upward to the nearest 1/100th of 1%) determined pursuant to the following formula:
IBOR = Non-Adjusted IBOR

1.00 - Eurodollar Reserve Percentage
The IBOR shall be adjusted automatically as of the effective date of any change in the Eurodollar Reserve Percentage.
"IBOR Loan" means a Loan that bears interest based on the IBOR.
"Indebtedness" of any Person means, without duplication, (a) all indebtedness for borrowed money; (b) all obligations issued, undertaken or assumed as the deferred purchase price of property or services (other than trade payables entered into in the ordinary course of business pursuant to ordinary terms); (c) all non-contingent reimbursement or payment obligations with respect to Surety Instruments; (d) all obligations evidenced by notes, bonds, debentures or similar instruments, including obligations so evidenced incurred in connection with the acquisition of property, assets or businesses; (e) all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect to Property acquired by the Person (even though the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession or sale of such property); (f) all Capital Lease Obligations; (g) all net obligations with respect to Rate Contracts; (h) all indebtedness referred to in clauses (a) through (g) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien upon or in Property (including accounts and contracts rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness; and (i) all Guaranty Obligations in respect of indebtedness or obligations of others of the kinds referred to in clauses (a) through (g) above.
"Indemnified Liabilities" has the meaning specified in subsection 10.5(a).
"Indemnified Person" has the meaning specified in subsection 10.5(a).
"Insolvency Proceeding" means (a) any case, action or proceeding before any court or other Governmental Authority relating to bankruptcy, reorganization, insolvency, liquidation, receivership, dissolution, winding-up or relief of debtors, or (b) any general assignment for the benefit of creditors, composition, marshalling of assets for creditors, or other, similar arrangement in respect of its creditors generally or any substantial portion of its creditors; in each case undertaken under U.S. Federal, State or foreign law, including the Bankruptcy Code.
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"Interest Payment Date" means, with respect to any IBOR Loan, the last day of each Interest Period applicable to such Loan and, with respect to any Base Rate Loan, the last Business Day of each calendar quarter.
"Interest Period" means, with respect to any IBOR Loan, the period commencing on the Business Day the Loan is disbursed or continued or on the Conversion Date on which a Loan is converted to an IBOR Loan and ending on the date one, two or three months thereafter, as selected by the Company in its Notice of Borrowing or Notice of Conversion/Continuation;
PROVIDED, that:
(i) if any Interest Period pertaining to an IBOR Loan would otherwise end on a day which is not a Business Day, that Interest Period shall be extended to the next succeeding Business Day unless, in the case of an IBOR Loan, the result of such extension would be to carry such Interest Period into another calendar month, in which event such Interest Period shall end on the immediately preceding Business Day;
(ii) any Interest Period pertaining to an IBOR Loan that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period;
(iii) no Interest Period for any Term Loan shall extend beyond the Term Loan Maturity Date and no Interest Period for any Revolving Loan shall extend beyond the Revolving Termination Date; and
(iv) no Interest Period applicable to a Term Loan or portion thereof shall extend beyond any date upon which is due any scheduled principal payment in respect of the Term Loan unless the aggregate principal amount of the Term Loan represented by Base Rate Loans, or by IBOR Loans having Interest Periods that will expire on or before such date, is equal to or in excess of the amount of such principal payment.
"Inventory" means any and all "inventory" (as defined in the UCC) now owned or hereafter acquired by each Loan Party, wherever located, including without limitation finished goods, raw materials, work in process and other materials and supplies (including packaging and shipping materials) used or consumed in the manufacture or production thereof, and goods which are returned to or repossessed by any Loan Party.
"Issuer" means BOA in its capacity as issuer of the Letters of Credit (or any other Person to whom BOA may assign its obligations pursuant to subsection 10.8(g)).
"Joint Venture" means a single-purpose corporation, partnership, joint venture or other legal arrangement (whether created pursuant to contract or conducted
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through a separate legal entity) now or hereafter formed by the Company or any of its Subsidiaries with another Person in order to conduct a common venture or enterprise with such Person.
"LaSalle" means LaSalle Bank National Association, a national banking association.
"LC Amount" means at any time the aggregate undrawn face amount of all Letters of Credit.
"Lender" has the meaning specified in the introductory clause hereto.
"Lending Office" means, with respect to any Lender, the office or offices of such Lender specified as its "Lending Office" or "Domestic Lending Office" or "Offshore Lending Office", as the case may be, opposite its name on the applicable signature page hereto, or such other office or offices of such Lender as it may from time to time notify the Company and the Administrative Agent.
"Letters of Credit" means letters of credit issued by Issuer for the account of the Company.
"Lien" means any mortgage, deed of trust, pledge, hypothecation, assignment, charge or deposit arrangement, encumbrance, lien (statutory or other) or other security interest or preferential arrangement of any kind or nature whatsoever (including those created by, arising under or evidenced by any conditional sale or other title retention agreement, the interest of a lessor under a Capital Lease Obligation or any financing lease having substantially the same economic effect as any of the foregoing) and any contingent or other agreement to provide any of the foregoing, but not including the interest of a lessor under an Operating Lease.
"Loan" means an extension of credit by a Lender to the Company pursuant to Article II, and may be a Base Rate Loan or an IBOR Loan.
"Loan Documents" means this Agreement, the Notes, the Collateral Documents and all documents delivered to the Administrative Agent in connection therewith and all Rate Contracts between the Company and any Lender.
"Loan Party" means the Company and each Subsidiary of the Company.
"Loan Party Guaranty" means the Guaranty executed by each then-existing Subsidiary of the Company and delivered to the Administrative Agent on the Original Closing Date, and each Guaranty subsequently executed by a Subsidiary of the Company and delivered to the Administrative Agent, as each has been amended to date and is amended from time to time hereafter.
"Loan Party Security Agreement" means the Security Agreement executed by each then-existing Subsidiary of the Company and delivered to the Administrative
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Agent on the Original Closing Date, and each Security Agreement subsequently executed by a Subsidiary of the Company and delivered to the Administrative Agent, as each has been amended to date and is amended from time to time hereafter.
"Maintenance Capital Expenditures" means, with respect to any Person, any Capital Expenditures that are made either to (a) replace or repair an existing capital asset or (b) extend the useful life of an existing capital asset.
"Majority Lenders" means at any time the Lenders then holding 75% of the then aggregate unpaid principal amount of the Loans, or, if no such principal amount is then outstanding, the Lenders then having 75% of the Revolving Commitments.
"Margin Stock" means "margin stock" as such term is defined in Regulation T, U or X of the Federal Reserve Board.
"Material Acquisition" means an Acquisition with respect to which the Total Consideration payable exceeds $5,000,000.
"Material Adverse Effect" means (a) a material adverse change in, or a material adverse effect upon, the operations, business, properties, assets, liabilities (actual or contingent) or condition (financial or otherwise) of the Company or the Company and its Subsidiaries taken as a whole; (b) a material impairment of the ability of the Company, or the other Loan Parties taken as a whole, to perform under the Loan Documents; or (c) a material adverse effect upon (i) the legality, validity, binding effect or enforceability of any Loan Document, or (ii) the perfection or priority of any Lien granted to any Lender or to the Administrative Agent, for the benefit of the Agents and the Lenders.
"Material Loan Party" means, at any time, any Loan Party (i) the gross revenues of which for the fiscal year most recently ended are 15% or more of the consolidated gross revenues of the Company and its Subsidiaries for such fiscal year or (ii) the aggregate book value of the assets of which at such time are 15% or more of the aggregate book value of the consolidated assets of the Company and its Subsidiaries at such time, all as determined in accordance with GAAP.
"Multiemployer Plan" means a "multiemployer plan," as defined in
Section 4001(a)(3) of ERISA, that is maintained for the employees of the Company or any ERISA Affiliate.
"Net Proceeds" means proceeds in cash, checks or other cash equivalent financial instruments (including Cash Equivalents) as and when received by the Person making a Disposition, net of: (a) the direct costs relating to such Disposition excluding amounts payable to any Affiliate of the Person making the Disposition, (b) taxes paid or payable as a result thereof, and (c) amounts required to be applied to repay principal, interest and prepayment premiums and penalties on Indebtedness secured by a Lien on the assets which are the subject of such Disposition but only if such Lien is permitted under the Loan Documents. "Net Proceeds" shall also include proceeds paid on account of any
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Event of Loss, net of: (i) all money actually, and permitted under the Loan Documents to be, applied to repair, replace, restore or substitute for the damaged Property, (ii) all of the costs and expenses reasonably incurred in connection with the collection of such proceeds, award or other payments, (iii) taxes paid or payable as a result thereof, and (iv) any amounts retained by or paid to parties having superior rights to such proceeds, awards or other payments but only if such superior rights are permitted under the Loan Documents.
"Net Worth" means shareholders' equity of the Company as determined in accordance with GAAP.
"Non-Adjusted IBOR" means the rate of interest per annum determined by the Administrative Agent to be the rate of interest per annum (rounded upward to the nearest 1/100th of 1%) notified to the Administrative Agent by the Reference Bank as the rate of interest at which Dollar deposits in the approximate amount of the principal amount of the Loan to be made or continued as, or converted into, an IBOR Loan by the Reference Bank and having a maturity comparable to the Interest Period for such IBOR Loan would be offered to major banks in the offshore dollar interbank market at their request at or about 11:00 a.m. (New York City time) on the second Business Day prior to the commencement of such Interest Period.
"Note" means a Revolving Note or a Term Note; and "NOTES" means the Revolving Notes and the Term Note.
"Notice of Borrowing" means a notice given by the Company to the Administrative Agent pursuant to Section 2.3, in substantially the form of EXHIBIT B.
"Notice of Conversion/Continuation" means a notice given by the Company to the Administrative Agent pursuant to Section 2.4, in substantially the form of EXHIBIT C.
"Notice of Lien" means any "notice of lien" or similar document intended to be filed or recorded with any court, registry, recorder's office, central filing office or other Governmental Authority for the purpose of evidencing, creating, perfecting or preserving the priority of a Lien securing obligations owing to a Governmental Authority.
"Obligations" means all Loans, and other Indebtedness, advances, debts, liabilities, obligations, covenants and duties owing by the Company to any Lender, any Agent, the Issuer, or any other Person required to be indemnified, that arises under any Loan Document or in connection with any interest rate cap, collar, swap or other agreement or arrangement designed to protect such Person against fluctuations in interest rates, in each case, whether or not for the payment of money, whether arising by reason of an extension of credit, loan, guaranty, reimbursement obligations with respect to Letters of Credit, indemnification or in any other manner, whether direct or indirect (including those acquired by assignment), absolute or contingent, due or to become due, now existing or hereafter arising and however acquired.
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"Offshore Lending Office" means with respect to each Lender, the office of such Lender designated as such in the signature pages hereto or such other office of such Lender as such Lender may from time to time specify to the Company and the Administrative Agent.
"Operating Lease" means, as applied to any Person, any lease of Property which is not a Capital Lease.
"Ordinary Course of Business" means, in respect of any transaction involving the Company or any other Loan Party, the ordinary course of such Person's business, as conducted by any such Person not inconsistent with past practice and undertaken by such Person in good faith.
"Organization Documents" means (i) for any corporation, the certificate or articles of incorporation, the bylaws, any certificate of determination or instrument relating to the rights of preferred shareholders of such corporation, any shareholder rights agreement, and all applicable resolutions of the board of directors of such corporation, (ii) for any partnership, the certificate of partnership, the partnership agreement and all applicable resolutions of the board of directors of such partnership's general partner and (iii) for any limited liability company, the limited liability company certificate or certificate of formation, the operating or similar agreement and all applicable resolutions of the board of directors of such limited liability company's managing member(s).
"Original Credit Agreement" has the meaning specified in the Recitals hereto.
"Other Taxes" has the meaning specified in subsection 3.1(b).
"Overadvance" has the meaning specified in subsection 2.8(b).
"Participant" has the meaning specified in subsection 10.8(d).
"PBGC" means the Pension Benefit Guaranty Corporation.
"Pension Plan" means a "pension plan," as such term is defined in
Section 3(2) of ERISA, that is subject to the provisions of Title IV of ERISA (other than a Multiemployer Plan) and to which the Company or any ERISA Affiliate may have any liability, including any liability by reason of being deemed to be a contributing sponsor under Section 4069 of ERISA.
"Permitted Acquisition" means an Acquisition that satisfies each of the following conditions:
(i) the assets so acquired are employed, or, if such Acquisition is structured as a purchase of Securities, the Person so acquired presently conducts its business, in the same industry or a related industry, and in the
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same or related lines of business now conducted by the Company and its Subsidiaries;
(ii) the Administrative Agent and each Lender shall have received written notice of such Acquisition and the basic terms thereof (a) in the case of a Material Acquisition, at least 10 Business Days' prior to the consummation thereof and (b) in the case of any other Acquisition, no later than the last day of the month after the month in which such Acquisition was consummated;
(iii) at the time of such Acquisition, no Default or Event of Default exists, or would be caused by the consummation thereof;
(iv) after giving effect to such Acquisition, the Company would be in compliance, on a pro forma basis, with the covenants set forth in Sections 7.13, 7.14, 7.15 and 7.16 of this Agreement, recomputed for the most recently ended period of 4 fiscal quarters;
(v) the assets so acquired are located in the United States or Canada or, if such acquisition is structured as a purchase of Securities, the Person so acquired is organized under the laws of a state in the United States or a province of Canada and the assets owned by such Person are located in the United States or Canada;
(vi) such Acquisition shall have been approved by the board of directors of the Person whose Properties or Securities are to be acquired;
(vii) to the extent required by Section 6.13, the Administrative Agent shall have received such duly executed and delivered (a) agreements, instruments and documents as the Administrative Agent shall reasonably request in order to create in favor of the Administrative Agent, for the benefit of the Agents and the Lenders, a Lien, subject only to Permitted Liens, on the Property so acquired (including any Securities) and the Securities of any Person created to facilitate such Acquisition, in order to secure the Obligations and (b) a guaranty of the Obligations executed by the Person so acquired or so created; PROVIDED, that in the case of any Acquisition other than a Material Acquisition, such items shall be delivered to the Administrative Agent no later than the last day of the month after the month in which such Acquisition was consummated;
(viii) if Total Cash Consideration payable in connection with such Acquisition exceeds $3,000,000, the Company shall have provided the Administrative Agent and the Lenders with pro forma Acquisition closing date financial statements for the Person who is to be acquired or whose Property is to be acquired in such Acquisition, based on the most recent monthly financial statements for such Person, which pro forma financial
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statements will detail any adjustments related to such Acquisition and include a computation of EBITDA for such Person for use in deriving pro forma EBITDA for the Company and its Subsidiaries for the next applicable testing date, including all add-backs that the Company proposes to use in order to so derive pro-forma EBITDA;
(ix) if either (a) Total Cash Consideration payable in connection with such Acquisition exceeds $5,000,000 or (b) the aggregate Total Cash Consideration paid in connection with all Permitted Acquisitions consummated after the Closing Date plus the Total Cash Consideration payable in connection with the proposed Acquisition exceeds $15,000,000, the Majority Lenders shall have consented in writing to such Acquisition;
(x) if so requested by the Administrative Agent or the Majority Lenders, the Administrative Agent and the Lenders shall have received, at the same time as the notice required pursuant to clause (ii) above (or, in the case of a Material Acquisition, if not available at such time, as soon afterward as is reasonably practicable), copies of the agreements, instruments and documents evidencing such Acquisition;
(xi) if so requested by the Administrative Agent or the Majority Lenders, the Administrative Agent and the Lenders shall have received, at the same time as the notice required pursuant to clause (ii) above (or, in the case of a Material Acquisition, if not available at such time, as soon afterward as is reasonably practicable), unless otherwise agreed by the Majority Lenders, such business and legal due diligence related to such Acquisition as the Administrative Agent or the Majority Lenders shall have reasonably requested, including without limitation any environmental audits and reports as the Company shall have obtained in connection therewith; and
(xii) in the case of each Material Acquisition, the Administrative Agent shall have received a certificate from a Responsible Officer of the Company, certifying to (a) the satisfaction of the conditions contained in clauses (i) - (viii) above and (b) certifying to the amount of the applicable Total Cash Consideration and Total Consideration and, in each case, showing all applicable computations.
"Permitted Liens" has the meaning specified in Section 7.1.
"Person" means an individual, partnership, corporation, business trust, limited liability company, joint stock company, trust, unincorporated association, joint venture or Governmental Authority.
"Pledged Collateral" has the meaning specified in the Company Pledge Agreement.
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"Pricing Change Certificate" means a certificate duly completed and executed by a Responsible Officer of the Company, substantially in the form of EXHIBIT D hereto.
"Property" means any interest in any kind of property or asset, whether real, personal or mixed, and whether tangible or intangible.
"Rate Contracts" means swap agreements (as such term is defined in
Section 101 of the Bankruptcy Code), commodity options, equity or equity index swaps or options, bond options or swaptions, and any other agreements or arrangements designed to provide protection against fluctuations in interest or currency exchange rates.
"Reference Bank" means BOA; references to the Reference Bank shall be deemed to refer to BOA's Grand Cayman Branch, Grand Cayman B.W.I. (or such other office as may be designated for such purpose by BOA).
"Reportable Event" has the meaning given to such term in ERISA.
"Requirement of Law" means, as to any Person, any law (statutory or common), treaty, rule or regulation or determination of an arbitrator or of a Governmental Authority, in each case applicable to or binding upon the Person or any of its property or to which the Person or any of its property is subject.
"Responsible Officer" means the chief executive officer, the president or the chief financial officer of the Company, or any other officer having substantially the same authority and responsibility; or, with respect to compliance with financial covenants and the preparation of the Borrowing Base Certificate, the chief financial officer or the treasurer of the Company, or any other officer having substantially the same authority and responsibility.
"Revolving Commitment", with respect to each Lender, has the meaning specified in Section 2.1(b).
"Revolving Commitment Percentage" means, as to any Lender, the percentage equivalent of such Lender's Revolving Commitment divided by the Aggregate Revolving Commitment.
"Revolving Loan" has the meaning specified in Section 2.1.
"Revolving Loan Availability" means the lesser of (a) the sum of the Revolving Commitments of each Lender and (b) the Borrowing Base (as calculated pursuant to the most recent Borrowing Base Certificate delivered pursuant to this Agreement).
"Revolving Note" means a promissory note of the Company payable to the order of a Lender, in substantially the form of EXHIBIT E, evidencing the aggregate
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indebtedness of the Company to such Lender resulting from Revolving Loans made by such Lender.
"Revolving Termination Date" has the meaning specified in Section 2.8(b).
"SEC" means the Securities and Exchange Commission, or any entity succeeding to any of its principal functions.
"Securities" means "Securities" as such term is used in Section 2(l) of the Securities Act of 1933, as amended.
"Senior Funded Debt" means, at any time, for any Person, determined for such Person and its Subsidiaries on a consolidated basis and in accordance with GAAP, all Funded Debt other than Subordinated Debt.
"Senior Funded Debt to EBITDA Ratio" means, as of any date, the ratio of (a) Senior Funded Debt as of such date to (b) EBITDA for the 12 month period ended on such date, all determined for the Company and its Subsidiaries on a consolidated basis and in accordance with GAAP.
"Solvent" means, as to any Person at any time, that (a) the fair value of the Property of such Person is greater than the amount of such Person's liabilities (including disputed, contingent and unliquidated liabilities) as such value is established and liabilities evaluated for purposes of Section 101(32) of the Bankruptcy Code and, in the alternative, for purposes of any applicable state fraudulent transfer law; (b) the present fair saleable value of the Property of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured; (c) such Person is able to realize upon its Property and pay its debts and other liabilities (including disputed, contingent and unliquidated liabilities) as they mature in the normal course of business; (d) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person's ability to pay as such debts and liabilities mature; and (e) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person's property would constitute unreasonably small capital.
"Subordinated Debt" means, collectively, that portion of any liabilities, obligations or Indebtedness of the Company or any of its Subsidiaries that contains terms satisfactory to the Majority Lenders and is subordinated, either (a) on the terms contained in EXHIBIT I or (b) in a manner satisfactory to the Majority Lenders, as to right and time of payments of principal and interest thereon, to all of the Obligations. Subordinated Debt includes purchase money Indebtedness, Capital Lease Obligations and Indebtedness incurred to acquire real estate that is secured by such real estate, in each case so long as such Indebtedness satisfies clause (a) or (b) hereof.
"Subsidiary" of a Person means any corporation, association, partnership, limited liability company, joint venture or other business entity of which more than 50%
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of the voting stock or other equity interests (in the case of Persons other than corporations), is owned or controlled directly or indirectly by the Person, or one or more of the Subsidiaries of the Person, or a combination thereof.
"Substantial Loan Party" means, at any time, any Loan Party (i) the gross revenues of which for the fiscal year most recently ended are 5% or more of the consolidated gross revenues of the Company and its Subsidiaries for such fiscal year or (ii) the aggregate book value of the assets of which at such time are 5% or more of the aggregate book value of the consolidated assets of the Company and its Subsidiaries at such time, all as determined in accordance with GAAP.
"Surety Instruments" means all letters of credit (including standby and commercial), banker's acceptances, bank guaranties, shipside bonds, surety bonds and similar instruments.
"Taxes" has the meaning specified in subsection 3.1(a).
"Term Commitment" with respect to each Lender, has the meaning specified in Section 2.1(a).
"Term Loan" has the meaning specified in Section 2.1(a).
"Term Maturity Date" means June 30, 2005.
"Term Note" means a promissory note of the Company payable to the order of a Lender, in substantially the form of EXHIBIT F, evidencing the aggregate indebtedness of the Company to such Lender resulting from the portion of the Term Loan made by such Lender.
"Total Cash Consideration" means total consideration paid or to be paid in cash or property (other than Securities of the Company) with respect to any Acquisition, including any deferred cash payments of any portion of the purchase price thereof.
"Total Consideration" means total consideration paid with respect to any Acquisition, including without limitation: (i) Total Cash Consideration,
(ii) all payments made in Securities, (iii) all amounts paid or to be paid pursuant to non-competition agreements and consulting agreements, (iv) the amount of Indebtedness assumed (and in the case of an Acquisition of Securities, the amount of Indebtedness of the Person to be acquired), (v) the amount of seller Subordinated Debt incurred in connection with such Acquisition and (vi) the amount of all transaction fees payable by any Loan Party.
"Total Funded Debt to EBITDA Ratio" means, as of any date, the ratio of (a) Funded Debt as of such date TO (b) EBITDA for the 12-month period ended on such date, all determined for the Company and its Subsidiaries on a consolidated basis and in accordance with GAAP.
"Transferee" has the meaning specified in subsection 10.8(e).
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"UCC" means the Uniform Commercial Code as in effect in the State of Illinois.
"United States" and "U.S." each means the United States of America.
"Wholly-Owned Subsidiary" means any Person in which (other than directors' qualifying shares required by law) 100% of the capital stock or other ownership interests of each class having ordinary voting power, and 100% of the capital stock or other ownership interests of every other class, in each case, at the time as of which any determination is being made, is owned, beneficially and of record, by the Company, or by one or more of the other Wholly-Owned Subsidiaries, or both.
1.2. OTHER INTERPRETIVE PROVISIONS.
(a) DEFINED TERMS.
Unless otherwise specified herein or therein, all terms defined in this Agreement shall have the defined meanings when used in any certificate or other document made or delivered pursuant hereto. The meaning of defined terms shall be equally applicable to the singular and plural forms of the defined terms. Terms (including uncapitalized terms) not otherwise defined herein and that are defined in the UCC shall have the meanings therein described.
(b) THE AGREEMENT.
The words "hereof", "herein", "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement; and subsection, section, schedule and exhibit references are to this Agreement unless otherwise specified.
(c) CERTAIN COMMON TERMS.
(i) The term "documents" includes any and all instruments, documents, agreements, certificates, indentures, notices and other writings, however evidenced.
(ii) The term "including" means "including without limitation" and the parties hereto agree that the rule of EJUSDEM GENERIS shall not be applicable to limit a general statement, which is followed by an enumeration of specific matters, to matters similar to the matters specifically mentioned.
(iii) References to the "knowledge of", "best knowledge of", or similar terms with respect to the Company shall mean the actual knowledge of a Responsible Officer of the Company.
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(d) PERFORMANCE; TIME.
Whenever any performance obligation hereunder shall be stated to be due or required to be satisfied on a day other than a Business Day, such performance shall, unless otherwise specified herein, be made or satisfied on the next succeeding Business Day. In the computation of periods of time from a specified date to a later specified date, the word "from" means "from and including"; the words "to" and "until" each mean "to but excluding", and the word "through" means "to and including." If any provision of this Agreement refers to any action taken or to be taken by any Person, or which such Person is prohibited from taking, such provision shall be interpreted to encompass any and all means, direct or indirect, of taking, or not taking, such action.
(e) CONTRACTS.
Unless otherwise expressly provided herein, references to agreements and other contractual instruments (including the Loan Documents) shall be deemed to include all subsequent amendments and other modifications thereto, but only to the extent such amendments and other modifications are not prohibited by the terms of any Loan Document.
(f) LAWS.
References to any statute or regulation are to be construed as including all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting the statute or regulation.
(g) CAPTIONS.
The captions and headings of this Agreement are for convenience of reference only and shall not affect the interpretation of this Agreement.
(h) INDEPENDENCE OF PROVISIONS.
The parties acknowledge that this Agreement and other Loan Documents may use several different limitations, tests or measurements to regulate the same or similar matters, and that such limitations, tests and measurements are cumulative and must each be performed, except as expressly stated to the contrary in this Agreement.
(i) INTERPRETATION.
This Agreement is the result of negotiations among and has been reviewed by counsel to the Administrative Agent, the Company and other parties, and is the product of all parties hereto. Accordingly, this Agreement and the other Loan Documents shall not be construed against the Lenders or the Administrative Agent merely because of the Administrative Agent's or the Lenders' involvement in the preparation of such documents and agreements.
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1.3. ACCOUNTING PRINCIPLES.
(a) Unless the context otherwise clearly requires, all accounting terms not expressly defined herein shall be construed, and all financial computations required under this Agreement shall be made, in accordance with GAAP, consistently applied. If any changes in accounting principles from those used in the preparation of the financial statements referred to in Section 5.11 hereafter occur as a result of the promulgation of rules, regulations, pronouncements, or opinions by the Financial Accounting Standards Board or the American Institute of Certified Public Accountants (or successors thereto or agencies with similar functions) and result in a change in the method of calculation of financial covenants, standards, or terms found in this Agreement, upon the request of the Companies or the Majority Lenders, the Company, the Administrative Agent and the Majority Lenders agree to enter into negotiations to amend such financial covenants, standards or terms so as to equitably reflect such changes with the desired result that the evaluations of the Company's financial condition shall be the same after such changes as if such changes had not been made; PROVIDED, HOWEVER, that until the parties hereto have reached a definitive agreement on such amendments, the Company's financial condition shall continue to be evaluated on the same principles as those used in the preparation of the financial statements referred to in Section 5.11 prior to such change in accounting principles.
(b) References herein to "fiscal year" and "fiscal quarter" refer to such fiscal periods of the Company.
ARTICLE II
THE CREDITS
2.1. AMOUNTS AND TERMS OF COMMITMENTS.
(a) THE TERM COMMITMENTS.
Each Lender agrees, on the terms and conditions hereinafter set forth, that a portion of the Closing Date Outstandings under the Original Credit Agreement in the aggregate amount of $20,000,000 shall, on the Closing Date, be converted into a single term loan to the Company (the "Term Loan"). Each Lender severally agrees that its portion of the Term Loan shall be equal to the amount set forth opposite such Lender's name in SCHEDULE 2.1(a) under the heading "Term Commitment" (such amount, as the same may be reduced as a result of one or more assignments pursuant to Section 10.8, such Lender's "Term Commitment"). Amounts deemed to be a portion of the Term Loan and which are repaid or prepaid by the Company may not be reborrowed. Conversion of a Base Rate Loan to an IBOR Loan, or an IBOR Loan to a Base Rate Loan, or the continuation of an IBOR Loan to another IBOR Loan, shall not be deemed to be a repayment or prepayment for purposes of the preceding sentence.
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(b) THE REVOLVING COMMITMENTS.
Each Lender severally agrees, on the terms and conditions hereinafter set forth, to make Loans to the Company (each such Loan, a "Revolving Loan") and to participate (pursuant to Section 2.15) in the Letters of Credit issued by the Issuer, from time to time on any Business Day during the period from the Closing Date to the Revolving Termination Date, in an aggregate amount not to exceed at any time outstanding the amount set forth opposite such Lender's name in SCHEDULE 2.1(b) under the heading "Revolving Commitment" (such amount, as the same (a) may be reduced from time to time (in accordance with such Lender's Revolving Commitment Percentage) pursuant to Section 2.5 or (b) may be reduced from time to time, as a result of one or more assignments pursuant to Section 10.8, is hereafter referred to as such Lender's "Revolving Commitment"); PROVIDED, HOWEVER, that, after giving effect to any Borrowing of Revolving Loans or issuance of any Letters of Credit, the sum of the aggregate principal amount of all outstanding Revolving Loans and the LC Amount shall not exceed the Revolving Loan Availability at such time. Within the limits of each Lender's Revolving Commitment, and subject to the other terms and conditions hereof, the Company may borrow under this subsection 2.1(b), prepay pursuant to Section 2.6 and reborrow pursuant to this subsection 2.1(b). No Lender shall be obligated to make available its Revolving Commitment Percentage of any Revolving Loans during the existence of any Event of Default or a Default.
2.2. NOTES.
(a) The portion of the Term Loan made by each Lender shall be evidenced by a Term Note payable to the order of that Lender in an amount equal to its Term Commitment.
(b) The Revolving Loans made by each Lender shall be evidenced by a Revolving Note payable to the order of that Lender in an amount equal to its Revolving Commitment.
(c) The Loans made by each Lender shall be evidenced by one or more loan accounts maintained by the Administrative Agent and such Lender in the ordinary course of business. The loan accounts or records maintained by the Administrative Agent and each Lender shall be conclusive absent manifest error of the amount of the Loans made by the Lenders to the Company and the interest and payments thereon. Any failure so to record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Company hereunder (and under any Note) to pay any amount owing with respect to the Loans. In the event of a conflict between the amount in the loan account maintained by a Lender and the amount in the loan account maintained by the Administrative Agent, the amount in the loan account maintained by the Administrative Agent shall govern.
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2.3. PROCEDURE FOR BORROWING AND ISSUANCE OF LETTERS OF CREDIT.
(a) Each Borrowing of Revolving Loans and request for the issuance of a Letter of Credit shall be made upon the Company's irrevocable written notice (except in the case of requests for Base Rate Loans, which may be by telephonic request promptly followed by written notice) delivered to the Administrative Agent in accordance with Section 10.2 in the form of a Notice of Borrowing (which notice must be received by the Administrative Agent prior to 11:00 a.m. (Chicago time)) (i) two Business Days prior to the requested Borrowing date, in the case of IBOR Loans; (ii) on the requested Borrowing date, in the case of Base Rate Loans; and (iii) three Business Days prior to the requested issuance date, in the case of Letters of Credit, specifying:
(A) the amount of the Borrowing, which
(except for a Borrowing deemed requested under clause (ii)
of the proviso below) shall be in an aggregate minimum principal amount of One Million Dollars ($1,000,000) or any multiple of Five Hundred Thousand Dollars ($500,000) in excess thereof, or the amount of the Letter of Credit (which shall be in a minimum amount of One Hundred Thousand Dollars ($100,000)), as applicable;
(B) the requested Borrowing date or issuance date, as applicable, which shall be a Business Day;
(C) whether the Borrowing is to be comprised of IBOR Loans or Base Rate Loans; and
(D) with respect to IBOR Loans, the duration of the Interest Period applicable to such Loans included in such notice. If the Notice of Borrowing shall fail to specify the duration of the Interest Period for any Borrowing comprised of IBOR Loans, such Interest Period shall be three months.
PROVIDED, HOWEVER, that (i) with respect to the Borrowing to be made on the Closing Date, if any, the Notice of Borrowing shall be delivered to the Administrative Agent not later than 11:00 a.m. (Chicago time) on the Closing Date and such Borrowing will consist of Base Rate Loans only; and (ii) in the event the Lenders reimburse the Issuer pursuant to subsection 2.15(b), the Company shall be deemed to have timely requested a Borrowing of Revolving Loans comprised of Base Rate Loans in the amount of such reimbursement.
(b) Upon receipt of the Notice of Borrowing, the Administrative Agent will promptly notify each Lender thereof and of the amount of such Lender's Commitment Percentage of such Borrowing of Revolving Loans or participation in Letters of Credit.
(c) Each Lender will make the amount of its Commitment Percentage of the Borrowing of Revolving Loans available to the Administrative Agent for the account of the Company at the Administrative Agent's Payment Office by 1:00
p.m. (Chicago time) on the
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Borrowing date requested by the Company in funds immediately available to the Administrative Agent. The proceeds of all such Loans will then be made available to the Company by the Administrative Agent, at the option of the Company, either
(i) at the Administrative Agent's office by crediting the operating account of the Company on the books of BOA, or (ii) by wire transfer in accordance with written instructions provided to the Administrative Agent by the Company, in each case with the aggregate of the amounts made available to the Administrative Agent by the Lenders and in like funds as received by the Administrative Agent.
(d) During the existence of a Default or an Event of Default, the Company may not elect to have a Loan be made as, or converted into or continued as, an IBOR Loan.
(e) After giving effect to any Borrowing, there shall not be more than eight different Interest Periods in effect.
(f) Each Letter of Credit shall be in form and substance acceptable to the Administrative Agent and the Issuer and shall by its terms be stated to expire on a date no later than the earlier of (i) the Revolving Termination Date and (ii) one year from the date of issuance. Each Notice of Borrowing requesting the issuance of a Letter of Credit shall be accompanied by a letter of credit application, in form and substance reasonably acceptable to the Administrative Agent and the Issuer, duly executed by a Responsible Officer. The aggregate undrawn face amount of all Letters of Credit outstanding at any time shall not exceed Five Million Dollars ($5,000,000).
(g) Prior to the Closing Date, BOA issued the letters of credit listed on SCHEDULE 2.3 (the "Existing Letters of Credit"). Each Agent, each Lender and the Company hereby agree that each Existing Letter of Credit shall be deemed to be a Letter of Credit issued by Issuer under this Agreement on the Closing Date for the account of the Company.
2.4. CONVERSION AND CONTINUATION ELECTIONS.
(a) The Company may upon irrevocable written notice to the Administrative Agent in accordance with subsection 2.4(b):
(i) elect to convert on any Business Day, any Base Rate Loans (or any part thereof in an amount not less than One Million Dollars ($1,000,000), or that is in an integral multiple of Five Hundred Thousand Dollars ($500,000) in excess thereof) into IBOR Loans; or
(ii) elect to convert on the last day of the applicable Interest Period any IBOR Loans having Interest Periods maturing on such day (or any part thereof in an amount not less than One Million Dollars ($1,000,000), or that is in an integral multiple of Five Hundred Thousand Dollars ($500,000) in excess thereof) into Base Rate Loans; or
(iii) elect to continue on the last day of the applicable Interest Period any IBOR Loans having Interest Periods maturing on such day (or any
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part thereof in an amount not less than One Million Dollars ($1,000,000), or that is in an integral multiple of Five Hundred Thousand Dollars ($500,000) in excess thereof);
PROVIDED, that if the aggregate amount of IBOR Loans in respect of any Borrowing shall have been reduced, by payment, prepayment, or conversion of part thereof to be less than One Million Dollars ($1,000,000), such IBOR Loans shall automatically convert (on the last day of the applicable Interest Period) into Base Rate Loans, and on and after such date the right of the Company to continue such Loans as, and convert such Loans into, IBOR Loans, as the case may be, shall terminate.
(b) The Company shall deliver a Notice of Conversion/Continuation in accordance with Section 10.2 to be received by the Administrative Agent not later than 11:00 a.m. (Chicago time) at least (i) two Business Days in advance of the Conversion Date or continuation date, if the Loans are to be converted into or continued as IBOR Loans; and (ii) on the Conversion Date, if the Loans are to be converted into Base Rate Loans; specifying:
(A) the proposed Conversion Date or continuation date;
(B) the aggregate amount of Loans to be converted or continued;
(C) the nature of the proposed conversion or continuation; and
(D) in the case of Loans to be continued as or converted into IBOR Loans, the duration of the requested Interest Period.
(c) If upon the expiration of any Interest Period applicable to IBOR Loans, the Company has failed to timely select a new Interest Period to be applicable to such IBOR Loans, as the case may be, or if any Default or Event of Default shall then exist, the Company shall be deemed to have elected to convert such IBOR Loans into Base Rate Loans effective as of the expiration date of such current Interest Period.
(d) Upon receipt of a Notice of Conversion/Continuation, the Administrative Agent will promptly notify each Lender thereof, or, if no timely notice is provided by the Company, the Administrative Agent will promptly notify each Lender of the details of any automatic conversion. All conversions and continuations shall be made pro rata according to the respective outstanding principal amounts of the Loans, with respect to which the notice was given, held by each Lender.
(e) During the existence of a Default or Event of Default, the Company may not elect to have a Loan converted into or continued as an IBOR Loan.
(f) Notwithstanding any other provision contained in this Agreement, after giving effect to any conversion or continuation of any Loans, there shall not be more than eight different Interest Periods in effect.
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2.5. VOLUNTARY TERMINATION OR REDUCTION OF REVOLVING COMMITMENTS.
The Company may, upon not less than five Business Days' prior notice to the Administrative Agent, terminate the Aggregate Revolving Commitment or permanently reduce the Aggregate Revolving Commitment (pro rata based on the Lenders' respective Revolving Commitment Percentages) by an aggregate minimum amount of One Million Five Hundred Thousand Dollars ($1,500,000) or any multiple of Five Hundred Thousand Dollars ($500,000) in excess thereof; PROVIDED, that
(i) until repayment in full of the Term Loan, the Aggregate Revolving Commitment may not be reduced below $25,000,000 or terminated; (ii) no such reduction or termination shall be permitted if, after giving effect thereto and to any prepayments of the Loans made on the effective date thereof, the sum of the then outstanding principal amount of the Revolving Loans and the LC Amount would exceed the Aggregate Revolving Commitment then in effect; and (iii) that once reduced in accordance with this Section 2.5, the Aggregate Revolving Commitment may not be increased. Any reduction of the Aggregate Revolving Commitment shall be applied to each Lender's Revolving Commitment in accordance with such Lender's Revolving Commitment Percentage. All accrued non-use fees to, but not including the effective date of any reduction or termination of the Aggregate Revolving Commitment, shall be paid on the effective date of such reduction or termination.
2.6. OPTIONAL PREPAYMENTS.
Subject to Section 3.4, the Company may, at any time or from time to time, upon at least two Business Days' notice in the case of IBOR Loans, or upon same day notice in the case of Base Rate Loans, to the Administrative Agent, ratably, in accordance with each Lender's Commitment Percentage, prepay Loans in whole or in part, (a) in the case of Revolving Loans which are IBOR Loans, in minimum amounts of Five Hundred Thousand Dollars ($500,000) or any multiple of One Hundred Thousand Dollars ($100,000) in excess thereof, (b) in the case of Revolving Loans which are Base Rate Loans, in any amount and (c) in the case of Term Loans, in minimum amounts of Five Hundred Thousand Dollars ($500,000) or any multiple of One Hundred Thousand Dollars ($100,000) in excess thereof. Each notice of prepayment shall specify the date and amount of such prepayment, whether such prepayment is of the Term Loan or the Revolving Loans and whether such prepayment is of Base Rate Loans or IBOR Loans, or any combination thereof and if such prepayment includes a prepayment of IBOR Loans, the Interest Periods of the Loans to be prepaid. Such notice shall not thereafter be revocable by the Company and the Administrative Agent will promptly notify each Lender thereof and of such Lender's Commitment Percentage of such prepayment. If such notice is given by the Company, the Company shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein, together with accrued interest to each such date on the amount prepaid and any amounts required pursuant to Section 3.4. Any prepayments by the Company pursuant to this Section 2.6 shall be applied to the Revolving Loans or the Term Loan as specified in the Company's notice of prepayment; PROVIDED, that if applied to the Term Loan, such prepayments shall be applied against the remaining installments of the Term Loan in the order of their maturities. If the Company shall have failed to specify in its notice of
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prepayment the Loans to which such prepayment is to be applied, any prepayments by the Company pursuant to this Section 2.6 shall be applied first to Revolving Loans and then to the Term Loan and within each category, first to any Base Rate Loans then outstanding and then to IBOR Loans with the shortest Interest Periods remaining. Amounts applied to the Revolving Loans pursuant to this Section 2.6 shall not permanently reduce or terminate the Revolving Commitments or the Aggregate Revolving Commitment, unless otherwise specified by the Company in its notice of prepayment and only if such reduction or termination is permitted under Section 2.5.
2.7. MANDATORY PREPAYMENTS OF LOANS FOR ASSET DISPOSITIONS.
Except as otherwise provided in Section 6.6, if the Company or any of its Subsidiaries shall at any time or from time to time make or agree to make a Disposition or shall suffer an Event of Loss, then (i) the Company shall promptly notify the Administrative Agent of such proposed Disposition or Event of Loss (including the amount of the estimated gross proceeds thereof and Net Proceeds thereof to be received by the Company or its Subsidiary in respect thereof) in excess of $250,000 or at any time that an Event of Default is in existence, and (ii) subject to Sections 6.6 and 7.2, deliver the Net Proceeds of each Disposition or Event of Loss to the Administrative Agent to be applied to the Obligations in the manner provided in this Section 2.7. Except as otherwise provided in Section 6.6, to the extent that the Property subject to the applicable Disposition or Event of Loss consists of Accounts Receivable or Inventory, the applicable prepayment shall be applied to reduce the outstanding principal balance of the Revolving Loans, but shall not permanently reduce the Aggregate Revolving Commitment. Except as otherwise provided in Section 6.6, to the extent that the Property subject to the applicable Disposition or Event of Loss consists of machinery or equipment, real Property or other Property other than Accounts Receivable or Inventory, so long as no Default or Event of Default has occurred and is continuing, proceeds of Dispositions thereof shall, at the request of the Company, be remitted to the Company to replace the subject Property with an economical unit of substantially similar character and value as the subject Property within 180 days after its Disposition; provided, that if the Company does not make such request at the time of such Disposition or if such proceeds are not so used, the applicable amount shall be applied first against the remaining installments of the Term Loan on a pro rata basis, and then, to reduce the outstanding principal balance of the Revolving Loans (but shall not permanently reduce the Aggregate Revolving Commitment).
Notwithstanding the foregoing, during the existence of a Event of Default, all such amounts shall be applied to the Obligations in such order and manner as all of the Lenders shall elect.
2.8. REPAYMENT.
(a) THE TERM LOAN.
Unless the Term Loan has been accelerated pursuant to subsection 8.2(a), the Company shall repay the Term Loan on each date set forth below in the amount set forth below opposite such date:
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      Date                        Amount
      ----                        ------
December 31, 2002              $ 1,250,000
March 31, 2003                 $ 1,250,000
June 30, 2003                  $ 1,250,000
September 30, 2003             $ 1,750,000
December 31, 2003              $ 1,750,000
March 31, 2004                 $ 1,750,000
June 30, 2004                  $ 1,750,000
September 30, 2004             $ 2,000,000
December 31, 2004              $ 2,000,000
March 31, 2005                 $ 2,625,000
June 30, 2005                  $ 2,625,000	

(b) THE REVOLVING LOANS.
The Revolving Commitments hereunder shall terminate on the earlier to occur of (i) the date on which the Revolving Commitments are terminated pursuant to subsection 8.2(a), (ii) such date as is deferred by the Company pursuant to
Section 2.5, and (iii) June 30, 2005. The date of termination of the Revolving Commitments as provided in the immediately preceding sentence is referred to herein as the "Revolving Termination Date." On the Revolving Termination Date, the Company shall repay to the Agents and the Lenders in full the aggregate principal amount of the Revolving Loans and reimbursement obligations with respect to Letters of Credit then outstanding. In the event any Letters of Credit are outstanding on the Revolving Termination Date, the Company shall provide to the Administrative Agent cash Collateral in the amount of such Letters of Credit to secure the Company's reimbursement obligations with respect to such Letters of Credit, together with reasonably anticipated related fees, costs and expenses, which cash Collateral shall be maintained in a Collateral Account.
If at any time hereafter the sum of the aggregate principal amount of all outstanding Revolving Loans and the LC Amount exceeds the Revolving Loan Availability (an "Overadvance"), the Company shall immediately pay such excess to Administrative Agent for the account of Lenders; provided, that notwithstanding the foregoing, if an Overadvance is caused by the occurrence of an Event of Loss, the Company shall not be required to pay the amount of such excess to Administrative Agent as provided herein until the earlier of (A) forty-five (45) days after the occurrence of such Event of Loss and (B) the receipt by the Company of insurance, condemnation or other proceeds of such Event of Loss.
2.9. INTEREST.
(a) Subject to subsection 2.9(d), each Loan shall bear interest on the outstanding principal amount thereof from the date when made to the date such Loan is repaid (i) for each day during which such Loan is an IBOR Loan, at IBOR for the applicable Interest Period for such Loan for such day, and (ii) for each day during which such Loan is a Base Rate
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Loan, at the Alternate Base Rate for such day; PLUS, in each case, the Applicable Margin then in effect.
(b) Interest on each Loan shall be paid in arrears on each Interest Payment Date with respect to such Loan. Interest on each Loan shall also be paid on the date of payment (including prepayment) in full thereof and interest on IBOR Loans only shall also be paid on the date of any prepayment of such IBOR Loans pursuant to Sections 2.6 and 2.7 for the portion of the IBOR Loans so prepaid. During the existence of any Event of Default, interest shall be paid on demand of the Administrative Agent at the request or with the consent of the Majority Lenders.
(c) While any Event of Default exists or after acceleration, the Company shall pay interest on the principal amount of (i) all outstanding Loans, at a rate per annum which is determined by adding 200 basis points to the interest rate otherwise applicable to such Loans and (ii) all reimbursement obligations of the Company under subsection 2.15(b) due and unpaid, at the rate per annum which is determined by adding 200 basis points to the interest rate otherwise applicable to Revolving Loans comprised of Base Rate Loans.
(d) Anything herein to the contrary notwithstanding, the obligations of the Company hereunder shall be subject to the limitation that payments of interest shall not be required, for any period for which interest is computed hereunder, to the extent (but only to the extent) that contracting for or receiving such payment by the respective Lender would be contrary to the provisions of any law applicable to such Lender limiting the highest rate of interest which may be lawfully contracted for, charged or received by such Lender, and in such event the Company shall pay such Lender interest at the highest rate permitted by applicable law.
2.10 FEES.
(a) FEE LETTERS.
The Company shall pay to the Administrative Agent for the accounts of the Agents as set forth therein certain fees in the amounts and at the times set forth in a certain letter agreement between the Company and the Agents of even date herewith (the "Fee Letter").
(b) NON-USE FEE.
The Company shall pay to the Administrative Agent for the account of each Lender, a non-use fee on the average daily unused portion of such Lender's Revolving Commitment, computed on a quarterly basis, in arrears, on the last Business Day of each calendar quarter, based upon the daily utilization for that quarter as calculated by the Administrative Agent, equal to the Applicable Margin for Non-Use Fees. Such non-use fee shall accrue from Closing Date to the Revolving Termination Date and shall be due and payable quarterly in arrears on the last Business Day of each March, June, September
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and December commencing on June 30, 2002 through the Revolving Termination Date, with the final payment to be made on the Revolving Termination Date.
(c) LETTER OF CREDIT FEES.
The Company shall pay to the Administrative Agent for the account of the Lenders a Letter of Credit fee on the average daily outstanding Letters of Credit issued for the account of the Company, computed on a quarterly basis in arrears on the last Business Day of each calendar quarter based on the daily utilization for that quarter as calculated by the Administrative Agent, at a per annum rate equal to the Applicable Margin at such time for IBOR Loans. Such Letter of Credit fees shall accrue from the date a Letter of Credit is issued to the date such Letter of Credit is terminated and shall be due and payable quarterly in arrears on the last Business Day of each March, June, September and December commencing on June 30, 2002. The Company further agrees to pay the Issuer for the sole account of the Issuer (i) with respect to standby Letters of Credit (a) on the date of issuance of each Letter of Credit an issuance fee in an amount equal to Two Hundred Fifty Dollars ($250) and (b) all costs and expenses incurred by the Issuer in connection with such Letter of Credit, and
(ii) with respect to documentary Letters of Credit, all customary charges, fees, costs and expenses of the Issuer at such times as the Issuer customarily charges such charges, fees, costs and expenses.
2.11 COMPUTATION OF FEES AND INTEREST.
(a) All computations of interest in respect of Base Rate Loans and all computations of fees under this Agreement shall be made on the basis of a 365 or 366-day year, as appropriate, and actual days elapsed; all computations of interest in respect of IBOR Loans under this Agreement shall be made on the basis of a 360-day year and actual days elapsed, which results in more interest being paid than if computed on the basis of a 365 or 366-day year. Interest and fees shall accrue during each period during which interest or such fees are computed from the first day thereof to the last day thereof.
(b) The Administrative Agent will, with reasonable promptness, notify the Company and the Lenders of each determination of IBOR; PROVIDED, that any failure to do so shall not relieve the Company of any liability hereunder or provide the basis for any claim against the Administrative Agent. Any change in the interest rate on a Loan resulting from a change in the Applicable Margin or Eurodollar Reserve Percentage shall become effective as of the opening of business on the day on which such change in the Applicable Margin or Eurodollar Reserve Percentage becomes effective. The Administrative Agent will with reasonable promptness notify the Company and the Lenders of the effective date and the amount of each such change; PROVIDED, that any failure to do so shall not relieve the Company of any liability hereunder or provide the basis for any claim against the Administrative Agent.
(c) Each determination of an interest rate by the Administrative Agent shall be conclusive and binding on the Company and the Lenders in the absence of manifest error. The Administrative Agent will, at the request of the Company or any Lender, deliver to the
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Company or the Lender, as the case may be, a statement showing the quotations used by the Administrative Agent in determining any interest rate.
(d) If the Reference Bank's Revolving Commitment shall terminate (otherwise than on termination of all the Revolving Commitments), or for any reason whatsoever the Reference Bank shall cease to be a Lender hereunder, the Reference Bank shall thereupon cease to be the Reference Bank, and the IBOR shall be determined on the basis of the rates as notified by the remaining Lenders.
(e) The Reference Bank shall use its best efforts to furnish quotations of rates to the Administrative Agent as contemplated hereby. If the Reference Bank shall be unable or otherwise fails to supply such rates to the Administrative Agent upon its request, the rate of interest shall be determined on the basis of the quotations of the remaining Lenders.
2.12 PAYMENTS BY THE COMPANY.
(a) All payments (including prepayments) to be made by the Company on account of principal, interest, fees and other amounts required hereunder shall be made without set-off, recoupment or counterclaim; shall, except as otherwise expressly provided herein, be made to the Administrative Agent for the account of the Lenders (pro rata based on each Lender's Commitment Percentage) at the Administrative Agent's Payment Office, and shall be made in dollars and in immediately available funds, no later than 11:00 a.m. (Chicago time) on the date specified herein. The Administrative Agent will promptly distribute to each Lender its Commitment Percentage (or other applicable share as expressly provided in the Loan Documents) of such principal, interest, fees or other amounts, in like funds as received. Any payment which is received by the Administrative Agent later than 11:00 a.m. (Chicago time) shall be deemed to have been received on the immediately succeeding Business Day and any applicable interest or fee shall continue to accrue.
(b) Whenever any payment hereunder shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of interest or fees, as the case may be; subject to the provisions set forth in the definition of "Interest Period" herein.
(c) Unless the Administrative Agent shall have received notice from the Company prior to the date on which any payment is due hereunder that the Company will not make such payment in full as and when required hereunder, the Administrative Agent may assume that the Company has made such payment in full to the Administrative Agent on such date in immediately available funds and the Administrative Agent may (but shall not be so required), in reliance upon such assumption, cause to be distributed to each Lender on such due date an amount equal to the amount then due such Lender. If and to the extent the Company shall not have made such payment in full to the Administrative Agent, each Lender shall repay to the Administrative Agent on demand its Commitment Percentage of such amount distributed to the Lenders in excess of the amount actually received by the Administrative Agent, together with interest thereon for each day from the date such amount is distributed to such Lender until
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the date such Lender repays such amount to the Administrative Agent, at the Federal Funds Rate as in effect for each such day.
2.13 PAYMENTS BY THE LENDERS TO THE ADMINISTRATIVE AGENT.
(a) Unless the Administrative Agent shall have received notice from a Lender on the Closing Date or, with respect to each Borrowing after the Closing Date, at least one Business Day prior to the date of any proposed Borrowing, that such Lender will not make available to the Administrative Agent as and when required hereunder for the account of the Company the amount of that Lender's Commitment Percentage of the Borrowing, the Administrative Agent may assume that each Lender has made such amount available to the Administrative Agent in immediately available funds on the Borrowing date no later than 11:00
a.m. (Chicago time) and the Administrative Agent may (but shall not be so required), in reliance upon such assumption, make available to the Company on such date a corresponding amount. If and to the extent any Lender shall not have made its full amount available to the Administrative Agent in immediately available funds and the Administrative Agent in such circumstances has made available to the Company such amount, that such Lender shall on or before 11:00
a.m. (Chicago time) the next Business Day following the date of such Borrowing make such amount available to the Administrative Agent, together with interest at the Federal Funds Rate for and determined as of each day during such period. A notice of the Administrative Agent submitted to any Lender with respect to amounts owing under this subsection 2.13(a) shall be conclusive, absent manifest error. If such amount is so made available, such payment to the Administrative Agent shall constitute such Lender's Loan on the date of Borrowing for all purposes of this Agreement. If such amount is not made available to the Administrative Agent on or before 11:00 a.m. (Chicago time) the next Business Day following the date of such Borrowing, the Administrative Agent shall notify the Company of such failure to fund and, upon demand by the Administrative Agent, the Company shall pay such amount to the Administrative Agent for the Administrative Agent's account, together with interest thereon for each day elapsed since the date of such Borrowing, at a rate per annum equal to the interest rate applicable at the time to the Loans comprising such Borrowing.
(b) The failure of any Lender to make any Loan on any Borrowing date shall not relieve any other Lender of any obligation hereunder to make a Loan on such Borrowing date, but no Lender shall be responsible for the failure of any other Lender to make the Loan to be made by such other Lender on the date of any Borrowing.
2.14 SHARING OF PAYMENTS, ETC.
If, other than as expressly provided elsewhere herein, any Lender shall receive on account of the Loans made by it any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) in excess of its Commitment Percentage of payments on account of the Loans received by all the Lenders, such Lender shall forthwith (a) notify the Administrative Agent of such fact, and (b) purchase from the other Lenders such participations in the Loans made by them as shall be necessary to cause such purchasing Lender to share the excess payment ratably with each of them; PROVIDED, HOWEVER, that if all or any portion of such excess payment is thereafter
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recovered from the purchasing Lender, such purchase shall to that extent be rescinded and each other Lender shall repay to the purchasing Lender the purchase price paid therefor, together with an amount equal to such paying Lender's Commitment Percentage (according to the proportion of (i) the amount of such paying Lender's required repayment, to (ii) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered. The Company agrees that any Lender so purchasing a participation from another Lender pursuant to this Section 2.14 may, to the fullest extent permitted by law, exercise all of its rights of payment (including the right of set-off, but subject to Section 10.9) with respect to such participation as fully as if such Lender were the direct creditor of the Company in the amount of such participation. The Administrative Agent will keep records (which shall be conclusive and binding in the absence of manifest error) of participations purchased pursuant to this Section 2.14 and will in each case notify the Lenders following any such purchases or repayments.
2.15 CERTAIN LETTER OF CREDIT PROVISIONS.
(a) Immediately upon the issuance of each Letter of Credit, each Lender shall be deemed to, and hereby severally agrees to, have irrevocably purchased from the Issuer a participation in such Letter of Credit and drawings thereunder in an amount equal to such Lender's Revolving Commitment Percentage of the maximum amount which is or at any time may become available to be drawn thereunder. The Issuer shall not have any obligation to issue any Letter of Credit if the Lenders have no obligation to participate in such Letter of Credit.
(b) In the event the Issuer has determined to honor a request for drawing under a Letter of Credit issued by it, the Issuer shall immediately notify the Company and the Administrative Agent, and the Company shall reimburse the Issuer on or before the Business Day immediately following the date on which such drawing is honored (such immediately following date, the "Disbursement Date") in same day funds equal to the amount of such drawing; PROVIDED, that, anything contained in this Agreement to the contrary notwithstanding, (i) unless the Company shall have notified the Administrative Agent and the Issuer prior to 11:00 a.m. (Chicago time) on the Disbursement Date that the Company intends to reimburse the Issuer for the amount of such drawing with funds other than the proceeds of Revolving Loans and the Company does so reimburse the Issuer prior to 11:00 a.m. (Chicago time) on the Disbursement Date, the Company shall be deemed to have given a timely Notice of Borrowing to the Administrative Agent requesting the Lenders to make Revolving Loans that are Base Rate Loans on the Disbursement Date in an amount equal to the amount of such drawing and (ii) subject to satisfaction or waiver of the conditions specified in Section 4.2, the Lenders shall, on the Disbursement Date, make Revolving Loans that are Base Rate Loans in the amount of such drawing, the proceeds of which shall be applied directly by the Administrative Agent to reimburse the Issuer for the amount of such drawing; and PROVIDED, FURTHER that if for any reason proceeds of Revolving Loans are not received by the Issuer on the Disbursement Date in an amount equal to the amount of such drawing, the Company shall reimburse the Issuer, on demand, in an amount in same day funds equal to the excess of the amount of such drawing over the aggregate amount of such Revolving Loans, if any, which are so received, together with interest thereon at a rate per annum equal to the rate per annum then in effect for Base Rate
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Revolving Loans pursuant to Section 2.9 from the date of demand to the date of reimbursement. Nothing in this subsection 2.15(b) shall be deemed to relieve any Lender from its obligation to make Revolving Loans on the terms and conditions set forth in this Agreement, and the Company shall retain any and all rights it may have against any Lender resulting from the failure of such Lender to make such Revolving Loans under this subsection 2.15(b).
(c) In the event that the Company shall fail for any reason to reimburse the Issuer as provided in subsection 2.15(b) on the Disbursement Date in an amount equal to the amount of any drawing honored by the Issuer under a Letter of Credit issued by it, the Issuer shall promptly notify the Administrative Agent and the Administrative Agent shall promptly notify each Lender of the unreimbursed amount of such drawing and of such Lender's respective participation therein based on such Lender's Revolving Commitment Percentage. In such event, each Lender shall make available to the Issuer an amount equal to its respective participation in same day funds, at the office of the Issuer specified in such notice, not later than 11:00 a.m. (Chicago time) on the first Business Day after the date notified by the Issuer. In the event that any Lender fails to make available to the Issuer on such Business Day the amount of such Lender's participation in such Letter of Credit as provided in this subsection 2.15(c), the Issuer shall be entitled to recover such amount on demand from such Lender together with interest thereon at the rate per annum equal to the Federal Funds Rate for and determined as of each day during such period. Nothing in this subsection 2.15(c) shall be deemed to relieve the Company from its obligation to reimburse the Issuer as provided in subsection
2.15(b). In the event the Issuer shall have been reimbursed by Lenders pursuant to this subsection 2.15(c) for all or any portion of any drawing honored by the Issuer under a Letter of Credit issued by it, the Issuer shall distribute to each Lender which has paid all amounts payable by it under this subsection 2.15(c) with respect to such drawing such Lender's Revolving Commitment Percentage of all payments subsequently received by the Issuer from the Company in reimbursement of such drawing when such payments are received. Promptly upon receipt by the Issuer of any payment of interest in respect of the Company's reimbursement obligation pursuant to subsection 2.15(b) with respect to a drawing, in the event the Issuer shall have been reimbursed by any Lender pursuant to this subsection 2.15(c) for all or any portion of such drawing, the Issuer shall distribute to such Lender which has paid all amounts payable by it under this subsection 2.15(c) with respect to such drawing such Lender's Revolving Commitment Percentage of any interest received by the Issuer in respect of that portion of such drawing so reimbursed by such Lender.
(d) The obligation of the Company to reimburse the Issuer for drawings made under the Letters of Credit issued by it and to repay any Revolving Loans made by the Lenders pursuant to subsection 2.15(b) and the obligations of the Lenders under subsection 2.15(c) shall be unconditional and irrevocable and shall be paid strictly in accordance with the terms of this Agreement under all circumstances including, without limitation, the following circumstances:
(i) any lack of validity or enforceability of any Letter of Credit;
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(ii) the existence of any claim, set-off, defense or other right which the Company or any Lender may have at any time against a beneficiary or any transferee of any Letter of Credit (or any Persons for whom any such transferee may be acting), the Issuer or other Lender or any other Person or, in the case of a Lender, against the Company, whether in connection with this Agreement, the transactions contemplated herein or any unrelated transaction (including any underlying transaction between the Company or one of its Subsidiaries and the beneficiary for which any Letter of Credit was procured);
(iii) any draft, demand, certificate or other document presented under any Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect;
(iv) payment by the Issuer under any Letter of Credit against presentation of a demand, draft or certificate or other document which does not comply with the terms of such Letter of Credit (absent the Issuer's gross negligence or willful misconduct);
(v) any adverse change in the business, operations, properties, assets, condition (financial or otherwise) or prospects of the Company or any of its Subsidiaries;
(vi) any breach of this Agreement or any other Loan Document by any party thereto;
(vii) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing; or
(viii) the fact that an Event of Default or a Default shall have occurred and be continuing;
PROVIDED, HOWEVER, that after paying in full its obligation hereunder, nothing herein shall adversely affect the right of the Company or such Lender, as the case may be, to commence any proceeding against the Issuer for any wrongful disbursement made by the Issuer under a Letter of Credit as a result of acts or omissions constituting gross negligence or willful misconduct on the part of the Issuer.
(e) In addition to amounts payable as provided in subsection 2.15(b), the Company hereby agrees to protect, indemnify, pay and save harmless the Issuer and its officers, employees or agents from and against any and all claims, demands, liabilities, damages, losses, and reasonable costs, charges and expenses (including reasonable fees, expenses and disbursements of counsel) which the Issuer may incur or be subject to as a consequence, direct or indirect, of (i) the issuance of any Letter of Credit by the Issuer, other than as a result of the gross negligence or willful misconduct of the Issuer or its officers, employees or agents as determined by a final judgment of a court of competent jurisdiction or
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(ii) the failure of the Issuer to honor a drawing under any such Letter of Credit as a result of any act or omission, whether rightful or wrongful, of any present or future Governmental Authority.
(f) As between the Company and the Issuer, the Company assumes all risks of the acts and omissions of, or misuse of the Letters of Credit issued by the Issuer by, the respective beneficiaries of such Letters of Credit. In furtherance and not in limitation of the foregoing, the Issuer shall not be responsible for: (i) the form, validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any party in connection with the application for and issuance of any such Letter of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any such Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason; (iii) failure of the beneficiary of any such Letter of Credit to comply fully with any conditions required in order to draw upon such Letter of Credit; (iv) errors, omissions, interruptions, or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher;
(v) errors in interpretation of technical terms; (vi) any loss or delay in the transmission or otherwise of any document required in order to make a drawing under any such Letter of Credit or of the proceeds thereof; (vii) the misapplication by the beneficiary of any such Letter of Credit of the proceeds of any drawing under such Letter of Credit; or (viii) any consequences arising from causes beyond the control of the Issuer; and none of the above shall affect or impair, or prevent the vesting of, any of the Issuer's rights or powers hereunder.
In furtherance and extension and not in limitation of the specific provisions set forth in the first paragraph of this subsection 2.15(f), any action taken or omitted by the Issuer under or in connection with the Letters of Credit issued by it or any documents and certificates delivered thereunder, if taken or omitted in good faith, shall not put the Issuer under any resulting liability to the Company.
Notwithstanding anything to the contrary contained in this subsection 2.15(f), the Company shall retain any and all rights it may have against the Issuer and its officers, employees or agents for any liability arising out of the gross negligence or willful misconduct of the Issuer or its officers, employees or agents.
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
3.1. TAXES.
(a) Subject to subsection 3.1(g), any and all payments by the Company to each Lender or any Agent under this Agreement shall be made free and clear of, and without deduction or withholding for, any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding, in the case of each Lender and each Agent, such taxes (including income taxes or franchise taxes) as are imposed on or measured by each Lender's and each Agent's taxable income by the jurisdiction under the laws of which such Lender or such Agent, as the case may be, is organized or maintains a
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Lending Office or any political subdivision thereof or any jurisdiction of which it is a political subdivision (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities being hereinafter referred to as "Taxes").
(b) In addition, the Company shall pay any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies which arise from any payment made hereunder or from the execution, delivery or registration of, or otherwise with respect to, this Agreement or any other Loan Documents (hereinafter referred to as "Other Taxes").
(c) Subject to subsection 3.1(g), the Company shall indemnify and hold harmless each Lender and each Agent for the full amount of Taxes or Other Taxes (including any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this Section 3.1) paid by such Lender or such Agent and any liability (including penalties, interest, additions to tax and expenses) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted. Payment under this indemnification shall be made within 30 days from the date such Lender or such Agent makes written demand therefor.
(d) If the Company shall be required by law to deduct or withhold any Taxes or Other Taxes from or in respect of any sum payable hereunder to any Lender or any Agent, then, subject to subsection 3.1(g):
(i) the sum payable shall be increased as necessary so that after making all required deductions of Taxes or Other Taxes (including deductions of Taxes or other Taxes applicable to additional sums payable under this Section 3.1) such Lender or such Agent, as the case may be, receives an amount equal to the sum it would have received had no such deductions been made;
(ii) the Company shall make such deductions, and
(iii) the Company shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law.
(e) Within 30 days after the date of any payment by the Company of Taxes or Other Taxes, the Company shall furnish to the Administrative Agent the original or a certified copy of a receipt evidencing payment thereof, or other evidence of payment satisfactory to the Administrative Agent.
(f) Each Lender which is a foreign person (i.e., a person other than a United States person for United States Federal income tax purposes) agrees that:
(i) it shall, no later than the Closing Date (or, in the case of a Lender which becomes a party hereto pursuant to Section 10.8 after the Closing Date, the date upon which the Lender becomes a party hereto) deliver to the Company through the Administrative Agent two accurate and complete
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signed originals of Internal Revenue Service Form W-8BEN or any successor thereto ("Form W-8BEN"), or two accurate and complete signed originals of Internal Revenue Service Form W-8ECI or any successor thereto ("Form W-8ECI"), as appropriate, in each case indicating that the Lender is on the date of delivery thereof entitled to receive payments of principal, interest and fees under this Agreement free from withholding of United States Federal income tax;
(ii) if at any time the Lender makes any changes necessitating a new Form W-8BEN or Form W-8ECI, it shall with reasonable promptness deliver to the Company through the Administrative Agent in replacement for, or in addition to, the forms previously delivered by it hereunder, two accurate and complete signed originals of Form W-8BEN; or two accurate and complete signed originals of Form W-8ECI, as appropriate, in each case indicating that the Lender is on the date of delivery thereof entitled to receive payments of principal, interest and fees under this Agreement free from withholding of United States Federal income tax;
(iii) it shall, before or promptly after the occurrence of any event (including the passing of time but excluding any event mentioned in (ii) above) requiring a change in or renewal of the most recent Form W-8BEN or Form W-8ECI previously delivered by such Lender and deliver to the Company through the Administrative Agent two accurate and complete original signed copies of Form W-8BEN or Form W-8ECI in replacement for the forms previously delivered by the Lender; and
(iv) it shall, promptly upon the Company's or the Administrative Agent's reasonable request to that effect, deliver to the Company or the Administrative Agent (as the case may be) such other forms or similar documentation as may be required from time to time by any applicable law, treaty, rule or regulation in order to establish such Lender's tax status for withholding purposes.
(g) The Company will not be required to pay any additional amounts in respect of United States Federal income tax pursuant to subsection 3.1(d) to any Lender for the account of any Lending Office of such Lender:
(i) if the obligation to pay such additional amounts would not have arisen but for a failure by such Lender to comply with its obligations under subsection 3.1(f);
(ii) if such Lender shall have delivered to the Company a Form W-8BEN in respect of such Lending Office pursuant to subsection 3.1(f), and such Lender shall not at any time be entitled to exemption from deduction or withholding of United States Federal income tax in respect of payments by the Company hereunder for the account of such Lending Office
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for any reason other than a change in United States law or regulations or in the official interpretation of such law or regulations by any Governmental Authority charged with the interpretation or administration thereof (whether or not having the force of law) after the date of delivery of such Form W-8BEN; or
(iii) if the Lender shall have delivered to the Company a Form W-8ECI in respect of such Lending Office pursuant to subsection 3.1(f), and such Lender shall not at any time be entitled to exemption from deduction or withholding of United States Federal income tax in respect of payments by the Company hereunder for the account of such Lending Office for any reason other than a change in United States law or regulations or any applicable tax treaty or regulations or in the official interpretation of any such law, treaty or regulations by any Governmental Authority charged with the interpretation or administration thereof (whether or not having the force of law) after the date of delivery of such Form W-8ECI.
(h) If, at any time, the Company requests any Lender to deliver any forms or other documentation pursuant to subsection 3.1(f)(iv), then the Company shall, on demand of such Lender through the Administrative Agent, reimburse such Lender for any costs and expenses (including Attorney Costs) reasonably incurred by such Lender in the preparation or delivery of such forms or other documentation.
(i) If the Company is required to pay additional amounts to any Lender or any Agent pursuant to subsection 3.1(d), then such Lender shall use its reasonable best efforts (consistent with legal and regulatory restrictions) to change the jurisdiction of its Lending Office so as to eliminate any such additional payment by the Company which may thereafter accrue if such change in the judgment of such Lender is not otherwise disadvantageous to such Lender.
3.2. ILLEGALITY.
(a) If any Lender shall determine that the introduction of any Requirement of Law, or any change in any Requirement of Law or in the interpretation or administration thereof, has made it unlawful, or that any central bank or other Governmental Authority has asserted that it is unlawful, for any Lender or its Lending Office to make IBOR Loans, then, on notice thereof by the Lender to the Company through the Administrative Agent, the obligation of that Lender to make IBOR Loans shall be suspended until the Lender shall have notified the Administrative Agent and the Company that the circumstances giving rise to such determination no longer exists.
(b) If a Lender shall determine that it is unlawful to maintain any IBOR Loan, the Company shall prepay in full all IBOR Loans of that Lender then outstanding, together with interest accrued thereon, either on the last day of the Interest Period thereof if the Lender may lawfully continue to maintain such IBOR Loans to such day, or immediately, if the
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Lender may not lawfully continue to maintain such IBOR Loans, together with any amounts required to be paid in connection therewith pursuant to Section 3.4.
(c) Before giving any notice to the Administrative Agent pursuant to this Section 3.2, the affected Lender shall designate a different Lending Office with respect to its IBOR Loans if such designation will avoid the need for giving such notice or making such demand and will not, in the judgment of the Lender, be illegal or otherwise disadvantageous to the Lender.
3.3. INCREASED COSTS AND REDUCTION OF RETURN.
(a) If any Lender shall determine that, due to either (i) the introduction after the Closing Date of, or any change in or in the interpretation of, any law or regulation or (ii) the compliance with any guideline or request issued after the Closing Date by any central bank or other Governmental Authority (whether or not having the force of law), there shall be any increase in the cost to such Lender of agreeing to make or making, funding or maintaining any IBOR Loans (other than any change by way of imposition of or increase in reserve requirements included in the calculation of the IBOR Rate), then the Company shall be liable for, and shall from time to time, upon demand therefor by such Lender (with a copy of such demand to the Administrative Agent), pay to the Administrative Agent for the account of such Lender, additional amounts as are sufficient to compensate such Lender for such increased costs.
(b) If any Lender shall have determined that (i) the introduction after the Closing Date of any Capital Adequacy Regulation, (ii) any change after the Closing Date in any Capital Adequacy Regulation, (iii) any change after the Closing Date in the interpretation or administration of any Capital Adequacy Regulation by any central bank or other Governmental Authority charged with the interpretation or administration thereof, or (iv) compliance by the Lender (or its Lending Office) or any corporation controlling the Lender, with any Capital Adequacy Regulation issued after the Closing Date; affects or would affect the amount of capital required or expected to be maintained by the Lender or any corporation controlling the Lender and (taking into consideration such Lender's or such corporation's policies with respect to capital adequacy and such Lender's desired return on capital) determines that the amount of such required capital is increased as a consequence of its Revolving Commitment, loans, credits or obligations under this Agreement, then, upon demand of such Lender (with a copy to the Administrative Agent), the Company shall upon demand pay to the Lender, from time to time as specified by the Lender, additional amounts sufficient to compensate the Lender for such increase.
3.4. FUNDING LOSSES.
The Company agrees to reimburse each Lender and to hold each Lender harmless from any loss or expense which the Lender may sustain or incur as a consequence of:
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(a) the failure of the Company to borrow an IBOR Loan, or to continue or convert a Loan as or into an IBOR Loan, in any case after the Company has given (or is deemed to have given) a Notice of Borrowing or a Notice of Conversion/ Continuation;
(b) the failure of the Company to make any prepayment of an IBOR Loan after the Company has given a notice in accordance with Section 2.6;
(c) the prepayment (including pursuant to Section 2.7) of an IBOR Loan on a day which is not the last day of the Interest Period with respect thereto; or
(d) the conversion pursuant to Section 2.4 of any IBOR Loan to a Base Rate Loan on a day that is not the last day of the respective Interest Period;
including any such loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain its IBOR Loans hereunder or from fees payable to terminate the deposits from which such funds were obtained. Solely for purposes of calculating amounts payable by the Company to the Lenders under this Section 3.4 and under subsection 3.3(a), each IBOR Loan made by a Lender (and each related reserve, special deposit or similar requirement) shall be conclusively deemed to have been funded at the IBOR used in determining the IBOR for such IBOR Loan by a matching deposit or other borrowing in the interbank eurodollar market for a comparable amount and for a comparable period, whether or not such IBOR Loan is in fact so funded.
3.5. INABILITY TO DETERMINE RATES.
If the Administrative Agent shall have determined that for any reason adequate and reasonable means do not exist for ascertaining the IBOR for any requested Interest Period with respect to a proposed IBOR Loan or that the IBOR applicable pursuant to Section 2.9 for any requested Interest Period with respect to a proposed IBOR Loan does not adequately and fairly reflect the cost to the Lenders of funding such Loan, the Administrative Agent will forthwith give notice of such determination to the Company and each Lender. Thereafter, the obligation of the Lenders to make or maintain future IBOR Loans, as the case may be, hereunder shall be suspended until the Administrative Agent revokes such notice in writing. Upon receipt of such notice, the Company may revoke any Notice of Borrowing or Notice of Conversion/Continuation then submitted by it, without giving rise to a reimbursement obligation under Section 3.4. If the Company does not revoke such notice, the Lenders shall make, convert or continue the Loans, as proposed by the Company, in the amount specified in the applicable notice submitted by the Company, but such Loans shall be made, converted or continued as Base Rate Loans instead of IBOR Loans, as the case may be.
3.6. CERTIFICATES OF THE LENDERS.
Any Lender claiming reimbursement or compensation pursuant to this Article III shall deliver to the Company (with a copy to the Administrative Agent) a certificate setting forth in reasonable detail the amount payable to the Lender hereunder
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and such certificate shall be conclusive and binding on the Company in the absence of manifest error.
3.7. REPLACEMENT OF CERTAIN LENDERS.
If a Lender shall have (a) made a claim against the Company under
Section 3.1 or 3.3 or (b) suspended its obligations to make IBOR Loans under subsection 3.2(a), the Company may make written demand on the affected Lender (with a copy to the Administrative Agent) to assign, and such affected Lender shall assign, pursuant to one or more duly executed Assignment and Acceptances within five Business Days after the date of such demand, to one or more Assignees to whom the Administrative Agent has consented (which consent shall not be unreasonably withheld), all of such affected Lender's rights and obligations under this Agreement (including without limitation such affected Lender's Revolving Commitment, Term Commitment and all Loans owing to it), in accordance with the terms of Section 10.8 hereof; PROVIDED, that the Administrative Agent shall have no duty to locate an acceptable Assignee for the purposes of accepting such assignment. The Administrative Agent is hereby irrevocably authorized to execute one or more Assignment and Acceptances as attorney-in-fact for any affected Lender which fails to or refuses to execute and deliver the same in a timely manner. Each affected Lender shall be entitled to receive, in cash and concurrently with the execution and delivery of the applicable Assignment and Acceptances, all amounts owed to such affected Lender hereunder and under any of the other Loan Documents, including accrued interest and fees through the date of such assignment.
3.8. SURVIVAL.
The agreements and obligations of the Company in this Article III shall survive the payment of all other Obligations.
ARTICLE IV
CONDITIONS PRECEDENT
4.1. CONDITIONS OF INITIAL LOANS.
The obligation of each Lender party to this Agreement on the Closing Date to make its initial Loan hereunder is subject to the condition that the Administrative Agent shall have received on or before the Closing Date all of the following, in form and substance satisfactory to each Agent and each Lender and in sufficient copies for each Lender:
(a) CREDIT AGREEMENT AND NOTES.
This Agreement executed by the Company, each Agent and each of the Lenders, and the Notes executed by the Company;
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(b) RESOLUTIONS; INCUMBENCY.
(i) Copies of the resolutions of the board of directors of the Company approving and authorizing the execution, delivery and performance by the Company of this Agreement and the other Loan Documents to be delivered hereunder, and authorizing the borrowing of the Loans, certified as of the Closing Date by the Secretary or an Assistant Secretary of the Company;
(ii) Copies of the resolutions of the board of directors of each Loan Party other than the Company approving and authorizing the execution, delivery and performance by it of the Loan Documents to be delivered by it hereunder, certified as of the Closing Date by the Secretary or an Assistant Secretary of such Loan Party; and
(iii) A certificate of the Secretary or Assistant Secretary of the Company, and each other Loan Party, certifying the names and true signatures of the officers of the Company and such Loan Party authorized to execute, deliver and perform, as applicable, the Loan Documents to be delivered by it hereunder;
(c) ARTICLES OF INCORPORATION; BY-LAWS AND GOOD STANDING.
Each of the following documents:
(i) the articles or certificate of incorporation or other similar organizational documents of the Company and each other Loan Party as in effect on the Closing Date, certified by the Secretary of State (or similar, applicable Governmental Authority) of the state of incorporation, organization or formation of the Company or such Loan Party, as the case may be, as of a recent date and by the Secretary or Assistant Secretary of the Company or such Loan Party, as the case may be, as of the Closing Date, and the bylaws or similar documents of the Company and such Loan Party as in effect on the Closing Date, certified by the Secretary or Assistant Secretary of the Company or such Loan Party, as the case may be, as of the Closing Date; and
(ii) a good standing certificate for the Company and each other Loan Party from the Secretary of State (or similar, applicable Governmental Authority) of its state of incorporation and each state where it is qualified to do business as a foreign corporation, partnership or other business entity as of a recent date;
(d) COLLATERAL DOCUMENTS.
The Collateral Documents, executed by the Company and each other Loan Party, in appropriate form for recording, where necessary, together with:
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(i) acknowledgment copies of all UCC-l financing statements filed, registered or recorded to perfect the security interests of the Administrative Agent, for the benefit of the Agents and the Lenders, or other evidence satisfactory to the Administrative Agent that there has been filed, registered or recorded all financing statements and other filings, registrations and recordings necessary and advisable to perfect the Liens of the Administrative Agent, for the benefit of the Agents and the Lenders in accordance with applicable law;
(ii) written advice relating to such Lien and judgment searches as the Administrative Agent shall have requested of the Company, and such termination statements or other documents as may be necessary to confirm that the Collateral is subject to no other Liens in favor of any Persons (other than Permitted Liens);
(iii) all stock certificates and similar instruments representing the Pledged Collateral, together with stock transfer powers executed in blank;
(iv) evidence that all other actions necessary or, in the opinion of the Administrative Agent or the Lenders, desirable to perfect and protect the first priority security interest created by the Collateral Documents (subject to the Permitted Liens) have been taken;
(v) evidence that the Administrative Agent, for the benefit of the Agents and the Lenders, has been named as loss payee under all policies of casualty and business interruption insurance pursuant to standard lenders' payable endorsements, and as additional insured under all policies of liability insurance, required by this Agreement; and
(vi) such consents, estoppels, subordination agreements, waivers and other documents and instruments executed by landlords, tenants, mortgagees and other Persons party to material contracts relating to any Collateral as to which the Administrative Agent shall be granted a Lien, for the benefit of the Agents and the Lenders, as requested by the Administrative Agent.
(e) LEGAL OPINIONS.
Opinions of Victor Casini, general counsel to the Company and each other Loan Party, and Bell, Boyd & Lloyd LLC, special counsel to the Company and each other Loan Party, each addressed to the Agents and the Lenders, substantially in the form of EXHIBIT G;
(f) PAYMENT OF FEES.
The Company shall have paid all accrued and unpaid fees, costs and expenses to the extent then due and payable on the Closing Date, together with Attorney
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Costs of the Administrative Agent to the extent invoiced prior to or on the Closing Date, together with such additional amounts of Attorney Costs as shall constitute the reasonable estimate of Attorney Costs of the Administrative Agent incurred or to be incurred through the closing proceedings, including any such costs, fees and expenses arising under or referenced in the Fee Letter or otherwise under Sections 2.10, 3.1 and 10.4; PROVIDED, that such estimate shall not thereafter preclude final settling of accounts between the Company and the Administrative Agent;
(g) CLOSING CERTIFICATE.
A certificate signed by a Responsible Officer, dated as of the Closing Date, stating that:
(i) the representations and warranties contained in Article V are true and correct in all material respects on and as of such date, as though made on and as of such date;
(ii) no Default or Event of Default exists or would result from the initial Borrowing; and
(iii) there has occurred since December 31, 2001, no event or circumstance that has resulted or could reasonably be expected to result in a Material Adverse Effect;
(h) FINANCIAL STATEMENTS.
Copies of the financial statements of the Company and its Subsidiaries referred to in Section 5.11;
(i) CONSENTS.
All consents and approvals required to be obtained from any Governmental Authority or other Person to consummate the transactions contemplated hereby;
(j) DUE DILIGENCE.
Evidence of completion to the satisfaction of each Agent of such investigations, reviews and audits with respect to the Company as any Agent or any Lender may deem appropriate;
(k) FEE LETTER.
The Fee Letter executed by the Company;
(l) CLOSING DATE BORROWING CERTIFICATE.
A certificate signed by a Responsible Officer showing the calculation of Closing Date Revolving Loan Availability, taking into account the making of the initial
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Loans and the issuance of the initial letters of credit hereunder on the Closing Date, and the payment of all transaction fees and expenses required to be paid on the Closing Date;
(m) FIELD EXAMINATION.
A completed field examination by the Administrative Agent of the Properties and books and records of the Company and its Subsidiaries, with results acceptable to the Lenders; and
(n) RELEASE OF CERTAIN COLLATERAL.
A written release by the Administrative Agent of its rights under certain guaranties provided by certain shareholders of the Company and securing a portion of the Obligations of the Company under the Original Credit Agreement and all Collateral for such guaranties, together with all original letters of credit delivered to the Administrative Agent to support such guaranties.
(o) OTHER DOCUMENTS.
Such other approvals, opinions, documents or materials as any Agent or any Lender may reasonably request.
4.2. CONDITIONS TO ALL BORROWINGS AND ISSUANCE OF LETTERS OF CREDIT.
The obligation of each Lender to make any Loan to be made by it hereunder (including its initial Loan), to continue or convert any Loan pursuant to Section 2.4 and to participate in any Letter of Credit as provided in Section 2.15, is subject to the satisfaction of the following conditions precedent on the relevant borrowing, continuation or conversion or issuance date:
(a) NOTICE OF BORROWING OR CONTINUATION/CONVERSION.
The Administrative Agent shall have received (with, in the case of the initial Loan only, a copy for each Lender) a Notice of Borrowing or a Notice of Continuation/Conversion, as applicable;
(b) CONTINUATION OF REPRESENTATIONS AND WARRANTIES.
The representations and warranties made by the Company contained in Article V shall be true and correct in all material respects on and as of such borrowing, continuation or conversion or issuance date with the same effect as if made on and as of such borrowing, continuation or conversion or issuance date (except to the extent such representations and warranties expressly refer to an earlier date, in which case they shall be true and correct as of such earlier date); and
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(c) NO EXISTING DEFAULT.
No Default or Event of Default shall exist or shall result from such Borrowing or continuation or conversion or issuance.
(d) OVERADVANCE.
No Overadvance shall exist or shall result from such Borrowing or continuation or conversion or issuance.
Each Notice of Borrowing and Notice of Continuation/Conversion submitted by the Company hereunder shall constitute a representation and warranty by the Company hereunder, as of the date of each such notice or application and as of the date of each Borrowing, continuation or conversion or issuance, as applicable, that the conditions in Section 4.2 are satisfied.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to each Agent and each Lender that:
5.1. CORPORATE EXISTENCE AND POWER.
The Company and each other Loan Party:
(a) is a corporation or limited partnership duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation;
(b) has the power and authority and all governmental licenses, authorizations, consents and approvals (i) to own its assets and carry on its business and (ii) to execute, deliver, and perform its obligations under the Loan Documents;
(c) conducts business in its own name and does not use any tradenames, tradestyles or doing business forms, except as provided on SCHEDULE 5.1 or as updated from time to time by notice to the Administrative Agent;
(d) is duly qualified as a foreign corporation or limited partnership, and licensed and in good standing, under the laws of each jurisdiction where its ownership, lease or operation of property or the conduct of its business requires such qualification or license, as set forth on SCHEDULE 5.1; and
(e) is in compliance with all Requirements of Law, except as provided on SCHEDULE 5.1;
except, in each case referred to in clause (c), clause (d) or clause (e), to the extent that the failure to do so could not reasonably be expected to have a Material Adverse Effect.
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5.2. CORPORATE AUTHORIZATION; NO CONTRAVENTION.
The execution, delivery and performance by each Loan Party of any Loan Document to which such Person is party, have been duly authorized by all necessary corporate or limited partnership action, as appropriate, and do not and will not:
(a) contravene the terms of any of that Person's Organization Documents;
(b) conflict with or result in any breach or contravention of, or the creation of any Lien under, any document evidencing any Contractual Obligation to which such Person is a party; or
(c) violate any Requirement of Law.
5.3. GOVERNMENTAL AUTHORIZATION.
No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority (except for those already obtained, recordings or filings in connection with the Liens granted to the Administrative Agent, for the benefit of the Agents and the Lenders, under the Collateral Documents and those contemplated by the terms and provisions of the Loan Documents) is necessary or required in connection with the execution, delivery, performance or enforcement of this Agreement or any other Loan Document.
5.4. BINDING EFFECT.
Each Loan Document to which a Loan Party is a party constitutes the legal, valid and binding obligations of such Person, enforceable against such Person in accordance with its respective terms, except as enforceability may be limited by applicable bankruptcy, insolvency, or similar laws affecting the enforcement of creditors' rights generally or by equitable principles relating to enforceability.
5.5. LITIGATION.
Except as specifically disclosed in SCHEDULE 5.5, there are no actions, suits, proceedings, claims or disputes pending, or to the best knowledge of the Company, threatened or contemplated, at law, in equity, in arbitration or before any Governmental Authority, against any Loan Party or any Properties of any Loan Party which:
(a) purport to affect or pertain to this Agreement or any other Loan Document, or any of the transactions contemplated hereby or thereby; or
(b) if determined adversely to a Loan Party, could reasonably be expected to have a Material Adverse Effect.
No injunction, writ, temporary restraining order or any order of any nature has been issued by any court or other Governmental Authority purporting to enjoin or restrain the
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execution, delivery or performance of this Agreement or any other Loan Document, or directing that the transactions provided for herein or therein not be consummated as herein or therein provided.
5.6. NO DEFAULT.
No Default or Event of Default exists or would result from the incurring of any Obligations by the Company or the grant or perfection of the Liens on the Collateral under the Collateral Documents. No Loan Party is in default under or with respect to any Contractual Obligation in any respect which, individually or together with all such defaults, could reasonably be expected to have a Material Adverse Effect or that would, if such default had occurred after the Closing Date, create an Event of Default under subsection 8.1(e).
5.7. INTENTIONALLY OMITTED.
5.8. USE OF PROCEEDS; MARGIN REGULATIONS.
The proceeds of the Loans are intended to be and shall be used solely for the purposes set forth in and permitted by Section 6.11, and are intended to be and shall be used in compliance with Section 7.7. Neither the Company nor any other Loan Party is generally engaged in the business of purchasing or selling Margin Stock or extending credit for the purpose of purchasing or carrying Margin Stock.
5.9. TITLE TO PROPERTIES.
Each Loan Party has good record and marketable title in fee simple to, or valid leasehold interests in, all real Property necessary or used in the ordinary conduct of its businesses, except for such defects in title as could not, individually or in the aggregate, have a Material Adverse Effect. No Property of any Loan Party is subject to any Liens, other than Permitted Liens.
5.10. TAXES.
Each Loan Party has filed all Federal and other material tax returns and reports required to be filed, and has paid all Federal and other material taxes, assessments, fees and other governmental charges levied or imposed upon it or its Properties, income or assets otherwise due and payable, except (i) where the failure to so file or pay could not reasonably be expected to have a Material Adverse Effect and (ii) those taxes, assessments, fees and other charges which are being contested in good faith by appropriate proceedings and for which adequate reserves have been provided in accordance with GAAP and no Notice of Lien has been filed or recorded. There is no proposed tax assessment against a Loan Party which, if made, could reasonably be expected to have a Material Adverse Effect.
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5.11. FINANCIAL CONDITION.
The Company has furnished to the Administrative Agent and the Lenders the following:
(a) The audited consolidated financial statements of financial condition of the Company and its Subsidiaries dated December 31, 2001, and the related consolidated statements of income, shareholders' equity and cash flows for the fiscal year ended on that date; and
(b) the unaudited consolidated balance sheet as of March 31, 2002 and the related unaudited consolidated statements of income, shareholders' equity and cash flows for the three-month period ended on March 31, 2002.
The foregoing financial statements:
(i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein;
(ii) fairly present the financial condition of the Company and its Subsidiaries as of the date thereof and results of operations for the period covered thereby (subject to purchase accounting adjustments and, in the case of the March 31, 2002 financial statements, to normal year-end adjustments); and
(iii) except as specifically disclosed in SCHEDULE 5.11, reflect all material indebtedness and other liabilities, including, to the best of the Company's knowledge, all material contingent liabilities of the Company and its consolidated Subsidiaries as of the date thereof, including liabilities for taxes, material commitments and Contingent Obligations.
Since December 31, 2001, there has been no Material Adverse Effect.
5.12. ENVIRONMENTAL MATTERS.
(a) Except as specifically disclosed in SCHEDULE 5.12, the operations of each Loan Party comply in all respects with all Environmental Laws, except such non-compliance which could not reasonably be expected to have a Material Adverse Effect.
(b) Except as specifically disclosed in SCHEDULE 5.12, each Loan Party has obtained all licenses, permits, authorizations and registrations required under any Environmental Law ("Environmental Permits") and necessary for its ordinary course operations, all such Environmental Permits are in good standing, and each Loan Party is in compliance with the terms and conditions of such Environmental Permits, except to the extent that the failure to obtain, maintain in good standing or comply with any such Environmental Permits could not reasonably be expected to have a Material Adverse Effect.
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(c) Except as specifically disclosed in SCHEDULE 5.12, or as updated from time to time by notice to the Administrative Agent, no Loan Party or any Property or operations of any Loan Party, is subject to any outstanding written order from or agreement with any Governmental Authority, or subject to any judicial or docketed administrative proceeding, respecting any Environmental Law, Environmental Claim or Hazardous Material.
(d) Except as specifically disclosed in SCHEDULE 5.12, (i) there are no Hazardous Materials or other conditions or circumstances existing with respect to any Property, or arising from operations prior to the Closing Date, of any Loan Party that could give rise to Environmental Claims that could reasonably be expected to have a Material Adverse Effect, and (ii) no Loan Party has any underground storage tanks (x) that are not properly registered or permitted under applicable Environmental Laws, or (y) that are leaking or disposing of Hazardous Materials off-site, to the extent that the same could reasonably be expected to have a Material Adverse Effect.
5.13. REGULATED ENTITIES.
Neither any Loan Party nor any Person controlling a Loan Party, is (a) an "Investment Company" within the meaning of the Investment Company Act of 1940; or (b) subject to regulation under the Public Utility Holding Company Act of 1935, the Federal Power Act, the Interstate Commerce Act, any state public utilities code, or any other Federal or state statute or regulation limiting its ability to incur Indebtedness.
5.14. NO BURDENSOME RESTRICTIONS.
No Loan Party is a party to or bound by any Contractual Obligation, or subject to any charter, corporate or partnership restriction, or any Requirement of Law, which could reasonably be expected to have a Material Adverse Effect.
5.15. SOLVENCY.
Each Substantial Loan Party is Solvent.
5.16. LABOR RELATIONS.
There are no strikes, lockouts or other labor disputes against any Loan Party, or, to the best of the Company's knowledge, threatened against or affecting any Loan Party, and no significant unfair labor practice complaint is pending against any Loan Party or, to the best knowledge of the Company, threatened against any Loan Party before any Governmental Authority. Except as disclosed on SCHEDULE 5.16, as of the Closing Date no Loan Party (a) has any employment contracts with any of its employees; or (b) is a party to any collective bargaining agreement.
5.17. COPYRIGHTS, PATENTS, TRADEMARKS AND LICENSES, ETC.
Each Loan Party owns or is licensed or otherwise has the right to use all of the patents, trademarks, service marks, trade names, copyrights, contractual franchises,
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authorizations and other rights that are reasonably necessary for the operation of its businesses, without conflict with the rights of any other Person, all of which are set forth on SCHEDULE 5.17. To the best knowledge of the Company, except as specifically disclosed on SCHEDULE 5.17, no slogan or other advertising device, product, process, method, substance, part or other material now employed, or now contemplated to be employed, by any Loan Party infringes upon any rights held by any other Person; except as specifically disclosed on SCHEDULE 5.5, no claim or litigation regarding any of the foregoing is pending or threatened, and no patent, invention, device, application, principle or any statute, law, rule, regulation, standard or code relating to intellectual property is pending or, to the knowledge of the Company, proposed, which, in either case, could reasonably be expected to have a Material Adverse Effect.
5.18. SUBSIDIARIES; CAPITALIZATION..
As of the Closing Date, no Loan Party has any Subsidiaries other than those specifically disclosed in part (a) of SCHEDULE 5.18 hereto and no Loan Party has any equity investments or partnership or joint venture interests in any other corporation, partnership or other entity other than those specifically disclosed in part (b) of SCHEDULE 5.18. The authorized capital stock of each Loan Party as of the Closing Date is as set forth on SCHEDULE 5.18. All issued and outstanding shares of capital stock of each Loan Party are duly authorized and validly issued, fully paid, nonassessable, free and clear of all Liens other than Permitted Liens, and such shares were issued in compliance in all material respects with Requirements of Law concerning the issuance of securities. The capital stock of each Loan Party is owned as of the Closing Date by the stockholders in the amounts set forth on SCHEDULE 5.18. As of the Closing Date, no shares of the capital stock of any Loan Party, other than those described above, are issued and outstanding. Except as set forth on SCHEDULE 5.18, as of the Closing Date, there are no preemptive or other outstanding rights, options, warrants, conversion rights or similar agreements or understandings for the purchase or acquisition from any Loan Party of any shares of capital stock or other securities of any such Person.
5.19. BROKER'S; TRANSACTION FEES.
No Loan Party has any obligation to any Person in respect of any finder's, broker's or investment banker's fee in connection with the transactions contemplated hereby.
5.20. INSURANCE.
SCHEDULE 5.20 is a complete and accurate summary as of the date hereof of the property and casualty insurance program carried by the Company and each other Loan Party on the date hereof. SCHEDULE 5.20 includes, as of the Closing Date, the insurer's(s') name(s), policy number(s), expiration date(s), amount(s) of coverage, type(s) of coverage, the annual premium(s), deductibles and self-insured retention and describes any retrospective rating plan, fronting arrangement or any other self-insurance or risk
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assumption agreed to by the Company or any other Loan Party or imposed upon the Company and each other Loan Party by any such insurer.
5.21. BUSINESS AND COLLATERAL LOCATIONS.
SCHEDULE 5.21 sets forth (a) the chief executive office and principal place of business of each Loan Party as of the Closing Date or during the prior 12 months, (b) each location at which any Property of a Loan Party is located as of the Closing Date or during the prior 12 months, and (c) each other place of business of a Loan Party as of the Closing Date. In addition, SCHEDULE 5.21 sets forth the record owner of such location as of the Closing Date.
5.22. FULL DISCLOSURE.
None of the representations or warranties made by any Loan Party in the Loan Documents as of the date such representations and warranties are made or deemed made, and none of the statements contained in each exhibit, report, statement or certificate furnished by or on behalf of any Loan Party in connection with the Loan Documents (including the offering and disclosure materials delivered by or on behalf of any Loan Party to the Administrative Agent or the Lenders prior to the Closing Date), contains any untrue statement of a material fact or omits any material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they are made, not misleading as of the time when made or delivered.
5.23. ERISA MATTERS.
Each Pension Plan complies, and has been administered in compliance, in all material respects, with all applicable statutes and governmental rules and regulations; no Reportable Event has occurred and is continuing with respect to any Pension Plan; neither the Company nor any ERISA Affiliate has withdrawn from any Multiemployer Plan in a "complete withdrawal" or a "partial withdrawal" as defined in Section 4203 or 4205 of ERISA, respectively, with respect to which the Company or any ERISA Affiliate has any unsatisfied liability; no steps have been instituted to terminate any Pension Plan except for the 401(k) plans listed on SCHEDULE 5.23(a), none of which has any unfunded liability; no contribution failure has occurred with respect to any Pension Plan sufficient to give rise to a Lien under Section 302(f) of ERISA; no condition exists or event or transaction has occurred in connection with any Pension Plan or Multiemployer Plan that is reasonably likely to have a Material Adverse Effect; and neither the Company nor any ERISA Affiliate is a "contributing sponsor" as defined in
Section 4001(a)(13) of ERISA of a "single-employer plan" as defined in Section 4001(a)(15) of ERISA that has two or more contributing sponsors at least two of whom are not under common control. Except as listed in SCHEDULE 5.23(b), neither the Company nor any ERISA Affiliate, to the extent there is joint and several liability with the Company to pay such benefits, has any liability to pay any welfare benefits under any employee welfare benefit plan within the meaning of
Section 3(l) of ERISA to former employees thereof or to current employees with
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respect to claims incurred after the termination of their employment other than as required by Section 4980B of the Code or Part 6 of Subtitle B of Title 1 of ERISA.
ARTICLE VI
AFFIRMATIVE COVENANTS
The Company covenants and agrees that, so long as any Lender shall have any Revolving Commitment hereunder, or any Loan or other Obligation shall remain unpaid or unsatisfied, unless the Majority Lenders waive compliance in writing:
6.1. FINANCIAL STATEMENTS.
The Company shall deliver to the Administrative Agent in form and detail satisfactory to the Administrative Agent and the Majority Lenders, with sufficient copies for each Lender:
(a) as soon as available, but not later than 90 days after the end of each fiscal year, a copy of the audited consolidated balance sheet of the Company as at the end of such year and the related consolidated statements of income or operations, shareholders' equity and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, and accompanied by the opinion of Deloitte & Touche LLP or another nationally-recognized independent public accounting firm which report shall state that such consolidated financial statements present fairly the financial position for the periods indicated in conformity with GAAP applied on a basis consistent with prior years, except for (i) changes in GAAP resulting from the application of financial accounting standard 142 related to goodwill and (ii) changes in GAAP approved by the Administrative Agent. Such opinion shall not be qualified or limited, except for a qualification in connection with the refinancing or the repayment of the Obligations;
(b) Intentionally omitted;
(c) as soon as available, but not later than 45 days after the end of each fiscal quarter of each year (or 90 days, in the case of the last fiscal quarter of each fiscal year), a copy of the unaudited consolidated balance sheet of the Company and its consolidated Subsidiaries as of the end of such quarter and the related consolidated statements of income, shareholders' equity and cash flows for the period commencing on the first day and ending on the last day of such quarter, and certified by an appropriate Responsible Officer as being complete and correct and fairly presenting, in accordance with GAAP, the financial position and the results of operations of the Company and its Subsidiaries (subject to normal year-end adjustments and the omission of footnotes);
(d) as soon as available, but not later than 35 days after the end of each month (or 45 days in the case of the last month of each fiscal quarter), a copy of the Company's internal management report, which shall include the unaudited consolidated balance sheet of the Company and its consolidated Subsidiaries as of the end of such month and the related
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consolidated statement of income and cash flows for the period commencing on the first day and ending on the last day of such month;
(e) as soon as available, but not later than 60 days after the last day of each fiscal year, an annual budget for the Company for the succeeding fiscal year, prepared on a consolidated and consolidating basis and in conformity with the financial statements furnished under the preceding clauses (a) and (b), signed by a Responsible Officer and consisting of at least a balance sheet, an income statement and a cash flow statement, each calculated on a month by month basis;
(f) within 10 days after receipt thereof by the Company, copies of any management letters or comparable letters delivered to the Company by any accountant retained by the Company; and
(g) prior to the expiration of the Company's insurance coverage, the Company shall provide new insurance certificates satisfying the requirements of SECTION 6.6.
6.2. CERTIFICATES; OTHER INFORMATION.
The Company shall furnish to the Administrative Agent, with sufficient copies for each Lender:
(a) concurrently with the delivery of the financial statements referred to in subsection 6.1(a) above, a certificate of the independent certified public accountants reporting on such financial statements (i) stating that in making the examination necessary therefor no knowledge was obtained of any Default or Event of Default, except as specified in such certificate and
(ii) which does not limit the ability of the Agents and the Lenders to rely on such financial statements;
(b) concurrently with the delivery of the financial statements referred to in subsection 6.1(c), (i) a Compliance Certificate of a Responsible Officer (A) stating that the Company, during such period, has observed and performed all of its covenants and other agreements, and satisfied every condition contained in this Agreement to be observed, performed or satisfied by it, and that such officer has obtained no knowledge of any Default or Event of Default except as specified (by applicable subsection reference) in such certificate, and (B) showing in detail the calculations supporting such statement in respect of Sections 7.5, 7.13, 7.14, 7.15 and 7.16; and (ii) a Pricing Change Certificate of a Responsible Officer;
(c) promptly after the same are sent, copies of all financial statements and reports which the Company sends to its public shareholders; and promptly after the same are filed, copies of all financial statements and regular, periodical or special reports which the Company may make to, or file with, the SEC;
(d) promptly, such additional business, financial, corporate or partnership affairs and other information as the Administrative Agent, at the request of any Lender, may from time to time reasonably request;
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(e) within 35 days after the end of each month (or 45 days in the case of the last month of each fiscal quarter), a consolidated aging of all Accounts Receivable as of the end of such month, in each case in form and content reasonably acceptable to the Agent;
(f) within 35 days after the end of each month (or 45 days in the case of the last month of each fiscal quarter), a consolidated Inventory report as of the end of the month for all Inventory locations in form and content reasonably acceptable to the Agent;
(g) within 35 days after the end of each month (or 45 days in the case of the last month of each fiscal quarter), a consolidated Borrowing Base Certificate executed by a Responsible Officer; and
(h) within 45 days after the end of each fiscal quarter (or 90 days in the case of the last quarter of each fiscal year), a schedule of Capital Expenditures listing (i) total Capital Expenditures for the fiscal year to date,
(ii) in detail, all items included in Capital Expenditures for such period and not constituting Maintenance Capital Expenditures and (iii) the total amount of Capital Expenditures for such period that are Maintenance Capital Expenditures.
6.3. NOTICES.
The Company shall promptly notify the Administrative Agent:
(a) of the occurrence of any Default or Event of Default;
(b) of (i) any breach or non-performance of, or any default under, any Contractual Obligation of any Loan Party which could result in a Material Adverse Effect; and (ii) any dispute, litigation, investigation, proceeding or suspension which may exist at any time between any Loan Party and any Governmental Authority which involves amounts in excess of $100,000;
(c) of the commencement of, or any material development in, any litigation or proceeding affecting any Loan Party (i) in which the amount of damages claimed is Two Million Five Hundred Thousand Dollars ($2,500,000) or more, (ii) in which injunctive or similar relief is sought and which, if adversely determined, could reasonably be expected to have a Material Adverse Effect, or (iii) in which the relief sought is an injunction or other stay of the performance of this Agreement or any Loan Document;
(d) upon, but in no event later than 10 days after, any Responsible Officer becoming aware of (i) any and all enforcement, cleanup, removal or other governmental or regulatory actions instituted, completed or threatened against any Loan Party or any Properties of any Loan Party pursuant to any applicable Environmental Laws which involves amounts in excess of $100,000, (ii) any environmental or similar condition on any real property adjoining or in the vicinity of the property of any Loan Party that could reasonably be anticipated to cause such property or any part thereof to be subject to any restrictions on the ownership, occupancy, transferability or use of such property under any Environmental Laws, and (iii) all other Environmental Claims involving in excess of Two Million Five Hundred Thousand Dollars ($2,500,000);
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(e) of any other litigation or proceeding affecting any Loan Party which the Company would be required to report to the SEC pursuant to the Exchange Act, within four days after reporting the same to the SEC;
(f) any Material Adverse Effect subsequent to the date of the most recent financial statements of the Company delivered to the Lenders pursuant to subsections 6.1(a), 6.1(c) or 4.1(h);
(g) of any material change in accounting policies or financial reporting practices by any Loan Party;
(h) of any labor controversy resulting in or threatening to result in any strike, work stoppage, boycott, shutdown or other labor disruption against or involving any Loan Party;
(i) any change or proposed change in any of the information set forth on SCHEDULE 5.21, including but not limited to (i) any change in the location where any Property of a Loan Party is kept, (ii) the identity of any new bailee, processor, warehouseman, consignee or other Person in possession or control of any Property of a Loan Party, (iii) any proposed change in the location of the Company's or any other Loan Party's chief executive office or chief place of business, and (iv) any proposed opening, closing or other change in the list of offices and other places of business of any Loan Party;
(j) any change in the name of any Loan Party; and
(k) the occurrence of a Reportable Event with respect to any Pension Plan; the filing of a notice of intent to terminate a Pension Plan by the Company or any ERISA Affiliate; the institution of proceedings to terminate a Pension Plan by the PBGC or any other Person; the withdrawal in a "complete withdrawal" or a "partial withdrawal" as defined in Sections 4203 and 4205, respectively, of ERISA by the Company or any ERISA Affiliate from any Multiemployer Plan; the failure of the Company or any ERISA Affiliate to make a required contribution to any Pension Plan, including but not limited to any failure to pay an amount sufficient to give rise to a Lien under Section 302(f) of ERISA; the taking of any action with respect to a Pension Plan which could result in the requirement that the Company or any ERISA Affiliate furnish a bond or other security to the PBGC; the occurrence of any other event with respect to any Pension Plan which could result in the incurrence by the Company or any ERISA Affiliate of any material liability, fine or penalty; or the establishment of a new plan subject to ERISA or an amendment to any existing plan which will result in a material increase in contributions or benefits under such plan or the incurrence of any material increase in the liability of the Company (or an ERISA Affiliate) with respect to any "employee welfare benefit plan" as defined in Section 3(l) of ERISA which covers former employees thereof or current employees and their beneficiaries with respect to claims incurred after the termination of their employment.
Each notice pursuant to this Section shall be accompanied by a written statement by a Responsible Officer of the Company setting forth details of the occurrence
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referred to therein, and stating the action the Company proposes to take with respect thereto (including the period during which such action will be taken). Each notice under subsection 6.3(a) shall describe with particularity any and all clauses or provisions of this Agreement or other Loan Document that have been breached or violated.
6.4. PRESERVATION OF CORPORATE EXISTENCE, ETC.
The Company shall, and shall cause each of its Subsidiaries to:
(a) Except as otherwise permitted under Section 7.3, preserve and maintain in full force and effect its corporate or partnership existence and good standing under the laws of its state or jurisdiction of incorporation or formation, as applicable; provided, that the Company may permit or cause the liquidation or sale of any Subsidiary that is not a Material Loan Party;
(b) preserve and maintain in full force and effect all rights, privileges, qualifications, permits, licenses and franchises necessary or desirable in the normal conduct of its business except in connection with transactions permitted by Section 7.3 and sales of assets permitted by Section 7.2; provided, that the Company may permit or cause the liquidation or sale of any Subsidiary that is not a Material Loan Party;
(c) use its reasonable efforts, in the Ordinary Course of Business, to preserve its business organization and preserve the goodwill and business of the customers, suppliers and others having material business relations with it; and
(d) preserve or renew all of its registered trademarks, trade names and service marks, the non-preservation of which could reasonably be expected to have a Material Adverse Effect.
6.5. MAINTENANCE OF PROPERTY.
The Company shall maintain, and shall cause each of its Subsidiaries to maintain, and preserve all its Property which is used or useful in its business in good working order and condition, ordinary wear and tear excepted and make all necessary repairs thereto and renewals and replacements thereof except where the failure to do so could not reasonably be expected to have a Material Adverse Effect or as permitted by Section 7.2, Section 6.4(a) or
Section 6.4(b).
6.6. INSURANCE.
The Company shall maintain, and shall cause each of its Subsidiaries to maintain, with financially sound and reputable independent insurers, insurance with respect to its Properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business, of such types and in such amounts as are customarily carried under similar circumstances by such other Persons and as are reasonably acceptable to the Administrative Agent, including workers' compensation insurance, public liability and property insurance. All property and
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business interruption insurance maintained by the Company shall name the Administrative Agent as loss payee, as its interests may appear, for the benefit of the Agents and the Lenders, and all liability insurance shall name the Administrative Agent as additional insured, as its interests may appear. All such insurance policies and loss payable clauses shall provide that they may not be cancelled, amended or terminated unless the Administrative Agent is given at least the same number of days' notice that the insurance company which issued such policies is required to give the Company or any Subsidiary, but in no event less than 30 day's prior written notice. Proceeds of such insurance for all losses shall be paid directly to the Administrative Agent, for the benefit of the Agents and the Lenders and applied to the Obligations as provided in Section 2.7; PROVIDED, that if no Default or Event of Default has occurred and is continuing, (A) proceeds of insurance for losses (other than relating to Accounts Receivable or Inventory, which shall be applied in accordance with
Section 2.7), equal to or less than Ten Million Dollars ($10,000,000) per occurrence shall be remitted by the Administrative Agent to the Company to repair, replace, restore or substitute the damaged Property, and (B) proceeds of insurance for losses in excess of Ten Million Dollars ($10,000,000) per occurrence shall be applied to the Obligations as provided in Section 2.7, except that if the Administrative Agent has received written evidence reasonably satisfactory to the Administrative Agent to the effect that (i) such proceeds are necessary and in an amount (when added to other amounts available to the Company) sufficient to pay all costs of repair, replacement, restoration or substitution of such damaged Property to an economical unit of substantially the same character and value as such Property was prior to such damage, (ii) the damaged Property can be repaired, replaced, restored or substituted prior to the Term Maturity Date, and (iii) the failure to be able to use such damaged Property during the period during which such damaged Property is to be repaired, replaced, restored or substituted could not reasonably be expected to have a Material Adverse Effect, such proceeds shall be held by the Administrative Agent in a Collateral Account to be disbursed from time to time to pay the cost of repair, replacement, restoration or substitution either, at the Administrative Agent's option, to the Company or directly to contractors, subcontractors, and material suppliers and subject to such conditions to disbursement as the Administrative Agent may impose to assure that the work is fully completed in a good and workmanlike manner and paid for and that no Liens (other then Permitted Liens) arise by reason thereof. Notwithstanding anything contained herein to the contrary, if an Event of Default arises after the occurrence of an Event of Loss, the amount of proceeds with respect to such Event of Loss held by the Administrative Agent in a Collateral Account shall, at the request of the Majority Lenders, be applied by the Administrative Agent to the Obligations as provided herein and in the other Loan Documents. Upon request of the Administrative Agent or any Lender, the Company shall furnish to the Administrative Agent, with sufficient copies for each Lender, at reasonable intervals (but not more than once per calendar year) a certificate of a Responsible Officer of the Company (and, if requested by the Administrative Agent, any insurance broker of the Company) setting forth the nature and extent of all insurance maintained by the Company and its Subsidiaries in accordance with this Section 6.6 or any Collateral Documents (and which, in the case of a certificate of a broker, was placed through such broker).
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Unless the Company provides the Administrative Agent with evidence of the insurance coverage required by this Agreement, the Administrative Agent may, with notice to the Company, purchase insurance at the Company's expense to protect the Administrative Agent's and the Lenders' interests in the Collateral. This insurance may, but need not, protect the interests of the Company and its Subsidiaries. The coverage that the Administrative Agent purchases may not pay any claim that the Company or any of its Subsidiaries may make or any claim that is made against the Company or any of its Subsidiaries in connection with the Collateral. The Company may later cancel any insurance purchased by the Administrative Agent, but only after providing the Administrative Agent with evidence that the Company has obtained insurance as required by this Agreement. If the Administrative Agent purchases insurance for the Collateral, the Company will be responsible for the costs of that insurance, including interest and any other charges that may be imposed in connection with the placement of the insurance, until the effective date of the cancellation or expiration of the insurance. The costs of the insurance may be added to the Revolving Loans. The costs of the insurance may be more than the cost of insurance the Company and its Subsidiaries may be able to obtain on their own.
6.7. PAYMENT OF OBLIGATIONS.
The Company shall, and shall cause its Subsidiaries to, pay and discharge as the same shall become due and payable, all their respective Indebtedness, obligations and liabilities, including:
(a) all tax liabilities, assessments and governmental charges or levies upon it or its properties or assets, unless the same are being contested in good faith by appropriate proceedings and adequate reserves in accordance with GAAP are being maintained by the Company or such Subsidiary;
(b) all lawful claims which, if unpaid, would by law become a Lien (other than a Permitted Lien) upon its Property; and
(c) all Indebtedness, as and when due and payable, unless the same is being contested in good faith by appropriate proceedings and adequate reserves in accordance with GAAP are being maintained by the Company or such Subsidiary, and subject to any subordination provisions contained in any instrument or agreement evidencing such Indebtedness.
6.8. COMPLIANCE WITH LAWS.
The Company shall comply, and shall cause each of its Subsidiaries to comply, with all Requirements of Law of any Governmental Authority having jurisdiction over it or its business (including the Federal Fair Labor Standards Act), except to the extent the failure to do so could not reasonably be expected to have a Material Adverse Effect.
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6.9. INSPECTION OF PROPERTY AND BOOKS AND RECORDS.
The Company shall maintain and shall cause each of its Subsidiaries to maintain proper books of record and account, in which full, true and correct entries in conformity with GAAP consistently applied shall be made of all financial transactions and matters involving the assets and business of the Company and such Subsidiaries. The Company shall permit, and shall cause each of its Subsidiaries to permit, representatives and independent contractors of the Administrative Agent or any Lender to visit and inspect any of their respective Properties, to examine their respective corporate or partnership, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss their respective affairs, finances and accounts with their respective directors, officers, and independent public accountants (at the expense of the Company with respect to all such inspections occurring during the existence of an Event of Default and with respect to one inspection per calendar year if no Event of Default is in existence) and at such reasonable times during normal business hours and as often as may be reasonably desired, upon reasonable advance notice to the Company; PROVIDED, HOWEVER, when an Event of Default exists, the Administrative Agent or any Lender may do any of the foregoing at the expense of the Company at any time during normal business hours and without advance notice. The Administrative Agent and each Lender hereby agrees that in the absence of an Event of Default, no Lender will perform any such visit or inspection except in conjunction with a visit or inspection by the Administrative Agent.
6.10. ENVIRONMENTAL LAWS.
(a) The Company shall, and shall cause each of its Subsidiaries to, conduct its operations and keep and maintain its Property in compliance with all Environmental Laws, except such non-compliance as could not reasonably be expected to have a Material Adverse Effect.
(b) Upon the written request of the Administrative Agent or any Lender, the Company shall submit and cause each of its Subsidiaries to submit, to the Administrative Agent with sufficient copies for each Lender, at the Company's sole cost and expense, at reasonable intervals, a report providing an update of the status of any environmental, health or safety compliance, hazard or liability issue identified in any notice or report required pursuant to subsection 6.3(d), that could, individually or in the aggregate, result in liability in excess of Two Million Five Hundred Thousand Dollars ($2,500,000).
6.11. USE OF PROCEEDS.
The Company shall use the proceeds of the Loans solely as follows: (a) to be allocated to the Term Loan as set forth in subsection 2.1(a), (b) to finance all or a portion of the purchase price for any Permitted Acquisition and
(c) for working capital and other general corporate or partnership purposes not in contravention of any Requirement of Law.
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6.12. SOLVENCY.
The Company shall at all times be, and shall cause each Substantial Loan Party to be, Solvent.
6.13. SUBSIDIARIES.
The Company shall (a) promptly cause each of its Subsidiaries, including without limitation any Subsidiary created or acquired in connection with a Permitted Acquisition, to execute and deliver to the Administrative Agent a guaranty of the Obligations, one or more security agreements whereby such Subsidiary grants to the Administrative Agent, for the benefit of the Agents and the Lenders, a Lien on substantially all of its Properties (other than real Property) in order to secure such guaranty and such additional agreements, instruments and documents (including without limitation UCC financing statements and evidence of corporate or partnership authority) as the Administrative Agent shall reasonably request in connection therewith and (b) execute and deliver, or cause to be executed and delivered, to the Administrative Agent a pledge of the Securities of each of its Subsidiaries, including without limitation any Subsidiary created or acquired in connection with a Permitted Acquisition, in each case in form and substance reasonably satisfactory to the Administrative Agent.
6.14. FURTHER ASSURANCES.
(a) The Company shall ensure that all written information, exhibits and reports furnished to the Agents or the Lenders do not and will not contain any untrue statement of a material fact and do not and will not omit to state any material fact or any fact necessary to make the statements contained therein not misleading in light of the circumstances in which made, and will promptly disclose to the Agents and the Lenders and correct any defect or error that may be discovered therein or in any Loan Document or in the execution, acknowledgment or recordation thereof.
(b) Promptly upon request by the Administrative Agent or the Majority Lenders, the Company shall (and shall cause any of its Subsidiaries to), at the Company's expense, execute, acknowledge, deliver, record, re-record, file, re-file, register and re-register, any and all such further acts, deeds, conveyances, security agreements, mortgages, assignments, estoppel certificates, financing statements and continuations thereof, termination statements, notices of assignment, transfers, certificates, assurances and other instruments the Administrative Agent or such Lenders, as the case may be, may reasonably require from time to time in order (i) to carry out more effectively the purposes of this Agreement or any other Loan Document, (ii) to subject to the Liens created by any of the Collateral Documents any of the Properties, rights or interests covered by any of the Collateral Documents, (iii) to perfect, protect and maintain the validity, effectiveness and priority of any of the Collateral Documents and the Liens intended to be created thereby, and (iv) to better assure, convey, grant, assign, transfer, preserve, protect and confirm to the Administrative Agent and the Lenders the rights granted or now or hereafter intended to be granted to the Administrative Agent or any Lender under any Loan Document or under any other document executed in connection therewith.
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6.15. INTEREST RATE PROTECTION.
Within 60 days following the Closing Date, the Company shall obtain and thereafter maintain interest rate protection with one or more of the Lenders in forms and on terms reasonably acceptable to Administrative Agent, for a notional amount of not less than $10,000,000.
6.16. DEPOSITORY ACCOUNTS.
The Company shall maintain all of its principal depository, cash management, operating and administrative accounts with one or more of the current Lenders or any subsequent Lenders, to the extent that a Lender is able to provide such accounts and services in a manner that is reasonably convenient from the standpoint of the Company.
ARTICLE VII
NEGATIVE COVENANTS
The Company hereby covenants and agrees that, so long as any Lender shall have any Revolving Commitment hereunder, or any Loan or other Obligation shall remain unpaid or unsatisfied, unless the Majority Lenders waive compliance in writing:
7.1. LIMITATION ON LIENS.
The Company shall not, and shall not suffer or permit any of its Subsidiaries to, directly or indirectly, make, create, incur, assume or suffer to exist any Lien upon or with respect to any part of its Property, whether now owned or hereafter acquired, other than the following ("Permitted Liens"):
(a) any Lien (other than Liens on the Collateral) existing on the Property of the Company or its Subsidiaries on the Closing Date and set forth in SCHEDULE 7.1 securing Indebtedness outstanding on such date;
(b) any Lien created under any Loan Document;
(c) Liens for taxes, fees, assessments or other governmental charges which are not delinquent or remain payable without penalty, or to the extent that non-payment thereof is permitted by Section 6.7; PROVIDED, that no Notice of Lien has been filed or recorded under the Code;
(d) carriers', warehousemen's, mechanics', landlords', materialmen's, repairmen's or other similar Liens arising in the Ordinary Course of Business or arising in connection with the repair, replacement, restoration or substitution of such Property permitted under Sections 2.7 and 6.6 hereof, in each case, which are not delinquent or remain payable without penalty or which are being contested in good faith and by appropriate proceedings,
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which proceedings have the effect of preventing the forfeiture or sale of the Property subject thereto;
(e) Liens (other than any Lien imposed by ERISA) consisting of pledges or deposits required in the Ordinary Course of Business in connection with workers' compensation, unemployment insurance and other social security legislation;
(f) Liens on the Property of the Company or any of its Subsidiaries securing (i) the non-delinquent performance of bids, trade contracts (other than for borrowed money), leases, statutory obligations, (ii) contingent obligations on surety and appeal bonds, and (iii) other non-delinquent obligations of a like nature; in each case, incurred in the Ordinary Course of Business, provided all such Liens in the aggregate could not (even if enforced) be reasonably expected to cause a Material Adverse Effect;
(g) Liens consisting of judgment or judicial attachment liens; PROVIDED, that the existence of such Liens would not constitute an Event of Default under Section 8.1(h);
(h) easements, rights-of-way, restrictions and other similar encumbrances incurred in the Ordinary Course of Business which, in the aggregate, are not substantial in amount, and which do not in any case materially detract from the value of the Property subject thereto or interfere with the ordinary conduct of the businesses of the Company and its Subsidiaries;
(i) Purchase money security interests on, or Liens securing Capital Lease Obligations with respect to, any Property (other than inventory) acquired, leased or held by the Company or its Subsidiaries in the Ordinary Course of Business, securing Indebtedness incurred or assumed for the purpose of financing all or any part of the cost of acquiring or leasing such Property; PROVIDED, that (i) any such Lien attaches to such Property concurrently with or within 90 days after the acquisition or lease thereof, (ii) such Lien attaches solely to the Property so acquired or leased in such transaction, (iii) the principal amount of the debt secured thereby does not exceed 100% of the cost of such Property, and (iv) the principal amount of the Indebtedness secured by any and all such purchase money security interests and Capital Lease Obligations shall not at any time exceed the Indebtedness permitted under subsection 7.5(d); and
(j) Liens arising solely by virtue of any statutory or common law provision relating to banker's liens, rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained with a creditor depository institution; PROVIDED, that (i) such deposit account is not a dedicated cash collateral account and is not subject to restrictions against access by the Company in excess of those set forth by regulations promulgated by the Federal Reserve Board, and (ii) such deposit account is not intended by the Company or any of its Subsidiaries to provide collateral to the depository institution.
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7.2. DISPOSITION OF ASSETS.
The Company shall not, and shall not suffer or permit any of its Subsidiaries to, directly or indirectly, sell, assign, lease, license, convey, transfer or otherwise dispose of (whether in one or a series of transactions) any Property (including accounts and notes receivable, with or without recourse) or enter into any agreement to do any of the foregoing, except:
(a) dispositions of Inventory in the Ordinary Course of Business;
(b) the sale, transfer or other disposition of worn-out, damaged or obsolete equipment, property, rights, privileges, qualifications, permits, licenses or franchises, in each case that is no longer useful to the Company or its Subsidiaries, so long as any proceeds thereof are used or applied as provided in Section 2.7; and
(c) other dispositions permitted under this Agreement.
7.3. CONSOLIDATIONS AND MERGERS.
The Company shall not, and shall not suffer or permit any of its Subsidiaries to, merge, consolidate with or into, or acquire (whether in one transaction or in a series of transactions) substantially all of the assets of any Person, except:
(a) in connection with a Permitted Acquisition; and
(b) any Subsidiary of the Company may merge with the Company (PROVIDED, that the Company shall be the continuing or surviving corporation), or with any one or more Subsidiaries of the Company, PROVIDED, that if any transaction shall be between a Subsidiary and a Wholly-Owned Subsidiary, the Wholly-Owned Subsidiary shall be the continuing or surviving corporation or partnership, as applicable.
7.4. LOANS AND INVESTMENTS.
The Company shall not purchase or acquire, or suffer or permit any of its Subsidiaries to purchase or acquire, or make any commitment for, any capital stock, equity interest, or any obligations or other Securities of, or any interest in, any Person, or make or commit to make any acquisitions of the business of any Person, or make or commit to make any advance, loan, extension of credit or capital contribution to or any other investment in, any Person including any Affiliate of the Company, except for:
(a) acquisitions and purchases constituting a Permitted Acquisition;
(b) investments in Cash Equivalents;
(c) extensions of credit in the nature of accounts receivable or notes receivable arising from the sale or lease of goods or services in the Ordinary Course of Business;
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(d) advances to employees of the Company or any Subsidiary for travel or other ordinary business expenses provided that the aggregate amount outstanding at any one time for the Company and its Subsidiaries shall not exceed Five Hundred Thousand Dollars ($500,000);
(e) investments outstanding on the date hereof and listed on SCHEDULE 7.4;
(f) loans by the Company to its Subsidiaries in the Ordinary Course of Business; and
(g) warrants for Securities received by the Company or any of its Subsidiaries and not purchased for cash.
7.5. LIMITATION ON INDEBTEDNESS.
The Company shall not, and shall not suffer or permit any of its Subsidiaries to, create, incur, assume, suffer to exist, or otherwise become or remain directly or indirectly liable with respect to, any Indebtedness, except:
(a) Indebtedness incurred pursuant to this Agreement;
(b) Indebtedness consisting of Contingent Obligations permitted pursuant to Section 7.8;
(c) Indebtedness existing on the Closing Date and set forth in SCHEDULE 7.5;
(d) Capital Lease Obligations and other Indebtedness secured by Liens permitted by subsection 7.1(i) (other than Subordinated Debt), so long as the aggregate amount of such Indebtedness incurred after the Closing Date and outstanding at any time does not exceed Five Million Dollars ($5,000,000);
(e) Indebtedness incurred in connection with operating leases;
(f) intercompany Indebtedness permitted under subsection 7.4(f);
(g) Subordinated Debt;
(h) Indebtedness to insurance companies incurred in order to permit the Company or one of its Subsidiaries to repay obligations owing by such Loan Party to former employees of such Loan Party under the Company's 401K Plus deferred compensation plan, so long as such Indebtedness is not greater than the aggregate cash surrender value of insurance policies owned by the Company and covering the lives of participants in the Company's 401K Plus deferred compensation plan; and
(i) other Indebtedness for borrowed money incurred after the Closing Date with an aggregate outstanding principal balance not at any time exceeding Five Million Dollars ($5,000,000).
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7.6. TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not suffer or permit any of its Subsidiaries to, enter into any transaction with any Affiliate of the Company or of any such Subsidiary, except (a) those transactions listed on SCHEDULE 7.6,
(b) as expressly permitted by this Agreement, or (c) in the Ordinary Course of Business and pursuant to the reasonable requirements of the business of the Company or such Subsidiary, in each case described in clause (c), upon fair and reasonable terms no less favorable to the Company or such Subsidiary than would obtain in a comparable arm's-length transaction with a Person not an Affiliate of the Company or such Subsidiary.
7.7. USE OF PROCEEDS.
The Company shall not and shall not suffer or permit any of its Subsidiaries to use any portion of the Loan proceeds, directly or indirectly,
(i) to purchase or carry Margin Stock, (ii) to repay or otherwise refinance indebtedness of the Company or others incurred to purchase or carry Margin Stock, (iii) to extend credit for the purpose of purchasing or carrying any Margin Stock, or (iv) to acquire any security in any transaction that is subject to Section 13 or 14 of the Exchange Act.
7.8. CONTINGENT OBLIGATIONS.
The Company shall not, and shall not suffer or permit any of its Subsidiaries to, create, incur, assume or suffer to exist any Contingent Obligations except: (a) endorsements for collection or deposit in the Ordinary Course of Business; (b) Contingent Obligations of the Company and its Subsidiaries existing as of the Closing Date and listed in SCHEDULE 7.8; (c) bonds in the nature of bid bonds, performance bonds, or bonds to cover extended warranties, obtained in the ordinary cause of business; (d) guaranties by the Company or any of its Subsidiaries of the operating lease obligations of any of the Company's Subsidiaries; and (e) guaranties by the Company or any of its Subsidiaries of Indebtedness permitted pursuant to Section 7.5.
7.9. JOINT VENTURES.
The Company shall not, and shall not suffer or permit any of its Subsidiaries to enter into any Joint Venture, other than in the Ordinary Course of Business.
7.10. UNCONDITIONAL PURCHASE OPTIONS.
Except as set forth on SCHEDULE 7.10, the Company shall not enter into or be a party to, or permit any Subsidiary to enter into or be a party to, any contract for the purchase of materials, supplies or other property or services, if such contract requires that payment be made by it regardless of whether or not delivery is ever made of such materials, supplies or other property or services.
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7.11. INTENTIONALLY OMITTED.
7.12. RESTRICTED PAYMENTS.
The Company shall not, and shall not suffer or permit any of its Subsidiaries to, declare or make any dividend payment or other distribution of assets, properties, cash, rights, obligations or securities on account of any shares of any class of its Securities, or purchase, redeem or otherwise acquire for value any shares of its Securities or any warrants, rights or options to acquire such Securities, now or hereafter outstanding, or repay, prepay, purchase or redeem any Subordinated Debt; except that the Company and any Wholly-Owned Subsidiary of the Company may:
(a) declare and make dividend payments or other distributions payable solely in its common stock;
(b) in the case of Wholly-Owned Subsidiaries only, declare and make dividend payments or other distributions at any time to the Company or to any other Wholly-Owned Subsidiary;
(c) purchase, redeem or otherwise acquire shares of its common stock or warrants or options to acquire any such shares with the proceeds received from the substantially concurrent issue of new shares of its common stock;
(d) repay Subordinated Debt pursuant to the terms of any subordination agreement or subordination provisions relating thereto; and
(e) so long as no Event of Default or Default is then existence or would be caused thereby, redeem Securities issued to any employee of the Company or any of its Subsidiaries, after termination of the employment of such Person, which Securities were originally issued to such Person in connection with an Acquisition consummated by the Company prior to the Closing Date or a Permitted Acquisition consummated by the Company after the Closing Date; provided, that the aggregate cost of such redemptions in any fiscal year shall not exceed One Million Dollars ($1,000,000).
7.13. CONSOLIDATED NET WORTH.
The Net Worth, as of the last day of any fiscal quarter commencing on June 30, 2002, shall not be less than the sum of (a) One Hundred Fifty Million Dollars ($150,000,000), PLUS (b) 100% of the aggregate net proceeds of any issuance of Securities of the Company or any Subsidiary in exchange for cash during the period from the Closing Date through and including the date of determination, PLUS (c) 75% of the aggregate imputed value of any issuance of Securities of the Company or any Subsidiary in connection with any Acquisition, determined at the time of such Acquisition, PLUS (d) 50% of positive net income, if any, for such quarter (but not LESS the amount of any loss for such fiscal quarter) MINUS (e) up to Forty-Five Million Dollars ($45,000,000) in respect of FASB 142 non-cash charges.
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7.14. FIXED CHARGE COVERAGE RATIO.
The Fixed Charge Coverage Ratio, on the last day of any fiscal quarter commencing on September 30, 2002, for the 12-month period ending on such date, shall not be less than 1.15:1.00.
7.15. SENIOR FUNDED DEBT TO EBITDA RATIO.
The Senior Funded Debt to EBITDA Ratio, on the last day of any fiscal quarter commencing on June 30, 2002, shall not exceed 2:50:1.00.
7.16. TOTAL FUNDED DEBT TO EBITDA RATIO.
The Total Funded Debt to EBITDA Ratio, on the last day of any fiscal quarter commencing on June 30, 2002, shall not exceed 3.25:1.00.
7.17. INTENTIONALLY OMITTED.
7.18. CHANGE IN BUSINESS.
The Company shall not, and shall not permit any of its Subsidiaries to, engage in any material line of business substantially different from, and unrelated to, those lines of business carried on by it on the date hereof.
7.19. CHANGE IN STRUCTURE.
Except as expressly permitted under Section 6.4(a) and Section 7.3, the Company shall not and shall not permit any of its Subsidiaries to, make any changes in its equity capital structure (including in the terms of its outstanding stock), or amend its Organization Documents in any respect material to the Lenders.
7.20. ACCOUNTING CHANGES.
The Company shall not, and shall not suffer or permit any of its Subsidiaries to, make any significant change in accounting treatment or reporting practices, except as required by GAAP, or change the fiscal year of the Company or of any of its consolidated Subsidiaries.
7.21. OTHER CONTRACTS.
The Company shall not, and shall not permit any of its Subsidiaries to, enter into any employment contracts or other employment or service-retention arrangements whose terms, including salaries, benefits and other compensation, are not normal and customary in the industry.
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7.22. MANAGEMENT FEES.
The Company shall not, and shall not permit any of its Subsidiaries to, pay any management, consulting, advisory or similar fees to any Affiliate, other than fees paid to the Company and/or any of its Subsidiaries by the Company or any of its Subsidiaries.
7.23. SUBSIDIARIES.
Except in connection with a Permitted Acquisition, the Company shall not, and shall not permit any of its Subsidiaries to, establish, create or acquire any new Subsidiary without providing Administrative Agent at least 10 days written notice prior to the date Subsidiary has any assets.
7.24. PENSION PLANS.
The Company shall not permit, and not permit any of its Subsidiaries to permit, any condition to exist in connection with any Pension Plan that would constitute grounds for the PBGC to institute proceedings to have such Pension Plan terminated or a trustee appointed to administer such Pension Plan; not fail, and not permit any of its Subsidiaries to fail, to make a required contribution to any Pension Plan if such failure is sufficient to give rise to a Lien under Section 302(f) of ERISA; and not engage in, or permit to exist or occur, or permit any of its Subsidiaries to engage in, or permit to exist or occur, any other condition, event or transaction with respect to any Pension Plan that is reasonably likely to result in a Material Adverse Effect.
7.25. AMENDMENT OF DOCUMENTS.
The Company will not, and will not permit any of its Subsidiaries to, amend, modify or alter, or permit to be amended, modified or altered, any agreement, instrument or document evidencing any of the Subordinated Debt, if the effect of such amendment is to (i) increase the interest rate on such Subordinated Debt, (ii) accelerate the dates upon which payments of principal or interest are due on such Subordinated Debt, (iii) change the payment provisions of such Subordinated Debt, (iv) change the subordination provisions thereof, if any or (v) otherwise alter the terms of such Subordinated Debt in any material respect.
ARTICLE VIII
EVENTS OF DEFAULT
8.1. EVENT OF DEFAULT.
Any of the following shall constitute an "Event of Default":
(a) NON-PAYMENT.
The Company fails to pay, (i) when and as required to be paid herein, any amount of principal of any Loan, or (ii) within 3 days after the same shall become due,
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any interest, fee or any other amount payable hereunder or pursuant to any other Loan Document; or
(b) REPRESENTATION OR WARRANTY.
Any representation or warranty by the Company or any other Loan Party made or deemed made herein, in any Loan Document, or which is contained in any certificate, document or financial or other statement by the Company, any other Loan Party, or their respective Responsible Officers, furnished at any time under this Agreement, or in or under any Loan Document, shall prove to have been incorrect in any material respect on or as of the date made or deemed made; or
(c) SPECIFIC DEFAULTS.
The Company fails to perform or observe any term, covenant or agreement contained in Sections 6.1, 6.2, 6.3, 6.6 and 6.9 or Article VII; or
(d) OTHER DEFAULTS.
The Company fails to perform or observe any other term or covenant contained in this Agreement or any Loan Document, and such default shall continue unremedied for a period of 30 days after the earlier of (i) the date upon which a Responsible Officer of the Company knew or should have known of such failure or (ii) the date upon which written notice thereof is given to the Company by the Administrative Agent; or
(e) CROSS-DEFAULT.
The Company or any other Loan Party (i) fails to make any payment in respect of any Indebtedness or Contingent Obligation having an aggregate principal amount (including undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement) of more than Two Million Five Hundred Thousand Dollars ($2,500,000) when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) and such failure continues after the applicable grace or notice period, if any, specified in the document relating thereto on the date of such failure; or (ii) fails to perform or observe any other condition or covenant, or any other event shall occur or condition exist, under any agreement or instrument relating to any such Indebtedness or Contingent Obligation, and such failure continues after the applicable grace or notice period, if any, specified in the document relating thereto on the date of such failure if the effect of such failure, event or condition is to cause, or to permit the holder or holders of such Indebtedness or beneficiary or beneficiaries of such Indebtedness (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause such Indebtedness to be declared to be due and payable prior to its stated maturity, or such Contingent Obligation to become payable or cash collateral in respect thereof to be demanded; or
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(f) INSOLVENCY; VOLUNTARY PROCEEDINGS.
The Company or any other Substantial Loan Party (i) ceases or fails to be Solvent, or generally fails to pay, or admits in writing its inability to pay, its debts as they become due, subject to applicable grace periods, if any, whether at stated maturity or otherwise; (ii) voluntarily ceases to conduct its business in the ordinary course; (iii) commences any Insolvency Proceeding with respect to itself; or (iv) takes any action to effectuate or authorize any of the foregoing; or
(g) INVOLUNTARY PROCEEDINGS.
(i) Any involuntary Insolvency Proceeding is commenced or filed against the Company or any Substantial Loan Party, or any writ, judgment, warrant of attachment, execution or similar process, is issued or levied against a substantial part of the Company's or any Substantial Loan Party's Properties, and any such proceeding or petition shall not be dismissed, or such writ, judgment, warrant of attachment, execution or similar process shall not be released, vacated or fully bonded within 60 days after commencement, filing or levy; (ii) the Company or any Substantial Loan Party admits the material allegations of a petition against it in any Insolvency Proceeding, or an order for relief (or similar order under non-U.S. law) is ordered in any Insolvency Proceeding; or (iii) the Company or any Substantial Loan Party acquiesces in the appointment of a receiver, trustee, custodian, conservator, liquidator, mortgagee in possession (or agent therefor), or other similar Person for itself or a substantial portion of its Property or business; or
(h) MONETARY JUDGMENTS.
One or more judgments, non-interlocutory orders, decrees or arbitration awards shall be entered against the Company or any other Loan Party involving in the aggregate a liability (not fully covered by independent third-party insurance) as to any single or related series of transactions, incidents or conditions, of One Million Dollars ($1,000,000) or more, and the same shall remain unsatisfied, unvacated and unstayed pending appeal for a period of 30 days after the entry thereof; or
(i) NON-MONETARY JUDGMENTS.
Any non-monetary judgment, order or decree shall be rendered against the Company or any other Loan Party which does or could reasonably be expected to have a Material Adverse Effect, and there shall be any period of 30 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; or
(j) COLLATERAL.
(i) any provision of any Collateral Document shall for any reason (other than as provided or permitted in this Agreement or any other Loan Document) cease to be valid and binding on or enforceable against the Company or any other Loan Party thereto or the Company or any other Loan
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Party shall so state in writing or bring an action to limit its obligations or liabilities thereunder; or
(ii) any Collateral Document shall for any reason (other than pursuant to the terms thereof or the terms or provisions of this Agreement or any other Loan Document) cease to create a valid security interest in the Collateral purported to be covered thereby or such security interest shall for any reason (other than as provided or permitted in this Agreement or any other Loan Document) cease to be a perfected and first priority security interest subject only to Permitted Liens; or
(k) CHANGE OF CONTROL.
Any Change of Control shall occur; or
(l) ADVERSE CHANGE.
There shall occur a Material Adverse Effect; or
(m) LOAN PARTY DEFAULTS.
A Material Loan Party (other than the Company) shall fail to perform or observe any term, covenant or agreement in any Loan Document to which it is a party and such failure shall continue unremedied for a period of 30 days after the earlier of (i) the date upon which a Responsible Officer of the Company knew or should have known of such failure or (ii) the date upon which written notice thereof is given to the Company by the Administrative Agent; or any Loan Party Guaranty shall for any reason (other than as provided or permitted in this Agreement or any other Loan Document) be partially (including with respect to future advances) or wholly revoked or invalidated, or, except in connection with a transaction permitted under this Agreement or any other Loan Document, otherwise cease to be in full force and effect, or any Loan Party shall contest in any manner the validity or enforceability thereof or deny that it has any further liability or obligation thereunder; or
(n) ERISA LIABILITIES.
Any of the following events shall have occurred, if such event is reasonably likely to have a Material Adverse Effect: (i) the existence of a Reportable Event, (ii) the withdrawal of the Company or any ERISA Affiliate from a Pension Plan during a plan year in which it was a "substantial employer" as defined in Section 4001(a)(2) of ERISA, (iii) the occurrence of an obligation to provide affected parties with a written notice of intent to terminate a Pension Plan in a distress termination under Section 4041 of ERISA, (iv) the institution by PBGC of proceedings to terminate any Pension Plan, (v) any event or condition that would require the appointment of a trustee to administer a Pension Plan,
(vi) the withdrawal of the Company or any ERISA Affiliate from a Multiemployer Plan, and (vii) any event that would give rise to a Lien under Section 302(f) of ERISA; or
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(o) FLYNN STOCK OWNERSHIP.
At any time prior to the initial public offering of the Company's stock, Donald Flynn or his heirs shall cease to beneficially own or hold, directly or indirectly, at least 750,000 shares of the common stock of the Company.
8.2. REMEDIES.
If any Event of Default occurs, the Administrative Agent shall, at the request of, or may, with the consent of, the Majority Lenders,
(a) declare the Revolving Commitment of each Lender to make Loans and to participate in Letters of Credit to be terminated, whereupon such Revolving Commitments shall forthwith be terminated;
(b) declare the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan Document to be immediately due and payable; without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Company; and
(c) exercise on behalf of itself and the Lenders all rights and remedies available to it and the Lenders under the Loan Documents or applicable law;
PROVIDED, HOWEVER, that upon the occurrence of any event specified in subsections (f) or (g) of Section 8.1 above (in the case of clause (i) of subsection (g) upon the expiration of the 60-day period mentioned therein), the obligation of each Lender to make Loans shall automatically terminate and the unpaid principal amount of all outstanding Loans and all interest and other amounts as aforesaid shall automatically become due and payable without further act of any Agent or any Lender.
8.3. RIGHTS NOT EXCLUSIVE.
The rights provided for in this Agreement and the other Loan Documents are cumulative and are not exclusive of any other rights, powers, privileges or remedies provided by law or in equity, or under any other instrument, document or agreement now existing or hereafter arising.
ARTICLE IX
THE AGENTS
9.1. APPOINTMENT AND AUTHORIZATION.
(a) Each Lender hereby irrevocably appoints, designates and authorizes the Administrative Agent to take such action on its behalf under the provisions of this Agreement and each other Loan Document and to exercise such powers and perform such duties as are expressly delegated to it by the terms of this Agreement or any other Loan Document, together
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with such powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary contained elsewhere in this Agreement or in any other Loan Document, the Administrative Agent shall not have any duties or responsibilities, except those expressly set forth herein, nor shall the Administrative Agent have or be deemed to have any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against the Administrative Agent.
(b) The Issuer shall act on behalf of the Lenders with respect to the Letters of Credit and the documents associated therewith until such time and except for so long as the Administrative Agent may agree at the request of the Majority Lenders to act for the Issuer with respect thereto; PROVIDED, HOWEVER, that each Issuer shall have all of the benefits and immunities (i) provided to the Administrative Agent in this Article IX with respect to any acts taken or omissions suffered by the Issuer in connection with Letters of Credit issued by it or proposed to be issued by it and the applications and agreements for letters of credit pertaining to Letters of Credit as fully as if the term "Administrative Agent", as used in this Article IX, included the Issuer with respect to such acts or omissions, and (ii) as additionally provided in this Agreement with respect to the Issuer.
9.2. DELEGATION OF DUTIES.
The Administrative Agent may execute any of its duties under this Agreement or any other Loan Document by or through agents, employees or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Administrative Agent shall not be responsible for the negligence or misconduct of any agent or attorney-in-fact that it selects with reasonable care.
9.3. LIABILITY OF THE ADMINISTRATIVE AGENT.
None of the Administrative Agent-Related Persons shall (i) be liable for any action taken or omitted to be taken by any of them under or in connection with this Agreement or any other Loan Document (except for its own gross negligence or willful misconduct), or (ii) be responsible in any manner to any of the Lenders or either Co-Syndication Agent for any recital, statement, representation or warranty made by the Company or any other Loan Party or Affiliate of the Company, or any officer thereof, contained in this Agreement or in any other Loan Document, or in any certificate, report, statement or other document referred to or provided for in, or received by the Administrative Agent under or in connection with, this Agreement or any other Loan Document, or for the value of any Collateral or the validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document, or for any failure of the Company or any other party to any Loan Document to perform its obligations hereunder or thereunder. No Administrative Agent-Related Person shall be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or
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any other Loan Document, or to inspect the Properties, books or records of the Company, any other Loan Party or the Company's Affiliates.
9.4. RELIANCE BY THE ADMINISTRATIVE AGENT.
(a) The Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone message, statement or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons, and upon advice and statements of legal counsel (including counsel to the Company), independent accountants and other experts selected by the Administrative Agent. The Administrative Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless it shall first receive such advice or concurrence of the Majority Lenders as it deems appropriate and, if it so requests, it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement or any other Loan Document in accordance with a request or consent of the Majority Lenders and such request and any action taken or failure to act pursuant thereto shall be binding upon all of the Lenders.
(b) For purposes of determining compliance with the conditions specified in Section 4.1, the Co-Syndication Agents and each Lender that has executed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with each document or other matter either sent by the Administrative Agent to such Co-Syndication Agent or such Lender for consent, approval, acceptance or satisfaction, or required thereunder to be consented to or approved by or acceptable or satisfactory to such Co-Syndication Agent or such Lender.
9.5. NOTICE OF DEFAULT.
The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default, except with respect to defaults in the payment of principal, interest and fees required to be paid to the Administrative Agent for the account of the Lenders, unless the Administrative Agent shall have received written notice from a Lender or the Company referring to this Agreement, describing such Default or Event of Default and stating that such notice is a "notice of default". In the event that the Administrative Agent receives such a notice, the Administrative Agent shall give notice thereof to the Lenders. The Administrative Agent shall take such action with respect to such Default or Event of Default as shall be requested by the Majority Lenders in accordance with Article VIII; PROVIDED, HOWEVER, that unless and until the Administrative Agent shall have received any such request, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable or in the best interest of the Lenders.
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9.6. CREDIT DECISION.
Each Co-Syndication Agent and each Lender expressly acknowledges that none of the Administrative Agent-Related Persons has made any representation or warranty to it and that no act by the Administrative Agent hereinafter taken, including any review of the affairs of the Company or any other Loan Party shall be deemed to constitute any representation or warranty by the Administrative Agent to a Co-Syndication Agent or any Lender. Each Lender represents to the Administrative Agent that it has, independently and without reliance upon the Administrative Agent and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, prospects, operations, property, financial and other condition and creditworthiness of the Company and each other Loan Party, and all applicable bank regulatory laws relating to the transactions contemplated thereby, and made its own decision to enter into this Agreement and extend credit to the Company hereunder. Each Co-Syndication Agent and each Lender also represents that such party will, independently and without reliance upon the Administrative Agent and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of the Company. Except for notices, reports and other documents expressly herein required to be furnished to the Lenders by the Administrative Agent, the Administrative Agent shall not have any duty or responsibility to provide either Co-Syndication Agent or any Lender with any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of the Company which may come into the possession of any of the Administrative Agent-Related Persons.
9.7. INDEMNIFICATION.
Whether or not the transactions contemplated hereby shall be consummated, the Lenders shall indemnify upon demand the Administrative Agent-Related Persons (to the extent not reimbursed by or on behalf of the Company and without limiting the obligation of the Company to do so), ratably, in accordance with each such Lender's Commitment Percentage, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses and disbursements of any kind whatsoever which may at any time (including at any time following the repayment of the Loans and the termination or resignation of the Administrative Agent) be imposed on, incurred by or asserted against any such Person any way relating to or arising out of this Agreement or any document contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by any such Person under or in connection with any of the foregoing; PROVIDED, HOWEVER, that no Lender shall be liable for the payment to the Administrative Agent-Related Persons of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting solely from such Persons' gross negligence or willful misconduct. Without limitation of the foregoing, each Lender shall
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reimburse the Administrative Agent upon demand for its ratable share (in accordance with each such Lender's Commitment Percentage) of any costs or out-of-pocket expenses (including Attorney Costs) incurred by the Administrative Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, any other Loan Document, or any document contemplated by or referred to herein to the extent that the Administrative Agent is not reimbursed for such expenses by or on behalf of the Company. Without limiting the generality of the foregoing, if the Internal Revenue Service or any other Governmental Authority of the United States or other jurisdiction asserts a claim that the Administrative Agent did not properly withhold tax from amounts paid to or for the account of any Lender (because the appropriate form was not delivered, was not properly executed, or because such Lender failed to notify the Administrative Agent of a change in circumstances which rendered the exemption from, or reduction of, withholding tax ineffective, or for any other reason) such Lender shall indemnify the Administrative Agent fully for all amounts paid, directly or indirectly, by the Administrative Agent as tax or otherwise, including penalties and interest, and including any taxes imposed by any jurisdiction on the amounts payable to the Administrative Agent under this Section, together with all costs and expenses (including Attorney Costs). The obligation of the Lenders in this Section shall survive the payment of all Obligations hereunder.
9.8. AGENTS IN THEIR INDIVIDUAL CAPACITY.
Each of BOA, LaSalle, Fleet and their respective Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests in and generally engage in any kind of banking, trust, financial advisory or other business with any Loan Party and its Affiliates as though BOA were not the Administrative Agent hereunder and LaSalle and Fleet were not Co-Syndication Agents and, in each case, without notice to or consent of the Lenders. The Lenders acknowledge that, pursuant to such activities, BOA, LaSalle, Fleet or their respective Affiliates may receive information regarding the Company or its Affiliates (including information that may be subject to confidentiality obligations in favor of the Company or its Affiliates) and acknowledge that none of BOA, LaSalle, Fleet nor their respective Affiliates shall be under any obligation to provide such information to them. With respect to its Loans, each of BOA, LaSalle and Fleet shall have the same rights and powers under this Agreement as any other Lender and may exercise the same as though it were not an Agent, and the terms "Lender" and "Lenders" shall include each of BOA, LaSalle and Fleet in its individual capacity.
9.9. SUCCESSOR ADMINISTRATIVE AGENT.
The Administrative Agent may resign as Administrative Agent upon 30 days' notice to the Lenders. If the Administrative Agent shall resign as Administrative Agent under this Agreement, the Majority Lenders, with the consent of the Company so long as no Default or Event of Default exists at such time, shall appoint from among the Lenders a successor administrative agent for the Lenders. If no successor administrative agent is appointed prior to the effective date of the resignation of the Administrative
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Agent, the Administrative Agent, with the consent of the Company so long as no Default or Event of Default exists at such time, may appoint a successor administrative agent from among the Lenders. Upon the acceptance of its appointment as successor administrative agent hereunder, such successor administrative agent shall succeed to all the rights, powers and duties of the retiring Administrative Agent and the term "Administrative Agent" shall mean such successor administrative agent and the retiring Administrative Agent's appointment, powers and duties as Administrative Agent shall be terminated. After any retiring Administrative Agent's resignation hereunder as Administrative Agent, the provisions of this Article IX and Sections 10.4 and 10.5 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was the Administrative Agent under this Agreement. If no successor administrative agent has accepted appointment as Administrative Agent by the date which is 30 days following a retiring Administrative Agent's notice of resignation, the retiring Administrative Agent's resignation shall nevertheless thereupon become effective and if no successor administrative agent has accepted appointment as Administrative Agent by the date which is 30 days following a retiring Administrative Agent's notice of resignation, the retiring Administrative Agent's resignation shall nevertheless thereupon become effective and the Lenders shall perform all of the duties of the Administrative Agent hereunder until such time, if any, as the Majority Lenders appoint a successor administrative agent as provided for above. Notwithstanding the foregoing, however, BOA may not removed as the Administrative Agent at the request of the Majority Lenders unless BOA or any Affiliate thereof acting as an Issuer hereunder shall also simultaneously be replaced as an Issuer pursuant to documentation in form and substance reasonably satisfactory to BOA (and if applicable, such Affiliate).
9.10. COLLATERAL MATTERS.
(a) The Administrative Agent is authorized on behalf of all the Lenders, without the necessity of any notice to or further consent from the Lenders, from time to time to take any action with respect to any Collateral or the Collateral Documents which may be necessary to perfect and maintain perfected the security interest in and Liens upon the Collateral granted pursuant to the Collateral Documents.
(b) The Lenders irrevocably authorize the Administrative Agent, at its option and in its discretion, to release any Lien granted to or held by the Administrative Agent upon any Collateral (i) upon termination of the Revolving Commitments and payment in full of all Loans and all other Obligations payable under this Agreement and under any other Loan Document; (ii) constituting Property sold or to be sold or disposed of as part of or in connection with any disposition permitted hereunder; (iii) constituting Property in which a Loan Party owned no interest at the time the Lien was granted or at any time thereafter; (iv) constituting Property leased to a Loan Party under a lease which has expired or been terminated in a transaction permitted under this Agreement or is about to expire and which has not been, and is not intended by such Loan Party to be, renewed or extended; (v) consisting of an instrument evidencing Indebtedness or other debt instrument, if the indebtedness evidenced thereby has been paid in full; or (vi) if approved, authorized or ratified in writing by the Majority Lenders or all the Lenders, as the case may be, as provided in subsection 10.1(f). Upon request by the
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Administrative Agent at any time, the Lenders will confirm in writing the Administrative Agent's authority to release particular types or items of Collateral pursuant to this subsection 9.10(b).
9.11. CO-SYNDICATION AGENTS.
Each Co-Syndication Agent, in its capacity as such, shall have no rights, powers, duties or responsibilities hereunder or any other Loan Document and no implied rights, powers, duties or responsibilities shall be read into this Agreement or any other Loan Document or otherwise exist on behalf of or against such Co-Syndication Agent, in its capacity as such. If LaSalle resigns as a Co-Syndication Agent, no successor Co-Syndication Agent shall be appointed. If Fleet resigns as a Co-Syndication Agent, no successor Co-Syndication Agent shall be appointed.
ARTICLE X
MISCELLANEOUS
10.1. AMENDMENTS AND WAIVERS.
No amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent with respect to any departure by any Loan Party therefrom, shall be effective unless the same shall be in writing and signed by such Loan Party and the Majority Lenders or, if the Lenders are not a party thereto, the Administrative Agent (with the prior written consent of the Majority Lenders), and then such waiver shall be effective only in the specific instance and for the specific purpose for which given; PROVIDED, HOWEVER, that no such waiver, amendment, or consent shall, unless in writing and signed by all the Lenders, or if the Lenders are not a party thereto, the Administrative Agent (with the prior written consent of all of the Lenders), do any of the following:
(a) increase or extend the Revolving Commitment or Term Commitment of any Lender (or reinstate any Revolving Commitment or Term Commitment terminated pursuant to subsection 8.2(a)) or subject any Lender to any additional obligations;
(b) postpone or delay any date fixed for any payment of principal, interest, fees or other amounts due to the Lenders (or any of them) hereunder or under any Loan Document;
(c) reduce the principal of, or the rate of interest specified herein on any Loan, or of any fees or other amounts payable hereunder or under any Loan Document;
(d) change the percentage of the Commitments or of the aggregate unpaid principal amount of the Loans which shall be required for the Lenders or any of them to take any action hereunder;
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(e) amend this Section 10.1 or Section 2.14 or any provision providing for consent or other action by all Lenders; or
(f) discharge any Loan Party Guaranty, or release Collateral with an aggregate fair market value in excess of Five Hundred Thousand Dollars ($500,000) in any one transaction or series of related transactions except as otherwise may be provided in the Collateral Documents;
and, PROVIDED, FURTHER, that (i) no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent in addition to the Majority Lenders or all the Lenders, as the case may be, affect the rights or duties of the Administrative Agent under this Agreement or any other Loan Document, (ii) no amendment, waiver or consent shall, unless in writing and signed by the Issuer in addition to the Majority Lender or all the Lenders, as the case may be, affect the rights or duties of the Issuer under this Agreement or any other Loan Document and (iii) the fees payable to the Administrative Agent pursuant to subsection 2.10(a), (c) and (d) may be changed pursuant to a writing executed by the Company and the Administrative Agent.
10.2. NOTICES.
(a) All notices, requests and other communications provided for hereunder shall be in writing (including, unless the context expressly otherwise provides, by facsimile transmission; PROVIDED, that any matter transmitted by the Company by facsimile (i) shall be immediately confirmed by a telephone call to the recipient at the number specified on the applicable signature page hereof, and (ii) shall be followed promptly by a hard copy original thereof) and mailed, faxed or delivered, to the address or facsimile number specified for notices on the applicable signature page hereof; or, as directed to the Company or the Administrative Agent, to such other address as shall be designated by such party in a written notice to the other parties, and as directed to each other party, at such other address as shall be designated by such party in a written notice to the Company and the Administrative Agent.
(b) All such notices, requests and communications shall, when transmitted by overnight delivery be effective upon delivery, or when faxed, be effective when transmitted by facsimile machine, or if otherwise delivered, upon delivery; except that notices pursuant to Article II or IX shall not be effective until actually received by the Administrative Agent.
(c) The Company acknowledges and agrees that any agreement of the Administrative Agent and the Lenders at Article II herein to receive certain notices by telephone and facsimile is solely for the convenience and at the request of the Company. The Administrative Agent and the Lenders shall be entitled to rely on the authority of any Person purporting to be a Person authorized by the Company to give such notice and the Administrative Agent and the Lenders shall not have any liability to the Company or other Person on account of any action taken or not taken by the Administrative Agent or the Lenders in reliance upon such telephonic or facsimile notice. The obligation of the Company to repay the Loans shall not be affected in any way or to any extent by any failure by the Administrative Agent and the Lenders to receive written confirmation of any telephonic or facsimile notice or
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the receipt by the Administrative Agent and the Lenders of a confirmation which is at variance with the terms understood by the Administrative Agent and the Lenders to be contained in the telephonic or facsimile notice.
10.3. NO WAIVER; CUMULATIVE REMEDIES.
No failure to exercise and no delay in exercising, on the part of the Administrative Agent or any Lender, any right, remedy, power or privilege hereunder, shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.
10.4. COSTS AND EXPENSES.
The Company shall, whether or not the transactions contemplated hereby shall be consummated:
(a) pay or reimburse BOA (including in its capacity as Administrative Agent), within thirty (30) days after demand (subject to subsection 4.1(f)) for all reasonable costs and expenses incurred by BOA (including in its capacity as Administrative Agent), in connection with the development, preparation, negotiation, delivery, closing, on-going administration and execution of, and any amendment, supplement, waiver or modification to (in each case, whether or not consummated), this Agreement, any Loan Document and any other documents prepared in connection herewith or therewith, and the consummation of the transactions contemplated hereby and thereby, including the reasonable Attorney Costs incurred by BOA (including in its capacity as Administrative Agent) with respect thereto;
(b) pay or reimburse each Lender, the Administrative Agent and each Co-Syndication Agent within thirty (30) days after demand (subject to subsection 4.1(f)) for all reasonable costs and expenses incurred by them in connection with the enforcement, attempted enforcement, or preservation of any rights or remedies during the existence of an Event of Default (including in connection with any "workout" or restructuring regarding the Loans, and including in any Insolvency Proceeding or appellate proceeding) under this Agreement, any other Loan Document, and any such other documents, including Attorney Costs, incurred by the Administrative Agent, each Co-Syndication Agent and any Lender; and
(c) pay or reimburse BOA (including in its capacity as Administrative Agent) within thirty (30) days after demand (subject to subsection 4.1(f)) for all reasonable appraisal (including the reasonable allocated cost of internal appraisal services), audit, environmental inspection and review (including the reasonable allocated cost of such internal services), search and filing costs, fees and expenses, incurred or sustained by BOA (including in its capacity as Administrative Agent) in connection with the matters referred to under subsections (a) and (b) of this Section 10.4.
10.5. INDEMNITY.
Whether or not the transactions contemplated hereby shall be consummated:
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(a) GENERAL INDEMNITY.
The Company shall pay, indemnify, and hold each Lender, each Agent and each of their respective officers, directors, employees, counsel, agents and attorneys-in-fact (each, an "Indemnified Person") harmless from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, charges, expenses or disbursements (including Attorney Costs) of any kind or nature whatsoever with respect to any investigation, litigation or proceeding (including any Insolvency Proceeding or appellate proceeding) related to this Agreement or the Loans or the use of the proceeds thereof, the execution, delivery, enforcement, performance and administration of this Agreement and any other Loan Documents, or the transactions contemplated hereby and thereby, and with respect to any investigation, litigation or proceeding (including any Insolvency Proceeding or appellate proceeding) related to this Agreement or the Loans or the use of the proceeds thereof, whether or not any Indemnified Person is a party thereto (all the foregoing, collectively, the "Indemnified Liabilities"); PROVIDED, that the Company shall have no obligation hereunder to any Indemnified Person with respect to Indemnified Liabilities arising from the gross negligence or willful misconduct of such Indemnified Person.
(b) ENVIRONMENTAL INDEMNITY.
(i) The Company hereby agrees to indemnify, defend and hold harmless each Indemnified Person, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, charges, expenses or disbursements (including Attorney Costs and the reasonable allocated cost of internal environmental audit or review services), which may be incurred by or asserted against such Indemnified Person in connection with or arising out of any pending or threatened investigation, litigation or proceeding, or any action taken by any Person, with respect to any Environmental Claim arising out of or related to any Property, other than any such actions that constitute gross negligence or willful misconduct by such Indemnified Person.
(ii) In no event shall any site visit, observation, or testing by any Agent or any Lender (or any contractee of any Agent or any Lender) be deemed a representation or warranty that Hazardous Materials are or are not present in, on, or under, the site, or that there has been or shall be compliance with any Environmental Law. Neither the Company nor any other Person is entitled to rely on any site visit, observation, or testing by any Agent or any Lender. Neither any Agent nor any Lender owes any duty of care to protect the Company or any other Person against, or to inform the Company or any other party of, any Hazardous Materials or any other adverse condition affecting any site or Property. Neither any Agent nor any Lender shall be obligated to disclose to the Company or any other Person any report or findings made as a result of, or in connection with, any site visit, observation, or testing by any Agent or any Lender.
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(c) SURVIVAL; DEFENSE.
The obligations in this Section 10.5 shall survive payment of all other Obligations. At the election of any Indemnified Person, the Company shall defend such Indemnified Person using legal counsel reasonably satisfactory to such Indemnified Person, at the sole cost and expense of the Company. All amounts owing under this Section 10.5 shall be paid within 30 days after demand.
10.6. MARSHALLING; PAYMENTS SET ASIDE.
Neither any Agent nor the Lenders shall be under any obligation to marshall any assets in favor of the Company or any other Person or against or in payment of any or all of the Obligations. To the extent that the Company makes a payment or payments to any Agent or any Lender, or any Agent or any Lender enforces its Liens or exercise its rights of set-off, and such payment or payments or the proceeds of such enforcement or set-off or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Administrative Agent in its discretion) to be repaid to a trustee, receiver or any other party in connection with any Insolvency Proceeding, or otherwise, then
(a) to the extent of such recovery the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or set-off had not occurred, and (b) each Lender severally agrees to pay to the Administrative Agent upon demand its ratable share of the total amount so recovered from or repaid by the Administrative Agent.
10.7. SUCCESSORS AND ASSIGNS.
The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, except that the Company may not assign or transfer any of its rights or obligations under this Agreement without the prior written consent of the Administrative Agent and each Lender.
10.8. ASSIGNMENTS, PARTICIPATIONS, ETC.
(a) Any Lender may, with the written consent of the Company at all times other than during the existence of an Event of Default and the Administrative Agent, which consents shall not be unreasonably withheld, at any time assign and delegate to one or more Persons (PROVIDED, that no written consent of the Company or the Administrative Agent shall be required in connection with any assignment and delegation by a Lender to an Affiliate of such Lender) (each an "Assignee") all, or any ratable part of all, of the Loans, the Revolving Commitments and the other rights and obligations of such Lender hereunder, in a minimum amount of Five Million Dollars ($5,000,000); PROVIDED, HOWEVER, that the Company and the Administrative Agent may continue to deal solely and directly with such Lender in connection with the interest so assigned to an Assignee until (A) written notice of such assignment, together with payment instructions, addresses and related information with respect to such Assignee, shall have been given to the Company and the Administrative Agent by such Lender and such
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Assignee; (B) such Lender and its Assignee shall have delivered to the Company and the Administrative Agent an Assignment and Acceptance in the form of EXHIBIT H ("Assignment and Acceptance") together with any Note or Notes subject to such assignment and (C) the assignor Lender or Assignee has paid to the Administrative Agent a processing fee in the amount of Three Thousand Five Hundred Dollars ($3,500).
(b) From and after the date that the Administrative Agent notifies the assignor Lender that it has received (and provided its consent with respect to) an executed Assignment and Acceptance and payment of the above-referenced processing fee, (i) the Assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, shall have the rights and obligations of a Lender under the Loan Documents, and (ii) the assignor Lender shall, to the extent that rights and obligations hereunder and under the other Loan Documents have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights and be released from its obligations under the Loan Documents.
(c) Within five Business Days after its receipt of notice by the Administrative Agent that it has received an executed Assignment and Acceptance and payment of the processing fee (and PROVIDED, that it consents to such assignment pursuant to subsection 10.8(a)), the Company shall execute and deliver to the Administrative Agent new Notes evidencing such Assignee's assigned Loans and Commitment and, if the assignor Lender has retained a portion of its Loans and its Commitment, replacement Notes in the principal amount of the Loans retained by the assignor Lender (such Notes to be in exchange for, but not in payment of, the Notes held by such Lender). Immediately upon each Assignee's making its processing fee payment under the Assignment and Acceptance, this Agreement, shall be deemed to be amended to the extent, but only to the extent, necessary to reflect the addition of the Assignee and the resulting adjustment of the Commitments arising therefrom. The Commitments allocated to each Assignee shall reduce such Commitments of the assigning Lender PRO TANTO.
(d) Any Lender may, upon prior written notice to the Company and the Administrative Agent, at any time sell to one or more commercial banks or other Persons not Affiliates of the Company (a "Participant") participating interests in any Loans, the Revolving Commitment of that Lender and the other interests of that Lender (the "originating Lender") hereunder and under the other Loan Documents; PROVIDED, HOWEVER, that (i) the originating Lender's obligations under this Agreement shall remain unchanged, (ii) the originating Lender shall remain solely responsible for the performance of such obligations,
(iii) the Company and the Administrative Agent shall continue to deal solely and directly with the originating Lender in connection with the originating Lender's rights and obligations under this Agreement and the other Loan Documents, and
(iv) no Lender shall transfer or grant any participating interest under which the Participant shall have rights to approve any amendment to, or any consent or waiver with respect to, this Agreement or any other Loan Document, except to the extent such amendment, consent or waiver would require unanimous consent of the Lenders as described in the FIRST PROVISO to Section 10.1. In the case of any such participation, the Participant shall be entitled to the benefit of Sections 3.1, 3.3 and 10.5, with respect to its participation interest, as though it were also a Lender hereunder and subject to the same qualifications and limitations as
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if it were a Lender hereunder, and provided there is no duplicate recovery, but shall not have any other rights under this Agreement, or any of the other Loan Documents, and all amounts payable by the Company hereunder shall be determined as if such Lender had not sold such participation; except that, if amounts outstanding under this Agreement are due and unpaid, or shall have been declared or shall have become due and payable upon the occurrence of an Event of Default, each Participant shall be deemed to have the right of set-off in respect of its participating interest in amounts owing under this Agreement to the same extent as if the amount of its participating interest were owing directly to it as a Lender under this Agreement.
(e) Each Lender agrees to take normal and reasonable precautions and exercise due care to maintain the confidentiality of all information provided to it by the Company or any Subsidiary of the Company, or by the Administrative Agent on such Company's or Subsidiary's behalf, in connection with this Agreement or any other Loan Document, and neither it nor any of its Affiliates shall use any such information for any purpose or in any manner other than pursuant to the terms contemplated by this Agreement; except to the extent such information (i) was or becomes generally available to the public other than as a result of a disclosure by such Lender, or (ii) was or becomes available on a non-confidential basis from a source other than the Company, PROVIDED, that such source is not bound by a confidentiality agreement with the Company known to such Lender; PROVIDED, FURTHER, HOWEVER, that any Lender may disclose such information (A) at the request or pursuant to any requirement of any Governmental Authority to which such Lender is subject or in connection with an examination of such Lender by any such authority; (B) pursuant to subpoena or other court process; (C) when required to do so in accordance with the provisions of any applicable Requirement of Law; (D) to the extent reasonably required in connection with any litigation or proceeding to which the Administrative Agent, any Lender or their respective Affiliates may be party, (E) to the extent reasonably required in connection with the exercise of any remedy hereunder or under any other Loan Document, and (F) to such Lender's independent auditors and other professional advisors, provided that each such Person has agreed to preserve the confidentiality of such material. Notwithstanding the foregoing, the Company authorizes each Lender to disclose to any Participant or Assignee (each, a "Transferee") and to any prospective Transferee, such financial and other information in such Lender's possession concerning the Company or its Subsidiaries which has been delivered to any Agent or any Lender pursuant to this Agreement or which has been delivered to any Agent or any Lender by the Company in connection with the Lenders' credit evaluation of the Company prior to entering into this Agreement; PROVIDED, that, unless otherwise agreed by the Company, such Transferee agrees in writing to such Lender to keep such information confidential to the same extent required of the Lenders hereunder. In the event that any Agent or Lender or any recipient of nonpublic information obtained pursuant to clause (E) above is required or requested to disclose any confidential information pursuant to clauses (A)-(D) above, such recipient shall give the Company prompt prior written notice of such requirement or request so that the Company may seek an appropriate protective order, and, at the expense of the Company, such recipient shall cooperate with the Company in any proceedings to obtain such a protective order to the extent such cooperation is necessary to obtain such protective order and to the extent the recipient determines its cooperation will not be disadvantageous to it. In the absence of a protective order, if the recipient is nonetheless compelled or required to disclose such confidential
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information in the opinion of its legal counsel, it may disclose such confidential information, provided that the recipient shall give the Company written notice of the confidential information to be disclosed as far in advance of the disclosure as is practicable and, upon the request and at the expense of the Company, shall use its reasonable effects to obtain assurances that confidential treatment shall be accorded such information by the receiving party.
(f) Notwithstanding any other provision contained in this Agreement or any other Loan Document to the contrary, any Lender may assign all or any portion of the Loans or Notes held by it to any Federal Reserve Bank or the United States Treasury as collateral security pursuant to Regulation A of the Federal Reserve Board and any Operating Circular issued by such Federal Reserve Bank, PROVIDED, that any payment in respect of such assigned Loans or Notes made by the Company to or for the account of the assigning or pledging Lender in accordance with the terms of this Agreement shall satisfy the Company's obligations hereunder in respect to such assigned Loans or Notes to the extent of such payment. No such assignment shall release the assigning Lender from its obligations hereunder.
(g) BOA may assign its obligations as an Issuer to an Affiliate of BOA without the prior written consent of any party hereto. In connection with such assignment, each of the parties hereto agrees to execute such documents as are reasonably requested by such Affiliate of BOA to effectuate such assignment.
10.9. SET-OFF.
In addition to any rights and remedies of the Lenders provided by law, if an Event of Default exists, each Lender is authorized at any time and from time to time, without prior notice to the Company, any such notice being waived by the Company to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held by, and other indebtedness at any time owing to, such Lender to or for the credit or the account of the Company against any and all Obligations owing to such Lender, now or hereafter existing, irrespective of whether or not the Administrative Agent or such Lender shall have made demand under this Agreement or any Loan Document and although such Obligations may be contingent or unmatured. Each Lender agrees promptly to notify the Company and the Administrative Agent after any such set-off and application made by such Lender; PROVIDED, HOWEVER, that the failure to give such notice shall not affect the validity of such set-off and application. The rights of each Lender under this
Section 10.9 are in addition to the other rights and remedies (including other rights of set-off) which the Lender may have.
10.10. COLLATERAL ACCOUNT.
(a) The Company hereby authorizes and directs the Administrative Agent to establish and maintain with the Administrative Agent, or at the Administrative Agent's election, with an Affiliate of the Administrative Agent, as a blocked account in the name of the Administrative Agent, on behalf of the Agents and the Lenders, a deposit account designated as the "Collateral Account".
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(b) All amounts held in the Collateral Account pertaining to the Company shall secure the Obligations and may be applied to the Obligations as provided in the Loan Documents.
(c) Any interest received in respect of investments of any amounts deposited in the Collateral Account shall be remitted by the Administrative Agent to the Company on the last Business Day of each calendar quarter; PROVIDED, that the Administrative Agent shall not remit any such interest if any Event of Default has occurred and is continuing.
(d) Cash held by an Administrative Agent, or an Affiliate of the Administrative Agent, in the Collateral Account shall be invested or reinvested as follows:
(i) Any funds on deposit in the Collateral Account shall be held by the Administrative Agent, or any Affiliate of the Administrative Agent, in a non-interest-bearing account; PROVIDED, that so long as no Event of Default shall have occurred and be continuing, the Company may, pursuant to written instructions, direct the Administrative Agent to invest funds on deposit in the Collateral Account in Cash Equivalents as indicated in such instructions; and
(ii) The Administrative Agent is hereby authorized to sell, and shall sell, all or any designated part of the securities held in the Collateral Account (A) so long as no Event of Default shall have occurred and be continuing, upon receipt of appropriate written instructions from the Company or (B) in any event if such sale is necessary to permit the Administrative Agent to perform its duties hereunder. The Administrative Agent shall not have any responsibility for any loss resulting from a fluctuation in interest rates, the sale or disposition of any Cash Equivalent prior to the maturity date or otherwise.
The Collateral Account shall be subject to such applicable laws, and such application regulations of the Board of Governors of the Federal Reserve System and of any other appropriate Governmental Authority, as may now or hereafter be in effect.
10.11. NOTIFICATION OF ADDRESSES, LENDING OFFICES, ETC.
Each Lender shall notify the Administrative Agent in writing of any changes in the address to which notices to the Lender should be directed, of addresses of its Lending Offices, of payment instructions in respect of all payments to be made to it hereunder and of such other administrative information as the Administrative Agent shall reasonably request.
10.12. COUNTERPARTS.
This Agreement may be executed by one or more of the parties to this Agreement in any number of separate counterparts, each of which, when so executed, shall be deemed an original, and all of said counterparts taken together shall be deemed to
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constitute but one and the same instrument. A set of the copies of this Agreement signed by all the parties shall be lodged with the Company and the Administrative Agent.
10.13. SEVERABILITY.
The illegality or unenforceability of any provision of this Agreement or any instrument or agreement required hereunder shall not in any way affect or impair the legality or enforceability of the remaining provisions of this Agreement or any instrument or agreement required hereunder.
10.14. NO THIRD PARTIES BENEFITED.
This Agreement is made and entered into for the sole protection and legal benefit of the Company, the Lenders and the Agents, and their permitted successors and assigns, and no other Person shall be a direct or indirect legal beneficiary of, or have any direct or indirect cause of action or claim in connection with, this Agreement or any of the other Loan Documents. Neither any Agent nor any Lender shall have any obligation to any Person not a party to this Agreement or other Loan Documents.
10.15. TIME.
Time is of the essence as to each term or provision of this Agreement and each of the other Loan Documents.
10.16. GOVERNING LAW AND JURISDICTION.
(a) THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF ILLINOIS; PROVIDED, THAT THE COMPANY, THE AGENTS AND THE LENDERS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT AND ANY OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE STATE OF ILLINOIS OR OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF ILLINOIS, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE COMPANY, EACH AGENT AND EACH LENDER CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE COMPANY, EACH AGENT AND EACH LENDER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE COMPANY, EACH AGENT AND EACH LENDER EACH WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY ILLINOIS LAW. NOTWITHSTANDING THE
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FOREGOING, THE AGENTS AND THE LENDERS SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST THE COMPANY OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION.
10.17. WAIVER OF JURY TRIAL.
THE COMPANY, THE LENDERS AND THE AGENTS EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE COMPANY, THE LENDERS AND THE AGENTS EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
10.18. AUTOMATIC DEBITS OF FEES.
With respect to any non-use fee, arrangement fee, agency fee, upfront facility fee, letter of credit fee or other fee, any interest payment, or any other cost or expense (including Attorney Costs) due and payable to the Administrative Agent or any Issuer under the Loan Documents, the Company hereby irrevocably authorizes BOA, upon 24 hours prior notice to the Company, to debit any deposit account of the Company with BOA in an amount such that the aggregate amount debited from all such deposit accounts does not exceed such fee or other cost or expense. If there are insufficient funds in such deposit accounts to cover the amount of the fee or other cost or expense then due, such debits will be reversed (in whole or in part, in BOA's sole discretion) and such amount not debited shall be deemed to be unpaid. No such debit under this Section shall be deemed a set-off.
10.19. ENTIRE AGREEMENT.
This Agreement, together with the other Loan Documents, embodies the entire agreement and understanding among the Company, the Lenders and the Agents, and supersedes all prior or contemporaneous Agreements and understandings of such Persons,
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verbal or written, relating to the subject matter hereof and thereof, except for the Fee Letter and any prior arrangements made with respect to the payment by the Company of (or any indemnification for) any fees, costs or expenses payable to or incurred (or to be incurred) by or on behalf of any Agent or any Lender.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered in Chicago, Illinois by their proper and duly authorized officers as of the day and year first above written.
LKQ CORPORATION

