Exhibit 10.1


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.  Only current directors of the Company who are
not officers or employees of the Company shall be entitled to receive options
or compensation under the Plan (each such individual receiving options granted
or compensation paid under the Plan is referred to herein as a “Director” and
each person entitled to exercise an option granted under the Plan is referred
to herein as an “Optionee”).


 


4.                                       Granting of Options; Annual Compensation.


 


(a)(i)                       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 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.


 


(ii)                                  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 upon his or her initial
election or appointment as a Director, provided such Director is eligible at that
time under the terms of Paragraph 3 hereof.


 


(iii)                               An
additional option under which 10,000 shares of Common Stock may be purchased
from the Company shall be granted to each Director each year, on the
anniversary of the granting of the initial option to such Director described in
Paragraph 4(a)(i) or (ii) 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.


 


(iv)                              Each
Director shall receive annual compensation of $60,000 payable in cash in equal
quarterly installments of $15,000 on the last day of each quarter (December 31,
March 31, June 30 and September 30) with the first such
quarterly payment beginning on the last day of the quarter in which consummation
of the Company’s initial public offering of its


 


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Common Stock occurs.  At the
election of such Director, such quarterly payment may be in the form of the
number of shares of the Common Stock (rounding up to the nearest whole share) equivalent
in value to $15,000 as described below, provided such Director continues to be
eligible at the time of such payment under the terms of Paragraph 3 of this
Plan.  In addition, each Director who
serves as a member of the Audit Committee, Compensation Committee or
Governance/Nominating Committee of the Board of Directors shall receive annual
compensation of $6,000 for each committee on which such Director serves payable
in cash in equal quarterly installments of $1,500 on the last day of each
quarter (December 31, March 31, June 30 and September 30),
with the first such quarterly payment beginning on the last day of the quarter
in which consummation of the Company’s initial public offering of its Common
Stock occurs.  At the election of such Director,
such quarterly payment may be in the form of the number of shares of the Common
Stock (rounding up to the nearest whole share) equivalent in value to $1,500,
as described below, provided such Director continues to be eligible at the time
of such payment under the terms of Paragraph 3 of this Plan and continues to
serve as a member of the Audit Committee, Compensation Committee or
Governance/Nominating Committee of the Board of Directors.  If such Director elects to receive the Common
Stock in lieu of the cash payment as described in this Paragraph 4(a)(iv), the
per share value of Common Stock shall equal the fair market value on the respective
payment date (or, if the payment date is not a trading date, on the first trading
date immediately preceding the payment 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 respective payment date. 
Such election must be made prior to the start of the calendar year in
which the compensation described in this Paragraph 4(a)(iv) is to be paid;
provided, however, that with respect to the calendar year in which the Company’s
initial public offering takes place, such election must be made prior to the
consummation of the Company’s initial public offering.


 


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 Director 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.


 


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5.                                       Option Price.  Except with respect to those options granted
under the terms of Paragraph 4(a)(i) 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 six months after the date of
its grant.


 


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.


 


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(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 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 


 


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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 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 September 10,
2003.


 


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