Document:

Exhibit 10.1

 

 

LUCKIN COFFEE INC.

 

 

2019 SHARE OPTION PLAN

 

(approved and adopted by a board resolution passed on January 18, 2019 )

 

 

 

TABLE OF CONTENTS

 

	
 
    	
PAGE
    
	
 
    	
 
    
	
Section 1. Definitions and Interpretation
    	
1
    
	
Section 2. Purpose of the Plan
    	
3
    
	
Section 3. Condition
    	
3
    
	
Section 4. Duration, Termination and Administration
    	
4
    
	
Section 5. Offer and Grant of Options
    	
4
    
	
Section 6. Exercise Price
    	
5
    
	
Section 7. Exercise of Options
    	
5
    
	
Section 8. Lapse of Option
    	
8
    
	
Section 9. Maximum Number of Shares Subject to Options
    	
9
    
	
Section 10. Reorganization of Capital Structure
    	
9
    
	
Section 11. Share Capital
    	
10
    
	
Section 12. Disputes
    	
10
    
	
Section 13. Alteration of this Plan
    	
11
    
	
Section 14. Miscellaneous
    	
11
    

 

 

Section 1.  Definitions and Interpretation. (a) In this Plan, save where the context otherwise requires, the following expressions have the respective meanings set opposite them:

 

“Adoption Date” being January 18, 2019, the date on which the Plan is approved and adopted by a resolution of the Board.

 

“Auditors” means the auditors for the time being of the Company.

 

“Award” means any Option granted under this Plan.

 

“Board” means the board of directors of the Company or a duly authorized committee thereof.

 

“Board Designee” means a member of the Board designated by the Board to make such determinations as are permitted hereunder, provided that no member of the Board shall make any such determination involving any Award held by such Board member.

 

“Business Associate” means any advisors, consultants, distributors, contractors, contract manufacturers, agents, customers, business partners, joint venture business partners, service providers of any member of the Group.

 

“Business Day(s)” means any day on which banks in New York, Hong Kong and PRC are open for business and the Stock Exchange is open for business of dealing in securities.

 

“Code” means the U.S. Internal Revenue Code of 1986, as amended.

 

“Company” means Luckin Coffee Inc., a company incorporated in the Cayman Islands.

 

“Director” means any director (including executive director, non-executive director and independent non-executive director) of any member of the Group from time to time.

 

“Employee” means any employee or officer of any member of the Group.

 

“Exercise Price” means the price per Share at which a Grantee may subscribe for the Shares on the exercise of an Option as described in Section 6.

 

“Fair Market Value” means, with respect to any property (including, without limitation, any Shares or other securities) the fair market value of such property determined by such methods or procedures as shall be established in good faith from time to time by the Board in accordance with applicable law.

 

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“Grantee” means any Participant who accepts an Offer in accordance with the terms of this Plan, or (where the context so permits) any person who is entitled to any Option in consequence of the death of the original Grantee.

 

“Grant Letter” means any written letter, agreement, contract or other instrument or document evidencing any Award granted under this Plan.

 

“Group” means the Company and its Subsidiaries.

 

“Hong Kong” means the Hong Kong Special Administrative Region of the PRC.

 

“IPO” shall mean the initial public offering of the Shares (or securities representing the Shares) of the Company in the United States.

 

“Offer” means the offer of the grant of an Option made in accordance with Section 5.

 

“Offer Date” means the date on which an Offer is made to a Participant.

 

“Option(s)” means a right granted to subscribe for the Shares pursuant to this Plan.

 

“Option Period” means a period to be notified by the Board to each Grantee in which an Option granted must be exercised (provided that such period shall not be more than ten years commencing on the Offer Date). The Board may also impose restrictions on the exercise of an Option during the period an Option may be exercised.

 

“Participant(s)” means any Director, Employee or Business Associate who the Board considers, in its sole discretion, has contributed or will contribute to the Group.

 

“PRC” means the People’s Republic of China, for the purposes of this Plan does not apply to Taiwan, Macau Special Administrative Region and Hong Kong.

 

“Plan” means this 2019 Share Option Plan in its present form or as amended from time to time in accordance with the provisions hereof.

 

“Share Registrar” means the share registrar of the Company from time to time.

 

“Shares” means ordinary shares, par value of US$0.001 each in the capital of the Company (or of such other nominal amount as shall result from a sub-division, consolidation, reclassification or reconstruction of the share capital of the Company from time to time).

 

“Stock Exchange” means any internationally recognized stock exchange.

 

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“Subsidiar(ies)” means any entity in which the Company has at any time, directly or indirectly, securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions.

 

“US$” means United States dollars, the lawful currency of the United States.

 

(b)   In this Plan, save where the context otherwise requires:

 

(i)         the headings are inserted for convenience only and shall not limit, vary, extend or otherwise affect the construction of any provision of this Plan;

 

(ii)        references to paragraphs are references to paragraphs of this Plan;

 

(iii)       references to any statute or statutory provision shall be construed as references to such statute or statutory provision as respectively amended, consolidated or re-enacted, or as its operation is modified by any other statute or statutory provision (whether with or without modification), and shall include any subsidiary legislation enacted under the relevant statute;

 

(iv)       expressions in the singular shall include the plural and vice versa;

 

(v)        expressions in any gender shall include other genders; and

 

(vi)       references to persons shall include bodies corporate, corporations, partnerships, sole proprietorships, organizations, associations, enterprises and branches.