By /s/ Mark T. Spears
Its Senior Vice President

Address for notices:	

120 North LaSalle Street, Suite 3300 Chicago, Illinois 60602 Attn: Mark Spears Facsimile: (312) 621-1969 Telephone: (312) 621-2709
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BANK OF AMERICA, N.A.,
as Administrative Agent
By David A. Johanson
Its Vice President
Address for notices:
231 South LaSalle Street
Chicago, Illinois 60697
Attn: Agency Management Services
Facsimile: (312) 974-9102
Telephone: (312) 828-7933
Administrative Agent's Payment Office:
901 Main Street
Dallas, Texas 75202-3714
Attn: Angela Azu
Facsimile: (214) 290-9559
Telephone: (214) 209-3099
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BANK OF AMERICA, N.A.,
as Issuer and as a Lender
By Craig W. McGuire
Its Vice President
Address for notices:
231 South LaSalle Street
Chicago, Illinois 60697
Attn: Craig McGuire
Facsimile: (312) 828-1974
Telephone: (312) 828-1320
Domestic and Offshore Lending Office:

Attn: _____________________________________
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LASALLE BANK NATIONAL ASSOCIATION,
as a Co-Syndication Agent and as a Lender
By Steve L. Marks
Its Commercial Banking Officer
Address for notices:
135 South LaSalle Street
Chicago, Illinois 60603
Attn: Mr. Steve Marks
Facsimile: (312) 904-6443
Telephone: (312) 904-6189
Domestic and Offshore Lending Office:
135 South LaSalle Street
Chicago, Illinois 60603
Attn: Bonita Conley
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FLEET NATIONAL BANK,
as a Co-Syndication Agent and as a Lender

By /s/ Jeffrey Kinney
Its Senior Vice President

Address for notices:	

777 Main Street 
CT EH 40224B
Hartford, Connecticut 06115
Attn: Jeffrey Kinney
Facsimile: (860) 952-7482
Telephone: (860) 952-7515
Domestic and Offshore Lending Office:
777 Main Street
CT EH 40224B
 Attn: Kori Kaercher
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EXHIBIT 10.6
FIRST AMENDMENT TO
AMENDED AND RESTATED CREDIT AGREEMENT
February 20, 2003
LKQ Corporation
120 North LaSalle Street
Suite 3300
Chicago, Illinois 60602
Ladies and Gentlemen:
Reference is made hereby to that certain Amended and Restated Credit Agreement dated as of June 21, 2002 among LKQ Corporation, a Delaware corporation ("Borrower"), the financial institutions from time to time a party thereto ("Lenders"), Bank of America, N.A., as Administrative Agent for the Lenders ("Administrative Agent"), LaSalle Bank National Association, as Co-Syndication Agent for the Lenders, and Fleet National Bank, as Co-Syndication Agent, as amended to date (the "Credit Agreement"). Unless otherwise defined herein, capitalized terms used herein shall have the meanings provided to such terms in the Credit Agreement.
Borrower has requested that Lenders agree to amend the Credit Agreement in order to provide an additional Term Loan B in the amount of $9,000,000 thereunder and to otherwise amend the Credit Agreement in certain respects. Lenders have agreed to such amendment, on the terms, and subject to the conditions, contained herein.
Therefore, Borrower and Lenders hereby agree as follows:
1. AMENDMENT. The Credit Agreement is hereby amended as follows:
(a) The third paragraph of the Credit Agreement is hereby amended and restated as follows:
WHEREAS, the Lenders and the Company have agreed to amend and restate the Original Credit Agreement in order to provide for a revolving credit facility and term loans upon the terms and conditions set forth in this Agreement;
(b) Section 1.1 of the Credit Agreement is hereby amended by amending and restating the definitions of "Aggregate Commitment," "Commitment," "Commitment Percentage," "Interest Period" and "Note" respectively, as follows:
"Aggregate Commitment" means the combined Aggregate Revolving Commitment, the Aggregate Term A Commitment and the Aggregate Term B Commitment.

"Commitment" means, for each Lender, the aggregate of its Revolving Commitment, its Term A Commitment and its Term B Commitment.
"Commitment Percentage" means, as to any Lender, the percentage equivalent of the sum of such Lender's Revolving Commitment, Term A Commitment and Term B Commitment, divided by the Aggregate Commitment.
"Interest Period" means, with respect to any IBOR Loan, the period commencing on the Business Day the Loan is disbursed or continued or on the Conversion Date on which a Loan is converted to an IBOR Loan and ending on the date one, two or three months thereafter, as selected by the Company in its Notice of Borrowing or Notice of Conversion/Continuation;
provided, that:
(i) if any Interest Period pertaining to an IBOR Loan would otherwise end on a day which is not a Business Day, that Interest Period shall be extended to the next succeeding Business Day unless, in the case of an IBOR Loan, the result of such extension would be to carry such Interest Period into another calendar month, in which event such Interest Period shall end on the immediately preceding Business Day;
(ii) any Interest Period pertaining to an IBOR Loan that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period;
(iii) no Interest Period for any Term Loan A shall extend beyond the Term Maturity Date, no Interest Period for any Term Loan B shall extend beyond the Term Loan B Maturity Date and no Interest Period for any Revolving Loan shall extend beyond the Revolving Termination Date; and
(iv) no Interest Period applicable to a Term Loan A or portion thereof shall extend beyond any date upon which is due any scheduled principal payment in respect of the Term Loan A unless the aggregate principal amount of the Term Loan A represented by Base Rate Loans, or by IBOR Loans having Interest Periods that will expire on or before such date, is equal to or in excess of the amount of such principal payment.
"Note" means a Revolving Note, a Term Note A or a Term Note B; and "Notes" means the Revolving Notes, the Term Note A and the Term Note B.
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(c) Section 1.1 of the Credit Agreement is hereby amended by deleting the definition of "Aggregate Term Commitment" and replacing it with the following definitions:
"Aggregate Term A Commitment" means the combined Term A Commitments of the Lenders, in the initial aggregate principal amount of Twenty Million Dollars ($20,000,000), as such amount may be reduced from time to time pursuant to this Agreement.
"Aggregate Term B Commitment" means the combined Term B Commitment of the Lenders, in the initial aggregate principal amount of Nine Million Dollars ($9,000,000), as such amount may be reduced from time to time pursuant to this Agreement.
(d) Section 1.1 of the Credit Agreement is hereby amended by deleting the definition of "Term Commitment" and replacing it with the following definitions:
"Term A Commitment" with respect to each Lender, has the meaning specified in Section 2.1(a)(i).
"Term B Commitment" with respect to each Lender, has the meaning specified in Section 2.1(a)(ii).
(e) Section 1.1 of the Credit Agreement is hereby amended by deleting the definition of "Term Loan" and replacing it with the following definitions:
"Term Loans" has the meaning specified in subsection 2.1(a)(iii).
"Term Loan A" has the meaning specified in subsection 2.1(a)(i).
"Term Loan B" has the meaning specified in subsection 2.1(a)(ii).
(f) Section 1.1 of the Credit Agreement is hereby amended by deleting the definition of "Term Note" and replacing it with the following definitions:
"Term Note A" means a promissory note of the Company payable to the order of a Lender, in substantially the form of EXHIBIT F, evidencing the aggregate indebtedness of the Company to such Lender resulting from the portion of the Term Loan A made by such Lender.
"Term Note B" means a promissory note of the Company payable to the order of a Lender, in substantially the form of EXHIBIT F-1, evidencing the aggregate indebtedness of the Company to such Lender resulting from the portion of the Term Loan B made by such Lender.
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(g) Section 1.1 of the Credit Agreement is hereby amended by inserting therein, in appropriate alphabetical order, new definitions of the terms "AutoNation Purchase", "AutoNation Purchase Agreement" and "Term Loan B Maturity Date" as follows:
"AutoNation Purchase" means the purchase of up to 2,000,000 shares of common stock of the Company from AutoNation, Inc. pursuant to the terms of the AutoNation Purchase Agreement and from other shareholders of the Company in connection therewith.
"AutoNation Purchase Agreement" means the Stock Purchase Agreement dated as of February 20, 2003 by and between AutoNation, Inc. and the Company.
"Term Loan B Maturity Date" means February 20, 2004.
(h) Section 2.1(a) of the Credit Agreement is hereby amended and restated in its entirety as follows:
(a) THE TERM A AND TERM B COMMITMENTS.
(i) Each Lender agrees, on the terms and conditions hereinafter set forth, that a portion of the Closing Date Outstandings under the Original Credit Agreement in the aggregate amount of $20,000,000 shall, on the Closing Date, be converted into a single term loan to the Company (the "Term Loan A"). Each Lender severally agrees that its portion of the Term Loan A shall be equal to the amount set forth opposite such Lender's name in SCHEDULE 2.1(a) under the heading "Term A Commitment" (such amount, as the same may be reduced as a result of one or more assignments pursuant to
Section 10.8, such Lender's "Term A Commitment"). Amounts deemed to be a portion of the Term Loan A and which are repaid or prepaid by the Company may not be reborrowed. Conversion of a Base Rate Loan to an IBOR Loan, or an IBOR Loan to a Base Rate Loan, or the continuation of an IBOR Loan to another IBOR Loan, shall not be deemed to be a repayment or prepayment for purposes of the preceding sentence.
(ii) Each Lender agrees, on the terms and conditions hereinafter set forth, to make loans to the Company in the aggregate amount of $9,000,000, on February 20, 2003 (the "Term Loan B"). Each Lender severally agrees that its portion of the Term Loan B shall be equal to the amount set forth opposite such Lender's name in SCHEDULE 2.1(a) under the heading "Term B Commitment" (such amount, as the same may be reduced as a result of one or more assignments pursuant to Section 10.8, such Lender's "Term B Commitment"). Amounts deemed to be a portion of the Term Loan B and which are repaid or prepaid by the Company may not be reborrowed. Conversion of a Base Rate Loan to an IBOR Loan, or an IBOR Loan to a Base Rate Loan, or the continuation of an IBOR Loan to another IBOR Loan, shall not be deemed to be a repayment or prepayment for purposes of the preceding sentence.
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(iii) Term Loan A and Term Loan B are sometimes referred to individually as a "Term Loan" and together as the "Term Loans".
(i) Section 2.2(a) of the Credit Agreement is hereby amended and restated in its entirety as follows:
(a)(i) The portion of the Term Loan A made by each Lender shall be evidenced by a Term Note A payable to the order of that Lender in an amount equal to its Term A Commitment.
(a)(ii) The portion of the Term Loan B made by each Lender shall be evidenced by a Term Note B payable to the order of that Lender in an amount equal to its Term B Commitment.
(j) Section 2.5 of the Credit Agreement is hereby amended by deleting the phrase "the Term Loan" from the seventh line thereof and replacing it with the phrase "Term Loan A and Term Loan B."
(k) Section 2.6 of the Credit Agreement is hereby amended and restated in its entirety as follows:
2.6. OPTIONAL PREPAYMENTS.
Subject to Section 3.4, the Company may, at any time or from time to time, upon at least two Business Days' notice in the case of IBOR Loans, or upon same day notice in the case of Base Rate Loans, to the Administrative Agent, ratably, in accordance with each Lender's Commitment Percentage, prepay Loans in whole or in part, (a) in the case of Revolving Loans which are IBOR Loans, in minimum amounts of Five Hundred Thousand Dollars ($500,000) or any multiple of One Hundred Thousand Dollars ($100,000) in excess thereof, (b) in the case of Revolving Loans which are Base Rate Loans, in any amount and (c) in the case of Term Loans, in minimum amounts of Five Hundred Thousand Dollars ($500,000) or any multiple of One Hundred Thousand Dollars ($100,000) in excess thereof. Each notice of prepayment shall specify the date and amount of such prepayment, whether such prepayment is of Term Loan A, Term Loan B or the Revolving Loans and whether such prepayment is of Base Rate Loans or IBOR Loans, or any combination thereof and if such prepayment includes a prepayment of IBOR Loans, the Interest Periods of the Loans to be prepaid. Such notice shall not thereafter be revocable by the Company and the Administrative Agent will promptly notify each Lender thereof and of such Lender's Commitment Percentage of such prepayment. If such notice is given by the Company, the Company shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein, together with accrued interest to each such date on the amount prepaid and any amounts required pursuant to Section 3.4. Any prepayments by the Company pursuant to this Section 2.6 shall be applied to the Revolving Loans, Term Loan A or Term Loan B as specified in the Company's notice of prepayment; provided, that if
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applied to Term Loan A, such prepayments shall be applied against the remaining installments of Term Loan A in the order of their maturities. If the Company shall have failed to specify in its notice of prepayment the Loans to which such prepayment is to be applied, any prepayments by the Company pursuant to this Section 2.6 shall be applied first to Revolving Loans, then to Term Loan A and then to Term Loan B and within each category, first to any Base Rate Loans then outstanding and then to IBOR Loans with the shortest Interest Periods remaining. Amounts applied to the Revolving Loans pursuant to this Section 2.6 shall not permanently reduce or terminate the Revolving Commitments or the Aggregate Revolving Commitment, unless otherwise specified by the Company in its notice of prepayment and only if such reduction or termination is permitted under
Section 2.5.
(l) Section 2.7 of the Credit Agreement is hereby amended by deleting the second to the last sentence of such Section and replacing it with the following:
Except as otherwise provided in Section 6.6, to the extent that the Property subject to the applicable Disposition or Event of Loss consists of machinery or equipment, real Property or other Property other than Accounts Receivable or Inventory, so long as no Default or Event of Default has occurred and is continuing, proceeds of Dispositions thereof shall, at the request of the Company, be remitted to the Company to replace the subject Property with an economical unit of substantially similar character and value as the subject Property within 180 days after its Disposition; provided, that if the Company does not make such request at the time of such Disposition or if such proceeds are not so used, the applicable amount shall be applied first against the remaining installments of Term Loan A on a pro rata basis, then against Term Loan B and then, to reduce the outstanding principal balance of the Revolving Loans (but shall not permanently reduce the Aggregate Revolving Commitment).
(m) Subsection 2.8(a) of the Credit Agreement is hereby amended and restated in its entirety as follows:
(a)(i) TERM LOAN A.
Unless Term Loan A has been accelerated pursuant to subsection 8.2(a), the Company shall repay Term Loan A on each date set forth below in the amount set forth below opposite such date:

     DATE                          AMOUNT
     ----                          ------
March 31, 2003                     $1,250,000
June 30, 2003                      $1,250,000
September 30, 2003                 $1,750,000
December 31, 2003                  $1,750,000
March 31, 2004                     $1,750,000
June 30, 2004                      $1,750,000	

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     DATE                          AMOUNT
     ----                          ------
September 30, 2004                 $2,000,000
December 31, 2004                  $2,000,000
March 31, 2005                     $2,625,000
June 30, 2005                      $2,625,000	

(a)(ii) TERM LOAN B.
Unless Term Loan B has been accelerated pursuant to subsection 8.2(a), the Company shall repay the balance of the outstanding principal and interest due under Term Loan B on February 20, 2004.
(n) Section 2.9(a) of the Credit Agreement is hereby amended and restated in its entirety as follows:
(a)(i) Subject to subsection 2.9(d), each Revolving Loan and Term Loan A shall bear interest on the outstanding principal amount thereof from the date when made to the date such Revolving Loan or Term Loan A is repaid
(i) for each day during which such Revolving Loan or Term Loan A is an IBOR Loan, at IBOR for the applicable Interest Period for such Revolving Loan or Term Loan A for such day, and (ii) for each day during which such Revolving Loan or Term Loan A is a Base Rate Loan, at the Alternate Base Rate for such day; PLUS, in each case, the Applicable Margin then in effect.
(a)(ii) Subject to subsection 2.9(d), each Term Loan B shall bear interest on the outstanding principal amount thereof from the date when made to the date such Term Loan B is repaid (i) for each day during which such Term Loan B is an IBOR Loan, at IBOR for the applicable Interest Period for such Term Loan B for such day PLUS 2.75% per annum, and (ii) for each day during which such Term Loan B is a Base Rate Loan, at the Alternate Base Rate for such day PLUS 1.25% per annum.
(o) Section 2.10 of the Credit Agreement is hereby amended by inserting therein a new Section 2.10(d) as follows:
(d) AMENDMENT FEE.
The Company shall pay to the Administrative Agent for the account of the Lenders an amendment fee equal to Forty-Five Thousand Dollars ($45,000), which will be shared by the Lenders in proportion to their respective Commitment Percentages. Additionally, in the event that Term Loan B is not repaid in full on or before the Term Loan B Maturity Date, the Company shall pay to Administrative Agent on the Term Loan B Maturity Date an additional fee of One Hundred Thousand Dollars ($100,000) which also will be shared by the Lenders in proportion to their respective Commitment Percentages.
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(p) Section 3.7 of the Credit Agreement is hereby amended by deleting the phrase "Term Commitment" from the ninth line of such Section and replacing it with the phrase "Term A Commitment, Term B Commitment."
(q) Section 6.11 of the Credit Agreement is hereby amended and restated in its entirety as follows:
6.11. USE OF PROCEEDS.
The Company shall use the proceeds of the Revolving Loan and Term Loan A solely as follows: (a) to be allocated to the Term Loans as set forth in subsections 2.1(a)(i) and 2.1(a)(ii), (b) to finance all or a portion of the purchase price for any Permitted Acquisition, (c) to repurchase outstanding stock of the Company and (d) for working capital and other general corporate or partnership purposes not in contravention of any Requirement of Law. The Company shall use the proceeds of Term Loan B solely as follows: (a) to repurchase outstanding stock of the Company, (b) to finance all or a portion of the purchase price for any Permitted Acquisition and (c) to repay a portion of the outstanding balance of the Revolving Loans.
(r) Section 7.6 of the Credit Agreement is hereby amended by deleting the "or" after the comma at the end of Section 7.6(c), replacing the period with ", or" at the end of Section 7.6(c) and inserting therein a new Section 7.6(d) as follows:
(d) the transactions relating to the AutoNation Purchase.
(s) Section 7.12 of the Credit Agreement is hereby amended by deleting the "and" after the semicolon at the end of Section 7.12(d), replacing the period with "; and" at the end of Section 7.12(e) and inserting therein a new
Section 7.12(f) as follows:
(f) so long as no Event of Default or Default is then in existence or would be caused thereby, purchase, redeem or otherwise acquire up to 2,000,000 shares of its common stock in connection with the AutoNation Purchase with the proceeds of Term Loan B and the Revolving Loans.
(t) Section 7.13 of the Credit Agreement is hereby amended by inserting a new Section 7.13(f) thereto as follows:
MINUS (f) up to Twelve Million Dollars ($12,000,000) of the price paid by the Company for common stock of the Company purchased pursuant to the AutoNation Purchase.
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(u) Section 7.15 of the Credit Agreement is hereby amended and restated in its entirety as follows:
7.15. SENIOR FUNDED DEBT TO EBITDA RATIO.
The Senior Funded Debt to EBITDA Ratio, on the last day of any fiscal quarter set forth below, shall not exceed the ratio set forth below opposite such date:

                   Date                           Ratio
                   ----                           -----
December 31, 2002                                    2.50:1.00
March 31, 2003, June 30, 2003 and
September 30, 2003                                   2.75:1.00
December 31, 2003 and each March 31,
June 30, September 30 and December 31
thereafter                                           2.50:1.00	

(v) Section 10.1(a) of the Credit Agreement is hereby amended and restated in its entirety as follows:
(a) increase or extend the Revolving Commitment, Term A Commitment or Term B Commitment of any Lender (or reinstate any Revolving Commitment, Term A Commitment or Term B Commitment terminated pursuant to subsection 8.2(a)) or subject any Lender to any additional obligations;
(w) Schedule 2.1(a) of the Credit Agreement is hereby amended and restated as set forth on Schedule 1 hereto.
(x) Exhibit F of the Credit Agreement is hereby amended and restated as set forth on Exhibits 1 and 2 hereto.
2. SCOPE. Except as amended hereby, the Credit Agreement remains unchanged and in full force and effect.
3. EFFECTIVENESS. This First Amendment to Amended and Restated Credit Agreement shall be effective on February 20, 2003 when executed by Lenders, agreed to by Borrower, and returned to Administrative Agent on or before February 20, 2003, together with (a) reaffirmations by each guarantor of the Obligations, (b) reaffirmation by the Company of the Amended and Restated Pledge Agreement and the Amended and Restated Security Agreement, each dated as of June 21, 2002, (c) new notes, (d) an opinion from Borrower's counsel, (e) articles of incorporation of Borrower, (f) good standing certificates of Borrower in its state of incorporation and each state in which it is qualified to do business, and (g) a secretary's certificate of Borrower.
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4. COUNTERPARTS. This First Amendment to Amended and Restated Credit Agreement may be executed in one or more counterparts, each of which shall constitute an original, but all of which taken together shall be one and the same instrument.
Very truly yours,
BANK OF AMERICA, N.A.,
as Administrative Agent

By /s/ David A. Johanson
   ---------------------------------------
Its Vice President
   ---------------------------------------	

BANK OF AMERICA, N.A., as a Lender

By /s/ Craig W. McGuire
   ---------------------------------------
Its Vice President
   ---------------------------------------	

LASALLE BANK NATIONAL ASSOCIATION,
as Co-Syndication Agent and as a Lender

By /s/ Steve M. Marks
   ---------------------------------------
Its First VP
   ---------------------------------------	

FLEET NATIONAL BANK,
as Co-Syndication Agent and as a Lender
By [ILLEGIBLE]
Its V.P.
ACKNOWLEDGED AND AGREED TO
THIS 20th DAY OF FEBRUARY, 2003:
LKQ CORPORATION

By /s/ Mark T. Spears
   --------------------------------
Its Senior Vice President
   --------------------------------	

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SCHEDULE 1
SCHEDULE 2.1(a)
TERM A COMMITMENTS

             Lender                            Term A Commitment
             ------                            -----------------
Bank of America, N.A.                            $6,666,666.67
LaSalle Bank National Association                $6,666,666.67
Fleet National Bank                              $6,666,666.66	

TERM B COMMITMENTS

              Lender                           Term B Commitment
              ------                           -----------------
Bank of America, N.A.                            $3,000,000.00
LaSalle Bank National Association                $3,000,000.00
Fleet National Bank                              $3,000,000.00	

EXHIBIT 1
EXHIBIT F
FORM OF TERM NOTE A
AMENDED AND RESTATED
TERM NOTE A
$6,666,666.67 February , 2003
FOR VALUE RECEIVED, LKQ Corporation, a Delaware corporation (the "Company"), promises to pay to the order of Bank of America (the "Creditor") the principal sum of Six Million Six Hundred Sixty-Six Thousand Six Hundred Sixty-Six and 67/100 Dollars ($6,666,666.67) or, if different, the aggregate unpaid principal amount of Term Loan A made by the Creditor pursuant to that certain Amended and Restated Credit Agreement dated as of June 21, 2002 (as the same may be amended, modified or supplemented from time to time, the "Credit Agreement"), among the Company, the various financial institutions (including the Creditor) as are, or may from time to time become, parties thereto (the "Lenders"), LaSalle Bank National Association, as a Lender and as co-syndication agent as provided therein, Fleet National Bank, as a Lender and as co-syndication agent as provided therein and Bank of America, N.A., as administrative agent as provided therein ("Administrative Agent"), regardless of whether such principal amount is shown on the schedule attached hereto (or any continuation thereof).
The principal outstanding amount of this Note shall be due and payable on June 30, 2005. Prior thereto, principal shall be repaid in accordance with the terms set forth in the Credit Agreement.
The Company also promises to pay interest on the unpaid principal amount hereof from time to time outstanding from the date hereof until maturity (whether by acceleration or otherwise) and, after maturity and/or judgment, until paid, at the rates per annum and on the dates specified in the Credit Agreement.
Payments of both principal and interest are to be made in lawful money of the United States of America in same day or immediately available funds to the account designated by the Administrative Agent pursuant to the Credit Agreement.
This Note is one of the Term Note As referred to in, and evidences Indebtedness incurred under, the Credit Agreement, to which reference is made for a statement of the terms and conditions on which the Company is permitted and required to make prepayments and repayments of principal of the Indebtedness evidenced by this Note and on which such Indebtedness may be declared to be immediately due and payable. Unless otherwise defined, terms used herein have the meanings provided in the Credit Agreement.
ALL PARTIES HERETO, WHETHER AS MAKERS, ENDORSERS, OR OTHERWISE, SEVERALLY WAIVE PRESENTMENT FOR PAYMENT, DEMAND, PROTEST AND NOTICE OF DISHONOR.
THIS NOTE SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE
OF ILLINOIS.

This Note amends and restates in its entirety, and is made in substitution for, the certain Term Note dated as of June 21, 2002 in the original principal amount of Six Million Six Hundred Sixty-Six Thousand Six Hundred Sixty-Six and 67/100 Dollars ($6,666,666.67) executed by the Company in favor of Creditor.
LKQ CORPORATION
By

Its

2

GRID

------------ --------------- --------------- --------------- ----------------------------------- ------------------ ----------------
                                                                         Portion of
                                                                         Principal
                                                                     Balance Maintained
                                                             -----------------------------------
                                Amount of      Outstanding
                Amount of       Principal       Principal       Base Rate            IBOR         Applicable IBOR      Notation
   Date         Term Loan        Payment         Balance           Loan              Loan         Interest Period       Made By
------------ --------------- --------------- --------------- ----------------- ----------------- ------------------ ----------------

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EXHIBIT 2
EXHIBIT F-1
FORM OF TERM NOTE B
TERM NOTE B
$3,000,000.00 February , 2003
FOR VALUE RECEIVED, LKQ Corporation, a Delaware corporation (the "Company"), promises to pay to the order of Bank of America, N.A. (the "Creditor") the principal sum of Three Million and No/100 Dollars ($3,000,000.00) or, if different, the aggregate unpaid principal amount of Term Loan B made by the Creditor pursuant to that certain Amended and Restated Credit Agreement dated as of June 21, 2002 (as the same may be amended, modified or supplemented from time to time, the "Credit Agreement"), among the Company, the various financial institutions (including the Creditor) as are, or may from time to time become, parties thereto (the "Lenders"), LaSalle Bank National Association, as a Lender and as co-syndication agent as provided therein, Fleet National Bank, as a Lender and as co-syndication agent as provided therein and Bank of America, N.A., as administrative agent as provided therein ("Administrative Agent"), regardless of whether such principal amount is shown on the schedule attached hereto (or any continuation thereof).
The principal outstanding amount of this Note shall be due and payable on February __, 2004. Prior thereto, principal shall be repaid in accordance with the terms set forth in the Credit Agreement.
The Company also promises to pay interest on the unpaid principal amount hereof from time to time outstanding from the date hereof until maturity (whether by acceleration or otherwise) and, after maturity and/or judgment, until paid, at the rates per annum and on the dates specified in the Credit Agreement.
Payments of both principal and interest are to be made in lawful money of the United States of America in same day or immediately available funds to the account designated by the Administrative Agent pursuant to the Credit Agreement.
This Note is one of the Term Note Bs referred to in, and evidences Indebtedness incurred under, the Credit Agreement, to which reference is made for a statement of the terms and conditions on which the Company is permitted and required to make prepayments and repayments of principal of the Indebtedness evidenced by this Note and on which such Indebtedness may be declared to be immediately due and payable. Unless otherwise defined, terms used herein have the meanings provided in the Credit Agreement.
ALL PARTIES HERETO, WHETHER AS MAKERS, ENDORSERS, OR OTHERWISE, SEVERALLY WAIVE PRESENTMENT FOR PAYMENT, DEMAND, PROTEST AND NOTICE OF DISHONOR.

THIS NOTE SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE
OF ILLINOIS.
LKQ CORPORATION
By

Its

2

GRID

------------ --------------- --------------- --------------- ----------------------------------- ------------------ ----------------
                                                                         Portion of
                                                                         Principal
                                                                     Balance Maintained
                                                             -----------------------------------
                                Amount of      Outstanding
                Amount of       Principal       Principal       Base Rate            IBOR         Applicable IBOR      Notation
   Date         Term Loan        Payment         Balance           Loan              Loan         Interest Period       Made By
------------ --------------- --------------- --------------- ----------------- ----------------- ------------------ ----------------

------------ --------------- --------------- --------------- ----------------- ----------------- ------------------ ----------------

------------ --------------- --------------- --------------- ----------------- ----------------- ------------------ ----------------

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3

EXHIBIT 10.7
SECOND AMENDMENT TO
AMENDED AND RESTATED CREDIT AGREEMENT
May 20, 2003
LKQ Corporation
120 North LaSalle Street
Suite 3300
Chicago, Illinois 60602
Ladies and Gentlemen:
Reference is made hereby to that certain Amended and Restated Credit Agreement dated as of June 21, 2002 among LKQ Corporation, a Delaware corporation ("Borrower"), the financial institutions from time to time a party thereto ("Lenders"), Bank of America, N.A., as Administrative Agent for the Lenders ("Administrative Agent"), LaSalle Bank National Association, as Co-Syndication Agent for the Lenders, and Fleet National Bank, as Co-Syndication Agent for the Lenders, as amended to date (the "Credit Agreement"). Unless otherwise defined herein, capitalized terms used herein shall have the meanings provided to such terms in the Credit Agreement.
Borrower has requested that Lenders agree to amend the Credit Agreement in certain respects and Lenders have agreed to such amendments, on the terms, and subject to the conditions, contained herein.
Therefore, Borrower and Lenders hereby agree as follows:
1. AMENDMENTS. The Credit Agreement is hereby amended as follows:
(a) Section 7.12 of the Credit Agreement is hereby amended by deleting the "and" after the semicolon at the end of Section 7.12(e), replacing the period with "; and" at the end of Section 7.12(f) and inserting therein a new
Section 7.12(g) as follows:
(g) so long as no Event of Default or Default is then in existence or would be caused thereby, at any time on or before August 14, 2003, purchase, redeem or otherwise acquire up to 1,750,000 shares of its common stock for a purchase price of up to $7 per share.
(b) Section 7.15 of the Credit Agreement is hereby amended and restated in its entirety as follows:

7.15. SENIOR FUNDED DEBT TO EBITDA RATIO.
The Senior Funded Debt to EBITDA Ratio, on the last day of any fiscal quarter set forth below, shall not exceed the ratio set forth below opposite such date:

                 Date                                 Ratio
                 ----                                 -----
June 30, 2003, September 30, 2003 and
December 31, 2003                                     2.75:1.00

March 31, 2004 and each June 30,
September 30, December 31 and March 31
thereafter                                            2.50:1.00	

2. SCOPE. Except as amended hereby, the Credit Agreement remains unchanged and in full force and effect.
3. EFFECTIVENESS. This Second Amendment to Amended and Restated Credit Agreement shall be effective on May 20, 2003 when executed by Lenders, agreed to by Borrower, and returned to Administrative Agent on or before May 20, 2003, together with (a) reaffirmations by each guarantor of the Obligations, (b) reaffirmation by the Company of the Amended and Restated Pledge Agreement and the Amended and Restated Security Agreement, each dated as of June 21, 2002 and the Pledge Agreement regarding Borrower's limited partnership interests in LKQ Atlanta L.P. dated November 12, 1999, and (c) an amendment fee equal to $66,000, which fee shall be shared equally by the Lenders.
-2-

4. COUNTERPARTS. This Second Amendment to Amended and Restated Credit Agreement may be executed in one or more counterparts, each of which shall constitute an original, but all of which taken together shall be one and the same instrument.
Very truly yours,
BANK OF AMERICA, N.A.,
as Administrative Agent

By /s/ David A. Johanson
Its Vice President

BANK OF AMERICA, N.A., as a Lender	

By [ILLEGIBLE]
Its Vice President
LASALLE BANK NATIONAL ASSOCIATION,
as Co-Syndication Agent and as a Lender

By /s/ Steve M. Marks
Its FVP

FLEET NATIONAL BANK,
  as Co-Syndication Agent and as a Lender	

By [ILLEGIBLE]
Its Senior Vice Presidentt
ACKNOWLEDGED AND AGREED TO
THIS 20th DAY OF MAY, 2003:
LKQ CORPORATION

By /s/ Mark T. Spears
Its Senior Vice President and Chief Financial Officer	

-3-

EXHIBIT 10.8
WARRANT AGREEMENT
This Warrant Agreement (this "Agreement") is made and entered into as of this 14th day of February, 2001, by and between LKQ Corporation, a Delaware corporation ("LKQ"), and the _________________ (the "Holder").
1. GRANT. LKQ hereby grants to the Holder the right to purchase, at any time during the Exercise Period (as hereinafter defined), a total of _________ shares of common stock of LKQ ("Common Stock") at an exercise price of $2.00 per share (the "Warrants"). For purposes of this Agreement, "Exercise Period" shall mean the period commencing on the date of this Agreement and ending on the fifth anniversary of the date of this Agreement.
2. TRANSFER RESTRICTIONS. The Warrants may not be sold, transferred, assigned or otherwise disposed of unless a registration statement under the Securities Act of 1933 and any applicable state securities laws with respect to such disposition is then in effect or unless such disposition will not involve any violation of the registration provisions of the Securities Act of 1933 or any applicable state securities laws.
3. STATUS OF THE WARRANT HOLDER. The Holder shall not be deemed the holder of the Common Stock purchasable upon the exercise of the Warrants for any purpose, nor shall anything contained herein be construed to confer upon the Holder any of the rights of a holder of Common Stock, until the Warrants shall have been exercised and Common Stock purchasable upon the exercise thereof shall have been issued and delivered as provided herein.
4. EXERCISE OF WARRANTS. (a) Exercise may be made of all or any part of the Warrants. In the event that a Holder elects to exercise all or any part of the Warrants, the Holder shall give written notice of exercise to LKQ.
(b) The closing of the purchase and sale of shares of Common Stock pursuant to an exercise of the Warrants (the "Closing") shall occur at such place and time and on such date as shall be specified by the Holder in the Exercise Notice (but in no event earlier than two or later than ten business days after delivery of the Exercise Notice). At the Closing (i) the Holder shall pay to LKQ the applicable exercise price in respect of the Warrants being exercised, and (ii) LKQ shall deliver to the Holder a stock certificate or stock certificates representing the shares of Common Stock being purchased pursuant to the exercise of the Warrants.
(c) Upon exercise of the Warrants, the Holder shall have no obligation to make any capital contribution to LKQ other than the exercise price payable upon exercise as set forth in Section 1 hereof. The Holder shall pay all transfer or stamp taxes, if any, in respect of the issuance of Common Stock upon exercise of the Warrants.
5. ADJUSTMENT. In the event of any change in the outstanding shares of Common Stock by reason of any stock dividend, stock split, reverse stock split, recapitalization,

combination, exchange of shares, merger, consolidation, reorganization or the like or any other change in the corporate or capital structure of LKQ that would have the effect of altering any of the Holder's rights hereunder, the number of shares of Common Stock subject to the Warrants and the exercise price of each Warrant shall be adjusted equitably and appropriately so as to restore the Holder to its rights hereunder.
6. MISCELLANEOUS. The Warrants and any provision hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by LKQ and the Holder. The headings herein are for purposes of reference only and shall not affect the meaning or construction of any of the provisions hereof.
7. COVENANTS OF THE COMPANY. LKQ covenants that it will at all times during the Exercise Period reserve and keep available, free from pre-emptive rights, out of its authorized but unissued Common Stock, solely for the purpose of issuance upon exercise of the Warrants as herein provided, such number of shares of Common Stock as shall then be issuable upon the exercise of the Warrants. The issuance and delivery of this Agreement (and the obligations of LKQ set forth herein) have been duly authorized by all necessary corporate action on the part of LKQ. LKQ covenants that all shares of Common Stock which shall be so issuable shall, upon such issuance, be duly and validly issued and fully-paid and nonassessable.
8. APPLICABLE LAW. This Agreement and all rights arising hereunder shall be governed by the laws of the State of Illinois, regardless of the law that might be applied under principles of conflicts of law.
9. COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together constitute one and the same instrument.
10. NOTICES. Any notice, request, information or other document to be given hereunder shall be in writing. Any notice, request, information or other document shall be deemed duly given four business days after it is sent by registered or certified mail, postage prepaid, to the intended recipient, addressed as follows:
If to the Holder:
2

If to LKQ:
LKQ Corporation
120 North LaSalle Street, Suite 3300
Chicago, Illinois 60602
Attention: General Counsel Fax: (312) 621-1968
Any party may send any notice request, information or other document to be given hereunder using any other means (including personal delivery, courier, messenger service, facsimile transmission, telex or ordinary mail), but no such notice, request, information or other document shall be deemed duly given unless and until it is actually received by the party for whom it is intended. Any party may change the address to which notices hereunder are to be sent to it by giving written notice of such change of address in the manner herein provided for giving notice.
IN WITNESS WHEREOF, each of LKQ and the Holder has caused this Agreement to be signed as of the date first above written.

