Document:

Exhibit
      10.3

    
 

    WUHAN
      GENERAL GROUP (CHINA), INC. 

    2007
      STOCK OPTION PLAN

     

    Nonqualified
      Stock Option Agreement for Employees

     

    No.
      of
      Shares subject to

    Nonqualified
      Stock Option: ___

    

    THIS
      NONQUALIFIED STOCK OPTION AGREEMENT FOR EMPLOYEES (this “Agreement”) dated as of
      the ____ day of ___________, 20__, by and between Wuhan General Group (China),
      Inc., a Nevada corporation (the “Company”), and ___________________________ (the
“Participant”), is made pursuant and subject to the provisions of the Company’s
      2007 Stock Option Plan (the “Plan”), a copy of which is attached hereto. All
      terms used herein that are defined in the Plan have the same meaning given
      them
      in the Plan. 

     

    1. Grant
      of Option.
      Pursuant to the Plan, the Company, on ____________, 20__ (the “Date of Grant”),
      granted to the Participant, subject to the terms and conditions of the Plan
      and
      subject further to the terms and conditions set forth herein, the right and
      option to purchase from the Company all or any part of an aggregate of
      __________ shares of the common stock of the Company, par value $.0001 per
      share
      (“Common Stock”), at the exercise price of $___________ per share. Such price
      per share is not less than the Fair Market Value of a share of Common Stock
      on
      the Date of Grant. This Option is exercisable as hereinafter
      provided.

     

    2. Terms
      and Conditions.
      This
      Option is subject to the following terms and conditions:

     

    (a) Expiration
      Date.
      This
      Option shall expire at 11:59 p.m. on ___________ __, 20__ (the “Expiration
      Date”) or such earlier time as set forth in paragraphs 3, 4, 5 or 6 of this
      Agreement. In no event shall the Expiration Date be later than 10 years from
      the
      Date of Grant.

     

    (b) Exercise
      of Option.
      Except
      as provided in the Plan and in paragraphs 3, 4, 5 or 6 of this Agreement, this
      Option shall become exercisable at the time or times set forth on Exhibit
      A,
      attached hereto. Once this Option has become exercisable, it shall continue
      to
      be exercisable until the earlier of the termination of the Participant’s rights
      hereunder pursuant to paragraphs 3, 4, 5 or 6 of this Agreement or until the
      Expiration Date. A partial exercise of this Option shall not affect the
      Participant’s right to exercise the Option with respect to the remaining shares
      of Common Stock, subject to the conditions of the Plan and this
      Agreement.

     

    (c) Method
      of Exercise and Payment for Shares.
      This
      Option shall be exercised by delivering written notice of exercise to the
      attention of the Company’s Secretary at the Company’s address specified in
      paragraph 11 below. The exercise date shall be the date of delivery of the
      notice of exercise. Such notice must be accompanied by payment of the Option
      price in full. The Participant may pay part or all of the Option price and
      any
      applicable withholdings (i) in cash, (ii) by certified or bank cashier’s check,
      (iii) by surrendering shares of Common Stock to the Company that the Participant
      already owns, (iv) by a cashless exercise through a broker, (v) by any other
      method the Committee authorizes or (vi) by any combination of the aforementioned
      methods of payment. If shares of Common Stock are used to pay part or all of
      the
      Option price, the sum of the cash and cash equivalent and the Fair Market Value
      (determined as of the day preceding the date of exercise) of the shares of
      Common Stock surrendered must not be less than the Option price of the shares
      of
      Common Stock for which the Option is being exercised.

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (d) Transferability.
      Except
      as provided herein, this Option is nontransferable. During the Participant's
      lifetime, only the Participant may exercise this Option. This Option may be
      transferred by will or the laws of descent and distribution and, notwithstanding
      the foregoing, during the Participant's lifetime, may be transferred by the
      Participant to the Participant's children, grandchildren, spouse, one or more
      trusts for the benefit of such family members or a partnership in which such
      family members are the only partners, on such terms and conditions as the
      Committee may provide. Any such transfer will be permitted only if (i) the
      Participant does not receive any consideration for the transfer and (ii) the
      Committee expressly approves the transfer. Any transferee to whom this Option
      is
      transferred shall be bound by the same terms and conditions that govern this
      Option; provided, however, that the transferee may not transfer this Option
      except by will or the laws of descent and distribution. No right or interest
      of
      the Participant in this Option shall be liable for, or subject to, any lien,
      obligation or liability of the Participant.