 

Section 2. Purpose of the Plan. The purpose of the Plan is to enhance the ability of the Company to attract and retain exceptionally qualified individuals and to encourage them to acquire a proprietary interest in the growth and performance of the Company.

 

Section 3. Condition. This Plan shall take effect subject to the passing of a resolution by the Board to approve and adopt this Plan, and to grant Options to subscribe for the Shares hereunder and to allot, issue and deal with the Shares pursuant to the exercise of any Options granted under this Plan.

 

If the condition is not satisfied within 30 days after adoption of the Plan by the Board, this Plan and any Options granted under this Plan shall forthwith lapse and no person shall be entitled to any rights or benefits or be under any obligations under or in respect of the Plan.

 

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Section 4. Duration, Termination and Administration. (a) Subject to Section 3, this Plan shall be valid and effective for the period of time commencing on the Adoption Date and expiring on the day immediately prior to the earlier of (i) the date which is ten years after the Adoption Date; or (ii) the Company by resolution of the shareholders, or the Board, may at any time terminates the operation of this Plan, after which period no further Options will be granted but the provisions of this Plan shall remain in force to the extent necessary to give effect to the exercise of any Options which are granted during the life of the Plan or otherwise as may be required in accordance with the provisions of this Plan.

 

(b)   This Plan shall be subject to the administration of the Board and the decision of the Board shall be final and binding on all parties. The Board shall have the right (i) to interpret and construe the provisions of the Plan; (ii) to determine the persons who will be awarded Options under the Plan, and the number of Options awarded thereto; (iii) to make such appropriate and equitable adjustments to the terms of Options granted under the Plan as it deems necessary; and (iv) to make such other decisions or determinations as it shall deem appropriate in the administration of the Plan.

 

(c)   No member of the Board shall be personally liable by reason of any contract or other instrument executed by such member or on his behalf in his capacity as a member of the Board nor for any mistake of judgment made in good faith, and the Company shall indemnify and hold harmless each employee, officer or director of the Company to whom any duty or power relating to the administration or interpretation of the Plan may be allocated or delegated, against any cost or expense (including counsel fees) or liability (including any sum paid in settlement of a claim with the approval of the Board) arising out of any act or omission to act in connection with the Plan unless arising out of such person’s own fraud or bad faith.

 

Section 5. Offer and Grant of Options. (a) On and subject to the terms of this Plan, the Board shall be entitled at any time during the life of the Plan to make an Offer to any Participant, as the Board may in its absolute discretion select, to take up Options in respect of such number of Shares as the Board may determine at the Exercise Price. Subject to the terms and conditions of this Plan, Options may be granted on such terms and conditions in relation to their vesting, exercise or otherwise (e.g. by linking their exercise to the attainment or performance of milestones by any member of the Group, the Grantee or any group of Participants as the Board may determine).

 

(b)   Options shall entitle the Grantee to subscribe for the Shares on the terms set out in this Plan save that if, at the time the Grantee wishes to exercise an Option, such exercise of the Option, the issue of the Shares to the Grantee pursuant to the Plan, the registration of the Grantee as the holder of such Shares, the exercise and enjoyment of the rights attaching to such Shares or the performance of the obligations of the Company or the Grantee under this Plan, is not permitted by any applicable laws or regulations, the Options shall not entitle the Grantee to subscribe for the Shares.

 

(c)   An Offer shall be made to a Participant in the manner and in such form as the Board may from time to time determine requiring the Participant to undertake to hold the Options on the terms to be granted and to be bound by the provisions of this Plan.

 

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(d)   Any Offer may be accepted in respect of less than the number of Shares to which the offered Option relates.

 

Section 6. Exercise Price. Subject to Section 10, the Exercise Price shall be determined by the Board in its sole discretion and set forth in the Grant Letter; provided, however, that, the per share exercise price of options granted to Participants who are subject to taxation under the Code shall not be less than the Fair Market Value of a Share on the date of grant of such Options.

 

Section 7. Exercise of Options. (a) An Option shall be personal to the Grantee and shall not be assignable or transferable. No Grantee shall in any way sell, transfer, charge, mortgage, encumber or otherwise dispose of or create any interest (legal or beneficial) in favor of any third party over or in relation to any Option or enter into any agreement so to do, except for (A) the transmission of an Option on the death of the Grantee to his personal representatives(s) according to the terms of this Plan, or (B) the transfer of any Option to any trustee, acting in its capacity as such trustee, of any trust of which the Grantee is a beneficiary. Any breach of the foregoing by a Grantee shall entitle the Company to cancel any Option granted to such Grantee to the extent not already exercised without incurring any liability on the part of the Company.

 

(b)   A Grantee (or where permitted under Section 7(d)(ii), his legal personal representative(s)) may exercise his Option in whole or in part by giving notice in the form required by the Company stating that the Option is thereby exercised and specifying the number of Shares to be subscribed; and by a payment for the full amount of the aggregate Exercise Price for the Shares in respect of which the notice is given. Within 10 Business Days or otherwise agreed after receipt of the notice and payment of the Exercise Price and any applicable withholding and, where appropriate, receipt of the Auditors’ or financial advisors’ certificate pursuant to Section 10(a), the Company shall allot, and shall instruct the Share Registrar to issue, the relevant Shares to the Grantee (or his personal representatives) credited as fully paid and issue to the Grantee (or his personal representatives) a share certificate in respect of the Shares so allotted.