LKQ CORPORATION                             HOLDER

By:
    ------------------------------------    ------------------------------------
Name:
Title:	

3

EXHIBIT 10.9
LaSalle Bank
Member ABN AMRO Group LaSalle Bank N.A.
208 South LaSalle Street
Chicago, Illinois 60604-1003
312-855-5816
Fax: 312-855-5847
CONFIRMATION

Date:        August 20, 2002

To:          LKQ Corporation
             120 N. LaSalle St.
             Suite 3300
             Chicago, IL  60602

ATTN:        Mark Spears

             Fax:   312-621-1969
             Phone: 312-621-2730

From:        LaSalle Bank National Association ("LaSalle")
             208 South LaSalle Street, 208-214
             Chicago, IL  60604

             Fax:    (312) 855-5847/5852

             Re:  Swap Transaction [No. INF 15260/20304]	

Ladies/Gentlemen:
The purpose of this letter agreement is to set forth the terms and conditions of the Swap Transaction entered into between us on the Trade Date specified below (the "Swap Transaction"). This letter agreement constitutes a "Confirmation" as referred to in the ISDA Master Agreement specified below.
The definitions and provisions contained in the 2000 ISDA Definitions (as published by the International Swaps and Derivatives Association, Inc. ("ISDA"), without regard to subsequent amendments or revisions thereto, are incorporated into this Confirmation. In the event of any inconsistency between those definitions and provisions of this Confirmation, this Confirmation will govern. Each party represents and warrants to the other that (i) it is duly authorized to enter into this Swap Transaction and to perform its obligations hereunder and
(ii) the person executing this Confirmation is duly authorized to execute and deliver it.
1. This Confirmation supplements, forms a part of, and is subject to, the ISDA Master Agreement in the form published by ISDA (the "Agreement") as if you and we had executed that

LaSalle Bank
Member ABN AMRO Group LaSalle Bank N.A.
208 South LaSalle Street
Chicago, Illinois 60604-1003
312-855-5816
Fax: 312-855-5847
agreement (but without any Schedule thereto) and the Agreement shall be governed by and construed in accordance with the laws of the State of New York without reference to choice of law doctrine. In addition, you and we agree to use our best efforts to promptly negotiate, execute, and deliver an ISDA Master Agreement (as published by ISDA). Upon execution and delivery by you and us of that agreement (i) this letter agreement shall constitute a "Confirmation" as referred to in that agreement and shall supplement, form part of, and be subject to that agreement and (ii) all provisions contained or incorporated by reference in that agreement shall govern this Confirmation as expressly modified below.
2. The terms of the particular Swap Transaction to which this Confirmation relates are as follows:

Notional Amount:                   USD 10,000,000.00

Trade Date:                        August 20, 2002

Effective Date:                    August 22, 2002

Termination Date:                  August 22, 2004

FIXED AMOUNTS:

      Fixed Rate Payer:            LKQ Corporation

      Fixed Rate:                  2.65%

      Fixed Rate
      Payer Payment Dates:         The 22nd day of each November, February, May,
                                   and August, commencing on November 22,
                                   2002, to and including the Termination Date,
                                   subject to adjustment in accordance with the
                                   Modified Following Business Day Convention

      Fixed Rate
      Day Count Fraction:          Actual/360

FLOATING AMOUNTS:

      Floating Rate Payer:         LaSalle

      Floating Rate Payer	

LaSalle Bank
                                                           Member ABN AMRO Group
LaSalle Bank N.A.
208 South LaSalle Street
Chicago, Illinois 60604-1003
312-855-5816
Fax: 312-855-5847

      Payment Dates:               The 22nd day of each November, February, May,
                                   and August, commencing on November 22,
                                   2002, to and including the Termination Date,
                                   subject to adjustment in accordance with the
                                   Modified Following Business Day Convention

      Floating Rate Option:        USD-LIBOR-BBA

      Designated Maturity:         3 months

      Initial Floating Rate:       1.77%

      Spread:                      None

      Floating Rate
      Day Count Fraction:          Actual/360

      Reset Dates:                 The first day each Calculation Period

      Method of Averaging:         Inapplicable

      Compounding:                 Inapplicable

Business Days:                     New York and London

Calculation Agent:                 LaSalle	

3. Offices:
(a) The Office of the Fixed Rate Payer for this Swap Transaction is Chicago, IL.
(b) The Office of the Floating Rate Payer for this Swap Transaction is Chicago, IL.
4. Account Details
Payments to LaSalle:
LaSalle Bank National Association, ABA #0710-0050-5, A/C 2090102, Attn: Treasury Division/Derivatives

LaSalle Bank
Member ABN AMRO Group LaSalle Bank N.A.
208 South LaSalle Street
Chicago, Illinois 60604-1003
312-855-5816
Fax: 312-855-5847
Payments to LKQ Corporation:
Please Advise
5. Other Provisions:
Assignment: This Swap Transaction may be assigned only with prior written

             consent

Netting:     The parties hereto hereby agree that subparagraph (ii) of
             Part 2(c) of the Agreement shall not apply to any Swap
             Transaction	

Please confirm that the foregoing correctly sets forth the terms and conditions of our agreement by responding within ten (10) Business Days by either (i) returning via telecopier an executed copy of this Confirmation to the attention of Keli Greenwood (fax number: (312) 855-5847/5852; telephone number:
(312) 855-5844), or sending a telex to Keli Greenwood (telex no.: 62734, answerback: ABN UW) substantially to the following effect: "We acknowledge receipt of your fax dated August 20, 2002 with respect to a Swap Transaction between LKQ Corporation and LaSalle Bank National Association with an Effective Date of August 22, 2002, and a Termination Date of August 22, 2004 and confirm that such fax correctly sets forth the terms of our agreement relating to the Swap Transaction described therein. Very truly yours, Mark T. Spears, V.P., CFO by (specify name and title of authorized officer)." Failure to respond within such period shall not affect the validity or enforceability of this Swap Transaction, and shall be deemed to be an affirmation of the terms and conditions contained herein, absent manifest error.
Yours sincerely,
LASALLE BANK NATIONAL ASSOCIATION

By: /s/Lily Levin                        By: /s/Aamer Quadri
    ------------------------------           -----------------------------------
    Name: Lily Levin                         Name: Aamer Quadri
          ------------------------                 -----------------------------
    Title:Vice President                     Title:Vice President
          ------------------------                 -----------------------------

LKQ CORPORATION

By: /s/Mark T. Spears                    By:
    ------------------------------           -----------------------------------
    Name: Mark T. Spears                     Name:
          ------------------------                 -----------------------------
    Title:Sr. VP & CFO                       Title:
          ------------------------                 -----------------------------	

EXHIBIT 10.10
SUBLEASE
THIS SUBLEASE (the "Sublease") is made and entered into as of this 1st day of June, 1998, by and between BLUE CHIP CASINO, INC., an Indiana corporation formerly known as INDIANA BLUE CHIP HOTEL & RIVERBOAT CASINO RESORT CORP. ("Sublessor"), and LKQ CORPORATION, a Delaware corporation ("Sublessee").
WITNESSETH
WHEREAS, pursuant to that certain Office Lease dated March 18, 1994 (the "Master Lease") by and between Savings of America Tower Associates, a California limited partnership, and GGP Limited Partnership ("GGP"), a Delaware limited partnership, a portion of the building commonly known as Suite 3300, 120 N. LaSalle Street, Chicago, Illinois (the "Sublease Premises") was demised and let to GGP; and
WHEREAS, pursuant to that certain Sublease dated September 19, 1996 (the "GGP Sublease") by and between GGP and Sublessor, GGP sublet the Sublease Premises to Sublessor; and
WHEREAS, Cole Taylor Bank, an Illinois banking corporation, as Trustee under Trust No. 94-6161 ("Landlord"), is the successor in interest to Savings of America Tower Associates and is the Landlord under the Master Lease; and
WHEREAS, Sublessee is a corporation under common control with Sublessor; and
WHEREAS, Sublessor desires to sublease, subdemise and sublet unto Sublessee and Sublessee desires to sublease, subhire and take from Sublessor, a portion of the Sublease Premises, subject to the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the rents hereinafter reserved and mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Sublessor and Sublessee hereby agree as follows:
1. SUBLEASE. Sublessor hereby subleases, subdemises and sublets unto Sublessee, and Sublessee hereby subleases, subhires and takes from Sublessor, the portion of the Sublease Premises described on Exhibit A hereto for the Term (as hereinafter defined) and subject to the terms and conditions hereinafter set forth.
2. TERM. The term of this Sublease (the "Term") shall commence on June 1, 1998 (the "Sublease Commencement Date"), and shall terminate on July 30, 2004 (the "Expiration Date"), unless sooner terminated as provided herein.
3. MASTER LEASE. This is a Sublease, and this Sublease is subject to and subordinate in all respects, to the Master Lease. To the extent not inconsistent with this Sublease, the Master Lease, except for Subparagraphs
1(d), (e), (g), (i), (j) and (k), and Paragraphs 3, 12, 13, 15, 21, 22, 34, 35 and Exhibits B and E thereof, is incorporated herein by reference as if fully set forth herein. Sublessee agrees that nothing herein contained shall be deemed to grant Sublessee any rights that would conflict with any of the covenants and conditions of the Master Lease, and

Sublessee agrees that it will do nothing in, on or about the Sublease Premises which would result in the breach by Sublessor or its undertakings and obligations under the Master Lease. Except as specifically provided in this Sublease, nothing contained in this Sublease shall be construed as a guarantee by Sublessor of any of the obligations, covenants, warranties, agreements or undertakings of Landlord in the Master Lease, nor as an undertaking by Sublessor or Sublessee on the same or similar terms as are contained in the Master Lease. From and after the Sublease Commencement Date, except as set forth herein, with respect to the Sublease Premises Sublessee agrees to assume and be bound by all of the covenants and agreements made by Sublessor under the Master Lease and to perform all of the duties, responsibilities and obligations of the Sublessor under the Master Lease (the "Master Lease Obligations"), in each case substituting Sublessor for Landlord (as defined in the Master Lease) and Sublessee for Tenant (as defined in the Master Lease) under the Master Lease, and to hold Sublessor harmless from any damages, responsibility or liability which Sublessor may incur by virtue of Sublessee's occupancy of the Sublease Premises or any failure of Sublessee to perform under this Sublease, including, but not limited to, performance of the Master Lease Obligations.
4. GGP SUBLEASE. This Sublease is also subject to and subordinate in all respects, to the GGP Sublease. To the extent not inconsistent with this Sublease, the GGP Sublease is incorporated herein by reference as if fully set forth herein. Sublessee agrees that nothing herein contained shall be deemed to grant Sublessee any rights that would conflict with any of the covenants and conditions of the GGP Sublease, and Sublessee agrees that it will do nothing in, on or about the Sublease Premises which would result in the breach by Sublessor of its undertakings and obligations under the GGP Sublease. Except as specifically provided in this Sublease, nothing contained in this Sublease shall be construed as a guarantee by Sublessor of any of the obligations, covenants, warranties, agreements or undertakings of GGP in the GGP Sublease, nor as an undertaking by Sublessor to Sublessee on the same or similar terms as are contained in the GGP Sublease. From and after the Sublease Commencement Date, except as set forth herein, with respect to the Sublease Premises Sublessee agrees to assume and be bound by all of the covenants and agreements made by Sublessor under the GGP Sublease and to perform all of the duties, responsibilities and obligations of Sublessor under the GGP Sublease (the "GGP Sublease Obligations"), and to hold Sublessor harmless from any damages, responsibility or liability which Sublessor may incur by virtue of Sublessee's occupancy of the Sublease Premises or any failure of Sublessee to perform under this Sublease, including, but not limited to, performance of the GGP Sublease Obligations. From and after the Sublease Commencement Date, except as set forth herein, with respect to the Sublease Premises, Sublessee shall be entitled to all of the rights, privileges and benefits of Sublessor under The GGP Sublease.
5. RENT. Sublessee shall pay as rent for the Sublease Premises, the aggregate of the following, all of which are hereby declared to be "Rent":
(a) BASE RENT. Sublessee shall pay to Sublessor at such place as Sublessor may from time to time designate, in coin or currency, which, at the time of payment, is legal tender for private or public debts in the United States of America, its pro rata portion (as set forth on Exhibit A hereto) of base rent at the annual rate of $68,250.00 ("Base Rent"). Base Rent shall be paid in monthly installments of Sublessee's pro rata portion (as set forth on Exhibit A hereto) of $5,687.50, being one-twelfth of the annual rate, in advance on or before the first day of each and every month during the Term, without any set-off or deduction whatsoever, except as expressly
2

set forth herein. Base Rent for the Sublease Premises shall be those amounts specified below at the annual rates and for the time periods specified.
(b) ADDITIONAL RENT.
(1) TAXES AND OPERATING EXPENSES. Sublessee shall pay any and all sums for its pro rata portion (as set forth on Exhibit A hereto) of Tenant's Percentage Share (as defined in The Master Lease) of Taxes (as defined in the Master Lease) and Operating Expenses (as defined in the Master Lease) that may become due during the Term. In the event that the Master Lease requires that payment of Taxes and Operating Expenses in installments, Sublessee shall pay such installments to Sublessor as and when they become due.
(2) Sublessee shall pay its pro rata portion (as set forth on Exhibit A hereto) of any and all additional sums for heating, ventilating or air-conditioning of the Sublease Premises as and when such charges may become due. Electricity for the Sublease Premises shall either be separately metered and Sublessee shall pay all bills for such electricity directly to the utility when due, or if not separately metered, Sublessee shall pay to Sublessor the electric bill for the Sublease Premises, as reasonably determined by Sublessor.
(3) Any sums due to Sublessor by Sublessee or due to GGP or Landlord by Sublessor under this Sublease, the GGP Sublease or under the Master Lease which are not Base Rent shall be deemed and considered to constitute "Additional Rent".
6. EXTENSION OPTION. If Sublessee desires to occupy and sublease the entire "Sublease Premises" (as defined in the GGP Sublease), Sublessee shall have the right to direct Sublessor to cause GGP to exercise the extension option set forth in Paragraph 33 of the Master Lease upon the following terms and conditions: (a) Sublessee shall deliver to Sublessor written notice of Sublessee's election to extend the Term not less than fourteen (14) months prior to the expiration of the Term and such notice shall specify whether Sublessee is requesting Sublessor to elect to extend for five (5) years or ten (10) years;
(b) Sublessee shall pay any and all Rent (as defined in the Master Lease) for any such extension period; (c) Sublessee shall pay any and all costs and expenses of Sublessee or Sublessor in connection with such election to extend, including, without limitation reasonable Sublessor's attorneys' fees for review of any documentation or notices, not to exceed $1,000.00; and (d) Sublessor shall not be liable to Sublessee for any failure or refusal by Landlord or GGP to extend the term of the Master Lease. Notwithstanding the foregoing, to the extent that Landlord agrees to accept notice and performance by Sublessee, and provided that Sublessee simultaneously delivers a copy of any notice to Sublessor, Sublessee shall have the right to exercise the extension option described above in accordance with the terms of the Master Lease, but subject to the provisions of clauses (b), (c) and (d) of this paragraph.
7. TERMINATION OPTION. If Sublessor intends to exercise the "Termination Option" described in Paragraph 22 of the GGP Sublease and Paragraph 32 of the Master Lease, Sublessor shall provide to Sublessee at least fifteen days' notice prior to any such exercise, and Sublessee
3

may then elect to take possession of the entire Sublease Premises by assuming all of the rights and obligations of Sublessor under the GGP Sublease and the Master Lease.
8. MISCELLANEOUS.
(a) NO WAIVER. The failure of either party to insist on strict performance of any covenant or condition hereof, or to exercise any option contained herein, shall not be construed as a waiver of such covenant, condition or option in any other instance.
(b) MEMORANDUM OF LEASE. Sublessee shall not record this Sublease or any memorandum hereof.
(c) GOVERNING LAW. This Sublease has been negotiated, executed and delivered in the State of Illinois, and the parties agree that the rights and obligations of the parties under this Sublease shall be governed and construed in accordance with the laws of the State of Illinois.
(d) SUCCESSOR AND ASSIGNS. Each provision of this Sublease shall extend to and shall bind and inure to the benefit not only of Sublessor and Sublessee, but also their respective successors and assigns, but this provision shall not operate to permit any transfer, assignment, mortgage, encumbrance, lien, charge or subletting contrary to the provisions of the Master Lease, the GGP Sublease or of this Sublease. The terms "GGP", "Tenant" and "Landlord" as employed herein shall include and refer to the respective successors and assigns under the Master Lease or the GGP Sublease of the parties so identified in the Master Lease.
(e) AMENDMENTS. No modification, waiver or amendment of this Sublease or of any of its conditions shall be binding upon Sublessor or Sublessee unless in writing signed by both parties.
(f) TIME OF ESSENCE. Time is of the essence of this Sublease and each and all of the provisions thereof.
(g) SEVERABILITY. The invalidity of any of the provisions of this Sublease will not impair or affect in any manner the validity, enforceability or effect of the rest of the Sublease.
(h) ENTIRE AGREEMENT. All understandings and agreements, oral or written, heretofore made between the parties hereto are merged in this Sublease, which alone fully and completely expresses the agreement between Sublessor and Sublessee.
(i) RELATIONSHIP BETWEEN THE PARTIES. This Sublease does not create the relationship of principal and agent, nor does it create any partnership, joint venture, or any association or relationship between Sublessor and Sublessee other than as and to the extent specifically provided in this Sublease, the sole relationship of Sublessor and Sublessee being that of sublandlord and subtenant as provided in this Sublease.
(j) REMEDIES CUMULATIVE. Except as specifically provided herein, all rights and remedies of Sublessor under this Sublease shall be cumulative and none shall exclude any other rights and remedies allowed by law.
4

(k) CONFLICT. In the event that any of the Terms and provisions of this Sublease vis-a-vis Landlord are inconsistent with the Master Lease, the terms and provisions of the Master Lease shall control. In the event that any of the Terms and provisions of this Sublease vis-a-vis GGP are inconsistent with the GGP Sublease, the terms and provisions of the GGP Sublease shall control.
(l) INSURANCE. Each of Sublessor and Sublessee shall name the other as an additional insured on its respective commercial insurance policies relating to the Sublease Premises.
(m) NOTICES. Sublessor shall deliver to Sublessee a copy of all notices received by Sublessor which relate to the GGP Sublease or the Master Lease.
IN WITNESS WHEREOF, the parties hereto have executed this Sublease as of the day and year first above written.
SUBLESSOR:
BLUE CHIP CASINO, INC.,
 an Indiana corporation

By: /s/ John P.  McMahon
    -------------------------------------
          John P.  McMahon
          Senior Vice President	

SUBLESSEE:
LKQ CORPORATION,
 a Delaware corporation

By: /s/ Frank Erlain
    -------------------------------------
          Name:  Frank Erlain
          Title:  Vice President	

5

EXHIBIT A
Each month Sublessee shall promptly reimburse Sublessor the "LKQ Percentage" (as hereinafter defined) of the following actual monthly operating expenses incurred by Sublessor relating to the Sublease Premises: (a) "Rent" as defined in the GGP Sublease (includes base rent, operating expenses, and real estate taxes); (b) furniture, fixtures arid equipment costs; (c) copy machine expenses; (d) utility bills; and (e) kitchen supplies.
As of the Sublease Commencement Date, Sublessee shall occupy six offices or workstations in the Sublease Premises, and the LKQ Percentage shall be 32%.
Each month in which Sublessee occupies any additional office, workstation or similar work area (each a "Space") in the Sublease Premises, the LKQ Percentage shall be adjusted for such month and determined by dividing the number of Spaces occupied by Sublessee by the sum of all Spaces occupied by Sublessor and Sublessee.
6

EXHIBIT 10.11
INDUSTRIAL BUILDING LEASE
BETWEEN
Leonard A. Damron, III, LLC,
a Georgia limited liability company
as Landlord
and
Damron Auto Parts, L.P., a Delaware limited partnership, as Tenant
DATE OF LEASE: July 29, 1998
PREMISES: Jenkinsburg, Georgia

TABLE OF CONTENTS

ARTICLE I GRANT AND TERM....................................................3

ARTICLE II RENT.............................................................3

ARTICLE III USE.............................................................4

ARTICLE IV POSSESSION.......................................................4

ARTICLE V TAXES.............................................................4

ARTICLE VI INSURANCE........................................................5

ARTICLE VII UTILITIES.......................................................6

ARTICLE VIII MAINTENANCE AND ALTERATIONS....................................6

ARTICLE IX COMPLIANCE WITH LAWS AND ORDINANCES..............................8

ARTICLE X MECHANIC'S LIENS..................................................8

ARTICLE XI OPTIONS TO EXTEND................................................9

ARTICLE XII DEFAULTS OF TENANT.............................................10

ARTICLE XIII DESTRUCTION AND RESTORATION...................................12

ARTICLE XIV CONDEMNATION...................................................13

ARTICLE XV ASSIGNMENT AND SUBLETTING.......................................14

ARTICLE XVI SUBORDINATION, NONDISTURBANCE AND ATTORNMENT...................14

ARTICLE XVII SIGNS.........................................................15

ARTICLE XVIII LANDLORD'S ACCESS............................................15

ARTICLE XIX SURRENDER AND HOLDING-OVER.....................................16

ARTICLE XX HAZARDOUS AND TOXIC MATERIALS...................................17

ARTICLE XXI RIGHT OF FIRST REFUSAL.........................................20

ARTICLE XXII MISCELLANEOUS PROVISIONS......................................21

ARTICLE XXIII LANDLORD'S REPRESENTATIONS AND WARRANTIES....................25	

ARTICLE XXIV LANDLORD DEFAULT..............................................27

ARTICLE XXV OPTION TO PURCHASE.............................................28

ARTICLE XXV ARBITRATION....................................................28	

EXHIBITS
EXHIBIT A - Legal Description
EXHIBIT B - Form Purchase Agreement

LEASE
THIS LEASE (this "Lease") is made as of the 29th day of July, 1998, by and between Leonard A. Damron, III, LLC, a Georgia limited liability company ("Landlord"), and Damron Auto Parts, L.P., a Delaware limited partnership ("Tenant").
ARTICLE I
GRANT AND TERM
1.1 Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord, that certain parcel of real estate (the "Land") located in Jenkinsburg, Georgia, as legally described on Exhibit A attached hereto and by this reference made a part hereof, together with all improvements located thereon (the "Improvements"), and all appurtenances belonging to or in any way pertaining to such premises (the Land, Improvements and appurtenances hereinafter collectively referred to as the "Premises").
1.2 The term hereof (the "Term") shall commence on July 29, 1998 (the "Commencement Date"), and shall terminate on the last day of the sixtieth (60th) complete calendar month to occur after the Commencement Date (the "Expiration Date") (unless the Term shall be terminated or extended in accordance herewith).
ARTICLE II
RENT
2.1 Annual rent ("Rent") throughout the Term shall be One Hundred Eighty Thousand and 00/100 Dollars ($180,000.00).
2.2 Tenant shall pay Rent in equal monthly installments ("Monthly Rent") of Fifteen Thousand and 00/l00 Dollars ($15,000.00) in advance on the first day of each and every calendar month during the Term.
2.3 Rent shall be paid to or upon the order of Landlord at Landlord's address set forth herein or as otherwise designated in writing by Landlord. Landlord may change its address by notice to Tenant of such change pursuant to
Section 22.2 hereof.
2.4 Rent not paid within fifteen (15) days after the same is due shall bear interest from the date when due and payable under the terms hereof until the same is paid at an annual rate of interest equal to ten percent (10%), unless a lesser rate shall then be the maximum rate

permissible by law, in which event said lesser rate shall be charged. The rate of interest determined pursuant to the preceding sentence is sometimes hereinafter referred to as the "Maximum Rate of Interest."
2.5 If the Commencement Date occurs on other than the first day of the month, or the Term shall end other than on the last day of the month, Tenant shall pay proportionate Rent at the monthly rate set forth herein (in advance) for such partial month, as well as any other charges payable for such partial month.
ARTICLE III
USE
The Premises may be used and occupied for a salvage yard, auto servicing operations, and automotive aftermarket parts sales, and for all uses customarily and incidentally related thereto. Tenant shall not use or permit the Premises to be used for any other purpose without the consent of Landlord, which consent shall not be unreasonably withheld or delayed.
ARTICLE IV
POSSESSION
Except as otherwise expressly provided herein, Landlord shall deliver exclusive possession of the Premises to Tenant on or before the Commencement Date.
ARTICLE V
TAXES
5.1 "Taxes" shall mean real estate taxes, sewer rents, rates and charges, and any other federal, state or local governmental charge, general, special, ordinary or extraordinary (but not including special or general assessments and income or franchise taxes or any other taxes imposed upon or measured by Landlord's income or profits, except as provided herein), which may now or hereafter be levied or imposed against the Premises or any portion thereof or interest therein. Notwithstanding the year for which any such taxes are levied, in the case of special taxes which may be payable in installments, the amount of each installment, plus any interest payable thereon, payable during any year shall be considered Taxes levied for that year. Except as provided in the preceding sentence, all references to Taxes levied, confirmed or imposed during a

particular year or Taxes "for" a particular year shall be deemed to refer to Taxes levied or otherwise imposed during such year without regard to when such Taxes are payable; provided, however, that in no event shall such Taxes be charged to or against Tenant or its successors or assigns, more than once. Landlord represents and warrants that it has received no written notice of special assessments affecting the Premises as of the date hereof.
5.2 Tenant shall pay, before any fine, penalty, interest or cost is incurred, all Taxes which are levied, confirmed, imposed or which become a lien upon the Premises with respect to any period of time within the Term; provided, however, that as to any calendar year not falling entirely within the Term, Tenant shall be obligated to pay only a prorata share of Taxes based upon the number of days of the Term falling within the calendar year. Within ten (10) days after receipt of a copy of a tax bill, Landlord shall forward same to Tenant. Tenant shall not be liable for any costs, penalties or other expenses due to Landlord's failure to provide copies of such tax bills in a timely manner.
5.3 Tenant shall have the right to contest at its own expense the amount or validity, in whole or in part, of any Taxes by appropriate proceedings diligently conducted in good faith, but only after payment of such Taxes, unless such payment, or a payment thereof under protest, would operate as a bar to such contest or interfere materially with the prosecution thereof, in which event, notwithstanding the provisions of Section 5.2 hereof, Tenant may postpone or defer payment of such Taxes if neither the Premises nor any portion thereof, by reason of such postponement or deferment, would be in danger of being forfeited or lost. Tenant also shall have the right to select the counsel to be retained in connection with the prosecution of any such proceedings. Upon the termination of any such proceedings, Tenant shall pay the amount of such Taxes or part thereof, if any, as finally determined in such proceedings, the payment of which may have been deferred during the prosecution of such proceedings, together with any costs, fees, including attorneys' fees, interest, penalties, fines and other liability in connection therewith. Tenant shall be entitled to the refund of any Taxes, penalty, fine and interest thereon received by Landlord which have been paid by Tenant or which have been paid by Landlord but for which Landlord previously has been reimbursed by Tenant. Landlord shall not be required to join in any proceedings referred to in this Section 5.3 unless the provisions of any law, rule or regulation at the time in effect shall require that such proceedings be brought by or in the name of Landlord, in which event Landlord shall join in such proceedings or permit the same to be brought in Landlord's name.
5.4 Tenant covenants to furnish to Landlord, upon request by Landlord therefor, official receipts of the appropriate taxing authority, or other appropriate proof reasonably satisfactory to Landlord, evidencing the payment of the same.
ARTICLE VI
INSURANCE
6.1 Tenant shall procure policies of insurance relating to the Premises, at its own cost and expense, in character and amounts substantially similar to that insurance carried on the

Premises by Landlord prior to the date of this Lease, and shall maintain such policies throughout the Term, and any Extension Period(s), in a commensurate ratio of insurance to replacement cost; provided however, that if the same becomes unreasonably expensive or impracticable to maintain, Tenant shall maintain insurance in accordance with industry standards.
6.2 With the prior written consent of Landlord, which consent shall not be unreasonably withheld or delayed, Tenant shall have the right to self-insure against any and all risks.
6.3 Notwithstanding any other provision of this Lease to the contrary, and without limitation of the provisions of this Article VI, whenever (a) any loss, cost, damage or expense resulting from fire, explosion or any other casualty or occurrence is incurred by either of the parties hereto, or anyone claiming by, through, or under it in connection with the Premises, and (b) such party then is covered in whole or in part by insurance with respect to such loss, cost, damage or expense or is required under this Lease to be so insured, then the party so insured (or so required) hereby waives any claims against and releases the other party from any liability said other party may have on account of such loss, cost, damage or expense to the extent of any amount recovered by reason of such insurance (or which could have been recovered had such insurance been carried as so required). The parties agree to furnish to each insurance company which has or will issue policies of casualty insurance on the Improvements, written notice of said waivers and to have the insurance policies properly endorsed, if necessary, to acknowledge such subrogation waivers. Such release of liability and waiver of the right of subrogation shall not be operative in any case where the effect thereof is to invalidate such insurance coverage or increase the cost thereof (except that in the case of increased cost, the other party shall have the right, within thirty (30) days following written notice, to pay such increased cost, thereby keeping such release and waiver in full force and effect).
ARTICLE VII
UTILITIES
Tenant will pay, when due, all charges of every nature, kind or description for utilities consumed by Tenant at the Premises, including all charges for water, sewage, heat, gas, light, garbage, electricity, telephone, steam, power or other public or private utility services.
ARTICLE VIII
MAINTENANCE AND ALTERATIONS
8.1 Tenant shall keep and maintain the exterior and interior of the Premises in good condition and repair, including without limitation, all structural and non-structural repairs, maintenance and replacement of the plumbing, electrical, heating, ventilating, air conditioning

and other mechanical systems (the "Systems"), and maintenance of the Premises' structure, foundation and roof. As to any repairs, alterations, additions and improvements (hereinafter "Alterations") costing in excess of $50,000.00, and as to any replacements or structural Alterations whatsoever, Tenant shall, in connection therewith, comply with the requirements of Section 8.2(b) hereof. To the extent possible, Tenant shall keep the Premises from falling temporarily out of repair or deteriorating. Further, Tenant shall keep and maintain the improvements at any time situated upon the Premises, the parking area and all sidewalks and areas adjacent thereto, safe, secure, clean and sanitary (including, without limitation, snow and ice clearance, planting and replacing flowers and landscaping, and necessary interior painting and carpet cleaning), and in substantial compliance with all zoning, municipal, county and state laws, ordinances and regulations applicable to the Premises. Landlord represents that the Premises are, as of the date of this Lease, in compliance with all applicable zoning, municipal, county and state laws, ordinances and regulations.
8.2 (a) Subject to Section 8.2(b) hereof, Tenant shall make all Alterations on the Premises, and on and to the Improvements, parking areas, sidewalks, and equipment thereon, which may be made necessary by the act or neglect of Tenant, its employees, agents or contractors, or any persons, firm or corporation, claiming by, through or under Tenant or which are necessary or desirable in Tenant's sole opinion for the safer or more efficient operation of Tenant's business. All Alternations performed by Tenant shall be performed with new materials, in a good and workmanlike manner. Except as provided in the first sentence of this paragraph, Tenant shall not create any openings in the roof or exterior walls, or make any other Alterations to the Premises, other than any non-structural Alterations not exceeding $50,000.00 in cost, without Landlord's prior written consent, which consent shall not be unreasonably withheld.
(b) As to any non-structural Alterations costing in excess of $50,000.00, and as to any replacements or structural Alterations whatsoever, such work shall be performed with new materials, in a good and workmanlike manner, strictly in accordance with plans and specifications therefor first reasonably approved in writing by Landlord and in accordance with all applicable laws and ordinances. Upon completion of any such work by or on behalf of Tenant, Tenant shall provide Landlord with such documents as Landlord reasonably may require (including, without limitation, sworn contractors' statements and supporting lien waivers) evidencing payment in full for such work, and "as-built" working drawings. In the event Tenant performs any work not in compliance with the provisions of this Section 8.2(b), Tenant, following written notice from Landlord, immediately shall remove such work and restore the Premises to its condition immediately prior to the performance thereof. If Tenant fails to remove such work and restore the Premises as aforesaid, Landlord, at its option, and in addition to all other rights or remedies of Landlord under this Lease, at law or in equity, may enter the Premises and perform said obligation(s) of Tenant and Tenant shall reimburse Landlord for the cost to the Landlord thereof, immediately upon being billed therefor by Landlord. Such entry by Landlord shall not be deemed an eviction or disturbance of Tenant's use or possession of the Premises nor render Landlord liable in any manner to Tenant.

ARTICLE IX
COMPLIANCE WITH LAWS AND ORDINANCES
9.1 During the Term Tenant shall, at its sole cost and expense, comply or cause compliance with all present and future laws, orders, rules, ordinances, regulations and requirements, including, without limitation, the Americans with Disabilities Act, applicable to the Premises. Landlord shall be responsible for all matters arising prior to Tenant's occupancy of the Premises.
9.2 After prior written notice to Landlord, Tenant, at its sole cost and expense, shall have the right to contest the validity or application of any law or ordinance referred to in this Article IX in the name of Tenant or Landlord, or both, by appropriate legal proceedings diligently conducted. If necessary or proper to permit Tenant to so contest the validity or application of any such law or ordinance, Landlord shall execute and deliver any appropriate papers or other documents.
ARTICLE X
MECHANIC'S LIENS
Tenant shall not suffer or permit any mechanic's lien or other lien to be filed against the Premises, or any portion thereof, by reason of work, labor, skill, services, equipment or materials supplied or claimed to have been supplied to the Premises at the request of Tenant, or of anyone holding the Premises, or any portion thereof, by, through or under Tenant. If any such mechanic's lien or other lien at any time shall be filed against the Premises or any portion thereof, Tenant, within thirty (30) days after the date Tenant first becomes aware of the filing of the same, at Tenant's election, shall cause said lien either to be discharged of record or to be bonded over in a manner which is reasonably acceptable to Landlord. If Tenant shall fail to discharge such mechanic's lien or other lien or to bond over the same within such period, then Landlord may, but shall not be obligated to, discharge the same by paying to the claimant the amount claimed to be due or by procuring the discharge of such lien as to the Premises by deposit of a cash sum or a bond or other security, or in such other manner as is now or may in the future be provided by present or future law for the discharge of such lien as a lien against the Premises. Any amount paid by Landlord, or the value of any deposit so made by Landlord, together with all costs, fees and expenses in connection therewith (including reasonable attorneys' fees), together with interest thereon at the Maximum Rate of Interest, shall be repaid by Tenant to Landlord within thirty (30) days after demand therefor. Tenant shall indemnify, defend and hold harmless Landlord and the Premises from all losses, costs, damages, expenses, liabilities, suits, penalties, claims, demands and obligations, including, without limitation, reasonable attorneys' fees, resulting from the assertion, filing, foreclosure or other legal proceedings with respect to any such mechanic's lien or other lien.

ARTICLE XI
OPTIONS TO EXTEND
11.1 Subject to the provisions hereinafter set forth in this Article XI, Landlord hereby grants Tenant options to extend the Term on the same terms, conditions and provisions as contained in this Lease, except as otherwise expressly provided herein, for three (3) periods of five (5) years each (collectively the "Extension Periods," or individually an "Extension Period," as applicable). If exercised in accordance herewith, the first Extension Period shall commence on the first (1st) day after the Expiration Date and each successive Extension Period shall commence on the day after the expiration of the immediately preceding Extension Period.
11.2 Said options to extend each shall be exercisable in the following manner:
(a) Not less than ninety (90) days prior to the Expiration Date or the last day of the applicable Extension Period, Tenant, by written notice to Landlord ("Extension Notice"), may exercise Tenant's option to extend for the next occurring Extension Period. If an option to extend the Term, as the same may have been previously extended, is not extended in the aforesaid manner, the Term and Tenant's rights hereunder and its rights to occupy and possess the Premises shall expire on the Expiration Date, or the last day of the then applicable Extension Period, as the case may be.
(b) Subject to Section 11.3 hereof, if Tenant delivers an Extension Notice as aforesaid, the Term shall be extended on the same terms, conditions and provisions as contained herein
11.3 Rent during the first Extension Period shall equal the Rent payable during the initial Term hereof, increased by the Increase Percentage, as that term is hereinafter defined, for the initial Term. Rent during the remaining Extension Period(s) shall equal the Rent payable during the immediately preceding Extension Period, increased by the Increase Percentage for the immediately preceding Extension Period. "Increase Percentage" shall mean the aggregate sum, for each year during the Term or relevant Extension Period, as the case may be, of the lesser of (i) the percentage increase in the Consumer Price Index over the immediately preceding twelve (12) months, as calculated utilizing the Consumer Price Index for the month of June in the relevant year, and (ii) Four and One-Half Percent (4.5%). By way of example only, if the annual increase in Consumer Price Index, as calculated in accordance with the foregoing, during the initial Term is, respectively, 2%, 5%, 1%, 6% and 4.7%, the Increase Percentage to be used in calculating Rent payable during the first Extension Period shall equal Sixteen and One-Half Percent (16.5%) [2 + 4.5 + 1 +
4.5 + 4.5 = 16.5]. Rent shall remain constant during each Extension Period. As used herein, "Consumer Price Index" means the Consumer Price Index, for all Urban Consumers -- Atlanta, Georgia. All Items (based index year 1982-84 = 100), as published by the United States Department of Labor, Bureau of Labor Statistics. If the manner in which the Consumer Price Index is determined by the Bureau of Labor Statistics shall be substantially revised, including without limitation, a change in the base index year, an adjustment

shall be made by Landlord in such revised index which would produce results equivalent, as nearly as possible, to those which would have been obtained if the Consumer Price Index had not been so revised. If the Consumer Price Index shall become unavailable to the public because publication is discontinued, or otherwise, or if equivalent data is not readily available to enable Landlord to make the adjustment referred to in the preceding sentence, then Landlord will substitute therefor a comparable index based upon changes in the cost of living or purchasing power of the consumer dollar published by any other governmental agency or, if no such index shall be available, then a comparable index published by a major bank or other financial institution or by a university or a recognized financial publication.
ARTICLE XII
DEFAULTS OF TENANT
12.1 The occurrence of any one or more of the following events shall constitute an "Event of Default":
(a) If default shall be made in the due and punctual payment of any Rent or in the payment of any other amount to be paid by Tenant to Landlord, when and as the same shall become due and payable, and such default shall continue for a period of fifteen (15) days after written notice thereof to Tenant; or
(b) If material default shall be made by Tenant in keeping, observing or performing any of the terms contained in this Lease, other than as referred to in subsection (a) of this Section 12.1, and such default shall continue for a period of thirty (30) days after written notice thereof given by Landlord to Tenant, or such longer period as is reasonable to cure said default, if said default cannot, with due diligence and in good faith, be cured within said thirty (30) days, provided that Tenant promptly and with due diligence and in good faith fails to commence the cure of the same within the thirty (30) day period and thereafter fails to prosecute the curing of such default with due diligence and in good faith.
12.2 If an Event of Default occurs, Landlord shall have the rights and remedies hereinafter set forth, which shall be distinct, separate and cumulative.
(a) Landlord may terminate this Lease by giving Tenant written notice of its election to do so, in which event the Term shall end and all right, title and interest of Tenant hereunder shall expire on the date stated in such notice;
(b) Landlord may terminate Tenant's right to possess the Premises without terminating this Lease by giving written notice to Tenant that Tenant's right of possession shall end on the date stated in such notice, whereupon Tenant's right to possess the Premises or any part thereof shall cease on the date stated in such notice; and

(c) Landlord may enforce the provisions of this Lease, including without limitation Section 12.5 hereof, and may enforce and protect the rights of Landlord hereunder by a suit or suits in equity or at law for the specific performance of any covenant or agreement contained herein, and for the enforcement of any other appropriate legal or equitable remedy, including, without limitation, injunctive relief, and for recovery of all monies due or to become due from Tenant under any of the provisions of this Lease.
12.3 If Landlord exercises either of the remedies provided for in Sections 12.2(a) and 12.2(b), Tenant shall surrender possession of and vacate the Premises and immediately deliver possession thereof to Landlord, and Landlord may, upon proper process of law, re-enter and take complete and peaceful possession of the Premises.
12.4 If Landlord terminates Tenant's right to possess the Premises without terminating this Lease, such termination of possession shall not release Tenant, in whole or in part, from Tenant's obligation to pay the Rent hereunder for the full Term, as and when the same becomes due and payable, and Landlord shall have the right, from time to time, to recover from Tenant, and Tenant shall remain liable for, all Rent and any other sums due and payable to Landlord during the period from the date of such notice of termination of possession to the stated end of the Term. In any such case, Landlord shall use reasonable efforts to mitigate damages and to re-let the Premises or any part thereof for the account of Tenant for such time (which may be for a term extending beyond the Term) and upon such terms as Landlord reasonably shall determine. Also, in any such case, Tenant shall pay the cost of Landlord's reasonable expenses of re-letting. Landlord shall collect the rents from any such re-letting and apply the same first to the payment of its unreimbursed expenses of re-letting and second to the payment of Rent herein provided to be paid by Tenant, and any excess or residue, until the expiration of the Term, shall operate only as an offsetting credit against the amount of Rent due and owing which thereafter becomes due and payable hereunder, and upon the expiration of the Term, the total aggregate amount of all such excesses which Landlord has then accumulated, if any, shall be paid to Tenant. No such re-entry, repossession, or re-letting shall be construed as an eviction or ouster of Tenant or as an election on Landlord's part to terminate this Lease, unless a written notice of such intention is given to Tenant, and Landlord, at any time and from time to time, may sue and seek a judgment for any deficiencies from time to time remaining after the application of the proceeds of any such re-letting. In no event shall Landlord be entitled to collect Rent or other charges from Tenant prior to the date the same is due and payable under the terms of this Lease.
12.5 If Landlord terminates this Lease pursuant to Section 12.2(a) hereof, Landlord shall be entitled to recover, as and for final damages for Tenant's default, an amount equal to the difference between the present value of the aggregate Rent to be paid by Tenant hereunder for the unexpired portion of the Term, and the then present value of the aggregate reasonable fair market rent for the Premises over the same period. In the computation of present value, a discount rate of six percent (6%) per annum shall be employed.
ARTICLE XIII

DESTRUCTION AND RESTORATION
13.1 Tenant covenants and agrees that, subject to the availability of insurance proceeds, in case of damage or destruction of the Improvements after the Commencement Date by fire or otherwise, Tenant shall promptly restore, repair, replace and rebuild the same as nearly as possible to the condition that the same were in immediately prior to such damage or destruction with such changes or alterations (made in conformity with Article VIII hereof) as may be reasonably acceptable to Landlord or required by law. Such restoration, repairs, replacements, rebuilding, changes and alterations, including the cost of temporary repairs for the protection of the Improvements, or any portion thereof, pending completion thereof are sometimes hereinafter referred to as the "Restoration." The Restoration shall be carried on and completed in accordance with the provisions and conditions of this Section and Article VIII hereof. All insurance monies payable on account of such damage or destruction shall be applied to the payment of the costs of the Restoration. Notwithstanding anything to the contrary herein contained, if the insurance monies in the hands of Tenant shall be insufficient to pay the entire costs of the Restoration, Tenant may, but shall not be obligated to, pay any deficiency. If Tenant elects not to pay any such deficiency, Tenant shall have the right to terminate this Lease upon thirty (30) days prior written notice to Landlord. Upon completion of the Restoration, Tenant shall be entitled to any insurance monies then remaining.
13.2 From and after any destruction of or damage to the Improvements, or any portion thereof, by fire, casualty or otherwise, which results in the inability of Tenant to conduct its business, in part or in whole, at the Premises, all Rent and all other charges payable by Tenant hereunder shall abate from the date of such suspension of business until the earlier of (a) the date such business is resumed, or (b) the completion of Restoration; and in connection therewith, if the Improvements are damaged in part but Tenant elects to continue to conduct its business therein, the Rent shall abate and be diminished in proportion to that part of the Improvements which is rendered unusable.
13.3 Notwithstanding the foregoing provisions of this Article XIII, in case of damage or destruction of the Improvements which results in the inability of Tenant to conduct its business, in part or in whole, at the Premises, and the Restoration can not reasonably be expected to be completed within one hundred eighty (180) days after the date of such damage or destruction, Tenant shall have the option of terminating this Lease as of the date of such damage or destruction by notice in writing given to Landlord within thirty (30) days after the occurrence of such damage or destruction. In such event, Landlord shall be entitled to all of the casualty insurance proceeds payable on account of such damage or destruction (excluding any insurance coverage for Tenant's contents, trade fixtures and other personal property), and Tenant shall assign to Landlord, Tenant's rights to such insurance proceeds.
ARTICLE XIV

CONDEMNATION
14.1 If, during the Term, the entire Premises shall be taken as the result of the exercise of the power of eminent domain or conveyed under threat thereof (hereinafter referred to as the "Proceedings"), this Lease and all right, title and interest of Tenant hereunder shall terminate on the earlier of taking of possession by the condemning authority or the date of vesting of title pursuant to such Proceedings. Landlord and Tenant each shall be entitled to an allocation of the award to be made in such Proceedings relative to their respective interests in the Premises. For purposes of determining the value of Tenant's interest, it shall be assumed that Tenant would extend the Term for the maximum number of Extension Periods.
14.2 If, during the Term, less than the entire Premises shall be taken in any such Proceedings, but such taking, in Tenant's reasonable judgment, shall render the Premises unusable, Tenant may terminate this Lease. Such termination shall be effected by notice in writing given not more than sixty (60) days after the date of vesting of title in such Proceedings, and shall specify a date not more than sixty (60) days after the giving of such notice as the date for such termination. Upon the date specified in such notice, the Term this Lease, and all right, title and interest of Tenant hereunder shall cease and terminate. If this Lease is terminated as provided in this Section 14.2, Landlord and Tenant each shall be entitled to an allocation of the award to be made in such Proceedings relative to their respective interests in the Premises. For purposes of determining the value of Tenant's interest, it shall be assumed that Tenant would extend the Term for the maximum number of Extension Periods.
14.3 If during the Term, less than the entire Premises shall be taken, but such taking, in Tenant's reasonable judgment, shall not render the Premises unusable, this Lease, upon the earlier of taking of possession by the condemning authority or vesting of title in the Proceedings, shall terminate as to the parts so taken, and the proceeds of the award for such taking shall be delivered to Tenant to restore that portion of the Improvements on the Premises not so taken to a complete architectural and mechanical unit and otherwise to make the remaining Premises appropriate for the use and occupancy of Tenant. In the event that the net amount of the award (after deduction of all costs and expenses, including attorneys' fees) that may be received in any such Proceedings for physical damage to the Improvements or the Land as a result of such taking is insufficient to pay all costs of such restoration work, Landlord shall deposit with Tenant such additional sum as may be required. The provisions and conditions in Article VIII applicable to changes and alterations shall apply to Tenant's obligations to restore as aforesaid.
14.4 In the event of any termination of this Lease, or any part thereof, as a result of any such Proceedings, Tenant shall pay to Landlord all Rent and all other charges payable hereunder with respect to that portion of the Premises so taken, apportioned to the date of such termination.
14.5 If Tenant either is not entitled, or does not elect, to terminate this Lease in the event of a partial taking of the Premises, the Rent payable hereunder during the period from and after the earlier of the taking of possession by the condemning authority and the date of vesting of title in such Proceedings through to the expiration or termination of this Lease (as the Term

may be extended) shall abate and be diminished in proportion to that part of the Improvements and the Land which has been taken.
ARTICLE XV
ASSIGNMENT AND SUBLETTING
15.1 Tenant, at any time and from time to time during the Term, may: (a) assign, transfer, mortgage, pledge, hypothecate or encumber this Lease or any interest under it; (b) allow to exist or occur any transfer of or lien upon this Lease or Tenant's interest herein by operation of law; or (c) sublet the Premises or any part thereof; provided, however, that the same shall not relieve Tenant from liability for performance of any covenant or obligation hereunder and, provided further, that Tenant shall notify Landlord in writing of such actions.
15.2 Tenant shall not need the consent of Landlord if the assignment is to an entity related to or affiliated with Tenant. Tenant shall not assign this Lease to an entity unrelated or unaffiliated with Tenant, without Landlord's prior consent, which consent shall not be unreasonably withheld or delayed. Any assignee of Tenant expressly shall assume in writing all of the obligations of Tenant hereunder, and Section 20.8 of this Lease shall be satisfied before such assignment is completed.
ARTICLE XVI
SUBORDINATION, NONDISTURBANCE, NOTICE TO MORTGAGEE AND ATTORNMENT
16.1 This Lease is and shall be subject and subordinate to the lien of any mortgage, deed of trust, security instrument or other document of like nature, hereinafter referred to as "Mortgage", which now or at any time hereafter may be placed upon the Premises, or any portion thereof or interest therein, and to all present and future ground or underlying leases of the Land, and to any replacements, renewals, amendments, modifications, extensions or refinancing of any of the foregoing, and to each and every advance made under any Mortgage (unless the holder of any Mortgage or the lessor under any such ground or underlying lease [such holder or lessor being hereinafter referred to as a "Mortgagee"] requires in writing that this Lease be superior thereto); provided that the Mortgagee agrees in writing that so long as no Event of Default is continuing, neither Tenant's right to quiet enjoyment under this Lease, nor the right of Tenant to continue to occupy the Premises and all portions thereof, and to conduct its business thereon in accordance with the covenants, conditions, provisions, terms and agreements of this Lease, shall be interfered with or disturbed by Landlord or anyone claiming by, through or under Landlord, including Mortgagee. Tenant agrees at any time hereafter, and from time to time within thirty (30) days after demand of Landlord, to execute and deliver to Landlord any instruments,

releases or other documents that reasonably may be required to effect or confirm the subordination or superiority of this Lease to the lien of any such Mortgage or to any such ground or underlying lease. In addition, Landlord shall cause any Mortgagee currently holding a Mortgage, to agree in writing in a manner satisfactory to Tenant not to interfere with or disturb Tenant's rights as aforesaid so long as no Event of Default is continuing, said writing to be delivered to Tenant within thirty (30) days of the Commencement Date. The lien of any Mortgage shall not cover Tenant's trade fixtures or other personal property located in or on the Premises.
16.2 If any Mortgagee shall succeed to the rights of Landlord under this Lease or to ownership of the Premises, whether through foreclosure or the delivery of a deed in lieu thereof, then upon the written request of such Mortgagee, and provided that such Mortgagee agrees in writing to assume and be bound by all of Landlord's obligations hereunder, Tenant shall attorn to and recognize such Mortgagee as Tenant's landlord under this Lease, and shall execute and deliver any instrument that such Mortgagee may reasonably request to evidence such attornment. Subject to the terms of Section 22.7 hereof, in the event of any other transfer of Landlord's interest hereunder, upon the written request of the transferee and Landlord, and provided such transferee agrees in writing to assume and be bound by all of Landlord's obligations hereunder, Tenant shall attorn to and recognize such transferee as Tenant's landlord under this Lease and shall execute and deliver any instrument that such transferee and Landlord reasonably may request to evidence such attornment.
ARTICLE XVII
SIGNS
Tenant may erect any signs on the exterior or interior of the Improvements or on the landscaped area adjacent thereto, provided that such sign or signs (i) do not cause any irreparable structural damage or other damage to the Improvements; (ii) do not violate applicable governmental laws, ordinances, rules or regulations; and (iii) do not violate any covenants, conditions or restrictions affecting the Premises.
ARTICLE XVIII
LANDLORD'S ACCESS
18.1 Tenant agrees to permit Landlord and its authorized representatives, at Landlord's sole cost and expense, to enter upon the Premises at all reasonable times during ordinary business hours, upon not less than twenty-four
(24) hours prior notice (except in the case of emergency, when no notice shall be required), for the purpose of inspecting the same and making any

necessary repairs or replacements which are the obligation of Landlord. Landlord may, during the progress of any work required hereunder, keep and store upon the Premises all reasonably necessary materials, tools and equipment.
18.2 Landlord is hereby also given the right at all reasonable times during ordinary business hours, upon not less than twenty-four (24) hours prior notice (except in the case of emergency, when no notice shall be required), to enter upon the Premises and to exhibit the same for the purpose of mortgaging or selling the same or, during the final four (4) months of the Term, leasing the same.
18.3 In exercising its rights hereunder, Landlord shall refrain from any acts which may interfere with Tenant's use or occupancy of the Premises or access thereto. Without limiting the generality of the foregoing, Landlord acknowledges that it is necessary for Tenant to control access to the Premises in order to avoid unauthorized persons from viewing Tenant's trade secrets, proprietary products, technology and/or processes. Accordingly, while within the Premises, Landlord and its representatives, at Tenant's option, shall be accompanied by a representative of Tenant and shall comply with reasonable directions of such representative relative to safety and to the protection of Tenant's trade secrets and other proprietary information. Landlord also agrees to defend, indemnify and hold Tenant harmless against any and all claims, damages, liability, costs and expenses arising out of or alleged to have arisen out of any entry onto the Premises by Landlord and/or its authorized representatives. Landlord agrees to execute and cause its authorized representatives to execute confidentiality agreements as required by Tenant.
ARTICLE XIX
SURRENDER AND HOLDING-OVER
19.1 Upon the termination of this Lease, whether by forfeiture, lapse of time or otherwise, or upon termination of Tenant's right to possession of the Premises, Tenant will at once surrender and deliver up the Premises, together with all improvements thereon, to Landlord, in good condition and repair, reasonable wear and tear and damage by casualty and condemnation excepted. Said improvements shall include all plumbing, lighting, electrical, heating, cooling and ventilating fixtures and equipment, and all alterations. All permanent alterations, additions and improvements made in or upon the Premises by Tenant shall become Landlord's property and shall remain upon the Premises on any such termination without compensation, allowance or credit to Tenant.
19.2 Upon the termination of this Lease, Tenant shall remove Tenant's personal property, trade fixtures and equipment; provided, however, that Tenant shall repair any injury or damage to the Premises which may result from such removal and shall restore the Premises to the same condition as existed prior to the installation thereof. If Tenant does not remove Tenant's personal property, trade fixtures and equipment from the Premises prior to the expiration or earlier termination of the Term, Landlord, upon thirty (30) days' notice to Tenant, at its option,

may remove the same (and repair any damage occasioned thereby) and dispose thereof or deliver the same to any other place of business of Tenant or warehouse the same, and Tenant shall pay the cost of such removal, repair, delivery and warehousing to Landlord within thirty (30) days of demand therefor.
19.3 Tenant shall have no right to occupy the Premises or any portion thereof after the expiration of this Lease or after the termination of this Lease or of Tenant's right to possession pursuant to Article XII hereof. In the event Tenant or any party claiming by, through or under Tenant holds over, Landlord may exercise any and all remedies available to it at law or in equity to recover possession of the Premises, and for direct damages; provided, however, that Landlord shall not be entitled to recover, and hereby expressly waives any right to recover, consequential damages. Notwithstanding anything contained herein to the contrary, in the event Tenant or any party claiming by, through or under Tenant holds-over after the expiration of the Term, Landlord may elect, in lieu of any other remedy provided by law or herein, that the same shall constitute a month-to-month tenancy upon the same terms as in this Lease at a rate of rent equal to one hundred twenty five percent (125%) of the Monthly Rent for the month in which the Term expires.
ARTICLE XX
HAZARDOUS AND TOXIC MATERIALS
20.1 As used herein:
(a) "Claim" shall mean and include any demand, cause of action, proceeding or suit (i) for damages, losses, injuries to person or property, damages to natural resources, fines, penalties, interest, or contribution;
(ii) for the costs of site investigations, feasibility studies, information requests, health or risk assessments or Response actions; or (iii) for enforcing this Article XX.
(b) "Environmental Law" means 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, relating to the protection of human health, safety, or the environment including without limitation: (a) the Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA") (42 U.S.C. Sections 9601 ET SEQ.; (b) the Superfund Amendments and Reauthorization Act of 1986 (42 U.S.C. Sections 9601 ET SEQ.); (c) The Hazardous Materials Transportation Control Act of 1970 (49 U.S.C. Sections 1802 ET SEQ.; (d) the Resource Conservation and Recovery Act of 1976, as amended by the Solid and Hazardous Waste Act Amendments ("RCRA") (42 U.S.C. Sections 6901 ET seq.);
(e) the Federal Water Pollution Control Act, as amended by the Clean Water Act of 1977 (33 U.S.C. Sections 1251 ET SEQ.) (the "Clean Water Act"); (f) the Safe Drinking Water Act (42 U.S.C. Sections 300h ET SEQ.); (g) the Clean Air Act, as amended by the

Clean Air Act Amendments of 1990 (42 U.S.C. Sections 1857 ET SEQ.); (h) the Solid Waste Disposal Act, as amended by RCRA (42 U.S.C. Section 6901 ET SEQ.); (i) the Toxic Substances Control Act (15 U.S.C. Sections 2601 ET SEQ.); (j) the Emergency Planning and Community Right-to-Know Act of 1986 ("EPCRA") (42 U.S.C. Sections 11001 ET SEQ.); (k) the Federal Insecticide, Fungicide and Rodenticide Act ("FIFRA") (7 U.S.C. Sections 136 ET SEQ.);
(l) the National Environmental Policy Act of 1975 (42 U.S.C. Sections 4321 ET SEQ.); (m) the Radon Gas and Indoor Air Quality Reserve Act (42 U.S.C. Sections 7401 ET SEQ.); (n) the National Environmental Policy Act of 1975 (42 U.S.C. Sections 4321 ET SEQ.); (o) the Rivers and Harbors Act of 1899 (33 U.S.C. Sections 401 ET SEQ.); (p) the Oil Pollution Act of 1990 (33 U.S.C. Sections 1321 ET SEQ.); (q) the Endangered Species Act of 1973, as amended (16 U.S.C. Sections 1531 ET SEQ.); (r) the Occupational Safety and Health Act of 1970, as amended, (29 U.S.C. Sections 651 ET SEQ.); (s) North American Free Trade Act, (t) counterparts of any of the foregoing federal statutes enacted within or outside the United States or by any other nation, any U.S. state, region, county or local government (including any subdivisions thereof); (u) any and all laws, rules, regulations, codes, ordinances, licenses, permits, approvals, plans, authorizations, directives, rulings, injunctions, decrees, orders and judgments enacted or promulgated under any of the foregoing, all as amended and as may be amended in the future, and (v) common law theories of nuisance, trespass, waste, negligence, and abnormally dangerous activities arising out of or relating to the presence of Hazardous Substances in the environment or work place.
(c) "Hazardous Substance" shall be construed broadly to include any substance, material or waste, including without limitation any constituent, chemical, element, particle, compound, material, substance or waste which is defined as a "hazardous waste," "hazardous material," "hazardous substance," "extremely hazardous substance," "restricted hazardous waste," "contaminant," "toxic waste," "toxic substance," or "special waste" under any Environmental Law which includes, but is not limited to, 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.
(d) "Manage" or "Management" means to generate, manufacture, process, treat, store, use, re-use, refine, recycle, reclaim, blend or burn for energy recovery, incinerate, accumulate speculatively, transport, transfer, dispose of or abandon Hazardous Substance.
(e) "Release" shall mean releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, disposing or dumping into the indoor or outdoor environment, including without limitation the abandonment or discarding of barrels, drums, containers, tanks and other receptacles containing or previously containing any Hazardous Substance.

(f) "Response" or "Respond" shall mean action required by any Environmental Law to correct, remove, remediate, cleanup, prevent, mitigate, monitor, evaluate, investigate, assess or abate a Release of a Hazardous Substance.
20.2 During the Term, Tenant, at its sole cost and expense, shall (a) comply with all Environmental Laws relating solely to its use of the Premises, and permits issued thereunder; (b) conduct any Management of Hazardous Substances by Tenant on the Premises in compliance with Environmental Laws; (c) use commercially reasonable efforts so as to not cause or allow the Release of any Hazardous Substances on, to or from the Premises, except in compliance with Environmental Laws and permits issued thereunder; (d) arrange for the lawful transportation and off-site disposal of all Hazardous Substances that it generates; (e) secure, maintain, and comply with all permits required by Environmental Laws in connection with Tenant's use of the Premises; and (f) provide Landlord with copies of all environmental reports and results of all environmental tests conducted by or for Tenant during the Term.
20.3 During the Term, Landlord, at its sole cost and expense, shall (a) comply with all Environmental Laws other than those relating solely to Tenant's use of the Premises, and permits issued thereunder; and (b) secure, maintain and comply with all permits required by Environmental Laws other than those required solely by reason of Tenant's use of the Premises.
20.4 Landlord and Landlord's agents and employees shall have the right to enter upon the Premises to conduct appropriate inspections or tests in order to determine Tenant's compliance with Environmental Laws, provided that (a) such inspections and tests shall be performed at the sole cost and expense of Landlord; (b) Landlord shall provide Tenant with written notice not less than five business (5) days prior to conducting such inspections or tests; (c) such tests shall be performed at reasonable times designated by Tenant, shall be subject to the provisions of Section 18.3 and in all other respects shall not interfere with Tenant's business operations and shall be in compliance with Tenant's security procedures; and (d) Landlord promptly shall communicate and, when appropriate, delivery copies of the results of any investigation and tests, to Tenant.
20.5 If Tenant's Management of Hazardous Substances at the Premises (a) results in or causes a Release which violates an Environmental Laws or permits issued thereunder; (b) gives rise to liability or a Claim or requires a Response under common law or any Environmental Law or permit issued thereunder; (c) causes a significant public health effect; or (d) creates a nuisance, Tenant shall promptly notify Landlord and, in any and all such occurrences and at its sole cost and expense, promptly take all applicable action in Response. Tenant shall keep Landlord reasonably informed as to its actions in connection with any Response.
20.6 Tenant shall indemnify, defend and hold harmless Landlord, its beneficiary, managing agents and mortgagees from all Claims arising from or attributable to any breach by Tenant of any of its warranties, representations or covenants in this Article XX.
20.7 Notwithstanding anything in the Article XX to the contrary, Tenant shall not be liable and Landlord shall fully indemnify and hold Tenant harmless from and against any and all

liabilities, damages, expenses, costs and losses arising from, or as a result of, any use and occupancy of the Premises prior to the Commencement Date, including any violation of any Environmental Laws attributable to the period prior to the Commencement Date.
20.8 Notwithstanding anything to the contrary in this Lease, in the event Tenant shall assign this Lease to an entity unrelated to or unaffiliated with Tenant, Tenant shall provide Landlord a Phase I environmental assessment of the Premises dated within ninety (90) days prior to the effective date of the assignment. Such assignee shall agree, as a condition precedent to the assignment, to provide Landlord with a Phase I environmental assessment of the Premises not less frequently than every five (5) years throughout the remainder of the Term, as the same may be extended pursuant to the terms of this Lease, and at the expiration of said Term.
ARTICLE XXI
RIGHT OF FIRST REFUSAL
If, at any time after the end of the eighty fourth (84th) complete calendar month to occur after the Commencement Date and before the end of the one hundred twentieth (120th) complete calendar month to occur after the Commencement Date, and while this Lease is in full force and effect, Landlord should receive from a bona fide, arm's-length purchaser a bona fide written offer to purchase the Premises ("Bona Fide Offer"), and should Landlord desire to accept the Bona Fide Offer, it shall first make a written offer (the "Tenant Offer") to sell said Premises to Tenant at the price and upon the terms and conditions set forth in the Bona Fide Offer. The Tenant Offer shall be accompanied by a copy of the Bona Fide Offer. Tenant may accept the Tenant Offer by service of notice of acceptance on Landlord on or before the thirtieth (30th) day following delivery of the Tenant Offer to Tenant. If the Tenant Offer is accepted, the purchase and sale shall be closed at the principal office of Landlord on the date set forth in the Bona Fide Offer or at such other place, time and date as Landlord and Tenant may agree upon, by payment of the purchase price against conveyance of the Premises free and clear of liens and encumbrances of every kind and description except as permitted by the Tenant Offer. If Tenant fails to fully and timely accept the Tenant Offer as herein provided, Landlord may make the bona fide sale of the Premises to the bona fide prospective purchaser making the Bona Fide Offer in accordance with the terms thereof; provided, however, that if Landlord fails to consummate the sale of the Premises on exactly the same terms and conditions as are set forth in the Bona Fide Offer, the Premises shall again be subject to Tenant's right of first refusal. Tenant's right of first refusal as set forth in this Article XXI shall be a continuing right and shall survive each sale of the Premises during the term hereof (as it may be extended as provided herein).

ARTICLE XXII
MISCELLANEOUS PROVISIONS
22.1 To the fullest extent allowed by law, Tenant, at all times, shall indemnify, defend and hold Landlord, its officers, directors, employees and agents, harmless from and against any and all claims by or on behalf of any person or persons, firm or firms, corporation or corporations, arising from the conduct or management of, or from any work or things whatsoever done in or about, the Premises (except to the extent arising out of Landlord's negligence or other wrongful conduct), and further will indemnify, defend and hold Landlord, its officers, directors, employees and agents, harmless against and from any and all claims arising during the Term and based upon any breach or default on the part of Tenant in the performance of any covenant or agreement on the part of Tenant to be performed pursuant to the terms of this Lease, or arising from any act or neglect of Tenant, its agents, servants, employees, licensees, or contractors, or arising from any accident, injury or damage whatsoever caused to any person, firm or corporation occurring during the Term in or about the Premises, and from and against all costs, attorneys' fees, expenses and liabilities incurred in or with respect to any such claim or action or proceeding brought thereon. To the fullest extent allowed by law, Landlord, at all times, shall indemnify, defend and hold Tenant, its officers, directors, employees and agents, harmless from and against any and all claims by or on behalf of any person or persons, firm or firms, corporation or corporations, arising from the conduct or management of, or from any work or things whatsoever done in or about, the Premises (except to the extent arising out of Tenant's negligence or other wrongful conduct), and further will indemnify, defend and hold Tenant, its officers, directors, employees and agents harmless against and from any and all claims arising during the Term and based upon any breach or default on the part of Landlord in the performance of any covenant or agreement on the part of Landlord to be performed pursuant to the terms of this Lease, or arising from any act or neglect of Landlord, its agents, servants, employees, licensees or contractors, whenever and wherever occurring or arising from any accident, injury or damage whatsoever caused to any person, firm or corporation occurring prior to or after the Term in or about the Premises, and from and against all costs, attorneys' fees, expenses and liabilities incurred in connection with any such claim or action or proceeding brought thereon.
22.2 All notices, demands and requests which may be or are required to be given, demanded or requested by either party to the other shall be in writing. All notices, demands and requests by Landlord to Tenant shall be sent by United States registered or certified mail, postage prepaid, or by commercial overnight delivery service or other personal service (with evidence of receipt), addressed as follows:

LKQ Corporation
120 N. LaSalle Street
Suite 330
Chicago, Illinois 60602
Attn: General Counsel
or at such other place as Tenant may from time to time designate by written notice to Landlord. All notices, demands and requests by Tenant to Landlord shall be sent by United States registered or certified mail, postage prepaid, or by commercial overnight delivery service or other personal service (with evidence of receipt), addressed to Landlord as follows:
Lenny Damron
1046 N. Stony Point
Crystal River, FL 34429
with a copy to:
Allan S. Gassman, Esq.
1245 Court Street, Suite 102
Clearwater, FL 33756
or at such other place as Landlord from time to time may designate by written notice to Tenant. Notices, demands and requests which shall be served upon Landlord by Tenant, or upon Tenant by Landlord, by mail in the manner aforesaid, shall be deemed to be sufficiently served or given for all purposes hereunder on the second business day after mailing, and notices served by overnight delivery service shall be deemed served or given on the second business day after delivery to such service.
22.3 Landlord covenants and agrees that Tenant, upon paying the Rent, and upon observing and keeping the covenants, agreements and conditions of this Lease on its part to be kept, observed and performed, shall lawfully and quietly hold, occupy and enjoy the Premises (subject to the provisions of this Lease) during the Term (as it may be extended from time to time as expressly provided herein) without hindrance or molestation by Landlord or by any person or persons claiming under Landlord. In the event of a breach by Landlord of this Section 22.3, or of any other covenant herein, then, anything in this Lease notwithstanding, Tenant shall have the full right to cure such breach at the expense of Landlord, and Landlord shall upon demand pay Tenant's costs, including attorneys' fees and expenses, of curing said breach (or Tenant, at its option, may deduct said costs and fees and expenses from the next accruing installment(s) of Rent or other charges payable by it to Landlord), or Tenant may enforce any and all remedies at law or in equity or under this Lease which may be available to Tenant under the particular circumstances.
22.4 Tenant and Landlord, each without charge at any time and from time to time, within thirty (30) days after written request by the other party, shall certify by written instrument, duly executed, acknowledged and delivered to any Mortgagee, assignee of a Mortgagee,

proposed Mortgagee, or to any purchaser or proposed purchaser or transferee of the Landlord, Tenant or Premises or any interest therein:
(a) That this Lease is unmodified and in full force and effect (or, if there have been modifications, that the same is in full force and effect, as modified, and stating the modifications);
(b) The dates to which the Rent has been paid in advance;
(c) Whether or not there are then existing any breaches or defaults by the certifying party or by the other party and known by the certifying party under any of the covenants, conditions, provisions, terms or agreements of this Lease, and specifying such breach or default, if any, or any set-offs or defenses against the enforcement of any covenant, condition, provision, term or agreement of this Lease upon the part of Landlord or Tenant, as the case may be, to be performed or complied with (and, if so, specifying the same and the steps being taken to remedy the same);
(d) That Tenant has made no advancements to or on behalf of Landlord for which it has the right to deduct from, or offset against, future Rent payments;
(e) Tenant has accepted the Premises and is in full and complete possession thereof; and
(f) Such other statements or certificates as Landlord or Tenant or any Mortgagee may reasonably request.
22.5 Upon not less than thirty (30) days prior written request by either party, the parties hereto agree to execute and deliver to each other a memorandum of lease, in recordable form, setting forth the following:
(a) the date of this Lease;
(b) the parties to this Lease;
(c) the Term of this Lease;
(d) the three (3), five (5) year extension options set forth in Article XI;
(e) the right of first refusal set forth in Article XXI;
(f) the legal description of the Premises;
(g) the option to purchase set forth in Article XXVI; and

(h) such other matters reasonably requested by Landlord or Tenant to be stated therein.
22.6 If any covenant, condition, provision, term or agreement of this Lease shall, to any extent, be held invalid or unenforceable, the remaining covenants, conditions, provisions, terms and agreements of this Lease shall not be affected thereby, but each covenant, condition, provision, term or agreement of this Lease shall be valid and in force to the fullest extent permitted by law. This Lease shall be construed and be enforceable in accordance with the laws of the State of Georgia.
22.7 The covenants and agreements herein contained shall bind and inure to the benefit of Landlord and its successors and assigns, and Tenant and its successors and assigns.
22.8 The caption of each article of this Lease is for convenience and reference only and in no way defines, limits or describes the scope or intent of such article or of this Lease.
22.9 This Lease does not create the relationship of principal and agent, or of partnership, joint venture, or of any association or relationship between Landlord and Tenant, the sole relationship between Landlord and Tenant being that of landlord and tenant.
22.10 All preliminary and contemporaneous negotiations are merged into and incorporated in this Lease. This Lease contains the entire agreement between the parties and shall not be modified or amended in any manner except by an instrument in writing executed by the parties hereto.
22.11 There shall be no merger of this Lease or the leasehold estate created by this Lease with any other estate or interest in the Premises by reason of the fact that the same person, firm, corporation or other entity may acquire, hold or own directly or indirectly, (a) this Lease or the leasehold interest created by this Lease or any interest therein, and (b) any other estate or interest in the Premises or any portion thereof. No such merger shall occur unless and until all persons, firms, corporations or other entities having an interest (including a security interest) in (1) this Lease or the leasehold estate created hereby, and (2) any such other estate or interest in the Premises or any portion thereof, shall join in a written instrument expressly effecting such merger and shall duly record the same.
22.12 All obligations, monetary or otherwise, accruing prior to expiration of the Term (as it may be extended from time to time) shall survive the expiration or other termination of this Lease.
22.13 Time is of the essence of this Lease, and all provisions herein relating thereto shall be strictly construed.
22.14 Each party represents and warrants to the other that it has not dealt with any broker in connection with this Lease and agrees to indemnify and hold the other party and its agents, officers, directors and employees harmless from all losses, damages, liabilities, claims, liens, costs and expenses, including, without limitation, attorneys' fees, arising from any claims or demands of any broker or brokers, salespersons or finders for any commission or fee alleged to

be due such broker or brokers, salespersons or finders based upon such broker or brokers, salespersons or finders having dealt with the indemnifying party in connection with this Lease.
22.15 To the extent either party indemnifies and agrees to defend the other under the terms of this Lease, the indemnifying party shall have the right to select counsel to undertake such defense, which counsel shall be reasonably acceptable to the indemnified party.
22.16 Subject to specific conditions as to consents and approvals provided for in other sections of this Lease, no consent or approval required under this Lease shall be unreasonably withheld or delayed.
22.17 This Lease may be executed in counterparts, each of which when taken together shall constitute one instrument.
22.18 This Lease represents the product of the joint negotiation, preparation and agreement of and between the parties hereto and is not to be construed against one party or the other as the principal drafter.
22.19 In the event of any litigation between the Landlord and the Tenant arising out of an alleged breach of this Lease by either of them and such litigation terminates upon the issuance of a final, unappealable judicial order, the unsuccessful party therein shall pay the successful party's reasonable attorneys' fees and expenses in such litigation. This provision shall inure only to the Landlord and Tenant and their respective successors and permitted assigns, if any.
ARTICLE XXIII
LANDLORD'S REPRESENTATIONS AND WARRANTIES
23.1 In addition to the other representations and warranties made herein, Landlord hereby represents and warrants to Tenant that as of the date hereof the following representations and warranties are true, correct and complete and that the same will be true, correct and complete on and as of the Commencement Date:
(a) Landlord warrants and represents that the execution and delivery of this Lease by the signatory hereto on behalf of Landlord and the performance of this Lease by Landlord have been duly authorized by Landlord and this Lease is binding upon Landlord and enforceable against Landlord in accordance with its terms.
(b) Landlord warrants and represents that it is the owner of fee simple title to the Land, and except for mortgages of record which have been disclosed in writing to Tenant, free and clear of all liens, encumbrances, covenants, conditions, restrictions, rights of way, easements, leases, tenancies, licenses, claims, options, and any other matters which would impair the marketability of title to the Land.

(c) Landlord represents and warrants that there are no condemnation or judicial proceedings, administrative actions or examinations, claims or demands of any type which have been instituted or which are pending or threatened against Landlord with respect to the Premises or any part thereof. There are no actions or proceedings pending or to the best of Landlord's knowledge, threatened against Landlord with respect to the Premises before any court or administrative agency which would result in any material adverse change in the condition and operation of the Premises. In the event Landlord receives notification of any of the foregoing prior to Commencement Date, copies of such notice shall be provided to Tenant by Landlord within three (3) days following its receipt thereof, but in no event later than the Commencement Date.
(d) Landlord represents and warrants that Landlord is duly organized and validly existing under the laws of the State of Georgia that the execution and delivery of this Lease and the transaction contemplated hereby have been duly authorized by Landlord and that the performance of Landlord's obligations under this Lease will not violate its organizational documents, the provisions of any applicable law or agreement to which it is a party or under which it is bound.
(e) Landlord represents and warrants that the Premises will be delivered on the Commencement Date in substantially the same condition as on the date hereof, reasonable wear and tear excepted, and free of any occupants, tenants or rights of first refusal, right of reverter or rights of first offer relating to the Premises, other than as provided in this Lease; any service contracts or management agreements; and any employee, employment agreements or union contract affecting the Premises.
(f) Landlord represents and warrants that Landlord has not filed any proceeding or petition in, nor received notice that any proceeding or petition has been filed against Landlord in bankruptcy or insolvency, or for reorganization or for the appointment of a receiver, custodian or trustee, or for the arrangement of debts under any state or federal statute relating to debtor protection or insolvency, and further that Landlord is not insolvent and will not be rendered insolvent by the consummation of the transaction contemplated by this Lease.
(g) Landlord represents and warrants that it has received no notice of any violations of building, fire, air pollution, or Environmental Law and that Landlord has no knowledge of any suits or judgments threatened or pending relating to violations at the Premises or any portion of the Premises of any such laws, ordinances and regulations.
(h) Landlord represents and warrants that there are no special taxes or assessments pending and/or unpaid with respect to any improvements not yet completed on the Premises;

(i) Landlord represents and warrants that there are no parties that have any rights to possession of any part of the Premises other than Landlord or that have any leases to any portion of the Premises, other than as provided in this Lease.
(j) Landlord represents and warrants that there are no written or oral service agreements or other contracts or leases with respect to the Property or any part thereof, except this Lease.
(k) Landlord represents and warrants that there are no underground storage tanks on the Premises or any condition on the Premises which materially violates the terms of any applicable environmental law.
(l) Landlord represents and warrants that there are no asbestos-containing materials on the Premises.
(m) Landlord represents and warrants that between the date of this Lease and the Commencement Date that it will not enter into any leases, service agreements or other contracts with respect to the Premises, which will be effective beyond the Commencement Date without express written consent of Tenant, which consent shall not be unreasonably withheld; provided, however, the Tenant shall not be required to consent to any agreement which will terminate on or before the Commencement Date.
All representations made by Landlord in this Article XXIII shall survive the execution of this Lease and, if later, the Commencement Date.
ARTICLE XXIV
LANDLORD DEFAULT
In the event Landlord breaches any of the representations and warranties contained in Article XXIII hereof, or in the event any such representation or warranty is untrue when made, or in the event Landlord breaches any of its obligations under Article IX hereof, and if such breach is curable and is not cured within thirty (30) days after written notice thereof, Tenant shall have the right to terminate this Lease. In addition to Tenant's rights contained herein or available in law or at equity, in the event Landlord neglects or fails to comply with any of Landlord's obligations contained in this Lease, Tenant may, after giving Landlord not less than 30 days prior written notice, (a) cure any such Landlord's default and (b) withhold rent in an amount not to exceed any amount which Tenant spends to cure any such default or otherwise incurs by reason of Landlord' default (including attorneys' fees and expenses).
ARTICLE XXV

OPTION TO PURCHASE
25.1 In consideration of the Rent to be paid by Tenant under this Lease and other good and valuable consideration and in addition to the right of first refusal granted to Tenant in Article XXI herein, Landlord hereby irrevocably grants to Tenant the exclusive option (the "Option") to purchase the Premises, including but not limited to all structures and improvements thereon and all appurtenances thereto, on the terms and conditions set forth herein and substantially in accordance with the Real Estate Purchase Agreement attached as Exhibit B hereto and made a part hereof (the "Purchase Agreement") for a purchase price (the "Purchase Price") equal to: (a) if exercised on the last day of the sixtieth (60th) complete calendar month to occur after the Commencement Date (the "First Exercise Date"), $1,800,000.00; and (b) if exercised at the end of the eighty fourth (84th) complete calendar month to occur after the Commencement Date (the "Second Exercise Date"), $2,205,000.
25.2 Tenant shall have the right to exercise the Option at the First Exercise Date, and, if not previously exercised, at the Second Exercise Date, by Tenant giving Landlord written notice of Tenant's exercise (the "Option Exercise Notice"), which notice shall be no less than ninety (90) days prior to the First Exercise Date, or the Second Exercise Date, as applicable. The Option Exercise Notice shall be accompanied by four (4) copies of the Purchase Agreement each dated as of the date of Tenant's notice and executed by Tenant, as purchaser, and in substantial accordance with Exhibit B hereto. Within three (3) days of Landlord's receipt of Tenant's exercise of the Option, Landlord shall execute and return to Tenant two (2) of the four (4) copies of the Purchase Agreement which Tenant shall have sent to Landlord. In the event that the Option is not exercised by Tenant in the manner provided herein, the Option shall be null and void and of no further force or effect.
25.3 The Option is a continuing option and shall survive any and all sales of the Premises by Landlord.
ARTICLE XXVI
ARBITRATION
Any party may request by notice to the other party that any dispute under this Lease be submitted to mediation, to be attended by each party and counsel for each party. If any such dispute has not been resolved within 20 days of the notice requesting mediation, then the dispute may be submitted to binding arbitration by either party. Arbitration shall be conducted under and governed by the Commercial Rules of the American Arbitration Association, as in effect from time to time. All arbitration hearings shall be conducted in Chicago, Illinois (if the dispute is submitted to arbitration by Landlord) or Tampa, Florida (if the dispute is submitted to arbitration by Tenant). A judgment upon the award may be entered in any court having jurisdiction. The number of arbitrators shall be three, one each selected by Tenant and the Landlord, with the third arbitrator selected by the two selected by the parties. The arbitrators must render their arbital decision and award and give a written opinion setting forth the basis of their decision, all not later than 45 days after the conclusion of the arbitration. Each party shall take or cause to be

taken all reasonable action to facilitate the conduct of the arbitration and the rendering of the award at the earliest possible date. The costs of the arbitration, including all costs and expenses (including reasonable legal fees and expenses) of each party shall be borne and paid in accordance with the determination of the arbitrators, who shall take into account, in such determination, which party (if any) has prevailed. The parties intend that the mediation and arbitration provisions set forth in this Article XXVI shall be the only means of resolving any disputes under this Lease.
IN WITNESS WHEREOF, each of the parties has caused this Lease to be duly executed as of the day and year first above written.

TENANT:                                     LANDLORD:

Damron Auto Parts, L.P.,                    Leonard A. Damron, III, LLC,
a Delaware limited partnership              a Georgia limited liability company

By: /s/ Thomas B. Raterman                  By: /s/ Leonard A. Damron III

Name: Thomas B. Raterman                    Name: Leonard A. Damron III

Title: Vice-President                       Title: President

Date: July 29, 1998                         Date: July 29, 1998	

EXHIBIT 10.12
INDUSTRIAL BUILDING LEASE
BETWEEN
Damron Auto Parts East, Inc., a Florida corporation, as Landlord
and
Damron Holding Company, a Delaware corporation,
as Tenant
DATE OF LEASE: July 29, 1998
PREMISES: Melbourne, Florida

TABLE OF CONTENTS

ARTICLE I GRANT AND TERM.......................................................1

ARTICLE II RENT................................................................1

ARTICLE III USE................................................................2

ARTICLE IV POSSESSION..........................................................2

ARTICLE V TAXES................................................................2

ARTICLE VI INSURANCE...........................................................4

ARTICLE VII UTILITIES..........................................................4

ARTICLE VIII MAINTENANCE AND ALTERATIONS.......................................5

ARTICLE IX COMPLIANCE WITH LAWS AND ORDINANCES.................................6

ARTICLE X MECHANIC'S LIENS.....................................................6

ARTICLE XI OPTIONS TO EXTEND...................................................7

ARTICLE XII DEFAULTS OF TENANT.................................................8

ARTICLE XIII DESTRUCTION AND RESTORATION......................................10

ARTICLE XIV CONDEMNATION......................................................11

ARTICLE XV ASSIGNMENT AND SUBLETTING..........................................12

ARTICLE XVI SUBORDINATION, NONDISTURBANCE AND ATTORNMENT......................12

ARTICLE XVII SIGNS............................................................13

ARTICLE XVIII LANDLORD'S ACCESS...............................................14

ARTICLE XIX SURRENDER AND HOLDING-OVER........................................14

ARTICLE XX HAZARDOUS AND TOXIC MATERIALS......................................15

ARTICLE XXI RIGHT OF FIRST REFUSAL............................................18

ARTICLE XXII MISCELLANEOUS PROVISIONS.........................................19

ARTICLE XXIII LANDLORD'S REPRESENTATIONS AND WARRANTIES.......................23	

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ARTICLE XXIV LANDLORD DEFAULT.................................................25

ARTICLE XXV OPTION TO PURCHASE................................................26

ARTICLE XXV ARBITRATION.......................................................26	

EXHIBITS
EXHIBIT A - Legal Description
EXHIBIT B - Form Purchase Agreement
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LEASE
THIS LEASE (this "Lease") is made as of the 29th day of July, 1998, by and between Damron Auto Parts East, Inc., a Florida corporation ("Landlord"), and Damron Holding Company, a Delaware corporation, ("Tenant").
ARTICLE I
GRANT AND TERM
1.1 Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord, that certain parcel of real estate (the "Land") located in Melbourne, Florida, as legally described on Exhibit A attached hereto and by this reference made a part hereof, together with all improvements located thereon (the "Improvements"), and all appurtenances belonging to or in any way pertaining to such premises (the Land, Improvements and appurtenances hereinafter collectively referred to as the "Premises").
1.2 The term hereof (the "Term") shall commence on July 29, 1998 (the "Commencement Date"), and shall terminate on the last day of the sixtieth (60th) complete calendar month to occur after the Commencement Date (the "Expiration Date") (unless the Term shall be terminated or extended in accordance herewith).
ARTICLE II
RENT
2.1 Annual rent ("Rent") throughout the Term shall be Two Hundred Sixty Four Thousand and 00/l00 Dollars plus applicable sales tax ($264,000.00 plus applicable sales tax).
2.2 Tenant shall pay Rent in equal monthly installments ("Monthly Rent") of Twenty-Two Thousand and 00/l00 Dollars plus applicable sales tax ($22,000.00 plus applicable sales tax), in advance on the first day of each and every calendar month during the Term.
2.3 Rent shall be paid to or upon the order of Landlord at Landlord's address set forth herein or as otherwise designated in writing by Landlord. Landlord may change its address by notice to Tenant of such change pursuant to
Section 22.2 hereof.
2.4 Rent not paid within fifteen (15) days after the same is due shall bear interest from the date when due and payable under the terms hereof until the same is paid at an annual rate of interest equal to ten percent (10%), unless a lesser rate shall then be the maximum rate

permissible by law, in which event said lesser rate shall be charged. The rate of interest determined pursuant to the preceding sentence is sometimes hereinafter referred to as the "Maximum Rate of Interest."
2.5 If the Commencement Date occurs on other than the first day of the month, or the Term shall end other than on the last day of the month, Tenant shall pay proportionate Rent at the monthly rate set forth herein (in advance) for such partial month, as well as any other charges payable for such partial month.
ARTICLE III
USE
The Premises may be used and occupied for a salvage yard, auto servicing operations, and automotive aftermarket parts sales, and for all uses customarily and incidentally related thereto. Tenant shall not use or permit the Premises to be used for any other purpose without the consent of Landlord, which consent shall not be unreasonably withheld or delayed.
ARTICLE IV
POSSESSION
Except as otherwise expressly provided herein, Landlord shall deliver exclusive possession of the Premises to Tenant on or before the Commencement Date.
ARTICLE V
TAXES
5.1 "Taxes" shall mean real estate taxes, sewer rents, rates and charges, and any other federal, state or local governmental charge, general, special, ordinary or extraordinary (but not including special or general assessments and income or franchise taxes or any other taxes imposed upon or measured by Landlord's income or profits, except as provided herein), which may now or hereafter be levied or imposed against the Premises or any portion thereof or interest therein. Notwithstanding the year for which any such taxes are levied, in the case of special taxes which may be payable in installments, the amount of each installment, plus any interest payable thereon, payable during any year shall be considered Taxes levied for that year. Except as provided in the preceding sentence, all references to Taxes levied, confirmed or imposed during a
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particular year or Taxes "for" a particular year shall be deemed to refer to Taxes levied or otherwise imposed during such year without regard to when such Taxes are payable; provided, however, that in no event shall such Taxes be charged to or against Tenant or its successors or assigns, more than once. Landlord represents and warrants that it has received no written notice of special assessments affecting the Premises as of the date hereof.
5.2 Tenant shall pay, before any fine, penalty, interest or cost is incurred, all Taxes which are levied, confirmed, imposed or which become a lien upon the Premises with respect to any period of time within the Term; provided, however, that as to any calendar year not falling entirely within the Term, Tenant shall be obligated to pay only a prorata share of Taxes based upon the number of days of the Term falling within the calendar year. Within ten (10) days after receipt of a copy of a tax bill, Landlord shall forward same to Tenant. Tenant shall not be liable for any costs, penalties or other expenses due to Landlord's failure to provide copies of such tax bills in a timely manner.
5.3 Tenant shall have the right to contest at its own expense the amount or validity, in whole or in part, of any Taxes by appropriate proceedings diligently conducted in good faith, but only after payment of such Taxes, unless such payment, or a payment thereof under protest, would operate as a bar to such contest or interfere materially with the prosecution thereof, in which event, notwithstanding the provisions of Section 5.2 hereof, Tenant may postpone or defer payment of such Taxes if neither the Premises nor any portion thereof, by reason of such postponement or deferment, would be in danger of being forfeited or lost. Tenant also shall have the right to select the counsel to be retained in connection with the prosecution of any such proceedings. Upon the termination of any such proceedings, Tenant shall pay the amount of such Taxes or part thereof, if any, as finally determined in such proceedings, the payment of which may have been deferred during the prosecution of such proceedings, together with any costs, fees, including attorneys' fees, interest, penalties, fines and other liability in connection therewith. Tenant shall be entitled to the refund of any Taxes, penalty, fine and interest thereon received by Landlord which have been paid by Tenant or which have been paid by Landlord but for which Landlord previously has been reimbursed by Tenant. Landlord shall not be required to join in any proceedings referred to in this Section 5.3 unless the provisions of any law, rule or regulation at the time in effect shall require that such proceedings be brought by or in the name of Landlord, in which event Landlord shall join in such proceedings or permit the same to be brought in Landlord's name.
5.4 Tenant covenants to furnish to Landlord, upon request by Landlord therefor, official receipts of the appropriate taxing authority, or other appropriate proof reasonably satisfactory to Landlord, evidencing the payment of the same.
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ARTICLE VI
INSURANCE
6.1 Tenant shall procure policies of insurance relating to the Premises, at its own cost and expense, in character and amounts substantially similar to that insurance carried on the Premises by Landlord prior to the date of this Lease, and shall maintain such policies throughout the Term, and any Extension Period(s), in a commensurate ratio of insurance to replacement cost; provided however, that if the same becomes unreasonably expensive or impracticable to maintain, Tenant shall maintain insurance in accordance with industry standards.
6.2 With the prior written consent of Landlord, which consent shall not be unreasonably withheld or delayed, Tenant shall have the right to self-insure against any and all risks.
6.3 Notwithstanding any other provision of this Lease to the contrary, and without limitation of the provisions of this Article VI, whenever (a) any loss, cost, damage or expense resulting from fire, explosion or any other casualty or occurrence is incurred by either of the parties hereto, or anyone claiming by, through, or under it in connection with the Premises, and (b) such party then is covered in whole or in part by insurance with respect to such loss, cost, damage or expense or is required under this Lease to be so insured, then the party so insured (or so required) hereby waives any claims against and releases the other party from any liability said other party may have on account of such loss, cost, damage or expense to the extent of any amount recovered by reason of such insurance (or which could have been recovered had such insurance been carried as so required). The parties agree to furnish to each insurance company which has or will issue policies of casualty insurance on the Improvements, written notice of said waivers and to have the insurance policies properly endorsed, if necessary, to acknowledge such subrogation waivers. Such release of liability and waiver of the right of subrogation shall not be operative in any case where the effect thereof is to invalidate such insurance coverage or increase the cost thereof (except that in the case of increased cost, the other party shall have the right, within thirty (30) days following written notice, to pay such increased cost, thereby keeping such release and waiver in full force and effect).
ARTICLE VII
UTILITIES
Tenant will pay, when due, all charges of every nature, kind or description for utilities consumed by Tenant at the Premises, including all charges for water, sewage, heat, gas, light, garbage, electricity, telephone, steam, power or other public or private utility services.
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ARTICLE VIII
MAINTENANCE AND ALTERATIONS
8.1 Tenant shall keep and maintain the exterior and interior of the Premises in good condition and repair, including without limitation, all structural and non-structural repairs, maintenance and replacement of the plumbing, electrical, heating, ventilating, air conditioning and other mechanical systems (the "Systems"), and maintenance of the Premises' structure, foundation and roof. As to any repairs, alterations, additions and improvements (hereinafter "Alterations") costing in excess of $50,000.00, and as to any replacements or structural Alterations whatsoever, Tenant shall, in connection therewith, comply with the requirements of Section 8.2(b) hereof. To the extent possible, Tenant shall keep the Premises from falling temporarily out of repair or deteriorating. Further, Tenant shall keep and maintain the improvements at any time situated upon the Premises, the parking area and all sidewalks and areas adjacent thereto, safe, secure, clean and sanitary (including, without limitation, snow and ice clearance, planting and replacing flowers and landscaping, and necessary interior painting and carpet cleaning), and in substantial compliance with all zoning, municipal, county and state laws, ordinances and regulations applicable to the Premises. Landlord represents that the Premises are, as of the date of this Lease, in compliance with all applicable zoning, municipal, county and state laws, ordinances and regulations.
8.2 (a) Subject to Section 8.2(b) hereof, Tenant shall make all Alterations on the Premises, and on and to the Improvements, parking areas, sidewalks, and equipment thereon, which may be made necessary by the act or neglect of Tenant, its employees, agents or contractors, or any persons, firm or corporation, claiming by, through or under Tenant or which are necessary or desirable in Tenant's sole opinion for the safer or more efficient operation of Tenant's business. All Alternations performed by Tenant shall be performed with new materials, in a good and workmanlike manner. Except as provided in the first sentence of this paragraph, Tenant shall not create any openings in the roof or exterior walls, or make any other Alterations to the Premises, other than any non-structural Alterations not exceeding $50,000.00 in cost, without Landlord's prior written consent, which consent shall not be unreasonably withheld.
(b) As to any non-structural Alterations costing in excess of $50,000.00, and as to any replacements or structural Alterations whatsoever, such work shall be performed with new materials, in a good and workmanlike manner, strictly in accordance with plans and specifications therefor first reasonably approved in writing by Landlord and in accordance with all applicable laws and ordinances. Upon completion of any such work by or on behalf of Tenant, Tenant shall provide Landlord with such documents as Landlord reasonably may require (including, without limitation, sworn contractors' statements and supporting lien waivers) evidencing payment in full for such work, and "as-built" working drawings. In the event Tenant performs any work not in compliance with the provisions of this Section 8.2(b), Tenant, following written notice from Landlord, immediately shall remove such work and restore the Premises to its condition immediately prior to the performance thereof. If Tenant fails to remove such work and restore the Premises as aforesaid, Landlord, at its option, and in addition to all other rights or remedies of Landlord under this Lease, at law or in equity, may enter the Premises
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and perform said obligation(s) of Tenant and Tenant shall reimburse Landlord for the cost to the Landlord thereof, immediately upon being billed therefor by Landlord. Such entry by Landlord shall not be deemed an eviction or disturbance of Tenant's use or possession of the Premises nor render Landlord liable in any manner to Tenant.
ARTICLE IX
COMPLIANCE WITH LAWS AND ORDINANCES
9.1 During the Term Tenant shall, at its sole cost and expense, comply or cause compliance with all present and future laws, orders, rules, ordinances, regulations and requirements, including, without limitation, the Americans with Disabilities Act, applicable to the Premises. Landlord shall be responsible for all matters arising prior to Tenant's occupancy of the Premises.
9.2 After prior written notice to Landlord, Tenant, at its sole cost and expense, shall have the right to contest the validity or application of any law or ordinance referred to in this Article IX in the name of Tenant or Landlord, or both, by appropriate legal proceedings diligently conducted. If necessary or proper to permit Tenant to so contest the validity or application of any such law or ordinance, Landlord shall execute and deliver any appropriate papers or other documents.
ARTICLE X
MECHANIC'S LIENS
Tenant shall not suffer or permit any mechanic's lien or other lien to be filed against the Premises, or any portion thereof, by reason of work, labor, skill, services, equipment or materials supplied or claimed to have been supplied to the Premises at the request of Tenant, or of anyone holding the Premises, or any portion thereof, by, through or under Tenant. If any such mechanic's lien or other lien at any time shall be filed against the Premises or any portion thereof, Tenant, within thirty (30) days after the date Tenant first becomes aware of the filing of the same, at Tenant's election, shall cause said lien either to be discharged of record or to be bonded over in a manner which is reasonably acceptable to Landlord. If Tenant shall fail to discharge such mechanic's lien or other lien or to bond over the same within such period, then Landlord may, but shall not be obligated to, discharge the same by paying to the claimant the amount claimed to be due or by procuring the discharge of such lien as to the Premises by deposit of a cash sum or a bond or other security, or in such other manner as is now or may in the future be provided by present or future law for the discharge of such lien as a lien against the Premises. Any amount paid by Landlord, or the value of any deposit so made by Landlord, together with all costs, fees and expenses in connection therewith (including reasonable attorneys' fees), together with interest thereon at the Maximum Rate of Interest, shall be repaid by Tenant to Landlord
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within thirty (30) days after demand therefor. Tenant shall indemnify, defend and hold harmless Landlord and the Premises from all losses, costs, damages, expenses, liabilities, suits, penalties, claims, demands and obligations, including, without limitation, reasonable attorneys' fees, resulting from the assertion, filing, foreclosure or other legal proceedings with respect to any such mechanic's lien or other lien.
ARTICLE XI
OPTIONS TO EXTEND
11.1 Subject to the provisions hereinafter set forth in this Article XI, Landlord hereby grants Tenant options to extend the Term on the same terms, conditions and provisions as contained in this Lease, except as otherwise expressly provided herein, for three (3) periods of five (5) years each (collectively the "Extension Periods," or individually an "Extension Period," as applicable). If exercised in accordance herewith, the first Extension Period shall commence on the first (1st) day after the Expiration Date and each successive Extension Period shall commence on the day after the expiration of the immediately preceding Extension Period.
11.2 Said options to extend each shall be exercisable in the following manner:
(a) Not less than ninety (90) days prior to the Expiration Date or the last day of the applicable Extension Period, Tenant, by written notice to Landlord ("Extension Notice"), may exercise Tenant's option to extend for the next occurring Extension Period. If an option to extend the Term, as the same may have been previously extended, is not extended in the aforesaid manner, the Term and Tenant's rights hereunder and its rights to occupy and possess the Premises shall expire on the Expiration Date, or the last day of the then applicable Extension Period, as the case may be.
(b) Subject to Section 11.3 hereof, if Tenant delivers an Extension Notice as aforesaid, the Term shall be extended on the same terms, conditions and provisions as contained herein
11.3 Rent during the first Extension Period shall equal the Rent payable during the initial Term hereof, increased by the Increase Percentage, as that term is hereinafter defined, for the initial Term. Rent during the remaining Extension Period(s) shall equal the Rent payable during the immediately preceding Extension Period, increased by the Increase Percentage for the immediately preceding Extension Period. "Increase Percentage" shall mean the aggregate sum, for each year during the Term or relevant Extension Period, as the case may be, of the lesser of (i) the percentage increase in the Consumer Price Index over the immediately preceding twelve (12) months, as calculated utilizing the Consumer Price Index for the month of June in the relevant year, and (ii) Four and One-Half Percent (4.5%). By way of example only, if the annual increase in Consumer Price Index, as calculated in accordance with the foregoing, during the initial Term is, respectively, 2%, 5%, 1%, 6% and 4.7%, the Increase Percentage to be used in calculating Rent payable during the first Extension Period shall equal Sixteen and One-Half
7

Percent (16.5%) [2 + 4.5 + 1 + 4.5 + 4.5 = 16.5]. Rent shall remain constant during each Extension Period. As used herein, "Consumer Price Index" means the Consumer Price Index, for all Urban Consumers -- Tampa, Florida. All Items (based index year 1982-84 = 100), as published by the United States Department of Labor, Bureau of Labor Statistics. If the manner in which the Consumer Price Index is determined by the Bureau of Labor Statistics shall be substantially revised, including without limitation, a change in the base index year, an adjustment shall be made by Landlord in such revised index which would produce results equivalent, as nearly as possible, to those which would have been obtained if the Consumer Price Index had not been so revised. If the Consumer Price Index shall become unavailable to the public because publication is discontinued, or otherwise, or if equivalent data is not readily available to enable Landlord to make the adjustment referred to in the preceding sentence, then Landlord will substitute therefor a comparable index based upon changes in the cost of living or purchasing power of the consumer dollar published by any other governmental agency or, if no such index shall be available, then a comparable index published by a major bank or other financial institution or by a university or a recognized financial publication.
ARTICLE XII
DEFAULTS OF TENANT
12.1 The occurrence of any one or more of the following events shall constitute an "Event of Default":
(a) If default shall be made in the due and punctual payment of any Rent or in the payment of any other amount to be paid by Tenant to Landlord, when and as the same shall become due and payable, and such default shall continue for a period of fifteen (15) days after written notice thereof to Tenant; or
(b) If material default shall be made by Tenant in keeping, observing or performing any of the terms contained in this Lease, other than as referred to in subsection (a) of this Section 12.1, and such default shall continue for a period of thirty (30) days after written notice thereof given by Landlord to Tenant, or such longer period as is reasonable to cure said default, if said default cannot, with due diligence and in good faith, be cured within said thirty (30) days, provided that Tenant promptly and with due diligence and in good faith fails to commence the cure of the same within the thirty (30) day period and thereafter fails to prosecute the curing of such default with due diligence and in good faith.
12.2 If an Event of Default occurs, Landlord shall have the rights and remedies hereinafter set forth, which shall be distinct, separate and cumulative.
(a) Landlord may terminate this Lease by giving Tenant written notice of its election to do so, in which event the Term shall end and all right, title and interest of Tenant hereunder shall expire on the date stated in such notice;
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(b) Landlord may terminate Tenant's right to possess the Premises without terminating this Lease by giving written notice to Tenant that Tenant's right of possession shall end on the date stated in such notice, whereupon Tenant's right to possess the Premises or any part thereof shall cease on the date stated in such notice; and
(c) Landlord may enforce the provisions of this Lease, including without limitation Section 12.5 hereof, and may enforce and protect the rights of Landlord hereunder by a suit or suits in equity or at law for the specific performance of any covenant or agreement contained herein, and for the enforcement of any other appropriate legal or equitable remedy, including, without limitation, injunctive relief, and for recovery of all monies due or to become due from Tenant under any of the provisions of this Lease.
12.3 If Landlord exercises either of the remedies provided for in Sections 12.2(a) and 12.2(b), Tenant shall surrender possession of and vacate the Premises and immediately deliver possession thereof to Landlord, and Landlord may, upon proper process of law, re-enter and take complete and peaceful possession of the Premises.
12.4 If Landlord terminates Tenant's right to possess the Premises without terminating this Lease, such termination of possession shall not release Tenant, in whole or in part, from Tenant's obligation to pay the Rent hereunder for the full Term, as and when the same becomes due and payable, and Landlord shall have the right, from time to time, to recover from Tenant, and Tenant shall remain liable for, all Rent and any other sums due and payable to Landlord during the period from the date of such notice of termination of possession to the stated end of the Term. In any such case, Landlord shall use reasonable efforts to mitigate damages and to re-let the Premises or any part thereof for the account of Tenant for such time (which may be for a term extending beyond the Term) and upon such terms as Landlord reasonably shall determine. Also, in any such case, Tenant shall pay the cost of Landlord's reasonable expenses of re-letting. Landlord shall collect the rents from any such re-letting and apply the same first to the payment of its unreimbursed expenses of re-letting and second to the payment of Rent herein provided to be paid by Tenant, and any excess or residue, until the expiration of the Term, shall operate only as an offsetting credit against the amount of Rent due and owing which thereafter becomes due and payable hereunder, and upon the expiration of the Term, the total aggregate amount of all such excesses which Landlord has then accumulated, if any, shall be paid to Tenant. No such re-entry, repossession, or re-letting shall be construed as an eviction or ouster of Tenant or as an election on Landlord's part to terminate this Lease, unless a written notice of such intention is given to Tenant, and Landlord, at any time and from time to time, may sue and seek a judgment for any deficiencies from time to time remaining after the application of the proceeds of any such re-letting. In no event shall Landlord be entitled to collect Rent or other charges from Tenant prior to the date the same is due and payable under the terms of this Lease.
12.5 If Landlord terminates this Lease pursuant to Section 12.2(a) hereof, Landlord shall be entitled to recover, as and for final damages for Tenant's default, an amount equal to the difference between the present value of the aggregate Rent to be paid by Tenant hereunder for the unexpired portion of the Term, and the then present value of the aggregate reasonable fair market
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rent for the Premises over the same period. In the computation of present value, a discount rate of six percent (6%) per annum shall be employed.
ARTICLE XIII
DESTRUCTION AND RESTORATION
13.1 Tenant covenants and agrees that, subject to the availability of insurance proceeds, in case of damage or destruction of the Improvements after the Commencement Date by fire or otherwise, Tenant shall promptly restore, repair, replace and rebuild the same as nearly as possible to the condition that the same were in immediately prior to such damage or destruction with such changes or alterations (made in conformity with Article VIII hereof) as may be reasonably acceptable to Landlord or required by law. Such restoration, repairs, replacements, rebuilding, changes and alterations, including the cost of temporary repairs for the protection of the Improvements, or any portion thereof, pending completion thereof are sometimes hereinafter referred to as the "Restoration." The Restoration shall be carried on and completed in accordance with the provisions and conditions of this Section and Article VIII hereof. All insurance monies payable on account of such damage or destruction shall be applied to the payment of the costs of the Restoration. Notwithstanding anything to the contrary herein contained, if the insurance monies in the hands of Tenant shall be insufficient to pay the entire costs of the Restoration, Tenant may, but shall not be obligated to, pay any deficiency. If Tenant elects not to pay any such deficiency, Tenant shall have the right to terminate this Lease upon thirty (30) days prior written notice to Landlord. Upon completion of the Restoration, Tenant shall be entitled to any insurance monies then remaining.
13.2 From and after any destruction of or damage to the Improvements, or any portion thereof, by fire, casualty or otherwise, which results in the inability of Tenant to conduct its business, in part or in whole, at the Premises, all Rent and all other charges payable by Tenant hereunder shall abate from the date of such suspension of business until the earlier of (a) the date such business is resumed, or (b) the completion of Restoration; and in connection therewith, if the Improvements are damaged in part but Tenant elects to continue to conduct its business therein, the Rent shall abate and be diminished in proportion to that part of the Improvements which is rendered unusable.
13.3 Notwithstanding the foregoing provisions of this Article XIII, in case of damage or destruction of the Improvements which results in the inability of Tenant to conduct its business, in part or in whole, at the Premises, and the Restoration can not reasonably be expected to be completed within one hundred eighty (180) days after the date of such damage or destruction, Tenant shall have the option of terminating this Lease as of the date of such damage or destruction by notice in writing given to Landlord within thirty (30) days after the occurrence of such damage or destruction. In such event, Landlord shall be entitled to all of the casualty insurance proceeds payable on account of such damage or destruction (excluding any insurance
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coverage for Tenant's contents, trade fixtures and other personal property), and Tenant shall assign to Landlord, Tenant's rights to such insurance proceeds.
ARTICLE XIV
CONDEMNATION
14.1 If, during the Term, the entire Premises shall be taken as the result of the exercise of the power of eminent domain or conveyed under threat thereof (hereinafter referred to as the "Proceedings"), this Lease and all right, title and interest of Tenant hereunder shall terminate on the earlier of taking of possession by the condemning authority or the date of vesting of title pursuant to such Proceedings. Landlord and Tenant each shall be entitled to an allocation of the award to be made in such Proceedings relative to their respective interests in the Premises. For purposes of determining the value of Tenant's interest, it shall be assumed that Tenant would extend the Term for the maximum number of Extension Periods.
14.2 If, during the Term, less than the entire Premises shall be taken in any such Proceedings, but such taking, in Tenant's reasonable judgment, shall render the Premises unusable, Tenant may terminate this Lease. Such termination shall be effected by notice in writing given not more than sixty (60) days after the date of vesting of title in such Proceedings, and shall specify a date not more than sixty (60) days after the giving of such notice as the date for such termination. Upon the date specified in such notice, the Term this Lease, and all right, title and interest of Tenant hereunder shall cease and terminate. If this Lease is terminated as provided in this Section 14.2, Landlord and Tenant each shall be entitled to an allocation of the award to be made in such Proceedings relative to their respective interests in the Premises. For purposes of determining the value of Tenant's interest, it shall be assumed that Tenant would extend the Term for the maximum number of Extension Periods.
14.3 If during the Term, less than the entire Premises shall be taken, but such taking, in Tenant's reasonable judgment, shall not render the Premises unusable, this Lease, upon the earlier of taking of possession by the condemning authority or vesting of title in the Proceedings, shall terminate as to the parts so taken, and the proceeds of the award for such taking shall be delivered to Tenant to restore that portion of the Improvements on the Premises not so taken to a complete architectural and mechanical unit and otherwise to make the remaining Premises appropriate for the use and occupancy of Tenant. In the event that the net amount of the award (after deduction of all costs and expenses, including attorneys' fees) that may be received in any such Proceedings for physical damage to the Improvements or the Land as a result of such taking is insufficient to pay all costs of such restoration work, Landlord shall deposit with Tenant such additional sum as may be required. The provisions and conditions in Article VIII applicable to changes and alterations shall apply to Tenant's obligations to restore as aforesaid.
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14.4 In the event of any termination of this Lease, or any part thereof, as a result of any such Proceedings, Tenant shall pay to Landlord all Rent and all other charges payable hereunder with respect to that portion of the Premises so taken, apportioned to the date of such termination.
14.5 If Tenant either is not entitled, or does not elect, to terminate this Lease in the event of a partial taking of the Premises, the Rent payable hereunder during the period from and after the earlier of the taking of possession by the condemning authority and the date of vesting of title in such Proceedings through to the expiration or termination of this Lease (as the Term may be extended) shall abate and be diminished in proportion to that part of the Improvements and the Land which has been taken.
ARTICLE XV
ASSIGNMENT AND SUBLETTING
15.1 Tenant, at any time and from time to time during the Term, may: (a) assign, transfer, mortgage, pledge, hypothecate or encumber this Lease or any interest under it; (b) allow to exist or occur any transfer of or lien upon this Lease or Tenant's interest herein by operation of law; or (c) sublet the Premises or any part thereof; provided, however, that the same shall not relieve Tenant from liability for performance of any covenant or obligation hereunder and, provided further, that Tenant shall notify Landlord in writing of such actions.
15.2 Tenant shall not need the consent of Landlord if the assignment is to an entity related to or affiliated with Tenant. Tenant shall not assign this Lease to an entity unrelated or unaffiliated with Tenant, without Landlord's prior consent, which consent shall not be unreasonably withheld or delayed. Any assignee of Tenant expressly shall assume in writing all of the obligations of Tenant hereunder, and Section 20.8 of this Lease shall be satisfied before such assignment is completed.
ARTICLE XVI
SUBORDINATION, NONDISTURBANCE, NOTICE TO MORTGAGEE AND
ATTORNMENT
16.1 This Lease is and shall be subject and subordinate to the lien of any mortgage, deed of trust, security instrument or other document of like nature, hereinafter referred to as "Mortgage", which now or at any time hereafter may be placed upon the Premises, or any portion thereof or interest therein, and to all present and future ground or underlying leases of the Land, and to any replacements, renewals, amendments, modifications, extensions or refinancing of any of the foregoing, and to each and every advance made under any Mortgage (unless the holder of any Mortgage or the lessor under any such ground or underlying lease [such holder or lessor being hereinafter referred to as a "Mortgagee"] requires in writing that this Lease be superior
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thereto); provided that the Mortgagee agrees in writing that so long as no Event of Default is continuing, neither Tenant's right to quiet enjoyment under this Lease, nor the right of Tenant to continue to occupy the Premises and all portions thereof, and to conduct its business thereon in accordance with the covenants, conditions, provisions, terms and agreements of this Lease, shall be interfered with or disturbed by Landlord or anyone claiming by, through or under Landlord, including Mortgagee. Tenant agrees at any time hereafter, and from time to time within thirty (30) days after demand of Landlord, to execute and deliver to Landlord any instruments, releases or other documents that reasonably may be required to effect or confirm the subordination or superiority of this Lease to the lien of any such Mortgage or to any such ground or underlying lease. In addition, Landlord shall cause any Mortgagee currently holding a Mortgage, to agree in writing in a manner satisfactory to Tenant not to interfere with or disturb Tenant's rights as aforesaid so long as no Event of Default is continuing, said writing to be delivered to Tenant within thirty (30) days of the Commencement Date. The lien of any Mortgage shall not cover Tenant's trade fixtures or other personal property located in or on the Premises.
16.2 If any Mortgagee shall succeed to the rights of Landlord under this Lease or to ownership of the Premises, whether through foreclosure or the delivery of a deed in lieu thereof, then upon the written request of such Mortgagee, and provided that such Mortgagee agrees in writing to assume and be bound by all of Landlord's obligations hereunder, Tenant shall attorn to and recognize such Mortgagee as Tenant's landlord under this Lease, and shall execute and deliver any instrument that such Mortgagee may reasonably request to evidence such attornment. Subject to the terms of Section 22.7 hereof, in the event of any other transfer of Landlord's interest hereunder, upon the written request of the transferee and Landlord, and provided such transferee agrees in writing to assume and be bound by all of Landlord's obligations hereunder, Tenant shall attorn to and recognize such transferee as Tenant's landlord under this Lease and shall execute and deliver any instrument that such transferee and Landlord reasonably may request to evidence such attornment.
ARTICLE XVII
SIGNS
Tenant may erect any signs on the exterior or interior of the Improvements or on the landscaped area adjacent thereto, provided that such sign or signs (i) do not cause any irreparable structural damage or other damage to the Improvements; (ii) do not violate applicable governmental laws, ordinances, rules or regulations; and (iii) do not violate any covenants, conditions or restrictions affecting the Premises.
ARTICLE XVIII
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LANDLORD'S ACCESS
18.1 Tenant agrees to permit Landlord and its authorized representatives, at Landlord's sole cost and expense, to enter upon the Premises at all reasonable times during ordinary business hours, upon not less than twenty-four (24) hours prior notice (except in the case of emergency, when no notice shall be required), for the purpose of inspecting the same and making any necessary repairs or replacements which are the obligation of Landlord. Landlord may, during the progress of any work required hereunder, keep and store upon the Premises all reasonably necessary materials, tools and equipment.
18.2 Landlord is hereby also given the right at all reasonable times during ordinary business hours, upon not less than twenty-four (24) hours prior notice (except in the case of emergency, when no notice shall be required), to enter upon the Premises and to exhibit the same for the purpose of mortgaging or selling the same or, during the final four (4) months of the Term, leasing the same.
18.3 In exercising its rights hereunder, Landlord shall refrain from any acts which may interfere with Tenant's use or occupancy of the Premises or access thereto. Without limiting the generality of the foregoing, Landlord acknowledges that it is necessary for Tenant to control access to the Premises in order to avoid unauthorized persons from viewing Tenant's trade secrets, proprietary products, technology and/or processes. Accordingly, while within the Premises, Landlord and its representatives, at Tenant's option, shall be accompanied by a representative of Tenant and shall comply with reasonable directions of such representative relative to safety and to the protection of Tenant's trade secrets and other proprietary information. Landlord also agrees to defend, indemnify and hold Tenant harmless against any and all claims, damages, liability, costs and expenses arising out of or alleged to have arisen out of any entry onto the Premises by Landlord and/or its authorized representatives. Landlord agrees to execute and cause its authorized representatives to execute confidentiality agreements as required by Tenant.
ARTICLE XIX
SURRENDER AND HOLDING-OVER
19.1 Upon the termination of this Lease, whether by forfeiture, lapse of time or otherwise, or upon termination of Tenant's right to possession of the Premises, Tenant will at once surrender and deliver up the Premises, together with all improvements thereon, to Landlord, in good condition and repair, reasonable wear and tear and damage by casualty and condemnation excepted. Said improvements shall include all plumbing, lighting, electrical, heating, cooling and ventilating fixtures and equipment, and all alterations. All permanent alterations, additions and improvements made in or upon the Premises by Tenant shall become Landlord's property and shall remain upon the Premises on any such termination without compensation, allowance or credit to Tenant.
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19.2 Upon the termination of this Lease, Tenant shall remove Tenant's personal property, trade fixtures and equipment; provided, however, that Tenant shall repair any injury or damage to the Premises which may result from such removal and shall restore the Premises to the same condition as existed prior to the installation thereof. If Tenant does not remove Tenant's personal property, trade fixtures and equipment from the Premises prior to the expiration or earlier termination of the Term, Landlord, upon thirty (30) days' notice to Tenant, at its option, may remove the same (and repair any damage occasioned thereby) and dispose thereof or deliver the same to any other place of business of Tenant or warehouse the same, and Tenant shall pay the cost of such removal, repair, delivery and warehousing to Landlord within thirty (30) days of demand therefor.
19.3 Tenant shall have no right to occupy the Premises or any portion thereof after the expiration of this Lease or after the termination of this Lease or of Tenant's right to possession pursuant to Article XII hereof. In the event Tenant or any party claiming by, through or under Tenant holds over, Landlord may exercise any and all remedies available to it at law or in equity to recover possession of the Premises, and for direct damages; provided, however, that Landlord shall not be entitled to recover, and hereby expressly waives any right to recover, consequential damages. Notwithstanding anything contained herein to the contrary, in the event Tenant or any party claiming by, through or under Tenant holds-over after the expiration of the Term, Landlord may elect, in lieu of any other remedy provided by law or herein, that the same shall constitute a month-to-month tenancy upon the same terms as in this Lease at a rate of rent equal to one hundred twenty five percent (125%) of the Monthly Rent for the month in which the Term expires.
ARTICLE XX
HAZARDOUS AND TOXIC MATERIALS
20.1 As used herein:
(a) "Claim" shall mean and include any demand, cause of action, proceeding or suit (i) for damages, losses, injuries to person or property, damages to natural resources, fines, penalties, interest, or contribution;
(ii) for the costs of site investigations, feasibility studies, information requests, health or risk assessments or Response actions; or (iii) for enforcing this Article XX.
(b) "Environmental Law" means 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, relating to the protection of human health, safety, or the environment including without limitation: (a) the Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA") (42 U.S.C. Sections 9601 ET SEQ.; (b) the Superfund Amendments and Reauthorization Act of 1986 (42 U.S.C. Sections 9601 ET SEQ.); (c) The Hazardous
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Materials Transportation Control Act of 1970 (49 U.S.C. Sections 1802 ET SEQ.; (d) the Resource Conservation and Recovery Act of 1976, as amended by the Solid and Hazardous Waste Act Amendments ("RCRA") (42 U.S.C. Sections 6901 ET SEQ.); (e) the Federal Water Pollution Control Act, as amended by the Clean Water Act of 1977 (33 U.S.C. Sections 1251 ET SEQ.) (the "Clean Water Act"); (f) the Safe Drinking Water Act (42 U.S.C. Sections 300h ET SEQ.); (g) the Clean Air Act, as amended by the Clean Air Act Amendments of 1990 (42 U.S.C. Sections 1857 ET SEQ.); (h) the Solid Waste Disposal Act, as amended by RCRA (42 U.S.C. Section 6901 ET SEQ.); (i) the Toxic Substances Control Act (15 U.S.C. Sections 2601 ET SEQ.); (j) the Emergency Planning and Community Right-to-Know Act of 1986 ("EPCRA") (42 U.S.C. Sections 11001 ET SEQ.); (k) the Federal Insecticide, Fungicide and Rodenticide Act ("FIFRA") (7 U.S.C. Sections 136 ET SEQ.); (l) the National Environmental Policy Act of 1975 (42 U.S.C. Sections 4321 ET SEQ.); (m) the Radon Gas and Indoor Air Quality Reserve Act (42 U.S.C. Sections 7401 ET SEQ.); (n) the National Environmental Policy Act of 1975 (42 U.S.C. Sections 4321 ET SEQ.); (o) the Rivers and Harbors Act of 1899 (33 U.S.C. Sections 401 ET SEQ.); (p) the Oil Pollution Act of 1990 (33 U.S.C. Sections 1321 ET SEQ.); (q) the Endangered Species Act of 1973, as amended (16 U.S.C. Sections 1531 ET SEQ.); (r) the Occupational Safety and Health Act of 1970, as amended, (29 U.S.C. Sections 651 ET SEQ.); (s) North American Free Trade Act, (t) counterparts of any of the foregoing federal statutes enacted within or outside the United States or by any other nation, any U.S. state, region, county or local government (including any subdivisions thereof); (u) any and all laws, rules, regulations, codes, ordinances, licenses, permits, approvals, plans, authorizations, directives, rulings, injunctions, decrees, orders and judgments enacted or promulgated under any of the foregoing, all as amended and as may be amended in the future, and (v) common law theories of nuisance, trespass, waste, negligence, and abnormally dangerous activities arising out of or relating to the presence of Hazardous Substances in the environment or work place.
(c) "Hazardous Substance" shall be construed broadly to include any substance, material or waste, including without limitation any constituent, chemical, element, particle, compound, material, substance or waste which is defined as a "hazardous waste," "hazardous material," "hazardous substance," "extremely hazardous substance," "restricted hazardous waste," "contaminant," "toxic waste," "toxic substance," or "special waste" under any Environmental Law which includes, but is not limited to, 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.
(d) "Manage" or "Management" means to generate, manufacture, process, treat, store, use, re-use, refine, recycle, reclaim, blend or burn for energy recovery, incinerate, accumulate speculatively, transport, transfer, dispose of or abandon Hazardous Substance.
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(e) "Release" shall mean releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, disposing or dumping into the indoor or outdoor environment, including without limitation the abandonment or discarding of barrels, drums, containers, tanks and other receptacles containing or previously containing any Hazardous Substance.
(f) "Response" or "Respond" shall mean action required by any Environmental Law to correct, remove, remediate, cleanup, prevent, mitigate, monitor, evaluate, investigate, assess or abate a Release of a Hazardous Substance.
20.2 During the Term, Tenant, at its sole cost and expense, shall (a) comply with all Environmental Laws relating solely to its use of the Premises, and permits issued thereunder; (b) conduct any Management of Hazardous Substances by Tenant on the Premises in compliance with Environmental Laws; (c) use commercially reasonable efforts so as to not cause or allow the Release of any Hazardous Substances on, to or from the Premises, except in compliance with Environmental Laws and permits issued thereunder; (d) arrange for the lawful transportation and off-site disposal of all Hazardous Substances that it generates; (e) secure, maintain, and comply with all permits required by Environmental Laws in connection with Tenant's use of the Premises; and (f) provide Landlord with copies of all environmental reports and results of all environmental tests conducted by or for Tenant during the Term.
20.3 During the Term, Landlord, at its sole cost and expense, shall (a) comply with all Environmental Laws other than those relating solely to Tenant's use of the Premises, and permits issued thereunder; and (b) secure, maintain and comply with all permits required by Environmental Laws other than those required solely by reason of Tenant's use of the Premises.
20.4 Landlord and Landlord's agents and employees shall have the right to enter upon the Premises to conduct appropriate inspections or tests in order to determine Tenant's compliance with Environmental Laws, provided that (a) such inspections and tests shall be performed at the sole cost and expense of Landlord; (b) Landlord shall provide Tenant with written notice not less than five business (5) days prior to conducting such inspections or tests; (c) such tests shall be performed at reasonable times designated by Tenant, shall be subject to the provisions of Section 18.3 and in all other respects shall not interfere with Tenant's business operations and shall be in compliance with Tenant's security procedures; and (d) Landlord promptly shall communicate and, when appropriate, delivery copies of the results of any investigation and tests, to Tenant.
20.5 If Tenant's Management of Hazardous Substances at the Premises (a) results in or causes a Release which violates an Environmental Laws or permits issued thereunder; (b) gives rise to liability or a Claim or requires a Response under common law or any Environmental Law or permit issued thereunder; (c) causes a significant public health effect; or (d) creates a nuisance, Tenant shall promptly notify Landlord and, in any and all such occurrences and at its sole cost and expense, promptly take all applicable action in Response. Tenant shall keep Landlord reasonably informed as to its actions in connection with any Response.
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20.6 Tenant shall indemnify, defend and hold harmless Landlord, its beneficiary, managing agents and mortgagees from all Claims arising from or attributable to any breach by Tenant of any of its warranties, representations or covenants in this Article XX.
20.7 Notwithstanding anything in the Article XX to the contrary, Tenant shall not be liable and Landlord shall fully indemnify and hold Tenant harmless from and against any and all liabilities, damages, expenses, costs and losses arising from, or as a result of, any use and occupancy of the Premises prior to the Commencement Date, including any violation of any Environmental Laws attributable to the period prior to the Commencement Date.
20.8 Notwithstanding anything to the contrary in this Lease, in the event Tenant shall assign this Lease to an entity unrelated to or unaffiliated with Tenant, Tenant shall provide Landlord a Phase I environmental assessment of the Premises dated within ninety (90) days prior to the effective date of the assignment. Such assignee shall agree, as a condition precedent to the assignment, to provide Landlord with a Phase I environmental assessment of the Premises not less frequently than every five (5) years throughout the remainder of the Term, as the same may be extended pursuant to the terms of this Lease, and at the expiration of said Term.
ARTICLE XXI
RIGHT OF FIRST REFUSAL
If, at any time after the end of the eighty fourth (84th) complete calendar month to occur after the Commencement Date and before the end of the one hundred twentieth (120th) complete calendar month to occur after the Commencement Date, and while this Lease is in full force and effect, Landlord should receive from a bona fide, arm's-length purchaser a bona fide written offer to purchase the Premises ("Bona Fide Offer"), and should Landlord desire to accept the Bona Fide Offer, it shall first make a written offer (the "Tenant Offer") to sell said Premises to Tenant at the price and upon the terms and conditions set forth in the Bona Fide Offer. The Tenant Offer shall be accompanied by a copy of the Bona Fide Offer. Tenant may accept the Tenant Offer by service of notice of acceptance on Landlord on or before the thirtieth (30th) day following delivery of the Tenant Offer to Tenant. If the Tenant Offer is accepted, the purchase and sale shall be closed at the principal office of Landlord on the date set forth in the Bona Fide Offer or at such other place, time and date as Landlord and Tenant may agree upon, by payment of the purchase price against conveyance of the Premises free and clear of liens and encumbrances of every kind and description except as permitted by the Tenant Offer. If Tenant fails to fully and timely accept the Tenant Offer as herein provided, Landlord may make the bona fide sale of the Premises to the bona fide prospective purchaser making the Bona Fide Offer in accordance with the terms thereof; provided, however, that if Landlord fails to consummate the sale of the Premises on exactly the same terms and conditions as are set forth in the Bona Fide Offer, the Premises shall again be subject to Tenant's right of first refusal. Tenant's right of first refusal as set forth in this Article XXI shall be a continuing right and shall survive each sale of the Premises during the term hereof (as it may be extended as provided herein).
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ARTICLE XXII
MISCELLANEOUS PROVISIONS
22.1 To the fullest extent allowed by law, Tenant, at all times, shall indemnify, defend and hold Landlord, its officers, directors, employees and agents, harmless from and against any and all claims by or on behalf of any person or persons, firm or firms, corporation or corporations, arising from the conduct or management of, or from any work or things whatsoever done in or about, the Premises (except to the extent arising out of Landlord's negligence or other wrongful conduct), and further will indemnify, defend and hold Landlord, its officers, directors, employees and agents, harmless against and from any and all claims arising during the Term and based upon any breach or default on the part of Tenant in the performance of any covenant or agreement on the part of Tenant to be performed pursuant to the terms of this Lease, or arising from any act or neglect of Tenant, its agents, servants, employees, licensees, or contractors, or arising from any accident, injury or damage whatsoever caused to any person, firm or corporation occurring during the Term in or about the Premises, and from and against all costs, attorneys' fees, expenses and liabilities incurred in or with respect to any such claim or action or proceeding brought thereon. To the fullest extent allowed by law, Landlord, at all times, shall indemnify, defend and hold Tenant, its officers, directors, employees and agents, harmless from and against any and all claims by or on behalf of any person or persons, firm or firms, corporation or corporations, arising from the conduct or management of, or from any work or things whatsoever done in or about, the Premises (except to the extent arising out of Tenant's negligence or other wrongful conduct), and further will indemnify, defend and hold Tenant, its officers, directors, employees and agents harmless against and from any and all claims arising during the Term and based upon any breach or default on the part of Landlord in the performance of any covenant or agreement on the part of Landlord to be performed pursuant to the terms of this Lease, or arising from any act or neglect of Landlord, its agents, servants, employees, licensees or contractors, whenever and wherever occurring or arising from any accident, injury or damage whatsoever caused to any person, firm or corporation occurring prior to or after the Term in or about the Premises, and from and against all costs, attorneys' fees, expenses and liabilities incurred in connection with any such claim or action or proceeding brought thereon.
22.2 All notices, demands and requests which may be or are required to be given, demanded or requested by either party to the other shall be in writing. All notices, demands and requests by Landlord to Tenant shall be sent by United States registered or certified mail, postage prepaid, or by commercial overnight delivery service or other personal service (with evidence of receipt), addressed as follows:
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LKQ Corporation
120 N. LaSalle Street
Suite 330
Chicago, Illinois 60602
Attn: General Counsel
or at such other place as Tenant may from time to time designate by written notice to Landlord. All notices, demands and requests by Tenant to Landlord shall be sent by United States registered or certified mail, postage prepaid, or by commercial overnight delivery service or other personal service (with evidence of receipt), addressed to Landlord as follows:
Lenny Damron
1046 N. Stony Point
Crystal River, FL 34429
with a copy to:
Allan S. Gassman, Esq.
1245 Court Street, Suite 102
Clearwater, FL 33756
or at such other place as Landlord from time to time may designate by written notice to Tenant. Notices, demands and requests which shall be served upon Landlord by Tenant, or upon Tenant by Landlord, by mail in the manner aforesaid, shall be deemed to be sufficiently served or given for all purposes hereunder on the second business day after mailing, and notices served by overnight delivery service shall be deemed served or given on the second business day after delivery to such service.
22.3 Landlord covenants and agrees that Tenant, upon paying the Rent, and upon observing and keeping the covenants, agreements and conditions of this Lease on its part to be kept, observed and performed, shall lawfully and quietly hold, occupy and enjoy the Premises (subject to the provisions of this Lease) during the Term (as it may be extended from time to time as expressly provided herein) without hindrance or molestation by Landlord or by any person or persons claiming under Landlord. In the event of a breach by Landlord of this Section 22.3, or of any other covenant herein, then, anything in this Lease notwithstanding, Tenant shall have the full right to cure such breach at the expense of Landlord, and Landlord shall upon demand pay Tenant's costs, including attorneys' fees and expenses, of curing said breach (or Tenant, at its option, may deduct said costs and fees and expenses from the next accruing installment(s) of Rent or other charges payable by it to Landlord), or Tenant may enforce any and all remedies at law or in equity or under this Lease which may be available to Tenant under the particular circumstances.
22.4 Tenant and Landlord, each without charge at any time and from time to time, within thirty (30) days after written request by the other party, shall certify by written instrument, duly executed, acknowledged and delivered to any Mortgagee, assignee of a Mortgagee,
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proposed Mortgagee, or to any purchaser or proposed purchaser or transferee of the Landlord, Tenant or Premises or any interest therein:
(a) That this Lease is unmodified and in full force and effect (or, if there have been modifications, that the same is in full force and effect, as modified, and stating the modifications);
(b) The dates to which the Rent has been paid in advance;
(c) Whether or not there are then existing any breaches or defaults by the certifying party or by the other party and known by the certifying party under any of the covenants, conditions, provisions, terms or agreements of this Lease, and specifying such breach or default, if any, or any set-offs or defenses against the enforcement of any covenant, condition, provision, term or agreement of this Lease upon the part of Landlord or Tenant, as the case may be, to be performed or complied with (and, if so, specifying the same and the steps being taken to remedy the same);
(d) That Tenant has made no advancements to or on behalf of Landlord for which it has the right to deduct from, or offset against, future Rent payments;
(e) Tenant has accepted the Premises and is in full and complete possession thereof; and
(f) Such other statements or certificates as Landlord or Tenant or any Mortgagee may reasonably request.
22.5 Upon not less than thirty (30) days prior written request by either party, the parties hereto agree to execute and deliver to each other a memorandum of lease, in recordable form, setting forth the following:
(a) the date of this Lease;
(b) the parties to this Lease;
(c) the Term of this Lease;
(d) the three (3), five (5) year extension options set forth in Article XI;
(e) the right of first refusal set forth in Article XXI;
(f) the legal description of the Premises;
(g) the option to purchase set forth in Article XXVI; and
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(h) such other matters reasonably requested by Landlord or Tenant to be stated therein.
22.6 If any covenant, condition, provision, term or agreement of this Lease shall, to any extent, be held invalid or unenforceable, the remaining covenants, conditions, provisions, terms and agreements of this Lease shall not be affected thereby, but each covenant, condition, provision, term or agreement of this Lease shall be valid and in force to the fullest extent permitted by law. This Lease shall be construed and be enforceable in accordance with the laws of the State of Florida.
22.7 The covenants and agreements herein contained shall bind and inure to the benefit of Landlord and its successors and assigns, and Tenant and its successors and assigns.
22.8 The caption of each article of this Lease is for convenience and reference only and in no way defines, limits or describes the scope or intent of such article or of this Lease.
22.9 This Lease does not create the relationship of principal and agent, or of partnership, joint venture, or of any association or relationship between Landlord and Tenant, the sole relationship between Landlord and Tenant being that of landlord and tenant.
22.10 All preliminary and contemporaneous negotiations are merged into and incorporated in this Lease. This Lease contains the entire agreement between the parties and shall not be modified or amended in any manner except by an instrument in writing executed by the parties hereto.
22.11 There shall be no merger of this Lease or the leasehold estate created by this Lease with any other estate or interest in the Premises by reason of the fact that the same person, firm, corporation or other entity may acquire, hold or own directly or indirectly, (a) this Lease or the leasehold interest created by this Lease or any interest therein, and (b) any other estate or interest in the Premises or any portion thereof. No such merger shall occur unless and until all persons, firms, corporations or other entities having an interest (including a security interest) in (1) this Lease or the leasehold estate created hereby, and (2) any such other estate or interest in the Premises or any portion thereof, shall join in a written instrument expressly effecting such merger and shall duly record the same.
22.12 All obligations, monetary or otherwise, accruing prior to expiration of the Term (as it may be extended from time to time) shall survive the expiration or other termination of this Lease.
22.13 Time is of the essence of this Lease, and all provisions herein relating thereto shall be strictly construed.
22.14 Each party represents and warrants to the other that it has not dealt with any broker in connection with this Lease and agrees to indemnify and hold the other party and its agents, officers, directors and employees harmless from all losses, damages, liabilities, claims, liens, costs and expenses, including, without limitation, attorneys' fees, arising from any claims or demands of any broker or brokers, salespersons or finders for any commission or fee alleged to
22

be due such broker or brokers, salespersons or finders based upon such broker or brokers, salespersons or finders having dealt with the indemnifying party in connection with this Lease.
22.15 To the extent either party indemnifies and agrees to defend the other under the terms of this Lease, the indemnifying party shall have the right to select counsel to undertake such defense, which counsel shall be reasonably acceptable to the indemnified party.
22.16 Subject to specific conditions as to consents and approvals provided for in other sections of this Lease, no consent or approval required under this Lease shall be unreasonably withheld or delayed.
22.17 This Lease may be executed in counterparts, each of which when taken together shall constitute one instrument.
22.18 This Lease represents the product of the joint negotiation, preparation and agreement of and between the parties hereto and is not to be construed against one party or the other as the principal drafter.
22.19 In the event of any litigation between the Landlord and the Tenant arising out of an alleged breach of this Lease by either of them and such litigation terminates upon the issuance of a final, unappealable judicial order, the unsuccessful party therein shall pay the successful party's reasonable attorneys' fees and expenses in such litigation. This provision shall inure only to the Landlord and Tenant and their respective successors and permitted assigns, if any.
ARTICLE XXIII
LANDLORD'S REPRESENTATIONS AND WARRANTIES
23.1 In addition to the other representations and warranties made herein, Landlord hereby represents and warrants to Tenant that as of the date hereof the following representations and warranties are true, correct and complete and that the same will be true, correct and complete on and as of the Commencement Date:
(a) Landlord warrants and represents that the execution and delivery of this Lease by the signatory hereto on behalf of Landlord and the performance of this Lease by Landlord have been duly authorized by Landlord and this Lease is binding upon Landlord and enforceable against Landlord in accordance with its terms.
(b) Landlord warrants and represents that it is the owner of fee simple title to the Land, and except for mortgages of record which have been disclosed in writing to Tenant, free and clear of all liens, encumbrances, covenants, conditions, restrictions, rights of way, easements, leases, tenancies, licenses, claims, options, and any other matters which would impair the marketability of title to the Land.
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(c) Landlord represents and warrants that there are no condemnation or judicial proceedings, administrative actions or examinations, claims or demands of any type which have been instituted or which are pending or threatened against Landlord with respect to the Premises or any part thereof. There are no actions or proceedings pending or to the best of Landlord's knowledge, threatened against Landlord with respect to the Premises before any court or administrative agency which would result in any material adverse change in the condition and operation of the Premises. In the event Landlord receives notification of any of the foregoing prior to Commencement Date, copies of such notice shall be provided to Tenant by Landlord within three (3) days following its receipt thereof, but in no event later than the Commencement Date.
(d) Landlord represents and warrants that Landlord is duly organized and validly existing under the laws of the State of Florida, that the execution and delivery of this Lease and the transaction contemplated hereby have been duly authorized by Landlord and that the performance of Landlord's obligations under this Lease will not violate its organizational documents, the provisions of any applicable law or agreement to which it is a party or under which it is bound.
(e) Landlord represents and warrants that the Premises will be delivered on the Commencement Date in substantially the same condition as on the date hereof, reasonable wear and tear excepted, and free of any occupants, tenants or rights of first refusal, right of reverter or rights of first offer relating to the Premises, other than as provided in this Lease; any service contracts or management agreements; and any employee, employment agreements or union contract affecting the Premises.
(f) Landlord represents and warrants that Landlord has not filed any proceeding or petition in, nor received notice that any proceeding or petition has been filed against Landlord in bankruptcy or insolvency, or for reorganization or for the appointment of a receiver, custodian or trustee, or for the arrangement of debts under any state or federal statute relating to debtor protection or insolvency, and further that Landlord is not insolvent and will not be rendered insolvent by the consummation of the transaction contemplated by this Lease.
(g) Landlord represents and warrants that it has received no notice of any violations of building, fire, air pollution, or Environmental Law and that Landlord has no knowledge of any suits or judgments threatened or pending relating to violations at the Premises or any portion of the Premises of any such laws, ordinances and regulations.
(h) Landlord represents and warrants that there are no special taxes or assessments pending and/or unpaid with respect to any improvements not yet completed on the Premises;
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(i) Landlord represents and warrants that there are no parties that have any rights to possession of any part of the Premises other than Landlord or that have any leases to any portion of the Premises, other than as provided in this Lease.
(j) Landlord represents and warrants that there are no written or oral service agreements or other contracts or leases with respect to the Property or any part thereof, except this Lease.
(k) Landlord represents and warrants that there are no underground storage tanks on the Premises or any condition on the Premises which materially violates the terms of any applicable environmental law.
(l) Landlord represents and warrants that there are no asbestos-containing materials on the Premises.
(m) Landlord represents and warrants that between the date of this Lease and the Commencement Date that it will not enter into any leases, service agreements or other contracts with respect to the Premises, which will be effective beyond the Commencement Date without express written consent of Tenant, which consent shall not be unreasonably withheld; provided, however, the Tenant shall not be required to consent to any agreement which will terminate on or before the Commencement Date.
All representations made by Landlord in this Article XXIII shall survive the execution of this Lease and, if later, the Commencement Date.
ARTICLE XXIV
LANDLORD DEFAULT
In the event Landlord breaches any of the representations and warranties contained in Article XXIII hereof, or in the event any such representation or warranty is untrue when made, or in the event Landlord breaches any of its obligations under Article IX hereof, and if such breach is curable and is not cured within thirty (30) days after written notice thereof, Tenant shall have the right to terminate this Lease. In addition to Tenant's rights contained herein or available in law or at equity, in the event Landlord neglects or fails to comply with any of Landlord's obligations contained in this Lease, Tenant may, after giving Landlord not less than 30 days prior written notice, (a) cure any such Landlord's default and (b) withhold rent in an amount not to exceed any amount which Tenant spends to cure any such default or otherwise incurs by reason of Landlord' default (including attorneys' fees and expenses).
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ARTICLE XXV
OPTION TO PURCHASE
25.1 In consideration of the Rent to be paid by Tenant under this Lease and other good and valuable consideration and in addition to the right of first refusal granted to Tenant in Article XXI herein, Landlord hereby irrevocably grants to Tenant the exclusive option (the "Option") to purchase the Premises, including but not limited to all structures and improvements thereon and all appurtenances thereto, on the terms and conditions set forth herein and substantially in accordance with the Real Estate Purchase Agreement attached as Exhibit B hereto and made a part hereof (the "Purchase Agreement") for a purchase price (the "Purchase Price") equal to: (a) if exercised on the last day of the sixtieth (60th) complete calendar month to occur after the Commencement Date (the "First Exercise Date"), $2,640,000.00; and (b) if exercised at the end of the eighty fourth (84th) complete calendar month to occur after the Commencement Date (the "Second Exercise Date"), $3,234,000.00.
25.2 Tenant shall have the right to exercise the Option at the First Exercise Date, and, if not previously exercised, at the Second Exercise Date, by Tenant giving Landlord written notice of Tenant's exercise (the "Option Exercise Notice"), which notice shall be no less than ninety (90) days prior to the First Exercise Date, or the Second Exercise Date, as applicable. The Option Exercise Notice shall be accompanied by four (4) copies of the Purchase Agreement each dated as of the date of Tenant's notice and executed by Tenant, as purchaser, and in substantial accordance with Exhibit B hereto. Within three (3) days of Landlord's receipt of Tenant's exercise of the Option, Landlord shall execute and return to Tenant two (2) of the four (4) copies of the Purchase Agreement which Tenant shall have sent to Landlord. In the event that the Option is not exercised by Tenant in the manner provided herein, the Option shall be null and void and of no further force or effect.
25.3 The Option is a continuing option and shall survive any and all sales of the Premises by Landlord.
ARTICLE XXVI
ARBITRATION
Any party may request by notice to the other party that any dispute under this Lease be submitted to mediation, to be attended by each party and counsel for each party. If any such dispute has not been resolved within 20 days of the notice requesting mediation, then the dispute may be submitted to binding arbitration by either party. Arbitration shall be conducted under and governed by the Commercial Rules of the American Arbitration Association, as in effect from time to time. All arbitration hearings shall be conducted in Chicago, Illinois (if the dispute is submitted to arbitration by Landlord) or Tampa, Florida (if the dispute is submitted to arbitration by Tenant). A judgment upon the award may be entered in any court having jurisdiction. The number of arbitrators shall be three, one each selected by Tenant and the Landlord, with the third
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arbitrator selected by the two selected by the parties. The arbitrators must render their arbital decision and award and give a written opinion setting forth the basis of their decision, all not later than 45 days after the conclusion of the arbitration. Each party shall take or cause to be taken all reasonable action to facilitate the conduct of the arbitration and the rendering of the award at the earliest possible date. The costs of the arbitration, including all costs and expenses (including reasonable legal fees and expenses) of each party shall be borne and paid in accordance with the determination of the arbitrators, who shall take into account, in such determination, which party (if any) has prevailed. The parties intend that the mediation and arbitration provisions set forth in this Article XXVI shall be the only means of resolving any disputes under this Lease.
IN WITNESS WHEREOF, each of the parties has caused this Lease to be duly executed as of the day and year first above written.

