UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

~~PURSUANT~~Pursuant TOto ~~SECTION~~ Section 13 ORor 15(Dd) OFof ~~THE~~the Securities Exchange Act of 1934

~~SECURITIES~~Date ~~EXCHANGE~~of ~~ACT~~Report: OFSeptember ~~1934~~24, 2007

~~Date of Report~~ (Date of earliest event reported)

~~June 29~~KEYSTONE AUTOMOTIVE INDUSTRIES, ~~2007~~INC.

Keystone Automotive Industries, Inc.

(Exact name of registrant as specified in its charter)

California	0-28568	95-2920557
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)
(State or other jurisdiction of incorporation)	(Commission File No.)	(IRS Employer Identification No.)

700 E. Bonita Avenue, Pomona, CACalifornia 91767 (Address of principal executive offices) (Zip Code)

(Address of Principal Executive Offices)

(909) 624-8041

(Registrant’s ~~Telephone~~telephone ~~Number~~number, ~~Including~~including ~~Area~~area ~~Code~~code)

N/Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the ~~exchange~~Exchange Act (17 CFR 240.14a-12)

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule ~~13e~~13a-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 5 8.0201. ~~Departure~~Other ~~of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers~~Events.

~~(e)~~As Onpreviously ~~June 29,~~announced ~~2007, we entered into a Change-~~in~~-Control~~ ~~Agreement~~our ~~(the~~Quarterly ~~“Agreement”)~~Report ~~with~~on D.Form ~~Currey~~10-Q ~~Hall~~filed ~~(the~~August 2, ~~“Executive”).~~2007, ~~The~~two ~~Agreement provides~~putative ~~that~~class ifaction ~~Executive’s~~law ~~employment~~suits iscaptioned ~~terminated~~Lynch byv. ~~the~~Keystone ~~Company~~Automotive ~~following~~Industries, aInc., ~~Change~~Case inNo. ~~Control~~BC374399 and ~~during~~Shoys ~~the~~v. ~~Term~~Keystone Automotive ofIndustries, ~~the Agreement~~Inc., ~~other~~Case ~~than~~No. byBC374480, ~~the~~were ~~Company~~filed ~~for~~in ~~Cause,~~the bySuperior ~~reason~~Court of ~~death~~the orState ~~Disability~~of California, orCounty byof ~~Executive~~Los ~~without~~Angeles ~~Good~~in ~~Reason, Executive~~connection ~~will~~with beKeystone ~~entitled~~Automotive toIndustries, ~~among~~Inc.’s ~~other~~(the ~~things:~~“Company” (ior “Keystone”) a proposed ~~lump~~merger ~~sum~~with ~~cash~~LKQ ~~amount~~Corporation ~~equal~~(“LKQ”) pursuant to ~~Executive’s~~the ~~unpaid~~terms ~~base~~of ~~salary,~~the ~~accrued~~merger ~~vacation~~agreement ~~pay,~~between ~~unreimbursed~~the ~~business~~Company ~~expenses~~ and ~~all~~LKQ ~~other items earned by Executive through~~ (the ~~Date~~“Actions”). ~~of Termination;~~On ~~(ii)~~September a17, ~~lump~~2007, ~~sum~~Keystone ~~cash~~entered ~~amount~~into ~~equal~~a toconditional ~~the~~memorandum ~~prorated~~of ~~portion at~~ understanding (the ~~target~~“Memorandum ~~award level~~ of ~~any~~Understanding”) ~~unpaid~~with ~~incentive~~plaintiffs’ ~~compensation~~counsel ~~allocated~~and orthe ~~awarded~~other tonamed ~~Executive~~defendants ~~preceding~~in the ~~Date~~Actions. ofOn ~~Termination;~~September ~~(iii) a~~24, ~~lump~~2007, ~~sum~~in ~~cash~~satisfaction ~~amount~~of ~~equal to~~ one ~~and~~of ~~one-half~~the ~~times~~conditions ~~Executive’s~~of ~~annual base salary in effect immediately prior to~~ the ~~Date~~Memorandum of ~~Termination or~~Understanding, ~~if higher~~Keystone, ~~immediately~~the ~~prior~~other tonamed defendants, ~~the~~and ~~first~~plaintiffs’ ~~occurrence~~counsel ofreached an ~~event~~agreement ~~constituting~~regarding ~~Good~~additional ~~Reason;~~disclosures. ~~(iv) a~~The ~~lump~~Company ~~sum~~has ~~cash~~agreed ~~amount equal~~ to ~~one~~make ~~and~~available ~~one-half~~to ~~times~~its ~~the~~shareholders ~~greater~~certain ofadditional ~~(A) Executive’s~~information ~~target~~in ~~bonus~~connection ~~percentage~~with ~~times~~the ~~his~~proposed ~~then~~merger, ~~current annual base salary~~ and ~~(B)~~ the ~~average~~Company, ~~annual~~the other ~~bonus~~named ~~earned~~defendants byand ~~Executive~~the ~~with~~plaintiffs ~~respect~~have agreed to settle the ~~three fiscal years (or~~Actions, ~~if Executive~~subject ~~has~~to ~~been~~certain ~~employed~~conditions, ~~for~~including: ~~less~~confirmatory ~~than three fiscal years~~discovery, the ~~average~~closing ~~bonus~~of ~~for~~ the ~~number~~merger ofand ~~full~~court ~~fiscal~~approval ~~years~~ of ~~Executive’s~~the ~~employment)~~final ~~ending~~settlement. ~~immediately~~If ~~prior~~the tocourt approves the ~~fiscal~~settlement contemplated ~~year~~ in ~~which~~ the ~~Date~~Memorandum of ~~Termination occurs or~~Understanding, ~~if higher, immediately prior to~~ the ~~fiscal~~Actions ~~year~~will inbe ~~which~~dismissed ~~the~~with ~~first~~prejudice. ~~event~~In ~~constituting~~addition, ~~Good~~Keystone ~~Reason~~agreed ~~occurs;~~to ~~(v) continuation~~pay ~~coverage under~~ the ~~Company’s~~legal ~~health~~fees ~~care~~ and ~~life~~expenses ~~insurance~~of ~~plans~~plaintiffs’ atcounsel in the ~~same~~amount ~~cost~~of ~~and~~$550,000, ~~coverage~~subject ~~level~~to ascourt inapproval. ~~effect~~This payment aswill ofnot affect the ~~Date~~ amount of ~~Termination;~~merger ~~and~~consideration ~~(vi) subject~~ to ~~certain~~be ~~exceptions,~~paid in the ~~immediate~~merger. ~~vesting~~The ofadditional ~~all~~information ~~stock~~is ~~options,~~contained ~~restricted~~below ~~stock~~in ~~and~~this ~~performance~~Current ~~share~~Report ~~awards~~and asshould ofbe ~~the~~read ~~date of a Change~~ in ~~Control.~~conjunction ~~The~~with ~~Agreement~~Keystone’s ~~provides~~proxy ~~that~~statement ~~Executive~~filed ~~would~~with bethe ~~eligible~~Securities ~~for~~and ~~payments~~Exchange inCommission ~~reimbursement~~(the ~~for~~“SEC”) ~~excise~~on ~~taxes~~September 5, ~~imposed~~2007 on (the ~~severance~~“Proxy ~~payments and benefits~~Statement”).

InKeystone ~~addition,~~denies ~~the~~all ~~Agreement provides~~of ~~that if Executive’s employment is terminated by~~ the allegations ~~Company without Cause and not~~ in the ~~context~~Actions ofand adoes ~~Change~~not ofmake ~~Control~~any ~~during~~admission ~~the~~that ~~Term of~~ the ~~Agreement,~~additional ~~Executive~~information ~~will~~is bematerial. ~~entitled to~~Nevertheless, ~~among~~Keystone ~~other~~and ~~things,~~ the ~~following~~other ~~severance payments:~~defendants ~~(i),~~have ~~(ii) and~~agreed ~~(v) described~~to ~~above,~~settle asthe ~~well~~Actions ~~as continuation of his base salary~~ in ~~effect~~order ~~immediately prior~~ to ~~the~~avoid ~~Date~~costly oflitigation ~~Termination~~and ~~for~~eliminate athe ~~period~~risk of any 18delay ~~months~~to ~~after~~ the ~~Date~~closing of ~~Termination~~the merger.