 

(c)   Except as provided otherwise and subject to the terms and conditions upon which such Option was granted, the vesting period for any Option granted to a Grantee under this Plan shall be determined by the Board, provided that:

 

(i)        in the event a Grantee terminates his employment or service on account of other than (A) his incapacitation or death, or (B) on one or more of the grounds of termination of employment, appointment or directorship specified in Section 8(f), all Options that are unvested as of the date of such termination shall lapse, unless the Board Designee otherwise determines in writing that such unvested Options shall not lapse and will continue to remain valid, such termination notwithstanding; and

 

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(ii)       in the event a Grantee’s employment or service terminates on account of incapacitation (as determined pursuant to corporate policy then is effective) or death, such Grantee or his personal representative(s) shall be entitled to immediate vesting for 100% of the Options that remain unvested as of the date of such incapacitation or death.

 

(d)   Subject to (A) the condition specified in Section 3 being fully satisfied, and (B) the terms and conditions on which such Option was granted, Options vested may be exercised by the Grantee at any time after the Company’s IPO and during the Option Period, provided that:

 

(i)        in the event specified in Section 7(c)(i), the Grantee shall be entitled to exercise the Option up to the vested entitlement of such Grantee as at the date of such termination (to the extent he is entitled to exercise at the date of termination but not already exercised pursuant to the terms of this Plan and the terms of grant), failing which it will lapse;

 

(ii)       in the event specified in Section 7(c)(ii), the Grantee or his personal representative(s) shall be entitled to exercise the Option up to the vested entitlement of such Grantee as at the date of such incapacitation or death (to the extent he is entitled to exercise at the date of incapacitation or death but not already exercised), pursuant to the terms of this Plan and the terms of grant;

 

(iii)      if a general offer by way of voluntary offer, takeover or otherwise (other than by way of plan of arrangement pursuant to Section 7(d)(iv) below) is made to all the holders of Shares (or all such holders other than the offeror and any person controlled by the offeror and any person acting in association or concert with the offeror) and such offer becomes or is declared unconditional prior to the expiry date of the relevant Option, the Company shall forthwith give notice thereof to the Grantee and the Grantee shall be entitled to exercise the Option to its full extent or, if the Company shall give the relevant notification, to the extent notified by the Company at any time within such period as shall be notified by the Company;

 

(iv)     if a general offer for Shares by way of plan of arrangement is made to all the holders of Shares and has been approved by the necessary number of holders of Shares at the requisite meetings, the Company shall forthwith give notice thereof to the Grantee and the Grantee may at any time thereafter (but before such time as shall be notified by the Company) exercise the Option to its full extent or, if the Company shall give the relevant notification, to the extent notified by the Company;

 

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(v)      in the event a notice is given by the Company to its shareholders to convene a shareholders’ meeting for the purpose of considering and, if thought fit, approving a resolution to voluntarily wind-up the Company, the Company shall forthwith give notice thereof to the Grantee and the Grantee may at any time thereafter (but before such time as shall be notified by the Company) exercise the Option to its full extent or, if the Company shall give the relevant notification, to the extent notified by the Company, and the Company shall as soon as possible and in any event no later than three days prior to the date of the proposed shareholders’ meeting, allot, issue and register in the name of the Grantee such number of fully paid Shares which fall to be issued on exercise of such Option; and

 

(vi)     in the event of a compromise or arrangement, other than a plan of arrangement contemplated in Section 7(d)(iv) above, between the Company and its members and/or creditors being proposed in connection with a plan for the reconstruction or amalgamation of the Company, the Company shall give notice thereof to all Grantees on the same day as it first gives notice of the meeting to its members and/or creditors to consider such a plan or arrangement and the Grantee may at any time thereafter but before such time as shall be notified by the Company exercise the Option to its full extent or, if the Company shall give the relevant notification, to the extent notified by the Company, and the Company shall as soon as possible and in any event no later than 3 days prior to the date of the proposed meeting, allot, issue and register in the name of the Grantee such number of fully paid Shares which fall to be issued on exercise of such Option.

 

Upon the occurrence of any of the events referred to in Sections 7(d)(iii) to 7(d)(vi), the Company may in its discretion and notwithstanding the terms of the relevant Option also give notice to a Grantee that his Option may be exercised at any time within such period as shall be notified by the Company and/or to the extent (not being less than the extent to which it could then be exercised in accordance with its terms) notified by the Company. If the Company gives such notice that any Option shall be exercised in part only, the balance of the Option shall lapse.

 

(e)   The Shares to be allotted and issued upon the exercise of an Option will be subject to the provisions of the articles of association of the Company for the time being in force and will rank pari passu with the fully paid Shares in issue as from the date of exercise of the Option and in particular will entitle the holders to participate in all dividends or other distributions paid or made on or after the date of exercise of the Option other than any dividend or other distribution previously declared or recommended or resolved to be paid or made if the record date therefor is before the date of exercise of the Option, provided always that when the date of exercise of the Option falls on a date upon which the register of members of the Company is closed then the exercise of the Option shall become effective on the next available Business Day on which the register of members of the Company is re-opened.

 

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(f)    The Board may at any time, with the mutual consent of the Grantee, cancel Options previously granted to, but not yet exercised by a Grantee. Where the Company cancels Options and, in compliance with applicable law, offers Options to the same Grantee, the offer of such new Options may only be made with available Options to the extent not yet granted (excluding the cancelled Options) within the limit as mentioned in Section 9(a) of this Plan.