TENANT:                                  LANDLORD:

Damron Holding Company, a Delaware       Damron Auto Parts East, Inc., a Florida
corporation                              corporation

By: /s/ Thomas B. Raterman               By: /s/ Leonard A. Damron III

Name: Thomas B. Raterman                 Name: Leonard A. Damron III

Title: Vice-President                    Title: President

Date: July 29, 1998                      Date: July 29, 1998	

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EXHIBIT 10.13
INDUSTRIAL BUILDING LEASE
BETWEEN
Damron Family Limited Partnership,
a Florida limited partnership, as Landlord
and
Damron Auto Parts, Inc., a Florida corporation, as Tenant
DATE OF LEASE: July 29, 1998
PREMISES: Crystal River, Florida

TABLE OF CONTENTS

ARTICLE I GRANT AND TERM ......................................................1

ARTICLE II RENT................................................................1

ARTICLE III USE................................................................2

ARTICLE IV POSSESSION..........................................................2

ARTICLE V TAXES................................................................2

ARTICLE VI INSURANCE...........................................................3

ARTICLE VII UTILITIES..........................................................4

ARTICLE VIII MAINTENANCE AND ALTERATIONS.......................................4

ARTICLE IX COMPLIANCE WITH LAWS AND ORDINANCES.................................6

ARTICLE X MECHANIC'S LIENS.....................................................6

ARTICLE XI OPTIONS TO EXTEND...................................................7

ARTICLE XII DEFAULTS OF TENANT.................................................8

ARTICLE XIII DESTRUCTION AND RESTORATION......................................10

ARTICLE XIV CONDEMNATION......................................................11

ARTICLE XV ASSIGNMENT AND SUBLETTING..........................................12

ARTICLE XVI SUBORDINATION, NONDISTURBANCE AND ATTORNMENT......................12

ARTICLE XVII SIGNS............................................................13

ARTICLE XVIII LANDLORD'S ACCESS...............................................14

ARTICLE XIX SURRENDER AND HOLDING-OVER........................................14

ARTICLE XX HAZARDOUS AND TOXIC MATERIALS......................................15

ARTICLE XXI RIGHT OF FIRST REFUSAL............................................18

ARTICLE XXII MISCELLANEOUS PROVISIONS.........................................19

ARTICLE XXIII LANDLORD'S REPRESENTATIONS AND WARRANTIES.......................23

ARTICLE XXIV LANDLORD DEFAULT.................................................25	

ARTICLE XXV OPTION TO PURCHASE................................................26

ARTICLE XXV ARBITRATION.......................................................26	

EXHIBITS
EXHIBIT A - Legal Description
EXHIBIT B - Form Purchase Agreement

LEASE
THIS LEASE (this "Lease") is made as of the 29th day of July, 1998, by and between Damron Family Limited Partnership, a Florida limited partnership ("Landlord"), and Damron Auto Parts, Inc., a Florida corporation ("Tenant").
ARTICLE I
GRANT AND TERM
1.1 Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord, that certain parcel of real estate (the "Land") located in Crystal River, Florida, as legally described on Exhibit A attached hereto and by this reference made a part hereof, together with all improvements located thereon (the "Improvements"), and all appurtenances belonging to or in any way pertaining to such premises (the Land, Improvements and appurtenances hereinafter collectively referred to as the "Premises").
1.2 The term hereof (the "Term") shall commence on July 29, 1998 (the "Commencement Date"), and shall terminate on the last day of the sixtieth (60th) complete calendar month to occur after the Commencement Date (the "Expiration Date") (unless the Term shall be terminated or extended in accordance herewith).
ARTICLE II
RENT
2.1 Annual rent ("Rent") throughout the Term shall be Two Hundred Forty Thousand and 00/l00 Dollars plus applicable sales tax ($240,000.00 plus applicable sales tax).
2.2 Tenant shall pay Rent in equal monthly installments ("Monthly Rent") of Twenty Thousand and 00/l00 Dollars plus applicable sales tax ($20,000.00 plus applicable sales tax) in advance on the first day of each and every calendar month during the Term.
2.3 Rent shall be paid to or upon the order of Landlord at Landlord's address set forth herein or as otherwise designated in writing by Landlord. Landlord may change its address by notice to Tenant of such change pursuant to
Section 22.2 hereof.
2.4 Rent not paid within fifteen (15) days after the same is due shall bear interest from the date when due and payable under the terms hereof until the same is paid at an annual rate of interest equal to ten percent (10%), unless a lesser rate shall then be the maximum rate

permissible by law, in which event said lesser rate shall be charged. The rate of interest determined pursuant to the preceding sentence is sometimes hereinafter referred to as the "Maximum Rate of Interest."
2.5 If the Commencement Date occurs on other than the first day of the month, or the Term shall end other than on the last day of the month, Tenant shall pay proportionate Rent at the monthly rate set forth herein (in advance) for such partial month, as well as any other charges payable for such partial month.
ARTICLE III
USE
The Premises may be used and occupied for a salvage yard, auto servicing operations, and automotive aftermarket parts sales, and for all uses customarily and incidentally related thereto. Tenant shall not use or permit the Premises to be used for any other purpose without the consent of Landlord, which consent shall not be unreasonably withheld or delayed.
ARTICLE IV
POSSESSION
Except as otherwise expressly provided herein, Landlord shall deliver exclusive possession of the Premises to Tenant on or before the Commencement Date.
ARTICLE V
TAXES
5.1 "Taxes" shall mean real estate taxes, sewer rents, rates and charges, and any other federal, state or local governmental charge, general, special, ordinary or extraordinary (but not including special or general assessments and income or franchise taxes or any other taxes imposed upon or measured by Landlord's income or profits, except as provided herein), which may now or hereafter be levied or imposed against the Premises or any portion thereof or interest therein. Notwithstanding the year for which any such taxes are levied, in the case of special taxes which may be payable in installments, the amount of each installment, plus any interest payable thereon, payable during any year shall be considered Taxes levied for that year. Except as provided in the preceding sentence, all references to Taxes levied, confirmed or imposed during a

particular year or Taxes "for" a particular year shall be deemed to refer to Taxes levied or otherwise imposed during such year without regard to when such Taxes are payable; provided, however, that in no event shall such Taxes be charged to or against Tenant or its successors or assigns, more than once. Landlord represents and warrants that it has received no written notice of special assessments affecting the Premises as of the date hereof.
5.2 Tenant shall pay, before any fine, penalty, interest or cost is incurred, all Taxes which are levied, confirmed, imposed or which become a lien upon the Premises with respect to any period of time within the Term; provided, however, that as to any calendar year not falling entirely within the Term, Tenant shall be obligated to pay only a prorata share of Taxes based upon the number of days of the Term falling within the calendar year. Within ten (10) days after receipt of a copy of a tax bill, Landlord shall forward same to Tenant. Tenant shall not be liable for any costs, penalties or other expenses due to Landlord's failure to provide copies of such tax bills in a timely manner.
5.3 Tenant shall have the right to contest at its own expense the amount or validity, in whole or in part, of any Taxes by appropriate proceedings diligently conducted in good faith, but only after payment of such Taxes, unless such payment, or a payment thereof under protest, would operate as a bar to such contest or interfere materially with the prosecution thereof, in which event, notwithstanding the provisions of Section 5.2 hereof, Tenant may postpone or defer payment of such Taxes if neither the Premises nor any portion thereof, by reason of such postponement or deferment, would be in danger of being forfeited or lost. Tenant also shall have the right to select the counsel to be retained in connection with the prosecution of any such proceedings. Upon the termination of any such proceedings, Tenant shall pay the amount of such Taxes or part thereof, if any, as finally determined in such proceedings, the payment of which may have been deferred during the prosecution of such proceedings, together with any costs, fees, including attorneys' fees, interest, penalties, fines and other liability in connection therewith. Tenant shall be entitled to the refund of any Taxes, penalty, fine and interest thereon received by Landlord which have been paid by Tenant or which have been paid by Landlord but for which Landlord previously has been reimbursed by Tenant. Landlord shall not be required to join in any proceedings referred to in this Section 5.3 unless the provisions of any law, rule or regulation at the time in effect shall require that such proceedings be brought by or in the name of Landlord, in which event Landlord shall join in such proceedings or permit the same to be brought in Landlord's name.
5.4 Tenant covenants to furnish to Landlord, upon request by Landlord therefor, official receipts of the appropriate taxing authority, or other appropriate proof reasonably satisfactory to Landlord, evidencing the payment of the same.
ARTICLE VI
INSURANCE
6.1 Tenant shall procure policies of insurance relating to the Premises, at its own cost and expense, in character and amounts substantially similar to that insurance carried on the

Premises by Landlord prior to the date of this Lease, and shall maintain such policies throughout the Term, and any Extension Period(s), in a commensurate ratio of insurance to replacement cost; provided however, that if the same becomes unreasonably expensive or impracticable to maintain, Tenant shall maintain insurance in accordance with industry standards.
6.2 With the prior written consent of Landlord, which consent shall not be unreasonably withheld or delayed, Tenant shall have the right to self-insure against any and all risks.
6.3 Notwithstanding any other provision of this Lease to the contrary, and without limitation of the provisions of this Article VI, whenever (a) any loss, cost, damage or expense resulting from fire, explosion or any other casualty or occurrence is incurred by either of the parties hereto, or anyone claiming by, through, or under it in connection with the Premises, and (b) such party then is covered in whole or in part by insurance with respect to such loss, cost, damage or expense or is required under this Lease to be so insured, then the party so insured (or so required) hereby waives any claims against and releases the other party from any liability said other party may have on account of such loss, cost, damage or expense to the extent of any amount recovered by reason of such insurance (or which could have been recovered had such insurance been carried as so required). The parties agree to furnish to each insurance company which has or will issue policies of casualty insurance on the Improvements, written notice of said waivers and to have the insurance policies properly endorsed, if necessary, to acknowledge such subrogation waivers. Such release of liability and waiver of the right of subrogation shall not be operative in any case where the effect thereof is to invalidate such insurance coverage or increase the cost thereof (except that in the case of increased cost, the other party shall have the right, within thirty (30) days following written notice, to pay such increased cost, thereby keeping such release and waiver in full force and effect).
ARTICLE VII
UTILITIES
Tenant will pay, when due, all charges of every nature, kind or description for utilities consumed by Tenant at the Premises, including all charges for water, sewage, heat, gas, light, garbage, electricity, telephone, steam, power or other public or private utility services.
ARTICLE VIII
MAINTENANCE AND ALTERATIONS
8.1 Tenant shall keep and maintain the exterior and interior of the Premises in good condition and repair, including without limitation, all structural and non-structural repairs, maintenance and replacement of the plumbing, electrical, heating, ventilating, air conditioning

and other mechanical systems (the "Systems"), and maintenance of the Premises' structure, foundation and roof. As to any repairs, alterations, additions and improvements (hereinafter "Alterations") costing in excess of $50,000.00, and as to any replacements or structural Alterations whatsoever, Tenant shall, in connection therewith, comply with the requirements of Section 8.2(b) hereof. To the extent possible, Tenant shall keep the Premises from falling temporarily out of repair or deteriorating. Further, Tenant shall keep and maintain the improvements at any time situated upon the Premises, the parking area and all sidewalks and areas adjacent thereto, safe, secure, clean and sanitary (including, without limitation, snow and ice clearance, planting and replacing flowers and landscaping, and necessary interior painting and carpet cleaning), and in substantial compliance with all zoning, municipal, county and state laws, ordinances and regulations applicable to the Premises. Landlord represents that the Premises are, as of the date of this Lease, in compliance with all applicable zoning, municipal, county and state laws, ordinances and regulations.
8.2 (a) Subject to Section 8.2(b) hereof, Tenant shall make all Alterations on the Premises, and on and to the Improvements, parking areas, sidewalks, and equipment thereon, which may be made necessary by the act or neglect of Tenant, its employees, agents or contractors, or any persons, firm or corporation, claiming by, through or under Tenant or which are necessary or desirable in Tenant's sole opinion for the safer or more efficient operation of Tenant's business. All Alternations performed by Tenant shall be performed with new materials, in a good and workmanlike manner. Except as provided in the first sentence of this paragraph, Tenant shall not create any openings in the roof or exterior walls, or make any other Alterations to the Premises, other than any non-structural Alterations not exceeding $50,000.00 in cost, without Landlord's prior written consent, which consent shall not be unreasonably withheld.
(b) As to any non-structural Alterations costing in excess of $50,000.00, and as to any replacements or structural Alterations whatsoever, such work shall be performed with new materials, in a good and workmanlike manner, strictly in accordance with plans and specifications therefor first reasonably approved in writing by Landlord and in accordance with all applicable laws and ordinances. Upon completion of any such work by or on behalf of Tenant, Tenant shall provide Landlord with such documents as Landlord reasonably may require (including, without limitation, sworn contractors' statements and supporting lien waivers) evidencing payment in full for such work, and "as-built" working drawings. In the event Tenant performs any work not in compliance with the provisions of this Section 8.2(b), Tenant, following written notice from Landlord, immediately shall remove such work and restore the Premises to its condition immediately prior to the performance thereof. If Tenant fails to remove such work and restore the Premises as aforesaid, Landlord, at its option, and in addition to all other rights or remedies of Landlord under this Lease, at law or in equity, may enter the Premises and perform said obligation(s) of Tenant and Tenant shall reimburse Landlord for the cost to the Landlord thereof, immediately upon being billed therefor by Landlord. Such entry by Landlord shall not be deemed an eviction or disturbance of Tenant's use or possession of the Premises nor render Landlord liable in any manner to Tenant.

ARTICLE IX
COMPLIANCE WITH LAWS AND ORDINANCES
9.1 During the Term Tenant shall, at its sole cost and expense, comply or cause compliance with all present and future laws, orders, rules, ordinances, regulations and requirements, including, without limitation, the Americans with Disabilities Act, applicable to the Premises. Landlord shall be responsible for all matters arising prior to Tenant's occupancy of the Premises.
9.2 After prior written notice to Landlord, Tenant, at its sole cost and expense, shall have the right to contest the validity or application of any law or ordinance referred to in this Article IX in the name of Tenant or Landlord, or both, by appropriate legal proceedings diligently conducted. If necessary or proper to permit Tenant to so contest the validity or application of any such law or ordinance, Landlord shall execute and deliver any appropriate papers or other documents.
ARTICLE X
MECHANIC'S LIENS
Tenant shall not suffer or permit any mechanic's lien or other lien to be filed against the Premises, or any portion thereof, by reason of work, labor, skill, services, equipment or materials supplied or claimed to have been supplied to the Premises at the request of Tenant, or of anyone holding the Premises, or any portion thereof, by, through or under Tenant. If any such mechanic's lien or other lien at any time shall be filed against the Premises or any portion thereof, Tenant, within thirty (30) days after the date Tenant first becomes aware of the filing of the same, at Tenant's election, shall cause said lien either to be discharged of record or to be bonded over in a manner which is reasonably acceptable to Landlord. If Tenant shall fail to discharge such mechanic's lien or other lien or to bond over the same within such period, then Landlord may, but shall not be obligated to, discharge the same by paying to the claimant the amount claimed to be due or by procuring the discharge of such lien as to the Premises by deposit of a cash sum or a bond or other security, or in such other manner as is now or may in the future be provided by present or future law for the discharge of such lien as a lien against the Premises. Any amount paid by Landlord, or the value of any deposit so made by Landlord, together with all costs, fees and expenses in connection therewith (including reasonable attorneys' fees), together with interest thereon at the Maximum Rate of Interest, shall be repaid by Tenant to Landlord within thirty (30) days after demand therefor. Tenant shall indemnify, defend and hold harmless Landlord and the Premises from all losses, costs, damages, expenses, liabilities, suits, penalties, claims, demands and obligations, including, without limitation, reasonable attorneys' fees, resulting from the assertion, filing, foreclosure or other legal proceedings with respect to any such mechanic's lien or other lien.

ARTICLE XI
OPTIONS TO EXTEND
11.1 Subject to the provisions hereinafter set forth in this Article XI, Landlord hereby grants Tenant options to extend the Term on the same terms, conditions and provisions as contained in this Lease, except as otherwise expressly provided herein, for three (3) periods of five (5) years each (collectively the "Extension Periods," or individually an "Extension Period," as applicable). If exercised in accordance herewith, the first Extension Period shall commence on the first (1st) day after the Expiration Date and each successive Extension Period shall commence on the day after the expiration of the immediately preceding Extension Period.
11.2 Said options to extend each shall be exercisable in the following manner:
(a) Not less than ninety (90) days prior to the Expiration Date or the last day of the applicable Extension Period, Tenant, by written notice to Landlord ("Extension Notice"), may exercise Tenant's option to extend for the next occurring Extension Period. If an option to extend the Term, as the same may have been previously extended, is not extended in the aforesaid manner, the Term and Tenant's rights hereunder and its rights to occupy and possess the Premises shall expire on the Expiration Date, or the last day of the then applicable Extension Period, as the case may be.
(b) Subject to Section 11.3 hereof, if Tenant delivers an Extension Notice as aforesaid, the Term shall be extended on the same terms, conditions and provisions as contained herein
11.3 Rent during the first Extension Period shall equal the Rent payable during the initial Term hereof, increased by the Increase Percentage, as that term is hereinafter defined, for the initial Term. Rent during the remaining Extension Period(s) shall equal the Rent payable during the immediately preceding Extension Period, increased by the Increase Percentage for the immediately preceding Extension Period. "Increase Percentage" shall mean the aggregate sum, for each year during the Term or relevant Extension Period, as the case may be, of the lesser of (i) the percentage increase in the Consumer Price Index over the immediately preceding twelve (12) months, as calculated utilizing the Consumer Price Index for the month of June in the relevant year, and (ii) Four and One-Half Percent (4.5%). By way of example only, if the annual increase in Consumer Price Index, as calculated in accordance with the foregoing, during the initial Term is, respectively, 2%, 5%, 1%, 6% and 4.7%, the Increase Percentage to be used in calculating Rent payable during the first Extension Period shall equal Sixteen and One-Half Percent (16.5%) [2 + 4.5 + 1 +
4.5 + 4.5 = 16.5]. Rent shall remain constant during each Extension Period. As used herein, "Consumer Price Index" means the Consumer Price Index, for all Urban Consumers -- Tampa, Florida. All Items (based index year 1982-84 = 100), as published by the United States Department of Labor, Bureau of Labor Statistics. If the manner in which the Consumer Price Index is determined by the Bureau of Labor Statistics shall be substantially revised, including without limitation, a change in the base index year, an adjustment

shall be made by Landlord in such revised index which would produce results equivalent, as nearly as possible, to those which would have been obtained if the Consumer Price Index had not been so revised. If the Consumer Price Index shall become unavailable to the public because publication is discontinued, or otherwise, or if equivalent data is not readily available to enable Landlord to make the adjustment referred to in the preceding sentence, then Landlord will substitute therefor a comparable index based upon changes in the cost of living or purchasing power of the consumer dollar published by any other governmental agency or, if no such index shall be available, then a comparable index published by a major bank or other financial institution or by a university or a recognized financial publication.
ARTICLE XII
DEFAULTS OF TENANT
12.1 The occurrence of any one or more of the following events shall constitute an "Event of Default":
(a) If default shall be made in the due and punctual payment of any Rent or in the payment of any other amount to be paid by Tenant to Landlord, when and as the same shall become due and payable, and such default shall continue for a period of fifteen (15) days after written notice thereof to Tenant; or
(b) If material default shall be made by Tenant in keeping, observing or performing any of the terms contained in this Lease, other than as referred to in subsection (a) of this Section 12.1, and such default shall continue for a period of thirty (30) days after written notice thereof given by Landlord to Tenant, or such longer period as is reasonable to cure said default, if said default cannot, with due diligence and in good faith, be cured within said thirty (30) days, provided that Tenant promptly and with due diligence and in good faith fails to commence the cure of the same within the thirty (30) day period and thereafter fails to prosecute the curing of such default with due diligence and in good faith.
12.2 If an Event of Default occurs, Landlord shall have the rights and remedies hereinafter set forth, which shall be distinct, separate and cumulative.
(a) Landlord may terminate this Lease by giving Tenant written notice of its election to do so, in which event the Term shall end and all right, title and interest of Tenant hereunder shall expire on the date stated in such notice;
(b) Landlord may terminate Tenant's right to possess the Premises without terminating this Lease by giving written notice to Tenant that Tenant's right of possession shall end on the date stated in such notice, whereupon Tenant's right to possess the Premises or any part thereof shall cease on the date stated in such notice; and

(c) Landlord may enforce the provisions of this Lease, including without limitation Section 12.5 hereof, and may enforce and protect the rights of Landlord hereunder by a suit or suits in equity or at law for the specific performance of any covenant or agreement contained herein, and for the enforcement of any other appropriate legal or equitable remedy, including, without limitation, injunctive relief, and for recovery of all monies due or to become due from Tenant under any of the provisions of this Lease.
12.3 If Landlord exercises either of the remedies provided for in Sections 12.2(a) and 12.2(b), Tenant shall surrender possession of and vacate the Premises and immediately deliver possession thereof to Landlord, and Landlord may, upon proper process of law, re-enter and take complete and peaceful possession of the Premises.
12.4 If Landlord terminates Tenant's right to possess the Premises without terminating this Lease, such termination of possession shall not release Tenant, in whole or in part, from Tenant's obligation to pay the Rent hereunder for the full Term, as and when the same becomes due and payable, and Landlord shall have the right, from time to time, to recover from Tenant, and Tenant shall remain liable for, all Rent and any other sums due and payable to Landlord during the period from the date of such notice of termination of possession to the stated end of the Term. In any such case, Landlord shall use reasonable efforts to mitigate damages and to re-let the Premises or any part thereof for the account of Tenant for such time (which may be for a term extending beyond the Term) and upon such terms as Landlord reasonably shall determine. Also, in any such case, Tenant shall pay the cost of Landlord's reasonable expenses of re-letting. Landlord shall collect the rents from any such re-letting and apply the same first to the payment of its unreimbursed expenses of re-letting and second to the payment of Rent herein provided to be paid by Tenant, and any excess or residue, until the expiration of the Term, shall operate only as an offsetting credit against the amount of Rent due and owing which thereafter becomes due and payable hereunder, and upon the expiration of the Term, the total aggregate amount of all such excesses which Landlord has then accumulated, if any, shall be paid to Tenant. No such re-entry, repossession, or re-letting shall be construed as an eviction or ouster of Tenant or as an election on Landlord's part to terminate this Lease, unless a written notice of such intention is given to Tenant, and Landlord, at any time and from time to time, may sue and seek a judgment for any deficiencies from time to time remaining after the application of the proceeds of any such re-letting. In no event shall Landlord be entitled to collect Rent or other charges from Tenant prior to the date the same is due and payable under the terms of this Lease.
12.5 If Landlord terminates this Lease pursuant to Section 12.2(a) hereof, Landlord shall be entitled to recover, as and for final damages for Tenant's default, an amount equal to the difference between the present value of the aggregate Rent to be paid by Tenant hereunder for the unexpired portion of the Term, and the then present value of the aggregate reasonable fair market rent for the Premises over the same period. In the computation of present value, a discount rate of six percent (6%) per annum shall be employed.

ARTICLE XIII
DESTRUCTION AND RESTORATION
13.1 Tenant covenants and agrees that, subject to the availability of insurance proceeds, in case of damage or destruction of the Improvements after the Commencement Date by fire or otherwise, Tenant shall promptly restore, repair, replace and rebuild the same as nearly as possible to the condition that the same were in immediately prior to such damage or destruction with such changes or alterations (made in conformity with Article VIII hereof) as may be reasonably acceptable to Landlord or required by law. Such restoration, repairs, replacements, rebuilding, changes and alterations, including the cost of temporary repairs for the protection of the Improvements, or any portion thereof, pending completion thereof are sometimes hereinafter referred to as the "Restoration." The Restoration shall be carried on and completed in accordance with the provisions and conditions of this Section and Article VIII hereof. All insurance monies payable on account of such damage or destruction shall be applied to the payment of the costs of the Restoration. Notwithstanding anything to the contrary herein contained, if the insurance monies in the hands of Tenant shall be insufficient to pay the entire costs of the Restoration, Tenant may, but shall not be obligated to, pay any deficiency. If Tenant elects not to pay any such deficiency, Tenant shall have the right to terminate this Lease upon thirty (30) days prior written notice to Landlord. Upon completion of the Restoration, Tenant shall be entitled to any insurance monies then remaining.
13.2 From and after any destruction of or damage to the Improvements, or any portion thereof, by fire, casualty or otherwise, which results in the inability of Tenant to conduct its business, in part or in whole, at the Premises, all Rent and all other charges payable by Tenant hereunder shall abate from the date of such suspension of business until the earlier of (a) the date such business is resumed, or (b) the completion of Restoration; and in connection therewith, if the Improvements are damaged in part but Tenant elects to continue to conduct its business therein, the Rent shall abate and be diminished in proportion to that part of the Improvements which is rendered unusable.
13.3 Notwithstanding the foregoing provisions of this Article XIII, in case of damage or destruction of the Improvements which results in the inability of Tenant to conduct its business, in part or in whole, at the Premises, and the Restoration can not reasonably be expected to be completed within one hundred eighty (180) days after the date of such damage or destruction, Tenant shall have the option of terminating this Lease as of the date of such damage or destruction by notice in writing given to Landlord within thirty (30) days after the occurrence of such damage or destruction. In such event, Landlord shall be entitled to all of the casualty insurance proceeds payable on account of such damage or destruction (excluding any insurance coverage for Tenant's contents, trade fixtures and other personal property), and Tenant shall assign to Landlord, Tenant's rights to such insurance proceeds.

ARTICLE XIV
CONDEMNATION
14.1 If, during the Term, the entire Premises shall be taken as the result of the exercise of the power of eminent domain or conveyed under threat thereof (hereinafter referred to as the "Proceedings"), this Lease and all right, title and interest of Tenant hereunder shall terminate on the earlier of taking of possession by the condemning authority or the date of vesting of title pursuant to such Proceedings. Landlord and Tenant each shall be entitled to an allocation of the award to be made in such Proceedings relative to their respective interests in the Premises. For purposes of determining the value of Tenant's interest, it shall be assumed that Tenant would extend the Term for the maximum number of Extension Periods.
14.2 If, during the Term, less than the entire Premises shall be taken in any such Proceedings, but such taking, in Tenant's reasonable judgment, shall render the Premises unusable, Tenant may terminate this Lease. Such termination shall be effected by notice in writing given not more than sixty (60) days after the date of vesting of title in such Proceedings, and shall specify a date not more than sixty (60) days after the giving of such notice as the date for such termination. Upon the date specified in such notice, the Term this Lease, and all right, title and interest of Tenant hereunder shall cease and terminate. If this Lease is terminated as provided in this Section 14.2, Landlord and Tenant each shall be entitled to an allocation of the award to be made in such Proceedings relative to their respective interests in the Premises. For purposes of determining the value of Tenant's interest, it shall be assumed that Tenant would extend the Term for the maximum number of Extension Periods.
14.3 If during the Term, less than the entire Premises shall be taken, but such taking, in Tenant's reasonable judgment, shall not render the Premises unusable, this Lease, upon the earlier of taking of possession by the condemning authority or vesting of title in the Proceedings, shall terminate as to the parts so taken, and the proceeds of the award for such taking shall be delivered to Tenant to restore that portion of the Improvements on the Premises not so taken to a complete architectural and mechanical unit and otherwise to make the remaining Premises appropriate for the use and occupancy of Tenant. In the event that the net amount of the award (after deduction of all costs and expenses, including attorneys' fees) that may be received in any such Proceedings for physical damage to the Improvements or the Land as a result of such taking is insufficient to pay all costs of such restoration work, Landlord shall deposit with Tenant such additional sum as may be required. The provisions and conditions in Article VIII applicable to changes and alterations shall apply to Tenant's obligations to restore as aforesaid.
14.4 In the event of any termination of this Lease, or any part thereof, as a result of any such Proceedings, Tenant shall pay to Landlord all Rent and all other charges payable hereunder with respect to that portion of the Premises so taken, apportioned to the date of such termination.

14.5 If Tenant either is not entitled, or does not elect, to terminate this Lease in the event of a partial taking of the Premises, the Rent payable hereunder during the period from and after the earlier of the taking of possession by the condemning authority and the date of vesting of title in such Proceedings through to the expiration or termination of this Lease (as the Term may be extended) shall abate and be diminished in proportion to that part of the Improvements and the Land which has been taken.
ARTICLE XV
ASSIGNMENT AND SUBLETTING
15.1 Tenant, at any time and from time to time during the Term, may: (a) assign, transfer, mortgage, pledge, hypothecate or encumber this Lease or any interest under it; (b) allow to exist or occur any transfer of or lien upon this Lease or Tenant's interest herein by operation of law; or (c) sublet the Premises or any part thereof; provided, however, that the same shall not relieve Tenant from liability for performance of any covenant or obligation hereunder and, provided further, that Tenant shall notify Landlord in writing of such actions.
15.2 Tenant shall not need the consent of Landlord if the assignment is to an entity related to or affiliated with Tenant. Tenant shall not assign this Lease to an entity unrelated or unaffiliated with Tenant, without Landlord's prior consent, which consent shall not be unreasonably withheld or delayed. Any assignee of Tenant expressly shall assume in writing all of the obligations of Tenant hereunder, and Section 20.8 of this Lease shall be satisfied before such assignment is completed.
ARTICLE XVI
SUBORDINATION, NONDISTURBANCE, NOTICE TO MORTGAGEE AND ATTORNMENT
16.1 This Lease is and shall be subject and subordinate to the lien of any mortgage, deed of trust, security instrument or other document of like nature, hereinafter referred to as "Mortgage", which now or at any time hereafter may be placed upon the Premises, or any portion thereof or interest therein, and to all present and future ground or underlying leases of the Land, and to any replacements, renewals, amendments, modifications, extensions or refinancing of any of the foregoing, and to each and every advance made under any Mortgage (unless the holder of any Mortgage or the lessor under any such ground or underlying lease [such holder or lessor being hereinafter referred to as a "Mortgagee"] requires in writing that this Lease be superior thereto); provided that the Mortgagee agrees in writing that so long as no Event of Default is continuing, neither Tenant's right to quiet enjoyment under this Lease, nor the right of Tenant to continue to occupy the Premises and all portions thereof, and to conduct its business thereon in

accordance with the covenants, conditions, provisions, terms and agreements of this Lease, shall be interfered with or disturbed by Landlord or anyone claiming by, through or under Landlord, including Mortgagee. Tenant agrees at any time hereafter, and from time to time within thirty (30) days after demand of Landlord, to execute and deliver to Landlord any instruments, releases or other documents that reasonably may be required to effect or confirm the subordination or superiority of this Lease to the lien of any such Mortgage or to any such ground or underlying lease. In addition, Landlord shall cause any Mortgagee currently holding a Mortgage, to agree in writing in a manner satisfactory to Tenant not to interfere with or disturb Tenant's rights as aforesaid so long as no Event of Default is continuing, said writing to be delivered to Tenant within thirty (30) days of the Commencement Date. The lien of any Mortgage shall not cover Tenant's trade fixtures or other personal property located in or on the Premises.
16.2 If any Mortgagee shall succeed to the rights of Landlord under this Lease or to ownership of the Premises, whether through foreclosure or the delivery of a deed in lieu thereof, then upon the written request of such Mortgagee, and provided that such Mortgagee agrees in writing to assume and be bound by all of Landlord's obligations hereunder, Tenant shall attorn to and recognize such Mortgagee as Tenant's landlord under this Lease, and shall execute and deliver any instrument that such Mortgagee may reasonably request to evidence such attornment. Subject to the terms of Section 22.7 hereof, in the event of any other transfer of Landlord's interest hereunder, upon the written request of the transferee and Landlord, and provided such transferee agrees in writing to assume and be bound by all of Landlord's obligations hereunder, Tenant shall attorn to and recognize such transferee as Tenant's landlord under this Lease and shall execute and deliver any instrument that such transferee and Landlord reasonably may request to evidence such attornment.
ARTICLE XVII
SIGNS
Tenant may erect any signs on the exterior or interior of the Improvements or on the landscaped area adjacent thereto, provided that such sign or signs (i) do not cause any irreparable structural damage or other damage to the Improvements; (ii) do not violate applicable governmental laws, ordinances, rules or regulations; and (iii) do not violate any covenants, conditions or restrictions affecting the Premises.

ARTICLE XVIII
LANDLORD'S ACCESS
18.1 Tenant agrees to permit Landlord and its authorized representatives, at Landlord's sole cost and expense, to enter upon the Premises at all reasonable times during ordinary business hours, upon not less than twenty-four
(24) hours prior notice (except in the case of emergency, when no notice shall be required), for the purpose of inspecting the same and making any necessary repairs or replacements which are the obligation of Landlord. Landlord may, during the progress of any work required hereunder, keep and store upon the Premises all reasonably necessary materials, tools and equipment.
18.2 Landlord is hereby also given the right at all reasonable times during ordinary business hours, upon not less than twenty-four (24) hours prior notice (except in the case of emergency, when no notice shall be required), to enter upon the Premises and to exhibit the same for the purpose of mortgaging or selling the same or, during the final four (4) months of the Term, leasing the same.
18.3 In exercising its rights hereunder, Landlord shall refrain from any acts which may interfere with Tenant's use or occupancy of the Premises or access thereto. Without limiting the generality of the foregoing, Landlord acknowledges that it is necessary for Tenant to control access to the Premises in order to avoid unauthorized persons from viewing Tenant's trade secrets, proprietary products, technology and/or processes. Accordingly, while within the Premises, Landlord and its representatives, at Tenant's option, shall be accompanied by a representative of Tenant and shall comply with reasonable directions of such representative relative to safety and to the protection of Tenant's trade secrets and other proprietary information. Landlord also agrees to defend, indemnify and hold Tenant harmless against any and all claims, damages, liability, costs and expenses arising out of or alleged to have arisen out of any entry onto the Premises by Landlord and/or its authorized representatives. Landlord agrees to execute and cause its authorized representatives to execute confidentiality agreements as required by Tenant.
ARTICLE XIX
SURRENDER AND HOLDING-OVER
19.1 Upon the termination of this Lease, whether by forfeiture, lapse of time or otherwise, or upon termination of Tenant's right to possession of the Premises, Tenant will at once surrender and deliver up the Premises, together with all improvements thereon, to Landlord, in good condition and repair, reasonable wear and tear and damage by casualty and condemnation excepted. Said improvements shall include all plumbing, lighting, electrical,

heating, cooling and ventilating fixtures and equipment, and all alterations. All permanent alterations, additions and improvements made in or upon the Premises by Tenant shall become Landlord's property and shall remain upon the Premises on any such termination without compensation, allowance or credit to Tenant.
19.2 Upon the termination of this Lease, Tenant shall remove Tenant's personal property, trade fixtures and equipment; provided, however, that Tenant shall repair any injury or damage to the Premises which may result from such removal and shall restore the Premises to the same condition as existed prior to the installation thereof. If Tenant does not remove Tenant's personal property, trade fixtures and equipment from the Premises prior to the expiration or earlier termination of the Term, Landlord, upon thirty (30) days' notice to Tenant, at its option, may remove the same (and repair any damage occasioned thereby) and dispose thereof or deliver the same to any other place of business of Tenant or warehouse the same, and Tenant shall pay the cost of such removal, repair, delivery and warehousing to Landlord within thirty (30) days of demand therefor.
19.3 Tenant shall have no right to occupy the Premises or any portion thereof after the expiration of this Lease or after the termination of this Lease or of Tenant's right to possession pursuant to Article XII hereof. In the event Tenant or any party claiming by, through or under Tenant holds over, Landlord may exercise any and all remedies available to it at law or in equity to recover possession of the Premises, and for direct damages; provided, however, that Landlord shall not be entitled to recover, and hereby expressly waives any right to recover, consequential damages. Notwithstanding anything contained herein to the contrary, in the event Tenant or any party claiming by, through or under Tenant holds-over after the expiration of the Term, Landlord may elect, in lieu of any other remedy provided by law or herein, that the same shall constitute a month-to-month tenancy upon the same terms as in this Lease at a rate of rent equal to one hundred twenty five percent (125%) of the Monthly Rent for the month in which the Term expires.
ARTICLE XX
HAZARDOUS AND TOXIC MATERIALS
20.1 As used herein:
(a) "Claim" shall mean and include any demand, cause of action, proceeding or suit (i) for damages, losses, injuries to person or property, damages to natural resources, fines, penalties, interest, or contribution;
(ii) for the costs of site investigations, feasibility studies, information requests, health or risk assessments or Response actions; or (iii) for enforcing this Article XX.
(b) "Environmental Law" means 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, relating to the protection of human health, safety, or the environment including without limitation: (a) the Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA") (42 U.S.C. Sections 9601 ET SEQ.; (b) the Superfund Amendments and Reauthorization Act of 1986 (42 U.S.C. Sections 9601 ET SEQ.); (c) The Hazardous Materials Transportation Control Act of 1970 (49 U.S.C. Sections 1802 ET SEQ.; (d) the Resource Conservation and Recovery Act of 1976, as amended by the Solid and Hazardous Waste Act Amendments ("RCRA") (42 U.S.C. Sections 6901 ET SEQ.); (e) the Federal Water Pollution Control Act, as amended by the Clean Water Act of 1977 (33 U.S.C. Sections 1251 ET SEQ.) (the "Clean Water Act"); (f) the Safe Drinking Water Act (42 U.S.C. Sections 300h ET SEQ.); (g) the Clean Air Act, as amended by the Clean Air Act Amendments of 1990 (42 U.S.C. Sections 1857 ET SEQ.); (h) the Solid Waste Disposal Act, as amended by RCRA (42 U.S.C. Section 6901 ET SEQ.); (i) the Toxic Substances Control Act (15 U.S.C. Sections 2601 ET SEQ.); (j) the Emergency Planning and Community Right-to-Know Act of 1986 ("EPCRA") (42 U.S.C. Sections 11001 ET SEQ.); (k) the Federal Insecticide, Fungicide and Rodenticide Act ("FIFRA") (7 U.S.C. Sections 136 ET SEQ.);
(l) the National Environmental Policy Act of 1975 (42 U.S.C. Sections 4321 ET SEQ.); (m) the Radon Gas and Indoor Air Quality Reserve Act (42 U.S.C. Sections 7401 ET seq.); (n) the National Environmental Policy Act of 1975 (42 U.S.C. Sections 4321 ET SEQ.); (o) the Rivers and Harbors Act of 1899 (33 U.S.C. Sections 401 ET SEQ.); (p) the Oil Pollution Act of 1990 (33 U.S.C. Sections 1321 ET SEQ.); (q) the Endangered Species Act of 1973, as amended (16 U.S.C. Sections 1531 ET SEQ.); (r) the Occupational Safety and Health Act of 1970, as amended, (29 U.S.C. Sections 651 ET SEQ.); (s) North American Free Trade Act, (t) counterparts of any of the foregoing federal statutes enacted within or outside the United States or by any other nation, any U.S. state, region, county or local government (including any subdivisions thereof); (u) any and all laws, rules, regulations, codes, ordinances, licenses, permits, approvals, plans, authorizations, directives, rulings, injunctions, decrees, orders and judgments enacted or promulgated under any of the foregoing, all as amended and as may be amended in the future, and (v) common law theories of nuisance, trespass, waste, negligence, and abnormally dangerous activities arising out of or relating to the presence of Hazardous Substances in the environment or work place.
(c) "Hazardous Substance" shall be construed broadly to include any substance, material or waste, including without limitation any constituent, chemical, element, particle, compound, material, substance or waste which is defined as a "hazardous waste," "hazardous material," "hazardous substance," "extremely hazardous substance," "restricted hazardous waste," "contaminant," "toxic waste," "toxic substance," or "special waste" under any Environmental Law which includes, but is not limited to, 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.

(d) "Manage" or "Management" means to generate, manufacture, process, treat, store, use, re-use, refine, recycle, reclaim, blend or burn for energy recovery, incinerate, accumulate speculatively, transport, transfer, dispose of or abandon Hazardous Substance.
(e) "Release" shall mean releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, disposing or dumping into the indoor or outdoor environment, including without limitation the abandonment or discarding of barrels, drums, containers, tanks and other receptacles containing or previously containing any Hazardous Substance.
(f) "Response" or "Respond" shall mean action required by any Environmental Law to correct, remove, remediate, cleanup, prevent, mitigate, monitor, evaluate, investigate, assess or abate a Release of a Hazardous Substance.
20.2 During the Term, Tenant, at its sole cost and expense, shall (a) comply with all Environmental Laws relating solely to its use of the Premises, and permits issued thereunder; (b) conduct any Management of Hazardous Substances by Tenant on the Premises in compliance with Environmental Laws; (c) use commercially reasonable efforts so as to not cause or allow the Release of any Hazardous Substances on, to or from the Premises, except in compliance with Environmental Laws and permits issued thereunder; (d) arrange for the lawful transportation and off-site disposal of all Hazardous Substances that it generates; (e) secure, maintain, and comply with all permits required by Environmental Laws in connection with Tenant's use of the Premises; and (f) provide Landlord with copies of all environmental reports and results of all environmental tests conducted by or for Tenant during the Term.
20.3 During the Term, Landlord, at its sole cost and expense, shall (a) comply with all Environmental Laws other than those relating solely to Tenant's use of the Premises, and permits issued thereunder; and (b) secure, maintain and comply with all permits required by Environmental Laws other than those required solely by reason of Tenant's use of the Premises.
20.4 Landlord and Landlord's agents and employees shall have the right to enter upon the Premises to conduct appropriate inspections or tests in order to determine Tenant's compliance with Environmental Laws, provided that (a) such inspections and tests shall be performed at the sole cost and expense of Landlord; (b) Landlord shall provide Tenant with written notice not less than five business (5) days prior to conducting such inspections or tests; (c) such tests shall be performed at reasonable times designated by Tenant, shall be subject to the provisions of Section 18.3 and in all other respects shall not interfere with Tenant's business operations and shall be in compliance with Tenant's security procedures; and (d) Landlord promptly shall communicate and, when appropriate, delivery copies of the results of any investigation and tests, to Tenant.
20.5 If Tenant's Management of Hazardous Substances at the Premises (a) results in or causes a Release which violates an Environmental Laws or permits issued thereunder; (b) gives rise to liability or a Claim or requires a Response under common law or any Environmental Law

or permit issued thereunder; (c) causes a significant public health effect; or
(d) creates a nuisance, Tenant shall promptly notify Landlord and, in any and all such occurrences and at its sole cost and expense, promptly take all applicable action in Response. Tenant shall keep Landlord reasonably informed as to its actions in connection with any Response.
20.6 Tenant shall indemnify, defend and hold harmless Landlord, its beneficiary, managing agents and mortgagees from all Claims arising from or attributable to any breach by Tenant of any of its warranties, representations or covenants in this Article XX.
20.7 Notwithstanding anything in the Article XX to the contrary, Tenant shall not be liable and Landlord shall fully indemnify and hold Tenant harmless from and against any and all liabilities, damages, expenses, costs and losses arising from, or as a result of, any use and occupancy of the Premises prior to the Commencement Date, including any violation of any Environmental Laws attributable to the period prior to the Commencement Date.
20.8 Notwithstanding anything to the contrary in this Lease, in the event Tenant shall assign this Lease to an entity unrelated to or unaffiliated with Tenant, Tenant shall provide Landlord a Phase I environmental assessment of the Premises dated within ninety (90) days prior to the effective date of the assignment. Such assignee shall agree, as a condition precedent to the assignment, to provide Landlord with a Phase I environmental assessment of the Premises not less frequently than every five (5) years throughout the remainder of the Term, as the same may be extended pursuant to the terms of this Lease, and at the expiration of said Term.
ARTICLE XXI
RIGHT OF FIRST REFUSAL
If, at any time after the end of the eighty fourth (84th) complete calendar month to occur after the Commencement Date and before the end of the one hundred twentieth (120th) complete calendar month to occur after the Commencement Date, and while this Lease is in full force and effect, Landlord should receive from a bona fide, arm's-length purchaser a bona fide written offer to purchase the Premises ("Bona Fide Offer"), and should Landlord desire to accept the Bona Fide Offer, it shall first make a written offer (the "Tenant Offer") to sell said Premises to Tenant at the price and upon the terms and conditions set forth in the Bona Fide Offer. The Tenant Offer shall be accompanied by a copy of the Bona Fide Offer. Tenant may accept the Tenant Offer by service of notice of acceptance on Landlord on or before the thirtieth (30th) day following delivery of the Tenant Offer to Tenant. If the Tenant Offer is accepted, the purchase and sale shall be closed at the principal office of Landlord on the date set forth in the Bona Fide Offer or at such other place, time and date as Landlord and Tenant may agree upon, by payment of the purchase price against conveyance of the Premises free and clear of liens and encumbrances of every kind and description except as permitted by the Tenant Offer. If Tenant fails to fully and timely accept the Tenant Offer as herein provided, Landlord may make the bona fide sale of the Premises to the bona fide prospective purchaser making the Bona Fide Offer in

accordance with the terms thereof; provided, however, that if Landlord fails to consummate the sale of the Premises on exactly the same terms and conditions as are set forth in the Bona Fide Offer, the Premises shall again be subject to Tenant's right of first refusal. Tenant's right of first refusal as set forth in this Article XXI shall be a continuing right and shall survive each sale of the Premises during the term hereof (as it may be extended as provided herein).
ARTICLE XXII
MISCELLANEOUS PROVISIONS
22.1 To the fullest extent allowed by law, Tenant, at all times, shall indemnify, defend and hold Landlord, its officers, directors, employees and agents, harmless from and against any and all claims by or on behalf of any person or persons, firm or firms, corporation or corporations, arising from the conduct or management of, or from any work or things whatsoever done in or about, the Premises (except to the extent arising out of Landlord's negligence or other wrongful conduct), and further will indemnify, defend and hold Landlord, its officers, directors, employees and agents, harmless against and from any and all claims arising during the Term and based upon any breach or default on the part of Tenant in the performance of any covenant or agreement on the part of Tenant to be performed pursuant to the terms of this Lease, or arising from any act or neglect of Tenant, its agents, servants, employees, licensees, or contractors, or arising from any accident, injury or damage whatsoever caused to any person, firm or corporation occurring during the Term in or about the Premises, and from and against all costs, attorneys' fees, expenses and liabilities incurred in or with respect to any such claim or action or proceeding brought thereon. To the fullest extent allowed by law, Landlord, at all times, shall indemnify, defend and hold Tenant, its officers, directors, employees and agents, harmless from and against any and all claims by or on behalf of any person or persons, firm or firms, corporation or corporations, arising from the conduct or management of, or from any work or things whatsoever done in or about, the Premises (except to the extent arising out of Tenant's negligence or other wrongful conduct), and further will indemnify, defend and hold Tenant, its officers, directors, employees and agents harmless against and from any and all claims arising during the Term and based upon any breach or default on the part of Landlord in the performance of any covenant or agreement on the part of Landlord to be performed pursuant to the terms of this Lease, or arising from any act or neglect of Landlord, its agents, servants, employees, licensees or contractors, whenever and wherever occurring or arising from any accident, injury or damage whatsoever caused to any person, firm or corporation occurring prior to or after the Term in or about the Premises, and from and against all costs, attorneys' fees, expenses and liabilities incurred in connection with any such claim or action or proceeding brought thereon.
22.2 All notices, demands and requests which may be or are required to be given, demanded or requested by either party to the other shall be in writing. All notices, demands and requests by Landlord to Tenant shall be sent by United States registered or certified mail, postage

prepaid, or by commercial overnight delivery service or other personal service (with evidence of receipt), addressed as follows:
LKQ Corporation
120 N. LaSalle Street
Suite 330
Chicago, Illinois 60602
Attn: General Counsel
or at such other place as Tenant may from time to time designate by written notice to Landlord. All notices, demands and requests by Tenant to Landlord shall be sent by United States registered or certified mail, postage prepaid, or by commercial overnight delivery service or other personal service (with evidence of receipt), addressed to Landlord as follows:
Lenny Damron
1046 N. Stony Point
Crystal River, FL 34429
with a copy to:
Allan S. Gassman, Esq.
1245 Court Street, Suite 102
Clearwater, FL 33756
or at such other place as Landlord from time to time may designate by written notice to Tenant. Notices, demands and requests which shall be served upon Landlord by Tenant, or upon Tenant by Landlord, by mail in the manner aforesaid, shall be deemed to be sufficiently served or given for all purposes hereunder on the second business day after mailing, and notices served by overnight delivery service shall be deemed served or given on the second business day after delivery to such service.
22.3 Landlord covenants and agrees that Tenant, upon paying the Rent, and upon observing and keeping the covenants, agreements and conditions of this Lease on its part to be kept, observed and performed, shall lawfully and quietly hold, occupy and enjoy the Premises (subject to the provisions of this Lease) during the Term (as it may be extended from time to time as expressly provided herein) without hindrance or molestation by Landlord or by any person or persons claiming under Landlord. In the event of a breach by Landlord of this Section 22.3, or of any other covenant herein, then, anything in this Lease notwithstanding, Tenant shall have the full right to cure such breach at the expense of Landlord, and Landlord shall upon demand pay Tenant's costs, including attorneys' fees and expenses, of curing said breach (or Tenant, at its option, may deduct said costs and fees and expenses from the next accruing installment(s) of Rent or other charges payable by it to Landlord), or Tenant may enforce any and all remedies at law or in equity or under this Lease which may be available to Tenant under the particular circumstances.

22.4 Tenant and Landlord, each without charge at any time and from time to time, within thirty (30) days after written request by the other party, shall certify by written instrument, duly executed, acknowledged and delivered to any Mortgagee, assignee of a Mortgagee, proposed Mortgagee, or to any purchaser or proposed purchaser or transferee of the Landlord, Tenant or Premises or any interest therein:
(a) That this Lease is unmodified and in full force and effect (or, if there have been modifications, that the same is in full force and effect, as modified, and stating the modifications);
(b) The dates to which the Rent has been paid in advance;
(c) Whether or not there are then existing any breaches or defaults by the certifying party or by the other party and known by the certifying party under any of the covenants, conditions, provisions, terms or agreements of this Lease, and specifying such breach or default, if any, or any set-offs or defenses against the enforcement of any covenant, condition, provision, term or agreement of this Lease upon the part of Landlord or Tenant, as the case may be, to be performed or complied with (and, if so, specifying the same and the steps being taken to remedy the same);
(d) That Tenant has made no advancements to or on behalf of Landlord for which it has the right to deduct from, or offset against, future Rent payments;
(e) Tenant has accepted the Premises and is in full and complete possession thereof; and
(f) Such other statements or certificates as Landlord or Tenant or any Mortgagee may reasonably request.
22.5 Upon not less than thirty (30) days prior written request by either party, the parties hereto agree to execute and deliver to each other a memorandum of lease, in recordable form, setting forth the following:
(a) the date of this Lease;
(b) the parties to this Lease;
(c) the Term of this Lease;
(d) the three (3), five (5) year extension options set forth in Article XI;
(e) the right of first refusal set forth in Article XXI;
(f) the legal description of the Premises;

(g) the option to purchase set forth in Article XXVI; and
(h) such other matters reasonably requested by Landlord or Tenant to be stated therein.
22.6 If any covenant, condition, provision, term or agreement of this Lease shall, to any extent, be held invalid or unenforceable, the remaining covenants, conditions, provisions, terms and agreements of this Lease shall not be affected thereby, but each covenant, condition, provision, term or agreement of this Lease shall be valid and in force to the fullest extent permitted by law. This Lease shall be construed and be enforceable in accordance with the laws of the State of Florida.
22.7 The covenants and agreements herein contained shall bind and inure to the benefit of Landlord and its successors and assigns, and Tenant and its successors and assigns.
22.8 The caption of each article of this Lease is for convenience and reference only and in no way defines, limits or describes the scope or intent of such article or of this Lease.
22.9 This Lease does not create the relationship of principal and agent, or of partnership, joint venture, or of any association or relationship between Landlord and Tenant, the sole relationship between Landlord and Tenant being that of landlord and tenant.
22.10 All preliminary and contemporaneous negotiations are merged into and incorporated in this Lease. This Lease contains the entire agreement between the parties and shall not be modified or amended in any manner except by an instrument in writing executed by the parties hereto.
22.11 There shall be no merger of this Lease or the leasehold estate created by this Lease with any other estate or interest in the Premises by reason of the fact that the same person, firm, corporation or other entity may acquire, hold or own directly or indirectly, (a) this Lease or the leasehold interest created by this Lease or any interest therein, and (b) any other estate or interest in the Premises or any portion thereof. No such merger shall occur unless and until all persons, firms, corporations or other entities having an interest (including a security interest) in (1) this Lease or the leasehold estate created hereby, and (2) any such other estate or interest in the Premises or any portion thereof, shall join in a written instrument expressly effecting such merger and shall duly record the same.
22.12 All obligations, monetary or otherwise, accruing prior to expiration of the Term (as it may be extended from time to time) shall survive the expiration or other termination of this Lease.
22.13 Time is of the essence of this Lease, and all provisions herein relating thereto shall be strictly construed.
22.14 Each party represents and warrants to the other that it has not dealt with any broker in connection with this Lease and agrees to indemnify and hold the other party and its agents, officers, directors and employees harmless from all losses, damages, liabilities, claims,

liens, costs and expenses, including, without limitation, attorneys' fees, arising from any claims or demands of any broker or brokers, salespersons or finders for any commission or fee alleged to be due such broker or brokers, salespersons or finders based upon such broker or brokers, salespersons or finders having dealt with the indemnifying party in connection with this Lease.
22.15 To the extent either party indemnifies and agrees to defend the other under the terms of this Lease, the indemnifying party shall have the right to select counsel to undertake such defense, which counsel shall be reasonably acceptable to the indemnified party.
22.16 Subject to specific conditions as to consents and approvals provided for in other sections of this Lease, no consent or approval required under this Lease shall be unreasonably withheld or delayed.
22.17 This Lease may be executed in counterparts, each of which when taken together shall constitute one instrument.
22.18 This Lease represents the product of the joint negotiation, preparation and agreement of and between the parties hereto and is not to be construed against one party or the other as the principal drafter.
22.19 In the event of any litigation between the Landlord and the Tenant arising out of an alleged breach of this Lease by either of them and such litigation terminates upon the issuance of a final, unappealable judicial order, the unsuccessful party therein shall pay the successful party's reasonable attorneys' fees and expenses in such litigation. This provision shall inure only to the Landlord and Tenant and their respective successors and permitted assigns, if any.
ARTICLE XXIII
LANDLORD'S REPRESENTATIONS AND WARRANTIES
23.1 In addition to the other representations and warranties made herein, Landlord hereby represents and warrants to Tenant that as of the date hereof the following representations and warranties are true, correct and complete and that the same will be true, correct and complete on and as of the Commencement Date:
(a) Landlord warrants and represents that the execution and delivery of this Lease by the signatory hereto on behalf of Landlord and the performance of this Lease by Landlord have been duly authorized by Landlord and this Lease is binding upon Landlord and enforceable against Landlord in accordance with its terms.
(b) Landlord warrants and represents that it is the owner of fee simple title to the Land, and except for mortgages of record which have been disclosed in writing to Tenant, free and clear of all liens, encumbrances, covenants, conditions,

restrictions, rights of way, easements, leases, tenancies, licenses, claims, options, and any other matters which would impair the marketability of title to the Land.
(c) Landlord represents and warrants that there are no condemnation or judicial proceedings, administrative actions or examinations, claims or demands of any type which have been instituted or which are pending or threatened against Landlord with respect to the Premises or any part thereof. There are no actions or proceedings pending or to the best of Landlord's knowledge, threatened against Landlord with respect to the Premises before any court or administrative agency which would result in any material adverse change in the condition and operation of the Premises. In the event Landlord receives notification of any of the foregoing prior to Commencement Date, copies of such notice shall be provided to Tenant by Landlord within three (3) days following its receipt thereof, but in no event later than the Commencement Date.
(d) Landlord represents and warrants that Landlord is duly organized and validly existing under the laws of the State of Florida that the execution and delivery of this Lease and the transaction contemplated hereby have been duly authorized by Landlord and that the performance of Landlord's obligations under this Lease will not violate its organizational documents, the provisions of any applicable law or agreement to which it is a party or under which it is bound.
(e) Landlord represents and warrants that the Premises will be delivered on the Commencement Date in substantially the same condition as on the date hereof, reasonable wear and tear excepted, and free of any occupants, tenants or rights of first refusal, right of reverter or rights of first offer relating to the Premises, other than as provided in this Lease; any service contracts or management agreements; and any employee, employment agreements or union contract affecting the Premises.
(f) Landlord represents and warrants that Landlord has not filed any proceeding or petition in, nor received notice that any proceeding or petition has been filed against Landlord in bankruptcy or insolvency, or for reorganization or for the appointment of a receiver, custodian or trustee, or for the arrangement of debts under any state or federal statute relating to debtor protection or insolvency, and further that Landlord is not insolvent and will not be rendered insolvent by the consummation of the transaction contemplated by this Lease.
(g) Landlord represents and warrants that it has received no notice of any violations of building, fire, air pollution, or Environmental Law and that Landlord has no knowledge of any suits or judgments threatened or pending relating to violations at the Premises or any portion of the Premises of any such laws, ordinances and regulations.

(h) Landlord represents and warrants that there are no special taxes or assessments pending and/or unpaid with respect to any improvements not yet completed on the Premises;
(i) Landlord represents and warrants that there are no parties that have any rights to possession of any part of the Premises other than Landlord or that have any leases to any portion of the Premises, other than as provided in this Lease.
(j) Landlord represents and warrants that there are no written or oral service agreements or other contracts or leases with respect to the Property or any part thereof, except this Lease.
(k) Landlord represents and warrants that there are no underground storage tanks on the Premises or any condition on the Premises which materially violates the terms of any applicable environmental law.
(l) Landlord represents and warrants that there are no asbestos-containing materials on the Premises.
(m) Landlord represents and warrants that between the date of this Lease and the Commencement Date that it will not enter into any leases, service agreements or other contracts with respect to the Premises, which will be effective beyond the Commencement Date without express written consent of Tenant, which consent shall not be unreasonably withheld; provided, however, the Tenant shall not be required to consent to any agreement which will terminate on or before the Commencement Date.
All representations made by Landlord in this Article XXIII shall survive the execution of this Lease and, if later, the Commencement Date.
ARTICLE XXIV
LANDLORD DEFAULT
In the event Landlord breaches any of the representations and warranties contained in Article XXIII hereof, or in the event any such representation or warranty is untrue when made, or in the event Landlord breaches any of its obligations under Article IX hereof, and if such breach is curable and is not cured within thirty (30) days after written notice thereof, Tenant shall have the right to terminate this Lease. In addition to Tenant's rights contained herein or available in law or at equity, in the event Landlord neglects or fails to comply with any of Landlord's obligations contained in this Lease, Tenant may, after giving Landlord not less than 30 days prior written notice, (a) cure any such Landlord's default and (b) withhold rent in an amount not to exceed any amount which Tenant spends to cure any such default or otherwise incurs by reason of Landlord' default (including attorneys' fees and expenses).

ARTICLE XXV
OPTION TO PURCHASE
25.1 In consideration of the Rent to be paid by Tenant under this Lease and other good and valuable consideration and in addition to the right of first refusal granted to Tenant in Article XXI herein, Landlord hereby irrevocably grants to Tenant the exclusive option (the "Option") to purchase the Premises, including but not limited to all structures and improvements thereon and all appurtenances thereto, on the terms and conditions set forth herein and substantially in accordance with the Real Estate Purchase Agreement attached as Exhibit B hereto and made a part hereof (the "Purchase Agreement") for a purchase price (the "Purchase Price") equal to: (a) if exercised on the last day of the sixtieth (60th) complete calendar month to occur after the Commencement Date (the "First Exercise Date"), $2,400,000.00; and (b) if exercised at the end of the eighty fourth (84th) complete calendar month to occur after the Commencement Date (the "Second Exercise Date"), $2,940,000.00.
25.2 Tenant shall have the right to exercise the Option at the First Exercise Date, and, if not previously exercised, at the Second Exercise Date, by Tenant giving Landlord written notice of Tenant's exercise (the "Option Exercise Notice"), which notice shall be no less than ninety (90) days prior to the First Exercise Date, or the Second Exercise Date, as applicable. The Option Exercise Notice shall be accompanied by four (4) copies of the Purchase Agreement each dated as of the date of Tenant's notice and executed by Tenant, as purchaser, and in substantial accordance with Exhibit B hereto. Within three (3) days of Landlord's receipt of Tenant's exercise of the Option, Landlord shall execute and return to Tenant two (2) of the four (4) copies of the Purchase Agreement which Tenant shall have sent to Landlord. In the event that the Option is not exercised by Tenant in the manner provided herein, the Option shall be null and void and of no further force or effect.
25.3 The Option is a continuing option and shall survive any and all sales of the Premises by Landlord.
ARTICLE XXVI
ARBITRATION
Any party may request by notice to the other party that any dispute under this Lease be submitted to mediation, to be attended by each party and counsel for each party. If any such dispute has not been resolved within 20 days of the notice requesting mediation, then the dispute may be submitted to binding arbitration by either party. Arbitration shall be conducted under and governed by the Commercial Rules of the American Arbitration Association, as in effect from time to time. All arbitration hearings shall be conducted in Chicago, Illinois (if the dispute is submitted to arbitration by Landlord) or Tampa, Florida (if the dispute is submitted to arbitration by Tenant). A judgment upon the award may be entered in any court having jurisdiction. The number of arbitrators shall be three, one each selected by Tenant and the Landlord, with the third

arbitrator selected by the two selected by the parties. The arbitrators must render their arbital decision and award and give a written opinion setting forth the basis of their decision, all not later than 45 days after the conclusion of the arbitration. Each party shall take or cause to be taken all reasonable action to facilitate the conduct of the arbitration and the rendering of the award at the earliest possible date. The costs of the arbitration, including all costs and expenses (including reasonable legal fees and expenses) of each party shall be borne and paid in accordance with the determination of the arbitrators, who shall take into account, in such determination, which party (if any) has prevailed. The parties intend that the mediation and arbitration provisions set forth in this Article XXVI shall be the only means of resolving any disputes under this Lease.
IN WITNESS WHEREOF, each of the parties has caused this Lease to be duly executed as of the day and year first above written.

TENANT:                                      LANDLORD:

Damron Auto Parts, Inc.,                     Damron Family Limited Partnership,
a Florida corporation                        a Florida limited partnership

By: /s/ Thomas B. Raterman                   By: /s/ Leonard A. Damron III

Name: Thomas B. Raterman                     Name: Leonard A. Damron III

Title: Vice-President                        Title: President

Date: July 29, 1998                          Date: July 29, 1998	

EXHIBIT 10.14
STOCK REPURCHASE AGREEMENT
THIS STOCK REPURCHASE AGREEMENT (this "Agreement"), dated as of February 20, 2003, by and between LKQ Corporation, a Delaware corporation (the "Company"), and AutoNation, Inc., a Delaware corporation ("Stockholder").
WHEREAS, Stockholder is the owner of 4,746,357 shares of Common Stock, par value $0.01 per share, of the Company ("Common Stock"); and
WHEREAS, the Company has agreed to repurchase certain of such shares from Stockholder on the terms set forth herein; and
WHEREAS, the parties hereto wish to set forth certain agreements between them relating to such repurchase.
NOW THEREFORE, the parties hereto covenant and agree as follows:
1. REPURCHASE OF SHARES. Immediately upon the execution hereof, the Company shall repurchase 1,878,684 shares of Common Stock (the "Shares") from Stockholder in exchange for the payment by the Company to Stockholder of Eleven Million Two Hundred Seventy Two Thousand One Hundred Four Dollars ($11,272,104) in cash by wire transfer of immediately available funds.
2. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER. Stockholder hereby represents and warrants to the Company as follows:
(a) Stockholder is the record and beneficial owner of the Shares and has good and valid title to the Shares, free and clear of any pledge, lien, security interest, charge, claim, equity, option, proxy, right of first refusal or other limitation on disposition or encumbrance of any kind (other than as set forth in the Company's Stockholders Agreement dated June 19, 1998 (the "Stockholders Agreement")). Stockholder has all necessary corporate power and authority to execute and deliver this Agreement and to consummate the transaction contemplated hereby. The execution and delivery of this Agreement and the consummation of the transaction contemplated hereby by Stockholder have been duly authorized by all necessary corporate action on the part of Stockholder. This Agreement has been duly executed and delivered by Stockholder and, assuming its due authorization, execution and delivery by the Company, constitutes a legal, valid and binding obligation of Stockholder, enforceable against Stockholder in accordance with its terms.
(b) The execution and delivery of this Agreement by Stockholder do not, and the performance of this Agreement by Stockholder will not, (i) conflict with or violate the Certificate of Incorporation or Bylaws of Stockholder, (ii) conflict with or violate any law, rule, regulation, order, judgment or decree applicable to Stockholder or by which Stockholder or any of its properties (including the Shares) is bound or affected, or (ii) conflict with, violate or result

in any breach of or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, or result in the creation of a lien or encumbrance on any of the property or assets (including the Shares) of Stockholder pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which Stockholder is a party or by which it or any of its properties is bound or affected.
(c) The execution and delivery of this Agreement by Stockholder do not, and the performance of this Agreement by Stockholder will not, require any consent, approval, authorization or permit of, or filing with or notification to, any governmental or regulatory authority, domestic or foreign, or other third party (other than as required by the Stockholders Agreement).
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby represents and warrants to Stockholder as follows:
(a) The Company is a corporation duly organized and validly existing under the laws of the State of Delaware. The Company has all necessary corporate power and authority to execute and deliver this Agreement and to consummate the transaction contemplated hereby. The execution and delivery of this Agreement and the consummation of the transaction contemplated hereby by the Company have been duly authorized by all necessary corporate action on the part of the Company. This Agreement has been duly executed and delivered by the Company and, assuming its due authorization, execution and delivery by Stockholder, constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms.
(b) The execution and delivery of this Agreement by the Company do not, and the performance of this Agreement by the Company will not, (i) conflict with or violate the Certificate of Incorporation or Bylaws of the Company, (ii) conflict with or violate any law, rule, regulation, order, judgment or decree applicable to the Company or by which the Company or any of its properties is bound or affected, or (iii) conflict with, violate or result in any breach of or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, or result in the creation of a lien or encumbrance on any of the property or assets of the Company pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which the Company is a party or by which it or any of its properties is bound or affected.
(c) The execution and delivery of this Agreement by the Company do not, and the performance of this Agreement by the Company will not, require any consent, approval, authorization or permit of, or filing with or notification to, any governmental or regulatory authority, domestic or foreign, or other third party (other than as required by the Stockholders Agreement).
4. BOARD OF DIRECTORS. Simultaneous with the execution of this Agreement, one of the two designees of Stockholder who are members of the Board of Directors of the
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Company (the "Board") shall submit his resignation from the Board effective as of the date of this Agreement. Notwithstanding any provision to the contrary in the Voting Agreement dated June 19, 1998 among the Company, Stockholder and others or in any other agreement, Stockholder agrees that it shall be entitled to one designee to the Board during the terms of the Voting Agreement unless and until Stockholder repurchases a percentage of shares of Common Stock equal to the percentage it is selling hereunder.
5. NOTICES. All notices and other communications given or made pursuant hereto shall be in writing and shall be deemed to have been duly given or made as of the date delivered, mailed or transmitted, and shall be effective upon receipt, if delivered personally, mailed by registered or certified mail (postage prepaid, return receipt requested) or by overnight courier to the parties at the following addresses (or at such other address for a party as shall be specified by like changes of address) or sent by electronic transmission to the telecopier number specified below:
(a) If to the Company:
LKQ Corporation
120 North LaSalle Street
Suite 3300
Chicago, IL 60602
Attention: General Counsel Telecopier No: 312-621-1969
(b) If to Stockholder:
AutoNation, Inc.
110 S.E. 6th Street
29th Floor
Fort Lauderdale, FL 33301
Attention: General Counsel Telecopier No: 954-769-6340
6. HEADINGS. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation or this Agreement.
7. SEVERABILITY. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable or being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible to the fullest extent permitted by applicable law in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the extent possible.
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8. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement of the parties and supersedes all prior agreements and undertakings, both written and oral, between the parties, or any of them, with respect to the subject matter hereof; provided, however, that this Agreement is not intended to modify or amend, and should not be deemed to modify or amend, the Stockholders Agreement.
9. ASSIGNMENT. This Agreement shall not be assigned by operation of law or otherwise.
10. PARTIES IN INTEREST. This Agreement shall be binding upon and inure solely to the benefit of each party hereto, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
11. GOVERNING LAW. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Illinois applicable to contracts executed and to be performed entirely within that state.
12. COUNTERPARTS. This Agreement may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

LKQ CORPORATION                      AUTONATION, INC.

By: /s/ Victor M. Casini              By: /s/ Jonathan P. Ferrando
Name: Victor M. Casini                Name: Jonathan P. Ferrando
Title: Vice-President                 Title: Senior Vice-President, General
                                      Counsel and Secretary	

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EXHIBIT 10.15
STOCK REPURCHASE AGREEMENT
THIS STOCK REPURCHASE AGREEMENT (this "Agreement"), dated as of February 20, 2003, by and between LKQ Corporation, a Delaware corporation (the "Company"), and PMM-LKQ Investments Limited Partnership ("Stockholder").
WHEREAS, Stockholder is the owner of 1,500,000 shares of Common Stock, par value $0.01 per share, of the Company ("Common Stock"); and
WHEREAS, the Company has agreed to repurchase certain of such shares from Stockholder on the terms set forth herein; and
WHEREAS, the parties hereto wish to set forth certain agreements between them relating to such repurchase.
NOW THEREFORE, the parties hereto covenant and agree as follows:
1. REPURCHASE OF SHARES. Immediately upon the execution hereof, the Company shall repurchase 111,897 shares of Common Stock (the "Shares") from Stockholder in exchange for the payment by the Company to Stockholder of Six Hundred Seventy One Thousand Three Hundred Eighty Two Dollars ($671,382) in cash by wire transfer of immediately available funds.
2. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER. Stockholder hereby represents and warrants to the Company as follows:
(a) Stockholder is the record and beneficial owner of the Shares and has good and valid title to the Shares, free and clear of any pledge, lien, security interest, charge, claim, equity, option, proxy, right of first refusal or other limitation on disposition or encumbrance of any kind (other than as set forth in the Company's Stockholders Agreement dated June 19, 1998 (the "Stockholders Agreement")). Stockholder has all necessary corporate power and authority to execute and deliver this Agreement and to consummate the transaction contemplated hereby. The execution and delivery of this Agreement and the consummation of the transaction contemplated hereby by Stockholder have been duly authorized by all necessary partnership action on the part of Stockholder. This Agreement has been duly executed and delivered by Stockholder and, assuming its due authorization, execution and delivery by the Company, constitutes a legal, valid and binding obligation of Stockholder, enforceable against Stockholder in accordance with its terms.
(b) The execution and delivery of this Agreement by Stockholder do not, and the performance of this Agreement by Stockholder will not, (i) conflict with or violate the Certificate of Limited Partnership or Agreement of Limited Partnership of Stockholder, (ii) conflict with or violate any law, rule, regulation, order, judgment or decree applicable to Stockholder or by which Stockholder or any of its properties (including the Shares) is bound or

affected, or (ii) conflict with, violate or result in any breach of or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, or result in the creation of a lien or encumbrance on any of the property or assets (including the Shares) of Stockholder pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which Stockholder is a party or by which it or any of its properties is bound or affected.
(c) The execution and delivery of this Agreement by Stockholder do not, and the performance of this Agreement by Stockholder will not, require any consent, approval, authorization or permit of, or filing with or notification to, any governmental or regulatory authority, domestic or foreign, or other third party (other than as required by the Stockholders Agreement).
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby represents and warrants to Stockholder as follows:
(a) The Company is a corporation duly organized and validly existing under the laws of the State of Delaware. The Company has all necessary corporate power and authority to execute and deliver this Agreement and to consummate the transaction contemplated hereby. The execution and delivery of this Agreement and the consummation of the transaction contemplated hereby by the Company have been duly authorized by all necessary corporate action on the part of the Company. This Agreement has been duly executed and delivered by the Company and, assuming its due authorization, execution and delivery by Stockholder, constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms.
(b) The execution and delivery of this Agreement by the Company do not, and the performance of this Agreement by the Company will not, (i) conflict with or violate the Certificate of Incorporation or Bylaws of the Company, (ii) conflict with or violate any law, rule, regulation, order, judgment or decree applicable to the Company or by which the Company or any of its properties is bound or affected, or (iii) conflict with, violate or result in any breach of or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, or result in the creation of a lien or encumbrance on any of the property or assets of the Company pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which the Company is a party or by which it or any of its properties is bound or affected.
(c) The execution and delivery of this Agreement by the Company do not, and the performance of this Agreement by the Company will not, require any consent, approval, authorization or permit of, or filing with or notification to, any governmental or regulatory authority, domestic or foreign, or other third party (other than as required by the Stockholders Agreement).
2

4. NOTICES. All notices and other communications given or made pursuant hereto shall be in writing and shall be deemed to have been duly given or made as of the date delivered, mailed or transmitted, and shall be effective upon receipt, if delivered personally, mailed by registered or certified mail (postage prepaid, return receipt requested) or by overnight courier to the parties at the following addresses (or at such other address for a party as shall be specified by like changes of address) or sent by electronic transmission to the telecopier number specified below:
(a) If to the Company:
LKQ Corporation
120 North LaSalle Street
Suite 3300
Chicago, IL 60602
Attention: General Counsel Telecopier No: 312-621-1969
(b) If to Stockholder:
c/o Latona Associates
Liberty Lane
Hampton, New Hampshire 03842 Telecopier No: 603-929-2409
5. HEADINGS. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation or this Agreement.
6. SEVERABILITY. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable or being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible to the fullest extent permitted by applicable law in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the extent possible.
7. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement of the parties and supersedes all prior agreements and undertakings, both written and oral, between the parties, or any of them, with respect to the subject matter hereof; provided, however, that this Agreement is not intended to modify or amend, and should not be deemed to modify or amend, the Stockholders Agreement.
8. ASSIGNMENT. This Agreement shall not be assigned by operation of law or otherwise.
3

9. PARTIES IN INTEREST. This Agreement shall be binding upon and inure solely to the benefit of each party hereto, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
10. GOVERNING LAW. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Illinois applicable to contracts executed and to be performed entirely within that state.
11. COUNTERPARTS. This Agreement may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

LKQ CORPORATION                                PMM-LKQ INVESTMENTS LIMITED
                                               PARTNERSHIP

By: /s/ Victor M. Casini                       By: /s/ Paul M. Meister
Name: Victor M. Casini                         Name: Paul M. Meister
Title: Vice President                          Title: Vice President	

4

EXHIBIT 10.16
STOCK REPURCHASE AGREEMENT
THIS STOCK REPURCHASE AGREEMENT (this "Agreement"), dated as of February 20, 2003, by and between LKQ Corporation, a Delaware corporation (the "Company"), and PMM-LKQ Investments Limited Partnership II ("Stockholder").
WHEREAS, Stockholder is the owner of 250,000 shares of Common Stock, par value $0.01 per share, of the Company ("Common Stock"); and
WHEREAS, the Company has agreed to repurchase certain of such shares from Stockholder on the terms set forth herein; and
WHEREAS, the parties hereto wish to set forth certain agreements between them relating to such repurchase.
NOW THEREFORE, the parties hereto covenant and agree as follows:
1. REPURCHASE OF SHARES. Immediately upon the execution hereof, the Company shall repurchase 9,419 shares of Common Stock (the "Shares") from Stockholder in exchange for the payment by the Company to Stockholder of Fifty Six Thousand Five Hundred Fourteen Dollars ($56,514) in cash by wire transfer of immediately available funds.
2. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER. Stockholder hereby represents and warrants to the Company as follows:
(a) Stockholder is the record and beneficial owner of the Shares and has good and valid title to the Shares, free and clear of any pledge, lien, security interest, charge, claim, equity, option, proxy, right of first refusal or other limitation on disposition or encumbrance of any kind (other than as set forth in the Company's Stockholders Agreement dated June 19, 1998 (the "Stockholders Agreement")). Stockholder has all necessary corporate power and authority to execute and deliver this Agreement and to consummate the transaction contemplated hereby. The execution and delivery of this Agreement and the consummation of the transaction contemplated hereby by Stockholder have been duly authorized by all necessary partnership action on the part of Stockholder. This Agreement has been duly executed and delivered by Stockholder and, assuming its due authorization, execution and delivery by the Company, constitutes a legal, valid and binding obligation of Stockholder, enforceable against Stockholder in accordance with its terms.
(b) The execution and delivery of this Agreement by Stockholder do not, and the performance of this Agreement by Stockholder will not, (i) conflict with or violate the Certificate of Limited Partnership or Agreement of Limited Partnership of Stockholder, (ii) conflict with or violate any law, rule, regulation, order, judgment or decree applicable to Stockholder or by which Stockholder or any of its properties (including the Shares) is bound or affected, or (ii) conflict with, violate or result in any breach of or constitute a default (or an event

that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, or result in the creation of a lien or encumbrance on any of the property or assets (including the Shares) of Stockholder pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which Stockholder is a party or by which it or any of its properties is bound or affected.
(c) The execution and delivery of this Agreement by Stockholder do not, and the performance of this Agreement by Stockholder will not, require any consent, approval, authorization or permit of, or filing with or notification to, any governmental or regulatory authority, domestic or foreign, or other third party (other than as required by the Stockholders Agreement).
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby represents and warrants to Stockholder as follows:
(a) The Company is a corporation duly organized and validly existing under the laws of the State of Delaware. The Company has all necessary corporate power and authority to execute and deliver this Agreement and to consummate the transaction contemplated hereby. The execution and delivery of this Agreement and the consummation of the transaction contemplated hereby by the Company have been duly authorized by all necessary corporate action on the part of the Company. This Agreement has been duly executed and delivered by the Company and, assuming its due authorization, execution and delivery by Stockholder, constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms.
(b) The execution and delivery of this Agreement by the Company do not, and the performance of this Agreement by the Company will not, (i) conflict with or violate the Certificate of Incorporation or Bylaws of the Company, (ii) conflict with or violate any law, rule, regulation, order, judgment or decree applicable to the Company or by which the Company or any of its properties is bound or affected, or (iii) conflict with, violate or result in any breach of or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, or result in the creation of a lien or encumbrance on any of the property or assets of the Company pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which the Company is a party or by which it or any of its properties is bound or affected.
(c) The execution and delivery of this Agreement by the Company do not, and the performance of this Agreement by the Company will not, require any consent, approval, authorization or permit of, or filing with or notification to, any governmental or regulatory authority, domestic or foreign, or other third party (other than as required by the Stockholders Agreement).
4. NOTICES. All notices and other communications given or made pursuant hereto shall be in writing and shall be deemed to have been duly given or made as of the date
2

delivered, mailed or transmitted, and shall be effective upon receipt, if delivered personally, mailed by registered or certified mail (postage prepaid, return receipt requested) or by overnight courier to the parties at the following addresses (or at such other address for a party as shall be specified by like changes of address) or sent by electronic transmission to the telecopier number specified below:
(a) If to the Company:
LKQ Corporation
120 North LaSalle Street
Suite 3300
Chicago, IL 60602
Attention: General Counsel Telecopier No: 312-621-1969
(b) If to Stockholder:
c/o Latona Associates
Liberty Lane
Hampton, New Hampshire 03842 Telecopier No: 603-929-2409
5. HEADINGS. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation or this Agreement.
6. SEVERABILITY. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable or being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible to the fullest extent permitted by applicable law in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the extent possible.
7. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement of the parties and supersedes all prior agreements and undertakings, both written and oral, between the parties, or any of them, with respect to the subject matter hereof; provided, however, that this Agreement is not intended to modify or amend, and should not be deemed to modify or amend, the Stockholders Agreement.
8. ASSIGNMENT. This Agreement shall not be assigned by operation of law or otherwise.
3

9. PARTIES IN INTEREST. This Agreement shall be binding upon and inure solely to the benefit of each party hereto, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
10. GOVERNING LAW. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Illinois applicable to contracts executed and to be performed entirely within that state.
11. COUNTERPARTS. This Agreement may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

LKQ CORPORATION                                PMM-LKQ INVESTMENTS LIMITED
                                               PARTNERSHIP II

By: /s/ Victor M. Casini                       By: /s/ Paul M. Meister
Name: Victor M. Casini                         Name:   Paul M. Meister
Title: Vice President                          Title: Vice President	

4

EXHIBIT 10.17
STOCK REPURCHASE AGREEMENT
THIS STOCK REPURCHASE AGREEMENT (this "Agreement"), dated as of May 20, 2003, by and between LKQ Corporation, a Delaware corporation (the "Company"), and AutoNation, Inc., a Delaware corporation ("Stockholder").
WHEREAS, Stockholder is the owner of 2,867,673 shares of Common Stock, par value $0.01 per share, of the Company ("Common Stock"); and
WHEREAS, the Company has agreed to repurchase certain of such shares from Stockholder on the terms set forth herein; and
WHEREAS, the parties hereto wish to set forth certain agreements between them relating to such repurchase.
NOW THEREFORE, the parties hereto covenant and agree as follows:
1. REPURCHASE OF SHARES. Immediately upon the execution hereof, the Company shall repurchase 1,500,000 shares of Common Stock (the "Shares") from Stockholder in exchange for the payment by the Company to Stockholder of Ten Million Five Hundred Thousand Dollars ($10,500,000) in cash by wire transfer of immediately available funds.
2. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER. Stockholder hereby represents and warrants to the Company as follows:
(a) Stockholder is the record and beneficial owner of the Shares and has good and valid title to the Shares, free and clear of any pledge, lien, security interest, charge, claim, equity, option, proxy, right of first refusal or other limitation on disposition or encumbrance of any kind (other than as set forth in the Company's Stockholders Agreement dated June 19, 1998 (the "Stockholders Agreement")). Stockholder has all necessary corporate power and authority to execute and deliver this Agreement and to consummate the transaction contemplated hereby. The execution and delivery of this Agreement and the consummation of the transaction contemplated hereby by Stockholder have been duly authorized by all necessary corporate action on the part of Stockholder. This Agreement has been duly executed and delivered by Stockholder and, assuming its due authorization, execution and delivery by the Company, constitutes a legal, valid and binding obligation of Stockholder, enforceable against Stockholder in accordance with its terms.
(b) The execution and delivery of this Agreement by Stockholder do not, and the performance of this Agreement by Stockholder will not, (i) conflict with or violate the Certificate of Incorporation or Bylaws of Stockholder, (ii) conflict with or violate any law, rule, regulation, order, judgment or decree applicable to Stockholder or by which Stockholder or any of its properties (including the Shares) is bound or affected, or (ii) conflict with, violate or result in any breach of or constitute a default (or an event that with notice or lapse of time or both

would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, or result in the creation of a lien or encumbrance on any of the property or assets (including the Shares) of Stockholder pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which Stockholder is a party or by which it or any of its properties is bound or affected.
(c) The execution and delivery of this Agreement by Stockholder do not, and the performance of this Agreement by Stockholder will not, require any consent, approval, authorization or permit of, or filing with or notification to, any governmental or regulatory authority, domestic or foreign, or other third party (other than as required by the Stockholders Agreement).
(d) Stockholder acknowledges that the Company has disclosed to the Stockholder the Company's plans to pursue an initial public offering of the Company's common stock (the "Proposed IPO"), including the fact that the Company has had an initial organizational meeting with underwriters concerning the proposed IPO. Stockholder further acknowledges that, while there can be no assurance that the Proposed IPO will occur, or as to what the price will be, such IPO price could be substantially higher than the purchase price under this Agreement. Stockholder confirms that it has been given an opportunity to make, and has in fact made, any other inquiries of the Company and its representatives that Stockholder desires to make regarding the Proposed IPO and that each such inquiry has been answered by the Company to the satisfaction of Stockholder.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby represents and warrants to Stockholder as follows:
(a) The Company is a corporation duly organized and validly existing under the laws of the State of Delaware. The Company has all necessary corporate power and authority to execute and deliver this Agreement and to consummate the transaction contemplated hereby. The execution and delivery of this Agreement and the consummation of the transaction contemplated hereby by the Company have been duly authorized by all necessary corporate action on the part of the Company. This Agreement has been duly executed and delivered by the Company and, assuming its due authorization, execution and delivery by Stockholder, constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms.
(b) The execution and delivery of this Agreement by the Company do not, and the performance of this Agreement by the Company will not, (i) conflict with or violate the Certificate of Incorporation or Bylaws of the Company, (ii) conflict with or violate any law, rule, regulation, order, judgment or decree applicable to the Company or by which the Company or any of its properties is bound or affected, or (iii) conflict with, violate or result in any breach of or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, or result in the creation of a lien or encumbrance on any of the property or assets
2

of the Company pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which the Company is a party or by which it or any of its properties is bound or affected.
(c) The execution and delivery of this Agreement by the Company do not, and the performance of this Agreement by the Company will not, require any consent, approval, authorization or permit of, or filing with or notification to, any governmental or regulatory authority, domestic or foreign, or other third party (other than as required by the Stockholders Agreement).
4. [RESERVED]
5. NOTICES. All notices and other communications given or made pursuant hereto shall be in writing and shall be deemed to have been duly given or made as of the date delivered, mailed or transmitted, and shall be effective upon receipt, if delivered personally, mailed by registered or certified mail (postage prepaid, return receipt requested) or by overnight courier to the parties at the following addresses (or at such other address for a party as shall be specified by like changes of address) or sent by electronic transmission to the telecopier number specified below:
(a) If to the Company:
LKQ Corporation
120 North LaSalle Street
Suite 3300
Chicago, IL 60602
Attention: General Counsel Telecopier No: 312-621-1969
(b) If to Stockholder:
AutoNation, Inc.
110 S.E. 6th Street
29th Floor
Fort Lauderdale, FL 33301 Attention: General Counsel Telecopier No: 954-769-6340
6. HEADINGS. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation or this Agreement.
7. SEVERABILITY. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any
3

manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable or being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible to the fullest extent permitted by applicable law in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the extent possible.
8. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement of the parties and supersedes all prior agreements and undertakings, both written and oral, between the parties, or any of them, with respect to the subject matter hereof; provided, however, that this Agreement is not intended to modify or amend, and should not be deemed to modify or amend, the Stockholders Agreement.
9. ASSIGNMENT. This Agreement shall not be assigned by operation of law or otherwise.
10. PARTIES IN INTEREST. This Agreement shall be binding upon and inure solely to the benefit of each party hereto, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
11. GOVERNING LAW. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Illinois applicable to contracts executed and to be performed entirely within that state.
12. COUNTERPARTS. This Agreement may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

LKQ CORPORATION                    AUTONATION, INC.

By: /s/ Victor M. Casini           By: /s/ Jonathan P. Ferrando
Name: Victor M. Casini             Name: Jonathan P. Ferrando
Title: Vice-President              Title: Senior Vice-President, General Counsel
                                   and Secretary	

4

EXHIBIT 10.18
STOCK REPURCHASE AGREEMENT
THIS STOCK REPURCHASE AGREEMENT (this "Agreement"), dated as of May 21, 2003, by and between LKQ Corporation, a Delaware corporation (the "Company"), and PMM-LKQ Investments Limited Partnership ("Stockholder").
WHEREAS, Stockholder is the owner of 1,388,103 shares of Common Stock, par value $0.01 per share, of the Company ("Common Stock"); and
WHEREAS, the Company has agreed to repurchase certain of such shares from Stockholder on the terms set forth herein; and
WHEREAS, the parties hereto wish to set forth certain agreements between them relating to such repurchase.
NOW THEREFORE, the parties hereto covenant and agree as follows:
1. REPURCHASE OF SHARES. Immediately upon the execution hereof, the Company shall repurchase 49,284 shares of Common Stock (the "Shares") from Stockholder in exchange for the payment by the Company to Stockholder of Three Hundred Forty Four Thousand Nine Hundred Eighty Eight Dollars ($344,988) in cash by wire transfer of immediately available funds.
2. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER. Stockholder hereby represents and warrants to the Company as follows:
(a) Stockholder is the record and beneficial owner of the Shares and has good and valid title to the Shares, free and clear of any pledge, lien, security interest, charge, claim, equity, option, proxy, right of first refusal or other limitation on disposition or encumbrance of any kind (other than as set forth in the Company's Stockholders Agreement dated June 19, 1998 (the "Stockholders Agreement")). Stockholder has all necessary corporate power and authority to execute and deliver this Agreement and to consummate the transaction contemplated hereby. The execution and delivery of this Agreement and the consummation of the transaction contemplated hereby by Stockholder have been duly authorized by all necessary corporate action on the part of Stockholder. This Agreement has been duly executed and delivered by Stockholder and, assuming its due authorization, execution and delivery by the Company, constitutes a legal, valid and binding obligation of Stockholder, enforceable against Stockholder in accordance with its terms.
(b) The execution and delivery of this Agreement by Stockholder do not, and the performance of this Agreement by Stockholder will not, (i) conflict with or violate the Certificate of Limited Partnership or Agreement of Limited Partnership of Stockholder, (ii) conflict with or violate any law, rule, regulation, order, judgment or decree applicable to Stockholder or by which Stockholder or any of its properties (including the Shares) is bound or

affected, or (ii) conflict with, violate or result in any breach of or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, or result in the creation of a lien or encumbrance on any of the property or assets (including the Shares) of Stockholder pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which Stockholder is a party or by which it or any of its properties is bound or affected.
(c) The execution and delivery of this Agreement by Stockholder do not, and the performance of this Agreement by Stockholder will not, require any consent, approval, authorization or permit of, or filing with or notification to, any governmental or regulatory authority, domestic or foreign, or other third party (other than as required by the Stockholders Agreement).
(d) Stockholder acknowledges that the Company has disclosed to the Stockholder the Company's plans to pursue an initial public offering of the Company's common stock (the "Proposed IPO"), including the fact that the Company has had an initial organizational meeting with underwriters concerning the proposed IPO. Stockholder further acknowledges that, while there can be no assurance that the Proposed IPO will occur, or as to what the price will be, such IPO price could be substantially higher than the purchase price under this Agreement. Stockholder confirms that it has been given an opportunity to make, and has in fact made, any other inquiries of the Company and its representatives that Stockholder desires to make regarding the Proposed IPO and that each such inquiry has been answered by the Company to the satisfaction of Stockholder.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby represents and warrants to Stockholder as follows:
(a) The Company is a corporation duly organized and validly existing under the laws of the State of Delaware. The Company has all necessary corporate power and authority to execute and deliver this Agreement and to consummate the transaction contemplated hereby. The execution and delivery of this Agreement and the consummation of the transaction contemplated hereby by the Company have been duly authorized by all necessary corporate action on the part of the Company. This Agreement has been duly executed and delivered by the Company and, assuming its due authorization, execution and delivery by Stockholder, constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms.
(b) The execution and delivery of this Agreement by the Company do not, and the performance of this Agreement by the Company will not, (i) conflict with or violate the Certificate of Incorporation or Bylaws of the Company, (ii) conflict with or violate any law, rule, regulation, order, judgment or decree applicable to the Company or by which the Company or any of its properties is bound or affected, or (iii) conflict with, violate or result in any breach of or constitute a default (or an event that with notice or lapse of time or both would become a
2

default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, or result in the creation of a lien or encumbrance on any of the property or assets of the Company pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which the Company is a party or by which it or any of its properties is bound or affected.
(c) The execution and delivery of this Agreement by the Company do not, and the performance of this Agreement by the Company will not, require any consent, approval, authorization or permit of, or filing with or notification to, any governmental or regulatory authority, domestic or foreign, or other third party (other than as required by the Stockholders Agreement).
4. [RESERVED]
5. NOTICES. All notices and other communications given or made pursuant hereto shall be in writing and shall be deemed to have been duly given or made as of the date delivered, mailed or transmitted, and shall be effective upon receipt, if delivered personally, mailed by registered or certified mail (postage prepaid, return receipt requested) or by overnight courier to the parties at the following addresses (or at such other address for a party as shall be specified by like changes of address) or sent by electronic transmission to the telecopier number specified below:
(a) If to the Company:
LKQ Corporation
120 North LaSalle Street
Suite 3300
Chicago, IL 60602
Attention: General Counsel Telecopier No: 312-621-1969
(b) If to Stockholder:
c/o Latona Associates
Liberty Lane
Hampton, New Hampshire 03842 Telecopier No: 603-929-2409
6. HEADINGS. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation or this Agreement.
7. SEVERABILITY. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any
3

manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable or being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible to the fullest extent permitted by applicable law in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the extent possible.
8. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement of the parties and supersedes all prior agreements and undertakings, both written and oral, between the parties, or any of them, with respect to the subject matter hereof; provided, however, that this Agreement is not intended to modify or amend, and should not be deemed to modify or amend, the Stockholders Agreement.
9. ASSIGNMENT. This Agreement shall not be assigned by operation of law or otherwise.
10. PARTIES IN INTEREST. This Agreement shall be binding upon and inure solely to the benefit of each party hereto, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
11. GOVERNING LAW. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Illinois applicable to contracts executed and to be performed entirely within that state.
12. COUNTERPARTS. This Agreement may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

LKQ CORPORATION                          PMM-LKQ Investments Limited Partnership

By: /s/ Victor M. Casini                 By: /s/ Paul M. Meister
Name: Victor M. Casini                   Name: Paul M. Meister
Title: Vice President                    Title: Vice President	

4

EXHIBIT 10.19
STOCK REPURCHASE AGREEMENT
THIS STOCK REPURCHASE AGREEMENT (this "Agreement"), dated as of May 21, 2003, by and between LKQ Corporation, a Delaware corporation (the "Company"), and PMM-LKQ Investments Limited Partnership II ("Stockholder").
WHEREAS, Stockholder is the owner of 240,581 shares of Common Stock, par value $0.01 per share, of the Company ("Common Stock"); and
WHEREAS, the Company has agreed to repurchase certain of such shares from Stockholder on the terms set forth herein; and
WHEREAS, the parties hereto wish to set forth certain agreements between them relating to such repurchase.
NOW THEREFORE, the parties hereto covenant and agree as follows:
1. REPURCHASE OF SHARES. Immediately upon the execution hereof, the Company shall repurchase 8,214 shares of Common Stock (the "Shares") from Stockholder in exchange for the payment by the Company to Stockholder of Fifty Seven Thousand Four Hundred Ninety Eight Dollars ($57,498) in cash by wire transfer of immediately available funds.
2. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER. Stockholder hereby represents and warrants to the Company as follows:
(a) Stockholder is the record and beneficial owner of the Shares and has good and valid title to the Shares, free and clear of any pledge, lien, security interest, charge, claim, equity, option, proxy, right of first refusal or other limitation on disposition or encumbrance of any kind (other than as set forth in the Company's Stockholders Agreement dated June 19, 1998 (the "Stockholders Agreement")). Stockholder has all necessary corporate power and authority to execute and deliver this Agreement and to consummate the transaction contemplated hereby. The execution and delivery of this Agreement and the consummation of the transaction contemplated hereby by Stockholder have been duly authorized by all necessary corporate action on the part of Stockholder. This Agreement has been duly executed and delivered by Stockholder and, assuming its due authorization, execution and delivery by the Company, constitutes a legal, valid and binding obligation of Stockholder, enforceable against Stockholder in accordance with its terms.
(b) The execution and delivery of this Agreement by Stockholder do not, and the performance of this Agreement by Stockholder will not, (i) conflict with or violate the Certificate of Limited Partnership or Agreement of Limited Partnership of Stockholder, (ii) conflict with or violate any law, rule, regulation, order, judgment or decree applicable to Stockholder or by which Stockholder or any of its properties (including the Shares) is bound or affected, or (ii) conflict with, violate or result in any breach of or constitute a default (or an event

that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, or result in the creation of a lien or encumbrance on any of the property or assets (including the Shares) of Stockholder pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which Stockholder is a party or by which it or any of its properties is bound or affected.
(c) The execution and delivery of this Agreement by Stockholder do not, and the performance of this Agreement by Stockholder will not, require any consent, approval, authorization or permit of, or filing with or notification to, any governmental or regulatory authority, domestic or foreign, or other third party (other than as required by the Stockholders Agreement).
(d) Stockholder acknowledges that the Company has disclosed to the Stockholder the Company's plans to pursue an initial public offering of the Company's common stock (the "Proposed IPO"), including the fact that the Company has had an initial organizational meeting with underwriters concerning the proposed IPO. Stockholder further acknowledges that, while there can be no assurance that the Proposed IPO will occur, or as to what the price will be, such IPO price could be substantially higher than the purchase price under this Agreement. Stockholder confirms that it has been given an opportunity to make, and has in fact made, any other inquiries of the Company and its representatives that Stockholder desires to make regarding the Proposed IPO and that each such inquiry has been answered by the Company to the satisfaction of Stockholder.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby represents and warrants to Stockholder as follows:
(a) The Company is a corporation duly organized and validly existing under the laws of the State of Delaware. The Company has all necessary corporate power and authority to execute and deliver this Agreement and to consummate the transaction contemplated hereby. The execution and delivery of this Agreement and the consummation of the transaction contemplated hereby by the Company have been duly authorized by all necessary corporate action on the part of the Company. This Agreement has been duly executed and delivered by the Company and, assuming its due authorization, execution and delivery by Stockholder, constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms.
(b) The execution and delivery of this Agreement by the Company do not, and the performance of this Agreement by the Company will not, (i) conflict with or violate the Certificate of Incorporation or Bylaws of the Company, (ii) conflict with or violate any law, rule, regulation, order, judgment or decree applicable to the Company or by which the Company or any of its properties is bound or affected, or (iii) conflict with, violate or result in any breach of or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or
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cancellation of, or result in the creation of a lien or encumbrance on any of the property or assets of the Company pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which the Company is a party or by which it or any of its properties is bound or affected.
(c) The execution and delivery of this Agreement by the Company do not, and the performance of this Agreement by the Company will not, require any consent, approval, authorization or permit of, or filing with or notification to, any governmental or regulatory authority, domestic or foreign, or other third party (other than as required by the Stockholders Agreement).
4. [RESERVED]
5. NOTICES. All notices and other communications given or made pursuant hereto shall be in writing and shall be deemed to have been duly given or made as of the date delivered, mailed or transmitted, and shall be effective upon receipt, if delivered personally, mailed by registered or certified mail (postage prepaid, return receipt requested) or by overnight courier to the parties at the following addresses (or at such other address for a party as shall be specified by like changes of address) or sent by electronic transmission to the telecopier number specified below:
(a) If to the Company:
LKQ Corporation
120 North LaSalle Street
Suite 3300
Chicago, IL 60602
Attention: General Counsel Telecopier No: 312-621-1969
(b) If to Stockholder:
c/o Latona Associates
Liberty Lane
Hampton, New Hampshire 03842 Telecopier No: 603-929-2409
6. HEADINGS. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation or this Agreement.
7. SEVERABILITY. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other
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provision is invalid, illegal or incapable or being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible to the fullest extent permitted by applicable law in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the extent possible.
8. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement of the parties and supersedes all prior agreements and undertakings, both written and oral, between the parties, or any of them, with respect to the subject matter hereof; provided, however, that this Agreement is not intended to modify or amend, and should not be deemed to modify or amend, the Stockholders Agreement.
9. ASSIGNMENT. This Agreement shall not be assigned by operation of law or otherwise.
10. PARTIES IN INTEREST. This Agreement shall be binding upon and inure solely to the benefit of each party hereto, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
11. GOVERNING LAW. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Illinois applicable to contracts executed and to be performed entirely within that state.
12. COUNTERPARTS. This Agreement may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

LKQ CORPORATION                       PMM-LKQ Investments Limited Partnership II

By: /s/ Victor M. Casini              By: /s/ Paul M. Meister
Name: Victor M. Casini                Name: Paul M. Meister
Title: Vice President                 Title: Vice President	

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EXHIBIT 10.20
PROPOSED FORM OF
LKQ CORPORATION
STOCK OPTION AND COMPENSATION PLAN
FOR NON-EMPLOYEE DIRECTORS
1. STATEMENT OF PURPOSE. The purpose of this Stock Option Plan (the "Plan") is to benefit LKQ Corporation (the "Company") and its subsidiaries by offering its non-employee directors a favorable opportunity to become holders of stock in the Company over a period of years, thereby giving them a stake in the growth and prosperity of the Company and encouraging the continuance of their services with the Company.
2. ADMINISTRATION. The Plan shall be administered by the board of directors of the Company (the "Board of Directors"), whose interpretation of the terms and provisions of the Plan and whose determination of matters pertaining to options granted under the Plan shall be final and conclusive.
3. ELIGIBILITY. Options shall be granted only to current directors of the Company who are not officers or employees of the Company (each such individual receiving options granted under the Plan and each other person entitled to exercise an option granted under the Plan is referred to herein as an "Optionee").
4. GRANTING OF OPTIONS; ANNUAL COMPENSATION. (a) (1) A one-time option, under which a total of 30,000 shares of common stock of the Company, $.01 par value (the "Common Stock"), may be purchased from the Company, shall be automatically granted to each existing director of the Company upon the consummation of the initial public offering of the Common Stock at an option price equal to the initial public offering price for the Common Stock, provided such director is eligible at that time under the terms of Paragraph 3 of this Plan.
(2) After the initial public offering of the Common Stock, a one-time option, under which a total of 30,000 shares of the Common Stock may be purchased from the Company, shall be automatically granted to each director of the Company upon his or her initial election or appointment as a director of the Company, provided such director is eligible at that time under the terms of Paragraph 3 hereof.
(3) With respect to each director of the Company, an additional option under which 10,000 shares of Common Stock may be purchased from the Company shall be granted to such director each year, on the anniversary of the granting of the initial option to such director described in Paragraph 4(a)(1) or (2) hereof, as the case may be, (the "Anniversary Date") provided such director continues to be eligible at that time under the terms of Paragraph 3 of this Plan.
(4) In addition, each director of the Company shall receive annual compensation of $40,000, which may be in the form of either (i) a cash payment of $40,000 or (ii) a number of shares of the Common Stock equivalent in value to $40,000, as described below, at the election of such director on the Anniversary Date provided such director continues to be eligible at that time under the terms of
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Paragraph 3 of this Plan. If such director elects to receive the Common Stock in lieu of the cash payment as described in this Paragraph 4(a)(4) the per share value of Common Stock shall equal the fair market value on the Anniversary Date (or, if the Anniversary Date is not a trading date, on the first trading date immediately preceding the Anniversary Date), which shall be the average of the highest and lowest sales prices of the Common Stock reported on the Nasdaq National Market (or on the principal national stock exchange on which it is listed or quotation service on which it is listed) (as reported in The Wall Street Journal)on the Anniversary Date. Such election must be made prior to the start of the calendar year in which the compensation described in this Paragraph 4(a)(4) is to be paid.
The aggregate number of shares which shall be available to be so optioned or otherwise issued under the Plan shall be 500,000 shares. Such number of shares, and the number of shares subject to options outstanding under the Plan, shall be subject in all cases to adjustment as provided in Paragraph 10 hereof. Options granted under the Plan are intended not be treated as incentive stock options as defined in Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
(b) No options shall be granted under the Plan subsequent to the tenth anniversary of the adoption of the Plan. In the event that an option expires or is terminated or cancelled unexercised as to any shares, such released shares may again be optioned (including a grant in substitution for a cancelled option). Shares subject to options may be made available from unissued or reacquired shares of Common Stock.
(c) Nothing contained in the Plan or in any option granted pursuant thereto shall confer upon any Optionee any right to continue serving as a director of the Company or interfere in any way with the right of the Board of Directors or stockholders of the Company to remove such director pursuant to the certificate of incorporation or bylaws of the Company or pursuant to applicable law.
5. OPTION PRICE. Except with respect to those options granted under the terms of Paragraph 4(a)(1) hereof and subject to the adjustment in Paragraph 10 hereof, the option price for all options granted under this Plan shall be the fair market value of the shares of Common Stock subject to the option on the date of the grant of such option. For purposes of this Paragraph 5, "fair market value" shall be the average of the highest and lowest sales prices of the Common Stock reported on the Nasdaq National Market (or on the principal national stock exchange on which it is listed or quotation service on which it is listed) (as reported in THE WALL STREET JOURNAL)on the date the option is granted (or, if the date of grant is not a trading date, on the first trading date immediately preceding the date of grant). In the event that the Common Stock is not listed or quoted on the Nasdaq National Market or any other national stock exchange, the fair market value of the shares of Common Stock for all purposes of this Plan shall be reasonably determined by the Board of Directors.
6. DURATION OF OPTIONS AND INCREMENTS. Subject to the provisions of Paragraph 8 hereof, each option shall be for a term of ten years. Each option shall become exercisable with respect to all of the shares subject to the option 6 months after the date of its grant.
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7. EXERCISE OF OPTION. (a) An option may be exercised by giving written notice to the Secretary of the Company, specifying the number of shares to be purchased. The option price for the number of shares of Common Stock for which the option is exercised shall become immediately due and payable; provided, however, that in lieu of cash an Optionee may, with the approval of the Board of Directors, exercise his or her option by (i) delivering a promissory note in accordance with the terms of the Plan and in a form specified by the Company;
(ii) tendering to the Company shares of Common Stock owned by him or her and with the certificates therefor registered in his or her name, having a fair market value equal to the cash exercise price of the shares being purchased; or
(iii) delivery of an irrevocable written notice instructing the Company to deliver the shares of Common Stock being purchased to a broker selected by the Company, subject to the broker's written guarantee to deliver the cash to the Company, in each case equal to the full consideration of the exercise price of the shares being purchased. For this purpose, the per share value of Common Stock shall be the fair market value on the date of exercise (or, if the date of exercise is not a trading date, on the first trading date immediately preceding the date of exercise), which shall be the average of the highest and lowest sales prices of the Common Stock reported on the Nasdaq National Market (or on the principal national stock exchange on which it is listed or quotation service on which it is listed) (as reported in THE WALL STREET JOURNAL) on such date.
(b) If at any time an Optionee is required to pay an amount required to be withheld under applicable income tax or other laws in connection with the exercise of an option in order for the Company to obtain a deduction for federal and state income tax purposes, the Company shall withhold shares of Common Stock having a value equal to the amount required to be withheld. The value of the shares to be withheld or delivered shall be based on the fair market value of the shares of Common Stock on the date of exercise, which shall be the average of the highest and lowest sales prices of the Common Stock reported on the Nasdaq National Market (or on the principal stock exchange on which it is listed or quotation service on which it is listed) (as reported in THE WALL STREET JOURNAL)on the date of exercise.
(c) At the time of any exercise of any option, the Company may, if the Company shall determine it necessary or desirable for any reason, require the Optionee (or his or her heirs, legatees, or legal representative, as the case may be) as a condition upon the exercise thereof, to deliver to the Company a written representation of present intention to purchase the shares for investment and not for distribution. In the event such representation is required to be delivered, an appropriate legend may be placed upon each certificate delivered to the Optionee upon his or her exercise of part or all of the option and a stop order may be placed with the transfer agent for the Common Stock. Each option shall also be subject to the requirement that, if at any time the Company determines, in its discretion, that the listing, registration or qualification of the shares subject to the option upon any securities exchange or under any state, federal or foreign law, or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition of, or in connection with, the issue or purchase of shares thereunder, the option may not be exercised in whole or in part unless such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Company.
8. CESSATION OF BOARD MEMBERSHIP - EXERCISE THEREAFTER. In the event that an Optionee ceases to be a director of the Company for any reason, such
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Optionee shall have five years from the date such Optionee ceased to be a director of the Company to exercise those options owned by such Optionee which were exercisable as of the date of such cessation, but in no event shall such options be exercisable after the initial term of such options as set forth in Paragraph 6 hereof shall have expired.
9. NON-TRANSFERABILITY OF OPTIONS. No option shall be transferable by the Optionee otherwise than by will or the laws of descent and distribution or pursuant to a qualified domestic relations order and each option shall be exercisable during an Optionee's lifetime only by the Optionee or by the Optionee's legal representative.
10. ADJUSTMENT. The number of shares subject to the Plan and to options granted under the Plan shall be adjusted as follows: (a) in the event that the number of outstanding shares of Common Stock is changed by any stock dividend, stock split or combination of shares, the number of shares subject to the Plan and to options granted thereunder shall be proportionately adjusted; (b) in the event of any merger, consolidation or reorganization of the Company with any other corporation or legal entity there shall be substituted, on an equitable basis as determined by the Board of Directors, for each share of Common Stock then subject to the Plan and for each share of Common Stock then subject to an option granted under the Plan, the number and kind of shares of stock or other securities to which the holders of shares of Common Stock will be entitled pursuant to the transaction; and (c) in the event of any other relevant change in the capitalization of the Company, the Board of Directors shall provide for an equitable adjustment in the number of shares of Common Stock then subject to the Plan and to each share of Common Stock then subject to an option granted under the Plan. In the event of any such adjustment, the option price per share of Common Stock shall be proportionately adjusted.
11. AMENDMENT OF THE PLAN. The Board of Directors of the Company or any authorized committee thereof may amend or discontinue the Plan at any time, provided, however, that the Plan may not be amended more than once every six months except to comport with changes in the Code, the Employee Retirement Income Security Act, or the rules and regulations under each, and provided further, that no such amendment or discontinuance shall (a) without the consent of the Optionee change or impair any option previously granted, or (b) without the approval of the holders of a majority of the shares of Common Stock which vote in person or by proxy at a duly held stockholders' meeting, (i) increase the maximum number of
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shares which may be purchased by all eligible directors pursuant to the Plan,
(ii) change the purchase price of any option, or (iii) change the option period or increase the time limitations on the grant of options.
12. EFFECTIVE DATE. The Plan is effective as of ________ __, 2003.
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EXHIBIT 10.21
LKQ CORPORATION
CEO STOCK OPTION PLAN
ARTICLE 1
ESTABLISHMENT, OBJECTIVES, AND DURATION
1.1 ESTABLISHMENT OF THE PLAN. LKQ Corporation, a Delaware corporation (hereinafter referred to as the "Company"), hereby establishes a stock option plan to be known as the CEO Stock Option Plan (hereinafter referred to as the "Plan") as set forth in this document. The Plan became effective as of November 2, 1998 (the "Effective Date") and shall remain in effect as provided in Section 1.3 hereof.
1.2 PURPOSE OF THE PLAN. The purpose of this Plan is to benefit the Company and its subsidiaries and affiliated companies by enabling the Company to offer to the Company's Chief Executive Officer stock based incentives in the Company, thereby giving such officer a stake in the growth and prosperity of the Company and encouraging the continuance of such officer's relationship with the Company and its subsidiaries or affiliated companies.
1.3 DURATION OF THE PLAN. The Plan shall commence on the Effective Date and shall remain in effect, subject to the right of the Board of Directors to amend or terminate the Plan at any time pursuant to Article 10 hereof, until all Shares subject to it shall have been purchased or acquired according to the Plan provisions.
ARTICLE 2
DEFINITIONS
Whenever used in the Plan, the following terms shall have the meanings set forth below, and when the meaning is intended, the initial letter of the word shall be capitalized:
"AWARD" means, individually or collectively, a grant under this Plan of Nonqualified Stock Options or Incentive Stock Options.
"AWARD AGREEMENT" means a writing provided by the Company to each Participant setting forth the terms and provisions applicable to Awards granted under this Plan. The Participant's acceptance of the terms of the Award Agreement shall be evidenced by his or her continued employment without written objection before any exercise or payment of the Award. If the Participant objects in writing, the grant of the Award shall be revoked.
"BENEFICIAL OWNER" or "BENEFICIAL OWNERSHIP" shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the Exchange Act.

