EXHIBIT 10.3





STANDARD
TERMS AND CONDITIONS GOVERNING

EMPLOYEE NON-QUALIFIED STOCK OPTIONS

GRANTED ON OR AFTER MAY 12, 2004 UNDER THE 

1998, 2000, 2002 AND 2004 STOCK INCENTIVE PLANS


The following constitute the
standard terms and conditions (these “Terms and Conditions”) governing any “non-qualified”
option (an “Option”) to purchase shares (“Option Shares”) of the Common Stock,
par value $.01 per share (“Common Stock”), of Aftermarket Technology Corp. (the
“Company”) granted on or after May 12, 2004 under the Company’s 1998,
2000, 2002 or 2004 Stock Incentive Plans, as amended from time to time (the
relevant stock incentive plan being referred to herein as the “Plan”), to any
optionee (an “Optionee”) who is an employee of the Company or one of its
subsidiaries, unless and to the extent otherwise provided by the Company’s
Board of Directors (the “Board”) (or a duly authorized committee of the Board)
at the time an Option is granted.  A
non-qualified Option is an Option not intended to qualify as an incentive stock
option under Section 422 of the Internal Revenue Code.  These Terms and Conditions are promulgated by
the Compensation and Human Resources Committee of the Board pursuant to the
Plan.


1.         Vesting;
Expiration.  The date on which
the grant of an Option is effective is referred to as the “Date of Grant.”  On each of the first, second and third
anniversaries of the Date of Grant the Option shall become exercisable to
purchase, and shall vest with respect to, one-third of the Option Shares.  The Option shall expire at 5:00 p.m., central
time, on the tenth anniversary of the Date of Grant (the “Expiration Date”).


2.         Acceleration
and Termination of Option.


(a)       Termination of Employment.


(i)        Generally.  If
Optionee ceases to be employed for any reason other than Retirement (as defined
in Section 2(a)(ii)), death, Permanent Disability (as defined in
Section 2(e)(iv)) or termination without Cause (as defined in
Section 2(e)(i)), then (A) the portion of the Option that has not
vested on or prior to the Termination Date (as defined in
Section 2(e)(vi)) shall terminate on the Termination Date and (B) the
remaining vested portion of the Option shall terminate on the earlier of the
Expiration Date or the date that is 30 days after the Termination Date.


(ii)       Retirement.  If
Optionee retires in accordance with the Company’s then-current retirement
policy (“Retirement”), then (A) the portion of the Option that has not
vested on or prior to the Termination Date shall terminate on the Termination
Date and (B) the remaining vested portion of the Option shall terminate
upon the Expiration Date.


(iii)      Death or Permanent Disability.  If Optionee ceases to be employed due to his
or her death or Permanent Disability, then (A) the portion of the Option
that has not vested on or prior to the Termination Date shall fully vest on the
Termination Date and (B) the Option shall terminate upon the earlier of
the Expiration Date or the first anniversary of the Termination Date.


 





















(iv)      Termination Without Cause.


(A)      If
Optionee’s employment is terminated without Cause other than within 18 months
after a Change of Control (as defined in Section 2(e)(ii)), then
(x) the portion of the Option that has not vested on or prior to the
Termination Date shall terminate on the Termination Date and (y) the
remaining vested portion of the Option shall terminate on the earlier of the
Expiration Date or the date that is 30 days after the Termination Date.


(B)       If
Optionee’s employment is terminated without Cause within 18 months after a
Change of Control, then (x) the portion of the Option that has not vested
on or prior to the Termination Date shall fully vest on the Termination Date,
and (y) the Option shall terminate on the earlier of the Expiration Date
or the first anniversary of the Termination Date.


(b)       Death
Following Termination of Employment. 
If Optionee shall die at any time after the Termination Date and prior
to the Expiration Date or earlier termination of the Option, then the remaining
vested portion of the Option shall terminate on the earlier of the Expiration
Date or the first anniversary of the date of death.