 

Section 8. Lapse of Option. An Option shall lapse automatically (to the extent (A) not already vested in accordance with Section 7(c), and (B) vested but not already exercised) on the earliest of:

 

(a)        the expiry of the Option Period (subject to the provisions of  Section 4(a));

 

(b)        the expiry of the periods for exercising the Option as referred to in Section 7(d)(i), (iii) or (vi);

 

(c)        subject to the plan of arrangement becoming effective, the expiry of the period for exercising the Option referred to in Section 7(d)(iv);

 

(d)        subject to Section 7(d)(v), the date of commencement of the winding up of the Company;

 

(e)        the date on which the Grantee commits a breach of Section 7(a);

 

(f)        the date on which:

 

(i)         subject to Section 7(c)(ii), the Grantee (being an Employee or Director of any member of the Group) ceases to be an employee, an officer or a director by reason of the termination of his employment, appointment or directorship, unless the Board Designee otherwise determines in writing that such unvested Options shall not lapse and will continue to remain valid, such termination notwithstanding;

 

(ii)        the Grantee (being an Employee) serves as an employee, director or officer of any other companies that are not a member of the Group, and/or, whether alone or jointly with others, carried on or be concerned or interested, directly or indirectly, whether as shareholder, employee, director, investor, consultant, adviser, partner or agent in any types of business which are in competition with or in opposition to any business of any member of the Group as determined by the Board in its sole discretion;

 

(iii)       the Grantee being a Business Associate is under any contract with the Group, such contract is terminated by reason of breach of contract on the part of the Business Associate or the Grantee ceases to be a Business Associate for any other reason;

 

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(iv)       the Grantee being a Business Associate, appears either to be unable to pay or have no reasonable prospect to be able to pay debts, or has become insolvent, or has made any arrangements or composition with his or her creditors generally, or ceases or threaten to cease to carry on its business, or is wound up, or has an administrator or liquidator being appointed for the whole or any part of its undertaking or assets; or has been convicted of any criminal offence involving integrity or honesty,

 

(v)        unless the Board otherwise determines, and other than in the circumstances referred to in Section 7(d), the date the Grantee ceases to be a Participant (as determined by a Board resolution) for any reason; or

 

(vi)       the Grantee being an employee, commits a material breach of the employment agreement; or

 

(g)        the date on which the Option is cancelled by the Board as provided in  Section 7(f); and

 

(h)        the date on which this Plan terminates pursuant to Section 4(a).

 

Section 9. Maximum Number of Shares Subject to Options. (a) The total number of Shares which may be issued upon exercise of Options to be granted under this Plan shall not exceed in aggregate 158,031 Shares.

 

(b)        The maximum number of Shares referred to in Sections 9(a) may be adjusted upon the occurrence of such events and in such manner as described in Section 10.

 

Section 10. Reorganization of Capital Structure. (a) In the event of any alteration in the capital structure of the Company by way of capitalization of profits or reserves, rights issue, sub-division or consolidation of Shares or reduction of share capital of the Company, but excluding, for the avoidance of doubt, any alteration in the capital structure of the Company as a result of an issue of Shares or other securities of the Group as consideration in a transaction to which the Company is a party, the Auditors or the financial advisors engaged by the Company for such purpose shall determine what equitable adjustment is required to be made to:

 

(i)         the number and type of Shares or other securities then available for Awards under the Plan are subject to any unexercised Option; and/or

 

(ii)        the Exercise Price; and/or

 

(iii)       the method of exercise of the Options,

 

and the Auditors or such financial advisors shall certify in writing to the Board that such adjustments are in their/his opinion fair and reasonable. The capacity of the Auditors or financial advisors in this paragraph is that of experts and not of arbitrators and their certification shall, in the absence of manifest error, be final and binding on the Company and the Grantees. The costs of the Auditors or financial advisors shall be borne by the Company.

 

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(b)        For the avoidance of doubt, following the date on which the Shares first commence trading on a Stock Exchange the events set forth in Section 10(a) above shall include any extraordinary cash dividend or other distribution (whether in the form of cash, Shares or other securities), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of Shares or other securities of the Company, issuance of warrants or other rights to purchase Shares or other securities of the Company, issuance of Shares pursuant to the anti-dilution provisions of securities of the Company, or other similar corporate transaction or event affecting the Shares, or of changes in applicable laws, regulations or accounting principles, in each case in respect of which an adjustment is appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan.

 

(c)        Any such adjustments shall give each Participant the same proportion of the equity capital of the Company for which such Participant was entitled to subscribe for prior to such adjustments and any adjustments to the advantage of the Participants to the Exercise Price or to the number of Shares subject to the Options must be approved by the shareholders of the Company in general meeting. No adjustment may be made to the extent that Shares would be issued at less than their nominal value.

 

(d)        If there has been any alteration in the capital structure of the Company as referred to in  Section 10(a), the Company shall, upon receipt of a notice from a Grantee in accordance with Section 7(b), inform the Grantee of such alteration and shall either inform the Grantee of the adjustment to be made in accordance with the certificate of the Auditors or the financial advisors engaged by the Company for such purpose or, if no such certificate has yet been obtained, inform the Grantee of such fact and instruct the Auditors or the financial advisors as soon as practicable thereafter to issue a certificate in that regard in accordance with  Section 10(a).

 

Section 11. Share Capital. The exercise of any Option shall be subject to the shareholders of the Company in general meeting approving any necessary increase in the authorized share capital of the Company. Subject thereto, the Board shall make available sufficient authorized but unissued share capital of the Company to meet subsisting requirements on the exercise of Options.

 

Section 12. Disputes. Any dispute arising in connection with this Plan (whether as to the number of Shares the subject of an Option, the amount of the Exercise Price or otherwise) may be determined by the Board, the decision of which shall be final and binding on all parties who may be affected thereby.