     "BOARD" or "BOARD OF DIRECTORS" means the Board of Directors of the
Company.	

     "CAUSE" shall mean, with respect to termination of a Participant's	

employment, consulting arrangement or other affiliation, the occurrence of any one or more of the following, as determined by the Board, in the exercise of good faith and reasonable judgment:
(i) In the case where there is no employment, change in control or similar agreement in effect between the Participant and the Company or a Subsidiary at the time of the grant of the Award, or where there is such an agreement but the agreement does not define "cause" (or similar words) or a "cause" termination would not be permitted under such agreement at that time because other conditions were not satisfied, the termination of an employment or consulting arrangement is due to the willful and continued failure or refusal by the Participant to substantially perform assigned duties (other than any such failure resulting from the Participant's Disability), the Participant's dishonesty or theft, the Participant's violation of any obligations or duties under any employee agreement, or the Participant's gross negligence or willful misconduct; or
(ii) In the case where there is an employment, change in control or similar agreement in effect between the Participant and the Company or a Subsidiary at the time of the grant of the Award that defines "cause" (or similar words) and a "cause" termination would be permitted under such agreement at that time, the termination of an employment or consulting arrangement is or would be deemed to be for "cause" (or similar words) as defined in such agreement.
No act or failure to act on a Participant's part shall be considered willful unless done, or omitted to be done, by the Participant not in good faith and without reasonable belief that his action or omission was in the best interest of the Company.
"CHANGE OF CONTROL" of the Company shall mean:
(a) the Company is merged or consolidated or reorganized into or with another corporation or other legal person (an "Acquiror") and as a result of such merger, consolidation or reorganization less than 50% of the outstanding voting securities or other capital interests of the surviving, resulting or acquiring corporation or other legal person are owned in the aggregate by the stockholders of the Company, directly or indirectly, immediately prior to such merger, consolidation or reorganization, other than by the Acquiror or any corporation or other legal person controlling, controlled by or under common control with the Acquiror;
(b) the Company sells all or substantially all of its business and/or assets to an Acquiror, of which less than 50% of the outstanding voting securities or other capital interests are owned in the aggregate by the stockholders of the Company, directly or indirectly, immediately prior to such sale, other than by any corporation or other legal person controlling, controlled by or under common control with the Acquiror;
(c) There is a report filed on Schedule 13D or Schedule 14D-1 (or any successor schedule, form or report), each as promulgated pursuant to the Exchange Act, disclosing that any person or group (as the terms "person" and "group" are used in Section 13(d)(3) or Section 14(d)(2) of the Exchange Act and the rules and regulations promulgated thereunder) has become the beneficial owner (as the term "beneficial owner" is defined under Rule 13d-3
2

or any successor rule or regulation promulgated under the Exchange Act) of 50% or more of the issued and outstanding shares of voting securities of the Company; or
(d) During any period of two consecutive years, individuals who at the beginning of any such period constitute the directors of the Company cease for any reason to constitute at least a majority thereof unless the election, or the nomination for election by the Company's stockholders, of each new director of the Company was approved by a vote of at least two-thirds of such directors of the Company then still in office who were directors of the Company at the beginning of any such period.
"CODE" means the Internal Revenue Code of 1986, as amended from time to time, or any successor legislation thereto.
"COMMON STOCK" means the common stock of the Company.
"COMPANY" means LKQ Corporation, a Delaware corporation, as well as any successor to such entity as provided in Article 12 herein.
"DIRECTOR" means any individual who is a member of the Board of Directors of the Company.
"DISABILITY" shall have the meaning ascribed to such term in the Participant's governing long-term disability plan. If no long term disability plan is in place with respect to a Participant, then with respect to that Participant, Disability shall mean: for the first 24 months of disability, that the Participant is unable to perform his or her job; thereafter, that the Participant is unable to perform any and every duty of any gainful occupation for which the Participant is reasonably suited by training, education or experience.
"EFFECTIVE DATE" shall have the meaning ascribed to such term in Section 1.1 hereof.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended from time to time, or any successor act thereto.
"FAIR MARKET VALUE" means (a) if the Common Stock is not listed or traded on a stock exchange or market, the value of the Common Stock determined in good faith by the Board, or (b) if the Common Stock is listed or traded on a stock exchange or market, for purposes of the valuation of any Shares delivered in payment of the Option Price upon the exercise of an Option or for purposes of the valuation of any Shares withheld in payment of the Option Price or to pay taxes due on an Award, the average of the high and low sales prices of the Common Stock on the applicable stock exchange or market (as reported in THE WALL STREET JOURNAL, Midwest Edition) on the date of exercise (or if the date of exercise is not a trading day, on the trading day next preceding the date of exercise).
"GOOD REASON" shall mean, with respect to the termination of a Participant's employment or consulting arrangement,
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(i) in the case where there is no employment, change in control or similar agreement in effect between the Participant and the Company or a Subsidiary at the time of the grant of the Award, or where there is such an agreement but the agreement does not define "good reason" (or similar words) or a "good reason" termination would not be permitted under such agreement at that time because other conditions were not satisfied, a voluntary termination of an employment or consulting arrangement due to "good reason" as the Board, in its sole discretion, decides to treat as a "Good Reason" termination; or
(ii) in the case where there is an employment, change in control or similar agreement in effect between the Participant and the Company or a Subsidiary at the time of the grant of the Award that defines "good reason" (or similar words) and a "good reason" termination would be permitted under such agreement at that time, the termination of an employment or consulting arrangement is or would be deemed to be for "good reason" (or similar words) as defined in such agreement.
"INCENTIVE STOCK OPTION" or "ISO" means an option to purchase Shares granted under Article 6 herein and which is designated as an Incentive Stock Option and which is intended to meet the requirements of Section 422 of the Code.
"INSIDER" shall mean an individual who is, on the relevant date, an officer, director or more than ten percent (10%) beneficial owner of any class of the Company's equity securities that is registered pursuant to Section 12 of the Exchange Act, all as defined under Section 16 of the Exchange Act.
"NONQUALIFIED STOCK OPTION" or "NQSO" means an option to purchase Shares granted under Article 6 herein and which is not intended to meet the requirements of Section 422 of the Code.
"OPTION" means an Incentive Stock Option or a Nonqualified Stock Option, as described in Article 6 herein.
"OPTION PRICE" means the price at which a Share may be purchased by a Participant pursuant to an Option.
"PARTICIPANT" means a Person who or which has outstanding an Award granted under the Plan.
"PERSON" shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Section 13(d) and 14(d) thereof, including a group as defined in Section 13(d) thereof.
"RETIREMENT" means the Participant's termination of employment with the Company or its Subsidiaries under circumstances which the Board determines, in its sole discretion, that qualify as a Retirement termination from the Company.
"SHARES" means shares of Common Stock of the Company.
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"SUBSIDIARY" means any corporation, partnership, joint venture, affiliate, or other entity in which the Company is the direct or indirect beneficial owner of not less than 20% of all issued and outstanding equity interests.
ARTICLE 3
ADMINISTRATION
3.1 THE ADMINISTRATOR. The Plan shall be administered by the Board.
3.2 AUTHORITY OF THE ADMINISTRATOR. Except as limited by law or by the Certificate of Incorporation or Bylaws of the Company, and subject to the provisions herein, the Board shall have full power to determine the sizes and types of Awards; determine the terms and conditions of Awards in a manner consistent with the Plan; construe and interpret the Plan and any agreement or instrument entered into under the Plan, establish, amend, or waive rules and regulations for the Plan's administration; and (subject to the provisions of Article 10 herein) amend the terms and conditions of any outstanding Award to the extent such terms and conditions are within the discretion of the Board as provided in the Plan. Further, the Board shall make all other determinations which may be necessary or advisable for the administration of the Plan. As permitted by law, the Board may delegate the authority granted to it herein.
3.3 DECISIONS BINDING. All determinations and decisions made by the Board pursuant to the provisions of the Plan and all related orders and resolutions of the Board shall be final, conclusive and binding on all Persons, including the Company, its stockholders, Participants, and their estates and beneficiaries.
ARTICLE 4
SHARES SUBJECT TO THE PLAN AND MAXIMUM AWARDS
4.1 SHARES AVAILABLE FOR AWARDS. The aggregate number of Shares which may be issued for or used for reference purposes under this Plan or with respect to which Awards may be granted shall not exceed 175,000 Shares (subject to adjustment as provided in Section 4.3), which may be either authorized and unissued Shares or Shares held in or acquired for the treasury of the Company. Upon a cancellation, termination, expiration, forfeiture, or lapse for any reason of any Award or payment of an Option Price and/or payment of any taxes arising upon exercise of an Option with previously acquired Shares or by withholding Shares which otherwise would be acquired on exercise or issued upon such payout, then the number of Shares underlying any such Award which were not issued as a result of any of the foregoing actions shall again be available for the purposes of Awards under the Plan.
4.2 INDIVIDUAL PARTICIPANT LIMITATIONS. Subject to adjustment as provided in Section 4.3 herein, the maximum aggregate number of Shares that may be granted in any one fiscal year to a Participant shall be 175,000.
4.3 ADJUSTMENTS IN AUTHORIZED SHARES. In the event of any change in corporate capitalization, such as a stock split, or a corporate transaction, such as any merger, consolidation, separation, including a spin-off, or other distribution of stock or property of the Company, any reorganization (whether or not such reorganization comes within the definition of such term in Section 368 of the Code) or any partial or complete liquidation of the Company, such adjustment
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shall be made in the number and class of Shares available for Awards, the number and class of and/or price of Shares subject to outstanding Awards granted under the Plan and the number of Shares set forth in Sections 4.1 and 4.2, as may be determined to be appropriate and equitable by the Board, in its sole discretion, to prevent dilution or enlargement of rights; provided, however, that the number of Shares subject to any Award shall always be a whole number.
ARTICLE 5
ELIGIBILITY AND PARTICIPATION
5.1 ELIGIBILITY. Persons eligible to participate in this Plan include any Chief Executive Officer of the Company.
ARTICLE 6
STOCK OPTIONS
6.1 GRANT OF OPTIONS. Subject to the terms and provisions of the Plan, Options may be granted to a Participant in such number, and upon such terms, and at any time and from time to time as shall be determined by the Board. The Board may grant Nonqualified Stock Options or Incentive Stock Options. The Board shall have complete discretion in determining the number of Options granted to a Participant (subject to Article 4 herein).
6.2 AWARD AGREEMENT. Each Option grant shall be evidenced by an Award Agreement that shall specify the Option Price, the duration of the Option, the number of Shares to which the Option pertains, and such other provisions as the Board shall determine. The Award Agreement with respect to the Option also shall specify whether the Option is intended to be an ISO within the meaning of
Section 422 of the Code, or an NQSO whose grant is intended not to fall under the provisions of Section 422 of the Code.
6.3 OPTION PRICE. The Board shall designate the Option Price for each grant of an Option under this Plan, which Option Price may not be subsequently changed by the Board except pursuant to Section 4.3 hereof or to the extent provided in the Award Agreement.
6.4 DURATION OF OPTIONS. Each Option granted to a Participant shall expire at such time as the Board shall determine at the time of grant; provided, however, that unless otherwise designated by the Board at the time of grant, no Option shall be exercisable later than the tenth anniversary date of its grant.
6.5 EXERCISE OF OPTIONS. Options granted under this Article 6 shall be exercisable at such times and be subject to such restrictions and conditions as the Board shall in each instance approve, which need not be the same for each grant or for each Participant.
6.6 PAYMENT. Options granted under this Article 6 shall be exercised by the delivery of a written notice of exercise to the Company, setting forth the number of Shares with respect to which the Option is to be exercised, accompanied by full payment for the Shares. The Option Price upon exercise of any Option shall be payable to the Company in full either:
(a) in cash or its equivalent,
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(b) by tendering previously acquired Shares having an aggregate Fair Market Value at the time of exercise equal to the total Option Price, or
(c) by a combination of (a) and (b).
The Board also may allow cashless exercises as permitted under Federal Reserve Board's Regulation T, subject to applicable securities law restrictions, or by any other means which the Board determines to be consistent with the Plan's purpose and applicable law. As soon as practicable after receipt of a written notification of exercise and full payment, the Company shall deliver to the Participant, in the Participant's name, Share certificates in an appropriate amount based upon the number of Shares purchased under the Option(s).
In connection with the exercise of Options granted under the Plan, the Company may make loans to the Participants as the Board, in its discretion, may determine. Such loans shall be subject to the following terms and conditions and such other terms and conditions as the Board shall determine not inconsistent with the Plan. Such loans shall bear interest at such rates as the Board shall determine from time to time, which rates may be below then current market rates or may be made without interest. In no event may any such loan exceed the Fair Market Value, at the date of exercise, of the shares covered by the Option, or portion thereof, exercised by the Participant. No loan shall have an initial term exceeding two years, but any such loan may be renewable at the discretion of the Board. When a loan shall have been made, Shares having a fair market value at least equal to 150 percent of the principal amount of the loan shall be pledged by the Participant to the Company as security for payment of the unpaid balance of the loan.
6.7 RESTRICTIONS ON SHARE TRANSFERABILITY. The Board may impose such restrictions on any Shares acquired pursuant to the exercise of an Option granted under this Article 6 as it may deem advisable, including, without limitation, restrictions under applicable federal securities laws, under the requirements of any stock exchange or market upon which such Shares are then listed and/or traded, and under any blue sky or state securities laws applicable to such Shares.
6.8 TERMINATION OF RELATIONSHIP. Each Award Agreement shall set forth the extent to which the Participant shall have the right to exercise the Option following termination of the Participant's employment or other relationship with the Company and/or its Subsidiaries. Such provisions shall be determined in the sole discretion of the Board, shall be included in the Award Agreement entered into with each Participant, need not be uniform among all Options issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination, including, but not limited to, termination of employment for Cause or Good Reason, or reasons relating to the breach or threatened breach of restrictive covenants. Subject to Article 9, in the event that a Participant's Award Agreement does not set forth such termination provisions, the following termination provisions shall apply:
(a) In the event a Participant's employment, consulting arrangement or other affiliation with the Company and/or its Subsidiaries is terminated for any reason other than death, Disability or Retirement, all Options held by the Participant shall expire and all rights to purchase Shares thereunder shall termination immediately; provided, however, that notwithstanding the foregoing, all Options to which the Participant has a vested right immediately prior to such termination shall be exercisable for the lesser of (i) 30 days
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following the date of termination or (ii) the expiration date of the Option, unless the termination was for Cause.
(b) In the event a Participant's employment, consulting arrangement or other affiliation with the Company and/or its Subsidiaries is terminated due to death or Disability, all Options shall immediately become fully vested on the date of termination.
(c) Subject to Article 9, in the event of termination of a Participant's employment, consulting arrangement or other affiliation due to death or Disability, all Options in which the Participant has a vested right upon termination shall be exercisable until the expiration date of the Option.
(d) Subject to Article 9, in the event of termination of a Participant's employment, consulting arrangement or other affiliation due to Retirement, all Options in which the Participant has a vested right upon termination shall be exercisable for the lesser of (i) three years following the date of termination or (ii) the expiration date of the Option.
6.9 NONTRANSFERABILITY OF OPTIONS.
(a) INCENTIVE STOCK OPTIONS. No ISO granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further, all ISOs granted to a Participant under the Plan shall be exercisable during his or her lifetime only by such Participant.
(b) NONQUALIFIED STOCK OPTIONS. Except as otherwise provided in a Participant's Award Agreement, no NQSO granted under this Article 6 may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further, except as otherwise provided in a Participant's Award Agreement, all NQSOs granted to a Participant under this Article 6 shall be exercisable during his or her lifetime only by such Participant.
ARTICLE 7
BENEFICIARY DESIGNATION
Each Participant under the Plan may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under the Plan is to be paid in case of his or her death before he or she receives any or all of such benefit. Each such designation shall revoke all prior designations by the same Participant, shall be in a form prescribed by the Company, and will be effective only when filed by the Participant in writing with the Secretary of the Company during the Participant's lifetime. In the absence of any such designation, benefits remaining unpaid at the Participant's death shall be paid to the Participant's estate.
ARTICLE 8
DEFERRALS
The Board may permit a Participant to defer such Participant's receipt of Shares that would otherwise be due to such Participant upon the exercise of any Option. If any such deferral election
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is required or permitted, the Board shall, in its sole discretion, establish rules and procedures for such payment deferrals.
ARTICLE 9
RIGHTS OF EMPLOYEES, CONSULTANTS AND OTHERS
9.1 EMPLOYMENT, CONSULTING OR OTHER ARRANGEMENTS. Nothing in the Plan shall interfere with or limit in any way the right of the Company to terminate any Participant's employment, consulting arrangement or other affiliation at any time, nor confer upon any Participant any right to continue in the employ of or consulting arrangement or other affiliation with the Company or any Subsidiary. For purposes of this Plan, temporary absence from employment because of illness, vacation, approved leaves of absence, and transfers of employment among the Company and its Subsidiaries, shall not be considered to terminate employment or to interrupt continuous employment. Temporary cessation of the provision of consulting or other services because of illness, vacation or any other reason approved in advance by the Company shall not be considered a termination of the consulting or other arrangement or an interruption of the continuity thereof. Conversion of a Participant's employment relationship to a consulting or other arrangement shall not result in termination of previously granted Awards.
9.2 PARTICIPATION. No Employee, consultant or other affiliated Person shall have the right to be selected to receive an Award under this Plan, or, having been so selected, to be selected to receive a future Award.
ARTICLE 10
CHANGE OF CONTROL
Upon the occurrence of a Change of Control, unless otherwise specifically prohibited under applicable laws, or by the rules and regulations of any governing governmental agencies or national securities exchanges, any and all Options granted hereunder shall become immediately exercisable, and shall remain exercisable throughout their entire term.
ARTICLE 11
AMENDMENT, MODIFICATION AND TERMINATION
11.1 AMENDMENT, MODIFICATION AND TERMINATION. The Board may at any time and from time to time, alter, amend, suspend or terminate the Plan in whole or in part, subject to any requirement of stockholder approval imposed by applicable law, rule or regulation.
11.2 AWARDS PREVIOUSLY GRANTED. No termination, amendment, or modification of the Plan shall adversely affect in any material way any Award previously granted under the Plan, without the written consent of the Participant holding such Award.
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ARTICLE 12
WITHHOLDING
12.1 TAX WITHHOLDING. The Company shall have the power and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy federal, state, and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising as a result of the Plan.
12.2 SHARE WITHHOLDING. With respect to withholding required upon the exercise of Options, or upon any other taxable event arising as a result of Awards granted hereunder, Participants may elect, subject to the approval of the Board, to satisfy the withholding requirement, in whole or in part, by having the Company withhold Shares having a Fair Market Value on the date the tax is to be determined equal to the minimum statutory total tax which would be imposed on the transaction. All such elections shall be irrevocable, made in writing, signed by the Participant, and shall be subject to any restrictions or limitations that the Board, in its sole discretion, deems appropriate.
ARTICLE 13
SUCCESSORS
All obligations of the Company under the Plan with respect to Awards granted hereunder shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect merger, consolidation, purchase of all or substantially all of the business and/or assets of the Company or otherwise.
ARTICLE 14
LEGAL CONSTRUCTION
14.1 GENDER AND NUMBER. Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine, the plural shall include the singular and the singular shall include the plural.
14.2 SEVERABILITY. In the event any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included.
14.3 REQUIREMENTS OF LAW. The granting of Awards and the issuance of Shares under the Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.
14.4 SECURITIES LAW COMPLIANCE. With respect to Insiders, transactions under this Plan are intended to comply with all applicable conditions of Rule 16b-3 or its successors under the Exchange Act. To the extent any provision of the Plan or action by the Board fails to so comply, it shall be deemed null and void, to the extent permitted by law and deemed advisable by the Board.
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14.5 GOVERNING LAW. To the extent not pre-empted by federal law, the Plan, and all agreements hereunder, shall be construed in accordance with and governed by the laws of the State of Delaware.
* * *
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EXHIBIT 10.22
LKQ CORPORATION
1998 EQUITY INCENTIVE PLAN
ARTICLE 1
ESTABLISHMENT, OBJECTIVES, AND DURATION
1.1 ESTABLISHMENT OF THE PLAN. LKQ CORPORATION, a Delaware corporation (hereinafter referred to as the "Company"), hereby establishes an incentive compensation plan to be known as the LKQ 1998 Equity Incentive Plan (hereinafter referred to as the "Plan") as set forth in this document. The Plan became effective as of February 13, 1998 (the "Effective Date") and shall remain in effect as provided in Section 1.3 hereof.
1.2 PURPOSE OF THE PLAN. The purpose of this Plan is to benefit the Company and its subsidiaries and affiliated companies by enabling the Company to offer to certain present and future executives, key personnel and other persons affiliated with the Company stock based incentives and other equity interests in the Company, thereby giving them a stake in the growth and prosperity of the Company and encouraging the continuance of their relationship with the Company or subsidiaries or affiliated companies.
1.3 DURATION OF THE PLAN. The Plan shall commence on the Effective Date and shall remain in effect, subject to the right of the Board of Directors to amend or terminate the Plan at any time pursuant to Article 15 hereof, until all Shares subject to it shall have been purchased or acquired according to the Plan provisions.
ARTICLE 2
DEFINITIONS
Whenever used in the Plan, the following terms shall have the meanings set forth below, and when the meaning is intended, the initial letter of the word shall be capitalized:
"AWARD" means, individually or collectively, a grant under this Plan of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Stock, Performance Shares or Performance Units.
"AWARD AGREEMENT" means a writing provided by the Company to each Participant setting forth the terms and provisions applicable to Awards granted under this Plan. The Participant's acceptance of the terms of the Award Agreement shall be evidenced by his or her continued employment without written objection before any exercise or payment of the Award. If the Participant objects in writing, the grant of the Award shall be revoked.
"BENEFICIAL OWNER" or "BENEFICIAL OWNERSHIP" shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the Exchange Act.

     "BOARD" or "BOARD OF DIRECTORS" means the Board of Directors of the
Company.

     "CAUSE" shall mean, with respect to termination of a Participant's	

employment, consulting arrangement or other affiliation, the occurrence of any one or more of the following, as determined by the Committee, in the exercise of good faith and reasonable judgment:
(i) In the case where there is no employment, change in control or similar agreement in effect between the Participant and the Company or a Subsidiary at the time of the grant of the Award, or where there is such an agreement but the agreement does not define "cause" (or similar words) or a "cause" termination would not be permitted under such agreement at that time because other conditions were not satisfied, the termination of an employment or consulting arrangement is due to the willful and continued failure or refusal by the Participant to substantially perform assigned duties (other than any such failure resulting from the Participant's Disability), the Participant's dishonesty or theft, the Participant's violation of any obligations or duties under any employee agreement, or the Participant's gross negligence or willful misconduct; or
(ii) In the case where there is an employment, change in control or similar agreement in effect between the Participant and the Company or a Subsidiary at the time of the grant of the Award that defines "cause" (or similar words) and a "cause" termination would be permitted under such agreement at that time, the termination of an employment or consulting arrangement is or would be deemed to be for "cause" (or similar words) as defined in such agreement.
No act or failure to act on a Participant's part shall be considered willful unless done, or omitted to be done, by the Participant not in good faith and without reasonable belief that his action or omission was in the best interest of the Company.
"CHANGE OF CONTROL" of the Company shall mean:
(a) the Company is merged or consolidated or reorganized into or with another corporation or other legal person (an "Acquiror") and as a result of such merger, consolidation or reorganization less than 50% of the outstanding voting securities or other capital interests of the surviving, resulting or acquiring corporation or other legal person are owned in the aggregate by the stockholders of the Company, directly or indirectly, immediately prior to such merger, consolidation or reorganization, other than by the Acquiror or any corporation or other legal person controlling, controlled by or under common control with the Acquiror;
(b) The Company sells all or substantially all of its business and/or assets to an Acquiror, of which less than 50% of the outstanding voting securities or other capital interests are owned in the aggregate by the stockholders of the Company, directly or indirectly, immediately prior to such sale, other than by any corporation or other legal person controlling, controlled by or under common control with the Acquiror;
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(c) There is a report filed on Schedule 13D or Schedule 14D-1 (or any successor schedule, form or report), each as promulgated pursuant to the Exchange Act, disclosing that any person or group (as the terms "person" and "group" are used in Section 13(d)(3) or Section 14(d)(2) of the Exchange Act and the rules and regulations promulgated thereunder) has become the beneficial owner (as the term "beneficial owner" is defined under Rule 13d-3 or any successor rule or regulation promulgated under the Exchange Act) of 50% or more of the issued and outstanding shares of voting securities of the Company; or
(d) During any period of two consecutive years, individuals who at the beginning of any such period constitute the directors of the Company cease for any reason to constitute at least a majority thereof unless the election, or the nomination for election by the Company's stockholders, of each new director of the Company was approved by a vote of at least two-thirds of such directors of the Company then still in office who were directors of the Company at the beginning of any such period.
"CODE" means the Internal Revenue Code of 1986, as amended from time to time, or any successor legislation thereto.
"COMMITTEE" means the Committee as specified in Article 3 herein appointed by the Board to administer the Plan with respect to grants of Awards.
"COMMON STOCK" means the common stock of the Company.
"COMPANY" means LKQ Corporation, a Delaware corporation, as well as any successor to such entity as provided in Article 17 herein.
"DIRECTOR" means any individual who is a member of the Board of Directors of the Company.
"DISABILITY" shall have the meaning ascribed to such term in the Participant's governing long-term disability plan. If no long term disability plan is in place with respect to a Participant, then with respect to that Participant, Disability shall mean: for the first 24 months of disability, that the Participant is unable to perform his or her job; thereafter, that the Participant is unable to perform any and every duty of any gainful occupation for which the Participant is reasonably suited by training, education or experience.
"EFFECTIVE DATE" shall have the meaning ascribed to such term in Section 1.1 hereof.
"EMPLOYEE" means any employee of the Company or any Subsidiary.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended from time to time, or any successor act thereto.
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"FAIR MARKET VALUE" means (a) if the Common Stock is not listed or traded on a stock exchange or market, the value of the Common Stock determined in good faith by the Committee; or (b) if the Common Stock is listed or traded on a stock exchange or market, (i) for purposes of setting any Option Price, unless otherwise required by any applicable provision of the Code or any regulations issued thereunder, or unless the Committee otherwise determines, means as of the date of the Award, the average of the closing sales prices of the Common Stock on the applicable stock exchange or market (as reported in THE WALL STREET JOURNAL, Midwest Edition) on each of the five trading dates immediately preceding such date; and (ii) for purposes of the valuation of any Shares delivered in payment of the Option Price upon the exercise of an Option, for purposes of the valuation of any Shares withheld in payment of the Option Price or to pay taxes due on an Award, or for purposes of the exercise of any SAR or conversion of a Performance Unit, means the average of the high and low sales prices of the Common Stock on the applicable stock exchange or market (as reported in THE WALL STREET JOURNAL, Midwest Edition) on the date of exercise (or if the date of exercise is not a trading day, on the trading day next preceding the date of exercise).
"FREESTANDING SAR" means a stock appreciation right that is granted independently of any Options, as described in Article 7 herein.
"GOOD REASON" shall mean, with respect to the termination of a Participant's employment or consulting arrangement,
(i) in the case where there is no employment, change in control or similar agreement in effect between the Participant and the Company or a Subsidiary at the time of the grant of the Award, or where there is such an agreement but the agreement does not define "good reason" (or similar words) or a "good reason" termination would not be permitted under such agreement at that time because other conditions were not satisfied, a voluntary termination of an employment or consulting arrangement due to "good reason" as the Committee, in its sole discretion, decides to treat as a "Good Reason" termination; or
(ii) in the case where there is an employment, change in control or similar agreement in effect between the Participant and the Company or a Subsidiary at the time of the grant of the Award that defines "good reason" (or similar words) and a "good reason" termination would be permitted under such agreement at that time, the termination of an employment or consulting arrangement is or would be deemed to be for "good reason" (or similar words) as defined in such agreement.
"INCENTIVE STOCK OPTION" or "ISO" means an option to purchase Shares granted under Article 6 herein and which is designated as an Incentive Stock Option and which is intended to meet the requirements of Section 422 of the Code.
"INSIDER" shall mean an individual who is, on the relevant date, an officer, director or more than ten percent (10%) beneficial owner of any class of the Company's equity securities that is registered pursuant to Section 12 of the Exchange Act, all as defined under Section 16 of the Exchange Act.
"NAMED EXECUTIVE OFFICER" means a Participant who is one of the group of covered employees as defined in the regulations promulgated under Section 162(m) of the Code, or any successor statute.
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"NONQUALIFIED STOCK OPTION" or "NQSO" means an option to purchase Shares granted under Article 6 herein and which is not intended to meet the requirements of Section 422 of the Code.
"OPTION" means an Incentive Stock Option or a Nonqualified Stock Option, as described in Article 6 herein.
"OPTION PRICE" means the price at which a Share may be purchased by a Participant pursuant to an Option.
"PARTICIPANT" means a Person who or which has outstanding an Award granted under the Plan.
"PERFORMANCE-BASED EXCEPTION" means the exception for performance-based compensation from the tax deductibility limitations of Section 162(m) of the Code.
"PERFORMANCE PERIOD" means the time period during which performance goals must be achieved with respect to an Award, as determined by the Committee.
"PERFORMANCE SHARE" means an Award granted to a Participant, as described in Article 9 herein.
"PERFORMANCE UNIT" means an Award granted to a Participant, as described in Article 9 herein.
"PERIOD OF RESTRICTION" means the period during which the transfer of Shares of Restricted Stock is limited in some way, and the Shares are subject to a substantial risk of forfeiture, as provided in Article 8 herein.
"PERSON" shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Section 13(d) and 14(d) thereof, including a group as defined in Section 13(d) thereof.
"RESTRICTED STOCK" means an Award granted to a Participant pursuant to Article 8 herein.
"RETIREMENT" means the Participant's termination of employment with the Company or its Subsidiaries under circumstances which the Committee determines, in its sole discretion, that qualify as a Retirement termination from the Company.
"SHARES" means shares of Common Stock of the Company.
"STOCK APPRECIATION RIGHT" or "SAR" means an Award, granted alone or in connection with a related Option, designated as an SAR, pursuant to the terms of Article 7 herein.
"SUBSIDIARY" means any corporation, partnership, joint venture, affiliate, or other entity in which the Company is the direct or indirect beneficial owner of not less than 20% of all issued and outstanding equity interests.
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"TANDEM SAR" means an SAR that is granted in connection with a related Option pursuant to Article 7 herein, the exercise of which shall require forfeiture of the right to purchase a Share under the related Option (and when a Share is purchased under the Option, the Tandem SAR shall similarly be forfeited).
ARTICLE 3
ADMINISTRATION
3.1 THE COMMITTEE. The Plan shall be administered by the Committee appointed by the Board. If and to the extent that no Committee exists that has the authority to administer the Plan, the functions of the Committee shall be exercised by the Board.
3.2 AUTHORITY OF THE COMMITTEE. Except as limited by law or by the Certificate of Incorporation or Bylaws of the Company, and subject to the provisions herein, the Committee shall have full power to select Persons who shall participate in the Plan; determine the sizes and types of Awards; determine the terms and conditions of Awards in a manner consistent with the Plan; construe and interpret the Plan and any agreement or instrument entered into under the Plan, establish, amend, or waive rules and regulations for the Plan's administration; and (subject to the provisions of Article 15 herein) amend the terms and conditions of any outstanding Award to the extent such terms and conditions are within the discretion of the Committee as provided in the Plan. Further, the Committee shall make all other determinations which may be necessary or advisable for the administration of the Plan. As permitted by law, the Committee may delegate the authority granted to it herein.
3.3 DECISIONS BINDING. All determinations and decisions made by the Committee pursuant to the provisions of the Plan and all related orders and resolutions of the Board shall be final, conclusive and binding on all Persons, including the Company, its stockholders, Employees, Participants, and their estates and beneficiaries.
ARTICLE 4
SHARES SUBJECT TO THE PLAN AND MAXIMUM AWARDS
4.1 SHARES AVAILABLE FOR AWARDS. The aggregate number of Shares which may be issued for or used for reference purposes under this Plan or with respect to which Awards may be granted shall not exceed 5,000,000 Shares (subject to adjustment as provided in Section 4.3), which may be either authorized and unissued Shares or Shares held in or acquired for the treasury of the Company. Upon (a) a payout of a Freestanding SAR, Tandem SAR, or Restricted Stock award in the form of cash; (b) a cancellation, termination, expiration, forfeiture, or lapse for any reason (with the exception of the termination of a Tandem SAR upon exercise of the related Options, or the termination of a related Option upon exercise of the corresponding Tandem SAR) of any Award; or (c) payment of an Option Price and/or payment of any taxes arising upon exercise of an Option or payout of any Award with previously acquired Shares or by withholding Shares which otherwise would be acquired on exercise or issued upon such payout, then the number of Shares underlying any such Award which were not issued as a result of any of the foregoing actions shall again be available for the purposes of Awards under the Plan.
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4.2 INDIVIDUAL PARTICIPANT LIMITATIONS. Unless and until the Committee determines that an Award to a Named Executive Officer shall not be designed to comply with the Performance-Based Exception, the following rules shall apply to grants of such Awards under the Plan:
(a) Subject to adjustment as provided in Section 4.3 herein, the maximum aggregate number of Shares (including Options, SARs, Restricted Stock, Performance Units and Performance Shares to be paid out in Shares) that may be granted in any one fiscal year to a Participant shall be 300,000.
(b) The maximum aggregate cash payout (including Performance Units and Performance Shares paid out in cash) with respect to Awards granted in any one fiscal year which may be made to any Participant shall be $1,000,000.
4.3 ADJUSTMENTS IN AUTHORIZED SHARES. In the event of any change in corporate capitalization, such as a stock split, or a corporate transaction, such as any merger, consolidation, separation, including a spin-off, or other distribution of stock or property of the Company, any reorganization (whether or not such reorganization comes within the definition of such term in Section 368 of the Code) or any partial or complete liquidation of the Company, such adjustment shall be made in the number and class of Shares available for Awards, the number and class of and/or price of Shares subject to outstanding Awards granted under the Plan and the number of Shares set forth in Sections 4.1 and 4.2, as may be determined to be appropriate and equitable by the Committee, in its sole discretion, to prevent dilution or enlargement of rights; provided, however, that the number of Shares subject to any Award shall always be a whole number.
ARTICLE 5
ELIGIBILITY AND PARTICIPATION
5.1 ELIGIBILITY. Persons eligible to participate in this Plan include all officers and other employees of the Company and its Subsidiaries, and other Persons affiliated with the Company and its Subsidiaries, as determined by the Committee, including Employees who are members of the Board and Employees who reside in countries other than the United States of America.
5.2 ACTUAL PARTICIPATION. Subject to the provisions of the Plan, the Committee may, from time to time, select from all eligible Persons, those to whom Awards shall be granted and shall determine the nature and amount of each Award.
ARTICLE 6
STOCK OPTIONS
6.1 GRANT OF OPTIONS. Subject to the terms and provisions of the Plan, Options may be granted to one or more Participants in such number, and upon such terms, and at any time and from time to time as shall be determined by the Committee. The Committee may grant Nonqualified Stock Options or Incentive Stock Options. The Committee shall have complete discretion in determining the number of Options granted to each Participant (subject to Article 4 herein).
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6.2 AWARD AGREEMENT. Each Option grant shall be evidenced by an Award Agreement that shall specify the Option Price, the duration of the Option, the number of Shares to which the Option pertains, and such other provisions as the Committee shall determine. The Award Agreement with respect to the Option also shall specify whether the Option is intended to be an ISO within the meaning of
Section 422 of the Code, or an NQSO whose grant is intended not to fall under the provisions of Section 422 of the Code.
6.3 OPTION PRICE. The Committee shall designate the Option Price for each grant of an Option under this Plan which Option Price shall be at least equal to one hundred percent (100%) of the Fair Market Value of a Share on the date the Option is granted, and which Option Price may not be subsequently changed by the Committee except pursuant to Section 4.3 hereof or to the extent provided in the Award Agreement.
6.4 DURATION OF OPTIONS. Each Option granted to an Employee shall expire at such time as the Committee shall determine at the time of grant; provided, however, that unless otherwise designated by the Committee at the time of grant, no Option shall be exercisable later than the tenth (10th) anniversary date of its grant.
6.5 EXERCISE OF OPTIONS. Options granted under this Article 6 shall be exercisable at such times and be subject to such restrictions and conditions as the Committee shall in each instance approve, which need not be the same for each grant or for each Participant.
6.6 PAYMENT. Options granted under this Article 6 shall be exercised by the delivery of a written notice of exercise to the Company, setting forth the number of Shares with respect to which the Option is to be exercised, accompanied by full payment for the Shares. The Option Price upon exercise of any Option shall be payable to the Company in full either:
(a) in cash or its equivalent,
(b) by tendering previously acquired Shares having an aggregate Fair Market Value at the time of exercise equal to the total Option Price, or
(c) by a combination of (a) and (b).
The Committee also may allow cashless exercises as permitted under Federal Reserve Board's Regulation T, subject to applicable securities law restrictions, or by any other means which the Committee determines to be consistent with the Plan's purpose and applicable law. As soon as practicable after receipt of a written notification of exercise and full payment, the Company shall deliver to the Participant, in the Participant's name, Share certificates in an appropriate amount based upon the number of Shares purchased under the Option(s).
In connection with the exercise of Options granted under the Plan, the Company may make loans to the Participants as the Committee, in its discretion, may determine. Such loans shall be subject to the following terms and conditions and such other terms and conditions as the Committee shall determine not inconsistent with the Plan. Such loans shall bear interest at such rates as the Committee shall determine from time to time, which rates may be below then current market rates or may be made without interest. In no event may any such loan exceed the Fair Market Value, at the date of exercise, of the shares covered by the Option, or portion thereof,
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exercised by the Optionee. No loan shall have an initial term exceeding two years, but any such loan may be renewable at the discretion of the Committee. When a loan shall have been made, Shares having a fair market value at least equal to 150 percent of the principal amount of the loan shall be pledged by the Participant to the Company as security for payment of the unpaid balance of the loan.
6.7 RESTRICTIONS ON SHARE TRANSFERABILITY. The Committee may impose such restrictions on any Shares acquired pursuant to the exercise of an Option granted under this Article 6 as it may deem advisable, including, without limitation, restrictions under applicable federal securities laws, under the requirements of any stock exchange or market upon which such Shares are then listed and/or traded, and under any blue sky or state securities laws applicable to such Shares.
6.8 TERMINATION OF RELATIONSHIP. Each Option Award Agreement shall set forth the extent to which the Participant shall have the right to exercise the Option following termination of the Participant's employment or other relationship with the Company and/or its Subsidiaries. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with each Participant, need not be uniform among all Options issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination, including, but not limited to, termination of employment for Cause or Good Reason, or reasons relating to the breach or threatened breach of restrictive covenants. Subject to Article 14, in the event that a Participant's Option Award Agreement does not set forth such termination provisions, the following termination provisions shall apply:
(a) In the event a Participant's employment, consulting arrangement or other affiliation with the Company and/or its Subsidiaries is terminated for any reason other than death, Disability or Retirement, all Options held by the Participant shall expire and all rights to purchase Shares thereunder shall termination immediately; provided, however, that notwithstanding the foregoing, all Options to which the Participant has a vested right immediately prior to such termination shall be exercisable for the lesser of (i) 30 days following the date of termination or (ii) the expiration date of the Option, unless the termination was for Cause.
(b) In the event a Participant's employment, consulting arrangement or other affiliation with the Company and/or its Subsidiaries is terminated due to death or Disability, all Options shall immediately become fully vested on the date of termination.
(c) Subject to Article 14, in the event of termination of a Participant's employment, consulting arrangement or other affiliation due to death or Disability, all Options in which the Participant has a vested right upon termination shall be exercisable until the expiration date of the Option.
(d) Subject to Article 14, in the event of termination of a Participant's employment, consulting arrangement or other affiliation due to Retirement, all Options in which the Participant has a vested right upon termination shall be exercisable for the lesser of (i) three years following the date of termination or (ii) the expiration date of the Option.
9

6.9 NONTRANSFERABILITY OF OPTIONS.
(a) INCENTIVE STOCK OPTIONS. No ISO granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further, all ISOs granted to a Participant under the Plan shall be exercisable during his or her lifetime only by such Participant.
(b) NONQUALIFIED STOCK OPTIONS. Except as otherwise provided in a Participant's Award Agreement, no NQSO granted under this Article 6 may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further, except as otherwise provided in a Participant's Award Agreement, all NQSOs granted to a Participant under this Article 6 shall be exercisable during his or her lifetime only by such Participant.
ARTICLE 7
STOCK APPRECIATION RIGHTS
7.1 GRANT OF SARs. Subject to the terms and conditions of the Plan, SARs may be granted to Participants at any time and from time to time as shall be determined by the Committee. The Committee may grant Freestanding SARs, Tandem SARs, or any combination of these forms of SARs. The Committee shall have complete discretion in determining the number of SARs granted to each Participant (subject to Article 4 herein) and, consistent with the provisions of the Plan, in determining the terms and conditions pertaining to such SARs. The Committee shall designate, at the time of grant, the grant price of Freestanding SARs which grant price shall at least equal the Fair Market Value of a Share on the date of grant of the SAR. The grant price of Tandem SARs shall equal the Option Price of the related Option. Grant prices of SARs shall not subsequently be changed by the Committee except pursuant to Section 4.3 hereof.
7.2 EXERCISE OF TANDEM SARs. Tandem SARs may be exercised for all or part of the Shares subject to the related Option upon the surrender of the right to exercise the equivalent portion of the related Option. A Tandem SAR may be exercised only with respect to the Shares for which its related Option is then exercisable. Notwithstanding any other provision of this Plan to the contrary, with respect to a Tandem SAR granted in connection with an ISO: (i) the Tandem SAR will expire no later than the expiration of the underlying ISO; (ii) the value of the payout with respect to the Tandem SAR may be for no more than one hundred percent (100%) of the difference between the Option Price of the underlying ISO and the Fair Market Value of the Shares subject to the underlying ISO at the time the Tandem SAR is exercised; and (iii) the Tandem SAR may be exercised only when the Fair Market Value of the Shares subject to the ISO exceeds the Option Price of the ISO.
7.3 EXERCISE OF FREESTANDING SARs. Freestanding SARs may be exercised upon whatever terms and conditions the Committee, in its sole discretion, imposes upon them.
7.4 SAR AGREEMENT. Each SAR grant shall be evidenced by an Award Agreement that shall specify the grant price, the term of the SAR, and such other provisions as the Committee shall determine.
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7.5 TERM OF SARs. The term of an SAR granted under the plan shall be determined by the Committee, in its sole discretion; provided, however, that unless otherwise designated by the Committee, such term shall not exceed ten
(10) years.
7.6 PAYMENT OF SAR AMOUNT. Upon exercise of an SAR, a Participant shall be entitled to receive payment from the Company in an amount determined by multiplying:
(a) The excess of the Fair Market Value of a Share on the date of exercise over the grant price; by
(b) The number of Shares with respect to which the SAR is exercised.
At the discretion of the Committee, the payment upon SAR exercise may be in cash, in Shares of equivalent value, or in some combination thereof.
7.7 TERMINATION OF RELATIONSHIP. Each SAR Award Agreement shall set forth the extent to which the Participant shall have the right to exercise the SAR following termination of the Participant's employment or other relationship with the Company and/or its Subsidiaries. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with each Participant, need not be uniform among all SARs issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination, including, but not limited to, termination of employment for Cause or Good Reason, or reasons relating to the breach or threatened breach of restrictive covenants. Subject to Article 14, in the event that a Participant's SAR Award Agreement does not set forth such termination provisions, the following termination provisions shall apply:
(a) In the event a Participant's employment, consulting arrangement or other affiliation with the Company and/or its Subsidiaries is terminated for any reason other than death, Disability or Retirement, all SARs held by the Participant shall expire and all rights thereunder shall terminate immediately; provided, however, that notwithstanding the foregoing, all SARs to which the Participant has a vested right immediately prior to such termination shall be exercisable for the lesser of (i) 30 days following the date of termination or (ii) the expiration date of the SAR, unless the termination was for Cause.
(b) In the event a Participant's employment, consulting arrangement or other affiliation with the Company and/or its Subsidiaries is terminated due to death or Disability, all SARs shall immediately become fully vested on the date of termination.
(c) Subject to Article 14, in the event of termination of a Participant's employment, consulting arrangement or other affiliation due to death or Disability, all SARs in which the Participant has a vested right upon termination shall be exercisable until the expiration date of the SAR.
(d) Subject to Article 14, in the event of termination of a Participant's employment, consulting arrangement or other affiliation due to Retirement, all SARs in which the Participant has a vested right upon termination shall be exercisable for the lesser of (i) three years following the date of termination or (ii) the expiration date of the SAR.
11

7.8 NONTRANSFERABILITY OF SARs. Except as otherwise provided in a Participant's Award Agreement, no SAR granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further, except as otherwise provided in a Participant's Award Agreement, all SARs granted to a Participant under the Plan shall be exercisable during his or her lifetime only by such Participant.
ARTICLE 8
RESTRICTED STOCK
8.1 GRANT OF RESTRICTED STOCK. Subject to the terms and provisions of the Plan, the Committee, at any time and from time to time, may grant Shares of Restricted Stock to Participants in such amounts as the Committee shall determine.
8.2 RESTRICTED STOCK AGREEMENT. Each Restricted Stock grant shall be evidenced by an Award Agreement that shall specify the Period(s) of Restriction, the number of Shares of Restricted Stock granted, and such other provisions as the Committee shall determine.
8.3 TRANSFERABILITY. Except as provided in this Article 8, the Shares of Restricted Stock granted herein may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, voluntarily or involuntarily, until the end of the applicable Period of Restriction established by the Committee and specified in the Restricted Stock Award Agreement, or upon earlier satisfaction of any other conditions, as specified by the Committee in its sole discretion and set forth in the Restricted Stock Agreement. All rights with respect to the Restricted Stock granted to a Participant under the Plan shall be available during his or her lifetime only to such Participant.
8.4 OTHER RESTRICTIONS. Subject to Article 10 herein, the Committee may impose such other conditions and/or restrictions on any Shares of Restricted Stock granted pursuant to the Plan as it may deem advisable including, without limitation, a requirement that Participants pay a stipulated purchase price for each Share of Restricted Stock, restrictions based upon the achievement of specific performance goals (Company-wide, Subsidiary-wide, divisional, and/or individual), time-based restrictions on vesting which may or may not be following the attainment of the performance goals, and/or restrictions under applicable federal or state securities laws. The Company shall retain the certificates representing Shares of Restricted Stock in the Company's possession until such time as all conditions and/or restrictions applicable to such Shares have been satisfied. Except as otherwise provided in this Article 8, Shares of Restricted Stock covered by each Restricted Stock grant made under the Plan shall become freely transferable by the Participant after the last day of the applicable Period of Restriction.
8.5 VOTING RIGHTS. Unless otherwise designated by the Committee at the time of grant, Participants to whom Shares of Restricted Stock have been granted hereunder may exercise full voting rights with respect to those Shares during the Period of Restriction.
8.6 DIVIDENDS AND OTHER DISTRIBUTIONS. Unless otherwise designated by the Committee at the time of grant, Participants holding Shares of Restricted Stock granted hereunder shall be credited with regular cash dividends paid with respect to the underlying Shares while they are so held during the Period of Restriction. The Committee may apply any restrictions to the dividends that the Committee deems appropriate. Without limiting the generality of the preceding sentence, if the grant or vesting of Shares of Restricted Stock granted to a Named Executive Officer
12

is designed to comply with the requirements of the Performance-Based Exception, the Committee may apply any restrictions it deems appropriate to the payment of dividends declared with respect to such Shares of Restricted Stock, such that the dividends and/or the Shares of Restricted Stock maintain eligibility for the Performance-Based Exception. In the event that any dividend constitutes a derivative security or an equity security pursuant to the rules under Section 16 of the Exchange Act, such dividend shall be subject to a vesting period equal to the remaining vesting period of the Shares of Restricted Stock with respect to which the dividend is paid.
8.7 TERMINATION OF RELATIONSHIP. Each Restricted Stock Award Agreement shall set forth the extent to which the Participant shall have the right to receive unvested Shares of Restricted Stock following termination of the Participant's employment or other relationship with the Company and/or its Subsidiaries. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with each Participant, need not be uniform among all Shares of Restricted Stock issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination, including, but not limited to, termination of employment for Cause or Good Reason, or reasons relating to the breach or threatened breach of restrictive covenants; provided, however, that, except in the cases of terminations connected with a Change of Control and terminations by reason of death or Disability, the vesting of Shares of Restricted Stock which qualify for the Performance-Based Exception and which are held by Named Executive Officers shall not occur prior to the time they otherwise would have, but for the employment termination. Subject to Article 14, in the event that a Participant's Restricted Stock Award Agreement does not set forth such termination provisions, the following termination provisions shall apply:
(a) In the event a Participant's employment, consulting arrangement or other affiliation with the Company and/or its Subsidiaries is terminated for any reason other than death or Disability, all Shares of Restricted Stock which are unvested at the date of termination shall be forfeited to the Company.
(b) Unless the Award qualifies for the Performance-Based Exception, in the event a Participant's employment, consulting arrangement or other affiliation with the Company and/or its Subsidiaries is terminated due to death or Disability, all Shares of Restricted Stock of such participant shall immediately become fully vested on the date of termination and the restrictions shall lapse.
ARTICLE 9
PERFORMANCE UNITS AND PERFORMANCE SHARES
9.1 GRANT OF PERFORMANCE UNITS/SHARES. Subject to the terms of the Plan, Performance Units and/or Performance Shares may be granted to Participants in such amounts and upon such terms, and at any time and from time to time, as shall be determined by the Committee.
13

9.2 VALUE OF PERFORMANCE UNITS/SHARES. Each Performance Unit shall have an initial value that is established by the Committee at the time of grant. Each Performance Share shall have an initial value equal to the Fair Market Value of a Share on the date of grant. The Committee shall set performance goals in its discretion which, depending on the extent to which they are met, will determine the number and/or value of Performance Units/Shares that will be paid out to the Participant. For purposes of this Article 9, the time period during which the performance goals must be met shall be referred to as a "Performance Period."
9.3 EARNING OF PERFORMANCE UNITS/SHARES. Subject to the terms of this Plan, after the applicable Performance Period has ended, the holder of Performance Units/Shares shall be entitled to receive payout on the number and value of Performance Units/Shares earned by the Participant over the Performance Period, to be determined as a function to the extent to which the corresponding performance goals have been achieved, as established by the Committee.
9.4 FORM AND TIMING OF PAYMENT OF PERFORMANCE UNITS/SHARES. (a) Except as provided below, payment of earned Performance Units/Shares shall be made in a single lump sum as soon as reasonably practicable following the close of the applicable Performance Period. Subject to the terms of this Plan, the Committee, in its sole discretion, may pay earned Performance Units/Shares in the form of cash or in Shares which have an aggregate Fair Market Value equal to the value of the earned Performance Units/Shares at the close of the applicable Performance Period (or in a combination thereof). Such Shares may be granted subject to any restrictions deemed appropriate by the Committee.
(b) At the time of grant or shortly thereafter, the Committee, at its discretion and in accordance with the terms designated by the Committee, may provide for a voluntary and/or mandatory deferral of all or any part of an otherwise earned Performance Unit/Share Award.
(c) At the discretion of the Committee, Participants may be entitled to receive any dividends declared with respect to Shares which have been earned but not yet distributed to Participants in connection with grants of Performance Units and/or Performance Shares (such dividends shall be subject to the same accrual, forfeiture, and payout restrictions as apply to dividends earned with respect to Shares of Restricted Stock, as set forth in Section 8.6 herein). In addition, Participants may, at the discretion of the Committee, be entitled to exercise their voting rights with respect to such Shares.
9.5 TERMINATION OF RELATIONSHIP. Subject to Article 14, in the event a Participant's employment or other relationship with the Company and/or its Subsidiaries is terminated during a Performance Period for any reason other than death, Disability or Retirement, all Performance Units/Shares shall be forfeited by the Participant to the Company. Subject to Article 14, in the event a Participant's employment, consulting arrangement or other affiliation with the Company and/or its Subsidiaries is terminated during a Performance Period due to death, Disability or Retirement, the Participant shall receive a prorated payout of the Performance Units/Shares, unless the Committee determines otherwise. The prorated payout shall be determined by the Committee, shall be based upon the length of time that the Participant held the Performance Units/Shares during the Performance Period, and shall further be adjusted based on the achievement of the pre-established performance goals. Subject to Article 14, unless the Committee determines otherwise in the event of a termination due to death, Disability or Retirement payment of earned Performance
11

Units/Shares shall be made at the same time as payments are made to Participants who did not terminate employment during the applicable Performance Period.
9.6 NONTRANSFERABILITY. Except as otherwise provided in a Participant's Award Agreement, Performance Units/Shares may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further, except as otherwise provided in a Participant's Award Agreement, a Participant's rights under the Plan shall be exercisable during the Participant's lifetime only by a Participant or the Participant's legal representative.
ARTICLE 10
PERFORMANCE MEASURES
(a) Unless and until the Committee proposes for stockholder vote and stockholders approve a change in the general performance measures set forth in this Article 10, the attainment of which may determine the degree of payout and/or vesting with respect to Awards to Named Executive Officers which are designed to qualify for the Performance-Based Exception, the performance goals to be used for purposes of such grants shall be established by the Committee in writing and stated in terms of the attainment of specified levels of, or percentage changes in, any one or more of the following measurements: revenue, primary or fully-diluted earnings per Share, pretax income, cash flow from operations, total cash flow, return on equity, return on capital, return on assets, net operating profits after taxes, economic value added, total stockholder return or return on sales, or any individual performance objective which is measured solely in terms of quantitative targets related to the Company or the Company's business, or any combination thereof. In addition, such performance goals may be based in whole or in part upon the performance of the Company, a Subsidiary, division and/or other operational unit, under one or more of such measures.
(b) The degree of payout and/or vesting of such Awards designed to qualify for the Performance-Based Exception shall be determined based upon the written certification of the Committee as to the extent to which the performance goals and any other material terms and conditions precedent to such payment and/or vesting have been satisfied. The Committee shall have the discretion to adjust the determinations of the degree of attainment of the pre-established performance goals; provided, however, that the performance goals applicable to Awards which are designed to qualify for the Performance-Based Exception, and which are held by Named Executive Officers, may not be adjusted so as to increase the payment under the Award (the Committee shall retain the discretion to adjust such performance goals upward, or to otherwise reduce the amount of the payment and/or vesting of the Award relative to the pre-established performance goals).
(c) In the event that applicable tax and/or securities laws change to permit Committee discretion to alter the governing performance measures without obtaining stockholder approval of such changes, the Committee shall have sole discretion to make such changes without obtaining stockholder approval. In addition, in the event that the Committee determines that it is advisable to grant Awards which shall not qualify for the Performance-Based Exception, the Committee may make such grants without satisfying the requirements of Section 162(m) of the Code and, thus, which use performance measures other than those specified above.
15

ARTICLE 11
BENEFICIARY DESIGNATION
Each Participant under the Plan may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under the Plan is to be paid in case of his or her death before he or she receives any or all of such benefit. Each such designation shall revoke all prior designations by the same Participant, shall be in a form prescribed by the Company, and will be effective only when filed by the Participant in writing with the Secretary of the Company during the Participant's lifetime. In the absence of any such designation, benefits remaining unpaid at the Participant's death shall be paid to the Participant's estate.
ARTICLE 12
DEFERRALS
The Committee may permit a Participant to defer such Participant's receipt of the payment of cash or the delivery of Shares that would otherwise be due to such Participant upon the exercise of any Option or by virtue of the lapse or waiver of restrictions with respect to Restricted Stock, or the satisfaction of any requirements or goals with respect to Performance Units/Shares. If any such deferral election is required or permitted, the Committee shall, in its sole discretion, establish rules and procedures for such payment deferrals.
ARTICLE 13
RIGHTS OF EMPLOYEES, CONSULTANTS AND OTHERS
13.1 EMPLOYMENT, CONSULTING OR OTHER ARRANGEMENTS. Nothing in the Plan shall interfere with or limit in any way the right of the Company to terminate any Participant's employment, consulting arrangement or other affiliation at any time, nor confer upon any Participant any right to continue in the employ of or consulting arrangement or other affiliation with the Company or any Subsidiary. For purposes of this Plan, temporary absence from employment because of illness, vacation, approved leaves of absence, and transfers of employment among the Company and its Subsidiaries, shall not be considered to terminate employment or to interrupt continuous employment. Temporary cessation of the provision of consulting or other services because of illness, vacation or any other reason approved in advance by the Company shall not be considered a termination of the consulting or other arrangement or an interruption of the continuity thereof. Conversion of a Participant's employment relationship to a consulting or other arrangement shall not result in termination of previously granted Awards.
13.2 PARTICIPATION. No Employee, consultant or other affiliated Person shall have the right to be selected to receive an Award under this Plan, or, having been so selected, to be selected to receive a future Award.
ARTICLE 14
CHANGE OF CONTROL
Upon the occurrence of a Change of Control, unless otherwise specifically prohibited under applicable laws, or by the rules and regulations of any governing governmental agencies or national securities exchanges:
16

(a) Any and all Options and SARs granted hereunder shall become immediately exercisable, and shall remain exercisable throughout their entire term;
(b) Any Period of Restriction and other restrictions imposed on Restricted Shares shall lapse; and
(c) Unless otherwise specified in a Participant's Award Agreement at time of grant, the maximum payout opportunities attainable under all outstanding Awards of Performance Units and Performance Shares shall be deemed to have been fully earned for the entire Performance Period(s) as of the effective date of the Change of Control. The vesting of all such Awards shall be accelerated as of the effective date of the Change of Control, and in full settlement of such Awards, there shall be paid out in cash to Participants within thirty (30) days following the effective date of the Change of Control the maximum of payout opportunities associated with such outstanding Awards.
ARTICLE 15
AMENDMENT, MODIFICATION AND TERMINATION
15.1 AMENDMENT, MODIFICATION AND TERMINATION. The Board may at any time and from time to time, alter, amend, suspend or terminate the Plan in whole or in part, subject to any requirement of stockholder approval imposed by applicable law, rule or regulation.
15.2 AWARDS PREVIOUSLY GRANTED. No termination, amendment, or modification of the Plan shall adversely affect in any material way any Award previously granted under the Plan, without the written consent of the Participant holding such Award.
ARTICLE 16
WITHHOLDING
16.1 TAX WITHHOLDING. The Company shall have the power and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy federal, state, and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising as a result of the Plan.
16.2 SHARE WITHHOLDING. With respect to withholding required upon the exercise of Options or SARs, upon the lapse of restrictions on Restricted Stock, or upon any other taxable event arising as a result of Awards granted hereunder, Participants may elect, subject to the approval of the Committee, to satisfy the withholding requirement, in whole or in part, by having the Company withhold Shares having a Fair Market Value on the date the tax is to be determined equal to the minimum statutory total tax which would be imposed on the transaction. All such elections shall be irrevocable, made in writing, signed by the Participant, and shall be subject to any restrictions or limitations that the Committee, in its sole discretion, deems appropriate.
17

ARTICLE 17
SUCCESSORS
All obligations of the Company under the Plan with respect to Awards granted hereunder shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect merger, consolidation, purchase of all or substantially all of the business and/or assets of the Company or otherwise.
ARTICLE 18
LEGAL CONSTRUCTION
18.1 GENDER AND NUMBER. Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine, the plural shall include the singular and the singular shall include the plural.
18.2 SEVERABILITY. In the event any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if as if the illegal or invalid provision had not been included.
18.3 REQUIREMENTS OF LAW. The granting of Awards and the issuance of Shares under the Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.
18.4 SECURITIES LAW COMPLIANCE. With respect to Insiders, transactions under this Plan are intended to comply with all applicable conditions of Rule 16b-3 or its successors under the Exchange Act. To the extent any provision of the Plan or action by the Committee fails to so comply, it shall be deemed null and void, to the extent permitted by law and deemed advisable by the Committee.
18.5 GOVERNING LAW. To the extent not pre-empted by federal law, the Plan, and all agreements hereunder, shall be construed in accordance with and governed by the laws of the State of Delaware.
* * *

EXHIBIT 10.23
LKQ CORPORATION
401(k) PLUS PLAN

LKQ CORPORATION
401(k) PLUS PLAN
TABLE OF CONTENTS

                                                                            PAGE
1. INTRODUCTION................................................................1
         1.1. Adoption and Name of Plan........................................1
         1.2. Purposes of Plan.................................................1
         1.3. "Top Hat" Pension Benefit Plan...................................1
         1.4. Plan Unfunded....................................................1
         1.5. Effective Date...................................................1
         1.6. Administration...................................................1

2. DEFINITIONS AND CONSTRUCTION................................................1
         2.1. Definitions......................................................1
                  2.1.1. Account...............................................2
                  2.1.2. Affiliate.............................................2
                  2.1.3. Base Salary...........................................2
                  2.1.4. Base Salary Deferral..................................2
                  2.1.5. Beneficiary...........................................2
                  2.1.6. Board.................................................2
                  2.1.7. Bonus Compensation....................................2
                  2.1.8. Bonus Deferral........................................2
                  2.1.9. Code..................................................2
                  2.1.10. Committee............................................3
                  2.1.11. Commissions..........................................3
                  2.1.12. Commission Deferral..................................3
                  2.1.13. Company..............................................3
                  2.1.14. Company Profit Sharing Contribution..................3
                  2.1.15. Deferral.............................................3
                  2.1.16. Deferral Period......................................3
                  2.1.17. Director.............................................3
                  2.1.18. Effective Date.......................................3
                  2.1.19. Employee.............................................4
                  2.1.20. ERISA................................................4
                  2.1.21. 401(k) Plan..........................................4
                  2.1.22. Matching Contribution................................4
                  2.1.23. Other Company Contribution...........................4
                  2.1.24. Participant..........................................4
                  2.1.25. Participation Agreement..............................4
                  2.1.26. Plan.................................................4
                  2.1.27. Plan Year............................................4
                  2.1.28. Retirement Date......................................5
                  2.1.29. Valuation Date.......................................5
                  2.1.30. Year of Service......................................5
         2.2. Number and Gender................................................5
         2.3. Headings.........................................................5

3. PARTICIPATION AND ELIGIBILITY...............................................5
         3.1. Participation....................................................5
         3.2. Commencement of Participation....................................6	

i

         3.3. Cessation of Active Participation................................6

4. DEFERRALS, MATCHING AND COMPANY CONTRIBUTIONS...............................6
         4.1. Deferrals by Participants........................................6
         4.2. Effective Date of Participation Agreement........................7
         4.3. Modification or Revocation of Election by Participant............7
         4.4. Matching Contributions...........................................7
         4.5. Company Profit Sharing Contribution..............................7
         4.6. Other Company Contributions......................................7
         4.7. Hardship Distribution Under 401(k) Plan..........................7

5. VESTING, DEFERRAL PERIODS AND INVESTMENT ELECTIONS..........................7
         5.1. Vesting..........................................................7
         5.2. Election of In-Service Distribution..............................8
         5.3. Investment Elections.............................................8

6. ACCOUNTS....................................................................9
         6.1. Establishment of Bookkeeping Accounts............................9
         6.2. Subaccounts......................................................9
         6.3. Hypothetical Nature of Accounts..................................9

7. PAYMENT OF ACCOUNT..........................................................9
         7.1. Timing of Distribution of Benefits...............................9
         7.2. Time of Distribution and Valuation..............................10
         7.3. Form of Payment or Payments.....................................10
         7.4. Accelerated Distribution........................................11
         7.5. Designation of Beneficiaries....................................11
         7.6. Amendments......................................................11
         7.7. Change in Marital Status........................................11
         7.8. No Beneficiary Designation......................................12
         7.9. Unclaimed Benefits..............................................12
         7.10. Hardship Withdrawals...........................................12
         7.11. Withholding....................................................13

8. ADMINISTRATION.............................................................13
         8.1. Committee.......................................................13
         8.2. General Powers of Administration................................13
         8.3. Indemnification of Committee....................................14

9. DETERMINATION OF BENEFITS, CLAIMS PROCEDURE AND ADMINISTRATION.............14
         9.1. Claims..........................................................14
         9.2. Claim Decision..................................................14
         9.3. Request for Review..............................................14
         9.4. Review of Decision..............................................15
         9.5. Discretionary Authority.........................................15

10. MISCELLANEOUS.............................................................15
         10.1. Plan Not a Contract of Employment..............................15
         10.2. Non-Assignability of Benefits..................................15
         10.3. Amendment and Termination......................................16
         10.4. Unsecured General Creditor Status Of Employee..................16
         10.5. Severability...................................................16
         10.6. Governing Laws.................................................16
         10.7. Binding Effect.................................................17	

ii

10.8. Entire Agreement...............................................17
10.9. No Guarantee of Tax Consequences...............................17
10.10. Sole Obliger..................................................17	

iii

LKQ CORPORATION
401(k) PLUS PLAN
1. INTRODUCTION
1.1. ADOPTION AND NAME OF PLAN.
The Company adopts the LKQ Corporation 401(k) Plus Plan.
1.2. PURPOSES OF PLAN.
The purposes of the Plan are to provide deferred compensation for a select group of management or highly compensated Employees of the Company and to permit them to maximize their elective contributions to the 401(k) Plan notwithstanding certain Code limitations.
1.3. "TOP HAT" PENSION BENEFIT PLAN.
The Plan is an "employee pension benefit plan" within the meaning of ERISA Section 3(2). The Plan is maintained, however, only for a select group of management or highly compensated employees and, therefore, is exempt from Parts 2, 3 and 4 of Title 1 of ERISA. The Plan is not intended to qualify under Code Section 401(a).
1.4. PLAN UNFUNDED.
The Plan is unfunded. All benefits will be paid from the general assets of the Company, which will continue to be subject to the claims of the Company's creditors. No amounts will be set aside for the benefit of Plan Participants or their Beneficiaries.
1.5. EFFECTIVE DATE.
The Plan is effective as of the Effective Date.
1.6. ADMINISTRATION.
The Plan shall be administered by the Committee.
2. DEFINITIONS AND CONSTRUCTION
2.1. DEFINITIONS.
For purposes of the Plan, the following words and phrases shall have the respective meanings set forth below, unless the context clearly requires a different meaning:
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2.1.1. ACCOUNT.
"Account" means the bookkeeping account maintained on behalf of each Participant pursuant to Section 6.1.
2.1.2. AFFILIATE.
"Affiliate" means any entity that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, LKQ Corporation.
2.1.3. BASE SALARY.
"Base Salary" means the base rate of cash compensation paid by the Company to or for the benefit of a Participant for services rendered.
2.1.4. BASE SALARY DEFERRAL.
"Base Salary Deferral" means the amount of a Participant's Base Salary which the Participant elects to have withheld on a pre-tax basis and credited to his Account pursuant to Section 4.1.
2.1.5. BENEFICIARY.
"Beneficiary" means the person or persons designated by the Participant in accordance with Section 7.5 or, in the absence of an effective designation, the person or entity described in Section 7.8.
2.1.6. BOARD.
"Board" means the board of directors of LKQ Corporation.
2.1.7. BONUS COMPENSATION.
"Bonus Compensation" means the amount awarded to a Participant under any bonus arrangement maintained by the Company.
2.1.8. BONUS DEFERRAL.
"Bonus Deferral" means the amount of a Participant's Bonus Compensation which the Participant elects to have withheld on a pre-tax basis and credited to his account pursuant to Section 4.1.
2.1.9. CODE.
"Code" means the Internal Revenue Code of 1986, as amended.
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2.1.10. COMMITTEE.
"Committee" means the administrative committee appointed by the Board to administer the Plan in accordance with Section 8.
2.1.11. COMMISSIONS.
"Commissions" means remuneration paid by the Company to a Participant based on sales of the Company's products and/or services made by the Participant or individuals under his supervision.
2.1.12. COMMISSION DEFERRAL.
"Commission Deferral" means the amount of a Participant's Commissions which the Participant elects to have withheld on a pre-tax basis and credited to his Account pursuant to Section 4.1.
2.1.13. COMPANY.
"Company" means LKQ Corporation and any Affiliate.
2.1.14. COMPANY PROFIT SHARING CONTRIBUTION.
"Company Profit Sharing Contribution" means the contribution made by the Company for a Participant which is based on the Participant's Base Salary, Bonus, and Commissions.
2.1.15. DEFERRAL.
"Deferral" means a Base Salary Deferral, Bonus Deferral and/or a Commission Deferral.
2.1.16. DEFERRAL PERIOD.
"Deferral Period" means the period of time for which a Participant elects to defer receipt of the Deferrals credited to such Participant's Account as specified in Section
5.2. Deferral Periods shall be measured on the basis of Plan Years, beginning with the Plan Year that commences immediately following the Plan Year for which the applicable Deferrals are credited to the Participant's Account.
2.1.17. DIRECTOR.
"Director" means a director of the Company.
2.1.18. EFFECTIVE DATE.
"Effective Date" means August 1, 1999.
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2.1.19. EMPLOYEE.
"Employee" means any common-law employee of the Company.
2.1.20. ERISA.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.
2.1.21. 401(k) PLAN.
"401(k) Plan" means the LKQ Corporation Employees' Retirement Plan, as amended from time to time.
2.1.22. MATCHING CONTRIBUTION.
"Matching Contribution" means the contribution made by the Company for a Participant based on a Deferral made by the Participant.
2.1.23. OTHER COMPANY CONTRIBUTION.
"Other Company Contribution" means the contribution made by the Company for a Participant which is based on such criteria as the Company shall determine.
2.1.24. PARTICIPANT.
"Participant" means each Employee who has been selected for participation in the Plan and who has become a Participant pursuant to Section 3.
2.1.25. PARTICIPATION AGREEMENT.
"Participation Agreement" means the written agreement pursuant to which the Participant elects the amount of his Base Salary, Bonus Compensation, and/or Commissions to be deferred pursuant to the Plan, the Deferral Period, the deemed investment of amounts credited to his Account, the amount of Deferrals which are distributed pursuant to Section 7.1(a) to be contributed to the 401(k) Plan, and such other matters as the Committee shall determine from time to time.
2.1.26. PLAN.
"Plan" means the LKQ Corporation 401(k) Plus Plan, as amended from time to time.
2.1.27. PLAN YEAR.
"Plan Year" means the twelve-consecutive month period commencing January 1 of each year ending on December 31. Notwithstanding the foregoing, the first Plan Year shall begin on the Effective Date and end on December 31, 1999.
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2.1.28. RETIREMENT DATE.
"Retirement Date" means the date a Participant
(a) voluntarily terminates his employment with the Company
(i) on or after he has attained at least 65 years of age,
(ii) on or after he has attained 55 years of age and completed at least 10 Years of Service, or
(iii) with the Committee's consent; or
(b) qualifies for disability under the Company's group long-term disability plan.
2.1.29. VALUATION DATE.
"Valuation Date" means the last business day of each calendar month and each special valuation date designated by the Committee.
2.1.30. YEAR OF SERVICE.
"Year of Service" has the same meaning as in the
401(k) Plan for purposes of vesting.
2.2. NUMBER AND GENDER.
Wherever appropriate, words used in the singular shall be considered to include the plural and words used in the plural shall be considered to include the singular. The masculine gender, where appearing in the Plan, shall be deemed to include the feminine gender.
2.3. HEADINGS.
The headings are included solely for convenience, and if there is any conflict between any heading and the text of the Plan, the Plan text shall control.
3. PARTICIPATION AND ELIGIBILITY
3.1. PARTICIPATION.
Participants in the Plan are those Employees who are (a) subject to the income tax laws of the United States, (b) members of a select group of highly compensated or management Employees, and (c) selected by the Committee, in its sole discretion, as Participants. The Committee shall notify each Participant of his selection as a Participant. Subject to the provisions of Section 3.3 a Participant shall remain eligible to continue
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participation in the Plan for each Plan Year following his initial year of selection to participate in the Plan.
3.2. COMMENCEMENT OF PARTICIPATION.
Except as provided in the following sentences, an Employee shall become a Participant effective as of the first day of the Plan Year following the date on which his Participation Agreement becomes effective. A newly eligible Employee (because of hire or promotion) who completes a Participation Agreement within thirty (30) days of the date on which his employment commences or the effective date of his promotion, as the case may be, shall become a Participant as of the date on which his Participation Agreement becomes effective under
Section 4.2.
3.3. CESSATION OF ACTIVE PARTICIPATION
Notwithstanding any provision of the Plan to the contrary, an individual who has become a Participant in the Plan shall cease to be a Participant effective as of any date designated by the Committee. In the event of such cessation, the last sentence of Section 4.1 shall apply as if such cessation had been a termination of employment. Any such Committee action shall be communicated to such Participant prior to the effective date of such action. Such cessation shall have no effect upon amounts then credited to his Account and shall not preclude the individual from subsequently being selected to be a Participant.
4. DEFERRALS, MATCHING AND COMPANY CONTRIBUTIONS
4.1. DEFERRALS BY PARTICIPANTS.
Before the first day of each Plan Year, a Participant may file with the Committee a Participation Agreement pursuant to which such Participant elects to make Deferrals. The minimum Deferral for a Plan Year is Two Thousand Dollars ($2000.00). The minimum Deferral shall be prorated for any Plan Year in which an individual is not a Participant for twelve (12) months based on full months of participation. Deferrals must be in whole percentages and cannot exceed
(a) fifty percent (50%) of Base Salary,
(b) one hundred percent (100%) of Commissions, and
(c) one hundred percent (100%) of Bonus Compensation.
In addition, a Participant's maximum aggregate Deferrals for a Plan Year shall not exceed such amount as the Committee shall determine from time to time. Any Participant election shall be subject to rules prescribed by the Committee. Deferrals will be credited to the Account of each Participant at the time they would have been paid to the Participant in cash but for the election to defer. If a Participant's employment has terminated when a Deferral would otherwise be credited to his Account, the amount which would have been deferred and credited will be paid to him in cash.
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4.2. EFFECTIVE DATE OF PARTICIPATION AGREEMENT.
A Participant's Participation Agreement shall become effective on the first day of the Plan Year to which it relates. The Participation Agreement of Employees who are first eligible during a Plan Year shall become effective as of the first day of the month following completion of a Participation Agreement provided the Participation Agreement is completed within thirty (30) days of the date the Employee first becomes eligible. Participation Agreements shall relate only to compensation earned after such agreement is completed and executed. If a Participant fails to complete a Participation Agreement before the first day of the Plan Year in which Participant shall earn the compensation to which the Participation Agreement relates, the Participant shall be deemed to have elected not to make any Deferrals for such Plan Year.
4.3. MODIFICATION OR REVOCATION OF ELECTION BY PARTICIPANT.
A Participant may change his Deferrals at any time during a Plan Year on a prospective basis if the Committee determines that he has suffered a severe, sudden and unforeseeable hardship as is more fully described in Section 7.10. Under no circumstances may a Participant's Participation Agreement be made, modified or revoked retroactively.
4.4. MATCHING CONTRIBUTIONS.
For each Plan Year, the Account of each Participant shall be credited with a Matching Contribution equal to such amount, if any, as the Company shall determine.
4.5. COMPANY PROFIT SHARING CONTRIBUTION.
For each Plan Year, the Account of each Participant shall be credited with a Company Contribution equal to such amount, if any, as the Company shall determine.
4.6. OTHER COMPANY CONTRIBUTIONS.
For each Plan Year, the Account of each Participant shall be credited with an Other Company Contribution equal to such amount, if any, as the Company shall determine.
4.7. HARDSHIP DISTRIBUTION UNDER 401(k) PLAN.
If required by the terms of the 401(k) Plan, a Participant who receives a hardship distribution under the 401(k) Plan shall not be eligible to make Deferrals for a one (1) year period after receipt of the hardship distribution.
5. VESTING, DEFERRAL PERIODS AND INVESTMENT ELECTIONS
5.1. VESTING.
A Participant shall be 100% vested at all times in the amount credited to his Account which is attributable to his Deferrals. The amount credited to his Account
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attributable to Matching Contributions and Company Profit Sharing Contributions shall vest in accordance with the vesting provisions of the 401(k) Plan applicable to the vesting of matching and profit sharing contributions, respectively. The amount credited to a Participant's Account attributable to Other Company Contributions for each Plan Year shall vest in accordance with the schedule determined by the Committee from time to time. Such determination for a Plan Year shall be made no later than the time the Other Company Contribution, if any, for the Plan Year is determined. In addition, to the extent not already vested, amounts credited to a Participant's Account attributable to Matching Contributions, Company Profit Sharing Contributions, and Other Company Contributions shall be fully vested upon a Participant's Retirement Date or his death while employed. All provisions of the Plan relating to the distribution of a Participant's Account shall mean only the vested portion of such Account. Since the Plan is unfunded, the portion of a Participant's Account which is not vested and therefore not distributed with the vested portion of his Account shall remain property of the Company and not be allocated to Accounts of other Participants or otherwise inure to their benefit.
5.2. ELECTION OF IN-SERVICE DISTRIBUTION.
If a Participant desires an in-service distribution of all or a percentage of his Deferrals for a Plan Year and earnings on such Deferrals, he must so elect on his Participation Agreement. In the case of any such election, the Deferral Period must be for at least five (5) years. If the Participant elects an in-service distribution and is entitled to such a distribution pursuant to such election prior to any event listed in Section 7.1(b), distribution pursuant to such election shall not include Matching Contributions, Company Profit Sharing Contributions, Other Company Contributions, and earnings on such contributions and must be in a lump sum.
5.3. INVESTMENT ELECTIONS.
Amounts credited to a Participant's Account shall be credited and charged with gains and losses, as the case may be, based on hypothetical investments elected by the Participant. A Participant may elect different investment allocations for new contributions and existing Account balances. Only whole percentages may be elected, the minimum percentage for any allocation is ten percent (10%), and the total elections must allocate one hundred percent (100%) of all new contributions and one hundred percent (100%) of all existing Account balances. Investment elections may be changed once per calendar quarter, effective as of the first day of such quarter, by written direction given at least seven (7) days before the start of such quarter. The hypothetical investment alternatives and the procedures relating to the election of such investments, other than those set forth in this Section 5.3, shall be determined by the Committee from time to time. A Participant's Account shall be adjusted as of each Valuation Date to reflect investment gains and losses.
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6. ACCOUNTS
6.1. ESTABLISHMENT OF BOOKKEEPING ACCOUNTS.
A separate bookkeeping Account shall be maintained for each Participant. Such account shall be credited with the Deferrals, Matching Contributions, Company Profit Sharing Contributions, and Other Company Contributions, credited (or charged, as the case may be) with the hypothetical investment results determined pursuant to Section 5.3, and charged with distributions made to or with respect to a Participant.
6.2. SUBACCOUNTS.
Within each Participant's bookkeeping Account, separate subaccounts shall be maintained to the extent necessary for the administration of the Plan.
6.3. HYPOTHETICAL NATURE OF ACCOUNTS.
The Account established under this Section 6 shall be hypothetical in nature and shall be maintained for bookkeeping purposes only, so that Deferrals, Matching Contributions, and Company Profit Sharing Contributions, and Other Company Contributions can be credited to the Participant and so that gains and losses on such amounts so credited can be credited (or charged, as the case may be). Neither the Plan nor any of the Accounts (or subaccounts) shall hold any actual funds or assets. The right of any person to receive one or more payments under the Plan shall be an unsecured claim against the general assets of the Company. Any liability of the Company to any Participant, former Participant, or Beneficiary with respect to a right to payment shall be based solely upon contractual obligations created by the Plan. Neither the Company, the Board, nor any other person shall be deemed to be a trustee of any amounts to be paid under the Plan. Nothing contained in the Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind, or a fiduciary relationship, between the Company and a Participant, former Participant, Beneficiary, or any other person.
7. PAYMENT OF ACCOUNT
7.1. TIMING OF DISTRIBUTION OF BENEFITS.
(a) DISTRIBUTION OF CONTRIBUTION TO 401(k) PLAN. As soon as practicable, but in no event later than March 15 of the Plan Year following the Plan Year for which the Participant executed the Participation Agreement, the lesser of (i) the allowable before-tax contribution which may be made on behalf of the Participant to the
401(k) Plan for the Plan Year for which the Participant executed the Participation Agreement, and (ii) the sum of the Base Salary Deferrals, Bonus Deferrals and Commission Deferrals for the Plan Year for which the Participant executed such Participation Agreement, shall be paid directly to Participant as compensation earned in the Plan Year for which the Participant executed the Participation Agreement, unless the Participant previously elected (in both the Participation Agreement and his 401(k) Plan elections) to have such amount contributed to the
401(k) Plan as an elective before-tax contribution. If the Participant elected to have such amount contributed to the 401(k)
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Plan as an elective before-tax contribution, such amount together with an amount equal to the applicable Matching Contributions (but not in excess of the matching contributions that would have been made on such amounts under the 401(k) Plan) shall be distributed directly to the Participant's Account in the 401(k) Plan. and the appropriate subaccounts of Participant's Account shall be debited accordingly. Notwithstanding the preceding, the Plan shall not make distributions to the Participant or to the 401(k) Plan in excess of the Participant's Account balance. Distributions pursuant to this Section 7.1(a) may be made in one or more installments.
(b) DISTRIBUTION AFTER DEFERRAL PERIOD OR TERMINATION OF EMPLOYMENT. Distribution of that portion of a Participant's Account which is not distributed under Section 7.1(a) and for which an in-service distribution has been elected pursuant to Section 5.2 shall be made at the time specified in such election unless the Participant's employment terminates prior to such time, in which event the remaining provisions of this Section 7.1(b), shall apply. Except as provided below, a Participant's entire Account shall be distributed to him (or his Beneficiary in the event of his death) following the earliest to occur of the following:
(i) the Participant's death;
(ii) the Participant's Retirement Date; or
(iii) the Participant's other termination of employment.
Notwithstanding the foregoing, if a Participant's Retirement Date is as defined in Section 2.1.28(b), if requested by the Participant and permitted by the Committee, distribution may be deferred up until the earlier of the dates specified in Section 2.1.28(a)(i) or Section 2.1.28(a)(ii) or the Participant's death.
7.2. TIME OF DISTRIBUTION AND VALUATION.
Upon a distributable event described in Section 7.1(b), the balance of a Participant's Account shall be determined as of the Valuation Date immediately following such event. Distribution will be made or begin to be made as soon as practical after such valuation or 60 days following the event, whichever shall last occur.
7.3. FORM OF PAYMENT OR PAYMENTS.
If the value of the Participant's Account as of the Valuation Date described in Section 7.2 is at least Five Thousand Dollars ($5,000.00), benefits which become payable after the Participant's Retirement Date or his death shall be paid in the form elected by the Participant. The form elected shall apply to the entire Account. The election may be amended, provided that the amended election does not increase the duration of payments in the previous election and the election is made no later than six (6) months prior to his Retirement Date or death. The forms of distribution are:
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(a) A lump sum amount; or
(b) Substantially equal monthly installments over a period of sixty (60), one hundred twenty (120), or one hundred eighty
(180) months or substantially equal annual installments over a period of five (5), ten (10), or fifteen (15) years. Gains and losses on the unpaid balance shall continue to be credited and charged to subaccounts in accordance with the provisions of Section 5.3. In all cases other than those described in the first sentence of this Section 7.3, the form of benefit shall be a lump sum. If a former Participant is receiving an installment form of distribution and dies prior to the distribution of his entire Account, distributions will be continued to his Beneficiary.
7.4. ACCELERATED DISTRIBUTION.
Notwithstanding any other provision of the Plan, a Participant shall be entitled to receive, upon written request to the Committee, a lump sum distribution of his Account balance, valued as of the end of the month, immediately prior to the month in which such request is made subject to a penalty of ten percent (10%) of such balance which shall be forfeited. A Participant who receives a distribution under this
Section 7.4 shall not be eligible to make Deferrals until the first day of the second Plan Year which begins after such distribution. The amount payable under this section shall be paid in a lump sum as soon as practical following the receipt of the Participant's written request by the Committee and the valuation of his Account.
7.5. DESIGNATION OF BENEFICIARIES.
Each Participant shall have the right, at any time, to designate one (1) or more persons or an entity as Beneficiary (both primary as well as secondary) to whom benefits under this Plan shall be paid in the event of a Participant's death prior to complete distribution of the Participant's Account. Each Beneficiary designation shall be in a written form prescribed by the Committee and will be effective only when filed with the Committee during the Participant's lifetime. Designation by a married Participant who is a resident of a community property state of a Beneficiary other than the Participant's spouse shall not be effective unless the spouse executes a written consent that acknowledges the effect of the designation and is witnessed by a notary public, or the consent cannot be obtained because the spouse cannot be located.
7.6. AMENDMENTS.
Except as provided below, any nonspousal designation of Beneficiary may be changed by a Participant without the consent of such Beneficiary by the filing of a new designation with the Committee. The filing of a new designation shall cancel all designations previously filed.
7.7. CHANGE IN MARITAL STATUS.
If the marital status of a Participant residing in a community property state changes after the Participant has designated a Beneficiary, the following shall apply:
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(a) If the Participant is married at death but was unmarried when the designation was made, the designation shall be void unless the spouse has consented to it in the manner prescribed above.
(b) If the Participant is unmarried at death but was married when the designation was made:
(i) The designation shall be void if the spouse was named as Beneficiary.
(ii) The designation shall remain valid if a nonspouse Beneficiary was named.
(c) If the Participant was married when the designation was made and is married to a different spouse at death, the designation shall be void unless the new spouse has consented to it in the manner prescribed above
7.8. NO BENEFICIARY DESIGNATION.
If any Participant fails to designate a Beneficiary in the manner provided above, or if the Beneficiary designated by a deceased Participant dies before the Participant or before complete distribution of the Participant's benefits, the Participant's Beneficiary shall be the person in the first of the following classes in which there is a survivor:
(a) The Participant's surviving spouse;
(b) The Participant's children in equal shares, except that if any of the children predeceases the Participant but leaves issue surviving, then such issue shall take by right of representation the share the parent would have taken if living;
(c) The Participant's estate.
7.9. UNCLAIMED BENEFITS.
In the case of a benefit payable on behalf of such Participant, if the Committee is unable to locate the Participant or beneficiary to whom such benefit is payable, such benefit may be forfeited to the Company, upon the Committee's determination. Notwithstanding the foregoing, if subsequent to any such forfeiture the Participant or beneficiary to whom such benefit is payable makes a valid claim for such benefit, such forfeited benefit shall be paid by the Company or restored to the Plan by the Company.
7.10. HARDSHIP WITHDRAWALS.
A Participant may apply in writing to the Committee for, and the Committee may permit, a hardship withdrawal of all (valued as of the last day of the month prior to the month in which the application is made) or any part of a Participant's Account if the Committee, in its sole discretion, determines that the Participant has incurred a severe
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financial hardship resulting from a sudden and unexpected illness or accident of the Participant or of a dependent (as defined in section 152(a) of the Code) of the Participant, loss of the Participant's property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant, as determined by the Committee, in its sole and absolute discretion. The amount that may be withdrawn shall be limited to the amount reasonably necessary to relieve the hardship or financial emergency upon which the request is based, plus the federal and state taxes due on the withdrawal, as determined by the Committee. The Committee may require a Participant who requests a hardship withdrawal to submit such evidence as the Committee, in its sole discretion, deems necessary or appropriate to substantiate the circumstances upon which the request is based. A Participant who receives a distribution under this Section 7.10 shall not be eligible to make Deferrals until the first day of the second Plan Year which begins after such distribution.
7.11. WITHHOLDING.
All Deferrals and distributions shall be subject to legally required income and employment tax withholding. Such taxes shall include, but not necessarily be limited to, Social Security taxes on Deferrals and Company Contributions at the time they are vested and income taxes on distributions.
8. ADMINISTRATION
8.1. COMMITTEE.
The Plan shall be administered by a Committee, which shall be appointed by and serve at the pleasure of the Board. The Committee shall be responsible for the general operation and administration of the Plan and for carrying out the provisions thereof. The Committee may delegate to others certain aspects of the management and operational responsibilities of the Plan including the employment of advisors and the delegation of ministerial duties to qualified individuals, provided that such delegation is in writing. No member of the Committee who is a Participant shall participate in any matter relating to his status as a Participant or his rights or entitlement to benefits as a Participant.
8.2. GENERAL POWERS OF ADMINISTRATION.
The Committee shall have all powers necessary or appropriate to enable it to carry out its administrative duties. Not in limitation, but in application of the foregoing, the Committee shall have discretionary authority to construe and interpret the Plan and determine all questions that may arise hereunder as to the status and rights of Employees, Participants, and Beneficiaries. The Committee may exercise the powers hereby granted in its sole and absolute discretion. The Committee may promulgate such regulations as it deems appropriate for the operation and administration of the Plan. No member of the Committee shall be personally liable for any actions taken by the Committee unless the member's action involves gross negligence or willful misconduct.
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8.3. INDEMNIFICATION OF COMMITTEE.
The Company shall indemnify the members of the Committee against any and all claims, losses, damages, expenses, including attorney's fees, incurred by them, and any liability, including any amounts paid in settlement with their approval, arising from their action or failure to act, except when the same is judicially determined to be attributable to their gross negligence or willful misconduct.
9. DETERMINATION OF BENEFITS, CLAIMS PROCEDURE AND ADMINISTRATION
9.1. CLAIMS.
A person who believes that he is being denied a benefit to which he is entitled under the Plan (the "Claimant") may file a written request for such benefit with the Committee, setting forth his claim. The request must be addressed to the Committee at the Company at its then principal place of business.
9.2. CLAIM DECISION
Upon receipt of a claim, the Committee shall advise the Claimant that a reply will be forthcoming within ninety (90) days and shall, in fact, deliver such reply within such period. The Committee may, however, extend the reply period for an additional ninety (90) days for reasonable cause.
If the claim is denied in whole or in part, the Committee shall adopt a written opinion, using language calculated to be understood by the Claimant, setting forth:
(a) The specific reason or reasons for such denial;
(b) The specific reference to pertinent provisions of the Plan on which such denial is based;
(c) A description of any additional material or information necessary for the Claimant to perfect his claim and an explanation why such material or such information is necessary;
(d) Appropriate information as to the steps to be taken if the Claimant wishes to submit the claim for review; and
(e) The time limits for requesting a review under
Section 9.3 and for review under Section 9.4 hereof.
9.3. REQUEST FOR REVIEW.
Within sixty (60) days after the receipt by the Claimant of the written opinion described above, the Claimant may request in writing that the Secretary of the Company
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(the "Secretary") review the determination of the Committee. Such request must be addressed to the Secretary of the Company, at its then principal place of business. The Claimant or his duly authorized representative may, but need not, review the pertinent documents and submit issues and comments in writing for consideration by the Secretary. If the Claimant does not request a review of the Committee's determination by the Secretary of the Company within such sixty (60) day period, he shall be barred and estopped from challenging the Committee's determination.
9.4. REVIEW OF DECISION.
Within sixty (60) days after the Secretary's receipt of a request for review, he will review the Committee's determination. After considering all materials presented by the Claimant, the Secretary will render a written opinion, written in a manner calculated to be understood by the Claimant, setting forth the specific reasons for the decision and containing specific references to the pertinent provisions of the Plan on which the decision is based. If special circumstances require that the sixty (60) day time period be extended, the Secretary will so notify the Claimant and will render the decision as soon as possible, but no later than one hundred twenty (120) days after receipt of the request for review.
9.5. DISCRETIONARY AUTHORITY.
The Committee and Secretary shall both have discretionary authority to determine a Claimant's entitlement to benefits upon his claim or his request for review of a denied claim, respectively.
10. MISCELLANEOUS
10.1. PLAN NOT A CONTRACT OF EMPLOYMENT.
The adoption and maintenance of the Plan shall not be or be deemed to be a contract between the Company and any person or to be consideration for the employment of any person. Nothing herein contained shall give or be deemed to give any person the right to be retained in the employ of the Company or to restrict the right of the Company to discharge any person at any time; nor shall the Plan give or be deemed to give the Company the right to require any person to remain in the employ of the Company or to restrict any person's right to terminate his employment at any time.
10.2. NON-ASSIGNABILITY OF BENEFITS.
No Participant, Beneficiary or distributee of benefits under the Plan shall have any power or right to transfer, assign, anticipate, hypothecate or otherwise encumber any part or all of the amounts payable hereunder, which are expressly declared to be unassignable and non-transferable. Any such attempted assignment or transfer shall be void. No amount payable hereunder shall, prior to actual payment thereof, be subject to seizure by any creditor of any such Participant, Beneficiary or other distributee for the payment of any debt, judgment, or other obligation, by a proceeding at law or in equity, nor transferable by
15

operation of law in the event of the bankruptcy, insolvency or death of such Participant, Beneficiary or other distributee hereunder.
10.3. AMENDMENT AND TERMINATION.
The Board may from time to time, in its discretion, amend, in whole or in part, any or all of the provisions of the Plan; provided, however, that no amendment may be made which would impair the rights of a Participant with respect to amounts already allocated to his Account. The Board may terminate the Plan at any time. In the event that the Plan is terminated, the balance in a Participant's Account shall be paid to such Participant or his Beneficiary in a lump sum or in equal monthly installments as the Committee determines.
10.4. UNSECURED GENERAL CREDITOR STATUS OF EMPLOYEE.
The payments to Participant, his Beneficiary or any other distributee hereunder shall be made from assets which shall continue, for all purposes, to be a part of the general, unrestricted assets of the Company; no person shall have nor acquire any interest in any such assets by virtue of the provisions of this Agreement. The Company's obligation hereunder shall be an unfunded and unsecured promise to pay money in the future. To the extent that the Participant, a Beneficiary, or other distributee acquires a right to receive payments from the Company under the provisions hereof, such right shall be no greater than the right of any unsecured general creditor of the Company; no such person shall have nor require any legal or equitable right, interest or claim in or to any property or assets of the Company. In the event that, in its discretion, the Company purchases an insurance policy or policies insuring the life of the Participant (or any other property) to allow the Company to recover the cost of providing the benefits, in whole, or in part, hereunder, neither the Participant, his Beneficiary or other distributee shall have nor acquire any rights whatsoever therein or in the proceeds therefrom. The Company shall be the sole owner and beneficiary of any such policy or policies and, as such, shall possess and may exercise all incidents of ownership therein. No such policy, policies or other property shall be held in any trust for a Participant, Beneficiary or other distributee or held as collateral security for any obligation of the Company hereunder.
10.5. SEVERABILITY.
If any provision of this Plan shall be held illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining provisions hereof; instead, each provision shall be fully severable and the Plan shall be construed and enforced as if said illegal or invalid provision had never been included herein.
10.6. GOVERNING LAWS.
All provisions of the Plan shall be construed in accordance with the laws of Illinois except to the extent preempted by federal law.
16

10.7. BINDING EFFECT.
This Plan shall be binding on each Participant and his heirs and legal representatives and on the Company and its successors and assigns.
10.8. ENTIRE AGREEMENT.
This document and any amendments contain all the terms and provisions of the Plan and shall constitute the entire Plan, any other alleged terms or provisions being of no effect.
10.9. NO GUARANTEE OF TAX CONSEQUENCES.
While the Company has established, and will maintain the Plan, the Company makes no representation, warranty, commitment, or guaranty concerning the income, employment, or other tax consequences of participation in the Plan under federal, state, or local law.
10.10. SOLE OBLIGER.
Each Company shall be the sole obliger with respect to Plan benefits that are owed to a Participant which arise by virtue of contributions made by such Company or the Participant's employment by such Company.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed on the 1st day of August, 1999.
LKQ CORPORATION

By: /s/ Daniel J. Hemmer
   -----------------------------
Title: Assistant Secretary
      --------------------------	

17

EXHIBIT 10.24
AMENDMENT TO THE
LKQ CORPORATION 401(K) PLUS PLAN
WHEREAS, LKQ Corporation ("Company") previously adopted the LKQ Corporation 401(k) Plus Plan ("Plan"); and
WHEREAS, the Company reserved the right to amend the Plan in Section 10.3 thereof; and
WHEREAS, effective January 1, 2002, the Company desires to amend the Plan to revise the claims procedure therein;
NOW, THEREFORE, effective January 1, 2002, Section 9 of the Plan is deleted in its entirety and replaced to read as follows:
9. DETERMINATION OF BENEFITS, CLAIMS PROCEDURE AND ADMINISTRATION
9.1 CLAIMS.
A Participant, beneficiary or other person who believes that he or she is being denied a benefit to which he or she is entitled (hereinafter referred to as "Claimant"), or his or her duly authorized representative, may file a written request for such benefit with the Committee setting forth his or her claim. The request must be addressed to the Committee at the Company at its then principal place of business.
9.2 CLAIM DECISION.
Upon receipt of a claim, the Committee shall advise the Claimant that a reply will be forthcoming within a reasonable period of time, but ordinarily not later than ninety days, and shall, in fact, deliver such reply within such period. However, the Committee may extend the reply period for an additional ninety days for reasonable cause. If the reply period will be extended, the Committee shall advise the Claimant in writing during the initial 90-day period indicating the special circumstances requiring an extension and the date by which the Committee expects to render the benefit determination.
If the claim is denied in whole or in part, the Committee will render a written opinion, using language calculated to be understood by the Claimant, setting forth:
(a) the specific reason or reasons for the denial;
(b) the specific references to pertinent Plan provisions on which the denial is based;
(c) a description of any additional material or information necessary for the Claimant to perfect the claim and an explanation as to why such material or such information is necessary;

(d) appropriate information as to the steps to be taken if the Claimant wishes to submit the claim for review, including a statement of the Claimant's right to bring a civil action under Section 502(a) of ERISA following an adverse benefit determination on review; and
(e) the time limits for requesting a review of the denial under
Section 9.3 and for the actual review of the denial under Section 9.4.
9.3 REQUEST FOR REVIEW.
Within sixty days after the receipt by the Claimant of the written opinion described above, the Claimant may request in writing that the Secretary of the Company ("Secretary") review the Committee's prior determination. Such request must be addressed to the Secretary at the Company at its then principal place of business. The Claimant or his or her duly authorized representative may submit written comments, documents, records or other information relating to the denied claim, which such information shall be considered in the review under this Section without regard to whether such information was submitted or considered in the initial benefit determination.
The Claimant or his or her duly authorized representative shall be provided, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information which (i) was relied upon by the Committee in making its initial claims decision, (ii) was submitted, considered or generated in the course of the Committee making its initial claims decision, without regard to whether such instrument was actually relied upon by the Committee in making its decision or (iii) demonstrates compliance by the Committee with its administrative processes and safeguards designed to ensure and to verify that benefit claims determinations are made in accordance with governing Plan documents and that, where appropriate, the Plan provisions have been applied consistently with respect to similarly situated claimants. If the Claimant does not request a review of the Committee's determination within such sixty-day period, he or she shall be barred and estopped from challenging such determination.
9.4 REVIEW OF DECISION.
Within a reasonable period of time, ordinarily not later than sixty days, after the Secretary's receipt of a request for review, it will review the Committee's prior determination. If special circumstances require that the sixty-day time period be extended, the Secretary will so notify the Claimant within the initial 60-day period indicating the special circumstances requiring an extension and the date by which the Secretary expects to render its decision on review, which shall be as soon as possible but not later than 120 days after receipt of the request for review. In the event that the Secretary extends the determination period on review due to a Claimant's failure to submit information necessary to decide a claim, the period for making the benefit determination on review shall not take into account the period beginning on the date on

which notification of extension is sent to the Claimant and ending on the date on which the Claimant responds to the request for additional information.
Benefits under the Plan will be paid only if the Secretary decides in its discretion that the Claimant is entitled to such benefits. The decision of the Secretary shall be final and non-reviewable, unless found to be arbitrary and capricious by a court of competent review. Such decision will be binding upon the Employer and the Claimant.
If the Secretary makes an adverse benefit determination on review, the Secretary will render a written opinion, using language calculated to be understood by the Claimant, setting forth:
(a) the specific reason or reasons for the denial;
(b) the specific references to pertinent Plan provisions on which the denial is based;
(c) a statement that the Claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information which (i) was relied upon by the Secretary in making its decision, (ii) was submitted, considered or generated in the course of the Secretary making its decision, without regard to whether such instrument was actually relied upon by the Secretary in making its decision or (iii) demonstrates compliance by the Secretary with its administrative processes and safeguards designed to ensure and to verify that benefit claims determinations are made in accordance with governing Plan documents, and that, where appropriate, the Plan provisions have been applied consistently with respect to similarly situated claimants; and
(d) a statement of the Claimant's right to bring a civil action under Section 502(a) of ERISA following the adverse benefit determination on such review.
9.5 DISCRETIONARY AUTHORITY.
The Committee and Secretary shall both have discretionary authority to determine a Claimant's entitlement to benefits upon his claim or his request for review of a denied claim, respectively.
IN WITNESS WHEREOF, the Company has caused this Amendment to be executed by a duly authorized officer this 4th day of November, 2002.
LKQ CORPORATION

By: /s/ Victor M. Casini
   -----------------------------
Title: Vice President and
       General Counsel
      --------------------------	

EXHIBIT 10.25
TRUST UNDER LKQ CORPORATION 401(k) PLUS PLAN
THIS AGREEMENT made as of April 7, 2000, by and among LKQ Corporation, a corporation organized under the laws of the State of Delaware or any successor corporation (the "Company") and LaSalle Bank National Association, a national banking association (the "Trustee").
WITNESSETH:
WHEREAS, the Company has adopted the LKQ Corporation 401(k) Plus Plan (the "Plan").
WHEREAS, the Company has incurred or expects to incur liability under the terms of such Plan with respect to the individuals participating in such Plan (the "Participants"); and
WHEREAS, Company wishes to establish a trust (hereinafter called "Trust") and to contribute to the Trust assets that shall be held therein, subject to the claims of the Company's creditors in the event of the Company's Insolvency, as herein defined, until paid to Participants and their beneficiaries in such manner and at such times as specified in the Plan;
WHEREAS, it is the intention of the parties that this Trust shall constitute an unfunded arrangement and shall not affect the status of the Plan as an unfunded plan maintained for the purpose of providing deferred compensation for a select group of management or highly compensated employees for purposes of Title I of the Employee Retirement Income Security Act of 1974, and shall not be construed to provide income for federal income tax purposes to a Participant for his or her beneficiary prior to the actual payment of benefits under the Plan; and
WHEREAS, it is the intention of the Company to make contributions to the Trust to provide itself with a source of funds to assist it in the meeting of its liabilities under the Plan;
NOW, THEREFORE, the parties do hereby establish the Trust and agree that the Trust shall be comprised, held and disposed of as follows:
ARTICLE I: ESTABLISHMENT OF TRUST
1.1 The Trustee shall receive any contributions paid to it in cash or in other property acceptable to it, which shall from time to time be transferred to the Trustee by the Company. All contributions so received together with the income therefrom and any other increment thereon (the "Trust Fund") shall be held, managed and administered by the Trustee pursuant to the terms of this Agreement. The amount of contributions by the Company to the Trust Fund shall be determined in accordance with the provisions of Section 1.5 hereof, and the Trustee shall have no duty or responsibility with respect thereto.
1.2 The Trust hereby established shall be irrevocable.