     

    3. Exercise
      in the Event of Death.
      This
      Option shall be exercisable for all or part of the number of shares of Common
      Stock that the Participant is entitled to purchase pursuant to paragraph 2(b)
      as
      of the date of the Participant’s death, reduced by the number of shares for
      which the Participant previously exercised the Option, in the event the
      Participant dies while employed by the Company or any Affiliate and prior to
      the
      Expiration Date and the termination of the Participant’s rights under paragraphs
      4, 5 or 6 of this Agreement. In that event, this Option may be exercised by
      the
      Participant’s estate, or the person or persons to whom his rights under this
      Option shall pass by will or the laws of descent and distribution, for the
      remainder of the period preceding the Expiration Date or within one year of
      the
      date the Participant dies, whichever period is shorter.

     

    4. Exercise
      in the Event of Disability.
      This
      Option shall be exercisable for all or part of the number of shares of Common
      Stock that the Participant is entitled to purchase pursuant to paragraph 2(b)
      as
      of the date the Participant becomes “Disabled,” as defined below, reduced by the
      number of shares for which the Participant previously exercised the Option,
      if
      the Participant becomes Disabled while employed by the Company or any Affiliate
      and prior to the Expiration Date and the termination of the Participant’s rights
      under paragraphs 3, 5 or 6 of this Agreement. In that event, the Participant
      may
      exercise this Option for the remainder of the period preceding the Expiration
      Date or within one year of the date he ceases to be employed by the Company
      or
      any Affiliate on account of being Disabled, whichever period is shorter.
“Disabled” means totally and permanently disabled within the meaning of the
      Company’s group long term disability plan then in effect or, if no such plan
      exists, “Disabled” means unable
      to
      engage in any substantial gainful activity by reason of any medically
      determinable physical or mental impairment which can be expected to result
      in
      death or which has lasted or can be expected to last for a continuous period
      of
      not less than 12 months. The
      Committee, in its sole discretion, shall determine whether the Participant
      is
      Disabled for purposes of this Agreement.

     

    
      
         

        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    5. Exercise
      After Termination of Employment.
      This
      Option shall be exercisable for all or part of the number of shares of Common
      Stock that the Participant is entitled to purchase pursuant to paragraph 2(b)
      as
      of the date the Participant ceases to be employed by the Company or any
      Affiliate, reduced by the number of shares for which the Participant previously
      exercised the Option, if the Participant ceases to be employed by the Company
      or
      any Affiliate other than on account of death, becoming Disabled or being
      terminated for Cause prior to the Expiration Date and the termination of the
      Participant’s rights under paragraphs 3, 4 or 6 of this Agreement. In that
      event, the Participant may exercise this Option for the remainder of the period
      preceding the Expiration Date or until the date that is three months after
      the
      date he ceases to be employed by the Company or any Affiliate, whichever period
      is shorter.

     

    6. Termination
      of Employment for Cause.
      Notwithstanding any other provision of this Agreement, all rights hereunder
      will
      be immediately discontinued and forfeited, and the Company shall not have any
      further obligation hereunder to the Participant and this Option will not be
      exercisable for any number of shares of Common Stock (even if the Option
      previously became exercisable), on and after the time the Participant is
      discharged from employment with the Company or any Affiliate for
      Cause.

     

    7. Agreement
      to Terms of the Plan and Agreement.
      The
      Participant has received a copy of the Plan, has read and understands the terms
      of the Plan and this Agreement, and agrees to be bound by their terms and
      conditions. 

     

    8. Minimum
      Exercise.
      This
      Option may not be exercised for less than 1,000 shares of Common Stock unless
      it
      is exercised for the full number of shares of Common Stock that remain subject
      to the Option.