 

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Section 13. Alteration of this Plan. (a) The Board may amend any of the provisions of this Plan (including without limitation amendments in order to comply with changes in legal or regulatory requirements and in order to waive any restrictions, imposed by the provisions of this Plan) at any time (but not so as to affect adversely any rights which have accrued to any Grantee at that date).

 

Section 14. Miscellaneous. (a) This Plan shall not form part of any contract of employment or engagement of services between the Group and any Participant and the rights and obligations of any Participant under the terms of his office, employment or engagement in services shall not be affected by the participation of the Participants in this Plan or any right which he may have to participate in it and this Plan shall afford such a Participant no additional rights to compensation or damages in consequence of the termination of such office, employment or engagement for any reason.

 

(b)        This Plan shall not confer on any person any legal or equitable right (other than those rights constituting the Options themselves) against the Company directly or indirectly or give rise to any cause of action at law or in equity against the Company.

 

(c)        The Company shall bear the costs of establishing and administering this Plan.

 

(d)        Any notice or other communication between the Company and a Grantee may be sent by prepaid post, by electronic means, or by personal delivery to, in the case of the Company, its principal place of business in the PRC or such other address as notified to the Grantee from time to time and, in the case of the Grantee, his address in the PRC or such other address as notified to the Company from time to time.

 

(e)        Any notice or other communication served by post:

 

(i)    by the Company shall be deemed to have been served 24 hours after the same was put in the post; and

 

(ii)   by the Grantee shall not be deemed to have been received until the same shall have been received by the Company.

 

(f)        Any notice or other communication served by electronic means by the Company or the Grantee shall be deemed to have been served if the sender did not receive a failure of receipt notification.

 

(g)        All allotments and issues of the Shares will be subject to all necessary consents under any relevant legislation for the time being in force in the PRC, Hong Kong and the Cayman Islands, and a Grantee shall be responsible for obtaining any governmental or other official consent or approval that may be required by any country or jurisdiction in order to permit the grant or exercise of the Option. The Company shall not be responsible for any failure by a Grantee to obtain any such consent or approval or for any tax or other liability to which a Grantee may become subject as a result of his or her participation in this Plan.

 

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(h)        This Plan and all Options granted hereunder shall be governed by and construed in accordance with the laws of the Cayman Islands.

 

(i)         This Plan is intended to comply with the requirements of Section 409A of the Code and the regulations and guidance thereunder (“Section 409A”) with respect to Awards made to or held by any Participant who is subject to taxation under the Code. The provisions of this Plan shall be interpreted in a manner that satisfies such requirements, and this Plan shall be operated accordingly. If any provision of this Plan would otherwise frustrate or conflict with this intent, the provision will be interpreted and deemed amended so as to avoid this conflict. If an operational failure occurs with respect to the requirements of Section 409A, any affected Participant shall fully cooperate with the Company to correct the failure, to the extent possible, in accordance with any correction procedure established by the Internal Revenue Service. No provision of this Plan shall be interpreted to transfer any liability for a failure to comply with Section 409A from a Participant or any other Person to the Company. Notwithstanding any provision of this Plan or any Grant Letter, if at the time of termination of a Participant’s employment or service with the Company he or she is a “specified employee” (as defined in Section 409A) and any payments upon such termination under this Plan or such Grant Letter are treated as deferred compensation subject to Section 409A, he or she will not be entitled to such payments until the earlier of (i) the date that is six months after such termination or (ii) any earlier date that does not result in any additional tax or interest to such Participant under Section 409A.

 

12Exhibit 10.2

 

FORM OF INDEMNIFICATION AGREEMENT

 

THIS INDEMNIFICATION AGREEMENT (the “Agreement”) is made and entered into this _________, 2018, between Luckin Coffee Inc., a Cayman Islands company (the “Company”), and                      (the “Indemnitee”).

 

A.            The Company and the Indemnitee recognize the continued difficulty in obtaining liability insurance for corporate directors, officers, employees, controlling persons, agents and fiduciaries, the significant increases in the cost of such insurance and the general reductions in the coverage of such insurance.

 

B.            The Company and the Indemnitee further recognize the substantial increase in corporate litigation in general, subjecting directors, officers, employees, controlling persons, agents and fiduciaries to expensive litigation risks at the same time as the availability and coverage of liability insurance has been severely limited.

 

C.            The Indemnitee does not regard the current protection available for the Company’s directors, officers, employees, controlling persons, agents and fiduciaries as adequate under the present circumstances, and the Indemnitee and other directors, officers, employees, controlling persons, agents and fiduciaries of the Company may not be willing to serve or continue to serve in such capacities without additional protection.

 

D.            The Company:  (i) desires to attract and retain the involvement of highly qualified individuals, such as the Indemnitee, to serve the Company and, in part, to induce the Indemnitee to be involved with the Company and (ii) wishes to provide for the indemnification and advancing of expenses to the Indemnitee to the maximum extent permitted by law.

 

NOW, THEREFORE, in consideration of the Indemnitee’s service to the Company, the parties hereto agree as follows:

 

1.             Indemnity of Indemnitee.  The Company hereby agrees to indemnify the Indemnitee to the fullest extent permitted by law, even if such indemnification is not specifically authorized by the other provisions of this Agreement, the Company’s Memorandum and Articles of Association (as amended from time to time) or by statute.  In the event of any change after the date of this Agreement in any applicable law, statute or rule that expands the right of an exempted company of Cayman Islands to indemnify a member of its Board of Directors or an officer, employee, controlling person, agent or fiduciary, it is the intent of the parties hereto that the Indemnitee shall enjoy by this Agreement the greater benefits afforded by such change.  In the event of any change in any applicable law, statute or rule that narrows the right of an exempted company of Cayman Islands to indemnify a member of its Board of Directors or an officer, employee, agent or fiduciary, such change, to the extent not otherwise required by such law, statute or rule to be applied to this Agreement, shall have no effect on this Agreement or the parties’ rights and obligations hereunder except as set forth in Section 3 hereof.

