Key Employee Salary Continuation Agreement

Exhibit 10.26


KEY EMPLOYEE SALARY CONTINUATION AGREEMENT


AGREEMENT, dated as of the 11/th/ day of April, 2000 between KEYSTONE AUTOMOTIVE INDUSTRIES, INC., a California corporation (the "Company"), and James C. Lockwood (the "Executive").


W I T N E S S E T H:
- - - - - - - - - -


WHEREAS, the Company considers it essential to the best interests of the Company and its stockholders that its management be encouraged to remain with the Company and to continue to devote full attention to the Company's business in the event an effort is made to obtain control of the Company through a tender offer or otherwise;


WHEREAS, in this connection, the Company recognized that the possibility for a change in control and the uncertainty and questions which it may raise among management may result in the departure or distraction of management personnel to the detriment of the Company and its stockholders;


WHEREAS, the Executive is a key employee of the Company;


WHEREAS, the Company believes the Executive has made valuable contributions to the productivity and profitability of the Company;


WHEREAS, should the Company receive any proposals from a third person concerning a possible business combination with, or acquisition of equity securities of, the Company, the Company believes it imperative that the Company and the Board of Directors (the "Board") be able to rely upon the Executive to continue in his position, and that the Company be able to receive and rely upon his advice, if so requested, as to the best interests of the Company and its stockholders without concern that he might be distracted by the personal uncertainties and risks created by such a proposal; and


WHEREAS, should the Company receive any such proposals, in addition to the Executive's regular duties, he may be called upon to assist in the assessment of such proposals, advise management and the Board as to whether such proposals would be in the best interests of the Company and its stockholders, and to take such other actions as the Board might determine to be appropriate;


NOW, THEREFORE, to assure the Company that it will have the continued undivided attention and services of the Executive and the availability of his advice and counsel notwithstanding the possibility, threat or occurrence of a bid to take over control of the Company, and to induce the Executive to remain in the employ of the Company, and for other good and valuable consideration, the Company and the Executive agree as follows:


1. Services During Certain Events.
-------------------------------


In the event a third person begins a tender or exchange offer, circulates a proxy to stockholders, or takes other steps seeking to effect a Change in Control (as hereafter defined), the Executive agrees that he will not voluntarily leave the employ of the Company, and will render the services contemplated in the recitals to this Agreement, until the third person has abandoned or terminated his or its efforts to effect a Change in Control or until after such a Change in Control has been effected. In the event that the Executive breaks his obligations under this paragraph, he shall forfeit his rights to the benefits conferred hereby (which forfeiture shall constitute the sole remedy of the Company for such breach). The Company shall promptly notify the Executive if and when it receives knowledge that steps are being taken to effect a Change in Control.


2. Change in Control.
------------------


For the purposes of this Agreement, "Change in Control" shall have the following meaning: (i) a merger of equivalent combination involving the Company after which forty-nine percent (49%) or more of the voting stock of the surviving corporation is held by persons other than former shareholders of the Company; (ii) the acquisition of thirty percent (30%) or more of the outstanding shares of Common Stock by any person (as defined by Section 3(a)(9) of the 1934 Act) other than directly from the Company; (iii) the occurrence of circumstance having the effect that thirty percent (30%) or more of the directors elected by shareholders to the Board are


persons who were not nominated by management in the then most recent proxy statement of the Company; or (iv) a change in the Chief Executive Officer of the Company.


3. Circumstances Triggering Receipt of Benefits.
---------------------------------------------

< ...