(c)       Other Events Causing Acceleration of
Option.  The Board (or a duly
authorized committee of the Board), in its sole discretion, may accelerate the
exercisability of the Option at any time and for any reason.


(d)       Other
Events Causing Termination of Option. 
Notwithstanding anything to the contrary in these Terms and Conditions,
the Option shall terminate upon the consummation of any of the following
events, or, if later, the 30th day following the first date upon
which such event shall have been approved by both the Board and the
stockholders of the Company:


(i)        the
dissolution or liquidation of the Company;


(ii)       a sale
of substantially all of the property and assets of the Company, unless the
terms of such sale shall provide otherwise; or


(iii)      a
Change of Control, if the Board (or a duly authorized committee of the Board)
elects to terminate the Option in connection therewith.


(e)       Certain Definitions.


(i)        “Cause” means the occurrence or existence
of any of the following with respect to Optionee, as determined by the Company
in its sole discretion:


(A)      a
material breach by Optionee of (x) his or her duty not to engage in any
transaction that represents, directly or indirectly, self-dealing with the
Company or any of its affiliates that has not been approved by the Company, or
(y) the terms of his or her employment, if in any such case such material
breach remains uncured after the lapse of 30 days following the date that the
Company has given Optionee written notice thereof;


 


2





















(B)       the
material breach by Optionee of any duty referred to in clause (A) above as to
which at least one written notice has been given pursuant to clause (A);


(C)       any act
of dishonesty, misappropriation, embezzlement, intentional fraud or similar
conduct involving the Company or any of its affiliates;


(D)      the
conviction or the plea of nolo contendere or the equivalent in respect of a
felony involving moral turpitude;


(E)       any
intentional damage of a material nature to any property of the Company or any
of its affiliates;


(F)       the
repeated non-prescription use of any controlled substance or the repeated use
of alcohol or any other non-controlled substance that, in the reasonable
determination of the Company renders Optionee unfit to serve in his or her
capacity as an employee of the Company or its affiliates; or


(G)       failure
to perform his or her duties in a reasonably satisfactory manner where such
failure has continued for 30 days following notice thereof; provided, however, that this Section
2(e)(i)(G) shall cease to be of effect upon a Change of Control.


(ii)       “Change of Control” means the first to occur of the
following events:


(A)      any sale
or transfer or other conveyance, whether direct or indirect, of all or
substantially all of the assets of the Company, on a consolidated basis, in one
transaction or a series of related transactions, unless, immediately after
giving effect to such transaction, at least 85% of the total voting power
normally entitled to vote in the election of directors, managers or trustees,
as applicable, of the transferee is “beneficially owned” by persons who,
immediately prior to the transaction, beneficially owned 100% of the total
voting power normally entitled to vote in the election of directors of the
Company;


(B)       any
Person or Group (as defined in Section 2(e)(v)) other than an Excluded
Person (as defined in Section 2(e)(iii)) is or becomes the “beneficial
owner,” directly or indirectly, of more than 35% of the total voting power in
the aggregate of all classes of Capital Stock of the Company then outstanding
normally entitled to vote in elections of directors, unless the percentage so
owned by an Excluded Person is greater;


(C)       during
any period of 12 consecutive months, individuals who at the beginning of such
12-month period constituted the Board (together with any new directors whose
election by the Board or whose nomination for election by the shareholders of
the Company was approved by a vote of a majority of the directors then still in
office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for any
reason to constitute a majority of the Board then in office; or


 


3





















(D)      a
reorganization, merger or consolidation of the Company the consummation of
which results in the outstanding securities of any class then subject to the
Option being exchanged for or converted into cash, property and/or a different
kind of securities, unless, immediately after giving effect to such
transaction, at least 85% of the total voting power normally entitled to vote
in the election of directors, managers or trustees, as applicable, of the
entity surviving or resulting from such reorganization, merger or consolidation
is “beneficially owned” by persons who, immediately prior to the transaction,
beneficially owned 100% of the total voting power normally entitled to vote in
the election of directors of the Company.