 

2.             Additional Indemnity.  Subject only to the limitations set forth in Section 3 hereof, the Company hereby further agrees to hold harmless and indemnify the Indemnitee:

 

 

(a)           against any and all expenses (including attorneys’ fees), witness fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by the Indemnitee in connection with any threatened, pending or completed action, claim, suit, arbitration, alternative dispute resolution mechanism, investigation or any other proceeding, whether civil, criminal, administrative or investigative (including any appeal therefrom and including an action by or in the right of the Company) to which the Indemnitee is, was or at any time becomes a party, or is threatened to be made a party, by reason of the fact that the Indemnitee is, was or at any time becomes a director, officer, employee or agent of the Company, or is or was serving or at any time serves at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise (collectively, a “Proceeding”); and

 

(b)           otherwise to the fullest extent as may be provided to the Indemnitee by the Company under the Company’s Memorandum and Articles of Association (as amended from time to time) and the Companies Law of the Cayman Islands (as amended from time to time).

 

3.             Limitations on Additional Indemnity.  

 

(a)           No indemnity pursuant to Section 2 hereof shall be paid by the Company for any of the following:

 

(i)            except to the extent the aggregate of losses to be indemnified thereunder exceeds the sum of such losses for which the Indemnitee is indemnified pursuant to Section 1 hereof or pursuant to any Directors’ and Officers’ Insurance purchased and maintained by the Company;

 

(ii)           in respect to remuneration paid to the Indemnitee if it shall be determined by a final judgment or other final adjudication that such remuneration was in violation of law;

 

(iii)          on account of any Proceeding in which judgment is rendered against the Indemnitee for an accounting of profits made from the purchase or sale by the Indemnitee of securities of the Company pursuant to the provisions of Section 16(b) of the Securities Exchange Act of 1934 and amendments thereto or similar provisions of any federal, state or local statutory law;

 

(iv)          on account of any Proceeding to the extent that the Indemnitee is a plaintiff, a counter-complainant or a cross-complainant therein (other than a Proceeding referred to in Section 8 hereof) unless such Proceeding was authorized in the specific case by action of the Board of Directors; or

 

(v)           if a final decision by a Court having jurisdiction in the matter shall determine that such indemnification is not lawful (and, in this respect, both the Company and the Indemnitee have been advised that the United States Securities and Exchange Commission believes that indemnification for liabilities arising under the federal securities laws is against public policy and is, therefore, unenforceable and that claims for indemnification should be submitted to appropriate courts for adjudication).

 

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(b)           In addition to those limitations set forth above in paragraph (a) of this Section 3, no indemnity pursuant to Section 2 hereof in an action by or in the right of the Company shall be paid by the Company for any of the following:

 

(i)            in respect of any claim, issue or matter as to which the Indemnitee shall have been adjudged to be liable to the Company in the performance of the Indemnitee’s duty to the Company and its stockholders, unless and only to the extent that the court in which such Proceeding is or was pending shall determine upon application that, in view of all the circumstances of the case, the Indemnitee is fairly and reasonably entitled to indemnity for expenses and then only to the extent that the court shall determine;

 

(ii)           of amounts paid in settling or otherwise disposing of a pending action without court approval;

 

(iii)          of expenses incurred in defending a pending action that is settled or otherwise disposed of without court approval;

 

(iv)          on account of the Indemnitee’s acts or omissions that involve intentional misconduct or a knowing and culpable violation of law;

 

(v)           on account of acts or omissions that the Indemnitee believes to be contrary to the best interests of the Company or its stockholders or that involve the absence of good faith on the part of the Indemnitee;

 

(vi)          with respect to any transaction from which the Indemnitee derived an improper personal benefit;

 

(vii)         on account of acts or omissions that show a reckless disregard for the Indemnitee’s duty to the Company or its stockholders in circumstances in which the Indemnitee was aware, or should have been aware, in the ordinary course of performing such duties, of a risk of serious injury to the Company or its stockholders; or

 

(viii)        on account of acts or omissions that constitute an unexcused pattern of inattention that amounts to an abdication of the Indemnitee’s duty to the Company or its stockholders.

 

4.             Contribution.  If the indemnification provided in Sections 1 and 2 hereof is unavailable by reason of a court decision described in Section 3(a)(v) hereof based on grounds other than any of those set forth in Sections 3(a)(ii) through (iv) hereof or in Sections 3(b)(i) through (vii) hereof, then in respect of any threatened, pending or completed action, suit or proceeding in which the Company is jointly liable with the Indemnitee (or would be if joined in such action, suit or proceeding), the Company shall contribute to the amount of expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred and paid or payable by the Indemnitee in such proportion as is appropriate to reflect:  (i) the relative benefits received by the Company on the one hand and the Indemnitee on the other hand from the transaction from which such action, suit or proceeding arose and (ii) the relative fault of the Company on the one hand and of the Indemnitee on the other in connection with the events that resulted in such expenses, judgments, fines or settlement amounts, as well as any other relevant equitable considerations.  The relative fault of the Company on the one hand and of the Indemnitee on the other shall be determined by reference to, among other things, the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent the circumstances resulting in such expenses, judgments, fines or settlement amounts.  The Company agrees that it would not be just and equitable if contribution pursuant to this Section 4 were determined by pro rata allocation or any other method of allocation that does not take account of the foregoing equitable considerations.