1.3 The Trust is intended to be a grantor trust, of which the Company is the grantor, within the meaning of subpart E, part I, subchapter J, chapter 1, subtitle A of the Internal Revenue Code of 1986, as amended, and shall be construed accordingly.
1.4 The principal of the Trust, and any earnings thereon shall be held separate and apart from other funds of the Company and shall be used exclusively for the uses and purposes of Participants and general creditors as herein set forth. Participants and their beneficiaries shall have no preferred claim on, or any beneficial ownership interest in, any assets of the Trust. Any rights created under the Plan and this Trust Agreement shall be mere unsecured contractual rights of Participants and their beneficiaries against the Company. Any assets held by the Trust will be subject to the claims of the Company's general creditors under federal and state law in the event of Insolvency, as defined in Section 4.1 herein.
1.5 The Company shall pay to the Trustee such amount as may be considered appropriate to provide for the payment of benefits under the Plan and the expenses of administration of the Trust.
1.6 A "Change of Control" shall mean any transaction or event designated as such by the Plan committee. Upon a Change of Control, the Company shall, as soon as possible, but in no event later than fifteen (15) calendar days following the Change in Control, make an irrevocable contribution to the Trust in an amount that is sufficient to pay each Plan participant or beneficiary the benefits to which the Plan Participants or their beneficiaries would be entitled pursuant to the terms of the Plan as of the date on which the Change in Control occurred. The Plan committee and the Plan participants, but not the Trustee, shall have the right to compel such contribution.
ARTICLE II: PAYMENTS TO PLAN PARTICIPANTS
AND THEIR BENEFICIARIES
2.1 The Trustee shall from time to time, upon the direction of the Company, make distributions or payments out of the Trust Fund, to such persons, in such manner and in such amounts as the Company shall deem necessary to satisfy its obligation to provide benefits under the Plan. The Trustee shall not be liable for the proper application of any part of the Trust Fund and shall not be liable for any distribution made in good faith without actual notice or knowledge of the changed status or condition of any recipient.
2.2 Any amount paid to a Participant or beneficiary under this Article II shall be reduced by the amount of taxes required to be withheld pursuant to written instructions from the Company. The Trustee shall pay to the Company a sum equal to the amount of such taxes as are required to be withheld, whereupon the Company shall have sole responsibility for the payment of all withholding taxes to the appropriate taxing authorities. The Company shall also have sole responsibility for any withholding related filings or reports.
2.3 Nothing in this Agreement shall relieve the Company of its liabilities to pay the benefits provided under the Plan except to the extent such liabilities are met by the application of Trust Fund assets.
2

2.4 The entitlement of a Participant or his or her beneficiaries to benefits under the Plan shall be determined by the Company or such party as it shall designate under the Plan, and any claim for such benefits shall be considered and reviewed under the procedures set forth in the Plan.
2.5 The Company may make payment of benefits directly to Participants or their beneficiaries as they become due under the terms of the Plan. The Company shall notify the Trustee of its decision to make payment of benefits directly prior to the time amounts are payable to the Participants or their beneficiaries. In addition, if the principal of the Trust, and any earnings thereon, are not sufficient to make payments of benefits in accordance with the terms of the Plan, the Company shall make the balance of each such payment as it becomes due. The Trustee shall notify the Company where principal and earnings are not sufficient.
2.6 In the event of a "failure to pay", the Trustee shall make distributions or payments out of the Trust Fund, to such persons, and in such amounts to satisfy the Company's obligation to provide benefits under the Plan if the following two conditions are met:
(a) A Participant/Beneficiary sends a notice to both the Trustee and the Company at the same time, indicating that the Company failed to pay the Participant/Beneficiary when due, and that such amount remains unpaid.
(b) The Trustee does not receive a written objection from the Company within sixty (60) calendar days indicating that the named Participant/Beneficiary is not owed any benefit payments according to the terms of the Plan.
ARTICLE III: TRUSTEE POWERS
3.1 Subject to investment guidelines which may be issued by the Company to the Trustee from time to time, the Trustee shall have the following powers and authority in the administration of the Trust Fund:
(a) To invest and reinvest the Trust Fund without distinction between principal and income in any kind of property, real, personal or mixed, tangible or intangible, and in any kind of investment, security or obligation, including any common trust fund, group trust, pooled fund or other commingled investment fund maintained by the Trustee or any other bank or entity for trust investment purposes;
(b) To sell for cash or on credit, to grant options, convert, redeem, exchange for other securities or other property, or otherwise to dispose of any securities or other property at any time held;
(c) To settle, compromise, contest, prosecute, abandon or submit to arbitration, any claims, debts or damages, due or owing to or from the Trust;
(d) To exercise any conversion privilege and/or subscription right available in connection with any securities or other property at any time held; to oppose or to consent to the reorganization, consolidation, merger, or readjustment of the finances of any corporation,
3

company or association or to the sale, mortgage, pledge or lease of the property of any corporation, company or association any of the securities of which may at any time be held and to do any act with reference thereto, including the exercise of options, the making of agreements or subscriptions, which may be deemed necessary or advisable in connection therewith, and to hold and retain any securities or other property so acquired;
(e) To exercise, personally or by general or by limited power of attorney, any right, including the right to vote, appurtenant to any securities or other property held at any time;
(f) To borrow money from any lender in such amounts and upon such terms and conditions as shall be deemed advisable or proper to carry out the purposes of the Trust and to pledge any securities or other property for the repayment of any such loan;
(g) To hold cash uninvested for a reasonable period of time under the circumstances without liability for interest, pending investment thereof or the payment of expenses or making distributions therewith;
(h) To form corporations and to create trusts to hold title to any securities or other property all upon such terms and conditions as may be deemed advisable;
(i) To employ suitable agents and counsel and to pay their reasonable expenses and compensation;
(j) To register any securities held hereunder in the name of the Trustee or in the name of a nominee with or without the addition of words indicating that such securities are held in a fiduciary capacity and to hold any securities in bearer form;
(k) To stop making payments to Participants or beneficiaries and hold Trust Fund assets for the benefit of the creditors of the Company and to deliver assets to satisfy such creditor's claims as directed by a regulatory agency or court of competent jurisdiction, all pursuant to Article IV below; and
(l) To make, execute and deliver, as Trustee, any and all conveyances, contracts, waivers, releases or other instruments in writing necessary or proper for the accomplishment of any of the foregoing powers.
3.2 The Trustee shall purchase or continue in effect such insurance contracts, including annuity contracts and policies of life insurance, as the Company shall direct, and the Trustee shall act with respect to those contracts only as directed by the Company and shall have no investment responsibility for such contracts.
ARTICLE IV: TRUSTEE RESPONSIBILITY REGARDING PAYMENTS TO TRUST
BENEFICIARY WHEN COMPANY IS INSOLVENT
4.1 The Trustee shall cease payment of benefits to Participants and their beneficiaries if the Company is Insolvent. The Company shall be considered "Insolvent" for purposes of this Trust Agreement if (i) the Company is unable to pay its debts as they become due, or (ii) the
4

Company is subject to a pending proceeding as a debtor under the United States Bankruptcy Code.
4.2 At all times during the continuance of this Trust, as provided in
Section 1.4 hereof, the principal and income of the Trust shall be subject to claims of general creditors of the Company under federal and state law as set forth below.
(a) The Board of Directors and the President of the Company shall have the fiduciary duty and responsibility on behalf of the general creditors of the Company to inform the Trustee promptly in writing of the Company's Insolvency, and the Trustee shall have the right to rely thereon to the exclusion of all directions or claims for payment made thereafter by Participants. If a person claiming to be a creditor of the Company alleges in writing to the Trustee that the Company has become Insolvent, the Trustee's only duty of inquiry shall be to request that the Company's independent public accountants determine whether the Company is Insolvent and, pending such determination, Trustee shall discontinue payment of benefits to Participants or their beneficiaries.
(b) Unless the Trustee has actual knowledge of the Company's Insolvency, or has received notice from the Company or a person claiming to be a creditor alleging that the Company is insolvent, the Trustee shall have no duty to inquire whether the Company is Insolvent. The Trustee may in all events rely on such evidence and determination concerning the Company's solvency as may be furnished to the Trustee by the Company's independent public accountants.
(c) If at any time the Company's independent public accountants have determined that the Company is Insolvent, the Trustee shall discontinue payments to Participants or their beneficiaries and shall hold the assets of the Trust for the benefit of the Company's general creditors. Nothing in this Trust Agreement shall in any way diminish any rights of Participants or their beneficiaries to pursue their rights as general creditors of the Company with respect to benefits due under the Plan or otherwise.
(d) The Trustee shall resume the payment of benefits to Participants or their beneficiaries in accordance with Article II of this Trust Agreement only after the Company's independent public accountants have determined that the Company is not insolvent (or is no longer Insolvent).
4.3 Provided that there are sufficient assets, if the Trustee discontinues the payment of benefits from the Trust pursuant to Section 4.3 hereof and subsequently resumes such payments, the first payment following such discontinuance shall include the aggregate amount of all payments due to Participants or their beneficiaries under the terms of the Plan for the period of such discontinuance, less the aggregate amount of any payments made to Participants or their beneficiaries by the Company in lieu of the payments provided for hereunder during any such period of discontinuance.
5

4.4 Participants and beneficiaries have only the Company's unsecured promise to pay benefits under the terms of the Plan and the status of an unsecured general creditor of the Company. Participants and beneficiaries receive and have no security interest in assets of the Trust.
ARTICLE V: MISCELLANEOUS
5.1 The Trustee shall be paid such reasonable compensation as shall from time to time be agreed upon by the Company and the Trustee. Such compensation and all expenses of administration of the Trust, including attorneys' fees, shall be withdrawn by the Trustee out of the Trust Fund unless paid by the Company.
5.2 The Trustee shall keep accurate and detailed accounts of all investments, receipts, disbursements and other transactions hereunder, and all accounts, books and records relating thereto shall be open to inspection and audit at all reasonable times by any person designated by the Company. Within 60 days after the close of each fiscal year (or such other date as may be agreed upon in writing between the Company and the Trustee), and within 60 days after the effective date of the resignation of the Trustee as provided in Section 5.3 hereof; the Trustee shall file with the Company a written account setting forth all investments, receipts, disbursements and other transactions effected by it during the year ending on such date (but not including any part of such year for which such an account has previously been filed) and certified as to the accuracy of the information set forth therein. Such account may incorporate by reference any and all schedules and other statements setting forth investments, receipts, disbursements and other transactions effected during the period for which such account is rendered which the Trustee has furnished to the Company prior to the filing of such account. Each account so filed (and copies of any schedules and statements incorporated therein by reference as aforesaid) shall be open to inspection during business hours by any Participant and any person designated by such Participant for a period of 60 days immediately following the date on which the account is filed with the Company. The Company may approve such accounts by an instrument in writing delivered to the Trustee. In the absence of the filing in writing with the Trustee by the Company of exceptions or objections to any such account within 90 days, the Company shall be deemed to have approved such account; and in such case, or upon the written approval of the Company of any such account, the Trustee shall be released, relieved and discharged with respect to all maters and things set forth in such account as though such account had been settled by the decree of a court of competent jurisdiction.
5.3 The Trustee shall be fully protected in relying upon a certification of an authorized representative of the Company with respect to any instruction, direction or approval of the Company, and protected also in relying upon the certification until a subsequent certification is filed with the Trustee.
5.4 The Trustee shall be fully protected in acting upon any instrument, certificate, or paper believed by it to be genuine and to be signed or presented by the proper person or persons, and the Trustee shall be under no duty to make any investigation or inquiry as to any statement contained in any such writing but may accept the same as conclusive evidence of the truth and accuracy of the statements therein contained.
6

5.5 All persons dealing with the Trustee are released from inquiry into the decision or authority of the Trustee and from seeing to the application of any moneys, securities or other property paid or delivered to the Trustee.
5.6 The Trustee shall not be liable hereunder for any loss or diminution of the Trust Fund resulting from any action taken or omitted, except to the extent that any such loss or diminution was the direct result of the Trustee's gross negligence or willful misconduct in the performance of its responsibilities hereunder. The Company shall indemnify the Trustee and defend it and hold it harmless from and against any and all costs, expenses and liabilities arising out of or in connection with the performance of the Trustee's duties arising hereunder (but excluding costs arising from the Trustee's gross negligence or willful misconduct in the performance of its responsibilities hereunder). If the Company does not pay such costs, expenses and liabilities in a reasonably timely manner, Trustee may obtain payment from the Trust. This Section shall survive the termination of this Agreement.
5.7 Notwithstanding any other provision of this Trust to the contrary, the Trustee does not guarantee payment of any amount which may become due and payable to a Participant or his or her beneficiary. The Trustee shall have no responsibility for the disclosure to Participants regarding the terms of the Plan or of this Trust, or for the validity thereof. The Trustee shall not be responsible for administrative functions under the Plan and shall have only such responsibilities under this Trust Agreement as are specifically set forth herein. The Trustee will be under no obligation or liability to anyone with respect to any failure on the part of the Company, the Plan or the Company's independent public accounting firm or any Participant to perform any of their respective obligations under the Plan or this Trust. Nothing in this Trust shall be construed as requiring the Trustee to make any payment in excess of the amounts held in the Trust Fund at the time of such payment or otherwise to risk or expend its own funds.
5.9 The Trustee acting hereunder may resign at any time by giving at least 30 days written notice to the Company. In the case of the resignation of the Trustee the Company shall appoint a successor Trustee, which shall be a bank or trust company. Any successor Trustee shall have the sane obligations, powers and duties as those conferred upon the Trustee hereunder and the appointment of a new Trustee shall be by a written instrument delivered to the Trustee acting hereunder. Upon receipt of such written instrument executed by the Company and a written instrument executed by the successor Trustee accepting the appointment. The Trustee shall deliver the assets of the Trust Fund to the successor Trustee but may reserve such reasonable amount as the Trustee may be necessary for outstanding and accrued charges against the Trust Fund.
5.9 This Agreement and the Trust created hereby shall be irrevocable; provided, however, that any property held in the Trust Fund shall be subject to the claims of general creditors of the Company under Federal or state law in the event of Insolvency. In the event that the Company certifies to the Trustee that the Plan is terminated and there are no remaining Participants or beneficiaries entitled to benefits thereunder, this Trust shall terminate and, subject to the Trustee's right to reserve such reasonable amount as it may deem necessary for outstanding and accrued charges against the Trust Fund, title to any remaining assets shall revert to the Company.
7

5.10 This Agreement and the Trust created herein shall be construed, regulated and administered under the laws of the State of Illinois and of the United States. All contributions to the Trustee shall be deemed to take place in the State of Illinois. The Trustee may at any time initiate an action or proceeding for the settlement of its accounts or for the determination of any question of construction which may arise or for instructions, and the only necessary party defendant to such action shall he the Company, except that the Trustee may, if it so elects, bring in as parties defendant any outer person or persons.
5.11 This Agreement may not be amended in any respect without the consent of the Company, Trustee and affected Participants, and no amendment shall reduce a Participant's benefits to less than the amount he would be entitled to receive on the date before the amendment.
5.12 This Agreement shall be executed in any number of counterparts, each one of which shall be deemed to be the original although the others shall not be produced.
8

IN WITNESS WHEREOF, this instrument has been executed as of the day and year first above written.
COMPANY:
LKQ CORPORATION

By:      /s/  Victor M. Casini
         -----------------------------
         Its: Vice President
         -----------------------------	

TRUSTEE:
LaSALLE BANK NATIONAL ASSOCIATION

By:      /s/  Linda Porcher
         -----------------------------
         Its: Vice President
         -----------------------------	

9

Exhibit 10.26
LKQ CORPORATION EMPLOYEES' RETIREMENT PLAN
Effective as of August 1, 1999

LKQ CORPORATION EMPLOYEES' RETIREMENT PLAN
TABLE OF CONTENTS

ARTICLE                                                                     PAGE
I     INTRODUCTION.............................................................1

      1.1   THE PLAN...........................................................1

      1.2   TYPE OF PLAN.......................................................1

      1.3   PLAN OBJECTIVES....................................................1

      1.4   EXCLUSIVE BENEFIT..................................................1

      1.5   FUNDING............................................................1

      1.6   SPONSOR AND EMPLOYERS..............................................2

      1.7   EFFECTIVE DATE.....................................................2

      1.8   AMENDMENT OF PRIOR PLANS...........................................2

II    DEFINITIONS AND RULES OF INTERPRETATION..................................3

      2.1   DEFINITIONS........................................................3

            ACCOUNT............................................................3

            ACCOUNT BALANCE....................................................3

            ACTIVE PARTICIPANT.................................................3

            ADMINISTRATOR......................................................3

            AFFILIATE..........................................................3

            ALTERNATE PAYEE....................................................3

            ANNIVERSARY DATE...................................................3

            BENEFICIARY........................................................3

            BOARD..............................................................3

            BREAK IN SERVICE...................................................4

            CODE...............................................................4	

ARTICLE                                                                     PAGE
            COLLECTIVE BARGAINING AGREEMENT....................................4

            COMPENSATION.......................................................4

            COMPUTATION PERIOD.................................................4

            CONTRIBUTION.......................................................4

            CONTRIBUTION PERCENTAGE............................................5

            DEFERRAL PERCENTAGE................................................5

            DOL REGULATIONS or DOL REG.........................................5

            EFFECTIVE DATE.....................................................5

            ELIGIBLE EMPLOYEE..................................................5

            EMPLOYEE...........................................................5

            EMPLOYER...........................................................6

            EMPLOYMENT COMMENCEMENT DATE.......................................6

            ENTRY DATE.........................................................6

            ERISA..............................................................6

            FORFEITURE.........................................................6

            401(k) COMPENSATION................................................6

            415 AFFILIATE......................................................6

            415 COMPENSATION...................................................6

            HIGHLY COMPENSATED ADP.............................................6

            HIGHLY COMPENSATED ACP.............................................6

            HIGHLY COMPENSATED EMPLOYEE........................................7

            HOUR OF SERVICE....................................................8

            INACTIVE PARTICIPANT...............................................9

            KEY EMPLOYEE.......................................................9

            LEASED EMPLOYEE...................................................10	

- ii -

ARTICLE                                                                     PAGE
            LEAVE OF ABSENCE..................................................11

            LIMITATION YEAR...................................................11

            MAXIMUM ACP.......................................................11

            MAXIMUM ADP.......................................................11

            NON-HIGHLY COMPENSATED ADP........................................12

            NON-HIGHLY COMPENSATED ACP........................................12

            NON-HIGHLY COMPENSATED EMPLOYEE...................................12

            NON-KEY EMPLOYEE..................................................12

            NORMAL RETIREMENT AGE.............................................12

            PARTICIPANT.......................................................12

            PERMANENT DISABILITY..............................................12

            PLAN..............................................................12

            PLAN YEAR.........................................................12

            QUALIFIED DOMESTIC RELATIONS ORDER................................12

            QUALIFIED MILITARY SERVICE........................................13

            QUALIFIED PRERETIREMENT SURVIVOR ANNUITY..........................13

            RE-EMPLOYMENT COMMENCEMENT DATE...................................13

            SPONSOR...........................................................13

            TERMINATION OF EMPLOYMENT.........................................13

            TESTING COMPENSATION..............................................14

            TOP-HEAVY DETERMINATION DATE......................................14

            TOP-HEAVY YEAR....................................................14

            TREASURY REGULATIONS or TREAS. REG................................15

            TRUST.............................................................16

            TRUST AGREEMENT...................................................16	

- iii -

ARTICLE                                                                     PAGE
            TRUSTEE...........................................................16

            VESTED............................................................16

            YEAR OF SERVICE...................................................16

      2.2   CONFORMANCE WITH CODE AND ERISA...................................16

      2.3   GENDER AND NUMBER; EFFECT OF TITLES...............................16

III   COMPUTATION OF SERVICE..................................................17

      3.1   METHOD OF COMPUTATION.............................................17

      3.2   COMPUTATION OF SERVICE UNDER THE HOURS OF SERVICE METHOD..........17

      3.3   SERVICE WITH PREDECESSOR EMPLOYERS................................19

IV    PARTICIPATION...........................................................20

      4.1   REQUIREMENTS FOR PARTICIPATION....................................20

      4.2   DETERMINATION OF ENTRY DATE.......................................20

      4.3   CESSATION AND RESUMPTION OF ACTIVE PARTICIPATION..................20

V     AMOUNT AND ALLOCATION OF CONTRIBUTIONS..................................22

      5.1   PRE-TAX CONTRIBUTIONS.............................................22

      5.2   MATCHING CONTRIBUTIONS............................................23

      5.3   PROFIT-SHARING CONTRIBUTIONS......................................24

      5.4   ROLLOVER CONTRIBUTIONS............................................24

      5.5   QUALIFIED NONELECTIVE CONTRIBUTIONS...............................25

      5.6   MINIMUM CONTRIBUTION IN TOP-HEAVY YEARS...........................25

      5.7   OTHER REQUIRED CONTRIBUTIONS......................................25

VI    LIMITS ON CONTRIBUTIONS.................................................27

      6.1   LIMIT ON ANNUAL ADDITIONS.........................................27

      6.2   LIMIT ON PRE-TAX CONTRIBUTIONS....................................29

      6.3   ACTUAL DEFERRAL PERCENTAGE LIMITATION.............................30	

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ARTICLE                                                                     PAGE
      6.4   ACTUAL CONTRIBUTION PERCENTAGE LIMITATION.........................31

      6.5   LIMIT ON DEDUCTIBLE CONTRIBUTIONS.................................33

      6.6   PURPOSE OF LIMITATIONS; AUTHORITY OF ADMINISTRATOR................33

VII   INVESTMENTS AND PLAN ACCOUNTING.........................................34

      7.1   PARTICIPANT ACCOUNTS..............................................34

      7.2   SEPARATE FUND ACCOUNTING..........................................34

      7.3   PARTICIPANT-DIRECTED ACCOUNTS.....................................35

VIII  VESTING AND FORFEITURE..................................................36

      8.1   ACCOUNTS THAT ARE ALWAYS FULLY VESTED.............................36

      8.2   VESTING ON RETIREMENT.............................................36

      8.3   VESTING AT DEATH..................................................36

      8.4   OTHER TERMINATION OF EMPLOYMENT...................................36

      8.5   FORFEITURES.......................................................38

IX    PAYMENT OF BENEFITS.....................................................40

      9.1   METHODS OF BENEFIT PAYMENT........................................40

      9.2   DISTRIBUTIONS UPON TERMINATION OF EMPLOYMENT......................43

      9.3   PAYMENTS AFTER A PARTICIPANT'S DEATH..............................44

      9.4   PURPOSE OF LIMITATIONS; AUTHORITY OF ADMINISTRATOR................47

      9.5   DIRECT TRANSFERS..................................................47

      9.6   MISSING PARTICIPANTS AND BENEFICIARIES............................47

      9.7   PAYMENT WITH RESPECT TO INCAPACITATED PARTICIPANTS OR
              BENEFICIARIES...................................................48

      9.8   LIMITATION ON LIABILITY FOR DISTRIBUTIONS.........................48

      9.9   WITHDRAWALS.......................................................48

      9.10  LOANS.............................................................50

X     PLAN ADMINISTRATION.....................................................52	

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ARTICLE                                                                     PAGE
      10.1  GENERAL FIDUCIARY STANDARD OF CONDUCT.............................52

      10.2  ALLOCATION OF RESPONSIBILITY AMONG FIDUCIARIES....................52

      10.3  ADMINISTRATOR.....................................................52

      10.4  POWERS AND DUTIES OF ADMINISTRATOR................................52

      10.5  COMMITTEE.........................................................53

      10.6  COMPENSATION AND EXPENSES.........................................54

      10.7  INDEMNIFICATION BY EMPLOYERS......................................54

      10.8  SERVICE IN MULTIPLE CAPACITIES....................................54

      10.9  CLAIMS PROCEDURE..................................................54

      10.10 QUALIFIED DOMESTIC RELATIONS ORDERS...............................55

XI    AMENDMENT, TERMINATION OR MERGER OF PLAN................................57

      11.1  AMENDMENT.........................................................57

      11.2  TERMINATION.......................................................57

      11.3  CONTINUATION BY A SUCCESSOR OR PURCHASER..........................58

      11.4  PLAN MERGER OR CONSOLIDATION......................................58

XII   GENERAL PROVISIONS......................................................59

      12.1  NO EMPLOYMENT GUARANTEE...........................................59

      12.2  NONALIENATION OF PLAN BENEFITS....................................59

      12.3  ACTION BY SPONSOR OR EMPLOYER.....................................59

      12.4  APPLICABLE LAW....................................................59

      12.5  PARTICIPANT LITIGATION............................................59

      12.6  PARTICIPANT AND BENEFICIARY DUTIES................................60

      12.7  ADEQUACY OF EVIDENCE..............................................60

      12.8  NOTICE TO PARTICIPANTS AND BENEFICIARIES..........................60

      12.9  WAIVER OF NOTICE..................................................60	

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ARTICLE                                                                     PAGE
      12.10 SUCCESSORS........................................................60

      12.11 SEVERABILITY......................................................60

      12.12 NONREVERSION......................................................60

APPENDIX A....................................................................62

APPENDIX B...................................................................107	

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LKQ CORPORATION EMPLOYEES' RETIREMENT PLAN
Effective August 1, 1999
ARTICLE I
INTRODUCTION
1.1 THE PLAN. The following provisions constitute the LKQ Corporation Employees' Retirement Plan (the "Plan") effective as of August 1, 1999. Seven Prior Plans which were maintained by certain Predecessor Employers were amended and merged into this Plan as of the Effective Date. The seven Prior Plans were originally adopted and maintained as follows: the Star Auto Parts, Inc. 401(k) Profit Sharing Plan, adopted by Star Auto Parts, Inc. effective as of January 1, 1992, and amended and restated effective as of January 1, 1995, January 1, 1996, and August 1, 1998; the Triplett Auto Recyclers 401(k) Retirement Savings Plan, adopted by Triplett Auto Recyclers effective as of January 1, 1993; the Recyclers Group, Inc. Profit Sharing/401(k) Plan, adopted by Recyclers Group, Inc. effective as of January 1, 1994, and amended and restated effective as of July 1, 1998; the Bud's Auto Parts, Inc. 401(k) Profit Sharing Plan, adopted by Bud's Auto Parts Inc. effective as of June 1, 1995; the Route 16 Auto Salvage 401(k) Profit Sharing Plan, adopted by Route 16 Auto Salvage effective as of January 1, 1996; the Damron Auto Parts, Inc. 401(k) Plan, adopted by Damron Auto Parts, Inc. effective as of December 1, 1996; and the Smart Parts 401K Plan, adopted by Hustiford Auto Company, Inc. effective January 1, 1998. The following two additional Prior Plans, which were maintained by certain Predecessor Employers, were amended and merged into this Plan as of October 1, 1999: John's Import Auto 401(k) Savings Plan, adopted by Tercek Enterprises, Inc. DBA John's Import Auto Wrecking Co. effective as of June 1, 1996; and Midwest Foreign Auto, Inc. 401(k) Profit Sharing Plan, adopted by Midwest Foreign Auto, Inc. effective September 1, 1991, and amended and restated effective January 1, 1998.
1.2 TYPE OF PLAN. For purposes of Section 401(a)(27) of the Code, the Plan is designated as a profit sharing plan that includes a cash or deferred arrangement qualified under Section 401(k) of the Code.
1.3 PLAN OBJECTIVES. The Plan is maintained by the Employers in order to stimulate interest and initiative and increase efficiency among Participants, to share with Participants the economic benefits produced by their efforts and to assist in providing Participants with retirement benefits.
1.4 EXCLUSIVE BENEFIT. The Plan is for the exclusive benefit of the Participants and their Beneficiaries. No portion of the funds contributed to the Plan shall ever revert to or be applied for the benefit of the Employers, except as specifically permitted herein.
1.5 FUNDING. In order to fund the benefits provided under the Plan, the Sponsor has established the LKQ Corporation Employees' Retirement Trust pursuant to the Trust Agreement. All benefits under the Plan shall be provided exclusively by distributions from the Trust. The Sponsor shall have the authority to replace the Trustee of the Trust at any time, or to establish additional Trusts to fund benefits under the Plan. Benefits under the Plan may also, in the Sponsor's

discretion, be provided by the purchase of insurance contracts, and in such event the term Trust shall also include the Plan's interest in such insurance contracts.
1.6 SPONSOR AND EMPLOYERS. The sponsor of the Plan (the "Sponsor") is LKQ Corporation. With the approval of the Sponsor, the Plan may be adopted for the benefit of its Employees by any Affiliate or any other business entity in which the Sponsor or an Affiliate has a substantial interest. The business entities which adopt the Plan, including the Sponsor, are referred to in the Plan as the "Employers." As of the Effective Date, the Employers other than the Sponsor are 250 Auto Wreckers Corp., Black Horse Auto Parts, Inc., Bud's Auto Parts, Inc., Damron Auto Parts, Inc., Damron Auto Parts, L.P., Damron Holding Co., DAP Management Inc., DAP Trucking, Inc., Dismantling & Recycling, Inc., Gorham Auto Parts Corp., Hustisford Auto Co., Lakenor Auto & Truck Salvage, Inc., LKQ All Models Corp., LKQ Auto Parts of Utah, Inc., LKQ Best Automotive Corp., LKQ B&D Auto Recyclers Corp., LKQ D&R Auto Parts Corp., LKQ Management Company, LKQ Midwest Auto Parts Corp., Mabry Auto Salvage Corp., Mid-America Auto Parts, Inc., Redding Auto Center, Inc., Route 16 Auto Salvage, Inc., Royal's Auto Salvage, Inc., Smith's Auto Sales and Salvage Corp., Star Auto Parts, Inc., Triplett Auto Recyclers, Inc., and United Auto Dismantling, Inc.
1.7 EFFECTIVE DATE. The Effective Date of the Plan shall be August 1, 1999, except as otherwise provided herein. The rights of a Participant who incurred a Termination of Employment prior to the Effective Date, or of a Beneficiary of such a Participant, shall, except as otherwise provided herein, be determined by the terms of the Prior Plan as in effect as of the date on which the Termination of Employment occurred. Notwithstanding the foregoing, any provision of the Plan that is required to have an earlier effective date in order to preserve the qualified status of the Plan under Section 401(a) of the Code or any Treasury Regulation shall be effective as of such earlier date.
1.8 AMENDMENT OF PRIOR PLANS. Each of the Prior Plans is hereby amended by adoption of the amendments provided in the Appendix A effective as of the dates shown therein.
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ARTICLE II
DEFINITIONS AND RULES OF INTERPRETATION
2.1 DEFINITIONS. As used in this Plan, capitalized terms shall have the meaning set forth below:
ACCOUNT. All of the separate accounts maintained under the Plan for the benefit of a Participant as provided in Section 7.1. The term "Account" shall not, unless otherwise specifically provided herein, include the
Section 415 Suspense Account, if any, established pursuant to Section 6.1.
ACCOUNT BALANCE. The total amount held for the benefit of a Participant in his Account (or in the specific separate Account referred to), as valued on a daily basis in accordance with the provisions of Article VII.
ACTIVE PARTICIPANT. Any Eligible Employee who participates in the Plan as provided in Article IV, while he remains an Eligible Employee.
ADMINISTRATOR. The Sponsor or such other corporation or person (or persons) appointed to administer the Plan pursuant to the provisions of
Section 10.3.
AFFILIATE. Any business entity that is either:
(a) a corporation that is a member of the same controlled group of corporations, as defined in Section 414(b) of the Code, as an Employer;
(b) a trade or business, whether or not incorporated, that is under common control with an Employer within the meaning of
Section 414(c) of the Code;
(c) a member of the same affiliated service group, as defined in
Section 414(m) of the Code, as an Employer; or
(d) otherwise required to be aggregated with an Employer pursuant to Treasury Regulations issued under Section 414(o) of the Code,
but that is not itself an Employer.
ALTERNATE PAYEE. A spouse, former spouse, child or other dependent of a Participant entitled to receive a portion of such Participant's Account under a Qualified Domestic Relations Order.
ANNIVERSARY DATE. The last day of each Plan Year.
BENEFICIARY. Any person, including a trust or other entity, entitled to receive any benefits which may become payable upon or after a Participant's death.
BOARD. The board of directors of the Sponsor.
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BREAK IN SERVICE. A period of absence from employment that causes an interruption in the computation of an Employee's Service under the hours of service method, as defined in Article III.
CODE. The Internal Revenue Code of 1986, as now in effect or as hereafter amended, and any regulation, ruling or other administrative guidance issued pursuant thereto by the Internal Revenue Service.
COLLECTIVE BARGAINING AGREEMENT. A bona fide agreement that the Secretary of Labor finds to be a collective bargaining agreement between employee representatives and an Employer or Affiliate, provided that not more than 50 percent of the Employees covered by such agreement are officers, owners or executives of the Employer or Affiliate as determined under Section 7701(a)(46) of the Code.
COMPENSATION.
(a) GENERAL RULE. Except as otherwise provided below, an Employee's Compensation for a Plan Year shall mean all amounts paid or made available to the Employee by all Employers during the Plan Year for services as an Active Participant that either (i) constitute wages as defined by Section 3401(a) of the Code for purposes of income tax withholding, but determined without regard to any rules that limit the remuneration included in wages based upon the nature or location of employment or the services performed, or (ii) are otherwise required to be reported on Form W-2 (or such other form as may be prescribed pursuant to Section 6041(d) and Section 6051(a)(3) of the Code).
(b) CERTAIN EXCLUSIONS. Except as otherwise provided in paragraph
(d), reimbursements or other expense allowances, fringe benefits (cash or noncash), moving expenses, deferred compensation, welfare benefits, and bonuses shall be excluded from a Participant's Compensation even if otherwise included under paragraph (a).
(c) ANNUAL LIMIT ON COMPENSATION. An Employee's Compensation for any Plan Year shall not exceed $160,000, as adjusted pursuant to Section 401(a)(17) of the Code. For purposes of computing the Pre-Tax Contributions withheld from a Participant whose Compensation exceeds such limit, all Compensation paid to the Participant during the period during which he has elected to have Pre-Tax Contributions withheld shall be taken into account until the total Compensation taken into account equals such limit.
(d) TREATMENT OF PRE-TAX CONTRIBUTIONS. Notwithstanding the foregoing, an Employee's Compensation shall include any elective contributions excluded from income under Section 125 of the Code (relating to cafeteria plans), Section 402(e)(3) of the Code (relating to 401(k) plans), or Section 132(f) of the Code (relating to qualified transportation fringes).
COMPUTATION PERIOD. A twelve-month period used in computing an Employee's Service, as determined under Section 3.1.
CONTRIBUTION. An amount contributed to the Plan by an Employer or a Participant in accordance with Article V.
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CONTRIBUTION PERCENTAGE. The total amount of Matching Contributions and Qualified Nonelective Contributions to the extent provided in Section 6.4 allocated to an Active Participant with respect to a Plan Year expressed as a percentage of such Active Participant's Testing Compensation for such Plan Year and calculated to the nearest one-hundredth of a percentage point. The Contribution Percentage of an Active Participant who receives no such Contributions shall be zero. If an Active Participant is eligible to receive any such contributions under any other plan maintained by an Employer or Affiliate
(other than a plan which cannot be aggregated with the Plan under Section 410(b)
of the Code), his Contribution Percentage shall include the contributions and compensation as determined under such other plan.
DEFERRAL PERCENTAGE. The total amount of Pre-Tax Contributions and Qualified Nonelective Contributions to the extent provided in Section 6.3 allocated to an Active Participant with respect to a Plan Year expressed as a percentage of such Active Participant's Testing Compensation for such Plan Year and calculated to the nearest one-hundredth of a percentage point. The Deferral Percentage of an Active Participant who receives no such Contributions shall be zero. If an Active Participant is eligible to receive any such contributions under any other plan maintained by an Employer or Affiliate (other than a plan which cannot be aggregated with the Plan under Section 410(b) of the Code), his Deferral Percentage shall include the contributions and compensation as determined under such other plan.
DOL REGULATIONS or DOL REG. Regulations, including proposed and temporary regulations, issued by the Department of Labor interpreting ERISA and codified at Title 29 of the Code of Federal Regulations. Where a reference is made to temporary or proposed regulations, such reference shall include any permanent regulations, modified proposed or temporary regulations, issued in lieu thereof.
EFFECTIVE DATE. The date on which this Plan is generally effective, as provided in Section 1.7.
ELIGIBLE EMPLOYEE. All Employees who are employed by an Employer, except that the term Eligible Employee shall not include Leased Employees, Employees covered by a Collective Bargaining Agreement in which retirement benefits were the subject of good faith bargaining, unless such Collective Bargaining Agreement provides for such Employees to participate in the Plan, and nonresident aliens who receive no earned income (as defined in Section 911(d)(2) of the Code) from an Employer which constitutes income from sources within the United States (as defined in Section 861(a)(3) of the Code). Notwithstanding the foregoing, any person who is retained to provide services for an Employer and who is classified by the Employer, whether or not pursuant to a written agreement with such person or his or her Employer, as either an independent contractor or as an employee of another employer (including, but not limited to, any person who is a Leased Employee), shall not be eligible to participate in the Plan, even if such person is subsequently determined to be an employee of an Employer under any applicable law, whether as a result of an examination by any administrative agency, a decision of any court, or otherwise.
EMPLOYEE. Any person who is an employee in the common law sense of an Employer or an Affiliate, or who is a Leased Employee with respect to an Employer or Affiliate.
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EMPLOYER. The Sponsor and any other business entity that adopts the Plan with the consent of the Sponsor for the benefit of its Employees pursuant to Section 1.6. A singular reference to an "Employer" shall be understood to be a reference to any Employer individually, except where the context is inconsistent with such interpretation. The Employers are listed in Exhibit A to this Plan, which shall be revised from time to time to reflect the addition of new Employers and the withdrawal of Employers.
EMPLOYMENT COMMENCEMENT DATE. The day on which an Employee first performs an Hour of Service for an Employer or Affiliate.
ENTRY DATE. The date upon which an Eligible Employee becomes a Participant as provided in Section 4.2.
ERISA. The Employee Retirement Income Security Act of 1974, as now in effect or as hereafter amended, and any regulation, ruling or other administrative guidance issued pursuant thereto by the Internal Revenue Service, the Department of Labor or the Pension Benefit Guaranty Corporation.
FORFEITURE. The portion of a Participant's Account that exceeds the Vested portion when he incurs a Termination of Employment, or at such other time as provided in the Plan.
401(k) COMPENSATION. A Participant's Compensation for a Plan Year, including the amount of any bonus which is not a year-end bonus based on Employer performance and also including the amount of any deferral made in accordance with the provisions of the LKQ Corporation 401(k) Plus Plan.
415 AFFILIATE. A business entity that either is an Affiliate, or would be an Affiliate if Section 414 of the Code were modified in the manner provided by Section 415(h) of the Code.
415 COMPENSATION. All amounts paid or made available by an Employer or 415 Affiliate to an Employee in a Limitation Year that would constitute Compensation under paragraph (a) and (d) of the definition of Compensation if paid to an Active Participant by an Employer, without regard to the other paragraphs of such definition, whether or not included in the Participant's Compensation.
HIGHLY COMPENSATED ADP. The average of the Deferral Percentages of all Highly Compensated Employees who are Active Participants for a Plan Year, including those whose Deferral Percentage is zero.
HIGHLY COMPENSATED ACP. The average of the Contribution Percentages of all Highly Compensated Employees who are Active Participants for a Plan Year, including those whose Contribution Percentage is zero.
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HIGHLY COMPENSATED EMPLOYEE.
(a) GENERAL RULE. Except as otherwise provided in this Section, an Employee shall be considered a Highly Compensated Employee for any Plan Year if he either:
(i) at any time during the Plan Year or the immediately preceding Plan Year owned more than five percent, by voting power or value, of the outstanding stock of an Employer or Affiliate that is a corporation, or owned more than five percent of the capital or profits interest in an Employer or Affiliate that is not a corporation; or
(ii) in the immediately preceding Plan Year received 415 Compensation in excess of $80,000 (as adjusted pursuant to
Section 414(q)(1) of the Code for the preceding Plan Year) and, if the Administrator so elects, was a member for such preceding Plan Year of the highest-paid group described in paragraph (b).
(b) HIGHEST-PAID GROUP. For any Plan Year, the highest-paid group described in this paragraph (b) shall consist of the group consisting of the top 20 percent of Employees when ranked on the basis of 415 Compensation paid during such Plan Year. For purposes of this paragraph (b), there shall be excluded Employees who have not completed six months of service, Employees who normally work less than 17 1/2 Hours of Service per week, Employees who normally work during not more than six months during any Plan Year, and Employees who have not attained the age of 18. The Administrator may elect to exclude Employees who are described in paragraph (a)(ii) but who are not in the highest-paid group in any Plan Year by adopting a resolution making such election, which shall be considered an amendment to the Plan, and such election shall apply to all succeeding Plan Years until the Administrator adopts a resolution revoking such election.
(c) FORMER EMPLOYEES. A former Employee shall be treated as a Highly Compensated Employee if he was a Highly Compensated Employee (based on the definition in effect at such time) either when his employment was terminated or at any time after attaining age 55.
(d) NONRESIDENT ALIENS. A nonresident alien who receives no earned income (within the meaning of Section 911(d)(2) of the Code) which constitutes income from sources within the United States (within the meaning of Section 861(a)(3) of the Code) from an Employer or Affiliate during any Plan Year shall not be considered an Employee for such Plan Year for any purpose of this Section.
(e) PURPOSE. The purpose of this Section is to conform to the definition of "highly compensated employee" set forth in Section 414(q) of the Code, as now in effect or as hereafter amended, which is incorporated herein by reference, and to the extent that this Section shall be inconsistent with
Section 414(q) of the Code, either by excluding Employees who would be classified as "highly compensated employees" thereunder or by including Employees who would not be so classified, the provisions of Section 414(q) of the Code shall govern and control. The Administrator may make or revoke any elective adjustment to the definition of Highly Compensated Employee permitted by Section 414(q) of the Code or any regulations, revenue procedures, or other guidance issued
- 7 -

thereunder and may elect to utilize the simplified method described in Revenue Procedure 93-42 (with or without "snapshot day" testing), or any successor thereto.
HOUR OF SERVICE. Each Employee shall be credited with an Hour of Service for:
(a) GENERAL RULE. Each hour for which he is directly or indirectly paid or entitled to payment by an Employer or Affiliate for the performance of duties. These hours shall be credited to the Employee for the computation period (or periods) during which the duties are performed. An Employee whose employer does not have records which would permit it to accurately determine the actual number of Hours of Service performed by such Employee shall be credited with the following number of Hours of Service for each payroll period during which he completes at least one Hour of Service, based upon the payroll period for which the Employee is compensated:
(i) 45 Hours of Service for each weekly payroll period;
(ii) 90 Hours of Service for each bi-weekly payroll period;
(iii) 95 Hours of Service for each semi-monthly payroll period; or
(iv) 190 Hours of Service for each monthly payroll period.
Hours of Service credited to a payroll period which includes an Anniversary Date shall be credited entirely to the Plan Year that includes the last day of such payroll period. An Employee who is not compensated on the basis of a regular payroll period shall be credited with 10 Hours of Service for each day on which he completes at least one Hour of Service.
(b) PERIODS DURING WHICH NO SERVICES ARE PERFORMED. Except as provided in paragraph (c) below, each hour (up to a maximum of 501 hours in any one continuous period) for which he is directly or indirectly paid or entitled to payment by an Employer or Affiliate (on account of a period during which no duties are performed, such as vacation or sickness, including payments made from a trust fund or insurance policy to which the Employer or Affiliate contributes or pays premiums. In the case of payments which are computed on the basis of specific periods of time during which no duties are performed, the Employee shall receive credit for Hours of Service as if he had actually worked during such periods of time, computed and credited as provided in paragraph (a). In the case of all other payments, the Employee's Hours of Service shall be computed and credited in the manner prescribed in subparagraphs (b) and (c) of DOL Regs.
Section 2530.200b-2, which are hereby incorporated herein by reference. Notwithstanding the foregoing, no Hours of Service shall be credited for a period during which no services are performed merely because an Employee is receiving payments under a plan maintained solely to comply with an applicable worker's compensation, unemployment compensation, or disability insurance law, or payments which solely reimburse the Employee for medical or medically related expenses.
(c) BACK PAY. Each hour for which back pay, irrespective of mitigation of damages, has been either awarded or agreed to by any Employer or Affiliate. These hours shall be credited to the Employee for the computation period (or periods) to which the award, agreement or payment pertains rather than the computation period (or periods) during which the award, agreement or payment was made.
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INACTIVE PARTICIPANT. A person who was an Active Participant and who is no longer an Eligible Employee, but whose Account has not yet been distributed in full.
KEY EMPLOYEE.
(a) GENERAL RULE. Except as otherwise provided in this Section, an Employee shall be considered a Key Employee for any Plan Year if, at any time during the Key Employee Test Period, he:
(i) is an officer of any Employer or Affiliate whose 415 Compensation exceeds 50 percent of the annual dollar limitation set forth in Section 415(b)(1)(A) of the Code; or
(ii) owns at least one-half percent of the outstanding stock of an Employer or Affiliate and receives 415 Compensation in excess of the annual defined contribution dollar limitation set forth in Section 415(c)(1)(A) of the Code, unless at least ten other Employees whose 415 Compensation exceeds the annual defined contribution dollar limitation set forth in Section 415(c)(1)(A) of the Code own during any Plan Year in the Key Employee Test Period a percentage share of the stock of the Employer or Affiliate which is greater than such Employee's percentage share; or
(iii) owns more than five percent of the stock of an Employer or Affiliate; or
(iv) owns more than one percent of the stock of an Employer or Affiliate and receives 415 Compensation for any Plan Year in which he owns such percentage in excess of $150,000.
(b) LIMITATION ON INCLUSION OF OFFICERS. For purposes of subparagraph (a)(i), the number of Employees classified as Key Employees solely because they are officers shall not exceed the greater of (i) three or (ii) ten percent of the largest number of Employees during any of the Years in the Key Employee Test Period; provided, however, that in no event shall such number exceed fifty (50). If more than such number of Employees would otherwise be classified as Key Employees by reason of being officers, the Employees classified as Key Employees by reason of being officers shall be those officers who had the highest 415 Compensation during any of the Years in the Key Employee Test Period during which they were officers.
(c) DETERMINATION OF LARGEST SHAREHOLDERS. For purposes of subparagraph (a)(ii), in the event that two or more Employees own the same percentage share of an Employer or Affiliate, the Employee who had the highest 415 Compensation of such Employees for the Plan Year during the Key Employee Test Period in which his 415 Compensation was the highest and in which he owned such interest in the Employer or Affiliate for part of the Plan Year shall be treated as owning the largest percentage share of the stock of the Employer or Affiliate. If an Employee's percentage interest in the stock of an Employer or Affiliate changes during a Plan Year, his interest for such Plan Year shall be the highest percentage he held at any time during such Plan Year.
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(d) DETERMINATION OF PERCENTAGE INTERESTS. For purposes of this Section, an Employee shall be considered to own any stock of any Employer or Affiliate which would be attributed to him under Section 318 of the Code (as modified by substituting "five percent" for "50 percent" in Section 318(a)(2) of the Code). In the case of an Employer or Affiliate that has issued more than one class of stock, the applicable test shall be satisfied if the Employee's stock ownership meets the test on the basis of either the value or the voting power of the stock. In the case of an Employer or Affiliate that is not a corporation, such tests shall be applied in accordance with regulations promulgated under
Section 416(i)(1)(B)(iii)(II) of the Code.
(e) DURATION OF CLASSIFICATION AS KEY EMPLOYEE. Any Employee who meets any of the four tests set forth in paragraph (a) as of any Top-Heavy Determination Date shall continue to be a Key Employee for the remainder of the Key Employee Test Period, commencing with the Plan Year which includes such Top-Heavy Determination Date, whether or not he remains an Employee, and, if such Employee dies during such Key Employee Test Period his Beneficiaries shall be classified as Key Employees for the balance of such Key Employee Test Period, unless such Employee is a Key Employee solely by reason of paragraph (a)(i) and is subsequently excluded from the group of officers having the highest 415 Compensation by reason of the limitation set forth in paragraph (b) in subsequent Years or solely by reason of paragraph (a)(ii) and is subsequently excluded from the group of the ten (10) Employees owning the largest percentage shares of the stock of an Employer or Affiliate in subsequent Years.
(f) KEY EMPLOYEE TEST PERIOD. The Key Employee Test Period for any Plan Year shall mean the period consisting of five Plan Years (or, if fewer, the total number of Plan Years during which the Plan and all other employee plans qualified under Section 401(a) of the Code maintained by an Employer or Affiliate have been in effect) ending with the Plan Year which includes the Top-Heavy Determination Date for such Plan Year.
(g) PURPOSE. The purpose of this Section is to conform to the definition of "key employee" set forth in Section 416(i)(1) of the Code, which is incorporated herein by reference, and to the extent that this Section shall be inconsistent with Section 416(i)(1) of the Code, either by excluding Employees who would be classified as "key employees" thereunder or by including Employees who would not be so classified, the provisions of Section 416(i)(1) of the Code shall govern and control.
LEASED EMPLOYEE.
(a) GENERAL RULE. Any person (other than a person described in paragraph (b)) who performs services for an Employer or Affiliate under the primary direction or control of the Employer or Affiliate on a substantially full-time basis pursuant to an agreement between the Employer or Affiliate and any third person (for purposes of this Section the "Leasing Organization"). A Leased Employee shall not be considered to be an Employee until he has provided such services to the Employer or Affiliate for at least one year, but thereafter the Leased Employee's Years of Service shall be determined on the basis of the entire period that the Leased Employee has performed services for any such persons.
(b) EXCEPTION FOR LEASED EMPLOYEES COVERED BY OTHER PLANS. A person shall not be considered a Leased Employee if (i) he is covered by a money purchase pension plan maintained
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by the Leasing Organization and providing for contributions equal to at least 10 percent of the Leased Employee's compensation (without regard to integration with Social Security) providing for full and immediate vesting of all such contributions and, providing that each employee of the Leasing Organization (other than employees who perform substantially all of their services for the Leasing Organization) immediately participate in such plan (other than employees whose compensation from the Leasing Organization for each of the plan years in the four plan year period ending with the year under determination is less than $1,000); and (ii) persons who would be Leased Employees but for this paragraph
(b) do not comprise more than 20 percent of the sum of number of Employees (excluding Leased Employees) who have performed services for the an Employer or Affiliate on a substantially full-time basis for at least one Plan Year and persons who would be Leased Employees but for this paragraph (b), excluding in each case any Highly Compensated Employee.
(c) DEFINITION OF AFFILIATE. Solely for purposes of this Section, the term Affiliate shall also include any person related to an Employer or Affiliate within the meaning of Section 144(a)(3) of the Code.
LEAVE OF ABSENCE. A period of absence that (i) is authorized by the Employer or Affiliate, (ii) is covered by the Uniformed Services Employment and Reemployment Rights Act of 1994, or (iii) to which the Employee is entitled under the Family and Medical Leave Act of 1993 or any comparable state law; provided, however, that the Employee retires or returns to work for an Employer or Affiliate within the time specified in his Leave of Absence (or, if applicable, within the period during which re-employment rights are protected by law).
LIMITATION YEAR. The twelve-month period used by the Plan for purposes of applying the limitations of Section 415 of the Code, which shall be the same as the Plan Year.
MAXIMUM ACP. The maximum permissible Highly Compensated ACP for a Plan Year, based upon the Non-Highly Compensated ACP for the current Plan Year, with respect to the Plan Year ending on December 31, 1999, or the prior Plan Year, with respect to Plan Years beginning on and after January 1, 2000, in accordance with the following schedule:

If the Non-Highly Compensated ACP is     The Maximum ACP is
2% or less                               the Non-Highly Compensated ACP
                                         multiplied by two
greater than 2% but less than 8%         the Non-Highly Compensated ACP
                                         plus two percentage points
8% or more                               the Non-Highly Compensated ACP
                                         multiplied by 1.25	

MAXIMUM ADP. The maximum permissible Highly Compensated ADP for a Plan Year, based upon the Non-Highly Compensated ADP for the current Plan Year, with respect to the Plan Year ending on December 31, 1999, or the prior Plan Year, with respect to Plan Years beginning on and after January 1, 2000, in accordance with the following schedule:
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If the Non-Highly Compensated ADP is     The Maximum ADP is
2% or less                               the Non-Highly Compensated ADP
                                         multiplied by two
greater than 2% but less than 8%         the Non-Highly Compensated ADP
                                         plus two percentage points
8% or more                               the Non-Highly Compensated ADP
                                         multiplied by 1.25	

NON-HIGHLY COMPENSATED ADP. The average of the Deferral Percentages of all Non-Highly Compensated Employees who are Active Participants for a Plan Year, including those whose Deferral Percentage is zero.
NON-HIGHLY COMPENSATED ACP. The average of the Contribution Percentages of all Non-Highly Compensated Employees who are Active Participants for a Plan Year, including those whose Contribution Percentage is zero.
NON-HIGHLY COMPENSATED EMPLOYEE. Any Employee who for any Plan Year is not a Highly Compensated Employee.
NON-KEY EMPLOYEE. Any Employee who for any Plan Year is not a Key Employee.
NORMAL RETIREMENT AGE. The day on which a Participant attains the age of 65.
PARTICIPANT. A person who is either an Active Participant or an Inactive Participant.
PERMANENT DISABILITY. The inability of a Participant to perform a substantial portion of his duties by reason of any medically determinable physical or mental impairment which can be expected to be of long-continued and indefinite duration. Disability shall be presumed to be present if the Participant receives disability benefits under the Social Security Act. Permanent Disability shall be determined solely by the Administrator upon medical evidence from a physician selected by the Administrator. A determination of Permanent Disability pursuant to the provisions of the Plan shall not be construed to be an admission of disability in regard to any other claim of disability brought by the Participant against an Employer.
PLAN. LKQ Corporation Employees' Retirement Plan, the profit sharing plan created by this instrument, and any amendments or supplements thereto.
PLAN YEAR. The twelve-month accounting period used by the Plan, which shall end on December 31 of each year.
QUALIFIED DOMESTIC RELATIONS ORDER.
(a) GENERAL RULE. Except as provided in paragraph (b), any order (including a judgment, a decree or an approval of a property settlement agreement entered by any court) which the Administrator determines (i) is made pursuant to any state domestic relations law (including a community property law), (ii) creates or recognizes the existence of an Alternate Payee's right to, or assigns to an Alternate Payee the right to, receive all or a portion of a Participant's Accounts, and (iii) clearly specifies (A) the name and last known mailing address of the Participant and the name
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and last known mailing address of each Alternate Payee covered by the order, (B) the amount or percentage of the Participant's benefits to be paid by the Plan to each Alternate Payee, or the manner in which such amount or percentage is to be determined, (C) the number of payments or period to which such order applies, and (D) the employee benefit plan to which such order applies.
(b) REQUIREMENTS FOR QUALIFIED STATUS. An order shall in no event be considered a Qualified Domestic Relations Order if the Administrator determines that such order (i) requires the Plan to provide benefits to Alternate Payees, the actuarial present value of which in the aggregate is greater than the benefits which would otherwise have been provided to the Participant, (ii) requires the Plan to pay benefits to an Alternate Payee, which benefits are required to be paid to a different Alternate Payee under another order previously determined to be a Qualified Domestic Relations Order, or (iii) except as provided in paragraph (c), requires the Plan to provide any type or form of benefit, or any option, not otherwise provided under the Plan.
(c) EXCEPTION FOR CERTAIN REQUIRED DISTRIBUTIONS. Notwithstanding paragraph (b)(iii), an order shall not fail to be a Qualified Domestic Relations Order merely because it requires a distribution to an Alternate Payee prior to the time the Participant incurs a Termination of Employment.
QUALIFIED MILITARY SERVICE. Service by a Participant or Employee in the armed forces of the United States of a character that entitles the Participant or Employee to re-employment under the Uniformed Services Employment and Reemployment Rights Act of 1994, but only if the Participant or Employee is re-employed during the period following such service in which his right of re-employment is protected by such Act.
QUALIFIED PRERETIREMENT SURVIVOR ANNUITY. A single-premium annuity contract purchased on commercially available terms from a life insurance company selected by the Administrator with at least 50 percent of a deceased Participant's Account Balance (or such larger percentage as may be elected by the Participant) that provides equal monthly annuity payments for the life of the Participant's surviving spouse in accordance with Article IX.
RE-EMPLOYMENT COMMENCEMENT DATE. The day on which an Employee first performs an Hour of Service for an Employer or Affiliate after a Termination of Employment, or, solely for purposes of computing an Employee's Service under the elapsed time method, after commencing a period of absence from service, whether or not paid, other than by reason of a Termination of Employment.
SPONSOR. LKQ Corporation, a Delaware corporation.
TERMINATION OF EMPLOYMENT.
(a) GENERAL RULE. An Employee shall be deemed to have incurred a Termination of Employment as a result of:
(i) a retirement, a resignation or a dismissal for any reason;
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(ii) a failure to return to work promptly upon the request of the Employer at the end of a layoff; or
(iii) a failure to retire or return to work at the end of a Leave of Absence.
(b) FAILURE TO RETURN AFTER LEAVE. In the event that a Termination of Employment occurs within the meaning of either subparagraph (a)(ii) or
(a)(iii), such termination shall be deemed to have occurred on the first day of a layoff or a Leave of Absence for which the Employee was not credited with an Hour of Service.
(c) TRANSFERS. A transfer between Employers or Affiliates shall not be considered to be a Termination of Employment for purposes of determining a Participant's Years of Service.
TESTING COMPENSATION. A Participant's Compensation for a Plan Year determined without regard to the exclusions in paragraph (b) of the definition of Compensation.
TOP-HEAVY DETERMINATION DATE. The Top-Heavy Determination Date for any Plan Year is the last day of the immediately preceding Plan Year.
TOP-HEAVY YEAR.
(a) GENERAL RULE. Except as otherwise provided below, a Top-Heavy Year shall be any Plan Year if, as of the Top-Heavy Determination Date for such Plan Year, the aggregate Account Balances of all Key Employees under the Plan exceed 60 percent of the aggregate Account Balances of all Participants under the Plan.
(b) MANDATORY AGGREGATION GROUPS. Notwithstanding paragraph (a), if during any Plan Year (i) at least one Participant is a Key Employee, (ii) as of the Top-Heavy Determination Date for such Plan Year any Employer or Affiliate has adopted any other employee plan qualified under Section 401(a) of the Code and (iii) either (A) a Key Employee participates in such other plan or (B) the Plan or such other plan has satisfied the requirements of Section 401(a)(4) or
Section 410 of the Code only by treating the Plan and such other plan as a single plan, then the Plan Year shall be considered a Top-Heavy Year if and only if the Account Balances of all Key Employees under the Plan and the aggregate balances in the accounts of all Key Employees under all such other plans exceed 60 percent of the aggregate balances in the accounts of all Participants under the Plan and all such other plans.
(c) PERMISSIVE AGGREGATION GROUPS. Notwithstanding paragraphs (a) and (b), if as of any Top-Heavy Determination Date any Employer or Affiliate has adopted any other employee plan qualified under Section 401(a) of the Code which is not a plan described in paragraph (b), but which plan may be considered as a single plan with the Plan and all plans described in paragraph (b) without causing any of such plans to violate the requirements of either Section 401(a)(4) or Section 410 of the Code, the Plan Year shall not be considered a Top-Heavy Year if the Account Balances of all Key Employees under the Plan and the aggregate balances in the accounts of all Key Employees under all plans described in paragraph (b) and all plans described in this paragraph (c) do not exceed 60 percent of the aggregate balances in the accounts of all Participants under all such plans.
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(d) INCLUSION OF DEFINED BENEFIT PLANS. If any of the plans described in either paragraph (b) or (c) are defined benefit plans (as defined in Section 414(j) of the Code), then the tests set forth in said paragraphs shall be applied by substituting the present value of all benefits accrued under such plans (as determined by the Administrator, using actuarial assumptions which are uniform for all such plans and are reasonable in the aggregate) for the account balances in such plans. The accrued benefits of the Non-Key Employees under such plans shall be determined in accordance with Section 416(g)(4)(F) of the Code. If any of such plans have a determination date (as defined in Section 416(g)(4)(C) of the Code) for purposes of determining top-heavy status which is different from the Top-Heavy Determination Date, the account balances (or the present value of the accrued benefits, in the case of a defined benefit plan) in such plan shall be determined as of the determination date for such plan which occurs in the same Plan Year as the Top-Heavy Determination Date.
(e) ACCOUNT BALANCES. For purposes of this Section, account balances shall include (i) all Contributions which any Employer or Affiliate has paid or is legally obligated to pay to any employee plan as of the Top-Heavy Determination Date (including Contributions made thereafter if they are allocated as of the Top-Heavy Determination Date) and all Forfeitures allocated as of the Top-Heavy Determination Date, and (ii) all distributions made to a Participant or his Beneficiary during the Key Employee Test Period (or, in the case of a defined benefit plan, the actuarial present value as of the Top-Heavy Determination Date of such distributions). If any plan that was terminated within the Key Employee Test Period would, if it had not been terminated, be a plan described in paragraph (b), distributions made under such plan shall also be taken into account. For purposes of this Section, account balances shall also include amounts which are attributable to Contributions made by the Participants
(other than deductible voluntary contributions under Section 219 of the Code) but shall not include any rollover (as defined in Section 402 of the Code) or a direct transfer from the trust of any employee plan qualified under Section 401(a) of the Code if such plan is not maintained by an Employer or Affiliate and such rollover or transfer is made at the request of the Participant after December 31, 1983.
(f) CERTAIN FORMER EMPLOYEES. Anything to the contrary notwithstanding, if an Employee has not performed any services for any Employer or Affiliate at any time during the Key Employee Test Period, his account balance (in the case of a defined contribution plan) or his accrued benefit (in the case of a defined benefit plan) shall not be taken into consideration in the determination of whether the Plan Year is a Top-Heavy Year.
(g) PURPOSE. The purpose of this Section is to conform to the definition of "top-heavy plan" set forth in Section 416(g) of the Code, which is incorporated herein by reference, and to the extent that this Section shall be inconsistent with Section 416(g) of the Code, either by causing any Plan Year during which the Plan would be classified as a "top-heavy plan" not to be a Top-Heavy Year or by causing any Plan Year during which it would not be classified as a "top-heavy plan" to be a Top-Heavy Year, the provisions of
Section 416(g) of the Code shall govern and control.
TREASURY REGULATIONS or TREAS. REG. Regulations, including proposed and temporary regulations, issued by the Department of the Treasury or Internal Revenue Service codified at Title 26 of the Code of Federal Regulations. Where a reference is made to temporary or proposed
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regulations, such reference shall include any permanent regulations, modified proposed or temporary regulations, issued in lieu thereof.
TRUST. The trust or trusts established to fund benefits provided under the Plan, as provided in Section 1.5. The term "Trust" shall also include, as applicable, any insurance policy purchased to fund benefits under the Plan.
TRUST AGREEMENT. The agreement pursuant to which the Trust is established.
TRUSTEE. The person or persons acting as trustee of the Trust.
VESTED. The portion of a Participant's Account at any time that would not be forfeited if he then incurred a Termination of Employment.
YEAR OF SERVICE. A Computation Period included in a Participant's period of Service under the hours of service method, as defined in Article III.
2.2 CONFORMANCE WITH CODE AND ERISA. The Plan is intended to comply in all respects with the requirements of Section 401(a) of the Code and Title 1 of ERISA, and shall be so construed. References to specific provisions of the Code or ERISA in certain provisions of the Plan shall not be construed to limit reference to other provisions of the Code or ERISA in construing other provisions of the Plan where such reference is consistent with the purpose of the Plan. If any provision of the Code or ERISA is amended, any reference in the Plan to such provision shall, if appropriate in the context and consistent with the purpose of the Plan, be deemed to refer to any successor to such provision.
2.3 GENDER AND NUMBER; EFFECT OF TITLES. Wherever used in this Plan, nouns or pronouns of one gender shall be interpreted to apply to all genders, and the singular shall include the plural and vice-versa, as the context may require. Titles, captions and headings of Articles, Sections and Exhibits are for ease of reference only, and shall have no substantive meaning.
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ARTICLE III
COMPUTATION OF SERVICE
3.1 METHOD OF COMPUTATION.
(a) ELIGIBILITY SERVICE. For purposes of determining an Employee's right to participate in the Plan pursuant to Article IV, an Employee's service shall be determined using the hours of service method, with Computation Periods commencing on the Employee's Employment Commencement Date or Re-Employment Commencement Date and each anniversary thereof.
(b) VESTING SERVICE. For purposes of determining a Participant's Vested Account Balance pursuant to Article VIII, a Participant's service shall be determined using the hours of service method, with Vesting Computation Periods being each Plan Year commencing with the Plan Year that includes the Employee's Employment Commencement Date or Re-Employment Commencement Date.
3.2 COMPUTATION OF SERVICE UNDER THE HOURS OF SERVICE METHOD.
(a) GENERAL RULE. Under the hours of service method, an Employee shall receive credit for one Year of Service for each Computation Period during which he is credited with at least 1,000 Hours of Service with all Employers and Affiliates, regardless of whether he is continuously employed throughout such Computation Period. An Employee's Service for purposes of eligibility to participate in the Plan and for purposes of vesting shall be calculated separately under the rules of this Section, and whenever the term "Service," "Year of Service," "Break in Service," or "Computation Period" is modified by the term "Eligibility" or "Vesting," such term shall refer only to such term as applied for purposes of computing the Employee's service for purposes of eligibility or vesting, as the case may be.
(b) RE-EMPLOYMENT. The Service of an Employee who incurs a Termination of Employment and is subsequently re-employed shall include the Service completed prior to such Termination of Employment, except as follows:
(i) If the Employee incurred a Break in Service, such prior Service shall not be included until the Employee completes a Year of Service after being re-employed.
(ii) If the Employee was not Vested in any portion of his Account attributable to Contributions by the Employers at the time of Termination of Employment such prior Service shall be included under subparagraph (i) only if the number of Computation Periods in such Break in Service did not exceed the greater of five or the number of Years of Service completed prior to such Termination of Employment, disregarding Years of Service completed prior to earlier Terminations of Employment which were not included by reason of this paragraph (b) when the Employee was previously re-employed.
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(c) BREAKS IN SERVICE. Except as otherwise provided below, a Break in Service shall mean a period of one or more consecutive Computation Periods during each of which the Employee fails to complete more than 500 Hours of Service with all Employers and Affiliates. The following Computation Periods shall not be considered either Breaks in Service or Years of Service:
(i) A Computation Period in which the Employee completes more than 500 but fewer than 1,000 Hours of Service.
(ii) A Computation Period in which the sum of the Employee's Hours of Service and Childbirth Leave Hours (as hereinafter defined) exceeds 500. For purposes of this subparagraph (ii), an Employee shall be credited with one Childbirth Leave Hour for each Hour of Service (but not in excess of 501 for any one continuous period of absence) which the Employee would have completed but for the fact that the Employee is absent from service (i) by reason of the pregnancy of the Employee, (ii) by reason of the birth of a child of the Employee, (iii) by reason of the placement of a child with the Employee in connection with the adoption of such child by the Employee, or
(iv) for purposes of caring for such child for a period beginning immediately following such birth or placement; provided, however, that an hour which is considered an Hour of Service shall not also be considered a Childbirth Leave Hour. In the case of any Employee with respect to whom it is not possible to determine the number of Hours of Service which such Employee would have completed but for such absence, such Employee shall be credited with eight (8) Childbirth Leave Hours for each work day of such absence. All Childbirth Leave Hours for any period of absence shall be attributed to the Computation Period during which such period of absence begins if the result of such attribution is to prevent such Computation Period from being considered a Break in Service; otherwise, all Childbirth Leave Hours shall be attributed to the immediately following Computation Period. The Administrator shall adopt regulations under which an Employee may be required to furnish reasonable information on a timely basis establishing the number of Childbirth Leave Hours to which such Employee is entitled with respect to any period of absence from service, and any Employee who fails to furnish such information with respect to any period of absence shall not be credited with any Childbirth Leave Hours for such period of absence.
(iii) A Computation Period during which the Employee fails to complete more than 500 Hours of Service because of Qualified Military Service.
(iv) A Computation Period not otherwise described above in which the Employee fails to complete more than 500 Hours of Service because of a Leave of Absence which the Employee is entitled to receive under the Family and Medical Leave Act of 1993, if applicable, provided that the Employee returns to the employ of an Employer within the period of time required for his employment rights to be restored under the terms of said Act.
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(d) EXCLUSIONS FROM VESTING SERVICE. An Employee's Vesting Service shall not include Years of Service completed before the Employee attained the age of 18.
3.3 SERVICE WITH PREDECESSOR EMPLOYERS. Each Employee shall also receive credit for all Service with the following predecessor employers computed as if such predecessors had been Affiliates while the Employee was employed by them: 250 Auto Wrecking, Inc., Damron Service, Inc., Damron Management, Inc., Damron Auto Parts Georgia, Inc., Damron Trucking, Inc., Damron Used Auto Parts of Gainesville, Inc., Damron Auto Parts East, Inc., Dismantling & Recycling, Inc., Gorham Used Auto Parts, Hustiford Auto Co, Inc. Cad-N-Chev, Inc., JRJ Auto Parts, Best Foreign & American Automotive, Inc., B&D Auto Recyclers, Inc., D&R Auto Parts, Inc., Viking Auto Salvage, Inc., Mabry Salvage, Inc., Wittig Investments, Inc., and Recyclers Group, Inc.
In the event that the Sponsor or an Employer acquires the business of another employer in the future, the employees of such business who become Employees shall receive credit for their service with such predecessor employer except to the extent otherwise provided in the acquisition agreement. Notwithstanding the foregoing, in any case in which an Employer maintains a plan of a predecessor employer, service for such predecessor employer shall be counted as service for the Employer.
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ARTICLE IV
PARTICIPATION
4.1 REQUIREMENTS FOR PARTICIPATION. Each Eligible Employee who is employed by an Employer on the Effective Date of the Plan shall become a Participant on the Effective Date. Each other Eligible Employee shall become a Participant on the Entry Date, as determined under Section 4.2, that he satisfies all of the following requirements:
(a) He or she is then an Eligible Employee;
(b) He or she is at least 21 years of age; and
(c) He or she has completed the following:
(i) With respect to Pre-Tax Contributions and Matching Contributions, six months of continuous employment or one Year of Eligibility Service, whichever comes first; and
(ii) With respect to Profit Sharing Contributions, one Year of Eligibility Service.
4.2 DETERMINATION OF ENTRY DATE. Each Eligible Employee's Entry Date shall be the first day of the Plan Year or of the fourth, seventh or tenth month of the Plan Year coinciding with or next following the date he meets the requirements of Section 4.1.
4.3 CESSATION AND RESUMPTION OF ACTIVE PARTICIPATION.
(a) GENERAL RULE. A Participant who ceases to be an Eligible Employee shall cease to be an Active Participant, but shall continue to be an Inactive Participant until the full amount of his Account Balance is distributed or forfeited in accordance herewith.
(b) REINSTATEMENT WITH RESPECT TO PRE-TAX CONTRIBUTIONS AND MATCHING CONTRIBUTIONS. A former or Inactive Participant who again becomes an Eligible Employee
(i) without having incurred a Break in Eligibility Service, shall immediately become an Active Participant.
(ii) after having incurred a Break in Eligibility Service, shall become an Active Participant upon completion of six months of employment or one Year of Eligibility Service.
(c) REINSTATEMENT WITH RESPECT TO PROFIT SHARING CONTRIBUTIONS. A former or Inactive Participant who again becomes an Eligible Employee
(i) without having incurred a Break in Eligibility Service shall immediately become an Active Participant.
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(ii) after having incurred a Break in Eligibility Service, but who is entitled to have his Service restored after completing one Year of Eligibility Service, shall become an Active Participant when such Eligibility Service is restored, but such Active Participation shall be retroactive to his Re-Employment Commencement Date.
(iii) after having incurred a Break in Eligibility Service, and who is not entitled to have his Eligibility Service restored, shall become an Active Participant in the same manner as a new Employee.
(d) OTHER PLANS. Unless otherwise provided in a supplement to this Plan, the Sponsor will provide that Employees who are participants in other plans maintained by the Employers, or by businesses acquired by the Employers, will become Active Participants immediately upon becoming Eligible Employees, in accordance with Regulations issued pursuant to Section 401(a)(4) of the Code.
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ARTICLE V
AMOUNT AND ALLOCATION OF CONTRIBUTIONS
5.1 PRE-TAX CONTRIBUTIONS.
(a) AMOUNT OF CONTRIBUTIONS. Subject to the limitations in Article VI, each Active Participant may elect to have a portion of his 401(k) Compensation contributed to the Plan as Pre-Tax Contributions. Pre-Tax Contributions shall be stated as a whole percentage of the Participant's 401(k) Compensation, which shall be not less than one percent and not more than fifteen percent, and the percentage elected shall be withheld from each payment of Compensation to the Participant. Any Participant who is also a participant in the LKQ Corporation 401(k) Plus Plan (the "401(k) Plus Plan") may elect to have Pre-Tax Contributions made to the Plan for a Plan Year in such amounts as are permitted in accordance with the limitations of Section 6.3(a). The contributions shall be made at such time as the amount specified in the 401(k) Plus Plan Participation Agreement shall be considered compensation in accordance with the terms of the 401(k) Plus Plan.
(b) WITHHOLDING, DEPOSIT AND ALLOCATION OF CONTRIBUTIONS. All Pre-Tax Contributions shall be withheld from Compensation payable to the Participant, and shall be deposited in the Trust as soon as practical, but in no event more than the fifteenth day of the month following the month in which they were withheld. No amount shall be withheld from Compensation that is available to be paid to the Participant before the date on which the election is made. All Pre-Tax Contributions shall be allocated to the Participant's Pre-Tax Contributions Account as of the day they are credited by the Trustee.
(c) TIMING AND REVISION OF ELECTIONS. An Active Participant is permitted to make or revise a Pre-Tax Contributions Election as of any Election Date coinciding with or succeeding his Entry Date. The Election Dates shall be the first day of any payroll period. Each election or revision of an election shall take effect for the first payment of Compensation payable to the Participant on or after the Election Date as of which it is effective. Elections or revisions shall be made in such form and manner as the Administrator shall determine. The Administrator may also change the frequency of Election Dates, suspend deferrals, or establish additional Election Dates in special circumstances, such as the payment of annual bonuses or other circumstances that may make it desirable for Participants to change their elections, provided that in all cases the availability of Election Dates shall not discriminate in favor of Highly Compensated Employees.
(d) TERMINATION AND RESUMPTION OF CONTRIBUTIONS. If an Active Participant ceases to be an Active Participant, his election to have Pre-Tax Contributions made on his behalf shall be automatically terminated, whether or not he continues to be an Employee or Inactive Participant. If such Participant continues to be an Employee, his Pre-Tax Contributions shall be terminated as of the next payment of Compensation to him (subject to any necessary delay for administrative processing). If he again becomes an Active Participant, he may make a new election as of the Election Date coinciding with or next succeeding his new Entry Date as provided in paragraph (c).
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5.2 MATCHING CONTRIBUTIONS.
(a) AMOUNT OF CONTRIBUTIONS.
(i) For the period beginning on January 1, 1999, and ending on July 31, 1999 (September 30, 1999, with respect to LKQ John's Eastside Corp. and LKQ Midwest Auto Parts Corp.), each Employer that maintained a Prior Plan which provided for matching contributions shall make such contributions in accordance with the terms of that Prior Plan. However, if the Prior Plan required employment on the last day of the Plan Year as a condition of receiving an allocation of matching contributions, such requirement is amended to mean employment on the day prior to the date on which the Prior Plan was merged into the Plan. In addition, if the Prior Plan required a participant to complete a designated number of hours of service during the Plan Year as a condition of receiving an allocation of matching contributions, such requirement shall be amended to require a pro-rated number of hours of service. With respect to the John's Import Auto 401(k) Savings Plan and the Midwest Foreign Auto, Inc. 401(k) Profit Sharing Plan, the pro-rated amount shall be determined by multiplying the required number of hours of service by the fraction 9/12. The pro-rated amount with respect to all other Prior Plans shall be determined by multiplying the required number of hours of service by the fraction 7/12.
(ii) Effective August 1, 1999 (October 1, 1999, with respect to LKQ John's Eastside Corp. and LKQ Midwest Auto Parts Corp.), each Employer shall make Matching Contributions for each Match Period, as defined below, on behalf of each of its Employees on whose behalf Pre-Tax Contributions were made during such period, in an amount equal to fifty percent of the portion of the Pre-Tax Contributions made on behalf of such Employee that does not exceed six percent of the Employee's Compensation for such Match Period.
(b) ELIGIBILITY TO PARTICIPATE. The Employees eligible to participate in Matching Contributions made pursuant to this Section for any Match Period shall be those Employees on whose behalf Pre-Tax Contributions were made during such Match Period. For purposes of this Section 5.2, the "Match Period" shall mean each payroll period of the Employer.
(c) ALLOCATION AND DEPOSIT OF CONTRIBUTIONS. All Matching Contributions shall be deposited in the Trust at such time or times as the Sponsor shall determine, provided that the Matching Contributions made by each Employer shall be deposited not later than the last date for the filing of the Employer's federal income tax return for the year which includes the last day of the Plan Year to which such Contributions relate. Each Participant's share of Matching Contributions shall be allocated to the Participant's Matching Contribution Account as of the day they are credited by the Trustee.
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5.3 PROFIT SHARING CONTRIBUTIONS.
(a) AMOUNT OF CONTRIBUTIONS.
(i) For the Plan Year ending December 31, 1999, each Employer which maintained a Prior Plan shall make a Profit Sharing Contribution in such amount, if any, as such Employer, in its sole discretion, shall determine.
(ii) For Plan Years beginning on or after January 1, 2000, each Employer shall make a Profit Sharing Contribution in such amount, if any, as the Sponsor, in its sole discretion, shall determine.
(b) ALLOCATION OF CONTRIBUTIONS.
(i) For the Plan Year ending December 31, 1999, Profit Sharing Contributions shall be allocated among all eligible Participants of an Employer as of the last day of the Plan Year in accordance with the allocation formula provided in Appendix B with respect to the Prior Plan maintained by that Employer.
(ii) For Plan Years beginning on or after January 1, 2000, Profit Sharing Contributions shall be allocated among all eligible Participants of an Employer as of the last day of each Plan Year in the proportion that the Compensation paid to each such Participant bears to the Compensation paid to all such Participants of that Employer during the Plan Year.
(c) ELIGIBILITY TO PARTICIPATE. The Employees eligible to participate in an Employer's Profit Sharing Contribution made pursuant to this
Section for any Plan Year shall be those Employees of the Employer who have been Active Participants at some time during such Plan Year and who are Employees on the last day of the Plan Year and completed 1,000 Hours of Service during the Plan Year or who incurred a Termination of Employment during the Plan Year due to death, Retirement or Permanent Disability.
(d) ALLOCATION AND DEPOSIT OF CONTRIBUTIONS. All Profit Sharing Contributions shall be deposited in the Trust at such time or times as the Sponsor shall determine, provided that the Profit Sharing Contributions made by each Employer shall be deposited not later than the last date for the filing of the Employer's federal income tax return for the year which includes the last day of the Plan Year to which such Contributions relate. Each Participant's share of Profit Sharing Contributions shall be allocated to the Participant's Profit Sharing Contribution Account as of the date credited by the Trustee.
5.4 ROLLOVER CONTRIBUTIONS. An Active Participant may make a Contribution to the Plan which constitutes a rollover of benefits from another plan qualified under Section 401(a) of the Code (either directly or through a conduit IRA described in Section 408(d)(3)(A)(ii) of the Code), or cause the trustee of another plan to make a direct transfer of such benefits on his behalf (in either case, a "Rollover Contribution"). Such Contribution shall be allocated to a separate Rollover Account maintained for the Participant. The Administrator may establish uniform rules limiting or restricting Rollover Contributions. An Eligible Employee who has not yet become a Participant may also make
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a Rollover Contribution to the Plan, and shall be treated as an Inactive Participant with respect to his Rollover Account until he becomes a Participant.
5.5 QUALIFIED NONELECTIVE CONTRIBUTIONS. The Sponsor may, but shall not be obliged to, direct all Employers to make Qualified Nonelective Contributions in an amount that does not exceed the amount necessary to enable the Plan to satisfy the limitations of Section 6.3 or 6.4. Such Qualified Nonelective Contributions shall be allocated among all Active Participants that are Non-Highly Compensated Employees for the Plan Year in proportion to their Compensation. Such Qualified Nonelective Contributions shall be allocated to the Participants' Pre-Tax Contributions Accounts and shall be treated as Pre-Tax Contributions for all purposes of the Plan.
5.6 MINIMUM CONTRIBUTION IN TOP-HEAVY YEARS.
(a) REQUIRED CONTRIBUTION. For any Plan Year that is a Top-Heavy Year, the minimum amount of Profit Sharing Contributions allocated to the Profit Sharing Account of each eligible Non-Key Employee shall be the lesser of (i) 3 percent of the Non-Key Employee's 415 Compensation for the Plan Year or (ii) the highest Key Employee percentage (as hereafter described) for such Plan Year, reduced in either case by any Qualified Nonelective Contributions allocated to such Non-Key Employee for such Plan Year. For purposes of this Section, the "Key Employee percentage" for each Key Employee shall mean the total amount of Contributions other than Rollover Contributions made by or on behalf of such Key Employee for a Plan Year expressed as a percentage of such Key Employee's 415 Compensation for the Plan Year. An eligible Non-Key Employee is one who was an Active Participant at any time during the Plan Year and who has not incurred a Termination of Employment prior to the end of the Plan Year regardless of whether the Non-Key Employee has completed 1,000 Hours of Service during the Plan Year. The amount of Profit Sharing Contributions that would otherwise be allocated to the Key Employees shall be reallocated (in proportion to their 415 Compensation) to the eligible Non-Key Employees (in proportion to their 415 Compensation) to the extent necessary to satisfy the requirement of this Section. Any additional amount required to satisfy the requirements of this
Section shall be contributed by the Employers in proportion to the 415 Compensation paid by them to eligible Non-Key Employees during the Plan Year, regardless of any other limits on Profit Sharing Contributions contained in this Article V.
(b) PARTICIPATION IN OTHER PLANS. The minimum Contribution required by paragraph (a) shall be reduced by any employer contributions (other than elective and matching contributions subject to Section 401(k) or Section 401(m) of the Code) allocated to the account of the Non-Key Employee in any other defined contribution plan maintained by an Employer or Affiliate. If an eligible Non-Key Employee also participates in any Top-Heavy Year in a top-heavy defined benefit plan maintained by any Employer or Affiliate, then this Section shall not apply to such eligible Non-Key Employee provided that the minimum top-heavy benefit required by Section 416(c)(1) is accrued under such defined benefit plan.
5.7 OTHER REQUIRED CONTRIBUTIONS. The Employers shall make any additional contributions required to restore a forfeited Account pursuant to
Section 8.5(c) or 9.6 to the extent that Forfeitures occurring in the same Plan Year are insufficient for such purpose. A Participant who is re-employed following Qualified Military Service shall have the right to have additional Pre-Tax
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Contributions made on his behalf in accordance with Section 5.1 in an amount up to the amount of Pre-Tax Contributions he could have received during the period of Qualified Military Service. Such additional Contributions shall be made by additional withholding over a period of time not to exceed three times the length of his Qualified Military Service (but not more than five years). Such Participant shall also be entitled to receive any Matching Contributions he would have received had such Pre-Tax Contributions been made during his period of Qualified Military Service, and to receive any other Contributions he would have received, had he been an Active Participant during such period of service. All such contributions shall be deemed to have been received during the period of Qualified Military Service for purposes of applying all limitations on Contributions under this Plan. For purposes of this Section 5.7, a Participant shall be deemed to have received Compensation during his period of Qualified Military Service based on the rate of Compensation he would have received had he been an Employee during such period or, if such rate cannot be determined with reasonable certainty, based on his average Compensation received during the 12 month period (or his entire period of employment, if shorter) immediately prior to the period of Qualified Military Service. The provisions of this Section 5.7 shall be interpreted and applied in accordance with Section 414(u) of the Code and the Treasury Regulations issued thereunder.
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ARTICLE VI
LIMITS ON CONTRIBUTIONS
6.1 LIMIT ON ANNUAL ADDITIONS.
(a) LIMITATION. Notwithstanding any other provisions of the Plan, the amount of annual additions (as hereinafter defined) allocated to a Participant's Account for any Limitation Year shall not exceed an amount equal to the lesser of:
(i) $30,000 (as adjusted pursuant to Section 415(d) of the Code as of the first day of such Limitation Year); or
(ii) 25 percent of the Participant's 415 Compensation for the Limitation Year, increased by any amounts treated as annual additions solely by reason of subparagraph (b)(iv);
reduced in either case by the amount of annual additions credited to the Participant's account for the Limitation Year under any other defined contribution plan maintained by an Employer or 415 Affiliate.
(b) ANNUAL ADDITIONS. For purposes of this Section, annual additions shall include (i) all Contributions made by an Employer or 415 Affiliate (including Pre-Tax Contributions and elective deferrals under other plans), (ii) Contributions made by the Participant (other than Rollover Contributions), (iii) Forfeitures, and (iv) contributions to a separate account described in Section 401(h) of the Code or Section 419A(d) of the Code to provide medical or life insurance benefits for Key Employees. An amount credited to a Participant's Account in order to correct an error made in a previous Limitation Year shall be treated for purposes of paragraph (a) as having been credited to such Account in the Limitation Year to which the error relates.
(c) CORRECTION OF EXCESS ANNUAL ADDITIONS. If, as the result of an allocation of Forfeitures, a reasonable error in determining a Participant's 415 Compensation, or similar factors, the amount otherwise allocable to a Participant's Account would exceed the limitation set forth in paragraph (a), the amount of such excess shall first be corrected by a return to the Participant of all or a portion of his Pre-Tax Contributions for the Limitation Year. If the allocations to the Participant's Account would still exceed the limitation set forth in paragraph (a), then the amount of such excess shall be allocated to such Participant's Account, but shall be applied to reduce the amount that would otherwise be allocated to such Participant's Account in the next succeeding Limitation Year and all subsequent Limitation Years until such amount has been fully utilized. If such Participant is no longer covered by the Plan as of the end of any such subsequent Limitation Year, any remaining portion of such excess shall be reallocated to the Section 415 Suspense Account. For each Limitation Year in which there remains a balance in the Section 415 Suspense Account, the amount of such balance shall be allocated and reallocated among the Accounts of the Active Participants, in proportion to their Compensation for such Limitation Year. Such allocation shall be subject to the limitation of paragraph (a), and shall be made prior to any other allocation of Contributions for such Limitation Year.
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(d) PARTICIPATION IN DEFINED BENEFIT PLAN. Anything to the contrary notwithstanding, if during any Limitation Year ending prior to January 1, 2000, a Participant also participates in a defined benefit plan (as defined in Section 414(j) of the Code) maintained by an Employer or 415 Affiliate, the combination of the annual additions under this Plan and the projected annual benefit under the defined benefit plan shall not exceed the combined plan limitation set forth in paragraph (e) with respect to any Participant. Compliance with the combined plan limitation shall be achieved by first returning to the Participant all or a portion of his Pre-Tax Contributions as described in paragraph (c), and then reducing the projected annual benefit under the defined benefit plan.
(e) COMBINED PLAN LIMITATION. The combined plan limitation shall be exceeded for a Limitation Year with respect to a Participant if the sum of the Participant's "defined benefit plan fraction" and "defined contribution plan fraction" (as hereafter defined) for such Limitation Year exceeds one. A Participant's defined benefit plan fraction for any Limitation Year is a fraction, the numerator of which is the Participant's projected annual benefit under the defined benefit plan, determined as of the close of its plan year on the assumptions that the Participant remains covered by the plan until normal retirement age and that the Participant's compensation and all other factors will remain the same (or, in the case of a Participant who has attained his normal retirement age, his accrued benefit) and the denominator of which is the lesser of:
(i) 1.25 multiplied by the maximum dollar limitation in effect under Section 415(b)(1)(A) of the Code for such Limitation Year, or
(ii) 1.4 multiplied by the amount which may be taken into account under Section 415(b(1)(B) of the Code for such Limitation Year.
A Participant's defined contribution plan fraction for any Limitation Year is a fraction, the numerator of which is the sum of the annual additions to the Participant's Account as of the close of the Limitation Year and the denominator of which is the sum of the lesser of the following amounts determined for such Limitation Year and each prior Limitation Year during any part of which the Participant was an Employee of an Employer or 415 Affiliate:
(i) 1.25 multiplied by the maximum dollar limitation in effect under Section 415(c)(1)(A) of the Code for such Limitation Year (determined without regard to Section 415(c)(6) of the Code), or
(ii) 1.4 multiplied by the maximum amount which could have been be taken into account under Section 415(c)(1)(B) of the Code for such Limitation Year.
Solely for purposes of computing the defined contribution plan fraction, the term "Limitation Year" shall include all prior twelve-month periods which would have been Limitation Years had the Plan been in existence and subject to Section 415 of the Code.
(f) TOP-HEAVY YEARS. For any Top-Heavy Year, 1.0 shall be substituted for 1.25 wherever it appears in paragraph (e).
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(g) AGGREGATION OF PLANS. For purposes of this Section 6.1, all defined benefit plans of any Employer or 415 Affiliate, whether or not terminated, are to be treated as one defined benefit plan, and all defined contribution plans of any Employer or 415 Affiliate, whether or not terminated, are to be treated as one defined contribution plan.
6.2 LIMIT ON PRE-TAX CONTRIBUTIONS.
(a) LIMITATION. The total amount of Pre-Tax Contributions made on behalf of any Participant under this Plan, plus the total amount of before-tax elective deferrals made on behalf of the Participant under any other plan described in Section 401(k) or Section 402(h)(1)(B) of the Code plus amounts used to purchase an annuity under Section 403(b) of the Code pursuant to a salary reduction agreement under Section 402(g)(3) of the Code, in any calendar year shall not exceed $10,000.00 (or such larger dollar limitation as may then be applicable for such calendar year under Section 402(g)(5) of the Code).
(b) NOTIFICATION AND DISTRIBUTION OF EXCESS. If the Participant notifies the Administrator not later than April 1 of the following calendar year that the limitation of this Section has been exceeded for any calendar year, and specifies the amount of Pre-Tax Contributions that must be distributed from the Plan to satisfy such limitation, such amount shall be distributed to the Participant notwithstanding any other limitation on distributions contained in this Plan. For purposes of this paragraph, if the limitation of this Section would be exceeded by reason of Contributions made under this Plan, or under this Plan and one or more other plans maintained by the Employers, the Participant shall be deemed to have notified the Administrator and the necessary distribution shall be made first from this Plan. The amount required to be distributed pursuant to this Section 6.2 shall be reduced by any amount previously distributed to satisfy Section 6.3.
(c) DISTRIBUTIONS DURING YEAR. If the notice is received or deemed received within the calendar year for which the limitation is exceeded, the required distribution shall, if possible, be made out of Pre-Tax Contributions already received and before the end of such year, and shall be designated as a distribution of excess Pre-Tax Contributions.
(d) DISTRIBUTIONS AFTER END OF YEAR. If the notice is received or deemed received after the end of the calendar year, or the required distribution cannot be accomplished before the end of the calendar year, the required distribution shall be made not later than April 15 of the following calendar year and shall include the income attributable to such distribution (as determined under paragraph (e)), and the total amount distributed shall be included in the Participant's taxable income for the calendar year in which the excess occurred.
(e) ALLOCATION OF INCOME. For purposes of paragraph (d), the amount of income allocated to the required distribution shall be equal to the total income earned by the Participant's Pre-Tax Contributions Account for the calendar year multiplied by a fraction, the numerator of which is the amount of the required distribution and the denominator of which is the sum of the Participant's Pre-Tax Contributions Account Balance as of the beginning of the calendar year and the amount of Pre-Tax Contributions made during the calendar year. The income allocable to the required distribution for the "gap period" between the end of the calendar year and the date of the distribution shall also be distributed. The gap period income shall be determined by multiplying the amount of income determined as set forth above by 10 percent for each whole month during the gap
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period. For such purpose, a distribution made on or before the 15th day of a month shall be deemed to have been made on the first day of the month, and a distribution made after the 15th day of the month shall be deemed to have been made on the first day of the next month.
(f) USE OF OTHER METHODS. Notwithstanding paragraph (e), the Administrator may use any other reasonable method of allocating income for any year provided that such method does not violate Section 401(a)(4) of the Code, is applied consistently to all excess distributions and Participants for the year, and is the method used to allocate income to Accounts generally.
(g) FORFEITURE OF MATCHING CONTRIBUTIONS. The portion of any Matching Contributions that relates to any excess Pre-Tax Contributions distributed pursuant to this Section 6.2 shall be forfeited, notwithstanding any other provision of the Plan or the Participant's Vesting Service.
6.3 ACTUAL DEFERRAL PERCENTAGE LIMITATION
(a) LIMITATION. The Pre-Tax Contributions of Participants who are Highly-Compensated Employees shall be further limited for each Plan Year so that the Highly Compensated ADP does not exceed the Maximum ADP. The Administrator may impose percentage or dollar limits on the Pre-Tax Contribution elections of such Participants during the Plan Year to prevent this limitation from being exceeded, but in no event shall the Administrator have any liability to any Highly Compensated Employee if it does not do so.
(b) CORRECTION OF EXCESS CONTRIBUTIONS. If the limitation of paragraph (a) is exceeded for any Plan Year after taking into account any Qualified Non-Elective Contributions, the excess Pre-Tax Contribution (as determined under paragraph (c)) of each Participant who is a Highly-Compensated Employee shall be distributed to such Participant. All distributions shall be made, notwithstanding any other restriction on distributions in the Plan, not later than 2 1/2 months following the end of the Plan Year if possible, and in any event not later than the last day of the following Plan Year. The amount required to be distributed under this Section 6.3 shall be reduced by any amount previously distributed to satisfy Section 6.2. Any amount distributed shall include the share of income allocable to such distribution, determined in accordance with the method used under Section 6.2(e) or 6.2(f), and all references to excess Pre-Tax Contributions shall be deemed to include such allocated income.
(c) DETERMINATION OF EXCESS CONTRIBUTIONS. If it is necessary to determine the excess Pre-Tax Contributions of Highly Compensated Employees pursuant to paragraph (b) for any Plan Year, the following method shall be used:
(i) First, the Administrator shall determine the amount by which the Pre-Tax Contributions of the Highly Compensated Employee or Employees whose Deferral Percentage is the highest must be reduced until their Deferral Percentage is equal to the greater of the Deferral Percentage which will cause the Highly Compensated ADP not to exceed the Maximum ADP or the Deferral Percentage of the Highly Compensated Employee or Employees who have the second highest Deferral Percentage. The same procedure shall then
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be applied, if necessary, to the Pre-Tax Contributions of the Highly Compensated Employees who have the second highest Deferral Percentage (including those whose Deferral Percentage was reduced in the prior step), and so on until the Highly Compensated ADP no longer exceeds the Maximum ADP. The aggregate amount by which all Pre-Tax Contributions would have to be reduced, using this method, so that the Highly Compensated ADP would no longer exceed the Maximum ADP is hereinafter referred to as the "Aggregate Excess Contribution."
(ii) Second, the Administrator shall determine the amount by which the Pre-Tax Contributions (determined without regard to subparagraph (c)(i) above) of the Highly Compensated Employee or Employees whose Pre-Tax Contributions are the largest in dollar amounts must be reduced until either the total amount of reductions equals the Aggregate Excess Contribution or their Pre-Tax Contributions are equal in amount to the Pre-Tax Contributions of the Highly Compensated Employee or Employees who have the second largest amount of Pre-Tax Contributions. The same procedure shall then be applied, if necessary, to the Pre-Tax Contributions of the Highly Compensated Employees who received the second largest dollar amount of Pre-Tax Contributions (including those whose Pre-Tax Contributions were reduced in the prior step), and so on until the total amount of reductions equals the Aggregate Excess Contribution.
(d) FORFEITURE OF MATCHING CONTRIBUTIONS. The portion of any Matching Contributions that relates to any excess Pre-Tax Contributions distributed pursuant to this Section 6.3 shall be forfeited, notwithstanding any other provision of the Plan or the Participant's Vesting Service.
6.4 ACTUAL CONTRIBUTION PERCENTAGE LIMITATION
(a) LIMITATION. The Matching Contributions of Participants who are Highly Compensated Employees shall be further limited for each Plan Year so that the Highly Compensated ACP does not exceed the Maximum ACP (or such lower amount as is determined under paragraph (e)). The Administrator may reduce the amount of Matching Contributions allocated to such Participants in accordance with paragraph (d) during the Plan Year to prevent this limitation from being exceeded, but in no event shall the Administrator have any liability to any Highly Compensated Employee if it does not do so.
(b) CORRECTION OF EXCESS CONTRIBUTIONS. If the limitation of paragraph (a) is exceeded for any Plan Year after taking into account any Qualified Non-Elective Contributions and the recharacterization of Pre-Tax Contributions pursuant to paragraph (c), the excess Matching Contribution (as determined under paragraph (d) of each Participant who is a Highly-Compensated Employee shall be distributed to such Participant. All distributions shall be made, notwithstanding any other restriction on distributions in the Plan, not later than 2 1/2 months following the end of the Plan Year if possible, and in any event not later than the last day of the following Plan Year. Each such distribution shall include the share of income allocable to such distribution, determined in
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accordance with the method used under Section 6.2(e) or 6.2(f), and all references to excess Contributions shall be deemed to include such allocated income.
(c) USE OF PRE-TAX CONTRIBUTIONS. For purposes of this Section, a portion of the Pre-Tax Contributions made on behalf of Participants who are Non-Highly Compensated Employees shall be treated as Matching Contributions. Such amount shall be determined by applying the method set forth in paragraph
(d) to recharacterize the Pre-Tax Contributions of Non-Highly Compensated Employees as Matching Contributions until either the limitation of paragraph (a) is satisfied or any further recharacterization would cause the limitation of
Section 6.3 to be exceeded. If before-tax contributions under any other plan maintained by an Employer or Affiliate are included in a Non-Highly Compensated Employee's Contribution Percentage, such before-tax contributions may be recharacterized only if such other plan and the Plan would satisfy Section 410(b) of the Code (without reliance on the average benefits test) if treated as a single plan. Pre-Tax Contributions that are so recharacterized shall continue to be treated as Pre-Tax Contributions for all other purposes under the Plan, including specifically limitations on Forfeitures and distributions.
(d) DETERMINATION OF EXCESS CONTRIBUTIONS. If it is necessary to determine the excess Matching Contributions of Highly Compensated Employees pursuant to paragraph (b) for any Plan Year, the same two-step method described in Section 6.3(c) shall be used.
(e) MULTIPLE USE OF ALTERNATIVE LIMITATION. If the sum of the Highly Compensated ADP and the Highly Compensated ACP would otherwise exceed the greater of (i) or (ii) below:
(i) The sum of (A) 1.25 times the greater of the Non-Highly Compensated ADP or the Non-Highly Compensated ACP plus (B) two percentage points plus the lesser of the Non-Highly Compensated ADP or the Non-Highly Compensated ACP; provided that the amount in (B) shall not exceed two times the lesser of the Non-Highly Compensated ADP or the Non-Highly Compensated ACP.
(ii) The sum of (A) 1.25 times the lesser of the Non-Highly Compensated ADP or the Non-Highly Compensated ACP plus (B) two percentage points plus the greater of the Non-Highly Compensated ADP or the Non-Highly Compensated ACP; provided that the amount in (B) shall not exceed two times the greater of the Non-Highly Compensated ADP or the Non-Highly Compensated ACP.
then this Section 6.4 shall be applied by substituting the highest Highly Compensated ACP that will keep the sum of the Highly Compensated ADP and the Highly Compensated ACP from exceeding such amount for the Maximum ACP in paragraph (a).
(f) FORFEITURE OF NONVESTED CONTRIBUTIONS. If a distribution of an excess Matching Contribution must be made to a Participant under this Section 6.4 at a time when the Participant is not fully Vested in his Matching Contribution Account, then the amount distributed to such Participant shall be equal to the amount of the excess Matching Contribution multiplied by the percentage of the Matching Contribution Account that is Vested, and the remaining portion of the excess Matching Contribution shall be forfeited.
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6.5 LIMIT ON DEDUCTIBLE CONTRIBUTIONS. Anything else contained herein to the contrary notwithstanding, the total Contributions made by any Employer to the Plan for any Plan Year shall not exceed 15 percent of the aggregate Compensation paid by the Employer to all Participants during the Plan Year, or such other amount as may be deductible under Section 404 of the Code for such Plan Year (determined without regard to Section 263A of the Code).
6.6 PURPOSE OF LIMITATIONS; AUTHORITY OF ADMINISTRATOR. The limitations of this Article VI are intended to comply with the requirements of
Section 415, Section 402(g), Section 401(k), Section 401(m) and Section 404(a)(3) of the Code and the Treasury Regulations issued thereunder, and shall be construed accordingly. To the extent that said Treasury Regulations provide for any elections or alternative methods of compliance not specifically addressed in this Article VI, the Administrator shall have the authority to make or revoke such election or utilize such alternative method of compliance unless such election or alternative method of compliance by its terms requires an amendment to the Plan.
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ARTICLE VII
INVESTMENTS AND PLAN ACCOUNTING
7.1 PARTICIPANT ACCOUNTS. The Administrator shall establish and maintain the following separate Accounts with respect to Participants:
(a) PRE-TAX CONTRIBUTIONS ACCOUNT. A Pre-Tax Contributions Account shall be maintained on behalf of each Participant who elects to have Pre-Tax Contributions made on his behalf or who is allocated any Qualified Nonelective Contributions.
(b) MATCHING CONTRIBUTIONS ACCOUNT. A Matching Contributions Account shall be maintained on behalf of each Participant who is allocated any Matching Contributions under the Plan.
(c) PRIOR PLAN MATCHING CONTRIBUTIONS ACCOUNT. A Prior Plan Matching Contributions Account shall be maintained on behalf of each Participant who received an allocation of Matching Contributions under one of the Prior Plans.
(d) PROFIT SHARING CONTRIBUTIONS ACCOUNT. A Profit Sharing Contributions Account shall be maintained on behalf of each Participant who is allocated any Profit Sharing Contributions under the Plan.
(e) PRIOR PLAN PROFIT SHARING CONTRIBUTIONS ACCOUNT. A Profit Sharing Contributions Account shall be maintained on behalf of each Participant who received an allocation of Profit Sharing Contributions under one of the Prior Plans.
(f) ROLLOVER ACCOUNT. A Rollover Account shall be maintained on behalf of each Participant who elects to make a Rollover Contribution to the Plan.
Each Account shall represent the aggregate amount of the type of Contribution referred to above, less any withdrawals, distributions or Forfeitures charged thereto, and adjusted by the earnings, gains, losses, expenses, and unrealized appreciation or depreciation attributable to such Contributions. The maintenance of separate Account balances shall not require physical segregation of plan assets with respects to any Account. The Accounts maintained hereunder represent the Participants' interests in the Plan and Trust and are intended as bookkeeping records to assist the Administrator in the administration of the Plan. Any reference to a Participant's "Accounts" or "Account Balances" shall refer to all of the Accounts maintained in the Participant's name under the Plan unless the context otherwise requires.
7.2 SEPARATE FUND ACCOUNTING.
(a) MANNER OF ACCOUNTING. The Trust shall be divided into separate funds, as provided in Section 7.3, and the total balance in a Participant's Account shall consist of the aggregate of the balance in the portion of his Account that is invested in each of such funds, which shall be determined in accordance with the accounting procedures specified in the trust agreement, investment management agreement, insurance contract, custodian agreement or other document
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under which such fund is maintained. To the extent not inconsistent with such procedures, the following rules shall apply:
(i) Amounts deposited in a fund shall be deposited by means of a transfer of such amounts to such fund from another fund as required.
(ii) Amounts required to be transferred from a fund to satisfy benefit payments shall be transferred from such investment funds as soon as practicable following receipt by the trustee or investment manager of proper instructions to complete such transfers.
(iii) Except as provided in the applicable fund document, all amounts deposited in a fund shall be invested as soon as practical following receipt of such deposit. Notwithstanding the primary purpose or investment policy of a fund, assets of any fund which are not invested in the manner required by the fund document shall be invested in such short term instruments or funds as the applicable trustee or investment manager shall determine pending investment in accordance with such investment policy.
(b) SEPARATE PARTICIPANT ACCOUNTS. Notwithstanding the foregoing, if any portion of the Trust is invested in a fund that permits each Participant's interest in the fund to be accounted for as a separate account, all Contributions, distributions, and earnings shall be accounted for as they are actually received, disbursed, or earned.
7.3 PARTICIPANT-DIRECTED ACCOUNTS. The Administrator may permit or require all Participants or Beneficiaries to direct the investment of some or all of their own Accounts. If Participants are required or permitted to direct the investment of their Accounts, the Administrator shall establish a written procedure to govern such investments, which procedure shall satisfy the requirements of Section 404(c) of ERISA and DOL Reg. Section 2550.404c-1, including without limitation the establishment of at least three investment funds that provide sufficient diversification, the identification of the fiduciaries who are obligated to carry out participant investment directions, and any limitations on permissible investments. Such procedure shall be appended to and considered a part of this Plan.
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ARTICLE VIII
VESTING AND FORFEITURE
8.1 ACCOUNTS THAT ARE ALWAYS FULLY VESTED. The following Accounts in the Plan shall be fully Vested at all times to the extent funded, and shall not be forfeited for any reason:
(a) Pre-Tax Contributions Account
(b) Rollover Account
(c) Prior Plan Matching Contributions Account
(d) Prior Plan Profit Sharing Contributions Account
Any provision of the Plan that refers to vesting or forfeiture shall in no event be construed to refer to any of the Accounts listed above. Any Account not listed above shall be hereinafter sometimes referred to as a "Forfeitable Account."
8.2 VESTING ON RETIREMENT. If a Participant incurs a Termination of Employment on or after attaining his Normal Retirement Age or after becoming Permanently Disabled, all of such Participant's Forfeitable Accounts shall be fully Vested.
8.3 VESTING AT DEATH. If a Participant dies before becoming eligible to retire pursuant to Section 8.2, his Forfeitable Accounts shall be fully Vested.
8.4 OTHER TERMINATION OF EMPLOYMENT.
(a) DETERMINATION OF VESTED PORTION. If a Participant incurs a Termination of Employment when he is not eligible to retire pursuant to Section 8.2 then, except as otherwise provided herein, the percentage of his Forfeitable Accounts that is Vested shall be determined in accordance with his Years of Vesting Service in accordance with the following tables:
(i) Matching Contributions Account

Number of Years                       Vested Percentage
---------------                       -----------------
Fewer than 2                             0%
2 but not 3                             50%
3 but not 4                             75%
4 or more                              100%	

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(ii) Profit Sharing Contributions Account

Number of Years                       Vested Percentage
---------------                       -----------------
Fewer than 1                             0%
1 but not 2                             25%
2 but not 3                             50%
3 but not 4                             75%
4 or more                              100%	