~~Executive~~Additional ~~will~~Information ~~also~~Regarding beSelection subject to a post-termination non-competition covenant, non-disclosure covenant and a post-termination non-solicitation covenant. All severance payments described above are contingent upon Executive’s compliance with these covenants, and any violation of ~~these covenants will cause~~ the ~~Executive~~Finance toCommittee ~~forfeit~~Members ~~any unpaid severance payments.~~

OnAs ~~June 29~~is disclosed in the Proxy Statement, ~~2007~~the Board created the Finance Committee, wecomprised ~~also~~of ~~revised~~Ronald ~~our~~G. ~~Change-in-Control~~Foster, ~~Agreement~~Timothy ~~with~~C. ~~Jeffrey~~McQuay Tand James R. ~~Gray~~Gerrity, for ~~previously~~the ~~reported~~specific purpose of reviewing and assessing strategic alternatives available to the Company. Mr. Foster’s selection was based on ~~our~~his ~~Form~~knowledge ~~8-K~~of ~~filed~~mergers ~~with~~and acquisitions and antitrust issues from his past experience in the ~~Securities~~automotive division of Tenneco, Inc. (“Tenneco”), where he specialized in mergers, joint ventures and ~~Exchange~~turnaround ~~Commission~~situations, onand ~~June~~his experience as a consultant. In particular, Mr. 6Foster served as the Vice President of Finance for Walker Manufacturing, ~~2007~~a division of Tenneco, toand ~~provide~~later served as the Vice President of Corporate Development for ~~similar~~Tenneco. ~~severance~~In ~~payments~~these ifpositions he was intricately involved in corporate transactions and financial matters, such as mergers and acquisitions. Mr. ~~Gray~~McQuay’s isselection ~~terminated~~was bybased on his extensive experience in the ~~Company~~investment ~~without~~banking ~~Cause~~industry from his service at various financial and ~~not~~consulting ininstitutions, ~~the~~including ~~context~~his ofcurrent ajob ~~Change~~as Managing Director of ~~Control~~A.G. Edwards & Sons, ~~except~~Inc. Mr. Gerrity’s selection was based on his ~~base~~past ~~salary~~involvement ~~continues~~in ~~for~~numerous ~~a period~~investment banking and consulting assignments and private investing activities and his knowledge of 24mergers ~~months~~and ~~after~~acquisitions ~~the~~from ~~Date~~his experience as President and Chief Financial Officer of ~~Termination~~Dyneer Corporation. Mr. ~~Gray~~McQuay’s ~~revised~~and ~~Agreement~~Mr. Gerrity’s ~~also~~“independence” ~~provides~~as ~~for~~that term is defined in Rule 4200 of the ~~forfeiture~~NASDAQ ~~provisions~~listing ~~described~~standards ~~above~~and Rule 10A-3(c) of the Securities Exchange Act were also considered in selecting them as members of the Finance Committee.

~~Defined~~Additional ~~terms~~Information ~~used~~Regarding inProcess ~~this~~with Private ~~Form 8-K~~Equity ~~but~~Sponsors ~~not otherwise defined have the meanings set forth in the Agreement.~~

As is disclosed in the Proxy Statement, J.P. Morgan Securities Inc. (“JPMorgan”) initiated preliminary discussions with a small group of private equity sponsors who were selected based on the sponsors’ focus on and experience with investments in the automotive aftermarket and distribution industries in the United States and internationally. The group of private equity sponsors was also selected based on the typical deal sizes that they have historically executed.