 

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5.             Continuation of Obligations.  All agreements and obligations of the Company contained herein shall continue during the period the Indemnitee is a director, officer, employee or agent of the Company (or is or was serving at the request of the Company as a director, officer employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise) and shall continue thereafter so long as the Indemnitee shall be subject to any possible claim or threatened, pending or completed action, suit or proceeding, whether civil, criminal or investigative, by reason of the fact that the Indemnitee was an officer or director of the Company or serving in any other capacity referred to herein.

 

6.             Notification and Defense of Claim.  Not later than thirty (30) days after receipt by the Indemnitee of notice of the commencement of any action, suit or proceeding, the Indemnitee will, if a claim in respect thereof is to be made against the Company under this Agreement, notify the Company of the commencement thereof; but the omission so to notify the Company will not relieve it from any liability that it may have to the Indemnitee otherwise than under this Agreement.  With respect to any such action, suit or proceeding as to which the Indemnitee notifies the Company of the commencement thereof:

 

(a)           the Company will be entitled to participate therein at its own expense;

 

(b)           except as otherwise provided below, to the extent that it may wish, the Company jointly with any other indemnifying party similarly notified will be entitled to assume the defense thereof, with counsel reasonably satisfactory to the Indemnitee.  After notice from the Company to the Indemnitee of its election to assume the defense thereof, the Company will not be liable to the Indemnitee under this Agreement for any legal or other expenses subsequently incurred by the Indemnitee in connection with the defense thereof other than reasonable costs of investigation or as otherwise provided below.  The Indemnitee shall have the right to employ its counsel in such action, suit or proceeding but the fees and expenses of such counsel incurred after notice from the Company of its assumption of the defense thereof shall be at the expense of the Indemnitee unless:  (i) the employment of counsel by the Indemnitee has been authorized by the Company; (ii) Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Company and the Indemnitee in the conduct of the defense of such action; or (iii) the Company shall not in fact have employed counsel to assume the defense of such action, in each of which cases the fees and expenses of the Indemnitee’s separate counsel shall be at the expense of the Company.  The Company shall not be entitled to assume the defense of any action, suit or proceeding brought by or on behalf of the Company or as to which the Indemnitee shall have made the conclusion provided for in (ii) above; and

 

(c)           the Company shall not be liable to indemnify the Indemnitee under this Agreement for any amounts paid in settlement of any action or claim effected without its written consent.  The Company shall be permitted to settle any action except that it shall not settle any action or claim in any manner that would impose any penalty or limitation on the Indemnitee without the Indemnitee’s written consent.  Neither the Company nor the Indemnitee will unreasonably withhold its consent to any proposed settlement.

 

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7.             Advancement and Repayment of Expenses.  If the Indemnitee employs his own counsel pursuant to Section 6(b)(i) through (iii) above, the Company shall advance to the Indemnitee, prior to any final disposition of any threatened or pending action, suit or proceeding, whether civil, criminal, administrative or investigative, any and all reasonable expenses (including legal fees and expenses) incurred in investigating or defending any such action, suit or proceeding within ten business days after receiving copies of invoices presented to the Indemnitee for such expenses; and

 

(a)           The Indemnitee agrees that the Indemnitee will reimburse the Company for all reasonable expenses paid by the Company in defending any Proceeding in the event and only to the extent it shall be ultimately determined by a final judicial decision (from which there is no right of appeal) that the Indemnitee is not entitled, under applicable law, the Company’s Bylaws, this Agreement or otherwise, to be indemnified by the Company for such expenses.

 

(b)           Notwithstanding the foregoing, the Company shall not be required to advance such expenses to the Indemnitee if the Indemnitee:  (i) commences or is a party to any action, suit or proceeding as a plaintiff unless such advance is specifically approved by a majority of the Board of Directors or (ii) is a party to an action, suit or proceeding brought by the Company and approved by a majority of the Board of Directors that alleges willful misappropriation of corporate assets by the Indemnitee, disclosure of confidential information in violation of the Indemnitee’s fiduciary or contractual obligations to the Company or any other willful and deliberate breach in bad faith of the Indemnitee’s duty to the Company or its stockholders.

 

8.             Enforcement.  If the Indemnitee brings any action to enforce rights or to collect moneys due under this Agreement and is successful in such action, the Company shall reimburse the Indemnitee for all of the Indemnitee’s reasonable fees and expenses in bringing and pursuing such action.

 

9.             Subrogation.  In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of the Indemnitee who shall execute all documents required and shall do all acts that may be necessary to secure such rights and to enable the Company effectively to bring suit to enforce such rights.

 

10.          Non-Exclusivity of Rights.  The rights conferred on the Indemnitee by this Agreement shall not be exclusive of any other right that the Indemnitee may have or hereafter acquire under any statute, provision of the Company’s Certificate of Incorporation or Articles, agreement, vote of stockholders or directors, or otherwise, both as to action in an official capacity and as to action in another capacity while holding office.

 

11.          Survival of Rights.  The rights conferred on the Indemnitee by this Agreement shall continue after the Indemnitee has ceased to be a director, officer, employee or other agent of the Company and shall inure to the benefit of the Indemnitee’s heirs, executors and administrators.