(b) VESTING FOLLOWING A DISTRIBUTION. If at any time a Participant receives a distribution from any of his Forfeitable Accounts at a time when it is possible to increase the Vested percentage of such Account, thereafter the Vested portion of such Account shall be determined as follows:
(i) FIRST, the amount previously distributed to the Participant shall be multiplied by a fraction, the numerator of which is the Account Balance at the time the Vested amount is being determined and the denominator of which is the Account Balance immediately preceding the distribution;
(ii) SECOND, the amount previously distributed to the Participant, as adjusted under subparagraph (i), shall be added back to the Account;
(iii) THIRD, the amount determined under subparagraph (ii) will be reduced by applying the applicable vesting percentage determined in accordance with the vesting schedule under paragraph (a);
(iv) FOURTH, the amount previously distributed to the Participant, as adjusted under subparagraph (i), shall be deducted from the amount determined under subparagraph (iii).
(c) VESTING FOLLOWING RE-EMPLOYMENT. If a Participant incurs a Termination of Employment when he is partially Vested in his Forfeitable Accounts, and is subsequently re-employed but is not eligible to have his forfeited Account Balances restored to him under Section 8.5, then any portion of his Forfeitable Accounts that was Vested at the time of the Termination of Employment but was not distributed to him (including a pro rata share of income, gains, losses, expenses, and unrealized appreciation or depreciation) shall thereafter be treated as a separate subaccount of such Account that is 100 percent Vested, and the vesting schedule in paragraph (a) shall apply only to the remainder of such Account.
(d) VESTING FOLLOWING PLAN TERMINATION. If there is a complete or partial termination of the Plan, or if there is a complete discontinuance of Contributions to the Plan by any Employer, then the Forfeitable Accounts of all Participants affected by such termination or discontinuance shall thereafter be fully Vested.
(e) VESTING FOLLOWING PLAN AMENDMENTS. If any amendment to the Plan alters directly or indirectly the manner in which the Vested portion of Forfeitable Accounts is determined,
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then, in the case of any Participant who on the later of the date on which the amendment is adopted or the effective date of the amendment had completed three Years of Vesting Service, such Participant shall be given the right to elect to have the Vested portion of his Forfeitable Accounts determined without regard to such amendment. Such election must be exercised during a period beginning on the date of adoption of the amendment and ending on the date that is 60 days after the latest of the date the amendment is adopted, the date it is effective, or the date on which written notice of the amendment is given to the Participant. Such election must be made in writing and shall be irrevocable.
8.5 FORFEITURES.
(a) EFFECTIVE DATE OF FORFEITURE. The portion of any Participant's Forfeitable Accounts which is not Vested when he incurs a Termination of Employment under Section 8.4 will become a Forfeiture as of the last day of the Plan Year in which occurs the earlier of (i) the date the Participant receives a distribution or deemed distribution of the Vested portion of his Forfeitable Account following the Termination of Employment or (ii) the date the Participant incurs a Break in Service of at least five years following the Termination of Employment. Matching Contributions forfeited pursuant to Section 6.2(g), Section 6.3(d) or Section 6.4(f) shall be forfeited as of the last day of the Plan Year to which such Matching Contributions relate.
(b) APPLICATION OF FORFEITURES. Forfeitures occurring in any Plan Year shall be applied in the following order:
(i) To restore the forfeited Accounts of Participants described in paragraph (c) and Section 9.6 during such Plan Year;
(ii) In the case of Forfeitures derived from Matching Contribution Accounts, to reduce the amount of Matching Contributions required for such Plan Year; and
(iii) In the case of Forfeitures derived from Profit Sharing Contribution and/or Top-Heavy Accounts, to reduce the amount of Profit Sharing Contributions required for such Plan Year.
(c) RESTORATION OF FORFEITURES. If a Participant who incurs a Termination of Employment when his Forfeitable Accounts are not fully Vested and incurs a forfeiture upon receiving the distribution or deemed distribution of the Vested portion of his Forfeitable Account is re-employed before incurring a Break in Vesting Service of at least five years, the portion of his Account that was not Vested shall be restored to his Account, without adjustment for any gains or losses, when the Participant is entitled to have his Vesting Service restored pursuant to Article III. Such restoration shall be made from Forfeitures occurring during the Plan Year and/or from additional Contributions by the Employers.
Notwithstanding the foregoing, if such Participant received a distribution of the Vested portion of his Account excluding any portion attributable to his Rollover Account, such amount will be restored only upon the Participant's repayment to the Plan of the full amount of such distribution excluding
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any portion attributable to his Rollover Account, which shall be restored to his Account. Such repayment must be made before the fifth anniversary of the date the Participant is rehired or, if earlier, the date on which the Participant has incurred a Break in Vesting Service of at least five years.
A Participant who is not Vested in any portion of his Forfeitable Account when he incurs a Termination of Employment shall be deemed to have received a distribution of the entire Vested balance of such Account and shall be deemed to have repaid such deemed distribution if and when he is entitled to have his Vesting Service restored pursuant to Article III. Nothing contained herein shall be construed to cause any period with respect to which a Participant received a distribution of the Vested portion of his Account to be disregarded for purposes of determining the Participant's Eligibility or Vesting Service.
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ARTICLE IX
PAYMENT OF BENEFITS
9.1 METHODS OF BENEFIT PAYMENT.
(a) NORMAL FORM OF PAYMENT. The normal form of payment of a Participant's benefit, whether to the Participant or a Beneficiary, shall, except as otherwise provided in paragraph (e)(ii), be a cash lump sum distribution equal to the Participant's total Vested Account Balance valued as of the Accounting Date coincident with or immediately prior to such distribution, and, except as otherwise provided herein, all benefits shall be paid in such form.
(b) SMALL ACCOUNT BALANCE. If the Participant's total Vested Account Balance at the time of distribution, or the portion thereof distributed to a Beneficiary, does not exceed $5,000.00, then distribution shall be made in the form described in paragraph (a).
(c) PAYMENT IN INSTALLMENTS. Wherever the Plan permits a Participant or Beneficiary to elect to receive payment in installments, payment shall be made in a series of distributions, not less often then annually, determined in accordance with the provisions set forth below. The payments shall continue until the Participant's entire Vested Account Balance, or the portion thereof distributed to a Beneficiary, hereinafter referred to in this paragraph
(c) as the "Balance," has been distributed, and until such time, income, gains, losses, expenses, and unrealized appreciation or depreciation shall continue to be allocated to the Account in accordance with Article VII.
(i) The amount distributed in each calendar year commencing with the calendar year in which the payment begins shall not be less than the Balance on the last day of the preceding calendar year divided by the divisor determined under clause
(iii) or (iv) below. If the first payment is made in the year that includes the April 1 referred to in Section 9.2(d)(ii), such payment shall relate to the immediately preceding year and be computed as if paid in such preceding year, and shall be subtracted from the Balance in computing the second annual payment which shall be due by December 31 of the same year in which the first payment was made.
(ii) Installments may be paid more often than annually, so long as the total amount distributed in any year satisfies the minimum distribution requirement of clause (i). Distributions in excess of the minimum requirement in any year shall not reduce the minimum required distribution in subsequent years. Corrective distributions made to satisfy any of the limitations of Article VI shall not be considered distributions for purposes of the minimum distribution requirement.
(iii) The divisor for the first year for which an installment payment is to be made shall be elected by the Participant or Beneficiary and shall be an integer that does not exceed either (A) the life expectancy of the Participant (or
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Beneficiary) or (B) the shorter of (1) the joint and last survivor life expectancy of the Participant and his designated Beneficiary, and (2) if the Participant's designated Beneficiary is not his spouse, the maximum period permitted by the minimum distribution incidental death benefit rule as set forth under proposed Treas. Reg. Section 1.401(a)(9)-2, Q&A 5, or any successor thereto provided that in no event shall the divisor be less than 5. Life expectancies shall be determined in accordance with actuarial tables promulgated under Section 72 of the Code as of the Participant's and/or Beneficiary's ages on their birthdays in the calendar year in which (or as of which in the case of distribution that begins in the latest year permitted by Section 9.2(d)(ii)) begins.
(iv) The divisor in all years after the initial year shall be the divisor in the immediately preceding year reduced by one except that if the initial divisor was determined by the life expectancy of Participant or the joint and last survivor life expectancy of the Survivor and his spouse, then if the Participant so elects, the divisor for each subsequent year shall be determined in the same manner as for the initial year based on the Participant's and/or Beneficiary's ages on their birthdays in such subsequent year.
(d) ANNUITIES. To the extent hereinafter provided, and subject to the requirements of Section 9.1(e)(ii), a Participant or Beneficiary may elect to have the portion of the Account distributable to him used to purchase an annuity contract in any of the forms set forth below on commercially available terms from a life insurance company selected by the Administrator. The amount of monthly payments provided by such annuity contract shall be conclusively deemed to be the actuarial equivalent of the Participant's Account Balance, and the Plan shall have no further liability for payment of such annuity.
(i) LIFE ANNUITY. A monthly annuity for the life of the Participant or Beneficiary, with no payments made following the first day of the month in which the annuitant's death occurs.
(ii) JOINT AND SURVIVOR ANNUITY. A monthly annuity for the life of the Participant, with payments continuing following the Participant's death to his Beneficiary, if the Beneficiary survives the Participant, in an amount equal to 50 percent, 66-2/3 percent, 75 percent or 100 percent, as elected by the Participant of the amount payable during the Participant's lifetime. The last payment shall be made as of the first day of the later of the month in which the Participant or Beneficiary dies. A Participant may not change his Beneficiary under a joint and survivor annuity after payment commences. If the Beneficiary is not the Participant's spouse, the maximum percentage payable after the Participant's death shall not exceed the percentage required by the minimum distribution incidental death benefit rule as set forth in proposed Treas. Reg. Section 1.401(a)(9)-2, Q&A 6(b) and any successor thereto. A "qualified" joint and survivor annuity shall mean a joint and survivor annuity in which the Beneficiary is the Participant's spouse and the percentage paid after the Participant's death is 50 percent.
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(iii) JOINT AND SURVIVOR ANNUITY WITH INSTALLMENT REFUND. A monthly annuity for the life of the Participant with a death benefit payable to the Beneficiary in an amount equal to 50, 66-2/3, 75 or 100 percent of the amount payable during the Participant's lifetime. The death benefit shall be a lump sum payment equal to the difference between the amount used to purchase the annuity and the total amount received as monthly annuity payments. No death benefit shall be paid if the total amount received as monthly annuity payments exceeds the amount used to purchase the annuity.
(iv) LIFE ANNUITY WITH INSTALLMENT REFUND. A monthly annuity for the life of the Participant with a death benefit payable to the Beneficiary. The death benefit shall be a lump sum payment equal to the difference between the amount used to purchase the annuity and the total amount received as monthly annuity payments. No death benefit shall be paid if the total amount received as monthly annuity payments exceeds the amount used to purchase the annuity.
(v) LIFE ANNUITY WITH PERIOD CERTAIN. A monthly annuity for the life of the Participant, with payments in the same amount continuing to a Beneficiary until a minimum number of total payments have been made if the primary annuitant dies before such minimum number of payments have been made. The minimum number of payments shall be 60, 120, or 180 months. The minimum number of guaranteed payments shall not exceed the maximum permitted by the minimum distribution incidental death benefit rule as set forth in proposed Treas. Reg. Section 1.401(a)(9)-2, Q&A 6(c) and any successor thereto.
Notwithstanding anything to the contrary, to the extent of a Participant's Account Balance under any Prior Plan as of the Effective Date, a Participant may receive a distribution in the form of any annuity that was permitted under the document of any Prior Plan in which he participated.
(e) ELECTION PROCEDURES.
(i) Wherever the Plan provides for a Participant or Beneficiary to elect a form of distribution (including the right to defer receiving a distribution), the Administrator shall provide a written explanation of the different forms of distribution. Such explanation shall be provided not less than 30 nor more than 90 days prior to the scheduled commencement of such benefit, or within such other period as may be provided by any applicable provision of ERISA or the Code. A Participant may waive the requirement that the written explanation be provided 30 days prior to the commencement of his benefit and elect an early commencement date, but in the case of a Participant to whom paragraph (e)(ii) applies, no waiver shall take effect until at least seven days after the written explanation is provided.
(ii) In the case of a Participant part of whose Account was transferred from a plan subject to Section 417 of the Code other than in a Rollover Contribution (but not
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with respect to the portion of his Account that is separately accounted for and represents Contributions under this Plan only), or who elects to receive an annuity under the Plan (whether or not such election is later revoked), such written explanation shall be furnished either during the period described in subparagraph (e)(i) or, if the Participant has attained his Normal Retirement Age, not less than 90 days prior to the date on which the distribution is scheduled to begin, shall explain the terms and conditions of a qualified joint and survivor annuity, the Participant's right to make and the effect of an election to waive the qualified joint and survivor annuity and to revoke such waiver, the right of the Participant's spouse to consent or refuse to consent to such waiver, and the effect of a revocation of a previous waiver, and shall otherwise satisfy the requirements of Section 401(a)(11) and Section 417 of the Code. Such a Participant's election to have his benefit paid in any form other than the qualified joint and survivor annuity shall not be valid unless the Participant waives payment in the form of a qualified joint and survivor annuity and his waiver is consented to by the Participant's spouse and the spouse's consent acknowledges the effect of the consent, either designates a specific alternate Beneficiary and form of payment or specifically authorizes the Participant to make changes in the Beneficiary and/or form of payment without further consent, and is witnessed by a representative of a Plan or a notary public, unless the Participant establishes to the Administrator's satisfaction that the Participant is unable to locate his spouse, that the Participant and his spouse are legally separated, that the Participant has been abandoned by his spouse and has a court order to such effect, or that such other circumstances exist as justify a failure to obtain the spouse's consent under Section 417 of the Code. A Participant's waiver of the qualified joint and survivor annuity under this paragraph (e)(ii) must be made within 90 days prior to the benefit commencement date, and may be revoked at any time, and any number of times, prior to the commencement of benefits. Consent of the Participant's spouse shall not be required for revocation of the waiver, but a new consent shall be required for any new election of an alternate form of benefit or designation of a new Beneficiary unless the spouse's prior consent explicitly authorized the Participant to make changes in the form of benefit or Beneficiary. The spouse's consent to a waiver shall be irrevocable, but shall not be binding upon any subsequent spouse of the same Participant.
9.2 DISTRIBUTIONS UPON TERMINATION OF EMPLOYMENT.
(a) SMALL ACCOUNT BALANCES. If, at the time of a Participant's Termination of Employment, his Vested Account Balance does not exceed the amount provided in Section 9.1(b), the entire amount of the Vested Account Balance shall be distributed to such Participant as soon as administratively feasible.
(b) RETIREMENT. A Participant who incurs a Termination of Employment on or after attaining his Normal Retirement Age, or after becoming Permanently Disabled, shall begin receiving the distribution of his Account Balance as soon as administratively feasible unless the
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Participant's Account Balance exceeds the amount described in Section 9.1(b) and the Participant elects to postpone receiving his distribution until a date not later than the latest date determined under paragraph (d), provided that in no event shall distribution begin before the Participant attains his Normal Retirement Age unless the Participant so elects. Such distribution shall be made either in the normal form provided in Section 9.1(a) or, if the Account Balance exceeds or exceeded the amount described in Section 9.1(b) and the Participant so elects, in any optional form provided by Section 9.1.
(c) TERMINATION OF EMPLOYMENT PRIOR TO RETIREMENT. If a Participant incurs a Termination of Employment prior to being eligible to retire, and paragraph (a) does not apply to such Participant, then if the Participant so elects, distribution of his Vested Account Balance shall begin as soon as administratively feasible and, if the Participant does not so elect, distribution of his Vested Account Balance shall begin as soon as administratively feasible after the Participant attains Normal Retirement Age. A Participant who does not elect to begin receiving his distribution at the time of his Termination of Employment may subsequently elect to begin receiving his distribution at any time prior to attaining Normal Retirement Age. Such distribution shall be made in the normal form provided in Section 9.1(a) or, if the Account Balance exceeds the amount described in Section 9.1(b) and the Participant so elects, in any optional form provided by Section 9.1.
(d) LATEST COMMENCEMENT DATE. Anything else contained herein to the contrary notwithstanding, in no event shall distribution of a Participant's Account begin later than the earliest of the dates determined under clause (i) or clause (ii) below:
(i) Unless the Participant consents to a later date, the sixtieth
(60th) day after the close of the Plan Year in which the latest of the following events occurs: (A) the Participant's attainment of his Normal Retirement Age; (B) the tenth anniversary of the date on which the Participant commenced participation in the Plan; or (C) the Participant's Termination of Employment.
(ii) April 1 of the calendar year following the later of the calendar year in which the Participant attains the age of 70 1/2 or incurs a Termination of Employment, or, in the case of a Participant who is described in paragraph (a)(i) of the definition of Highly Compensated Employee in the year in which he attains the age of 70 1/2, April 1 of the following calendar year regardless of whether he has incurred a Termination of Employment.
9.3 PAYMENTS AFTER A PARTICIPANT'S DEATH.
(a) DESIGNATION OF BENEFICIARIES. The Account of a Participant who dies before his Account has been distributed in full shall be distributed to his Beneficiary or Beneficiaries as provided herein:
(i) Each Participant may file with the Administrator, in such form as the Administrator shall from time to time require, a written designation of a Beneficiary or Beneficiaries (including contingent or successive Beneficiaries). If more than one Beneficiary is designated, such designation
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shall also specify the manner in which payments are to be divided. In the absence of such designation, all payments shall be divided per capita, or, if the Beneficiaries are the Participant's descendants, per stirpes. The Beneficiaries may be changed at any time or times by the filing of a new designation with the Administrator, without the necessity of obtaining the written consent of any Beneficiary, subject to the rights of the Participant's spouse under clause (ii) below. No designation of a Beneficiary or change thereof shall be effective until it has been received by the Administrator. The Administrator shall be entitled to rely upon the last designation filed by the Participant prior to his death.
(ii) Except as otherwise provided in paragraph (d), any Beneficiary designation which has the effect of causing any portion of a Participant's Vested Account Balance to be paid to any Beneficiary other than the surviving spouse of the Participant shall be effective only if (i) such election is consented to, in writing, by the person who was the Participant's spouse for the one-year period ending on the date of the Participant's death, and the spouse's signature is witnessed either by a representative designated by the Administrator or by a notary public, or (ii) it is established, to the satisfaction of the Administrator, that the Participant had not been married for one year on the date of his death or that, if the Participant had been married for one year on the date of his death, that the consent of the spouse could not be obtained when the designation was filed because the Participant was unable to locate his spouse, the Participant and his spouse were legally separated, the Participant had been abandoned by his spouse and had a court order to such effect, or that such other circumstances existed as would justify a failure to obtain the spouse's consent under Section 417 of the Code.
(iii) To the extent provided in any Qualified Domestic Relations Order, a former spouse of the Participant shall be treated as the Participant's spouse at the time of his death (and as having been married to the Participant for a one-year period at the time of his death).
(iv) If a Participant dies without having a Beneficiary designation in force, or if at the time of the Participant's death all designated Beneficiaries have died, payment shall be made to the Participant's spouse at the time of his death if they had been married for at least one year at the time of his death; or if the Participant's spouse predeceases him or they had been married for less than one year, then first among his descendants (including adopted descendants), per stirpes; or, if there are no then living descendants, to his estate.
(b) DEATH OF PARTICIPANT AFTER DISTRIBUTION HAS COMMENCED. If a Participant dies after distribution of his benefit has commenced, and after the date specified in Section 9.2(d)(ii) unless distribution has been made by purchase of an annuity, then distribution shall continue under the same method of distribution elected by the Participant. If distribution has commenced in any
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form other than through the purchase of an annuity but the Participant dies prior to the date specified in Section 9.2(d)(ii), then distribution shall be made in accordance with paragraph (c).
(c) DEATH OF PARTICIPANT BEFORE DISTRIBUTION HAS COMMENCED. If the Participant dies before distribution of his Account has commenced, or before the date specified in Section 9.2(d)(ii), then the remaining balance of the Participant's Account shall be distributed among his Beneficiaries in a lump sum as soon as administratively feasible following the Participant's death, but in no event later than December 31 of the calendar year than includes the fifth anniversary of the Participant's death. Notwithstanding the foregoing, any Beneficiary whose share of the Participant's Account Balance exceeds the amount described in Section 9.1(b) may elect to have such share distributed in installments as provided in Section 9.1(c) or used to purchase a life annuity as provided in Section 9.1(d)(i). In the case of a Beneficiary who is not the Participant's surviving spouse, such payments must begin not later than December 31 of the calendar year that includes the first anniversary of the Participant's death. In the case of a surviving spouse, commencement may be deferred until December 31 of the calendar year in which the Participant would have attained the age of 70 1/2, if later. If the surviving spouse dies before such distribution is to begin, then the provisions of this paragraph (c) shall apply to the successor Beneficiary as if the surviving spouse had been the Participant, except that, if the surviving spouse had remarried, his surviving spouse shall not be treated as the surviving spouse of a Participant. Such an election must be made no later than the earlier of the date on which such payments would be required to begin or December 31 of the calendar year that includes the fifth anniversary of the Participant's death (or such earlier date as the Administrator may establish for purposes of administrative processing), and shall be irrevocable and binding on all successor Beneficiaries.
(d) QUALIFIED PRERETIREMENT SURVIVOR ANNUITY. If a deceased Participant is described in Section 9.1(e)(ii) or has designated a person other than his surviving spouse as a beneficiary without his obtaining the required consent of his surviving spouse, and his surviving spouse does not consent following his death, then, in lieu of the distribution provided in paragraph
(c), 50 percent (or such larger percentage as is set forth below) of such Participant's remaining Vested Account Balance shall be used to purchase a Qualified Preretirement Survivor Annuity for his surviving spouse, and the remainder shall be distributed to his Beneficiaries in the manner provided in paragraph (c). If the Participant has not designated any other Beneficiary, 100 percent shall be used to purchase the annuity. A surviving spouse may waive the receipt of a Qualified Preretirement Survivor Annuity hereunder and receive distribution in accordance with paragraph (c) instead.
(e) SPECIAL RULES FOR PAYMENTS TO SURVIVING SPOUSE. Any distribution to a surviving spouse (including commencement of a Qualified Preretirement Survivor Annuity) shall be available to such spouse within a reasonable time following the Participant's death. For this purpose, a reasonable time shall mean either 90 days or, if longer, the period of time within which other types of distributions made on Termination of Employment are customarily made. The portion of the Account payable to the surviving spouse shall be adjusted for gains and losses before it is distributed in the same manner and at the same times as Accounts are adjusted for purposes of other distributions.
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9.4 PURPOSE OF LIMITATIONS; AUTHORITY OF ADMINISTRATOR. The provisions of Sections 9.1, 9.2 and 9.3 are intended comply with the requirements of Section 401(a)(9) of the Code, including specifically the minimum distribution incidental death benefit rule of Section 401(a)(9)(G), the proposed Treasury Regulations issued thereunder, and any final Treasury Regulations, and shall be construed accordingly. Said Code and Treasury Regulation provisions are hereby incorporated herein by this reference, and shall control over any form of distribution provided in this Plan that is inconsistent therewith. To the extent that said Treasury Regulations provide for any elections or alternative methods of compliance not specifically addressed in Sections 9.1, 9.2 and 9.3, the Administrator shall have the authority to make or revoke such election or utilize such alternative method of compliance.
9.5 DIRECT TRANSFERS. Any Participant or Alternate Payee (but only with respect to an Alternate Payee who is the spouse or former spouse of a Participant) who is entitled to receive an "eligible rollover distribution," as hereinafter defined, shall have the right to direct the transfer of all or a portion of such distribution directly to an individual retirement account or annuity qualified under Section 408 of the Code (other than an endowment contract) (an "IRA"), or to a defined contribution pension or profit-sharing trust qualified under Section 401(a), annuity plan qualified under Section 403(a) of the Code, or other "eligible retirement plan" as defined in Section 401(a)(31) of the Code, which will accept such a transfer, provided that the amount so transferred must either be the entire amount of such distribution or must be at least $500. The surviving spouse of a Participant shall similarly be entitled to direct the transfer of all or a portion of any distribution to which this Section 9.5 applies, but only to an IRA. The Administrator shall furnish each Participant, Alternate Payee or surviving spouse to whom this Section 9.5 applies with a notice describing his right to a direct transfer and the tax consequences of a distribution. Such notice shall be furnished not more than 90 days nor less than 30 days before the Participant, Alternate Payee or surviving spouse is entitled to receive such distribution, and no distribution shall be made until 30 days after he or she has received such notice unless he or she waives such 30 day period in writing. For purposes of this Section 9.5, an "eligible rollover distribution" means any distribution that is at least $200.00, other than (i) a distribution that is part of a series of substantially equal installment payments, paid not less frequently than annually, over the life or life expectancy of the Participant, the joint lives or joint life expectancies of the Participant and his beneficiary, or a fixed period of 10 years or more, but only to the extent such distribution exceeds the minimum amount required to be distributed under the Plan, and (ii) a distribution of Pre-Tax Contributions made on account of hardship. The Administrator may adopt administrative procedures to implement direct transfers, which may vary the time periods and minimum amounts set forth above, to the extent consistent with final Treasury Regulations issued under Section 401(a)(31) of the Code.
9.6 MISSING PARTICIPANTS AND BENEFICIARIES. If a portion of an Account remains to be distributed to a Participant or Beneficiary at a time when the Administrator is unable to locate the Participant or Beneficiary, and the Participant or Beneficiary fails to contact the Administrator within three years after being notified of his right to receive such distribution by a letter sent to his address on file with the Administrator, then such Account shall be applied to reduce the amount of Contributions that the Employers would otherwise be required to contribute to the Plan, but if the Participant or Beneficiary later asserts a proper claim for such distribution, or if the person who would be entitled to receive such distribution upon the death of such Participant or Beneficiary
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establishes that such Participant or Beneficiary has died, the Employers shall contribute the amount necessary to restore such Account.
9.7 PAYMENT WITH RESPECT TO INCAPACITATED PARTICIPANTS OR BENEFICIARIES. If any person entitled to a distribution of benefits under the Plan is under a legal disability, or in the Administrator's opinion, is incapacitated in any way so as to be unable to manage his financial affairs, the Administrator may direct the payment of such distribution to such person's legal representative or to a relative or friend of such person for such person's benefit or the trustee may direct the application of such benefits to the benefit of such person. Payments made in accordance with this Section 9.7 shall discharge all liabilities for such distribution under the Plan.
9.8 LIMITATION ON LIABILITY FOR DISTRIBUTIONS. Anything else contained herein to the contrary notwithstanding, any distribution made under any provision of this Article IX to a person whom the Administrator determines in good faith to be entitled to receive such distribution shall fully discharge the Plan's obligation to make such distribution, and neither the Plan, the Trustee, the Administrator, the Sponsor nor any Employer shall have any further liability with respect to such distribution to the Participant or any other person claiming through him.
9.9 WITHDRAWALS.
(a) NON-HARDSHIP WITHDRAWALS. Participants shall be permitted to make withdrawals from their Account without demonstrating a financial hardship to the extent provided below:
(i) WITHDRAWALS FROM ROLLOVER ACCOUNT. A Participant may make one withdrawal per Plan Year of any portion of the current balance in his Rollover Account.
(ii) WITHDRAWALS AFTER AGE 59 1/2. A Participant who has attained the age of 59 1/2 may make one withdrawal per Plan Year of any portion of the current balance in his Pre-Tax Contributions Account.
(iii) WITHDRAWALS BY INACTIVE PARTICIPANTS AND BENEFICIARIES. An Inactive Participant or Beneficiary who has elected to receive payment in installments or to defer distribution of his Account Balance may, to the extent not inconsistent with an irrevocable election or the requirements of Section 401(a)(9) of the Code, withdraw amounts in excess of the minimum amounts he is required to receive in any year, but such amount shall not reduce the minimum distribution requirement in any subsequent year.
(b) HARDSHIP WITHDRAWALS. A Participant may receive a hardship withdrawal as provided below:
(i) Subject to the limitations set forth below, a hardship withdrawal may be made from the Participant's Pre-Tax Contributions Account.
(ii) A hardship withdrawal can only be made because of
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(A) the Participant's need to pay medical expenses (as defined in Section 213(d) of the Code) for the Participant, his spouse, or one of his dependents (as defined in Section 152 of the Code);
(B) the Participant's need to purchase the Participant's principal residence (excluding mortgage payments);
(C) the Participant's need to pay tuition, related fees, and room and board for up to twelve months of post-secondary education for the Participant, his spouse, one of his children, or one of his dependents (as defined in Section 152 of the Code); or
(D) the Participant's need to pay rent to avoid eviction from his principal residence, or mortgage payments to avoid foreclosure on his principal residence.
(iii) A hardship withdrawal must be limited to the amount reasonably necessary to satisfy the financial need described above (after payment of all income taxes and penalties on the withdrawal). A withdrawal will be considered reasonably necessary to satisfy a financial need only if it satisfies the following criteria:
(A) the Participant has obtained all other distributions permitted under paragraph (a) and loans permitted under
Section 9.10,
(B) the Participant's elective deferrals (as hereinafter defined) are suspended for a period of at least twelve months after the withdrawal under all plans maintained by any Employer or Affiliate, and
(C) the maximum amount of such elective deferrals for the calendar year following the year of the withdrawal are limited to the amount set forth in Section 6.2 reduced by all elective deferrals made prior to the withdrawal in the year of the withdrawal. For this purpose, the term elective deferrals includes Pre-Tax Contributions and all compensation the payment of which is deferred on a pre-tax basis, including that deferred under non-qualified plans.
(iv) A hardship withdrawal that is charged to the Pre-Tax Contributions Account may not exceed the lesser of the (A) current balance of the Account or (B) the excess of the total amount of Pre-Tax Contributions made to the Account over the total prior hardship withdrawals made from such Account.
(c) LIMITATIONS ON WITHDRAWALS. The Administrator may adopt uniform and non-discriminatory procedures imposing limitations on the number, frequency, or amount of hardship withdrawals pursuant to this Section 9.9.
(d) TREATMENT OF WITHDRAWALS. Except as otherwise specifically provided herein, a withdrawal shall be treated as a distribution for all purposes of the Plan. No withdrawal shall be
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made by any Participant unless such Participant waives the qualified joint and survivor annuity (or life annuity, if unmarried) form of benefit with respect to the portion of his Account withdrawn, and his spouse consents to such waiver in the manner provided in said Section 9.1(e)(ii).
9.10 LOANS.
(a) ELIGIBILITY FOR LOANS. An Active Participant, or an Inactive Participant who is still an Employee, may borrow against his Account Balance subject to the provisions set forth herein. Such loans shall be available to all Participants on a reasonably equivalent basis and shall not be made available to Highly Compensated Employees, officers or shareholders in an amount greater than the amount (stated as a percentage of the Participant's Accounts) made available to other Participants. Inactive Participants who are no longer Employees and Beneficiaries of deceased Participants shall be entitled to borrow from the Plan only if they are "parties in interest" as defined in Section 3(14) of ERISA at the time the loan is requested. Loans to such Inactive Participants and Beneficiaries shall be governed by the same rules as provided in this Section, with such modifications as the Administrator may determine to be appropriate to reflect the lack of an employment relationship.
(b) MAXIMUM AMOUNT OF LOANS. A loan to any Participant, when added to the outstanding balance of all other loans to him from the Plan, shall not exceed the lesser of (i) 50 percent of the Participant's Vested Account Balance or (ii) $50,000.00 reduced by the excess (if any) of (A) the highest outstanding balance of loans from the Plan during the one year period ending on the day before the date of the loan over (B) the outstanding balance of loans from the Plan on the date of the loan.
(c) MAXIMUM TERM. Each loan to a Participant shall provide for repayment over a period not to exceed five years, except that any such loan may provide for repayment over a period up to 15 years if it is to be used to acquire a dwelling unit which within a reasonable time is to be used (determined at the time the loan is made) as the principal residence of the Participant. Each such loan shall provide for substantially level amortization (with payments not less frequently than quarterly) over the term of the loan.
(d) INTEREST RATE. Each such loan shall bear interest at a reasonable rate to be determined by the Trustees in a nondiscriminatory manner, taking into consideration interest rates currently being charged by commercial lending institutions for similar loans.
(e) COLLATERAL AND ENFORCEMENT. Each loan made to a Participant shall be secured by not more than 50 percent of the Vested portion of the Participant's Accounts. Each Participant who is an Employee shall be required to execute a wage withholding agreement providing for payments of principal and interest to be withheld from his compensation. Each loan shall also provide that Termination of Employment by the Participant is an event of default, whether or not a distribution is made from the Participant's Accounts, permitting the balance of the loan to be offset against the Participant's Accounts. Anything else contained herein to the contrary notwithstanding, no amount shall be offset against a Participant's Pre-Tax Contributions Account except at a time that a distribution would be permitted to the Participant, whether or not a loan is treated as a distribution for tax purposes under Section 72(p) of the Code.
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(f) ACCOUNTING TREATMENT. The loan shall for purposes of Article VII be treated as an investment of the funds credited to the Participant's Accounts. For purposes of the accounting adjustments provided for by Article VII until the loan is repaid in full, the Administrator shall reduce the Participant's Account Balances by the unpaid balance on such loan and shall increase his Accounts by the amount of interest and other payments made by the Participant. Each such reduction or increase shall be applied to the Participant's Accounts and the Investment Funds in which his Accounts are invested in such proportions as he may specify in accordance rules adopted by the Administrator, or, if he fails to specify the proportions, shall be applied proportionately to such Accounts and Investment Funds.
(g) OTHER RESTRICTIONS. No loan shall be made to any Participant in an amount of less than $1,000. No loan shall be made to any Participant at such time as he has an outstanding balance from a prior loan. The Administrator may establish additional restrictions on the number, frequency, or terms of loans, provided that such restrictions are applied in a uniform and non-discriminatory manner and do not cause loans to fail to be available to Participants on a reasonably equivalent basis. No loan shall be made to any Participant unless such Participant waives the qualified joint and survivor annuity (or life annuity, if unmarried) form of benefit with respect to the portion of his Account that secures such loan, and his spouse consents to such waiver in the manner provided in Section 9.1(e)(ii) within the 90 day period ending on the date on which the loan is secured by the Participant's Account as provided in paragraph (e).
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ARTICLE X
PLAN ADMINISTRATION
10.1 GENERAL FIDUCIARY STANDARD OF CONDUCT. Each fiduciary under this Plan shall discharge his duties hereunder solely in the interest of the Participants and their Beneficiaries and for the exclusive purpose of providing benefits to the Participants and their Beneficiaries and defraying the reasonable expenses of administering the Plan and the Trust. Each fiduciary shall act with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent man, acting in a like capacity and familiar with such matters, would use in the conduct of an enterprise of a like character and with like aims, in accordance with the documents and instruments governing the Plan and the Trust, insofar as such documents and instruments are consistent with this standard.
10.2 ALLOCATION OF RESPONSIBILITY AMONG FIDUCIARIES. The fiduciaries shall have only those specific powers, duties, responsibilities and obligations specifically delegated to them under this Agreement. The Sponsor, the Administrator (if other than the Sponsor), members of the Committee, the Trustee, if any, and any investment manager shall each be a "named fiduciary" as defined in Section 402(a)(2) of ERISA. The Administrator may delegate fiduciary duties (other than trustee duties) to persons other than named fiduciaries, and may approve any allocation of fiduciary duties among named fiduciaries, as provided in Section 405(c) of ERISA. If there is more than one Trustee, they may enter into agreements among themselves with respect to the allocation of trustee responsibilities with the consent of the Administrator as provided in Section 405(b) of ERISA.
10.3 ADMINISTRATOR. The Administrator of the Plan shall be the Sponsor. The Administrator shall be the "plan administrator" as defined in
Section 414(g) of the Code, and the "administrator" as defined in Section 3(16)(A) of ERISA. The Administrator shall have the duty to file such plan descriptions and annual reports as may be required by ERISA or similar legislation and shall be designated to accept service of legal process and any other notices for the Plan. The Administrator shall also furnish each Participant with a summary plan description, a summary annual report, and all other notices and other documents required by ERISA, the Code or this Plan. The Sponsor shall have the authority to appoint one or more persons to serve as the Administrator hereunder, and shall also have the authority to remove the Administrator at any time that it is not serving as Administrator.
10.4 POWERS AND DUTIES OF ADMINISTRATOR. In addition to all other powers and duties set forth herein, the Administrator shall have all necessary power to accomplish its duties under the Plan, including, but not limited to, the power to:
(a) construe and interpret the Plan, decide all questions of eligibility and determine the amount, manner and time of payment of any benefits hereunder;
(b) prescribe procedures to be followed by Participants or Beneficiaries filing applications for benefits;
(c) assist any Participant regarding any rights, benefits or elections available under the Plan;
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(d) adopt reasonable procedures for determining whether any order, judgment or decree constitutes a Qualified Domestic Relations Order, and notify the Participant and all alternative payees affected as to the results of its determinations.
(e) direct the Trustee with respect to the amount and type of benefits to which any Participant or Beneficiary shall be entitled hereunder and with respect to other disbursements from the Trust;
(f) to the extent permitted under the Trust Agreement, direct the Trustee with respect to the investments of the Trust;
(f) receive from the Employers and from Participants such information as shall be necessary for the proper administration of the Plan;
(g) furnish the Employers, upon request, such annual reports with respect to the administration of the Plan as are reasonable and appropriate;
(h) maintain all the necessary records for the administration of the Plan;
(i) receive, review and keep on file (as it deems convenient and proper) reports of benefit payments made by the Trustee and reports of disbursements for expenses directed by it; and
(j) do all other acts which the Administrator deems necessary or proper to accomplish and implement its responsibilities under the Plan.
Any rule or procedure adopted by the Administrator, or any decision, ruling or determination made by the Administrator, in good faith and in accordance with the applicable fiduciary standards of ERISA shall be final, binding and conclusive on all Employers, Employees, Participants, Beneficiaries and all persons claiming through them.
10.5 COMMITTEE.
(a) APPOINTMENT AND MEMBERSHIP. A Committee may be appointed to administer the Plan as agent for the Sponsor. The Committee shall consist of one or more members appointed by the Board from time to time. Each member shall serve at the pleasure of the Board or for such term as the Board may determine, and may be removed by the Board at any time. A member of the Committee who is an Employee shall automatically cease to be a member upon his Termination of Employment. The Board may change the size of the Committee at any time, and if any vacancy occurs on the Committee, the remaining members shall have full authority to act unless and until the Board appoints a replacement member.
(b) ACTION BY COMMITTEE. The Committee shall act by the concurrence of a majority of its members at the time in office and such action may be taken either by vote at a meeting or in writing without a meeting. The Committee may adopt such by-laws, rules and regulations as it deems necessary, desirable or appropriate for the conduct of its affairs. When making a determination or calculation, the Committee shall be entitled to rely upon information furnished by a Participant, Beneficiary, Employer, or Affiliate, the Administrator or the Trustee, and shall have no
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duty or responsibility to verify such information. By vote or by unanimous written consent the Committee may authorize any one or more of its members to execute any instrument or document on its behalf.
(c) FAILURE TO APPOINT COMMITTEE. If the Sponsor is acting as Administrator and fails to appoint a Committee, the Sponsor's powers and duties as Administrator shall be discharged by such officers and employees as may be specifically delegated such powers and duties by the Board or Chief Executive Officer of the Sponsor or, in the absence of such delegation, by such officers and employees as are customarily responsible for matters involving human resources and/or employee benefits. In no event shall any such person be deemed to be the Administrator unless he is specifically so designated and accepts such designation in writing.
10.6 COMPENSATION AND EXPENSES. All fiduciaries and Committee members who are Employees shall serve without compensation for their services hereunder. Professional Trustees and investment managers shall be paid such compensation as may be agreed upon by the Administrator. All expenses of the administration of the Plan, including expenses incurred in the hiring of consultants, advisors, investment managers, attorneys and accountants, shall be paid by the Employers to the extent that such expenses are not paid out of the Trust.
10.7 INDEMNIFICATION BY EMPLOYERS. The Employers shall indemnify the members of the Committee, the Administrator and each Trustee for, and hold them harmless from and against, any and all liabilities, losses, costs or expenses (including reasonable attorneys fees) of whatsoever kind and nature which may be imposed on, incurred by or asserted against them at any time by reason of their service under the Plan or the Trust as long as they did not act dishonestly or engage in willful misconduct or gross negligence in their official capacities hereunder, including all expenses reasonably incurred in their defense if the Employers fail to provide such defense.
10.8 SERVICE IN MULTIPLE CAPACITIES. Any person may serve in more than one fiduciary capacity hereunder, including but not limited to service both as a member of the Committee and as a Trustee.
10.9 CLAIMS PROCEDURE.
(a) FILING OF CLAIM. A Participant or Beneficiary, or an authorized representative acting on his behalf (hereinafter called the "claimant"), may notify the Administrator of a claim for benefits under the Plan. Such notice may be in any form acceptable to the Administrator and shall set forth the basis of such claim and shall authorize the Administrator to conduct such examinations as may be necessary to determine the validity of the claim and to take such steps as may be necessary to facilitate the payment of any benefits to which the claimant may be entitled under the terms of the Plan.
(b) NOTICE OF DENIAL. Whenever a claim for benefits by the claimant has been denied by the Administrator, a written notice of denial shall be given to the claimant, prepared in a manner calculated to be understood by him without legal assistance and setting forth the specific reasons for the denial and explaining the procedure for an appeal and review of the decision by the Administrator. Such notice shall be furnished not later than 90 days after the claim has been filed
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(which 90 day period may be extended for up to an additional 90 days if special circumstances require and notice of the extension is furnished to the claimant prior to the end of the first 90 day period).
(c) REVIEW OF DENIAL. A claimant whose claim is denied, or his authorized representative, may request a review upon written application to the Administrator within 60 days after receiving notice of the denial. In connection with such application, the claimant or his authorized representative may review pertinent documents and may submit issues and comments in writing. If such an application is made, the Administrator shall make a full and fair review of the denial of the claim and shall make a decision not later than 60 days after receipt of the application, unless special circumstances (such as the need to hold a hearing) require an extension of time, in which case a decision shall be made as soon as possible but not later than 120 days after receipt of the request for review, and written notice of the extension shall be given to the claimant before the commencement of the extension. The decision on review shall be in writing and shall include specific reasons for the decision and specific references to the pertinent provisions of the Plan on which the decision is based.
10.10 QUALIFIED DOMESTIC RELATIONS ORDERS.
(a) DISTRIBUTION IN ACCORDANCE WITH QDRO. Notwithstanding Section 12.2 or anything else in the Plan to the contrary, a Participant's Accounts may be distributed to an Alternate Payee in accordance with a Qualified Domestic Relations Order.
(b) PROCEDURE ON RECEIPT OF ORDER. After receipt of an order that is a potential Qualified Domestic Relations Order, the Administrator shall (i) promptly notify the affected Participant and any Alternate Payee of the receipt of such order and the Administrator's procedure for determining qualified status of such orders, and (ii) within a reasonable period after receipt shall determine whether the order is a Qualified Domestic Relations Order and notify the Participant and each Alternate Payee of such determination.
(c) DETERMINATION OF STATUS OF ORDERS. The Administrator shall establish a procedure to determine the qualified status of such orders and to administer Plan distributions in accordance with Qualified Domestic Relations Orders. Such procedure shall be in writing, shall include a provision specifying the notification requirements enumerated in the preceding paragraph, shall permit an Alternate Payee to designate a representative for receipt of communications from the Administrator and shall include such other provisions as the Administrator determines, consistent with Section 401(a)(13) and Section 206(d)(3) of ERISA.
(d) SEGREGATION OF ACCOUNTS. During any period in which the issue of the qualified status of such an order is being determined (by the Administrator, a court of competent jurisdiction or otherwise), the Plan shall separately account for the amounts, if any, which would have been payable to the Alternate Payee during such period if the order had been determined to be a Qualified Domestic Relations Order.
(e) PAYMENT AFTER DETERMINATION OF STATUS. If an order is determined to be a Qualified Domestic Relations Order within the 18-month period after distribution of the Participant's
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Accounts would otherwise be required, then payment from the segregated account shall be made to the appropriate Alternate Payee. If such a determination is not made within the 18-month period, the segregated account shall be returned to the Participant's Accounts under the Plan and shall be paid at the time and the manner provided under the Plan as if no order had been received. Any subsequent determination that the order is a Qualified Domestic Relations Order shall be applied prospectively only.
(f) PRE-1985 ORDERS. An order that was entered prior to January 1, 1985 and that does not meet the requirements of a Qualified Domestic Relations Order, shall nevertheless be treated as a Qualified Domestic Relations Order if benefits were being paid pursuant to such order on such date, and, otherwise may be treated as a Qualified Domestic Relations Order in the Administrator's discretion.
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ARTICLE XI
AMENDMENT, TERMINATION OR MERGER OF PLAN
11.1 AMENDMENT.
(a) SPONSOR'S AUTHORITY TO AMEND. The Sponsor shall have the right at any time to amend in whole or in part any or all of the provisions of this Plan by action of its Board or any other person to whom the Board may delegate such authority except as expressly set forth below. Any rule or procedure adopted by the Administrator pursuant to Section 10.4 that is inconsistent with any provision of the Plan that is administrative or ministerial in nature shall also constitute an amendment to the Plan.
(b) NO REVERSIONARY AMENDMENTS. Except as expressly provided in
Section 12.12 below, no amendment may result in, authorize or permit any part of the Trust, the income from the Trust or any Plan assets to be distributed to or for the benefit of anyone other than the Participants and their Beneficiaries.
(c) NO BENEFIT REDUCTIONS. No amendment may be adopted which will reduce any Participant's Account Balance or the Vested portion thereof to an amount less than the Account Balance or the Vested portion thereof that the Participant would be entitled to receive if he had resigned from the employ of all Employers and Affiliates immediately prior to the later of the adoption date or election date of such amendment. Except as otherwise provided in Treasury Regulations issued pursuant to Section 411(d)(6) of the Code, an amendment that eliminates or reduces an early retirement benefit or retirement-type subsidy, or that eliminates an optional form of benefit, with respect to a Participant's Account Balance shall be treated as reducing the Participant's Account Balance for this purpose.
11.2 TERMINATION.
(a) COMPLETE TERMINATION. The Sponsor may terminate the Plan as to all Employers at any time by written notice to all of the Employers.
(b) TERMINATION BY AN EMPLOYER. The Plan will terminate as to any Employer on the earliest date on which one of the events described in (i) through (iv) below has occurred with respect to any that employer:
(i) Any date that the Plan is terminated with respect to an Employer by action of that Employer provided that the Sponsor has been given prior written notice of such termination;
(ii) Any date that an Employer is judicially declared bankrupt or insolvent;
(iii) Any date an Employer completely discontinues its Contributions under the Plan; or
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(iv) Any date on which an Employer is dissolved, merged, consolidated or reorganized or the date on which the assets of an Employer are completely or substantially sold unless arrangements have been made whereby the Plan will be continued by a successor to that employer or purchaser of its assets under Section 11.3.
11.3 CONTINUATION BY A SUCCESSOR OR PURCHASER. Notwithstanding
Section 11.2(b)(iv), the Plan and the Trust shall not terminate with respect to an Employer in the event of dissolution, merger, consolidation or reorganization of the Employer or sale by an Employer of its entire assets or substantially all of its assets if arrangements are made in writing, with the consent of the Sponsor, between the Employer and any successor to the Employer or purchaser of all or substantially all of its assets whereby such successor or purchaser will continue the Plan. If such arrangements are made then such successor or purchaser shall be substituted for the Employer under the Plan.
11.4 PLAN MERGER OR CONSOLIDATION. The Sponsor may cause the Plan or the Trust to be merged or consolidated with, or may transfer the assets or liabilities under the Plan to, any other qualified plan or from any other qualified plan provided that the documents and other arrangements regarding such merger, consolidation or transfer provide safeguards which would cause each Participant in the Plan, if the Plan terminated, to receive a benefit in the event of a termination immediately after such merger, consolidation or transfer which is equal to or greater than the benefit the Participant would have been entitled to receive if the Plan had terminated immediately prior to such merger, consolidation or transfer.
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ARTICLE XII
GENERAL PROVISIONS
12.1 NO EMPLOYMENT GUARANTEE. Neither the establishment of the Plan nor any modification thereof, nor the creation of any fund or account, nor the payment of any benefits shall be construed as giving to any Participant or other person any legal or equitable right against the Sponsor, any Employer, the Administrator or the Trustee except as herein provided. Under no circumstances shall the terms of employment with an Employer of any Participant be modified or in any way affected hereby. The maintenance of this Plan shall not constitute a contract of employment with any Employer. Participation in the Plan will not give any Participant a right to be retained as an employee of any Employer.
12.2 NONALIENATION OF PLAN BENEFITS. The rights or interests of any Participant or any Participant's Beneficiaries to any benefits or future payments hereunder shall not be subject to attachment or garnishment or other legal process by any creditor of any such Participant or beneficiary nor shall any such Participant or beneficiary have any right to alienate, anticipate, commute, pledge, encumber or assign any of the benefits or rights which he may expect to receive, contingently or otherwise under this Plan except as may be required by Section 10.10 or otherwise by applicable law that is not pre-empted by ERISA.
12.3 ACTION BY SPONSOR OR EMPLOYER. Action required to be taken or permitted by the Sponsor or an Employer may be taken by action of the Board of the Sponsor or such Employer or by a person or committee of persons authorized to act by said Board.
12.4 APPLICABLE LAW. The Plan and the Trust shall be construed in accordance with the provisions of ERISA and other applicable federal laws. To the extent not inconsistent with such laws, this Plan shall be construed in accordance with the laws of the State of Illinois.
12.5 PARTICIPANT LITIGATION. In any action or proceeding regarding the Plan assets or any property constituting a portion or all thereof or regarding the administration of the Plan, employees or former employees of an Employer or their Beneficiaries or any other persons having or claiming to have an interest in this Plan shall not be necessary parties and shall not be entitled to any notice or process. Any final judgment which is not appealed or appealable and may be entered in any such action or proceeding shall be binding and conclusive on the parties hereto and all persons having or claiming to have any interest in this Plan. To the extent permitted by law, if a legal action is begun against the Sponsor, an Employer, the Administrator, the Committee, or the Trustee by or on behalf of any person and such action results adversely to such person or if a legal action arises because of conflicting claims to a Participant's or other person's benefits, the costs to the Sponsor, an Employer, the Administrator, the Committee, or the Trustee of defending the action will be charged to the amounts, if any, which were involved in the action or were payable to the Participant or other person concerned. To the extent permitted by applicable law, acceptance of participation in this Plan shall constitute a release of the Sponsor, each Employer, the Administrator, the Committee, and the Trustee and their respective agents from any and all liability and obligation not involving willful misconduct or gross neglect.
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12.6 PARTICIPANT AND BENEFICIARY DUTIES. Persons entitled to benefits under the Plan shall file with the Administrator from time to time such person's post office address and each change of post office address. Each such person entitled to benefits under the Plan also shall furnish the committee with all appropriate documents, evidence, data or information which the committee considers necessary or desirable in administering the Plan. Any document will be properly filed with the Administrator if it is delivered or mailed by registered mail postage prepaid to the Administrator in care of the Sponsor.
12.7 ADEQUACY OF EVIDENCE. Evidence that is required of anyone under this Plan shall be executed or presented by proper individuals or parties and may be in the form of certificates, affidavits, documents or other information which the person acting on such evidence considers pertinent and reliable.
12.8 NOTICE TO PARTICIPANTS AND BENEFICIARIES. A notice mailed to a Participant or Beneficiary at his last address filed with the Administrator will be binding on the Participant or Beneficiary for all purposes of the Plan.
12.9 WAIVER OF NOTICE. Any notice under this Plan may be waived by the person entitled to notice.
12.10 SUCCESSORS. This Plan will be binding on the Sponsor and Employers, and on all persons entitled to benefits hereunder, and their respective successor, heirs and legal representatives.
12.11 SEVERABILITY. If any provision of this Plan shall be held illegal or invalid for any reason, such illegal or invalid provision shall not affect the remaining provisions of the Plan, and the Plan shall be construed and enforced as if such illegal or invalid provisions had never been contained in the Plan.
12.12 NONREVERSION.
(a) PROHIBITION ON REVERSIONS. The Employers have no right, title or interest in the assets of the Plan or in Trust and no portion of the Trust or the assets of the Plan or interest therein shall at any time revert or be repaid to the Employers, except as otherwise provided in paragraph (b).
(b) Notwithstanding paragraph (a), the following Employer Contributions may be returned to an Employer:
(i) Employer Contributions which are made as a result of a good faith mistake of fact may be returned to the Employer making the Contributions within 12 months after the Contribution is made by the Employer.
(ii) All Employer Contributions are conditioned upon the assumption that such Contributions are deductible under Section 404 of the Code, and shall be returned to the Employer that made such Contribution to the extent the Employer's deduction is disallowed. Such amount shall be returned within 12 months
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after the final conclusion of all administrative and judicial proceedings with respect to the disallowance of such deduction.
(iii) Upon termination of the Plan, any remaining balance in the
Section 415 Suspense Account shall revert to the Employers, in such proportions as the Sponsor shall determine.
(c) GENERAL LIMITATIONS ON RETURNS. The amount returned to an Employer pursuant to subparagraph (b)(i) or (b)(ii) shall be the excess, if any, of the amount actually contributed over the amount that either would have been contributed had the mistake not occurred, or that is determined to be deductible, as applicable. Such amount shall be reduced by a pro rata share of any losses incurred by the Trust, but shall not include any earnings. A Contribution may be returned even though it has been allocated to a Participant's Account, and such Account may be reduced accordingly, but in no event shall any account be reduced below the amount that would have been allocated to it if the mistaken or non-deductible Contribution had not been made. If the amount returned under any provision of paragraph (b) represents a Pre-Tax Contribution or Rollover Contribution, it shall be promptly paid by the Employer to the Participant.
IN WITNESS WHEREOF, the Sponsor has caused this Plan to be executed by its duly authorized officers this 1st day of August, 1999.
LKQ CORPORATION

By:    /s/ Daniel J. Hemmer
    ----------------------------------
  Its: Assistant Secretary
       ---------------------------	

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APPENDIX A
AMENDMENTS TO THE
BUD'S AUTO PARTS, INC. 401(K) PROFIT SHARING PLAN
IRC SECTION 414(q) - HIGHLY COMPENSATED EMPLOYEES
Effective date: Plan Years beginning after December 31, 1996, except that, in determining whether an employee is a highly compensated employee in 1997, the amendments are treated as having been in effect in 1996.
- The term "highly compensated employee" includes highly compensated active employees and highly compensated former employees. A highly compensated active employee means any employee who:
(A) was a 5-percent owner (as defined in section 416(i)(1) of the Code) of the employer at any time during the current or the preceding year; or
(B) for the preceding year:
(i) had compensation from the employer in excess of $80,000
(as adjusted by the Secretary pursuant to section 415(d) of the Code, except that the base period shall be the calendar quarter ending September 30, 1996); and
(ii) if the employer elects the application of this clause for such preceding year, was in the top-paid group of employees for such preceding year.
For this purpose, an employee is in the top-paid group of employees for any year if such employee is in the group consisting of the top 20 percent of the employees when ranked on the basis of compensation paid during such year.
A former employee shall be treated as a highly compensated employee if: (A) such employee was highly compensated when such employee separated from service or (B) such employee was a highly compensated employee at any time after attaining age 55.
- A determination of who is a highly compensated employee, including the determinations of the number and identity of employees in the top-paid group, will be made in accordance with section 414(q) of the Code and the regulations thereunder.
For purposes of this subsection, the term "compensation" means compensation within the meaning of section 415(c)(3) of the Code. The determination will be made without regard to sections 125, 402(e)(3), and 402(h)(1)(B) of the Code, and in the case of employer contributions made pursuant to a salary reduction agreement, without regard to section 403(b) of the Code.
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For plan years beginning after December 31, 1997, for purposes of this subsection, the term "compensation" means compensation within the meaning of section 415(c)(3) of the Code.
FAMILY AGGREGATION RULES
Effective for plan years beginning after December 31, 1996, the family aggregation rules required by IRS section 414(q)(6) of the Code have been deleted from the plan. This subsection is subject to the plan amendment rules of section 1.401(a)(4)-5(a) of the regulations.
SECTION 401(a)(9) REQUIRED DISTRIBUTIONS
NON-5-PERCENT OWNER: No amendment will be made to the plan for section 401(a)(9) of the Code. The term "required beginning date" will continue to be defined as April 1 of the calendar year following the calendar year in which the participation attains age 70-1/2.
5-PERCENT OWNER: The required beginning date for a participant who is a 5-percent owner (as described in section 416(I) of the Code) is April 1 of the calendar year following the calendar year in which the participation attains age 70-1/2.
SECTION 417(a)(7)(A)
SPECIAL RULE RELATING TO TIME FOR WRITTEN EXPLANATION
Effective Date: January 1, 1997
- The written explanation described in section 417(a)(7)(A) of the Code may be provided after the annuity starting date. The 90-day applicable election period to waive the qualified joint and survivor annuity described in section 417(a)(7)(A) of the Code, shall not end before the 30th day after the date on which such explanation is provided.
The Secretary may by regulations limit the period of time by which the annuity starting date precedes the provision of the written explanation other than by providing that the annuity starting date may not be earlier than termination of employment.
- A participant may elect (with any applicable spousal consent) to waive any requirement that the written explanation be provided at least 30 days before the annuity starting date (or to waive the 30-day requirement under the above paragraph) if the distribution commences more than 7 days after such explanation is provided.
FAMILY AGGREGATION RULES
Effective as of January 1, 1997, the plan is amended to delete the provision of family aggregation as described in section 401(a)(17)(A) of the Code which requires a plan participant, the spouse of such participant and any lineal descendants who have not attained age 19 before the close of the plan year
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to be treated as a single participant for purposes of applying the limitation on compensation for a plan year.
SECTION 414(n)(2): TREATMENT OF LEASED EMPLOYEES
Effective as of January 1, 1997, the plan is amended to define the term "Leased Employee" as any person (other than an employee of the recipient) who pursuant to an agreement between the recipient and any other person ("leasing organization") has performed services for the recipient (or for the recipient and related persons determined in accordance with sections 414(n)(6) of the Code) on a substantially full-time basis for a period of at least 1 year, and such services are performed under primary direction or control by the recipient.
SECTION 414(u): SPECIAL RULES RELATING TO VETERANS REEMPLOYMENT RIGHTS UNDER USERRA
Effective date: As of December 12, 1994
Notwithstanding any provision of this plan to the contrary, contributions, benefits and service credit with respect to qualified military service will be provided in accordance with section 414(u) of the Internal Revenue Code.
SECTION 401(d): AGGREGATION RULES FOR SELF-EMPLOYED PLANS
Effective as of January 1, 1997, any contributions to this plan on behalf of any owner-employee may be made only with respect to the earned income of the owner-employee that is derived from the trade or business with respect to which the plan is established.
APPLICATION OF PARTICIPATION AND DISCRIMINATION STANDARDS
Section 4.5 of the basic plan document of the plan is amended to use the actual deferral percentage (hereinafter "ADP") for participants who are Highly Compensated Employees for the current plan year and the ADP for participants who are non-highly compensated employees for THE PRECEDING PLAN YEAR in performing the nondiscrimination testing required under this section for the 1997 and 1998 plan years.
The provision of section 401(k)(3)(A) of the Code as amended by SBJPA are incorporated herein by reference.
SECTION 401(k)(8)(c): DISCRIMINATION OF EXCESS CONTRIBUTIONS
Effective as of January 1, 1997, any distribution of the excess contributions for any plan year shall be made to Highly Compensated Employees on the basis of the amount of contributions by, or on behalf of, each of such employees.
Excess Contributions will be distributed according to the following procedures:
1. The dollar amount of excess contributions is computed for each affected Highly Compensated Employee (HCE) in accordance with the provisions currently in effect.
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2. The excess contributions are distributed in the following manner:
Reduce the applicable contributions of the HCE's beginning with the HCE with the highest dollar amount, to equal the dollar amount of the HCE with the next highest dollar amount of contributions.
This amount will be distributed to the HCE with the highest dollar amount.
3. Repeat set 2 until total excess contributions are distributed.
If these distributions are made, the ADP is treated as meeting the nondiscrimination test of section 401(k)(3) of the Code regardless of whether the ADP, if recalculated after distributions, would satisfy section 401(k)(3) of the Code.
The above procedure issued for the purposes of recharacterizing excess contributions under 401(k)(8)(A)(ii) of the Code.
For purposes of section 401(m)(9) of the Code, if a corrective distribution of excess contributions has been made, or a recharacterization has occurred, the ADP for Highly Compensated Employees is deemed to be the largest amount permitted under section 401(k)(3) of the Code.
SECTION 401(m): NONDISCRIMINATION TEST FOR MATCHING CONTRIBUTIONS AND EMPLOYEE CONTRIBUTIONS
Section 4.7 of the basic plan document of the plan is amended to use the actual contribution percentage (hereinafter "ACP") for participants who are Highly Compensated Employees for the current plan year and the ACP for participants who are non-highly compensated employees FOR THE PRECEDING PLAN YEAR in performing the nondiscrimination testing required under this section for the 1997 and 1998 plan years.
The provisions of section 401(m)(6)(C) of the Code as amended by SBJPA are incorporated herein by reference.
SECTION 401(m)(6)(C): METHOD OF DISTRIBUTING EXCESS AGGREGATE CONTRIBUTIONS
Effective as of January 1, 1997, any distribution of the excess aggregate contributions for any plan year shall be made to Highly Compensated Employees on the basis of the amount of contributions by, or on behalf of, each of such employee. Forfeitures of excess aggregate contributions may not be allocated to participants whose contributions are reduced under this paragraph.
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Excess Aggregate Contributions will be distributed according to the following procedures:
1. The dollar amount of excess aggregate contributions is computed for each affected Highly Compensated Employee (HCE) in accordance with the provisions currently in effect.
2. The excess aggregate contributions are distributed in the following manner:
Reduce the applicable contributions of the HCE's beginning with the HCE with the highest dollar amount, to equal the dollar amount of the HCE with the next highest dollar amount of contributions.
This amount will be distributed to the HCE with the highest dollar amount.
3. Repeat set 2 until total excess aggregate contributions are distributed.
If these distributions are made, the ACP is treated as meeting the nondiscrimination test of section 401(m)(2) of the Code regardless of whether the ACP, if recalculated after distributions, would satisfy section 401(m)(2) of the Code.
For purposes of section 401(m)(9) of the Code, if a corrective distribution of excess aggregate contributions has been made, the ACP for Highly Compensated Employees is deemed to be the largest amount permitted under section 401(m)(2) of the Code.
IRC SECTION 411(a)(11)(A)
Effective as of January 1, 1998, the plan is amended to permit distribution without consent of any nonforfeitable accrued benefit which does not exceed $5,000.
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AMENDMENTS TO THE
DAMROM AUTO PARTS, INC. 401(K) PLAN
IRC SECTION 414(q) - HIGHLY COMPENSATED EMPLOYEES
Effective date: Plan Years beginning after December 31, 1996, except that, in determining whether an employee is a highly compensated employee in 1997, the amendments are treated as having been in effect in 1996.
- The term "highly compensated employee" includes highly compensated active employees and highly compensated former employees. A highly compensated active employee means any employee who:
(A) was a 5-percent owner (as defined in section 416(i)(1) of the Code) of the employer at any time during the current or the preceding year; or
(B) for the preceding year:
(i) had compensation from the employer in excess of $80,000
(as adjusted by the Secretary pursuant to section 415(d) of the Code, except that the base period shall be the calendar quarter ending September 30, 1996); and
(ii) if the employer elects the application of this clause for such preceding year, was in the top-paid group of employees for such preceding year.
For this purpose, an employee is in the top-paid group of employees for any year if such employee is in the group consisting of the top 20 percent of the employees when ranked on the basis of compensation paid during such year.
A former employee shall be treated as a highly compensated employee if: (A) such employee was highly compensated when such employee separated from service or (B) such employee was a highly compensated employee at any time after attaining age 55.
- A determination of who is a highly compensated employee, including the determinations of the number and identity of employees in the top-paid group, will be made in accordance with section 414(q) of the Code and the regulations thereunder.
For purposes of this subsection, the term "compensation" means compensation within the meaning of section 415(c)(3) of the Code. The determination will be made without regard to sections 125, 402(e)(3), and 402(h)(1)(B) of the Code, and in the case of employer contributions made pursuant to a salary reduction agreement, without regard to section 403(b) of the Code.
For plan years beginning after December 31, 1997, for purposes of this subsection, the term "compensation" means compensation within the meaning of section 415(c)(3) of the Code.
- 67 -

FAMILY AGGREGATION RULES
Effective for plan years beginning after December 31, 1996, the family aggregation rules required by IRS section 414(q)(6) of the Code have been deleted from the plan. This subsection is subject to the plan amendment rules of section 1.401(a)(4)-5(a) of the regulations.
SECTION 401(a)(9) REQUIRED DISTRIBUTIONS
NON-5-PERCENT OWNER: No amendment will be made to the plan for section 401(a)(9) of the Code. The term "required beginning date" will continue to be defined as April 1 of the calendar year following the calendar year in which the participation attains age 70-1/2.
5-PERCENT OWNER: The required beginning date for a participant who is a 5-percent owner (as described in section 416(I) of the Code) is April 1 of the calendar year following the calendar year in which the participation attains age 70-1/2.
SECTION 417(a)(7)(A)
SPECIAL RULE RELATING TO TIME FOR WRITTEN EXPLANATION
Effective Date: January 1, 1997
- The written explanation described in section 417(a)(7)(A) of the Code may be provided after the annuity starting date. The 90-day applicable election period to waive the qualified joint and survivor annuity described in section 417(a)(7)(A) of the Code, shall not end before the 30th day after the date on which such explanation is provided.
The Secretary may by regulations limit the period of time by which the annuity starting date precedes the provision of the written explanation other than by providing that the annuity starting date may not be earlier than termination of employment.
- A participant may elect (with any applicable spousal consent) to waive any requirement that the written explanation be provided at least 30 days before the annuity starting date (or to waive the 30-day requirement under the above paragraph) if the distribution commences more than 7 days after such explanation is provided.
FAMILY AGGREGATION RULES
Effective as of January 1, 1997, the plan is amended to delete the provision of family aggregation as described in section 401(a)(17)(A) of the Code which requires a plan participant, the spouse of such participant and any lineal descendants who have not attained age 19 before the close of the plan year to be treated as a single participant for purposes of applying the limitation on compensation for a plan year.
- 68 -

SECTION 414(n)(2): TREATMENT OF LEASED EMPLOYEES
Effective as of January 1, 1997, the plan is amended to define the term "Leased Employee" as any person (other than an employee of the recipient) who pursuant to an agreement between the recipient and any other person ("leasing organization") has performed services for the recipient (or for the recipient and related persons determined in accordance with sections 414(n)(6) of the Code) on a substantially full-time basis for a period of at least 1 year, and such services are performed under primary direction or control by the recipient.
SECTION 414(u): SPECIAL RULES RELATING TO VETERANS REEMPLOYMENT RIGHTS UNDER USERRA
Effective date: As of December 12, 1994
Notwithstanding any provision of this plan to the contrary, contributions, benefits and service credit with respect to qualified military service will be provided in accordance with section 414(u) of the Internal Revenue Code.
SECTION 401(d): AGGREGATION RULES FOR SELF-EMPLOYED PLANS
Effective as of January 1, 1997, any contributions to this plan on behalf of any owner-employee may be made only with respect to the earned income of the owner-employee that is derived from the trade or business with respect to which the plan is established.
APPLICATION OF PARTICIPATION AND DISCRIMINATION STANDARDS
Section 3.07(a) of the basic plan document of the plan is amended to use the actual deferral percentage (hereinafter "ADP") for participants who are Highly Compensated Employees for the current plan year and the ADP for participants who are non-highly compensated employees for THE PRECEDING PLAN YEAR in performing the nondiscrimination testing required under this section for the 1997 and 1998 plan years.
The provision of section 401(k)(3)(A) of the Code as amended by SBJPA are incorporated herein by reference.
SECTION 401(k)(8)(c): DISCRIMINATION OF EXCESS CONTRIBUTIONS
Effective as of January 1, 1997, any distribution of the excess contributions for any plan year shall be made to Highly Compensated Employees on the basis of the amount of contributions by, or on behalf of, each of such employees.
Excess Contributions will be distributed according to the following procedures:
1. The dollar amount of excess contributions is computed for each affected Highly Compensated Employee (HCE) in accordance with the provisions currently in effect.
2. The excess contributions are distributed in the following manner:
- 69 -

Reduce the applicable contributions of the HCE's beginning with the HCE with the highest dollar amount, to equal the dollar amount of the HCE with the next highest dollar amount of contributions.
This amount will be distributed to the HCE with the highest dollar amount.
3. Repeat set 2 until total excess contributions are distributed.
If these distributions are made, the ADP is treated as meeting the nondiscrimination test of section 401(k)(3) of the Code regardless of whether the ADP, if recalculated after distributions, would satisfy section 401(k)(3) of the Code.
The above procedure issued for the purposes of recharacterizing excess contributions under 401(k)(8)(A)(ii) of the Code.
For purposes of section 401(m)(9) of the Code, if a corrective distribution of excess contributions has been made, or a recharacterization has occurred, the ADP for Highly Compensated Employees is deemed to be the largest amount permitted under section 401(k)(3) of the Code.
SECTION 401(m): NONDISCRIMINATION TEST FOR MATCHING CONTRIBUTIONS AND EMPLOYEE CONTRIBUTIONS
Section 3.07(a) of the basic plan document of the plan is amended to use the actual contribution percentage (hereinafter "ACP") for participants who are Highly Compensated Employees for the current plan year and the ACP for participants who are non-highly compensated employees FOR THE PRECEDING PLAN YEAR in performing the nondiscrimination testing required under this section for the 1997 and 1998 plan years.
The provisions of section 401(m)(6)(C) of the Code as amended by SBJPA are incorporated herein by reference.
SECTION 401(m)(6)(C): METHOD OF DISTRIBUTING EXCESS AGGREGATE CONTRIBUTIONS
Effective as of January 1, 1997, any distribution of the excess aggregate contributions for any plan year shall be made to Highly Compensated Employees on the basis of the amount of contributions by, or on behalf of, each of such employee. Forfeitures of excess aggregate contributions may not be allocated to participants whose contributions are reduced under this paragraph.
Excess Aggregate Contributions will be distributed according to the following procedures:
1. The dollar amount of excess aggregate contributions is computed for each affected Highly Compensated Employee (HCE) in accordance with the provisions currently in effect.
2. The excess aggregate contributions are distributed in the following manner:
Reduce the applicable contributions of the HCE's beginning with the HCE with the highest dollar amount, to equal the dollar amount of the HCE with the next highest dollar
- 70 -

amount of contributions.
This amount will be distributed to the HCE with the highest dollar amount.
3. Repeat set 2 until total excess aggregate contributions are distributed.
If these distributions are made, the ACP is treated as meeting the nondiscrimination test of section 401(m)(2) of the Code regardless of whether the ACP, if recalculated after distributions, would satisfy section 401(m)(2) of the Code.
For purposes of section 401(m)(9) of the Code, if a corrective distribution of excess aggregate contributions has been made, the ACP for Highly Compensated Employees is deemed to be the largest amount permitted under section 401(m)(2) of the Code.
IRC SECTION 411(a)(11)(A)
Effective as of January 1, 1998, the plan is amended to permit distribution without consent of any nonforfeitable accrued benefit which does not exceed $5,000.
- 71 -

AMENDMENTS TO THE
JOHN'S IMPORT AUTO 401(K) SAVINGS PLAN
IRC SECTION 414(q) - HIGHLY COMPENSATED EMPLOYEES
Effective date: Plan Years beginning after December 31, 1996, except that, in determining whether an employee is a highly compensated employee in 1997, the amendments are treated as having been in effect in 1996.
- The term "highly compensated employee" includes highly compensated active employees and highly compensated former employees. A highly compensated active employee means any employee who:
(A) was a 5-percent owner (as defined in section 416(i)(1) of the Code) of the employer at any time during the current or the preceding year; or
(B) for the preceding year:
(i) had compensation from the employer in excess of $80,000
(as adjusted by the Secretary pursuant to section 415(d) of the Code, except that the base period shall be the calendar quarter ending September 30, 1996); and
(ii) if the employer elects the application of this clause for such preceding year, was in the top-paid group of employees for such preceding year.
For this purpose, an employee is in the top-paid group of employees for any year if such employee is in the group consisting of the top 20 percent of the employees when ranked on the basis of compensation paid during such year.
A former employee shall be treated as a highly compensated employee if: (A) such employee was highly compensated when such employee separated from service or (B) such employee was a highly compensated employee at any time after attaining age 55.
- A determination of who is a highly compensated employee, including the determinations of the number and identity of employees in the top-paid group, will be made in accordance with section 414(q) of the Code and the regulations thereunder.
For purposes of this subsection, the term "compensation" means compensation within the meaning of section 415(c)(3) of the Code. The determination will be made without regard to sections 125, 402(e)(3), and 402(h)(1)(B) of the Code, and in the case of employer contributions made pursuant to a salary reduction agreement, without regard to section 403(b) of the Code.
For plan years beginning after December 31, 1997, for purposes of this subsection, the term "compensation" means compensation within the meaning of section 415(c)(3) of the Code.
- 72 -

FAMILY AGGREGATION RULES
Effective for plan years beginning after December 31, 1996, the family aggregation rules required by IRS section 414(q)(6) of the Code have been deleted from the plan. This subsection is subject to the plan amendment rules of section 1.401(a)(4)-5(a) of the regulations.
SECTION 401(a)(9) REQUIRED DISTRIBUTIONS
NON-5-PERCENT OWNER: No amendment will be made to the plan for section 401(a)(9) of the Code. The term "required beginning date" will continue to be defined as April 1 of the calendar year following the calendar year in which the participation attains age 70-1/2.
5-PERCENT OWNER: The required beginning date for a participant who is a 5-percent owner (as described in section 416(I) of the Code) is April 1 of the calendar year following the calendar year in which the participation attains age 70-1/2.
SECTION 417(a)(7)(A)
SPECIAL RULE RELATING TO TIME FOR WRITTEN EXPLANATION
Effective Date: January 1, 1997
- The written explanation described in section 417(a)(7)(A) of the Code may be provided after the annuity starting date. The 90-day applicable election period to waive the qualified joint and survivor annuity described in section 417(a)(7)(A) of the Code, shall not end before the 30th day after the date on which such explanation is provided.
The Secretary may by regulations limit the period of time by which the annuity starting date precedes the provision of the written explanation other than by providing that the annuity starting date may not be earlier than termination of employment.
- A participant may elect (with any applicable spousal consent) to waive any requirement that the written explanation be provided at least 30 days before the annuity starting date (or to waive the 30-day requirement under the above paragraph) if the distribution commences more than 7 days after such explanation is provided.
FAMILY AGGREGATION RULES
Effective as of January 1, 1997, the plan is amended to delete the provision of family aggregation as described in section 401(a)(17)(A) of the Code which requires a plan participant, the spouse of such participant and any lineal descendants who have not attained age 19 before the close of the plan year to be treated as a single participant for purposes of applying the limitation on compensation for a plan year.
SECTION 414(n)(2): TREATMENT OF LEASED EMPLOYEES
- 73 -

Effective as of January 1, 1997, the plan is amended to define the term "Leased Employee" as any person (other than an employee of the recipient) who pursuant to an agreement between the recipient and any other person ("leasing organization") has performed services for the recipient (or for the recipient and related persons determined in accordance with sections 414(n)(6) of the Code) on a substantially full-time basis for a period of at least 1 year, and such services are performed under primary direction or control by the recipient.
SECTION 414(u): SPECIAL RULES RELATING TO VETERANS REEMPLOYMENT RIGHTS UNDER USERRA
Effective date: As of December 12, 1994
Notwithstanding any provision of this plan to the contrary, contributions, benefits and service credit with respect to qualified military service will be provided in accordance with section 414(u) of the Internal Revenue Code.
Loan repayment will be suspended under this plan as permitted section 414(u)(4) of the Internal Revenue Code.
SECTION 401(d): AGGREGATION RULES FOR SELF-EMPLOYED PLANS
Effective as of January 1, 1997, any contributions to this plan on behalf of any owner-employee may be made only with respect to the earned income of the owner-employee that is derived from the trade or business with respect to which the plan is established.
APPLICATION OF PARTICIPATION AND DISCRIMINATION STANDARDS
Section 12.5 of the basic plan document of the plan is amended to use the actual deferral percentage (hereinafter "ADP") for participants who are Highly Compensated Employees for the current plan year and the ADP for participants who are non-highly compensated employees for THE PRECEDING PLAN YEAR in performing the nondiscrimination testing required under this section for the 1997 plan year. In accordance with Section 12.5 of the basic plan document of the plan, current year data was used to determine the ADP of non-highly compensated employees for the 1998 plan year.
The provision of section 401(k)(3)(A) of the Code as amended by SBJPA are incorporated herein by reference.
SECTION 401(k)(8)(c): DISCRIMINATION OF EXCESS CONTRIBUTIONS
Effective as of January 1, 1997, any distribution of the excess contributions for any plan year shall be made to Highly Compensated Employees on the basis of the amount of contributions by, or on behalf of, each of such employees.
Excess Contributions will be distributed according to the following procedures:
1. The dollar amount of excess contributions is computed for each affected Highly Compensated Employee (HCE) in accordance with the provisions currently in effect.
- 74 -

2. The excess contributions are distributed in the following manner:
Reduce the applicable contributions of the HCE's beginning with the HCE with the highest dollar amount, to equal the dollar amount of the HCE with the next highest dollar amount of contributions.
This amount will be distributed to the HCE with the highest dollar amount.
3. Repeat set 2 until total excess contributions are distributed.
If these distributions are made, the ADP is treated as meeting the nondiscrimination test of section 401(k)(3) of the Code regardless of whether the ADP, if recalculated after distributions, would satisfy section 401(k)(3) of the Code.
The above procedure issued for the purposes of recharacterizing excess contributions under 401(k)(8)(A)(ii) of the Code.
For purposes of section 401(m)(9) of the Code, if a corrective distribution of excess contributions has been made, or a recharacterization has occurred, the ADP for Highly Compensated Employees is deemed to be the largest amount permitted under section 401(k)(3) of the Code.
SECTION 401(m): NONDISCRIMINATION TEST FOR MATCHING CONTRIBUTIONS AND EMPLOYEE CONTRIBUTIONS
Section 12.7 of the basic plan document of the plan is amended to use the actual contribution percentage (hereinafter "ACP") for participants who are Highly Compensated Employees for the current plan year and the ACP for participants who are non-highly compensated employees FOR THE PRECEDING PLAN YEAR in performing the nondiscrimination testing required under this section for the 1997 plan year. In accordance with Section 12.7 of the basic plan document of the plan, current year data was used to determine the ACP of non-highly compensated employees for the 1998 plan year.
The provisions of section 401(m)(6)(C) of the Code as amended by SBJPA are incorporated herein by reference.
SECTION 401(m)(6)(C): METHOD OF DISTRIBUTING EXCESS AGGREGATE CONTRIBUTIONS
Effective as of January 1, 1997, any distribution of the excess aggregate contributions for any plan year shall be made to Highly Compensated Employees on the basis of the amount of contributions by, or on behalf of, each of such employee. Forfeitures of excess aggregate contributions may not be allocated to participants whose contributions are reduced under this paragraph.
Excess Aggregate Contributions will be distributed according to the following procedures:
1. The dollar amount of excess aggregate contributions is computed for each affected Highly Compensated Employee (HCE) in accordance with the provisions currently in effect.
- 75 -

2. The excess aggregate contributions are distributed in the following manner:
Reduce the applicable contributions of the HCE's beginning with the HCE with the highest dollar amount, to equal the dollar amount of the HCE with the next highest dollar amount of contributions.
This amount will be distributed to the HCE with the highest dollar amount.
3. Repeat set 2 until total excess aggregate contributions are distributed.
If these distributions are made, the ACP is treated as meeting the nondiscrimination test of section 401(m)(2) of the Code regardless of whether the ACP, if recalculated after distributions, would satisfy section 401(m)(2) of the Code.
For purposes of section 401(m)(9) of the Code, if a corrective distribution of excess aggregate contributions has been made, the ACP for Highly Compensated Employees is deemed to be the largest amount permitted under section 401(m)(2) of the Code.
IRC SECTION 411(a)(11)(A)
Effective as of January 1, 1998, the plan is amended to permit distribution without consent of any nonforfeitable accrued benefit which does not exceed $5,000.
- 76 -

AMENDMENTS TO THE
MIDWEST FOREIGN AUTO, INC. 401(K) PROFIT SHARING PLAN
IRC SECTION 414(q) - HIGHLY COMPENSATED EMPLOYEES
Effective date: Plan Years beginning after December 31, 1996, except that, in determining whether an employee is a highly compensated employee in 1997, the amendments are treated as having been in effect in 1996.
- The term "highly compensated employee" includes highly compensated active employees and highly compensated former employees. A highly compensated active employee means any employee who:
(A) was a 5-percent owner (as defined in section 416(i)(1) of the Code) of the employer at any time during the current or the preceding year; or
(B) for the preceding year:
(i) had compensation from the employer in excess of $80,000
(as adjusted by the Secretary pursuant to section 415(d) of the Code, except that the base period shall be the calendar quarter ending September 30, 1996); and
(ii) if the employer elects the application of this clause for such preceding year, was in the top-paid group of employees for such preceding year.
For this purpose, an employee is in the top-paid group of employees for any year if such employee is in the group consisting of the top 20 percent of the employees when ranked on the basis of compensation paid during such year.
A former employee shall be treated as a highly compensated employee if: (A) such employee was highly compensated when such employee separated from service or (B) such employee was a highly compensated employee at any time after attaining age 55.
- A determination of who is a highly compensated employee, including the determinations of the number and identity of employees in the top-paid group, will be made in accordance with section 414(q) of the Code and the regulations thereunder.
For purposes of this subsection, the term "compensation" means compensation within the meaning of section 415(c)(3) of the Code. The determination will be made without regard to sections 125, 402(e)(3), and 402(h)(1)(B) of the Code, and in the case of employer contributions made pursuant to a salary reduction agreement, without regard to section 403(b) of the Code.
For plan years beginning after December 31, 1997, for purposes of this subsection, the term "compensation" means compensation within the meaning of section 415(c)(3) of the Code.
- 77 -

FAMILY AGGREGATION RULES
Effective for plan years beginning after December 31, 1996, the family aggregation rules required by IRS section 414(q)(6) of the Code have been deleted from the plan. This subsection is subject to the plan amendment rules of section 1.401(a)(4)-5(a) of the regulations.
SECTION 401(a)(9) REQUIRED DISTRIBUTIONS
NON-5-PERCENT OWNER: No amendment will be made to the plan for section 401(a)(9) of the Code. The term "required beginning date" will continue to be defined as April 1 of the calendar year following the calendar year in which the participation attains age 70-1/2.
5-PERCENT OWNER: The required beginning date for a participant who is a 5-percent owner (as described in section 416(I) of the Code) is April 1 of the calendar year following the calendar year in which the participation attains age 70-1/2.
SECTION 417(a)(7)(A)
SPECIAL RULE RELATING TO TIME FOR WRITTEN EXPLANATION
Effective Date: January 1, 1997
- The written explanation described in section 417(a)(7)(A) of the Code may be provided after the annuity starting date. The 90-day applicable election period to waive the qualified joint and survivor annuity described in section 417(a)(7)(A) of the Code, shall not end before the 30th day after the date on which such explanation is provided.
The Secretary may by regulations limit the period of time by which the annuity starting date precedes the provision of the written explanation other than by providing that the annuity starting date may not be earlier than termination of employment.
- A participant may elect (with any applicable spousal consent) to waive any requirement that the written explanation be provided at least 30 days before the annuity starting date (or to waive the 30-day requirement under the above paragraph) if the distribution commences more than 7 days after such explanation is provided.
FAMILY AGGREGATION RULES
Effective as of January 1, 1997, the plan is amended to delete the provision of family aggregation as described in section 401(a)(17)(A) of the Code which requires a plan participant, the spouse of such participant and any lineal descendants who have not attained age 19 before the close of the plan year to be treated as a single participant for purposes of applying the limitation on compensation for a plan year.
SECTION 414(n)(2): TREATMENT OF LEASED EMPLOYEES
- 78 -

Effective as of January 1, 1997, the plan is amended to define the term "Leased Employee" as any person (other than an employee of the recipient) who pursuant to an agreement between the recipient and any other person ("leasing organization") has performed services for the recipient (or for the recipient and related persons determined in accordance with sections 414(n)(6) of the Code) on a substantially full-time basis for a period of at least 1 year, and such services are performed under primary direction or control by the recipient.
SECTION 414(u): SPECIAL RULES RELATING TO VETERANS REEMPLOYMENT RIGHTS UNDER USERRA
Effective date: As of December 12, 1994
Notwithstanding any provision of this plan to the contrary, contributions, benefits and service credit with respect to qualified military service will be provided in accordance with section 414(u) of the Internal Revenue Code.
Loan repayment will be suspended under this plan as permitted section 414(u)(4) of the Internal Revenue Code.
SECTION 401(d): AGGREGATION RULES FOR SELF-EMPLOYED PLANS
Effective as of January 1, 1997, any contributions to this plan on behalf of any owner-employee may be made only with respect to the earned income of the owner-employee that is derived from the trade or business with respect to which the plan is established.
APPLICATION OF PARTICIPATION AND DISCRIMINATION STANDARDS
In accordance with Section 11.110 of the basic plan document of the plan, current year data was used to determine the ADP of non-highly compensated employees for the 1998 plan year.
The provision of section 401(k)(3)(A) of the Code as amended by SBJPA are incorporated herein by reference.
SECTION 401(k)(8)(c): DISCRIMINATION OF EXCESS CONTRIBUTIONS
Effective as of January 1, 1997, any distribution of the excess contributions for any plan year shall be made to Highly Compensated Employees on the basis of the amount of contributions by, or on behalf of, each of such employees.
Excess Contributions will be distributed according to the following procedures:
1. The dollar amount of excess contributions is computed for each affected Highly Compensated Employee (HCE) in accordance with the provisions currently in effect.
2. The excess contributions are distributed in the following manner:
Reduce the applicable contributions of the HCE's beginning with the HCE with the highest dollar amount, to equal the dollar amount of the HCE with the next highest dollar
- 79 -

amount of contributions.
This amount will be distributed to the HCE with the highest dollar amount.
3. Repeat set 2 until total excess contributions are distributed.
If these distributions are made, the ADP is treated as meeting the nondiscrimination test of section 401(k)(3) of the Code regardless of whether the ADP, if recalculated after distributions, would satisfy section 401(k)(3) of the Code.
The above procedure issued for the purposes of recharacterizing excess contributions under 401(k)(8)(A)(ii) of the Code.
For purposes of section 401(m)(9) of the Code, if a corrective distribution of excess contributions has been made, or a recharacterization has occurred, the ADP for Highly Compensated Employees is deemed to be the largest amount permitted under section 401(k)(3) of the Code.
SECTION 401(m): NONDISCRIMINATION TEST FOR MATCHING CONTRIBUTIONS AND EMPLOYEE CONTRIBUTIONS
In accordance with Section 11.109 of the basic plan document of the plan, current year data was used to determine the ACP of non-highly compensated employees for the 1998 plan year.
The provisions of section 401(m)(6)(C) of the Code as amended by SBJPA are incorporated herein by reference.
SECTION 401(m)(6)(C): METHOD OF DISTRIBUTING EXCESS AGGREGATE CONTRIBUTIONS
Effective as of January 1, 1997, any distribution of the excess aggregate contributions for any plan year shall be made to Highly Compensated Employees on the basis of the amount of contributions by, or on behalf of, each of such employee. Forfeitures of excess aggregate contributions may not be allocated to participants whose contributions are reduced under this paragraph.
Excess Aggregate Contributions will be distributed according to the following procedures:
1. The dollar amount of excess aggregate contributions is computed for each affected Highly Compensated Employee (HCE) in accordance with the provisions currently in effect.
2. The excess aggregate contributions are distributed in the following manner:
Reduce the applicable contributions of the HCE's beginning with the HCE with the highest dollar amount, to equal the dollar amount of the HCE with the next highest dollar amount of contributions.
This amount will be distributed to the HCE with the highest dollar amount.
- 80 -

3. Repeat set 2 until total excess aggregate contributions are distributed.
If these distributions are made, the ACP is treated as meeting the nondiscrimination test of section 401(m)(2) of the Code regardless of whether the ACP, if recalculated after distributions, would satisfy section 401(m)(2) of the Code.
For purposes of section 401(m)(9) of the Code, if a corrective distribution of excess aggregate contributions has been made, the ACP for Highly Compensated Employees is deemed to be the largest amount permitted under section 401(m)(2) of the Code.
IRC SECTION 411(a)(11)(A)
Effective as of January 1, 1998, the plan is amended to permit distribution without consent of any nonforfeitable accrued benefit which does not exceed $5,000.
- 81 -

AMENDMENTS TO THE
SMART PARTS 401K PLAN
IRC SECTION 414(q) - HIGHLY COMPENSATED EMPLOYEES
Effective date: Plan Years beginning after December 31, 1996, except that, in determining whether an employee is a highly compensated employee in 1997, the amendments are treated as having been in effect in 1996.
- The term "highly compensated employee" includes highly compensated active employees and highly compensated former employees. A highly compensated active employee means any employee who:
(C) was a 5-percent owner (as defined in section 416(i)(1) of the Code) of the employer at any time during the current or the preceding year; or
(D) for the preceding year:
(iii) had compensation from the employer in excess of $80,000
(as adjusted by the Secretary pursuant to section 415(d) of the Code, except that the base period shall be the calendar quarter ending September 30, 1996); and
(iv) if the employer elects the application of this clause for such preceding year, was in the top-paid group of employees for such preceding year.
For this purpose, an employee is in the top-paid group of employees for any year if such employee is in the group consisting of the top 20 percent of the employees when ranked on the basis of compensation paid during such year.
A former employee shall be treated as a highly compensated employee if: (A) such employee was highly compensated when such employee separated from service or (B) such employee was a highly compensated employee at any time after attaining age 55.
- A determination of who is a highly compensated employee, including the determinations of the number and identity of employees in the top-paid group, will be made in accordance with section 414(q) of the Code and the regulations thereunder.
For purposes of this subsection, the term "compensation" means compensation within the meaning of section 415(c)(3) of the Code. The determination will be made without regard to sections 125, 402(e)(3), and 402(h)(1)(B) of the Code, and in the case of employer contributions made pursuant to a salary reduction agreement, without regard to section 403(b) of the Code.
For plan years beginning after December 31, 1997, for purposes of this subsection, the term "compensation" means compensation within the meaning of section 415(c)(3) of the Code.
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FAMILY AGGREGATION RULES
Effective for plan years beginning after December 31, 1996, the family aggregation rules required by IRS section 414(q)(6) of the Code have been deleted from the plan. This subsection is subject to the plan amendment rules of section 1.401(a)(4)-5(a) of the regulations.
SECTION 401(a)(9) REQUIRED DISTRIBUTIONS
NON-5-PERCENT OWNER: No amendment will be made to the plan for section 401(a)(9) of the Code. The term "required beginning date" will continue to be defined as April 1 of the calendar year following the calendar year in which the participation attains age 70-1/2.
5-PERCENT OWNER: The required beginning date for a participant who is a 5-percent owner (as described in section 416(I) of the Code) is April 1 of the calendar year following the calendar year in which the participation attains age 70-1/2.
SECTION 417(a)(7)(A)
SPECIAL RULE RELATING TO TIME FOR WRITTEN EXPLANATION
Effective Date: January 1, 1997
- The written explanation described in section 417(a)(7)(A) of the Code may be provided after the annuity starting date. The 90-day applicable election period to waive the qualified joint and survivor annuity described in section 417(a)(7)(A) of the Code, shall not end before the 30th day after the date on which such explanation is provided.
The Secretary may by regulations limit the period of time by which the annuity starting date precedes the provision of the written explanation other than by providing that the annuity starting date may not be earlier than termination of employment.
- A participant may elect (with any applicable spousal consent) to waive any requirement that the written explanation be provided at least 30 days before the annuity starting date (or to waive the 30-day requirement under the above paragraph) if the distribution commences more than 7 days after such explanation is provided.
FAMILY AGGREGATION RULES
Effective as of January 1, 1997, the plan is amended to delete the provision of family aggregation as described in section 401(a)(17)(A) of the Code which requires a plan participant, the spouse of such participant and any lineal descendants who have not attained age 19 before the close of the plan year to be treated as a single participant for purposes of applying the limitation on compensation for a plan year.
SECTION 414(n)(2): TREATMENT OF LEASED EMPLOYEES
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Effective as of January 1, 1997, the plan is amended to define the term "Leased Employee" as any person (other than an employee of the recipient) who pursuant to an agreement between the recipient and any other person ("leasing organization") has performed services for the recipient (or for the recipient and related persons determined in accordance with sections 414(n)(6) of the Code) on a substantially full-time basis for a period of at least 1 year, and such services are performed under primary direction or control by the recipient.
SECTION 414(u): SPECIAL RULES RELATING TO VETERANS REEMPLOYMENT RIGHTS UNDER USERRA
Effective date: As of December 12, 1994
Notwithstanding any provision of this plan to the contrary, contributions, benefits and service credit with respect to qualified military service will be provided in accordance with section 414(u) of the Internal Revenue Code.
Loan repayment will be suspended under this plan as permitted section 414(u)(4) of the Internal Revenue Code.
SECTION 401(d): AGGREGATION RULES FOR SELF-EMPLOYED PLANS
Effective as of January 1, 1997, any contributions to this plan on behalf of any owner-employee may be made only with respect to the earned income of the owner-employee that is derived from the trade or business with respect to which the plan is established.
APPLICATION OF PARTICIPATION AND DISCRIMINATION STANDARDS
In accordance with Section 11.110 of the basic plan document of the plan, current year data was used to determine the ADP of non-highly compensated employees for the 1997 and 1998 plan years.
The provision of section 401(k)(3)(A) of the Code as amended by SBJPA are incorporated herein by reference.
SECTION 401(k)(8)(c): DISCRIMINATION OF EXCESS CONTRIBUTIONS
Effective as of January 1, 1997, any distribution of the excess contributions for any plan year shall be made to Highly Compensated Employees on the basis of the amount of contributions by, or on behalf of, each of such employees.
Excess Contributions will be distributed according to the following procedures:
4. The dollar amount of excess contributions is computed for each affected Highly Compensated Employee (HCE) in accordance with the provisions currently in effect.
5. The excess contributions are distributed in the following manner:
Reduce the applicable contributions of the HCE's beginning with the HCE with the highest dollar amount, to equal the dollar amount of the HCE with the next highest dollar
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amount of contributions.
This amount will be distributed to the HCE with the highest dollar amount.
6. Repeat set 2 until total excess contributions are distributed.
If these distributions are made, the ADP is treated as meeting the nondiscrimination test of section 401(k)(3) of the Code regardless of whether the ADP, if recalculated after distributions, would satisfy section 401(k)(3) of the Code.
The above procedure issued for the purposes of recharacterizing excess contributions under 401(k)(8)(A)(ii) of the Code.
For purposes of section 401(m)(9) of the Code, if a corrective distribution of excess contributions has been made, or a recharacterization has occurred, the ADP for Highly Compensated Employees is deemed to be the largest amount permitted under section 401(k)(3) of the Code.
SECTION 401(m): NONDISCRIMINATION TEST FOR MATCHING CONTRIBUTIONS AND EMPLOYEE CONTRIBUTIONS
In accordance with Section 11.109 of the basic plan document of the plan, current year data was used to determine the ACP of non-highly compensated employees for the 1997 and 1998 plan years.
The provisions of section 401(m)(6)(C) of the Code as amended by SBJPA are incorporated herein by reference.
SECTION 401(m)(6)(C): METHOD OF DISTRIBUTING EXCESS AGGREGATE CONTRIBUTIONS
Effective as of January 1, 1997, any distribution of the excess aggregate contributions for any plan year shall be made to Highly Compensated Employees on the basis of the amount of contributions by, or on behalf of, each of such employee. Forfeitures of excess aggregate contributions may not be allocated to participants whose contributions are reduced under this paragraph.
Excess Aggregate Contributions will be distributed according to the following procedures:
3. The dollar amount of excess aggregate contributions is computed for each affected Highly Compensated Employee (HCE) in accordance with the provisions currently in effect.
4. The excess aggregate contributions are distributed in the following manner:
Reduce the applicable contributions of the HCE's beginning with the HCE with the highest dollar amount, to equal the dollar amount of the HCE with the next highest dollar amount of contributions.
This amount will be distributed to the HCE with the highest dollar amount.
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3. Repeat set 2 until total excess aggregate contributions are distributed.
If these distributions are made, the ACP is treated as meeting the nondiscrimination test of section 401(m)(2) of the Code regardless of whether the ACP, if recalculated after distributions, would satisfy section 401(m)(2) of the Code.
For purposes of section 401(m)(9) of the Code, if a corrective distribution of excess aggregate contributions has been made, the ACP for Highly Compensated Employees is deemed to be the largest amount permitted under section 401(m)(2) of the Code.
IRC SECTION 411(a)(11)(A)
Effective as of January 1, 1998, the plan is amended to permit distribution without consent of any nonforfeitable accrued benefit which does not exceed $5,000.
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AMENDMENTS TO THE
RECYCLERS GROUP, INC. PROFIT SHARING/401(K) PLAN
IRC SECTION 414(q) - HIGHLY COMPENSATED EMPLOYEES
Effective date: Plan Years beginning after December 31, 1996, except that, in determining whether an employee is a highly compensated employee in 1997, the amendments are treated as having been in effect in 1996.
- The term "highly compensated employee" includes highly compensated active employees and highly compensated former employees. A highly compensated active employee means any employee who:
(A) was a 5-percent owner (as defined in section 416(i)(1) of the Code) of the employer at any time during the current or the preceding year; or
(B) for the preceding year:
(i) had compensation from the employer in excess of $80,000
(as adjusted by the Secretary pursuant to section 415(d) of the Code, except that the base period shall be the calendar quarter ending September 30, 1996); and
(ii) if the employer elects the application of this clause for such preceding year, was in the top-paid group of employees for such preceding year.
For this purpose, an employee is in the top-paid group of employees for any year if such employee is in the group consisting of the top 20 percent of the employees when ranked on the basis of compensation paid during such year.
A former employee shall be treated as a highly compensated employee if: (A) such employee was highly compensated when such employee separated from service or (B) such employee was a highly compensated employee at any time after attaining age 55.
- A determination of who is a highly compensated employee, including the determinations of the number and identity of employees in the top-paid group, will be made in accordance with section 414(q) of the Code and the regulations thereunder.
For purposes of this subsection, the term "compensation" means compensation within the meaning of section 415(c)(3) of the Code. The determination will be made without regard to sections 125, 402(e)(3), and 402(h)(1)(B) of the Code, and in the case of employer contributions made pursuant to a salary reduction agreement, without regard to section 403(b) of the Code.
For plan years beginning after December 31, 1997, for purposes of this subsection, the term "compensation" means compensation within the meaning of section 415(c)(3) of the Code.
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FAMILY AGGREGATION RULES
Effective for plan years beginning after December 31, 1996, the family aggregation rules required by IRS section 414(q)(6) of the Code have been deleted from the plan. This subsection is subject to the plan amendment rules of section 1.401(a)(4)-5(a) of the regulations.
SECTION 401(a)(9) REQUIRED DISTRIBUTIONS
NON-5-PERCENT OWNER: No amendment will be made to the plan for section 401(a)(9) of the Code. The term "required beginning date" will continue to be defined as April 1 of the calendar year following the calendar year in which the participation attains age 70-1/2.
5-PERCENT OWNER: The required beginning date for a participant who is a 5-percent owner (as described in section 416(I) of the Code) is April 1 of the calendar year following the calendar year in which the participation attains age 70-1/2.
SECTION 417(a)(7)(A)
SPECIAL RULE RELATING TO TIME FOR WRITTEN EXPLANATION
Effective Date: January 1, 1997
- The written explanation described in section 417(a)(7)(A) of the Code may be provided after the annuity starting date. The 90-day applicable election period to waive the qualified joint and survivor annuity described in section 417(a)(7)(A) of the Code, shall not end before the 30th day after the date on which such explanation is provided.
The Secretary may by regulations limit the period of time by which the annuity starting date precedes the provision of the written explanation other than by providing that the annuity starting date may not be earlier than termination of employment.
- A participant may elect (with any applicable spousal consent) to waive any requirement that the written explanation be provided at least 30 days before the annuity starting date (or to waive the 30-day requirement under the above paragraph) if the distribution commences more than 7 days after such explanation is provided.
FAMILY AGGREGATION RULES
Effective as of January 1, 1997, the plan is amended to delete the provision of family aggregation as described in section 401(a)(17)(A) of the Code which requires a plan participant, the spouse of such participant and any lineal descendants who have not attained age 19 before the close of the plan year to be treated as a single participant for purposes of applying the limitation on compensation for a plan year.
SECTION 414(n)(2): TREATMENT OF LEASED EMPLOYEES
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Effective as of January 1, 1997, the plan is amended to define the term "Leased Employee" as any person (other than an employee of the recipient) who pursuant to an agreement between the recipient and any other person ("leasing organization") has performed services for the recipient (or for the recipient and related persons determined in accordance with sections 414(n)(6) of the Code) on a substantially full-time basis for a period of at least 1 year, and such services are performed under primary direction or control by the recipient.
SECTION 414(u): SPECIAL RULES RELATING TO VETERANS REEMPLOYMENT RIGHTS UNDER USERRA
Effective date: As of December 12, 1994
Notwithstanding any provision of this plan to the contrary, contributions, benefits and service credit with respect to qualified military service will be provided in accordance with section 414(u) of the Internal Revenue Code.
SECTION 401(d): AGGREGATION RULES FOR SELF-EMPLOYED PLANS
Effective as of January 1, 1997, any contributions to this plan on behalf of any owner-employee may be made only with respect to the earned income of the owner-employee that is derived from the trade or business with respect to which the plan is established.
APPLICATION OF PARTICIPATION AND DISCRIMINATION STANDARDS
In accordance with Section 4.5 of the basic plan document of the plan, current year data was used to determine the ADP of non-highly compensated employees for the 1997 and 1998 plan years.
The provision of section 401(k)(3)(A) of the Code as amended by SBJPA are incorporated herein by reference.
SECTION 401(k)(8)(c): DISCRIMINATION OF EXCESS CONTRIBUTIONS
Effective as of January 1, 1997, any distribution of the excess contributions for any plan year shall be made to Highly Compensated Employees on the basis of the amount of contributions by, or on behalf of, each of such employees.
Excess Contributions will be distributed according to the following procedures:
1. The dollar amount of excess contributions is computed for each affected Highly Compensated Employee (HCE) in accordance with the provisions currently in effect.
2. The excess contributions are distributed in the following manner:
Reduce the applicable contributions of the HCE's beginning with the HCE with the highest dollar amount, to equal the dollar amount of the HCE with the next highest dollar amount of contributions.
This amount will be distributed to the HCE with the highest dollar amount.
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3. Repeat set 2 until total excess contributions are distributed.
If these distributions are made, the ADP is treated as meeting the nondiscrimination test of section 401(k)(3) of the Code regardless of whether the ADP, if recalculated after distributions, would satisfy section 401(k)(3) of the Code.
The above procedure issued for the purposes of recharacterizing excess contributions under 401(k)(8)(A)(ii) of the Code.
For purposes of section 401(m)(9) of the Code, if a corrective distribution of excess contributions has been made, or a recharacterization has occurred, the ADP for Highly Compensated Employees is deemed to be the largest amount permitted under section 401(k)(3) of the Code.
SECTION 401(m): NONDISCRIMINATION TEST FOR MATCHING CONTRIBUTIONS AND EMPLOYEE CONTRIBUTIONS
In accordance with Section 4.7 of the basic plan document of the plan, current year data was used to determine the ACP of non-highly compensated employees for the 1997 and 1998 plan years.
The provisions of section 401(m)(6)(C) of the Code as amended by SBJPA are incorporated herein by reference.
SECTION 401(m)(6)(C): METHOD OF DISTRIBUTING EXCESS AGGREGATE CONTRIBUTIONS
Effective as of January 1, 1997, any distribution of the excess aggregate contributions for any plan year shall be made to Highly Compensated Employees on the basis of the amount of contributions by, or on behalf of, each of such employee. Forfeitures of excess aggregate contributions may not be allocated to participants whose contributions are reduced under this paragraph.
Excess Aggregate Contributions will be distributed according to the following procedures:
1. The dollar amount of excess aggregate contributions is computed for each affected Highly Compensated Employee (HCE) in accordance with the provisions currently in effect.
2. The excess aggregate contributions are distributed in the following manner:
Reduce the applicable contributions of the HCE's beginning with the HCE with the highest dollar amount, to equal the dollar amount of the HCE with the next highest dollar amount of contributions.
This amount will be distributed to the HCE with the highest dollar amount.
3. Repeat set 2 until total excess aggregate contributions are distributed.
If these distributions are made, the ACP is treated as meeting the nondiscrimination test of section 401(m)(2) of the Code regardless of whether the ACP, if recalculated after distributions, would satisfy section 401(m)(2) of the Code.
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For purposes of section 401(m)(9) of the Code, if a corrective distribution of excess aggregate contributions has been made, the ACP for Highly Compensated Employees is deemed to be the largest amount permitted under section 401(m)(2) of the Code.
IRC SECTION 411(a)(11)(A)
Effective as of January 1, 1998, the plan is amended to permit distribution without consent of any nonforfeitable accrued benefit which does not exceed $5,000.
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AMENDMENTS TO THE
ROUTE 16 AUTO SALVAGE 401(K) PROFIT SHARING PLAN
IRC SECTION 414(q) - HIGHLY COMPENSATED EMPLOYEES
Effective date: Plan Years beginning after December 31, 1996, except that, in determining whether an employee is a highly compensated employee in 1997, the amendments are treated as having been in effect in 1996.
- The term "highly compensated employee" includes highly compensated active employees and highly compensated former employees. A highly compensated active employee means any employee who:
(A) was a 5-percent owner (as defined in section 416(i)(1) of the Code) of the employer at any time during the current or the preceding year; or
(B) for the preceding year:
(i) had compensation from the employer in excess of $80,000
(as adjusted by the Secretary pursuant to section 415(d) of the Code, except that the base period shall be the calendar quarter ending September 30, 1996); and
(ii) if the employer elects the application of this clause for such preceding year, was in the top-paid group of employees for such preceding year.
For this purpose, an employee is in the top-paid group of employees for any year if such employee is in the group consisting of the top 20 percent of the employees when ranked on the basis of compensation paid during such year.
A former employee shall be treated as a highly compensated employee if: (A) such employee was highly compensated when such employee separated from service or (B) such employee was a highly compensated employee at any time after attaining age 55.
- A determination of who is a highly compensated employee, including the determinations of the number and identity of employees in the top-paid group, will be made in accordance with section 414(q) of the Code and the regulations thereunder.
For purposes of this subsection, the term "compensation" means compensation within the meaning of section 415(c)(3) of the Code. The determination will be made without regard to sections 125, 402(e)(3), and 402(h)(1)(B) of the Code, and in the case of employer contributions made pursuant to a salary reduction agreement, without regard to section 403(b) of the Code.
For plan years beginning after December 31, 1997, for purposes of this subsection, the term "compensation" means compensation within the meaning of section 415(c)(3) of the Code.
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FAMILY AGGREGATION RULES
Effective for plan years beginning after December 31, 1996, the family aggregation rules required by IRS section 414(q)(6) of the Code have been deleted from the plan. This subsection is subject to the plan amendment rules of section 1.401(a)(4)-5(a) of the regulations.
SECTION 401(a)(9) REQUIRED DISTRIBUTIONS
NON-5-PERCENT OWNER: No amendment will be made to the plan for section 401(a)(9) of the Code. The term "required beginning date" will continue to be defined as April 1 of the calendar year following the calendar year in which the participation attains age 70-1/2.
5-PERCENT OWNER: The required beginning date for a participant who is a 5-percent owner (as described in section 416(I) of the Code) is April 1 of the calendar year following the calendar year in which the participation attains age 70-1/2.
SECTION 417(a)(7)(A)
SPECIAL RULE RELATING TO TIME FOR WRITTEN EXPLANATION
Effective Date: January 1, 1997
- The written explanation described in section 417(a)(7)(A) of the Code may be provided after the annuity starting date. The 90-day applicable election period to waive the qualified joint and survivor annuity described in section 417(a)(7)(A) of the Code, shall not end before the 30th day after the date on which such explanation is provided.
The Secretary may by regulations limit the period of time by which the annuity starting date precedes the provision of the written explanation other than by providing that the annuity starting date may not be earlier than termination of employment.
- A participant may elect (with any applicable spousal consent) to waive any requirement that the written explanation be provided at least 30 days before the annuity starting date (or to waive the 30-day requirement under the above paragraph) if the distribution commences more than 7 days after such explanation is provided.
FAMILY AGGREGATION RULES
Effective as of January 1, 1997, the plan is amended to delete the provision of family aggregation as described in section 401(a)(17)(A) of the Code which requires a plan participant, the spouse of such participant and any lineal descendants who have not attained age 19 before the close of the plan year to be treated as a single participant for purposes of applying the limitation on compensation for a plan year.
SECTION 414(n)(2): TREATMENT OF LEASED EMPLOYEES
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Effective as of January 1, 1997, the plan is amended to define the term "Leased Employee" as any person (other than an employee of the recipient) who pursuant to an agreement between the recipient and any other person ("leasing organization") has performed services for the recipient (or for the recipient and related persons determined in accordance with sections 414(n)(6) of the Code) on a substantially full-time basis for a period of at least 1 year, and such services are performed under primary direction or control by the recipient.
SECTION 414(u): SPECIAL RULES RELATING TO VETERANS REEMPLOYMENT RIGHTS UNDER USERRA
Effective date: As of December 12, 1994
Notwithstanding any provision of this plan to the contrary, contributions, benefits and service credit with respect to qualified military service will be provided in accordance with section 414(u) of the Internal Revenue Code.
Loan repayment will be suspended under this plan as permitted section 414(u)(4) of the Internal Revenue Code.
SECTION 401(d): AGGREGATION RULES FOR SELF-EMPLOYED PLANS
Effective as of January 1, 1997, any contributions to this plan on behalf of any owner-employee may be made only with respect to the earned income of the owner-employee that is derived from the trade or business with respect to which the plan is established.
APPLICATION OF PARTICIPATION AND DISCRIMINATION STANDARDS
Section 11.110 of the basic plan document of the plan is amended to use the actual deferral percentage (hereinafter "ADP") for participants who are Highly Compensated Employees for the current plan year and the ADP for participants who are non-highly compensated employees for THE PRECEDING PLAN YEAR in performing the nondiscrimination testing required under this section for the 1997 and 1998 plan years.
The provision of section 401(k)(3)(A) of the Code as amended by SBJPA are incorporated herein by reference.
SECTION 401(k)(8)(c): DISCRIMINATION OF EXCESS CONTRIBUTIONS
Effective as of January 1, 1997, any distribution of the excess contributions for any plan year shall be made to Highly Compensated Employees on the basis of the amount of contributions by, or on behalf of, each of such employees.
Excess Contributions will be distributed according to the following procedures:
1. The dollar amount of excess contributions is computed for each affected Highly Compensated Employee (HCE) in accordance with the provisions currently in effect.
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2. The excess contributions are distributed in the following manner:
Reduce the applicable contributions of the HCE's beginning with the HCE with the highest dollar amount, to equal the dollar amount of the HCE with the next highest dollar amount of contributions.
This amount will be distributed to the HCE with the highest dollar amount.
3. Repeat set 2 until total excess contributions are distributed.
If these distributions are made, the ADP is treated as meeting the nondiscrimination test of section 401(k)(3) of the Code regardless of whether the ADP, if recalculated after distributions, would satisfy section 401(k)(3) of the Code.
The above procedure issued for the purposes of recharacterizing excess contributions under 401(k)(8)(A)(ii) of the Code.
For purposes of section 401(m)(9) of the Code, if a corrective distribution of excess contributions has been made, or a recharacterization has occurred, the ADP for Highly Compensated Employees is deemed to be the largest amount permitted under section 401(k)(3) of the Code.
SECTION 401(m): NONDISCRIMINATION TEST FOR MATCHING CONTRIBUTIONS AND EMPLOYEE CONTRIBUTIONS
Section 11.109 of the basic plan document of the plan is amended to use the actual contribution percentage (hereinafter "ACP") for participants who are Highly Compensated Employees for the current plan year and the ACP for participants who are non-highly compensated employees FOR THE PRECEDING PLAN YEAR in performing the nondiscrimination testing required under this section for the 1997 and 1998 plan years.
The provisions of section 401(m)(6)(C) of the Code as amended by SBJPA are incorporated herein by reference.
SECTION 401(m)(6)(C): METHOD OF DISTRIBUTING EXCESS AGGREGATE CONTRIBUTIONS
Effective as of January 1, 1997, any distribution of the excess aggregate contributions for any plan year shall be made to Highly Compensated Employees on the basis of the amount of contributions by, or on behalf of, each of such employee. Forfeitures of excess aggregate contributions may not be allocated to participants whose contributions are reduced under this paragraph.
Excess Aggregate Contributions will be distributed according to the following procedures:
1. The dollar amount of excess aggregate contributions is computed for each affected Highly Compensated Employee (HCE) in accordance with the provisions currently in effect.
2. The excess aggregate contributions are distributed in the following manner:
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Reduce the applicable contributions of the HCE's beginning with the HCE with the highest dollar amount, to equal the dollar amount of the HCE with the next highest dollar amount of contributions.
This amount will be distributed to the HCE with the highest dollar amount.
3. Repeat set 2 until total excess aggregate contributions are distributed.
If these distributions are made, the ACP is treated as meeting the nondiscrimination test of section 401(m)(2) of the Code regardless of whether the ACP, if recalculated after distributions, would satisfy section 401(m)(2) of the Code.
For purposes of section 401(m)(9) of the Code, if a corrective distribution of excess aggregate contributions has been made, the ACP for Highly Compensated Employees is deemed to be the largest amount permitted under section 401(m)(2) of the Code.
IRC SECTION 411(a)(11)(A)
Effective as of January 1, 1998, the plan is amended to permit distribution without consent of any nonforfeitable accrued benefit which does not exceed $5,000.
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AMENDMENTS TO THE
STAR AUTO PARTS, INC. 401(K) PROFIT SHARING PLAN
IRC SECTION 414(q) - HIGHLY COMPENSATED EMPLOYEES
Effective date: Plan Years beginning after December 31, 1996, except that, in determining whether an employee is a highly compensated employee in 1997, the amendments are treated as having been in effect in 1996.
- The term "highly compensated employee" includes highly compensated active employees and highly compensated former employees. A highly compensated active employee means any employee who:
(C) was a 5-percent owner (as defined in section 416(i)(1) of the Code) of the employer at any time during the current or the preceding year; or
(D) for the preceding year:
(iii) had compensation from the employer in excess of $80,000
(as adjusted by the Secretary pursuant to section 415(d) of the Code, except that the base period shall be the calendar quarter ending September 30, 1996); and
(iv) if the employer elects the application of this clause for such preceding year, was in the top-paid group of employees for such preceding year.
For this purpose, an employee is in the top-paid group of employees for any year if such employee is in the group consisting of the top 20 percent of the employees when ranked on the basis of compensation paid during such year.
A former employee shall be treated as a highly compensated employee if: (A) such employee was highly compensated when such employee separated from service or (B) such employee was a highly compensated employee at any time after attaining age 55.
- A determination of who is a highly compensated employee, including the determinations of the number and identity of employees in the top-paid group, will be made in accordance with section 414(q) of the Code and the regulations thereunder.
For purposes of this subsection, the term "compensation" means compensation within the meaning of section 415(c)(3) of the Code. The determination will be made without regard to sections 125, 402(e)(3), and 402(h)(1)(B) of the Code, and in the case of employer contributions made pursuant to a salary reduction agreement, without regard to section 403(b) of the Code.
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For plan years beginning after December 31, 1997, for purposes of this subsection, the term "compensation" means compensation within the meaning of section 415(c)(3) of the Code.
FAMILY AGGREGATION RULES
Effective for plan years beginning after December 31, 1996, the family aggregation rules required by IRS section 414(q)(6) of the Code have been deleted from the plan. This subsection is subject to the plan amendment rules of section 1.401(a)(4)-5(a) of the regulations.
SECTION 401(a)(9) REQUIRED DISTRIBUTIONS
NON-5-PERCENT OWNER: No amendment will be made to the plan for section 401(a)(9) of the Code. The term "required beginning date" will continue to be defined as April 1 of the calendar year following the calendar year in which the participation attains age 70-1/2.
5-PERCENT OWNER: The required beginning date for a participant who is a 5-percent owner (as described in section 416(I) of the Code) is April 1 of the calendar year following the calendar year in which the participation attains age 70-1/2.
SECTION 417(a)(7)(A)
SPECIAL RULE RELATING TO TIME FOR WRITTEN EXPLANATION
Effective Date: January 1, 1997
- The written explanation described in section 417(a)(7)(A) of the Code may be provided after the annuity starting date. The 90-day applicable election period to waive the qualified joint and survivor annuity described in section 417(a)(7)(A) of the Code, shall not end before the 30th day after the date on which such explanation is provided.
The Secretary may by regulations limit the period of time by which the annuity starting date precedes the provision of the written explanation other than by providing that the annuity starting date may not be earlier than termination of employment.
- A participant may elect (with any applicable spousal consent) to waive any requirement that the written explanation be provided at least 30 days before the annuity starting date (or to waive the 30-day requirement under the above paragraph) if the distribution commences more than 7 days after such explanation is provided.
FAMILY AGGREGATION RULES
Effective as of January 1, 1997, the plan is amended to delete the provision of family aggregation as described in section 401(a)(17)(A) of the Code which requires a plan participant, the spouse of such participant and any lineal descendants who have not attained age 19 before the close of the plan year
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to be treated as a single participant for purposes of applying the limitation on compensation for a plan year.
SECTION 414(n)(2): TREATMENT OF LEASED EMPLOYEES
Effective as of January 1, 1997, the plan is amended to define the term "Leased Employee" as any person (other than an employee of the recipient) who pursuant to an agreement between the recipient and any other person ("leasing organization") has performed services for the recipient (or for the recipient and related persons determined in accordance with sections 414(n)(6) of the Code) on a substantially full-time basis for a period of at least 1 year, and such services are performed under primary direction or control by the recipient.
SECTION 414(u): SPECIAL RULES RELATING TO VETERANS REEMPLOYMENT RIGHTS UNDER USERRA
Effective date: As of December 12, 1994
Notwithstanding any provision of this plan to the contrary, contributions, benefits and service credit with respect to qualified military service will be provided in accordance with section 414(u) of the Internal Revenue Code.
Loan repayment will be suspended under this plan as permitted section 414(u)(4) of the Internal Revenue Code.
SECTION 401(d): AGGREGATION RULES FOR SELF-EMPLOYED PLANS
Effective as of January 1, 1997, any contributions to this plan on behalf of any owner-employee may be made only with respect to the earned income of the owner-employee that is derived from the trade or business with respect to which the plan is established.
APPLICATION OF PARTICIPATION AND DISCRIMINATION STANDARDS
Section 12.5 of the basic plan document of the plan is amended to use the actual deferral percentage (hereinafter "ADP") for participants who are Highly Compensated Employees for the current plan year and the ADP for participants who are non-highly compensated employees for THE PRECEDING PLAN YEAR in performing the nondiscrimination testing required under this section for the 1997 plan year. In accordance with Section 12.5 of the basic plan document of the plan, current year data was used to determine the ADP of non-highly compensated employees for the 1998 plan year.
The provision of section 401(k)(3)(A) of the Code as amended by SBJPA are incorporated herein by reference.
SECTION 401(k)(8)(c): DISCRIMINATION OF EXCESS CONTRIBUTIONS
Effective as of January 1, 1997, any distribution of the excess contributions for any plan year shall be made to Highly Compensated Employees on the basis of the amount of contributions by, or on behalf of, each of such employees.
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Excess Contributions will be distributed according to the following procedures:
4. The dollar amount of excess contributions is computed for each affected Highly Compensated Employee (HCE) in accordance with the provisions currently in effect.
5. The excess contributions are distributed in the following manner:
Reduce the applicable contributions of the HCE's beginning with the HCE with the highest dollar amount, to equal the dollar amount of the HCE with the next highest dollar amount of contributions.
This amount will be distributed to the HCE with the highest dollar amount.
6. Repeat set 2 until total excess contributions are distributed.
If these distributions are made, the ADP is treated as meeting the nondiscrimination test of section 401(k)(3) of the Code regardless of whether the ADP, if recalculated after distributions, would satisfy section 401(k)(3) of the Code.
The above procedure issued for the purposes of recharacterizing excess contributions under 401(k)(8)(A)(ii) of the Code.
For purposes of section 401(m)(9) of the Code, if a corrective distribution of excess contributions has been made, or a recharacterization has occurred, the ADP for Highly Compensated Employees is deemed to be the largest amount permitted under section 401(k)(3) of the Code.
SECTION 401(m): NONDISCRIMINATION TEST FOR MATCHING CONTRIBUTIONS AND EMPLOYEE CONTRIBUTIONS
Section 12.7 of the basic plan document of the plan is amended to use the actual contribution percentage (hereinafter "ACP") for participants who are Highly Compensated Employees for the current plan year and the ACP for participants who are non-highly compensated employees FOR THE PRECEDING PLAN YEAR in performing the nondiscrimination testing required under this section for the 1997 plan year. In accordance with Section 12.7 of the basic plan document of the plan, current year data was used to determine the ACP of non-highly compensated employees for the 1998 plan year.
The provisions of section 401(m)(6)(C) of the Code as amended by SBJPA are incorporated herein by reference.
SECTION 401(m)(6)(C): METHOD OF DISTRIBUTING EXCESS AGGREGATE CONTRIBUTIONS
Effective as of January 1, 1997, any distribution of the excess aggregate contributions for any plan year shall be made to Highly Compensated Employees on the basis of the amount of contributions by, or on behalf of, each of such employee. Forfeitures of excess aggregate contributions may not be allocated to participants whose contributions are reduced under this paragraph.
Excess Aggregate Contributions will be distributed according to the following procedures:
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4. The dollar amount of excess aggregate contributions is computed for each affected Highly Compensated Employee (HCE) in accordance with the provisions currently in effect.
5. The excess aggregate contributions are distributed in the following manner:
Reduce the applicable contributions of the HCE's beginning with the HCE with the highest dollar amount, to equal the dollar amount of the HCE with the next highest dollar amount of contributions.
This amount will be distributed to the HCE with the highest dollar amount.
6. Repeat set 2 until total excess aggregate contributions are distributed.
If these distributions are made, the ACP is treated as meeting the nondiscrimination test of section 401(m)(2) of the Code regardless of whether the ACP, if recalculated after distributions, would satisfy section 401(m)(2) of the Code.
For purposes of section 401(m)(9) of the Code, if a corrective distribution of excess aggregate contributions has been made, the ACP for Highly Compensated Employees is deemed to be the largest amount permitted under section 401(m)(2) of the Code.
IRC SECTION 411(a)(11)(A)
Effective as of January 1, 1998, the plan is amended to permit distribution without consent of any nonforfeitable accrued benefit which does not exceed $5,000.
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AMENDMENTS TO THE
TRIPLETT AUTO RECYCLERS 401(K) RETIREMENT SAVINGS PLAN
IRC SECTION 414(q) - HIGHLY COMPENSATED EMPLOYEES
Effective date: Plan Years beginning after December 31, 1996, except that, in determining whether an employee is a highly compensated employee in 1997, the amendments are treated as having been in effect in 1996.
- The term "highly compensated employee" includes highly compensated active employees and highly compensated former employees. A highly compensated active employee means any employee who:
(A) was a 5-percent owner (as defined in section 416(i)(1) of the Code) of the employer at any time during the current or the preceding year; or
(B) for the preceding year:
(i) had compensation from the employer in excess of $80,000
(as adjusted by the Secretary pursuant to section 415(d) of the Code, except that the base period shall be the calendar quarter ending September 30, 1996); and
(ii) if the employer elects the application of this clause for such preceding year, was in the top-paid group of employees for such preceding year.
For this purpose, an employee is in the top-paid group of employees for any year if such employee is in the group consisting of the top 20 percent of the employees when ranked on the basis of compensation paid during such year.
A former employee shall be treated as a highly compensated employee if: (A) such employee was highly compensated when such employee separated from service or (B) such employee was a highly compensated employee at any time after attaining age 55.
- A determination of who is a highly compensated employee, including the determinations of the number and identity of employees in the top-paid group, will be made in accordance with section 414(q) of the Code and the regulations thereunder.
For purposes of this subsection, the term "compensation" means compensation within the meaning of section 415(c)(3) of the Code. The determination will be made without regard to sections 125, 402(e)(3), and 402(h)(1)(B) of the Code, and in the case of employer contributions made pursuant to a salary reduction agreement, without regard to section 403(b) of the Code.
For plan years beginning after December 31, 1997, for purposes of this subsection, the term "compensation" means compensation within the meaning of section 415(c)(3) of the Code.
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FAMILY AGGREGATION RULES
Effective for plan years beginning after December 31, 1996, the family aggregation rules required by IRS section 414(q)(6) of the Code have been deleted from the plan. This subsection is subject to the plan amendment rules of section 1.401(a)(4)-5(a) of the regulations.
SECTION 401(a)(9) REQUIRED DISTRIBUTIONS
NON-5-PERCENT OWNER: No amendment will be made to the plan for section 401(a)(9) of the Code. The term "required beginning date" will continue to be defined as April 1 of the calendar year following the calendar year in which the participation attains age 70-1/2.
5-PERCENT OWNER: The required beginning date for a participant who is a 5-percent owner (as described in section 416(I) of the Code) is April 1 of the calendar year following the calendar year in which the participation attains age 70-1/2.
SECTION 417(a)(7)(A)
SPECIAL RULE RELATING TO TIME FOR WRITTEN EXPLANATION
Effective Date: January 1, 1997
- The written explanation described in section 417(a)(7)(A) of the Code may be provided after the annuity starting date. The 90-day applicable election period to waive the qualified joint and survivor annuity described in section 417(a)(7)(A) of the Code, shall not end before the 30th day after the date on which such explanation is provided.
The Secretary may by regulations limit the period of time by which the annuity starting date precedes the provision of the written explanation other than by providing that the annuity starting date may not be earlier than termination of employment.
- A participant may elect (with any applicable spousal consent) to waive any requirement that the written explanation be provided at least 30 days before the annuity starting date (or to waive the 30-day requirement under the above paragraph) if the distribution commences more than 7 days after such explanation is provided.
FAMILY AGGREGATION RULES
Effective as of January 1, 1997, the plan is amended to delete the provision of family aggregation as described in section 401(a)(17)(A) of the Code which requires a plan participant, the spouse of such participant and any lineal descendants who have not attained age 19 before the close of the plan year to be treated as a single participant for purposes of applying the limitation on compensation for a plan year.
SECTION 414(n)(2): TREATMENT OF LEASED EMPLOYEES
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Effective as of January 1, 1997, the plan is amended to define the term "Leased Employee" as any person (other than an employee of the recipient) who pursuant to an agreement between the recipient and any other person ("leasing organization") has performed services for the recipient (or for the recipient and related persons determined in accordance with sections 414(n)(6) of the Code) on a substantially full-time basis for a period of at least 1 year, and such services are performed under primary direction or control by the recipient.
SECTION 414(u): SPECIAL RULES RELATING TO VETERANS REEMPLOYMENT RIGHTS UNDER USERRA
Effective date: As of December 12, 1994
Notwithstanding any provision of this plan to the contrary, contributions, benefits and service credit with respect to qualified military service will be provided in accordance with section 414(u) of the Internal Revenue Code.
Loan repayment will be suspended under this plan as permitted section 414(u)(4) of the Internal Revenue Code.
SECTION 401(d): AGGREGATION RULES FOR SELF-EMPLOYED PLANS
Effective as of January 1, 1997, any contributions to this plan on behalf of any owner-employee may be made only with respect to the earned income of the owner-employee that is derived from the trade or business with respect to which the plan is established.
APPLICATION OF PARTICIPATION AND DISCRIMINATION STANDARDS
Section 4.5 of the plan is amended to use the actual deferral percentage (hereinafter "ADP") for participants who are Highly Compensated Employees for the current plan year and the ADP for participants who are non-highly compensated employees for THE PRECEDING PLAN YEAR in performing the nondiscrimination testing required under this section for the 1997 and 1998 plan years.
The provision of section 401(k)(3)(A) of the Code as amended by SBJPA are incorporated herein by reference.
SECTION 401(k)(8)(c): DISCRIMINATION OF EXCESS CONTRIBUTIONS
Effective as of January 1, 1997, any distribution of the excess contributions for any plan year shall be made to Highly Compensated Employees on the basis of the amount of contributions by, or on behalf of, each of such employees.
Excess Contributions will be distributed according to the following procedures:
1. The dollar amount of excess contributions is computed for each affected Highly Compensated Employee (HCE) in accordance with the provisions currently in effect.
2. The excess contributions are distributed in the following manner:
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Reduce the applicable contributions of the HCE's beginning with the HCE with the highest dollar amount, to equal the dollar amount of the HCE with the next highest dollar amount of contributions.
This amount will be distributed to the HCE with the highest dollar amount.
3. Repeat set 2 until total excess contributions are distributed.
If these distributions are made, the ADP is treated as meeting the nondiscrimination test of section 401(k)(3) of the Code regardless of whether the ADP, if recalculated after distributions, would satisfy section 401(k)(3) of the Code.
The above procedure issued for the purposes of recharacterizing excess contributions under 401(k)(8)(A)(ii) of the Code.
For purposes of section 401(m)(9) of the Code, if a corrective distribution of excess contributions has been made, or a recharacterization has occurred, the ADP for Highly Compensated Employees is deemed to be the largest amount permitted under section 401(k)(3) of the Code.
SECTION 401(m): NONDISCRIMINATION TEST FOR MATCHING CONTRIBUTIONS AND EMPLOYEE CONTRIBUTIONS
Section 4.7 of the plan is amended to use the actual contribution percentage (hereinafter "ACP") for participants who are Highly Compensated Employees for the current plan year and the ACP for participants who are non-highly compensated employees FOR THE PRECEDING PLAN YEAR in performing the nondiscrimination testing required under this section for the 1997 and 1998 plan years.
The provisions of section 401(m)(6)(C) of the Code as amended by SBJPA are incorporated herein by reference.
SECTION 401(m)(6)(C): METHOD OF DISTRIBUTING EXCESS AGGREGATE CONTRIBUTIONS
Effective as of January 1, 1997, any distribution of the excess aggregate contributions for any plan year shall be made to Highly Compensated Employees on the basis of the amount of contributions by, or on behalf of, each of such employee. Forfeitures of excess aggregate contributions may not be allocated to participants whose contributions are reduced under this paragraph.
Excess Aggregate Contributions will be distributed according to the following procedures:
1. The dollar amount of excess aggregate contributions is computed for each affected Highly Compensated Employee (HCE) in accordance with the provisions currently in effect.
2. The excess aggregate contributions are distributed in the following manner:
Reduce the applicable contributions of the HCE's beginning with the HCE with the highest dollar amount, to equal the dollar amount of the HCE with the next highest dollar amount of contributions.
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This amount will be distributed to the HCE with the highest dollar amount.
3. Repeat set 2 until total excess aggregate contributions are distributed.
If these distributions are made, the ACP is treated as meeting the nondiscrimination test of section 401(m)(2) of the Code regardless of whether the ACP, if recalculated after distributions, would satisfy section 401(m)(2) of the Code.
For purposes of section 401(m)(9) of the Code, if a corrective distribution of excess aggregate contributions has been made, the ACP for Highly Compensated Employees is deemed to be the largest amount permitted under section 401(m)(2) of the Code.
IRC SECTION 411(a)(11)(A)
Effective as of January 1, 1998, the plan is amended to permit distribution without consent of any nonforfeitable accrued benefit which does not exceed $5,000.
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APPENDIX B
PROFIT SHARING CONTRIBUTIONS ALLOCATION FORMULAS
FOR THE PLAN YEAR ENDING DECEMBER 31, 1999
1. BUD'S AUTO PARTS, INC. 401(k) PROFIT SHARING PLAN
Each eligible participant shall receive an allocation equal to his "base compensation" multiplied by the "base percentage," plus his "excess compensation," if any, multiplied by the "excess percentage," all as set forth below. A participant's "base compensation" is the portion of his compensation for the Plan Year that does not exceed $72,600, and his "excess compensation" is the remainder of his compensation for the Plan Year. The "total base compensation" for the Plan Year is the sum of the base compensation of all participants eligible to receive an allocation for the Plan Year, and the "total excess compensation" is the sum of the excess compensation of all such participants. Initially, the "base percentage" shall tentatively be determined to be the percentage that satisfies the following equation:
Base Percentage = Total Allocable Amount/(Total Base Compensation +
 (2 x Total Excess Compensation))
If the percentage so determined does not exceed 5.7 percent, it shall be the base percentage and the "excess percentage" shall be equal to two times the base percentage. If the percentage so determined does exceed 5.7 percent, the base percentage shall be redetermined to be the percentage that satisfies the following equation:
Base Percentage = (Total Allocable Amount - 5.7% Total Excess Compensation)/(Total Base Compensation + Total Excess Compensation)
In such event the Excess Percentage shall be the Base Percentage plus 5.7 percent.
2. DAMRON AUTO PARTS, INC. 401(k) PLAN
Each eligible participant shall receive an allocation equal to his "base compensation" multiplied by the "base percentage," plus his "excess compensation," if any, multiplied by the "excess percentage," all as set forth below. A participant's "base compensation" is the portion of his compensation for the Plan Year that does not exceed $72,600, and his "excess compensation" is the remainder of his compensation for the Plan Year. The "total base compensation" for the Plan Year is the sum of the base compensation of all participants eligible to receive an allocation for the Plan Year, and the "total excess compensation" is the sum of the excess compensation of all such participants. Initially, the "base percentage" shall tentatively be determined to be the percentage that satisfies the following equation:
Base Percentage = Total Allocable Amount/(Total Base Compensation +
 (2 x Total Excess Compensation))
If the percentage so determined does not exceed 5.7 percent, it shall be the base percentage and the "excess percentage" shall be equal to two times the base percentage. If the
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percentage so determined does exceed 5.7 percent, the base percentage shall be redetermined to be the percentage that satisfies the following equation:
Base Percentage = (Total Allocable Amount - 5.7% Total Excess Compensation)/(Total Base Compensation + Total Excess Compensation)
In such event the Excess Percentage shall be the Base Percentage plus 5.7 percent.
3. MIDWEST FOREIGN AUTO, INC. 401(k) PROFIT SHARING PLAN
Each eligible participant shall receive an allocation equal to his "base compensation" multiplied by the "base percentage," plus his "excess compensation," if any, multiplied by the "excess percentage," all as set forth below. A participant's "base compensation" is the portion of his compensation for the Plan Year that does not exceed $30,000, and his "excess compensation" is the remainder of his compensation for the Plan Year. The "total base compensation" for the Plan Year is the sum of the base compensation of all participants eligible to receive an allocation for the Plan Year, and the "total excess compensation" is the sum of the excess compensation of all such participants. Initially, the "base percentage" shall tentatively be determined to be the percentage that satisfies the following equation:
Base Percentage = Total Allocable Amount/(Total Base Compensation +
 (2 x Total Excess Compensation))
If the percentage so determined does not exceed 4.3 percent, it shall be the base percentage and the "excess percentage" shall be equal to two times the base percentage. If the percentage so determined does exceed 4.3 percent, the base percentage shall be redetermined to be the percentage that satisfies the following equation:
Base Percentage = (Total Allocable Amount - 4.3% Total Excess Compensation)/(Total Base Compensation + Total Excess Compensation)
In such event the Excess Percentage shall be the Base Percentage plus 4.3 percent.
4. RECYCLERS GROUP, INC. PROFIT SHARING/401(k) PLAN
Each eligible participant shall receive an allocation equal to his "base compensation" multiplied by the "base percentage," plus his "excess compensation," if any, multiplied by the "excess percentage," all as set forth below. A participant's "base compensation" is the portion of his compensation for the Plan Year that does not exceed $72,600, and his "excess compensation" is the remainder of his compensation for the Plan Year. The "total base compensation" for the Plan Year is the sum of the base compensation of all participants eligible to receive an allocation for the Plan Year, and the "total excess compensation" is the sum of the excess compensation of all such participants. Initially, the "base percentage" shall tentatively be determined to be the percentage that satisfies the following equation:
Base Percentage = Total Allocable Amount/(Total Base Compensation +
 (2 x Total Excess Compensation))
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If the percentage so determined does not exceed 5.7 percent, it shall be the base percentage and the "excess percentage" shall be equal to two times the base percentage. If the percentage so determined does exceed 5.7 percent, the base percentage shall be redetermined to be the percentage that satisfies the following equation:
Base Percentage = (Total Allocable Amount - 5.7% Total Excess Compensation)/(Total Base Compensation + Total Excess Compensation)
In such event the Excess Percentage shall be the Base Percentage plus 5.7 percent.
5. ROUTE 16 AUTO SALVAGE 401(k) PROFIT SHARING PLAN
Each eligible participant shall receive an allocation equal to his "base compensation" multiplied by the "base percentage," plus his "excess compensation," if any, multiplied by the "excess percentage," all as set forth below. A participant's "base compensation" is the portion of his compensation for the Plan Year that does not exceed $72,600, and his "excess compensation" is the remainder of his compensation for the Plan Year. The "total base compensation" for the Plan Year is the sum of the base compensation of all participants eligible to receive an allocation for the Plan Year, and the "total excess compensation" is the sum of the excess compensation of all such participants. Initially, the "base percentage" shall tentatively be determined to be the percentage that satisfies the following equation:
Base Percentage = Total Allocable Amount/(Total Base Compensation +
 (2 x Total Excess Compensation))
If the percentage so determined does not exceed 5.7 percent, it shall be the base percentage and the "excess percentage" shall be equal to two times the base percentage. If the percentage so determined does exceed 5.7 percent, the base percentage shall be redetermined to be the percentage that satisfies the following equation:
Base Percentage = (Total Allocable Amount - 5.7% Total Excess Compensation)/(Total Base Compensation + Total Excess Compensation)
In such event the Excess Percentage shall be the Base Percentage plus 5.7 percent.
6. SMART PARTS 401K PLAN
Each eligible Participant shall receive an allocation in proportion that the Compensation paid to each such participant bears to the Compensation paid to all such Participants during the Plan Year.
7. STAR AUTO PARTS, INC. 401(k) PROFIT SHARING PLAN
Each eligible Participant shall receive an allocation in proportion that the Compensation paid to each such participant bears to the Compensation paid to all such Participants during the Plan Year.
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8. TRIPLETT AUTO RECYCLERS 401(k) RETIREMENT SAVING PLAN
Each eligible Participant shall receive an allocation in proportion that the Compensation paid to each such participant bears to the Compensation paid to all such Participants during the Plan Year.
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LKQ CORPORATION EMPLOYEES' RETIREMENT PLAN
EXHIBIT A
LIST OF PARTICIPATING EMPLOYERS
1. 250 Auto Wreckers Corp.
2. Black Horse Auto Parts, Inc.
3. Bud's Auto Parts, Inc.
4. Damron Auto Parts, Inc.
5. Damron Auto Parts, L.P.
6. Damron Holding Co.
7. DAP Management Inc.
8. DAP Trucking, Inc.
9. Dismantling & Recycling, Inc.
10. Gorham Auto Parts Corp.
11. Grainger Auto Parts, Inc.
12. Hustisford Auto Co.
13. Lakenor Auto & Truck Salvage, Inc.
14. LKQ All Models Corp.
15. LKQ Auto Parts of Utah, Inc.
16. LKQ Best Automotive Corp.
17. LKQ B&D Auto Recyclers Corp.
18. LKQ Corporation
19. LKQ D&R Auto Parts Corp.
20. LKQ Great Lakes Corp.
21. LKQ Hunts Point Auto Parts Corp.
22. LKQ John's Eastside Corp.
23. LKQ John's Mid-Valley Corp.
24. LKQ John's Westside Corp.
25. LKQ Management Company
26. LKQ Manchester Auto Parts Corp.
27. LKQ Midwest Auto Parts Corp.
28. LKQ Raleigh Auto Parts Corp.
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29. Mabry Auto Salvage Corp.
30. Mid-America Auto Parts, Inc.
31. Redding Auto Center, Inc.
32. Route 16 Auto Salvage, Inc.
33. Royal's Auto Salvage, Inc.
34. Smith's Auto Sales and Salvage Corp.
35. Star Auto Parts, Inc.
36. Triplett Auto Recyclers, Inc.
37. United Auto Dismantling, Inc.
December 1, 1999
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Exhibit 10.27
FIRST AMENDMENT
TO THE
LKQ CORPORATION EMPLOYEES' RETIREMENT PLAN
WHEREAS, LKQ Corporation (the "Company") maintains the LKQ Corporation Employees' Retirement Plan (the "Plan"); and
WHEREAS, by virtue and in exercise of the powers reserved to the Company by
Section 11.1 of the Plan, and pursuant to the authority delegated to the undersigned officers of the Company by resolutions of the Compensation Committee of its Board of Directors, the Plan be and hereby is amended, effective August 1, 1999, by:
1. AMENDING SECTION 1.1 OF THE PLAN IN ITS ENTIRETY TO READ AS FOLLOWS:
1.1 THE PLAN. The following provisions constitute the LKQ Corporation Employees' Retirement Plan (the "Plan") effective as of August 1, 1999. Seven Prior Plans which were maintained by certain Predecessor Employers were amended and merged into this Plan as of the Effective Date. The seven Prior Plans were originally adopted and maintained as follows: the Star Auto Parts, Inc. 401(k) Profit Sharing Plan, adopted by Star Auto Parts, Inc. effective as of January 1, 1992, and amended and restated effective as of January 1, 1995, January 1, 1996, and August 1, 1998; the Triplett Auto Recyclers 401(k) Retirement Savings Plan, adopted by Triplett Auto Recyclers, Inc. effective as of January 1, 1993; the Recyclers Group, Inc. Profit Sharing/401(k) Plan, adopted by Mid-America Auto Parts, Inc. effective as of January 1, 1994, and amended and restated effective as of July 1, 1998; the Bud's Auto Parts, Inc. 401(k) Profit Sharing Plan, adopted by Bud's Auto Parts Inc. effective as of June 1, 1995; the Route 16 Auto Salvage 401(k) Profit Sharing Plan, adopted by Route 16 Auto Salvage, Inc. effective as of January 1, 1996; the Damron Auto Parts, Inc. 401(k) Plan, adopted by Damron Auto Parts, Inc. effective as of December 1, 1996; and the Smart Parts 401K Plan, adopted by Hustisford Auto Company effective January 1, 1998.
The following two additional Prior Plans, which were maintained by certain Predecessor Employers, were amended and merged into this Plan as of October 1, 1999: John's Import Auto 401(k) Savings Plan, adopted by LKQ John's Eastside Corp. effective as of June 1, 1996; and Midwest Foreign Auto, Inc. 401(k) Profit Sharing Plan, adopted by LKQ Midwest Auto Parts Corp. effective September 1, 1991, and amended and restated effective January 1, 1998.