Between June 15, 2007 and July 3, 2007, JPMorgan did not contact the private equity sponsor which submitted a non-binding indication of interest to specifically ask it to improve and/or correct its proposal. As is disclosed in the Proxy Statement, by July 3, 2007, the offers from LKQ and the private equity sponsor presented substantially similar economic terms to Keystone’s shareholders. The Company did not pursue negotiating a higher offer from the private equity sponsor before deciding to terminate its discussions with the private equity sponsor on July 3, 2007 because, among other things, an improved offer from the private equity sponsor was highly unlikely without the completion of diligence and secured financing, which would require significant additional time without a guarantee of a higher price. Furthermore, because the private equity sponsor’s offer was highly conditional on the completion of diligence of the Ford/ITC patent proceeding, a lower offer after completion of diligence was likely because of the business risks presented by the patent proceeding.

Additional Information Regarding Opinion of J.P. Morgan Securities, Inc.

The companies selected to be the basis of the public trading multiples analysis shared similar business characteristics to the Company, including similarities to the Company’s distribution model, and were all involved in the automotive aftermarket industry. Companies with similar business characteristics not in the automotive aftermarket industry were not included in the analysis because of the unique characteristics of the automotive aftermarket and the differences displayed in the automotive distribution market dynamics versus the industrial distribution market.

In determining the transactions to be used in the selected transaction multiples analysis, JPMorgan reviewed thirteen comparable transactions and selected three of those transactions as being most relevant to its fairness analysis based on, among other factors, business model, transaction size, recency of transaction date, type of consideration and other transaction terms, as well as the target’s industry and end markets. Based on these factors, as disclosed in the Proxy Statement, JPMorgan focused its analysis on the following transactions: Bridgestone’s acquisition of Bandag, Investcorp’s acquisition of Fleetpride and Sumitomo’s acquisition of TBC Corp. The following table reflects the transaction value, the ratio of transaction value to trailing twelve months’ EBITDA and the type of consideration for each of the transactions reviewed by JPMorgan.


Announced Date	Acquirer	Target	Transaction Value¹	TV/TTM EBITDA²	Consideration
Automotive Aftermarket/Retail
12/4/2006	Bridgestone Corp.	Bandag Inc.	$942	10.6x	Cash
6/7/2006	Investcorp International Inc.	FleetPride Inc.	$506	9.6x	Cash
9/18/2005	Sumitomo Corp.	TBC Corp.	$1,092	10.4x	Cash
			Median	10.4x
			Mean	10.2x

¹	Transaction value defined as net debt plus equity

²	Ratio is Transaction Value/ Trailing Twelve Months’ EBITDA

In connection with its review of the fairness of the transaction, JPMorgan performed a sensitivity analysis to quantify the potential impact on the Company’s equity value per share of the Company either over- or under-achieving the EBIT projections as outlined in management’s business plan. The following chart reflects this potential impact if EBIT margins, expressed as a percentage of revenues, exceeded or fell below projected values by 1% or 2% at discount rates ranging from 9.5% to 10.5%.

Discounted Cash Flow EBIT Margin Sensitivity (Equity Value Per Share – $)


	EBIT margin sensitivity
	(2.00%)		(1.00%)		0.00%		1.00%		2.00%
Discount rate 9.50%	$	32.62	$	39.12	$	45.61	$	52.10	$	58.59
10.00%	$	29.91	$	35.92	$	41.92	$	47.92	$	53.93
10.50%	$	27.60	$	33.18	$	38.77	$	44.35	$	49.93

In addition, the disclosure in the paragraph under the heading “Opinion of J.P. Morgan Securities Inc.—Discounted Cash Flow Analysis” on page 28 of the Proxy Statement is supplemented as follows (new text is underlined):