 

12.          Notice.  All notices and other communications required or permitted hereunder shall be in writing, shall be effective when given, and shall in any event be deemed to be given:  (a) five (5) calendar days after deposit with the U.S. Postal Service or other applicable postal service, if delivered by first class mail, postage prepaid; (b) upon delivery, if delivered by hand; (c) one (1) business day after the business day of deposit with Federal Express or similar overnight courier, freight prepaid; or (d) one (1) day after the business day of delivery by facsimile transmission, if deliverable by facsimile transmission, with copy by first class mail, postage prepaid, and shall be addressed if to the Indemnitee, at Indemnitee’s address as set forth beneath the Indemnitee’s signature to this Agreement and if to the Company at the address of its principal corporate offices (attention: Chief Executive Officer) or at such other address as such party may designate by ten (10) calendar days’ advance written notice to the other party hereto.

 

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13.          Severability.  The provisions of this Agreement shall be severable in the event that any of the provisions hereof (including any provision within a single section, paragraph or sentence) are held by a court of competent jurisdiction to be invalid, void or otherwise unenforceable, and the remaining provisions shall remain enforceable to the fullest extent permitted by law.  Furthermore, to the fullest extent possible, the provisions of this Agreement (including, without limitations, each portion of this Agreement containing any provision held to be invalid, void or otherwise unenforceable, that is not itself invalid, void or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable.

 

14.          Governing Law.  This Agreement shall be interpreted and enforced in accordance with the laws of Hong Kong, without regard to conflict of law provisions thereof.

 

15.          Dispute Resolution.  Any dispute, controversy or difference between the parties hereto arising out of, in connection with or relating to, this Agreement (a “Dispute”) shall be resolved through arbitration pursuant to this Section 15.  The arbitration shall be conducted in Hong Kong by the Hong Kong International Arbitration Centre (the “HKIAC”) in accordance with the Hong Kong International Arbitration Centre Administered Arbitration Rules (the “HKIAC Rules”) in effect at the time of the arbitration. There shall be three arbitrators.  Each of the following: (i) the claimant to the Dispute, or in the case of multiple claimants, all such claimants acting collectively (the “Claimant”) and (ii) the respondent to the Dispute, or in the case of more than one respondent, the respondents acting collectively (the “Respondent”) shall select one arbitrator.  The party commencing the arbitration shall nominate his arbitrator at the time of filing the demand for arbitration.  The Respondent shall nominate his arbitrator within thirty (30) days after receiving the demand for arbitration.  Such arbitrators shall be freely selected, and neither the Claimant nor the Respondent shall be limited in their selection to any prescribed list.  The HKIAC shall select the third arbitrator.  Each arbitrator shall be qualified to practice law in Hong Kong.  If either party does not appoint an arbitrator within the time set forth above or if there are more than one Claimant or one Respondent and the Claimant (or Respondent as the case may be) fails to agree on the selection of the same arbitrator between themselves as provided above, the relevant appointment or selection shall be made by the HKIAC.  The arbitration proceedings shall be conducted in English.  If the HKIAC Rules are in conflict with the provisions of this Section 15 including the provisions concerning the appointment of arbitrators, the provisions of this Section 15 shall prevail.  The arbitration tribunal shall decide any Dispute submitted by the parties to the arbitration strictly in accordance with the substantive law of the Hong Kong and shall not apply any other substantive law.  In making their award, the arbitrators shall have the authority to award attorney’s fees and other costs and expenses of the arbitration as they deem just and appropriate under the circumstances. The award of the arbitration tribunal shall be final and binding upon the disputing parties, and any party may apply to a court of competent jurisdiction for enforcement of such award.  A party shall be entitled to seek preliminary injunctive relief, if possible, from any court of competent jurisdiction pending the constitution of the arbitral tribunal.

 

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16.          Binding Effect.  This Agreement shall be binding upon the Indemnitee and upon the Company, its successors and assigns, and shall inure to the benefit of the Indemnitee, the Indemnitee’s heirs, personal representatives and assigns and to the benefit of the Company, its successors and assigns.

 

17.          Amendment and Termination.  No amendment, modification, termination or cancellation of this Agreement shall be effective unless it is in writing signed by all parties hereto.  No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.

 

18.          Integration and Entire Agreement.  This Agreement sets forth the entire understanding between the parties hereto and supersedes and merges all previous written and oral negotiations, commitments, understandings and agreements relating to the subject matter hereof between the parties hereto.

 

19.          No Construction as Employment Agreement.  Nothing contained in this Agreement shall be construed as giving the Indemnitee any right to be retained in the employ of the Company or any of its subsidiaries.

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as a deed as of the day and year first above written.

 

COMPANY:

 

	
SIGNED SEALED AND DELIVERED
    as a DEED in the name of
    Luckin Coffee Inc.
    by its duly authorized representative
    	
)
   )
   )
   )
    	

    
	
in the presence of:
    	
)
    	
Name:
    
	
 
    	
)
    	
Title
    
	
 
    	
)
    	
 
    
	
 
    	
 
    	
 
    
	
Witness
    	
 
    	
 
    

 

Signature Page to Indemnification Agreement

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as a deed as of the day and year first above written.

 

INDEMNITEE:

 

 

	
SIGNED   SEALED AND DELIVERED
    	
)
    	

    
	
as a DEED by
    	
)
    
	
[                      ]
    	
)
    
	
in the presence of:
    	
)
    
	
 
    	
)
    	
 
    
	
 
    	
)
    	
 
    
	
 
    	
 
    	
 
    
	
Witness
    	
 
    	
 
    

 

Signature Page to Indemnification Agreement

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