The
foregoing definition supercedes Section 11.2 of the 1998, 2000 and 2002
Plans.


(iii)      “Excluded Person” has the meaning set forth in that certain
Indenture dated as of August 2, 1994 by and among the Company, the Guarantors
named therein and American Bank National Association.


(iv)      “Permanent Disability” means the inability to engage in any
substantial gainful activity by reason of any medically determinable physical
or mental impairment that can be expected to result in death or that has lasted
or can be expected to last for a continuous period of not less than 12
months.  Optionee shall not be deemed to
have a Permanent Disability until proof of the existence thereof shall have
been furnished to the Board in such form and manner, and at such times, as the
Board may require.  Any determination by
the Board that Optionee does or does not have a Permanent Disability shall be
final and binding upon the Company and Optionee.


(v)       “Person”  and  “Group” have the meanings used for purposes of Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended, whether or
not such sections apply to the transaction in question.


(vi)      “Termination Date” means the date on which Optionee ceases
to be employed by the Company and its subsidiaries for any reason (including
Retirement, death or Permanent Disability) or for no reason.


3.             Adjustments. 
In the event that the outstanding securities of the class then subject
to the Option are increased, decreased or exchanged for or converted into cash,
property and/or a different number or kind of securities, or cash, property
and/or securities are distributed in respect of such outstanding securities, in
either case as a result of a reorganization, merger, consolidation,
recapitalization, reclassification, dividend (other than a regular, quarterly
cash dividend) or other distribution, stock split, reverse stock split or the
like, or in the event that substantially all of the property and assets of the
Company are sold, then, unless such event shall cause the Option to terminate
pursuant to Section 2(d) or the terms of such transaction provide
otherwise, the Board (or a duly authorized committee of the Board) may make
appropriate and proportionate adjustments in the number and type of shares or
other securities or cash or other property that may thereafter be acquired upon
the exercise of the Option, and such adjustment shall be in the Board’s (or
such committee’s) sole discretion and be final and binding on Optionee; provided, however, that any such adjustments in the Option
shall be made without changing the aggregate Exercise Price of the then
unexercised portion of the Option.


 


4





















4.         Exercise. 
The Option shall be exercisable during Optionee’s lifetime only by
Optionee or by his or her guardian or legal representative, and after Optionee’s
death only by the person or entity entitled to do so under Optionee’s last will
and testament or applicable intestate law. 
The Option may only be exercised by the delivery to the Company of
(i) a written notice of such exercise, which shall specify the number of
Option Shares to be purchased (the “Purchased Shares”) and the aggregate
Exercise Price for such Purchased Shares, and (ii) payment in full of such
aggregate Exercise Price in cash or by check payable to the Company; provided, however, that payment of such aggregate Exercise
Price may instead be made promptly after the exercise date if on or before the
exercise date the Company receives a commitment from a broker, acceptable to
the Company, to pay the required amount out of the proceeds of a sale of Option
Shares on behalf of Optionee.


5.         Payment
of Withholding Taxes.  If the Company becomes
obligated to withhold an amount on account of any tax imposed as a result of
the exercise of the Option, including, without limitation, any federal, state,
local or other income tax, or any F.I.C.A., state disability insurance tax or
other employment tax, then Optionee shall, on the first day upon which the
Company becomes obligated to pay such amount to the appropriate taxing
authority, pay such amount to the Company in cash or by check payable to the
Company, provided that if Optionee fails to pay
such amount, the Company may deduct the amount from other compensation payable
to Optionee or withhold from Optionee a number of Option Shares having a Fair
Market Value equal to such amount.


