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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.
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"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
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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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