2. AMENDING SECTION 1.6 OF THE PLAN IN ITS ENTIRETY TO READ AS FOLLOWS:
1.6 SPONSOR AND EMPLOYERS. The sponsor of the Plan (the "Sponsor") is LKQ Corporation. With the approval of the Sponsor, the Plan may be adopted for the benefit of its Employees by any Affiliate or any other business entity in which the Sponsor or an Affiliate has a substantial interest. The business entities which adopt the Plan, including the Sponsor, are referred to in the Plan as the "Employers." As of the Effective Date, the Employers other than the Sponsor are 250 Auto Wreckers Corp., Black Horse Auto Parts, Inc., Bud's Auto Parts, Inc., Damron Auto Parts, Inc., Damron Auto Parts, L.P., Damron Holding Co., DAP Management Inc., DAP Trucking, Inc., Dismantling & Recycling, Inc., Gorham Auto Parts Corp., Hustisford Auto Co., Lakenor Auto & Truck Salvage, Inc., LKQ All Models Corp., LKQ Auto Parts of Utah, Inc., LKQ Best Automotive Corp., LKQ B&D Auto Recyclers Corp., LKQ D&R Auto Parts Corp., LKQ John's Eastside Corp., LKQ Management Company, LKQ Midwest Auto Parts Corp., Mabry Auto Salvage Corp., Mid-America Auto Parts, Inc., Redding Auto Center, Inc., Route 16 Auto Salvage, Inc., Royal's Auto Salvage, Inc., Smith's Auto Sales and Salvage Corp., Star Auto Parts, Inc., Triplett Auto Recyclers, Inc., and United Auto Dismantling, Inc.
In addition, the following business enetities have become Employers as of September 1, 1999: Granger Auto Parts, Inc.
In addition, the following business entities have become Employers as of October 1, 1999: LKQ John's Mid-Valley Corp., and LKQ John's Westside Corp.
In addition, the following business entities have become Employers as of November 1, 1999: LKQ Hunts Point Auto Parts Corp., LKQ Manchester Auto Parts Corp., and LKQ Raleigh Auto Parts Corp.
3. AMENDING SECTION 3.3 OF THE PLAN BY REPLACING "Hustisford Auto Co., Inc."
WITH "Hustisford Auto Co.,".
IN WITNESS WHEREOF, the Company has caused this amendment to be executed by its duly authorized officers, this 13th Day of August, 2001.
LKQ CORPORATION

By:    /s/ Joseph M. Holsten
   -----------------------------------
Name:  Joseph M. Holsten
     ---------------------------------
Title: President
      --------------------------------	

2

Exhibit 10.28
SECOND AMENDMENT
TO THE
LKQ CORPORATION EMPLOYEES' RETIREMENT PLAN
WHEREAS, LKQ Corporation (the "Company") maintains the LKQ Corporation Employees' Retirement Plan (the "Plan"); and
WHEREAS, amendment of the Plan is deemed desirable to reflect certain provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 ("EGTRRA") and certain other distribution changes under IRS regulations and is intended as good faith compliance with the requirements of EGTRRA and is to be construed in accordance with EGTRRA and guidance issued thereunder; and
WHEREAS, except as otherwise provided in a particular of the amendment, such amendment shall be effective as of the first day of the first Plan Year beginning after December 31, 2001;
NOW, THEREFORE, by virtue and in exercise of the power reserved to the company under Section 11.1 of the Plan, and pursuant to the authority delegated to the undersigned officers of the company by resolutions of the Compensation Committee of its Board of Directors, the Plan be and hereby is amended in the following particulars:
1. By substituting for paragraph (c) of the definition of "Compensation" in
Section 2.1 of the Plan the following:
"(c) ANNUAL LIMIT ON COMPENSATION. An Employee's Compensation for any Plan Year shall not exceed $200,000, as adjusted pursuant to Section 401(a)(17) of the Code. For purposes of computing the Pre-Tax Contributions withheld from a Participant whose Compensation exceeds such limit, all Compensation paid to the Participant during the period during which he has elected to have Pre-Tax Contributions withheld shall be taken into account until the total Compensation taken into account equals such limit."

2. By substituting for the definition of "Key Employee" in Section 2.1 of the Plan the following:
"(a) GENERAL RULE. Except as otherwise provided in this Section, an Employee shall be considered a Key Employee for any Plan Year if, at any time during the Plan Year which contains the Top-Heavy Determination Date, he:
(i) is an officer of any Employer or Affiliate whose Modified 415 Compensation exceeds $130,000; or
(ii) owns more than five percent of the stock of an Employer or Affiliate; or
(iii) owns more than one percent of the stock of an Employer or Affiliate and receives Modified 415 Compensation for any Plan Year in which he owns such percentage in excess of $150,000 (determined in accordance with Section 416(i)(1)(B) of the Code).
(b) PURPOSE. The purpose of this Section is to conform to the definition of "key employee" set forth in Section 416(i)(1) of the Code effective as of January 1, 2002 and thereafter, which is incorporated herein by reference, and to the extent that this Section shall be inconsistent with Section 416(i)(1) of the Code, either by excluding Employees who would be classified as "key employees" thereunder or by including Employees who would not be so classified, the provisions of Section 416(i)(1) of the Code shall govern and control."
3. By substituting for paragraphs (e) and (f) of the definition of "Top-Heavy Year" in Section 2.1 of the Plan the following:
"(e) ACCOUNT BALANCES. For purposes of this Section, account balances shall include (i) all Contributions which any Employer or Affiliate has paid or is legally obligated to pay to any employee plan as of the Top-Heavy Determination Date (including Contributions made thereafter if they are allocated as of the Top-Heavy Determination Date) and all Forfeitures allocated as of the Top-Heavy Determination Date, and (ii) all distributions made to a Participant or his Beneficiary during the 1-year period ending on the Top-Heavy Determination Date (5-year period ending on the Top-Heavy Determination Date for Plan Years beginning prior to January 1, 2002) (or, in the case of a defined benefit plan, the actuarial present value as of the Top-Heavy Determination Date of such distributions). Effective for Plan Years beginning after December 31, 2001, in the case of a distribution made for a reason other than separation from service, death or disability, this provision shall be applied by substituting "5-year period" for "1-year period." If any plan that was terminated within the 1-year period ending on the Top-Heavy Determination Date (5-year period ending on the Top-Heavy Determination Date for Plan Years beginning prior to January 1, 2002) would, if it had not been terminated, be a plan described in paragraph (b), distributions made under such plan shall also be taken into account. For purposes of this Section, account balances shall also include amounts which are attributable to Contributions made by the Participants (other than deductible voluntary contributions under Section 219 of the Code) but shall not include any rollover (as defined in Section 402 of the Code) or a direct transfer from the trust of any employee plan qualified under Section 401(a) of the Code if such plan is not maintained by an Employer or

Affiliate and such rollover or transfer is made at the request of the Participant after December 31, 1983.
(f) CERTAIN FORMER EMPLOYEES. Anything to the contrary notwithstanding, if an Employee has not performed any services for any Employer or Affiliate at any time during the 1-year period ending on the Top-Heavy Determination Date (or prior to January 1, 2002, within the 5-year period ending on the Top-Heavy Determination Date), his account balance (in the case of a defined contribution plan) or his accrued benefit (in the case of a defined benefit plan) shall not be taken into consideration in the determination of whether the Plan Year is a Top-Heavy Year."
4. By substituting for Section 5.4 of the Plan the following:
"5.4 ROLLOVER CONTRIBUTIONS. An Eligible Employee may make a Contribution to the Plan which constitutes a rollover of benefits from another plan qualified under
Section 401(a) of the Code (either directly or through an IRA described in
Section 408(d)(3)(A)(ii) of the Code, to the extent permissible under applicable law), Section 403(a) of the Code, Section 403(b) of the Code, and Section 457 of the Code, or cause the trustee of another plan to make a direct transfer of such benefits on his behalf (in any case, a "Rollover Contribution"). In no event shall such Contribution consist of after-tax employee contributions. All Rollover Contributions shall be allocated to a separate Rollover Account maintained for the Participant. The Administrator may establish uniform rules limiting or restricting Rollover Contributions."
5. By substituting for Section 6.1 of the Plan the following:
"6.1 LIMIT ON ANNUAL ADDITIONS.
(a) LIMITATION. Notwithstanding any other provisions of the Plan, the amount of annual additions (as hereinafter defined) allocated to a Participant's Account for any Limitation Year shall not exceed an amount equal to the lesser of:
(i) $40,000 (as adjusted pursuant to Section 415(d) of the Code as of the first day of such Limitation Year); or
(ii) 100 percent of the Participant's 415 Compensation for the Limitation Year, increased by amounts treated as annual additions solely by reason of subparagraph (b)(iv);
reduced in either case by the amount of annual additions credited to the Participant's account for the limitation Year under any other defined contribution plan maintained by an Employer or 415 Affiliate. For purposes of applying this Section to contributions made following a period of Qualified Military Service pursuant to Section 5.7, a Participant's 415 Compensation shall include the amount of 415 Compensation he would have received had he been employed during such period of Qualified Military Service, based on his rate of pay that would have been in effect during such period or, if such rate of pay is not reasonably certain, his average compensation during the 12 month period of employment (or the total period of employment if less) immediately preceding the Qualified Military Service. "

6. By deleting paragraphs (d), (e), (f) and (g) of Section 6.1 of the Plan and by substituting for paragraphs (d) and (e) the following:
"(d) AGGREGATION OF PLANS. For purposes of this Section 6.1, all defined benefit plans of any Employer or 415 Affiliate, whether or not terminated, are to be treated as one defined benefit plan, and all defined contribution plans of any Employer or 415 Affiliate, whether or not terminated, are to be treated as one defined contribution plan.
(e) PARTICIPATION IN DEFINED BENEFIT PLAN. Anything to the contrary notwithstanding, if during any Limitation Year a Participant also participates in a defined benefit plan (as defined in Section 414(j) of the Code) maintained by an Employer or 415 Affiliate, the annual additions under this Plan and the projected annual benefit under the defined benefit plan shall be separately determined pursuant to the rules in effect for such plan."
7. By substituting for Section 6.2(a) of the Plan the following:
"(a) LIMITATION. The total amount of Pre-Tax Contributions made on behalf of any Participant under this Plan, plus the total amount of before-tax elective deferrals made on behalf of the Participant under any other plan described in 401(k) or 402(h)(1)(B) of the Code plus amounts used to purchase an annuity under 403(b) of the Code pursuant to a salary reduction agreement under 402(g)(3) of the Code, in any calendar year shall not exceed $11,000 (or such larger dollar limitation as may then be applicable for such calendar year under 402(g) of the Code)."
8. By substituting for Section 6.3 of the Plan the following:
"6.3 ACTUAL DEFERRAL PERCENTAGE LIMITATION.
(a) LIMITATION. The Pre-Tax Contributions of Participants who are Highly-Compensated Employees shall be further limited for each Plan Year so that the Highly Compensated ADP does not exceed the Maximum ADP. The Administrator may reduce the Pre-Tax Deferral Elections of such Participants in accordance with paragraph (c) during the Plan Year to prevent this limitation from being exceeded, but in no event shall the Administrator have any liability to any Highly Compensated Employee if it does not do so.
(b) CORRECTION OF EXCESS CONTRIBUTIONS. If the limitation of paragraph
(a) is exceeded for any Plan Year after taking into account any Qualified Non-Elective Contributions, the excess Pre-Tax Contribution (as determined under paragraph (c)) of each Participant who is a Highly-Compensated Employee shall be recharacterized as an After-Tax Contribution to the extent the Participant so elects and to the extent such recharacterization does not cause the limitation of Section 6.4 to be exceeded, and otherwise distributed to such Participant.
All distributions shall be made, notwithstanding any other restriction on distributions in the Plan, not later than 2 1/2 months following the end of the Plan Year if possible, and in any event not later than the last day of the following Plan Year. All recharacterizations shall be made not later than 2 1/2 months following the end of the Plan Year. The amount required to be distributed or recharacterized under this Section 6.3 shall be reduced by

any amount previously distributed to satisfy Section 6.2. Any amount distributed or recharacterized shall include the share of income allocable to such distribution, determined in accordance with the method used under Section 6.2(e) or 6.2(f), and all references to excess Pre-Tax Contributions shall be deemed to include such allocated income
(c) DETERMINATION OF EXCESS CONTRIBUTIONS. If it is necessary to determine the excess Pre-Tax Contributions of Highly Compensated Employees pursuant to paragraph (b) for any Plan Year, the following method shall be used:
(i) First, Contributions of the Highly Compensated Employee or Employees whose Deferral Percentage is the highest must be reduced until their Deferral Percentage is equal to the greater of the Deferral Percentage which will cause the Highly Compensated ADP not to exceed the Maximum ADP or the Deferral Percentage of the Highly Compensated Employee or Employees who have the second highest Deferral Percentage. The same procedure shall then be applied, if necessary, to the Pre-Tax Contributions of the Highly Compensated Employees who have the second highest Deferral Percentage (including those whose Deferral Percentage was reduced in the prior step), and so on until the Highly Compensated ADP no longer exceeds the Maximum ADP. The aggregate amount by which all Pre-Tax Contributions would have to be reduced, using this method, so that the Highly Compensated ADP would no longer exceed the Maximum ADP is hereinafter referred to as the "Aggregate Excess Contribution."
(ii) Second, the Administrator shall determine the amount by which the Pre-Tax Contributions (determined without regard to subparagraph (c)(i) above) of the Highly Compensated Employee or Employees whose Pre-Tax Contributions are the largest in dollar amounts must be reduced until either the total amount of reductions equals the Aggregate Excess Contribution or their Pre-Tax Contributions are equal in amount to the Pre-Tax Contributions of the Highly Compensated Employee or Employees who have the second largest amount of Pre-Tax Contributions. The same procedure shall then be applied, if necessary, to the Pre-Tax Contributions of the Highly Compensated Employees who received the second largest dollar amount of Pre-Tax Contributions (including those whose Pre-Tax Contributions were reduced in the prior step), and so on until the total amount of reductions equals the Aggregate Excess Contribution.
(d) CALCULATION OF ADP. In calculating the ADP for the purpose of this Section 6.3, the Highly-Compensated Employee ADP will be determined by treating all cash or deferred arrangements maintained by an Employer or an Affiliate under which the Highly-Compensated Employee is eligible (other than those that may not be permissively aggregated) as a single aggregated plan. For the purpose of determining whether such an aggregated plan satisfies the actual

deferral percentage test of Section 6.3(a), all Employee Contributions or other elective contributions that are made under two or more plans maintained by an Employer or an Affiliate that are so aggregated for the purposes of Code Section 401(a)(4) or Section 410(b) (other than Code
Section 410(b)(2)(A)(ii)) will be treated as made under a single aggregated plan. If two or more plans maintained by an Employer or an Affiliate are permissively aggregated for the purpose of Code Section 401(k), the aggregated plans must also satisfy Code Section 401(a)(4) and Section 410(b) as though they were a single aggregated plan.
(e) FORFEITURE OF MATCHING CONTRIBUTIONS. The portion of any Matching Contributions that relates to any excess Pre-Tax Contributions distributed pursuant to this Section 6.3 shall be forfeited, notwithstanding any other provision of the Plan or the Participant's Vesting Service."
9. By substituting for Section 6.4 of the Plan the following:
"6.4 ACTUAL CONTRIBUTION PERCENTAGE LIMITATION.
(a) LIMITATION. The Matching Contributions of Participants who are Highly Compensated Employees shall be further limited for each Plan Year so that the Highly Compensated ACP does not exceed the Maximum ACP (or such lower amount as is determined under paragraph (e)). The Administrator may reduce the amount of Matching Contributions allocated such Participants in accordance with paragraph (d) during the Plan Year to prevent this limitation from being exceeded, but in no event shall the Administrator have any liability to any Highly Compensated Employee if it does not do so.
(b) CORRECTION OF EXCESS CONTRIBUTIONS. If the limitation of paragraph
(a) is exceeded for any Plan Year after taking into account any Qualified Non-Elective Contributions and the recharacterization of Pre-Tax Contributions pursuant to paragraph (c), the excess Matching Contribution (as determined under paragraph (d) of each Participant who is a Highly-Compensated Employee shall be distributed to such Participant. All distributions shall be made, notwithstanding any other restriction on distributions in the Plan, not later than 2 1/2 months following the end of the Plan Year if possible, and in any event not later than the last day of the following Plan Year. Each such distribution shall include the share of income allocable to such distribution, determined in accordance with the method used under Section 6.2(e) or 6.2(f), and all references to excess Contributions shall be deemed to include such allocated income.
(c) USE OF PRE-TAX CONTRIBUTIONS. For purposes of this Section, a portion of the Pre-Tax Contributions made on behalf of Participants who are Non-Highly Compensated Employees shall be treated as Matching Contributions. Such amount shall be determined by applying the method set forth in paragraph
(d) to recharacterize the Pre-Tax Contributions of Non-Highly Compensated Employees as Matching Contributions until either the limitation of paragraph (a) is satisfied or any further recharacterization would cause the limitation of
Section 6.3 to be exceeded. If before-tax contributions under any other plan maintained by an Employer or Affiliate are included in a Non-Highly Compensated Employee's Contribution Percentage, such before-tax contributions may be recharacterized only if such other plan and the Plan would satisfy Section 410(b) of the

Code (without reliance on the average benefits test) if treated as a single plan. Pre-Tax Contributions that are so recharacterized shall continue to be treated as Pre-Tax Contributions for all other purposes under the Plan, including specifically limitations on Forfeitures and distributions.
(d) DETERMINATION OF EXCESS CONTRIBUTIONS. If it is necessary to determine the excess Matching Contributions of Highly Compensated Employees pursuant to paragraph (b) for any Plan Year, the same two-step method described in Section 6.3(c) shall be used.
(e) FORFEITURE OF NONVESTED CONTRIBUTIONS. If a distribution of an excess Matching Contribution must be made to a Participant under this Section 6.4 at a time when the Participant is not fully Vested in his Matching Contribution Account, then the amount distributed to such Participant shall be equal to the amount of the excess Matching Contribution multiplied by the percentage of the Matching Contribution Account that is Vested, and the remaining portion of the excess Matching Contribution shall be forfeited.
(f) CALCULATION OF ACP. In calculating ACP for the purpose of this
Section 6.4, the Actual Contribution Percentage of a Highly-Compensated Employee will be determined by treating all plans subject to Code Section 401(m) maintained by an Employer or an Affiliate under which the Highly-Compensated Employee is eligible (other than those that may not be permissively aggregated) as a single aggregated plan. For the purpose of determining whether such an aggregated plan satisfies the ACP test of section 6.4(a), all Employee Contributions or other elective contribution s and Matching Contributions that are made under two or more plans maintained by an Employer or an Affiliate that are so aggregated for the purposes of Code Section 401(a)(4) or Section 410(b) (other than Code Section 410(b)(2)(A)(ii)) will be treated as made under a single aggregated plan. If two or more plans maintained by an Employer or an Affiliate are permissively aggregated for the purpose of Code Section 401(m), the aggregated plans must also satisfy Code Section 401(a)(4) and Section 410(b) as though they were a single aggregated plan."
10. By substituting the following for Section 6.5 of the Plan:
"6.5 LIMIT ON DEDUCTIBLE CONTRIBUTIONS Anything else contained herein to the contrary notwithstanding, the total Contributions made by any Employer to the Plan for any Plan Year (excluding After-Tax Contributions withheld by the Employer) shall not exceed 25 percent of the aggregate Compensation paid by the Employer to all Participants during the Plan Year, or such other amount as may be deductible under Section 404 of the Code for such Plan Year (determined without regard to Section 263A of the Code)."
11. By substituting for Section 9.1(b) of the Plan the following:
"(b) SMALL ACCOUNT BALANCE. Effective for all distributions made after December 31, 2001, if the Participant's total Vested Account Balance at the time of distribution, or the portion thereof distributed to a Beneficiary, does not exceed $5,000.00, then distribution shall be made in the form described in paragraph (a). For purposes of this Section 9.1(b), the determination of whether a Participant's Vested Account Balance exceeds $5,000

shall be made without regard to the portion of the Participant's Vested Account Balance attributable to Rollover Contributions."
12. By substituting the following for Section 9.2(a) of the Plan:
"(a) SMALL ACCOUNT BALANCES. If, at the time of a Participant's Termination of Employment, his Vested Account Balance does not exceed the amount provided in
Section 9.1(b), the entire amount of the Vested Account Balance shall be distributed to such Participant under Section 9.1(a) as soon as administratively feasible.
(i) For purposes of this Section 9.2(a), the determination of whether a Participant's Account Balance exceeds the amount provided in Section 9.1(b) upon his Termination of Employment shall be made without regard to whether the Participant's Account Balance exceeded such amount at a time prior to the Participant's Termination of Employment, and without regard to the portion of the Participant's Account Balance attributable to Rollover Contributions.
(ii) If, upon a Participant's Termination of Employment, his Account Balance (i) exceeds $1,000 but is less than the amount provided in
Section 9.1(b), and (ii) the Participant fails to affirmatively elect to have his entire Account Balance distributed in accordance with Section 9.1(a), the Administrator shall transfer the Participant's Account Balance to an individual retirement account or a trustee or issuer designated by the Administrator, in its sole discretion, and shall notify the Participant, in writing, that the Participant's distribution may be transferred, without cost or penalty to the Participant, to another individual retirement account selected by the Participant. This Section 9.2(a)(ii) shall not become effective until the first date prescribed by the IRS and Department of Labor."
13. By substituting for Section 9.3(b) of the Plan the following:
"(b) DEATH OF PARTICIPANT AFTER DISTRIBUTION HAS COMMENCED. If a Participant dies after distribution of his benefit has commenced and after the date specified in Section 9.2(d)(ii), then distribution shall be made in accordance with paragraph (c) unless distribution has been made by purchase of an annuity."
14. By substituting for Section 9.5 of the Plan the following:
"9.5 DIRECT TRANSFERS. Any Participant, surviving spouse, or Alternate Payee (but only with respect to an Alternate Payee who is the spouse or former spouse of a Participant) who is entitled to receive an "eligible rollover distribution," as hereinafter defined, shall have the right to direct the transfer of all or a portion of such distribution directly to an individual retirement account or annuity qualified under Section 408 of the Code (other than an endowment contract) (an "IRA"), a defined contribution pension or profit-sharing trust qualified under Section 401(a), an annuity plan qualified under Section 403(a) of the Code, an annuity contract described in section 403(b) of the Code, an eligible plan under section 457 of the

Code; or another "eligible retirement plan" as defined in Section 401(a)(31) of the Code, which will accept such a transfer, provided that the amount so transferred must either be the entire amount of such distribution or must be at least $500. The Administrator shall furnish each Participant, Alternate Payee or surviving spouse to whom this Section 9.5 applies with a notice describing his right to a direct transfer and the tax consequences of a distribution. Such notice shall be furnished not more than 90 days nor less than 30 days before the Participant, Alternate Payee or surviving spouse is entitled to receive such distribution, and no distribution shall be made until 30 days after he or she has received such notice unless he or she waives such 30 day period in writing. For purposes of this Section 9.5, an "eligible rollover distribution" means any distribution that is at least $200.00, other than (i) a distribution that is part of a series of substantially equal installment payments, paid not less frequently than annually, over the life or life expectancy of the Participant, the joint lives or joint life expectancies of the Participant and his beneficiary, or a fixed period of 10 years or more, but only to the extent such distribution exceeds the minimum amount required to be distributed under the Plan, and (ii) a distribution of Pre-Tax Contributions made on account of hardship. The Administrator may adopt administrative procedures to implement direct transfers, which may vary the time periods and minimum amounts set forth above, to the extent consistent with final Treasury Regulations issued under
Section 401(a)(31) of the Code."
15. By adding the following sentences at the end of Section 10.4 of the Plan.
"Benefit under the Plan will be paid only if the Administrator decides in its discretion that the applicant is entitled to such benefits."

IN WITNESS WHEREOF, the Company has caused this amendment to be executed by its duly authorized officers, this 31 day of December, 2002.
LKQ CORPORATION

By: /s/ Victor M. Casini
    ---------------------------------

       Its: Vice President
            -------------------------	

Exhibit 10.29
LKQ CORPORATION
EMPLOYEES' RETIREMENT PLAN
NON-DISCRETIONARY TRUST AGREEMENT

TABLE OF CONTENTS

ARTICLE                                                                               PAGE
-------                                                                               ----
    I      Name                                                                          1
           Parties                                                                       1

   II      Fiduciary Responsibility                                                      2

  III      The Trust Fund and Its Administration                                         2
                          The Trust Fund                                                 2
                          Certificate of Authority                                       3
                          Investment Powers                                              3
                          General Powers                                                 3
                          Investment Managers                                            6
                          Compensation and Expenses                                      7
                          Common Fund                                                    7
                          Trust Accounting                                               7
                          Limit of Trustee's Responsibility                              8

   IV      Investment Funds                                                              8
                          Investment Funds                                               8
                          Trustee's Investment of Amounts Credited
                           to Individually Directed Investment Accounts                  8

    V      General Provisions                                                           10
                          Action by Company                                             10
                          Warranty                                                      10
                          Disagreement as to Acts                                       10
                          Courts                                                        10
                          Evidence                                                      10
                          Third Parties                                                 10
                          No Reversion to Company                                       11
                          Interests Not Transferable                                    11
                          Indemnification                                               12
                          Litigation by Participants                                    12
                          Liabilities Mutually Exclusive                                13
                          Waiver of Notice                                              13
                          Counterparts                                                  13
                          Controlling Law                                               13
                          Gender and Number                                             13
                          Successors                                                    13
                          Severability                                                  13
                          Statutory References                                          14	

(i)

ARTICLE                                                                               PAGE
-------                                                                               ----
   VI      Changes in Trustee                                                           14
                          Resignation or Removal of Trustee                             14
                          Appointment of Successor Trustee                              14
                          Duties of Resigning or Removed Trustee
                          and of Successor Trustee                                      14

  VII      Amendment and Termination                                                    15
                          Amendment                                                     15
                          Termination                                                   15

 VIII      Incorporation of Collective Investment Trusts                                15	

(ii)

LKQ CORPORATION EMPLOYEES' RETIREMENT PLAN
NON-DISCRETIONARY TRUST AGREEMENT
THIS AGREEMENT, made this 1st day of August,1999, by and between LKQ Corporation, an Illinois corporation (the "Company"), and THE CHICAGO TRUST COMPANY located at Chicago, Illinois, (the "Trustee"),
WITNESSETH THAT:
WHEREAS, the Company has established the LKQ Corporation Employees' Retirement Plan (the "Plan") effective August 1, 1999, a copy of which Plan, as amended from time to time, will be identified by the Secretary of the Company and filed with the Trustee; and
WHEREAS, this agreement is intended to implement the Plan and form a part of it:
NOW THEREFORE, IT IS AGREED, that this agreement, on and after the day and year first above written, shall constitute the sole Trust Agreement between the Company and the Trustee in connection with the Plan.
ARTICLE I
NAME
This agreement and the Trust hereby evidenced may be referred to as LKQ Corporation Employees' Retirement Plan Trust ("Trust").
PARTIES
The Plan is sponsored by the Company. Upon written approval by Board Resolution, the Company may allow another affiliated employer or member of the Company's controlled group to adopt the Plan and as a result become a party to this Trust Agreement (a "Participating Employer"), without the execution of this separate Trust, the terms of which are hereby incorporated by reference in the Plan as adopted by the Company and any Participating Employer. The Company, as original signatory to this Trust, shall continue to act as Named Fiduciary hereunder and in providing all directions, instructions or other notices to the Trustee, on behalf of itself and all Participating Employers that may adopt the Plan
1

and this Trust Agreement.
ARTICLE II
FIDUCIARY RESPONSIBILITY
The Company, as Named Fiduciary, the Trustee, any Investment Manager appointed pursuant to paragraph III-5, and any other fiduciaries with respect to the Plan or Trust shall discharge their duties thereunder solely in the interest of Participants and beneficiaries, for the exclusive purpose of providing their benefits and defraying reasonable expenses of Plan and Trust administration, with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims.
ARTICLE III
THE TRUST FUND AND ITS ADMINISTRATION
III-1. THE TRUST FUND. The Trust Fund as at any date means all property then held by the Trustee under this agreement ("Trust Fund").
III-2. CERTIFICATE OF AUTHORITY. The Company is the Plan Administrator and the Named Fiduciary under the plan. Benefits payable under the Plan are distributed by the Trustee as directed by the Company. The Secretary of the Company will certify to the Trustee from time to time the person or persons authorized to act for the Company in its capacity as Named Fiduciary, or otherwise under the Plan (the "Company Representatives"). The Trustee may rely on the latest certificate received without further inquiry or verification. The Trustee shall be responsible for the property received by it as Trustee, but shall not be responsible for the administration of the Plan or for those assets of the Plan which have not been delivered to and accepted by the Trustee. The Trustee shall not have the duty or obligation to determine the adequacy of the Trust Fund or whether contributions received by it comply with the provisions of the Plan or with any resolution of the Board of Directors or to enforce the collection from the Company of any contribution to the Trust. The Trustee shall be fully protected in
2

acting upon any instrument, certificate, paper or electronic data transmission believed by it to be genuine and either signed or presented by the proper person or persons, or by authorized electronic data transmission. Further, the Trustee shall be under no duty to make any investigation or inquiry as to any statement contained in any such writing or electronic data transmission, but may accept the same as conclusive evidence of the truth and accuracy of the statement therein contained.
III-3. INVESTMENT POWERS. The Trustee shall have no discretion with respect to the investment of Plan assets but shall be limited to implementing the directions provided by the Company, any Investment Manager described in
Section III-5 or, subject to Section IV-2, a Participant. The Trustee shall have no responsibility for the selection of Investment Funds or for the investment of Investment Accounts under the Plan and shall not render investment advice to any person in connection with the selection of such options. The Company, as Named Fiduciary , shall be responsible for the investment of the entire Trust Fund, except for any portion of the Trust Fund assigned to an Investment Manager as provided in Section III-5.
III-4. GENERAL POWERS. Subject to Section III-3 and the other provisions of this agreement, the Trustee shall have the following powers, rights and duties in addition to those provided elsewhere in this agreement, the Plan or by law but only to the extent such powers, rights and duties are consistent with the guidelines, investment objectives and restrictions of the Investment Funds and Investment Accounts:
(a) To invest and reinvest part or all of the balance of the trust fund in stocks, bonds, notes, mortgages, mutual fund shares (including but not limited to those offered by the Trustee or an affiliate) or other property of any kind, real or personal, including, at the approval of the Company, units of collective investment trusts (including but not limited to those offered by the Trustee or an affiliate) and one or more group annuity, deposit administration or separate account contracts issued by a legal reserve life insurance company; To the extent assets are invested in a collective investment trust, the declaration of trust creating such collective investment trust are hereby incorporated by reference.
3

(b) To acquire upon the direction of the Company and become the policyholder under group annuity contracts issued by a legal reserve life insurance company; and to manage, sell, contract to sell, grant options to purchase, convey, exchange, transfer, abandon, improve, repair, insure, lease for any term (although commencing in the future or extending beyond the term of this Trust) and otherwise deal with all property, real or personal, in such way, for such considerations, and on such terms and conditions as the Trustee is empowered.
(c) To retain in cash such amounts as the Trustee considers advisable and as are permitted by applicable law; to deposit cash in any depository without liability for interest and, without limiting the generality of the foregoing, to invest cash in savings accounts or time certificates of deposit bearing a reasonable rate of interest.
(d) To make any payment or distribution from the Trust Fund as directed by the Company without inquiring as to whether a payee or distributee is entitled thereto or as to whether it is proper, and the Trustee shall not be liable for a payment or distribution that is not proper under the terms of the Plan or this agreement; to notify the Company as appropriate if a payment or distribution is returned to the Trustee, upon which return the Trustee shall have no obligation to search for or ascertain the whereabouts of a payee or distributee.
(e) To the extent permitted by law, to borrow from anyone, with the Company's approval, such sum or sums from time to time as the Trustee considers desirable to carry out this Trust, and to mortgage or pledge all or part of the Trust Fund as security.
(f) To retain any funds or property subject to any dispute without liability for interest and to decline to make payment or delivery thereof until final adjudication by a court of competent jurisdiction or until an appropriate release is obtained.
(g) To begin, maintain or defend any litigation necessary in connection with the administration of the Plan or this Trust, except that, unless otherwise required by law, the Trustee shall not be obliged or required to do so unless indemnified to the Trustee's satisfaction.
(h) To compromise, contest, arbitrate or abandon claims or demands.
(i) To give proxies to vote stocks and other voting securities, to join in or oppose (alone or jointly with others) voting trusts, mergers, consolidations, foreclosures, reorganizations, liquidations, or other changes in the financial structure of any corporation, and to exercise or sell stock subscription or conversion rights.
(j) To hold securities or other property in the name of a nominee, in a depository, or in any other way, with or without disclosing the trust
4

relationship; provided however, that except as authorized by regulations issued by the Secretary of Labor, the indicia of ownership of the assets of the Trust Fund shall not be maintained outside the jurisdiction of the district courts of the United States.
(k) To report to the Company annually on or after the close of the Plan Year, or as soon thereafter as practicable, or at such other times as the Company may request, the then net worth of the Trust Fund (that is, the fair market value of all assets comprising the Trust Fund, less liabilities, if any, other than liabilities to persons entitled to benefits under the Plan) determined on the basis of such evidence, data or information as the Trustee considers pertinent and reliable and subject to the provisions of paragraph III-7 below.
(l) To furnish to the Company an annual account or an account for such other period as the Company may specify or as may be required under this agreement or the Plan, showing all investments, receipts, disbursements, and other transactions involving the Trust during the accounting period, and also showing the assets of the Trust Fund held at the end of the period, which, to the extent permitted by law, shall be conclusive on all persons, including the Company, except as to any act or transaction as to which the Company files with the Trustee written exceptions or objections within one hundred eighty days after receipt of the account.
(m) To pay any estate, inheritance, income or other tax, charge or assessment attributable to any benefit payable under the Plan out of such benefit after giving the Company notice as far in advance as practicable; to defer making payment of any such tax, charge or assessment if it is indemnified to its satisfaction in the premises; and to require before making any payment such release or other document from any lawful taxing authority and such indemnity from the intended payee as the Trustee considers necessary for its protection.
(n) To maintain records and accounts reflecting all receipts and disbursements under this agreement and such other records and accounts as the Company may specify, all of which shall be open to the inspection of the Company at all reasonable times, and may be audited from time to time by anyone named by the Company.
(o) To employ agents, attorneys, accountants or other persons (who also may be employed by the Company) and to delegate to them such powers as the Trustee considers desirable (except that the Trustee may not delegate its ERISA responsibilities as to the management or control of the assets of the Trust Fund to the extent such responsibilities are specified in this Trust Agreement), provided that such delegation, and the acceptance thereof, by such agents, attorneys, accountants or to other persons, shall be in writing; and, to the extent permitted by law, the Trustee shall be protected in acting or refraining from acting on the advice of persons so employed without court action.
(p) To appoint a bank, trust company, or broker or dealer registered under the
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Securities Exchange Act of 1934 to act as custodian with respect to any portion of the Trust Fund; and a custodian so appointed shall have custody of such assets as are deposited with it and as custodian such rights, powers and duties with respect thereto as shall be agreed upon from time to time by the Trustee and such custodian.
(q) To furnish the Company with such information in the Trustee's possession as the Company may need for tax or other purposes.
(r) At the direction of the Company, to receive, hold and invest any funds or other property transferred to the Trustee from:
(i) any other trust forming a part of a plan intended to meet the requirements of Section 401(a) of the Internal Revenue Code;
(ii) an employee of the Company if such funds or property qualify as an eligible rollover distribution described in Section 402(c)(4) of the Internal Revenue Code; or
(iii) an individual retirement account or individual retirement annuity maintained by an employee of the Company, if such funds or property qualify as a rollover contribution described in Section 408(d)(3) of the Internal Revenue Code;
and to allocate, credit and distribute any such funds and other property so transferred in accordance with the terms of the Plan.
(s) To transfer all or any portion of the Trust Fund to another trust or trusts forming a part of a plan or plans that are intended to meet the requirements of Section 401(a) of the Internal Revenue Code, as directed by the Company.
(t) To perform any and all other acts which in the Trustee's judgment are appropriate for the proper management, investment and distribution of the Trust Fund.
III-5. INVESTMENT MANAGERS. The Company may appoint one or more Investment Managers to manage the investment of any part of the assets of the Trust Fund. An Investment Manager so appointed pursuant to this paragraph shall be either a registered investment adviser under the Investment Advisers Act of 1940, a bank, as defined in said Act, or an insurance company qualified to manage, acquire and dispose of the assets of the Plan under the laws of more than one state of the United States. Except as otherwise provided by law, the Trustee shall have no obligation for investment of any assets of the Trust Fund which are subject to management by an Investment Manager. Appointment of
6

an Investment Manager shall be made by written notice to the Investment Manager and the Trustee, which notice shall specify those powers, rights and duties of the Trustee under this agreement that are allocated to the Investment Manager and that portion of the assets of the Trust Fund subject to such appointment. Any such Investment Manager shall acknowledge to the Company in writing that it accepts such appointment and that it is a fiduciary with respect to the Plan and Trust. An Investment Manager may resign at any time upon advance written notice to the Trustee and the Company. The Company may remove an Investment Manager at any time by advance written notice to the Investment Manager and the Trustee.
III-6. COMPENSATION AND EXPENSES. Except as otherwise provided in this agreement, all reasonable costs, charges, and expenses incurred in the administration of this Trust and the Plan, including compensation to the Trustee (as agreed upon between the Company and the Trustee), compensation to an Investment Manager (as agreed upon between the Company and the Investment Manager), and any compensation to agents, attorneys, accountants and other persons employed by the Trustee, will be paid from the Trust Fund to the extent not paid by the Company. Expenses incurred in connection with the sale, investment and reinvestment of the Trust Fund (such as brokerage, postage, express and insurance charges and transfer taxes) shall be paid from the Trust Fund.
III-7. COMMON FUND. The Trustee shall not be required to make any separate investment of the Trust Fund for the account of the Plan as applied to multiple employers and may administer and invest all contributions made under the Plan as one Trust Fund. If, for any purpose, it becomes necessary to determine as of any date the portion of the Trust Fund allocable to all or any group of Participants employed by any separate employer, the Company shall specify such date as a special accounting date and, after all adjustments required as of the date have been made, such portion of the Trust Fund shall be an amount equal to the aggregate of the account balances of such Participants. Any such determination by the Company shall be binding upon all of the employers, Participants and all other persons. The Trustee will have no duty or responsibility to question any determination or direction by the Company
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under this paragraph III-7.
III-8. TRUST ACCOUNTING. For purposes of determining the value of assets in the Trust, the Trustee shall value such assets in accordance with the Trustee's procedures for determining fair market value as of any date for which such valuation or accounting is required and in accordance with the procedures for valuation of any interests in any collective investment trust described in Article VIII.
III-9. LIMIT OF TRUSTEE'S RESPONSIBILITY. No power, duty or responsibility is imposed upon the Trustee under the Plan, except as set forth in this agreement. Until they determine or are advised to the contrary, the Trustee and any Investment Manager (appointed as provided in paragraph III-5) may assume that this Plan is qualified under Section 401(a), and that the Trust is entitled to tax exemption under Section 501(a), of the Internal Revenue Code.
ARTICLE IV
INVESTMENT FUNDS AND INVESTMENT ACCOUNTS
IV-1. INVESTMENT FUNDS. The Company hereby authorizes at its direction the establishment of separate alternatives for the investment of Plan assets under the Plan ("Investment Funds"). To implement the same, the Company shall so direct the Trustee to constitute the Trust Fund in such Investment Funds to be offered under the Plan. The Company shall establish corresponding written guidelines and objectives for each Investment Fund under the Plan, which it shall communicate to the Trustee. Except as otherwise directed by an Investment Manager appointed by the Company, the Trustee shall invest contributions and account balances among the Investment Funds in the proportions specified by the Company or as directed by Participants under Section IV-2 and in accordance with the provisions of the Plan. The Trustee shall have no duty to verify such directions and shall have no responsibility or liability for any loss to any Participant or beneficiary which results from following such directions.
IV-2. TRUSTEE'S INVESTMENT OF AMOUNTS CREDITED TO INDIVIDUALLY DIRECTED INVESTMENT ACCOUNTS. If the Company has provided for Participants to individually direct the investment of contributions and/or account balances ("Investment Accounts") in one or more of the Investment Funds
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described in paragraph IV-1, the Trustee shall, upon receipt of Participant directions made in accordance with the Plan documents, invest and reinvest amounts credited to such Participant's Investment Account as follows:
(a) Except as otherwise provided below, the Trustee shall make investments in such Investment Funds including applicable contributions, withdrawals, transfers or liquidations only as the Company, as a "Named Fiduciary", as described in ERISA, or an Investment Manager directs in writing and the Trustee shall be under no obligation to inquire as to the propriety of such direction or as to the amount to be invested in each such Investment Account on behalf of such Participant.
(b) In the event that the Trustee shall be directed by a Participant, the Trustee shall have no liability with respect to the investment of such assets, but shall be responsible only to execute such investment instructions as so directed.
(c) The Trustee shall be entitled to rely fully on the instructions of a Participant made by voice recognition or other electronic means of transmission as if the same were provided in writing by the Company, and shall not be liable for any loss or other liability, resulting from such direction (or lack of direction) of the investment of any part of the Plan assets.
(d) The Trustee may delegate the duty to execute such Participant instructions to any fiduciary or nonfiduciary agent.
(e) The Trustee may refuse to comply with any direction from a Participant in the event the Trustee, in its sole and absolute discretion, deems such directions improper by virtue of applicable law. The Trustee shall not be responsible or liable for any loss or expense which may result from the Trustee's refusal or failure to comply with any directions from the Participant. A Participant shall not direct the Trustee to enter into any prohibited transaction (as defined in Code
Section 4975).
(f) Any costs and expenses related to compliance with the Participant's directions may be borne by the Participant's Investment Accounts, to the extent permitted by the Plan.
(g) The Trustee shall have the power to invest any portion of the assets in a Participant's Investment Account which is held in cash or cash equivalents in short term, fixed income investment pending receipt of instructions from the Company regarding the investment of a Participant's accounts. While an Investment Fund transfer is pending, a Participant will not share in any gains or losses in the fund to which such amount is transferred until the trade into such fund is settled by the Trustee.
(h) The Company shall indemnify and hold the Trustee harmless for any losses suffered as a result of investments and reinvestments made by the Trustee in reliance upon any investment direction given by such Participant under the
9

Plan.
(i) Notwithstanding paragraph III-6, all expenses incurred in connection with the sale, investment and reinvestment of assets in an Investment Fund (such as brokerage, postage, express and insurance charges and transfer taxes) may be charged by the Trustee to the appropriate Investment Fund, to the extent not paid by the Company or the Plan.
(j) The Trustee makes no warranty that the Plan complies with ERISA Section 404(c). Should the Company intend to comply with the mitigation of liability provisions of ERISA 404(c), the Company, as Plan Administrator, shall be responsible for developing and implementing such procedures, providing such information, and observing such other conditions as may be necessary or appropriate to comply therewith.
(k) Except to the extent otherwise required by law, the Trustee shall not be liable or responsible for any loss resulting to an Investment Fund or Investment Account by reason of any investment or reinvestment made by the Trustee at the direction of the Participant or the Company, and the Trustee is relieved of any duty to review from time to time such amounts or property held in any Investment Fund or Investment Account.
ARTICLE V
GENERAL PROVISIONS
V-1. ACTION BY COMPANY. Any action required or permitted to be taken by the Company under the Trust shall be by resolution of its Board of Directors, by resolution of a duly authorized committee of its Board of Directors, or by a person or persons authorized by resolution of its Board of Directors or such committee.
V-2. WARRANTY. The Company warrants that all directions or authorizations by the Company representatives, whether for the payment of money or otherwise, will comply with the Plan and this Trust.
V-3. DISAGREEMENT AS TO ACTS. If there is a disagreement between the Trustee and anyone as to any act or transaction reported in any accounting, the Trustee shall have the right to a settlement of its account by any proper court.
V-4. COURTS. Except as otherwise provided by law, in case of any court proceedings involving a Participating Employer, the Trustee or the Trust Fund, only the Employer concerned and the
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Trustee shall be necessary parties to the proceedings, and no other person shall be entitled to notice of process. A final judgment entered in any such proceedings shall be conclusive.
V-5. EVIDENCE. Evidence required of anyone under this agreement may be by certificate, affidavit, document or other information which the person acting on it considers pertinent and reliable, and signed, made or presented by the proper party or parties.
V-6. THIRD PARTIES. Except as otherwise provided by law, the Trustee's exercise or non-exercise of its powers and discretions in good faith shall be conclusive on all persons. No one shall be obliged to see to the application of any money paid or property delivered to the Trustee, except to the extent such person is acting as an Investment Manager as respects such money or property. The certificate of the Trustee that it is acting according to this agreement will fully protect all persons dealing with the Trustee. An insurance company may assume that this agreement and the Plan have not been amended or changed unless notice of such amendment or change is received by the insurance company at its home office.
V-7. NO REVERSION TO COMPANY. The Company shall have no right, title or interest in the Trust Fund, nor shall any part of the Trust Fund revert or be repaid to the Company, directly or indirectly, unless:
(a) the Internal Revenue Service initially determines that the Plan, as applied to the Company or any Participating Employer, does not meet the requirements of Section 401(a) of the Internal Revenue Code, in which event the contributions made to the Plan by the Company shall be returned to it;
(b) a contribution is made by the Company or any Participating Employer by mistake of fact and such contribution is returned to the employer within one year after payment to the Trustee; or
(c) a contribution conditioned on the deductibility thereof is disallowed as an expense for federal income tax purposes and such contribution (to the extent disallowed) is returned to the Company or any Participating Employer within one year after the disallowance of the deduction.
The amount of any contribution that may be returned pursuant to subparagraph (b) or (c) above must be reduced by any portion thereof previously distributed from the Trust Fund and by any losses of the Trust
11

Fund allocable thereto, and in no event may the return of such contribution cause any Participant's account balances to be less than the amount of such balances had the contribution not been made under the Plan.
V-8. INTERESTS NOT TRANSFERABLE. The interests of persons entitled to benefits under the Plan are not subject to their debts or other obligations and, except as may be required by the tax withholding provisions of the Internal Revenue Code or any state's income tax act or pursuant to a qualified domestic relations order as defined in Section 414(p) of the Internal Revenue Code, may not be voluntarily or involuntarily sold, transferred, alienated, assigned or encumbered.
V-9. INDEMNIFICATION. To the extent permitted by law, the Trustee shall not be liable for any act done or omitted to be done in good faith. The Trustee shall be indemnified and saved harmless by the Company and any Participating Employer (to the extent not indemnified or saved harmless under any liability insurance or other indemnification arrangement with respect to the Plan or this Trust) from and against any and all liability or claim of liability to which they may be subjected by reason of any act done or omitted to be done in good faith in connection with the administration of this Trust or the investment of the Trust Fund, or good faith compliance with any directions given in accordance with the provisions of the Plan or this Trust by an Investment Manager, the Company, or any person duly authorized by the Company, a Participant, or by reason of its failure to take any action with respect to any assets of the Trust Fund which are subject to investment direction from the Company, an Investment Manager, or a Participant, in the absence of proper directions from same, including without limitation all expenses reasonably incurred in its defense if the Company fails to provide such defense through mutually acceptable counsel after having been requested to do so in writing. The Trustee will not be liable or responsible for delays or errors by acts of God or by reason of circumstances beyond its control, including without limitation acts of civil or military authority, national emergencies, labor difficulties, mechanical breakdown, insurrection, war, riots, or failure or unavailability of transportation, communication or power supply, fire, flood or other catastrophe,
12

extreme market volatility or trading volumes, to the extent permitted by applicable law.
V-10. LITIGATION BY PARTICIPANTS. If a legal action begun against the Trustee, the Company or any Participating Employer by or on behalf of any person results adversely to that person, or if a legal action arises because of conflicting claims to a Participant's or other person's benefits, the cost to the Trustee, the Company or any Participating Employer of defending the action will be charged to the extent permitted by law to the sums, if any, which were involved in the action or were payable to the person concerned.
V-11. LIABILITIES MUTUALLY EXCLUSIVE. To the extent permitted by law, the Trustee, an Investment Manager and the Company shall be responsible only for its own acts or omissions and the Trustee shall not be required to collect any contribution from the Company or any Participating Employer or any other person or to verify that it is in the proper amount. No insurance company shall be a party to this agreement for any purpose or be responsible for the validity of this agreement, it being intended that an insurance company shall be liable only for the obligations set forth in the contracts issued by it.
V-12. WAIVER OF NOTICE. Any notice required under this agreement may be waived by the person entitled to such notice.
V-13. COUNTERPARTS. This agreement may be executed in two or more counterparts, any one of which will be an original without reference to the others.
V-14. CONTROLLING LAW. Except to the extent superseded by laws of the United States, the laws of Illinois shall be controlling in all matters relating to this agreement.
V-15. GENDER AND NUMBER. Where the context admits, words in the masculine gender shall include the feminine and neuter genders, the singular shall include the plural, and the plural shall include the singular.
V-16. SUCCESSORS. This agreement shall be binding on all persons entitled to benefits under the Plan and their respective heirs and legal representatives, on the Company and their successors
13

and assigns and on the Trustee and its successors. The term Company as used in the Plan and this agreement includes any entity that continues the Plan and this Trust in effect, as provided in the Plan; and, if the employer concerned is the Company, the term "Company" also shall include such entity.
V-17. SEVERABILITY. If any provision of the Plan or this agreement is held to be illegal or invalid, such illegality or invalidity shall not affect the remaining provisions of the Plan and this agreement, and they shall be construed and enforced as if such illegal or invalid provision had never been inserted therein.
V-18. STATUTORY REFERENCES. Any references in the Plan or this agreement to a Section of the Internal Revenue Code of 1986 (the "Code") or the Employee Retirement Income Security Act of 1974 ("ERISA") shall include any comparable section or sections of any future legislation which amends, supplements or supersedes said Section.
ARTICLE VI
CHANGES IN TRUSTEE
VI-1. RESIGNATION OR REMOVAL OF TRUSTEE. The Trustee may resign at any time by giving thirty (30) days' advance written notice to the Company, which advance notice may be waived by the Company upon the appointment of a Successor Trustee. The Company may remove a Trustee by advance written notice to the Trustee.
VI-2. APPOINTMENT OF SUCCESSOR TRUSTEE. The Company shall fill any vacancy in the office of Trustee as soon as practicable and shall give prompt written notice thereof to the person or corporation appointed to fill the vacancy who should indicate its acceptance in writing.
VI-3. DUTIES OF RESIGNING OR REMOVED TRUSTEE AND OF SUCCESSOR TRUSTEE. A Trustee that resigns or is removed shall furnish promptly to the employers and the Successor Trustee an account of its administration of the Trust from the date of its last account. The Trustee, upon the rendering of such account, shall, on the earlier of its acceptance by the Successor Trustee or on the expiration of sixty (60) days from the accounting, be fully discharged as to all liability with respect to its duties thereunder.
14

With the approval of the Company, a Successor Trustee may accept the account furnished and the property delivered by a predecessor Trustee without incurring any liability for so doing. Each Successor Trustee shall succeed to the title to the Trust Fund vested in its predecessor without the signing or filing of any instrument, but each predecessor Trustee shall execute all documents and do all acts necessary to vest such title of record in the successor Trustee. Each Successor Trustee shall have all the powers conferred by this agreement as if originally named Trustee. No Successor Trustee shall be personally liable for any act or failure to act of a predecessor Trustee.
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ARTICLE VII
AMENDMENT AND TERMINATION
VII-1. AMENDMENT. This Trust may be amended from time to time by the Company, except as follows:
(a) The duties and liabilities of the Trustee cannot be changed without its consent.
(b) Except as provided in paragraph V-7, under no condition shall an amendment result in the return or repayment to an employer of any part of the Trust Fund or the income from it or result in the distribution of the Trust Fund for the benefit of anyone other than persons entitled to benefits under the Plan.
VII-2. TERMINATION. If the Plan is terminated, this Trust, including all rights, titles, powers, duties, discretions and immunities imposed on or reserved to the Trustee and the Company nevertheless shall continue in effect until all assets have been distributed by the Trustee as directed by the Company under the Plan.
ARTICLE VIII
INCORPORATION OF COLLECTIVE INVESTMENT TRUSTS
VIII-1. The Declaration of Trust, executed by Chicago Title and Trust Company on January 17, 1968, establishing "Chicago Title and Trust Company Investment Trust for the Employee Benefit Plans," as it may be amended from time to time, is hereby adopted as a part of this agreement. The Trustee may, subject to the direction of Investment Managers under paragraph III-4 or as limited pursuant to Article IV hereof, cause any part or all of the assets held hereunder to be commingled with the assets of other trusts by investment as part of any fund established under said Declaration of Trust, and the assets so invested shall be subject to all of the provisions of said Declaration of Trust as it may be amended from time to time.
VIII-2. The Declaration of Trust executed by Chicago Title and Trust Company on April 24, 1985, establishing "Chicago Title and Trust Company Stated Principal Value Investment Trust for
16

Employee Benefit Plans," as it may be amended from time to time, is hereby adopted as a part of this agreement. The Trustee may, subject to the direction of Investment Managers under paragraph III-4 or as limited pursuant to Article IV hereof, cause any part or all of the assets held hereunder to be commingled with the assets of other trusts by investment as part of any fund established under said Declaration of Trust, and the assets so invested shall be subject to all of the provisions of said Declaration of Trust as it may be amended from time to time. The Declaration of Trust executed by The Chicago Trust Company on June 18, 1996, establishing "The Chicago Trust Company Stable Value Investment Trust for Employee Benefit Plans," as it may be amended from time to time, is hereby adopted as a part of this Trust Agreement. Notwithstanding any other provisions of this Trust Agreement, the Trustee may cause any part or all of the assets held hereunder to be commingled with the assets of other trusts by investment as part of any fund established under said Declaration of Trust, and the assets so invested shall be subject to all of the provisions of said Declaration of Trust as it may be amended from time to time.
* * *
17

IN WITNESS WHEREOF, the parties hereto have caused this agreement to be signed and their respective corporate seals affixed and attested by their respective officers, the day and year first above written; the Trustee hereby evidencing its acceptance of the Trust, and its agreement to perform the duties given to or required of it by the Trust.
LKQ CORPORATION

                                         By:  /s/ Victor M. Casini
                                            ------------------------------------
                                         Its: Vice President
                                             -----------------------------------
                                                      (Corporate Seal)

ATTEST:

By:  /s/ Daniel J. Hemmer
   --------------------------------------
Its: Assistant Secretary
    -------------------------------------	

THE CHICAGO TRUST COMPANY

                                         By:  /s/ Terry Zirkle
                                            ------------------------------------
                                         Its: Senior Vice President
                                             -----------------------------------
                                                      (Corporate Seal)

ATTEST:

By:  /s/ Daniel Jaszi
   --------------------------------------
Its: Assistant Secretary
    -------------------------------------	

18

EXHIBIT 10.30
FORM OF INDEMNIFICATION AGREEMENT
This Agreement, made and entered into this ___ day of __________, 20__ ("Agreement"), by and between LKQ Corporation, a Delaware corporation ("Corporation"), and _______________ ("Indemnitee"):
WHEREAS, highly competent persons are becoming more reluctant to serve corporations as directors, officers or in other capacities unless they are provided with adequate protection through insurance or adequate indemnification against inordinate risks of claims and actions against them arising out of their service to and activities on behalf of the corporation; and
WHEREAS, the current impracticability of obtaining adequate insurance and the uncertainties relating to indemnification have increased the difficulty of attracting and retaining such persons;
WHEREAS, the Board of Directors of the Corporation (the "Board") has determined that the inability to attract and retain such persons is detrimental to the best interests of the Corporation's stockholders and that the Corporation should act to assure such persons that there will be increased certainty of such protection in the future; and
WHEREAS, it is reasonable, prudent and necessary for the Corporation contractually to obligate itself to indemnify such persons to the fullest extent permitted by applicable law and the Certificate of Incorporation and resolutions of the Corporation so that they will serve the Corporation free from undue concern that they will not be indemnified;
WHEREAS, this Agreement is a supplement to and in furtherance of Article Ninth of the Certificate of Incorporation of the Corporation and any resolutions adopted pursuant thereto and shall not be deemed to be a substitute therefor nor to diminish or abrogate any rights of Indemnitee thereunder, and
WHEREAS, Indemnitee is willing to serve the Corporation on the condition that he be so indemnified;

NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the Corporation and Indemnitee do hereby covenant and agree as follows:
Section 1. SERVICES BY INDEMNITEE. Indemnitee agrees to serve as __________________ of the Corporation, and, at its request, as a director, officer, employee, agent or fiduciary of certain other corporations and entities. Indemnitee may at any time and for any reason resign from such position (subject to any other contractual obligation or any obligation imposed by operation of law), in which event the Corporation shall have no obligation under this Agreement to continue Indemnitee in any such position.
Section 2. INDEMNIFICATION - GENERAL. The Corporation shall indemnify, and advance Expenses (as hereinafter defined), to Indemnitee as provided in this Agreement and to the fullest extent permitted by applicable law and the Certificate of Incorporation and resolutions of the Corporation in effect on the date hereof and to such greater extent as applicable law may thereafter from time to time permit. The rights of Indemnitee provided under the preceding sentence shall include, but shall not be limited to, the rights set forth in the other Sections of this Agreement.
Section 3. PROCEEDINGS OTHER THAN PROCEEDINGS BY OR IN THE RIGHT OF THE CORPORATION. Indemnitee shall be entitled to the rights of indemnification provided in this Section 3 if, by reason of his Corporate Status (as hereinafter defined), he is, or is threatened to be made, a party to any threatened, pending, or completed Proceeding (as hereinafter defined), other than a Proceeding by or in the right of the Corporation, but including, without limitation, any such Proceeding in existence on the Effective Date. Pursuant to this Section, Indemnitee shall be indemnified against Expenses, judgments, penalties, fines and amounts paid in settlement (including all interest, assessments, excise taxes assessed with respect to any employee benefit plan, and other charges paid or payable in connection with or in respect of such Expenses, judgments, penalties, fines and amounts paid in settlement) actually and reasonably incurred by him or on his behalf in connection with such Proceeding or any claim, issue or matter therein, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best
2

interests of the Corporation, and, with respect to any criminal Proceeding, had no reasonable cause to believe his conduct was unlawful.
Section 4. PROCEEDINGS BY OR IN THE RIGHT OF THE CORPORATION. Indemnitee shall be entitled to the rights of indemnification provided in this Section 4 if, by reason of his Corporate Status, he is, or is threatened to be made, a party to any threatened, pending or completed Proceeding brought by or in the right of the Corporation to procure a judgment in its favor, including, without limitation, any such Proceeding in existence on the Effective Date. Pursuant to this Section, Indemnitee shall be indemnified against Expenses actually and reasonably incurred by him or on his behalf in connection with such Proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation. Notwithstanding the foregoing, no indemnification against such Expenses shall be made in a respect of any claim, issue or matter in such Proceeding as to which Indemnitee shall have been adjudged to be liable to the Corporation if applicable law prohibits such indemnification; provided, however, that, if applicable law so permits, indemnification against Expenses shall nevertheless be made by the Corporation in such event if and only to the extent that the Court of Chancery of the State of Delaware, or the court in which such Proceeding shall have been brought or is pending, shall determine.
Section 5. INDEMNIFICATION FOR EXPENSES OF A PARTY WHO IS WHOLLY OR PARTLY SUCCESSFUL. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of his Corporate Status, a party to and is successful, on the merits or otherwise, in any Proceeding, he shall be indemnified against all Expenses actually and reasonably incurred by him or on his behalf in connection therewith. If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Corporation shall indemnify Indemnitee against all Expenses actually and reasonably incurred by him or on his behalf in connection with each successfully resolved claim, issue or matter. For purposes of this Section and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.
3

Section 6. INDEMNIFICATION FOR EXPENSES OF A WITNESS. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of his Corporate Status, a witness in any Proceeding, he shall be indemnified against all Expenses Actually and reasonably incurred by him or on his behalf in connection therewith.
Section 7. ADVANCEMENT OF EXPENSES. The Corporation shall advance all reasonable Expenses incurred by or on behalf of Indemnitee in connection with any Proceeding within ten days after the receipt by the Corporation of a statement or statements from Indemnitee requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding. Such statement or statements shall reasonably evidence the Expenses incurred by Indemnitee and shall include or be preceded or accompanied by an undertaking by or on behalf of Indemnitee to repay any Expenses advanced if it shall ultimately be determined that Indemnitee is not entitled to be indemnified against such Expenses.
Section 8. PROCEDURE FOR DETERMINATION OF ENTITLEMENT TO INDEMNIFICATION.
(a) To obtain indemnification under this Agreement, Indemnitee shall submit to the Corporation a written request, including therein or therewith such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification. The Secretary of the Corporation shall, promptly upon receipt of such a request for indemnification, advise the Board of Directors in writing that Indemnitee has requested indemnification.
(b) Upon written request by Indemnitee for indemnification pursuant to the first sentence of Section 8(a) hereof, a determination, if required by applicable law, with respect to Indemnitee's entitlement thereto shall be made in the specific case: (i) if a Change in Control (as hereinafter defined) shall have occurred, by Independent Counsel (as hereinafter defined) unless Indemnitee shall request that such determination be made by the Board of Directors or the stockholders, in which case by the person or persons or in the manner provided for in clauses (ii) or (iii) of this Section 8(b)) in a written opinion to the Board of Directors, a copy of which shall be delivered to Indemnitee; (ii) if a Change of Control shall not have occurred, (A) by the Board of Directors by a majority
4

vote of the Disinterested Directors (as hereinafter defined), even though less than a quorum, of (B) if there are no such Disinterested Directors or, if such Disinterested Directors so direct, by Independent Counsel in a written opinion to the Board of Directors, a copy of which shall be delivered to Indemnitee, or
(C) by the stockholders of the Corporation; or (iii) as provided in Section 9(b) of this Agreement; and, if it is so determined that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made within ten days after such determination. Indemnitee shall cooperate with the person, persons or entity making such determination with respect to Indemnitee's entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination. Any costs or expenses (including reasonable attorneys' fees and disbursements) incurred by Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Corporation (irrespective of the determination as to Indemnitee's entitlement to indemnification) and the Corporation hereby indemnifies and agrees to hold Indemnitee harmless therefrom.
(c) In the event the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 8(b) hereof, the Independent Counsel shall be selected as provided in this Section
8(c). If a Change of Control shall not have occurred, the Independent Counsel shall be selected by the Board of Directors, and the Corporation shall give written notice to Indemnitee advising him of the identity of the Independent Counsel so elected. If a Change of Control shall have occurred, the Independent Counsel shall be selected by Indemnitee (unless Indemnitee shall request that such selection be made by the Board of Directors, in which event the proceeding sentence shall apply), and Indemnitee shall give written notice to the Corporation advising it of the identity of the Independent Counsel so elected. In either event, Indemnitee or the Corporation, as the case may be may, within seven days after such written notice of selection shall have been given, deliver to the Corporation or to Indemnitee, as the case may be, a written objection to such selection. Such objection may be asserted only on the ground that the Independent Counsel so elected does not meet the requirements of "Independent Counsel" as defined in Section 17 of this
5

Agreement, and the objection shall set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the person so selected shall act as Independent Counsel. If such written objection made, the Independent Counsel so selected may not serve as Independent Counsel unless and until a court has determined that such objection is without merit. Either the Corporation or Indemnitee may petition the Court of Chancery of the State of Delaware or other court of competent jurisdiction if the parties have been unable to agree on such selection within 20 days after submission by Indemnitee of a written request for indemnification pursuant to Section 8(a) hereof. Such petition may request a determination whether an objection to a party's selection is without merit and/or seek the appointment as Independent Counsel of a person elected by the Court or by such other person as the Court shall designate. A person so appointed by the Court shall act as Independent Counsel under Section 8(b) hereof. The Corporation shall pay any and all reasonable fees and expenses of Independent Counsel incurred by such Independent Counsel in connection with acting pursuant to Section 8(b) hereof, and the Corporation shall pay all reasonable fees and expenses incident to the procedures of this Section 8(c), regardless of the manner in which such Independent Counsel was selected or appointed. Upon the due commencement of any judicial proceeding or arbitration pursuant to Section 10(a)(iii) of this Agreement, Independent Counsel shall be discharged and relieved of any further responsibility in such capacity (subject to the applicable standards of professional conduct then prevailing).
Section 9. PRESUMPTIONS AND EFFECT OF CERTAIN PROCEEDINGS.
(a) If a Change of Control shall have occurred, in making a determination with respect to entitlement to indemnification hereunder, the person, persons or entity making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with Section 8(a) of this Agreement, and the Corporation shall have the burden of proof to overcome that presumption in connection with the making by any person, persons or entity of any determination contrary to that presumption.
(b) If the person, persons or entity empowered or selected under
Section 8 of this Agreement to determine whether Indemnitee is entitled to
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indemnification shall not have made a determination within 60 days after receipt by the Corporation of the request therefor, the requisite determination of entitlement to indemnification shall be deemed to have been made and Indemnitee shall be entitled to such indemnification, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee's statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law; PROVIDED, HOWEVER, that such 60-day period may be extended for a reasonable time, not to exceed an additional 30 days, if the person, persons or entity making the determination with respect to entitlement to indemnification in good faith requires such additional time for the obtaining or evaluating of documentation and/or information relating thereto; and PROVIDED, FURTHER, that the foregoing provisions of this Section 9(b) shall not apply (i) if the determination of entitlement to indemnification is to be made by the stockholders pursuant to Section 9(b) of this Agreement and if (A) within 15 days after receipt by the Corporation of the request for such determination the Board of Directors has resolved to submit such determination to the stockholders for their consideration at an annual meeting thereof to be held within 75 days after such receipt and such determination is made thereat, or (B) a special meeting of stockholders is called within 15 days after such receipt for the purpose of making such determination, such meeting is held for such purpose within 60 days after having been so called and such determination is made thereto, or (ii) if the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 8(b) of this Agreement.
(c) The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of NOLO CONTENDERE or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Corporation or, with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that his conduct was unlawful.
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Section 10. REMEDIES OF INDEMNITEE.
(a) In the event that (i) a determination is made pursuant to
Section 8 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 7 of this Agreement, (iii) the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 8(b) of this Agreement and such determination shall not have been made and delivered in a written opinion within 90 days after receipt by the Corporation of the request for indemnification, (iv) payment of indemnification is not made pursuant to
Section 6 of this Agreement within ten days after receipt by the Corporation of a written request therefor, or (v) payment of indemnification is not made within ten days after a determination has been made that Indemnitee is entitled to indemnification or such determination is deemed to have been made pursuant to Sections 8 or 9 of this Agreement, Indemnitee shall be entitled to an adjudication in the Court of Chancery of the State of Delaware, or in any other court of competent jurisdiction, of his entitlement of such indemnification or advancement of Expenses. Alternatively, Indemnitee, at his option, may seek an award in arbitration to be conducted by a single arbitrator pursuant to the rules of the American Arbitration Association. Indemnitee shall commence such proceeding seeking an adjudication or an award in arbitration within 180 days following the date on which Indemnitee first has the right to commence such proceeding pursuant to this Section 10(a). The Corporation shall not oppose Indemnitee's right to seek any such adjudication or award in arbitration.
(b) In the event that a determination shall have been made pursuant to Section 8 of this Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding or arbitration commenced pursuant to this Section 10 shall be conducted in all respects as a DE NOVO trial, or arbitration, on the merits, and Indemnitee shall not be prejudiced by reason of that adverse determination. If a Change of Control shall have occurred, in any judicial proceeding or arbitration commenced pursuant to this Section 10, the Corporation shall have the burden of proving that Indemnitee is not entitled to indemnification or advancement of Expenses, as the case may be.
(c) If a determination shall have been made or deemed to have been made pursuant to Section 8 or 9 of this Agreement that Indemnitee is entitled to
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indemnification, the Corporation shall be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 10, absent
(i) a misstatement by Indemnitee of a material fact or an omission of a material fact necessary to make Indemnitee's statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law.
(d) The Corporation shall be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 10 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court or before any such arbitrator that the Corporation is bound by all the provisions of this Agreement.
(e) In the event that Indemnitee, pursuant to this Section 10, seeks a judicial adjudication of or an award in arbitration to enforce his rights under, or to recover damages for breach of this Agreement, Indemnitee shall be entitled to recover from the Corporation, and shall be indemnified by the Corporation against, any and all expenses (of the types described in the definition of Expenses in Section 17 of this Agreement) actually and reasonably incurred by him in such judicial adjudication or arbitration, but only if he prevails therein. If it shall be determined in such judicial adjudication or arbitration that Indemnitee is entitled to receive part but not all of the indemnification or advancement of expenses sought, the expenses incurred by Indemnitee in connection with such judicial adjudication or arbitration shall be appropriately prorated.
Section 11. NON-EXCLUSIVITY; SURVIVAL OF RIGHTS; INSURANCE; SUBROGATION.
(a) The rights of indemnification and to receive advancement of Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Certificate of Incorporation, the By-Laws, any agreement, a vote of stockholders or a resolution of directors, or otherwise. No amendment, alteration or repeal of this Agreement or any provision hereof shall be effective as to any Indemnitee with respect to any action taken or omitted by such Indemnitee in his Corporate Status prior to such amendment, alteration or repeal.
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(b) To the extent that the Corporation maintains an insurance policy or policies providing liability insurance for directors, officers, employees, agents or fiduciaries of the Corporation or of any other corporation, partnership, joint venture, trust employee benefit plan or other enterprise which such person serves at the request of the Corporation, Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage available for any such director, officer, employee or agent under such policy or policies.
(c) In the event of any payment under this Agreement, the Corporation shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Corporation to bring suit to enforce such rights.
(d) The Corporation shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.
Section 12. DURATION OF AGREEMENT. This Agreement shall continue until and terminate upon the later of: (a) ten years after the date that Indemnitee shall have ceased to serve as director, officer, employee, agent or fiduciary of the Corporation or of any other corporation, partnership, joint venture, trust, employee benefit plan or the enterprise which Indemnitee served at the request of the Corporation; or (b) the final termination of all pending Proceedings in respect of which Indemnitee is granted rights of indemnification or advancement of expense hereunder and of any proceeding commenced by Indemnitee pursuant to
Section 10 of this Agreement relating thereto. This Agreement shall be binding upon the Corporation and its successors and assigns and shall inure to the benefit of Indemnitee and his heirs, executors and administrators.
Section 13. SEVERABILITY. If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including without limitation, each portion of any
Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid,
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illegal or unenforceable) shall not in any way be affected or impaired thereby; and (b) to the fullest extent possible, the provisions of this Agreement (including without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable.
Section 14. EXCEPTION TO RIGHT TO INDEMNIFICATION OR ADVANCEMENT OF EXPENSES. Except as provided in Sections 8(c) and 10(e) hereof, Indemnitee shall not be entitled to indemnification or advancement of Expenses under this Agreement with respect to any Proceeding, or any claim therein, brought or made by him against the Corporation.
Section 15. IDENTICAL COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement. Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement.
Section 16. HEADINGS. The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.
Section 17. DEFINITION. For purposes of this Agreement:
(a) "Affiliate" and "Associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations (as in effect on the date hereof) under the Securities Exchange Act of 1934 (the "Act").
(b) "Change in Control" means a change in control of the Corporation or its successor occurring after the Effective Date of a nature that would be required to be reported in response to Item 1 of Form 8-K (as in effect on the date of this Agreement) promulgated under the Act, whether or not the Corporation is then subject to such reporting requirement; provided, however, that, without limitation, such a Change in Control shall be deemed to have occurred if after the Effective Date (i) the Corporation is merged or consolidated or reorganized into or with another corporation or other legal person (an "Acquiror") and as a result of such merger, consolidation or reorganization
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less than 75% of the outstanding voting securities or other capital interests of the surviving, resulting or acquiring corporation or other legal person are owned in the aggregate by the stockholders of the Corporation, directly or indirectly, immediately prior to such merger, consolidation or reorganization, other than by the Acquiror or any corporation or other legal person controlling, controlled by or under common control with the Acquiror; or (ii) the Corporation sells all or substantially all of its business and/or assets to an Acquiror, of which less than 75% of the outstanding voting securities or other capital interests are owned in the aggregate by the stockholders of the Corporation, directly or indirectly, immediately prior to such sale, other than by a corporation or other legal person controlling, controlled by or under common control with the Acquiror; or (iii) there is a report filed on Schedule 13D or Schedule 14D-1 (or any successor schedule, form or report), each as promulgated pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act"), disclosing that any person or group (as the terms "person" and "group" are used in Section 13(d)(3) or Section 14(d)(2) of the Exchange Act and the rules and regulations promulgated thereunder) has become the beneficial owner (as the term "beneficial owner" is defined under Rule 13d-3 or any successor rule or regulation promulgated under the Exchange Act) of 20% or more of the issued and outstanding shares of voting securities of the Corporation; or (iv) during any period of two consecutive years, individuals who at the beginning of any such period constitute the directors of the Corporation cease for any reason to constitute at least a majority thereof unless the election, or the nomination for election by the Corporation's stockholders, of each new director of the Corporation was approved by a vote of at least two-thirds of such directors of the Corporation then still in office who were directors of the Corporation at the beginning of any such period.
(c) "Corporate Status" describes the status of a person who is or was a director, officer, employee, agent or fiduciary of the Corporation or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise which such person is or was serving at the request of the Corporation.
(d) "Disinterested Director" means a director of the Corporation who is not and was not a party to the Proceeding in respect of which indemnification is sought by Indemnitee.
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(e) "Effective Date" means __________ ____, 2000.
(f) "Expenses" shall include all reasonable attorneys' fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, or being or preparing to be a witness in a Proceeding.
(g) "Independent Counsel" means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five years has been, retained to represent: (i) the Corporation or Indemnitee in any matter material to either such party, or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term "Independent Counsel" shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Corporation or Indemnitee in an action to determine Indemnitee's rights under this Agreement.
(h) "Proceeding" includes any action, suit, arbitration, alternative dispute resolution mechanism, investigation, administrative hearing or any other proceeding whether civil, criminal, administrative or investigative and including any and all appeals relating thereto.
(i) "Significant Stockholder" shall mean any individual, firm, corporation, limited liability company, partnership, trust or other entity who or which, together with all its Affiliates and Associates, shall be the "beneficial owner" (as defined above) of securities of the Corporation representing 30% or more of the combined voting power of the Corporation's then outstanding securities.
Section 18. MODIFICATION AND WAIVER. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.
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Section 19. NOTICE BY INDEMNITEE. Indemnitee agrees promptly to notify the Corporation in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to indemnification or advancement of Expenses covered hereunder.
Section 20. NOTICES. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if (i) delivered by hand and receipted for by the party to whom said notice or other communication shall have been directed, or (ii) mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed:
(a) If to Indemnitee, to:

(b) If to Corporation to:
LKQ Corporation 120 North LaSalle Street Suite 3300
Chicago, Illinois 60602 Attention: General Counsel
or to such other address as may have been furnished to Indemnitee by the Corporation or to the Corporation by Indemnitee, as the case may be.
Section 21. GOVERNING LAW. The parties agree that this Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware.
Section 22. MISCELLANEOUS. Use of the masculine pronoun shall be deemed to include usage of the feminine pronoun where appropriate.
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Section 23. CONTRIBUTION.
(a) If the indemnification provided in this Agreement should under applicable law be unenforceable or insufficient to hold Indemnitee harmless in respect of any and all Expenses, judgments, penalties, fines, and amounts paid in settlement in connection with a Proceeding, then the Corporation agrees, subject to the provisions of Subsection (b) below, that for purposes of this
Section the Corporation shall be treated as if it were a party which was or was threatened to be made a party to such Proceeding and that the Corporation shall contribute to the amounts paid or payable by the Indemnitee as a result of such Expenses, judgments, penalties, fines, and amounts paid in settlement of such Proceeding in such proportion as is appropriate to reflect the relative benefits accruing to the Corporation on the one hand and Indemnitee on the other which arose out of the event underlying such Proceeding and also the relative fault of the Corporation on the one hand and Indemnitee on the other in connection with such event, as well as any other relevant equitable considerations. For purposes of this Section, the relative benefit of the Corporation shall be deemed to be the benefits accruing to it and to all of its directors, officers, employees and agents (other than Indemnitee) on the one hand, as a group and treated as one entity, and the relative benefit of Indemnitee shall be deemed to be an amount not greater than Indemnitee's annual compensation from the Corporation and its subsidiaries during the first calendar year in which the event forming the basis for such Proceeding was alleged to have occurred (except that, if Indemnitee is both a director of the Corporation and an officer of the Corporation and/or one or more subsidiaries of the Corporation, and the Proceeding is brought against Indemnitee only in his capacity as a director of the Corporation, then the relative benefit of Indemnitee shall
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be deemed to be an amount no greater than the highest annual compensation paid by the Corporation for such year to any of its directors who is not also an officer of the Corporation or of any of its subsidiaries). The relative fault shall be determined by reference to, among other things, the fault of the Corporation and all of its directors, officers, employees and agents (other than Indemnitee) on the one hand, as a group and treated as one entity, and Indemnitee's and such group's relative intent, knowledge, access to information and opportunity to have altered or prevented the action or inaction, or alleged action or inaction, forming the basis for such Proceeding.
(b) No provision of this Section shall operate to create a right of contribution in favor of Indemnitee if it is judicially determined that, with respect to any such Proceeding to which paragraph (a) pertains, Indemnitee intentionally caused or contributed to the injury complained of with the knowledge that such injury would occur.
Section 24. PERIOD OF LIMITATIONS. No legal action shall be brought, and no cause of action shall be asserted by or on behalf of the Corporation or any subsidiary or other affiliate of the Corporation against Indemnitee or Indemnitee's spouse, heirs, executors, or personal or legal representatives after the expiration of two years from the date of accrual of such cause of action, and any claim or cause of action of the Corporation or its subsidiaries or other affiliates shall be extinguished and deemed released unless asserted by the timely filing of a legal action within such two-year period; provided, however, that if any shorter period of limitations is otherwise applicable to any such cause of action, such shorter period shall govern.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first above written.

ATTEST:                                                LKQ CORPORATION

By:                                         By:
   -------------------------------------      ---------------------------------
Name:                                       Name:
     -----------------------------------         ------------------------------
Title:                                      Title:
      ----------------------------------          -----------------------------	

WITNESS:

EXHIBIT 10.31
SEVERANCE AGREEMENT
This Severance Agreement (this "Agreement") is made as of July 15, 1998 by and between H. Bradley Willen ("Employee"), Triplett Auto Recyclers, Inc., an Ohio corporation ("Triplett"), and LKQ Corporation, a Delaware corporation ("LKQ").
RECITALS
Employee is the Vice President and Secretary of Triplett.
Triplett and LKQ are parties to an Agreement and Plan of Merger dated as of July 15, 1998 (the "Merger Agreement") pursuant to which LKQ Acquisition Corporation, an Ohio corporation and wholly-owned subsidiary of LKQ ("Acquisition") will be merged with and into Triplett, with Triplett being the surviving corporation and becoming a wholly-owned subsidiary of LKQ.
It is a condition to the obligations of the parties to the Merger Agreement that this Agreement be entered into. Terms defined in the Merger Agreement and not otherwise defined herein shall have the same meaning as in the Merger Agreement.
COVENANTS
1. DEFINITIONS. As used in this Agreement, "Termination for Cause" shall mean termination of Employee by Triplett for any one or more of the following reasons: (i) Employee's commission of any grossly negligent, fraudulent or dishonest act in connection with Employee's employment with Triplett; (ii) Employee's commission of a felony or a crime involving dishonesty or moral turpitude; (iii) Employee's breach of any covenant relating to non-competition or confidentiality between Employee and Triplett or LKQ; or (iv) Employee's continued failure (after five business days prior written notice specifying the failure) to carry out Employee's duties and responsibilities as an employee of Triplett. As used in this Agreement, "Good Reason" shall mean the occurrence of any of the following (without Employee's express written consent or except in connection with a Termination for Cause): (i) the reduction of Employee's duties and responsibilities with Triplett as such are in existence on the date of this Agreement; (ii) the reduction by Triplett of Employee's base salary as in effect on the date of this Agreement or as the same may be increased from time to time, during the term of this Agreement; (iii) the failure by Triplett or LKQ to allow Employee to participate in any benefit plan or arrangement in which Employee is presently participating or, alternatively, the benefit plans and arrangements of LKQ which are available to other similarly-situated employees of LKQ; (iv) the relocation of Employee to a city other than Akron, Ohio or Chicago, Illinois or the metropolitan areas thereof; (v) the failure by Triplett to provide Employee with the number of paid vacation days consistent with the policy of LKQ for similarly-situated employees; (vi) the material breach by Triplett of any provision of this Agreement; and (vii) the failure by Triplett to obtain the assumption of this Agreement by any successor or assign of Triplett.

2. SEVERANCE PAYMENT. At any time during the period commencing on the date of this Agreement and ending on the closing of the initial public offering of LKQ's common stock, in the event of a termination by Triplett of Employee's employment (other than a Termination for Cause) or in the event Employee terminates his employment with Triplett for Good Reason, Triplett shall pay Employee a lump sum amount (subject to the usual payroll deductions) equal to 12 months of Employee's salary at the time of such termination.
3. RESTRICTIVE COVENANT. Employee agrees that (i) he shall not, directly or indirectly, either for himself or for any other person, during the time of his employment and for a period of two years thereafter, engage in, represent, furnish consulting services to, be employed by or have any interest in (whether as owner, principal, officer, partner, agent, consultant, shareholder, member or otherwise) any business which would be competitive with any business conducted by Triplett as of the date of this Agreement or, as long as Employee (together with the members of his immediate family and their affiliates) beneficially owns at least five percent of the outstanding shares of LKQ, any other business conducted by LKQ or its subsidiaries, anywhere in the continental United States; provided, however, that Employee may acquire and hold an aggregate of up two percent of the outstanding shares of any corporation engaged in any such business if such shares are publicly traded in an established securities market,
(ii) he shall not, directly or indirectly, during the term of his employment and for a period of two years thereafter induce any customer of LKQ or any of its subsidiaries to patronize any such competitive business or otherwise request or advise any such customer to withdraw, curtail or cancel any of its business with LKQ or any of its subsidiaries; and (iii) he shall not, directly or indirectly, during the term of his employment and for a period of two years thereafter, solicit for employment or assist any other person in soliciting for employment, any person employed by LKQ or any of its subsidiaries.
4. CONFIDENTIALITY. Employee acknowledges that in his employment he will be making use of, acquiring and adding to confidential information relating to the business of Triplett, LKQ and their subsidiaries. Employee agrees to keep all such information confidential and will not disclose any such information in any manner whatsoever to a third party or use such information (other than for the benefit of Triplett, LKQ or their subsidiaries); provided, however that this
Section 4 shall not apply to information that (a) was in Employee's possession before receipt from Triplett, LKQ or its subsidiaries; (b) is or becomes a matter of public knowledge through no fault of Employee; (c) is rightfully received by Employee from a third party without the duty of confidentiality; or
(d) is independently developed by Employee. In the event Employee is required by law (through oral questions, interrogatories, requests for information or documents, subpoena, civil investigative demand or similar process), or is requested in any judicial or administrative proceeding or by any governmental authority to disclose any confidential information, Employee shall (i) provide prompt notice of the existence, terms and circumstances of such request to LKQ so that LKQ may seek an appropriate protective order or waive compliance with the terms of this Agreement, (ii) consult with LKQ on the advisability of taking legally available steps to resist or narrow such request, and (iii) if disclosure of such information is required, disclose such information and, subject to reimbursement by LKO of the Employee's expenses, exercise his best efforts to obtain an order or other reliable assurance that confidential treatment will be accorded to such portion of the disclosed information which LKQ designates.
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5. GENERAL. (a) No delay on the part of any party in the exercise of any right or remedy hereunder shall operate as a waiver thereof, and no single or partial exercise by any party of any right or remedy shall preclude other or further exercise thereof or the exercise of any other right or remedy. The waiver of any breach or condition of this Agreement by either party shall not constitute a precedent in the future enforcement of any of the terms and conditions of this Agreement.
(b) If any provision of this Agreement, as applied to any party or to any circumstances, 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.
(c) Upon the breach of any provision of Section 3 or 4, LKQ and Triplett shall be entitled to injunctive relief, since the remedy at law would be inadequate and insufficient. In addition, they shall be entitled to such damages as they can show they have sustained by reason of such breach.
(d) This Agreement contains the entire agreement of the parties hereto, and supersedes all prior understandings and agreements of the parties hereto, with respect to the subject matter hereof.
(e) This Agreement is deemed to have been drafted jointly by the parties, and any uncertainty or ambiguity shall not be construed for or against either party as a result of the attribution of drafting to either party.
This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois applicable to contracts made and to be performed wholly therein, without regard to any conflicts of laws provisions.
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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby, have duly executed and delivered this Agreement on the day and year first written above.
LKQ CORPORATION

/s/  H. Bradley Willen                  By:    /s/  Thomas B. Raterman
----------------------------------         -------------------------------------
H. Bradley Willen                       Name:  Thomas B. Raterman
                                        Title: Senior Vice President and
                                               Chief Financial Officer

                                        TRIPLETT AUTO RECYLERS, INC.

                                        By:    /s/  Stuart P. Willen
                                           ------------------------------------
                                        Name:  Stuart P. Willen
                                        Title: President	

4

EXHIBIT 10.32
SEVERANCE AGREEMENT
This Severance Agreement (this "Agreement") is made as of July 15, 1998 by and between Stuart P. Willen ("Employee"), Triplett Auto Recyclers, Inc., an Ohio corporation ("Triplett"), and LKQ Corporation, a Delaware corporation ("LKQ").
RECITALS
Employee is the President of Triplett.
Triplett and LKQ are parties to an Agreement and Plan of Merger dated as of July 15, 1998 (the "Merger Agreement") pursuant to which LKQ Acquisition Corporation, an Ohio corporation and wholly-owned subsidiary of LKQ ("Acquisition") will be merged with and into Triplett, with Triplett being the surviving corporation and becoming a wholly-owned subsidiary of LKQ.
It is a condition to the obligations of the parties to the Merger Agreement that this Agreement be entered into. Terms defined in the Merger Agreement and not otherwise defined herein shall have the same meaning as in the Merger Agreement.
COVENANTS
1. DEFINITIONS. As used in this Agreement, "Termination for Cause" shall mean termination of Employee by Triplett for any one or more of the following reasons: (i) Employee's commission of any grossly negligent, fraudulent or dishonest act in connection with Employee's employment with Triplett; (ii) Employee's commission of a felony or a crime involving dishonesty or moral turpitude; (iii) Employee's breach of any covenant relating to non-competition or confidentiality between Employee and Triplett or LKQ; or (iv) Employee's continued failure (after five business days prior written notice specifying the failure) to carry out Employee's duties and responsibilities as an employee of Triplett. As used in this Agreement, "Good Reason" shall mean the occurrence of any of the following (without Employee's express written consent or except in connection with a Termination for Cause): (i) the reduction of Employee's duties and responsibilities with Triplett as such are in existence on the date of this Agreement; (ii) the reduction by Triplett of Employee's base salary as in effect on the date of this Agreement or as the same may be increased from time to time during. the term of this Agreement; (iii) the failure by Triplett or LKQ to allow Employee to participate in any benefit plan or arrangement in which Employee is presently participating or, alternatively, the benefit plans and arrangements of LKQ which are available to other similarly-situated employees of LKQ; (iv) the relocation of Employee to a city other than Akron, Ohio or Chicago, Illinois or the metropolitan areas thereof; (v) the failure by Triplett to provide Employee with the number of paid vacation days consistent with the policy of LKQ for similarly-situated employees; (vi) the material breach by Triplett of any provision of this Agreement; and (vii) the failure by Triplett to obtain the assumption of this Agreement by any successor or assign of Triplett.

2. SEVERANCE PAYMENT. At any time during the period commencing on the date of this Agreement and ending on the closing of the initial public offering of LKQ's common stock, in the event of a termination by Triplett of Employee's employment (other than a Termination for Cause) or in the event Employee terminates his employment with Triplett for Good Reason, Triplett shall pay Employee a lump sum amount (subject to the usual payroll deductions) equal to 12 months of Employee's salary at the time of such termination.
3. RESTRICTIVE COVENANT. Employee agrees that (i) he shall not, directly or indirectly, either for himself or for any other person, during the time of his employment and for a period of two years thereafter, engage in, represent, furnish consulting services to, be employed by or have any interest in (whether as owner, principal, officer, partner, agent, consultant, shareholder, member or otherwise) any business which would be competitive with any business conducted by Triplett as of the date of this Agreement or, as long as Employee (together with the members of his immediate family and their affiliates) beneficially owns at least five percent of the outstanding shares of LKQ, any other business conducted by LKQ or its subsidiaries, anywhere in the continental United States; provided, however, that Employee may acquire and hold an aggregate of up two percent of the outstanding shares of any corporation engaged in any such business if such shares are publicly traded in an established securities market,
(ii) he shall not, directly or indirectly, during the term of his employment and for a period of two years thereafter induce any customer of LKQ or any of its subsidiaries to patronize any such competitive business or otherwise request or advise any such customer to withdraw, curtail or cancel any of its business with LKQ or any of its subsidiaries; and (iii) he shall not, directly or indirectly, during the term of his employment and for a period of two years thereafter, solicit for employment or assist any other person in soliciting for employment, any person employed by LKQ or any of its subsidiaries.
4. CONFIDENTIALITY. Employee acknowledges that in his employment he will be making use of, acquiring and adding to confidential information relating to the business of Triplett, LKQ and their subsidiaries. Employee agrees to keep all such information confidential and will not disclose any such information in any manner whatsoever to a third party or use such information (other than for the benefit of Triplett, LKQ or their subsidiaries); provided, however that this
Section 4 shall not apply to information that (a) was in Employee's possession before receipt from Triplett, LKQ or its subsidiaries; (b) is or becomes a matter of public knowledge through no fault of Employee; (c) is rightfully received by Employee from a third party without the duty of confidentiality; or
(d) is independently developed by Employee. In the event Employee is required by law (through oral questions, interrogatories, requests for information or documents, subpoena, civil investigative demand or similar process), or is requested in any judicial or administrative proceeding or by any governmental authority to disclose any confidential information, Employee shall (i) provide prompt notice of the existence, terms and circumstances of such request to LKQ so that LKQ may seek an appropriate protective order or waive compliance with the terms of this Agreement, (ii) consult with LKQ on the advisability of taking legally available steps to resist or narrow such request, and (iii) if disclosure of such information is required, disclose such information and, subject to reimbursement by LKO of the Employee's expenses, exercise his best efforts to obtain an order or other reliable assurance that confidential treatment will be accorded to such portion of the disclosed information which LKQ designates.

5. GENERAL. (a) No delay on the part of any party in the exercise of any right or remedy hereunder shall operate as a waiver thereof, and no single or partial exercise by any party of any right or remedy shall preclude other or further exercise thereof or the exercise of any other right or remedy. The waiver of any breach or condition of this Agreement by either party shall not constitute a precedent in the future enforcement of any of the terms and conditions of this Agreement.
(b) If any provision of this Agreement, as applied to any party, or to any circumstances, 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.
(c) Upon the breach of any provision of Section 3 or 4, LKQ and Triplett shall be entitled to injunctive relief, since the remedy at law would be inadequate and insufficient. In addition, they shall be entitled to such damages as they can show they have sustained by reason of such breach.
(d) This Agreement contains the entire agreement of the parties hereto, and supersedes all prior understandings and agreements of the parties hereto, with respect to the subject matter hereof.
(e) This Agreement is deemed to have been drafted jointly by the parties, and any uncertainty or ambiguity shall not be construed for or against either party as a result of the attribution of drafting to either party.
(f) This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois applicable to contracts made and to be performed wholly therein, without regard to any conflicts of laws provisions.

IN WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby, have duly executed and delivered this Agreement on the day and year first written above.
LKQ CORPORATION

/s/  Stuart P. Willen                   By:   /s/ Thomas B. Raterman
-----------------------------              -------------------------------------
Stuart P. Willen                        Name:  Thomas B. Raterman
                                        Title: Senior Vice President and
                                               Chief Financial Officer

                                        TRIPLETT AUTO RECYCLERS, INC.

                                        By:    /s/  Stuart P. Willen
                                           -------------------------------------
                                        Name:  Stuart P.  Willen
                                        Title: President	

EXHIBIT 21.1
LKQ CORPORATION AND ITS SUBSIDIARIES

                                                 JURISDICTION            ASSUMED NAMES
                                                 ------------            -------------
1.     Akron Airport Properties, Inc.            Ohio
2.     Black Horse Auto Parts, Inc.              Florida                 Lents Auto Parts; LKQ Auto
                                                                         Parts of Orlando
3.     Damron Holding Company, LLC               Delaware                LKQ North Florida; LKQ
                                                                         Melbourne; LKQ Service
                                                                         Center of Crystal River; LKQ
                                                                         Fort Myers
4.     DAP Trucking, Inc.                        Florida
5.     DAP Trucking, LLC                         Florida
6.     LKQ 250 Auto, Inc.                        Ohio
7.     LKQ All Models Corp.                      Arizona                 Wholesale Auto Recyclers; Cars
                                                                         `n More
8.     LKQ Atlanta, L.P.                         Delaware                LKQ Carolina
9.     LKQ Auto Parts of Central                 California
       California, Inc.
10.    LKQ Auto Parts of Memphis, Inc.           Arkansas
11.    LKQ Auto Parts of North Texas, Inc.       Delaware
12.    LKQ Auto Parts of North Texas, L.P.       Delaware
13.    LKQ Auto Parts of Orlando, LLC            Florida
14.    LKQ Auto Parts of Utah, Inc.              Utah
15.    LKQ Best Automotive Corp.                 Delaware
16.    LKQ Best Automotive, L.P.                 Delaware                LKQ Auto Parts of South Texas;
                                                                         A-1 Auto Salvage Pick & Pull
17.    LKQ Birmingham, Inc.                      Alabama
18.    LKQ Broadway Auto Parts, Inc.             New York
19.    LKQ Corporation                           Delaware
20.    LKQ Crystal River, Inc.                   Florida                 LKQ Fort Myers
21.    LKQ Gorham Auto Parts Corp.               Maine
22.    LKQ Great Lakes Corp.                     Indiana
23.    LKQ Holding Co.                           Delaware
24.    LKQ Hunts Point Auto Parts Corp.          New York                Partsland USA; LKQ Auto Parts
                                                                         of Eastern Pennsylvania; LKQ
                                                                         Auto Parts
25.    LKQ John's Westside Corp.                 Oregon                  Northwest Cylinder Heads
26.    LKQ Lakenor Auto &                        California              LKQ of Southern California;
       Truck Salvage, Inc.                                               LKQ of Las Vegas
27.    LKQ Management Company                    Delaware
28.    LKQ Mid-America Auto Parts, Inc.          Kansas                  Mabry Auto Salvage
29.    LKQ Mid-Atlantic, Inc.                    Pennsylvania
30.    LKQ Midwest Auto Parts Corp.              Nebraska                Midwest Foreign Auto
31.    LKQ of Indiana, Inc.                      Indiana
32.    LKQ of Michigan Inc.                      Michigan	

                                                 JURISDICTION            ASSUMED NAMES
                                                 ------------            -------------
33.    LKQ of Nevada, Inc.                       Nevada
34.    LKQ of Stockton, Inc.                     California
35.    LKQ of Tennessee, Inc.                    Tennessee
36.    LKQ Raleigh Auto Parts Corp.              North Carolina
37.    LKQ Route 16 Used Auto Parts, Inc.        Massachusetts
38.    LKQ Salisbury, Inc.                       North Carolina
39.    LKQ Savannah, Inc.                        Georgia
40.    LKQ Smart Parts, Inc.                     Delaware
41.    LKQ Smart Parts, L.P.                     Delaware
42.    LKQ Star Auto Parts, Inc.                 Delaware
43.    LKQ Star Auto Parts, L.P.                 Delaware
44.    LKQ TriplettASAP, Inc.                    Ohio
45.    Redding Auto Center, Inc.                 California              LKQ Auto Parts of Northern
                                                                         California	

2

Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of LKQ Corporation and subsidiaries on Form S-1 of our report dated March 31, 2003 (which report expresses an unqualified opinion and includes an explanatory paragraph relating to the adoption of Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" as of January 1, 2002), appearing in the Prospectus, which is a part of this Registration Statement, and of our report dated March 31, 2003, relating to the financial statement schedule appearing elsewhere in this Registration Statement.
We also consent to the reference to us under the headings "Selected Financial Data" and "Experts" in such Prospectus.

/s/ DELOITTE & TOUCHE LLP
Chicago, Illinois

July 28, 2003