“JPMorgan conducted a discounted cash flow analysis for the purpose of determining the fully diluted equity value per share for Keystone’s common stock. JPMorgan calculated the unlevered free cash flows that Keystone is expected to generate during fiscal years 2008 through 2017 based upon financial projections prepared by the management of Keystone. JPMorgan also calculated a range of terminal asset values of Keystone at the end of the period ending March 31, 2017 by applying a perpetual unlevered free cash flow growth rate ranging from 3.25% to 3.75%. The perpetual unlevered free cash flow growth rate was based on JPMorgan’s judgment and experience. The unlevered free cash flows and the range of terminal asset values were then discounted to present values using a range of discount rates from 9.5% to 10.5% which were chosen by JPMorgan based upon an analysis of the weighted average cost of capital of Keystone and JPMorgan’s judgment and experience. The present value of the unlevered free cash flows and the range of terminal asset values were then adjusted for Keystone’s estimated excess cash, option exercise proceeds and total debt balances on October 31, 2007. Based on these assumptions, the discounted cash flow analysis implied a range for Keystone’s common stock as of October 31, 2007, of $38.13 to $46.66 per share.”

Additional Information Regarding Relationship Between JPMorgan and LKQ

JPMorgan currently lends to LKQ as a participant in LKQ’s credit facility. However, JPMorgan is not the arranger nor the agent. Additionally, JPMorgan provides treasury services to LKQ. JPMorgan does not provide financial advisory services or do any investment banking business with LKQ.

Additional Information Regarding JPMorgan’s Fee

Under an engagement letter between JPMorgan and the Company, JPMorgan is entitled to receive between 1.00% and 1.50% of the aggregate deal value, depending on the final purchase price, of which JPMorgan is entitled to receive $1.0 million as an announcement fee and $1.0 million as an opinion fee, each of which is payable regardless of whether the merger is consummated. At a purchase price of $48.00 per share, JPMorgan will receive approximately $8.9 million in total transaction fees (including the opinion and announcement fees), representing 1.10% of the aggregate deal value, if the proposed merger is consummated. If the Company receives any payment from another person following or in connection with the termination, abandonment or failure of the proposed merger to occur, JPMorgan will receive 25% of such payment received by the Company, but in no event will such payment to JPMorgan exceed the amount of transaction fees that JPMorgan would have received if the merger was consummated.

Additional Information and Where to Find It

Keystone’s stockholders are urged to read the Proxy Statement because it contains important information about Keystone and the proposed transaction. Investors, security holders and other interested parties may obtain free copies of the Proxy Statement and other documents filed with the SEC at the SEC’s website at www.sec.gov. The Proxy Statement and such other documents may also be obtained free of charge by going to Keystone’s Investor Relations page on its corporate website at www.keystone-auto.com or by directing such request to Keystone Automotive Industries, Inc., 655 Grassmere Park Drive, Nashville, TN 37211, Attn: Corporate Secretary.

In addition, Keystone and its officers and directors may be deemed to be participants in the solicitation of proxies from Keystone’s stockholders with respect to the proposed transaction. Information concerning the interests of Keystone’s participants in the solicitation is set forth in Keystone’s proxy statements and Annual Reports on Form 10-K, and any interests that Keystone’s participants have in the proposed transaction are available in the Proxy Statement. LKQ may be deemed to be participating in the solicitation of Keystone’s stockholders in favor of the approval of the merger as well. Information concerning LKQ’s directors and executive officers is set forth in LKQ’s proxy statements and Annual Reports on Form 10-K filed with the SEC. These documents are available free of charge at the SEC’s website at www.sec.gov or by going to LKQ’s investor relations page on its corporate website at www.lkqcorp.com.

This communication shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the ~~Registrant~~registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	KEYSTONE AUTOMOTIVE INDUSTRIES, INC. (Registrant)
		KEYSTONE AUTOMOTIVE INDUSTRIES, INC.
Dated: July 2, 2007	By:	/s/ John G. Arena, Esq.
Date: October 1, 2007		By:	/s/ John G. Arena, Esq.
	Name:	John G. Arena
			John G. Arena Vice President, General Counsel and Secretary
	Title:	Vice President, General Counsel and Secretary

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