6.         Notices. 
All notices and other communications required or permitted to be given
pursuant to the Award Document (as defined in Section 9(b)) shall be in
writing and shall be deemed given (i) five days after mailing by certified
or registered mail, postage prepaid, return receipt requested, (ii) the
next business day after being sent through an overnight delivery service under
circumstances in which such service guarantees next day delivery, or
(iii) when actually received if sent by any other method.  All notices shall be sent to the Company at
One Oak Hill Center, Suite 400, Westmont, Illinois 60559 (or such other
address as is then the Company’s headquarters), attention General Counsel, and
to Optionee at the address set forth in the payroll records of the Company, or
at such other addresses as the Company or Optionee may designate by written
notice in the manner aforesaid.


7.         Stock
Exchange Requirements; Applicable Laws. 
Notwithstanding anything to the contrary in the Award Document, no
shares of stock purchased upon exercise of the Option, and no certificate
representing all or any part of such shares, shall be issued or delivered if
(i) such shares have not been admitted to listing upon official notice of
issuance on each stock exchange or interdealer quotation system upon which
shares of that class are then listed or (ii) in the opinion of counsel to
the Company, such issuance or delivery would cause the Company to be in
violation of or to incur liability under any federal, state or other securities
law, or any requirement of any stock exchange or interdealer quotation system
listing agreement to which the Company is a party, or any other requirement of
law or of any administrative or regulatory body having jurisdiction over the
Company.


8.         Nontransferability. 
Neither the Option nor any interest therein may be transferred,
conveyed, assigned, pledged, encumbered, mortgaged, hypothecated, gifted or
disposed of in any manner other than by will or the laws of descent and
distribution.


 


5





















9.         Plan;
Award Document; Amendment.


(a)       The Option is granted
pursuant to the Plan and is subject to all the terms and conditions of the
Plan, as the same may be amended from time to time by the Board in its sole
discretion, and these Terms and Conditions, as they may be amended from time to
time by the Board (or a duly authorized committee of the Board) in its sole
discretion.


(b)       The terms of the Plan,
these Terms and Conditions and a certificate issued to evidence the Option
together constitute the “Option Document” contemplated by the 1998, 2000 or
2002 Plan or the Award Agreement contemplated by the 2004 Plan (such Option
Document or Award Agreement being referred to herein as the “Award Document”),
and the interpretation and construction of the Award Document by the Board (or
a duly authorized committee of the Board) shall be final and binding upon
Optionee.


(c)       To the extent permitted
by the Plan, the Board (or a duly authorized committee of the Board) may amend
the Award Document without the consent of Optionee.


(d)       Until the Option shall
expire, terminate or be exercised in full, the Company shall, upon written
request therefor, send a copy of the Plan and these Terms and Conditions, in
their then-current form, to Optionee or any other person or entity then
entitled to exercise the Option.


10.          Stockholder Rights. 
Optionee shall not be entitled to vote, receive dividends or be deemed
for any purpose the holder of any Option Shares until such Option Shares have
been issued following the exercise of the Option in accordance with the terms
of the Award Document.


11.          Employment Rights. 
No provision of the Award Document or of the Option shall
(i) confer upon Optionee any right to continue as an employee of the
Company or any of its subsidiaries, (ii) affect the right of the Company
and each of its subsidiaries to terminate the employment of Optionee, with or
without cause, or (iii) confer upon Optionee any right to participate in
any employee welfare or benefit plan or other program of the Company or any of
its subsidiaries other than the Plan.  The Company and each of its
subsidiaries may terminate the employment of Optionee at any time and for any
reason, or for no reason, unless Optionee and the Company or such subsidiary
are parties to a written employment agreement that expressly provides
otherwise.


12.          Governing Law. 
The Award Document shall be governed by and construed and enforced in
accordance with the laws of the State of Delaware without reference to choice
or conflict of law principles.


AFTERMARKET TECHNOLOGY CORP.

COMPENSATION AND HUMAN RESOURCES COMMITTEE


Robert Anderson

Michael J. Hartnett

Michael D. Jordan, Chairman


 


6