     

    9. Fractional
      Shares.
      Fractional shares shall not be issuable hereunder, and
      when
      any provision hereof may entitle the Participant to a fractional share, such
      fractional share shall be disregarded.

     

    10. Change
      in Capital Structure.
      The
      terms of this Option shall be adjusted in accordance with the terms and
      conditions of the Plan as the Committee determines is equitably required in
      the
      event the Company effects one or more stock dividends, stock splits,
      subdivisions or consolidations of shares or other similar changes in
      capitalization.

     

    11. Notice.
      Any
      notice or other communication given pursuant to this Agreement, or in any way
      with respect to this Option, shall be in writing and shall be personally
      delivered or mailed by United States registered or certified mail, postage
      prepaid, return receipt requested, to the following addresses:

     

    
      	 	
              If
                to the Company:

            	
              Canglongdao
                Science Park of Wuhan

            
	 	 	
              East
                Lake Hi-Tech Development Zone

            
	 	 	
              Wuhan,
                Hubei 430200

            
	 	 	
              People’s
                Republic of China

            

    

     

    
      
         

        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    
      	 	
              If
                to the Participant:

            	 
	 	 	 
	 	 	 

    

     

    12. No
      Right to Continued Employment.
      This
      Option does not confer upon the Participant any right with respect to continued
      employment by the Company or any Affiliate, nor shall it interfere in any way
      with the right of the Company or any Affiliate to terminate the Participant’s
      employment at any time without assigning a reason therefor.

     

    13. No
      Stockholder Rights.
      The
      Participant shall not have any rights as a stockholder with respect to shares
      of
      Common Stock subject to the Option until the date of exercise of the Option
      and
      the issuance of the shares that are being acquired.

     

    14. Binding
      Effect.
      Subject
      to the limitations stated above and in the Plan, this Agreement shall be binding
      upon and inure to the benefit of the legatees, distributees, transferees and
      personal representatives of the Participant and the successors of the
      Company.

     

    15. Conflicts.
      In the
      event of any conflict between the provisions of the Plan and the provisions
      of
      this Agreement, the provisions of the Plan shall govern. All references herein
      to the Plan shall mean the Plan as in effect on the date hereof.

     

    16. Counterparts.
      This
      Agreement may be executed in a number of counterparts, each of which shall
      be
      deemed an original, but all of which together shall constitute one in the same
      instrument.

     

    17. Miscellaneous.
      The
      parties agree to execute such further instruments and take such further actions
      as may be necessary to carry out the intent of the Plan and this Agreement.
      This
      Agreement and the Plan shall constitute the entire agreement of the parties
      with
      respect to the subject matter hereof.

     

    18. Governing
      Law.
      This
      Agreement shall be governed by the laws of the State of Nevada, except to the
      extent federal law or the laws of the P.R.C. apply.

     

    19. Tax
      Consequences and Section 409A.
      The
      Participant acknowledges that there may be tax consequences upon the acquisition
      and disposition of shares of Common Stock acquired upon exercise of this Option,
      and that the Participant should consult a tax adviser prior to such acquisition
      or disposition. The Option is intended to be exempt from the requirements of
      Section 409A of the Code. Notwithstanding the preceding, the Company and its
      Affiliates shall not be liable to the Participant or any other person if the
      Internal Revenue Service or any court or other authority having jurisdiction
      over such matter determines for any reason that this Agreement is subject to
      taxes, penalties or interest as a result of failing to comply with Section
      409A
      of the Code.

     

    20. Withholding
      Obligations.
      The
      Participant shall be responsible for satisfying all applicable income and
      employment tax withholding obligations with respect to the exercise of the
      Option (i) in cash, (ii) by certified or bank cashier’s check, (iii) by
      surrendering shares of Common Stock to the Company that the Participant already
      owns, (iv) by a cashless exercise through a broker, (v) by any other method
      the
      Committee authorizes or (vi) by any combination of the aforementioned methods
      of
      payment. 

     

    
      
         

        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, the Company has caused this Agreement to be signed by a duly
      authorized officer, and the Participant has affixed his signature
      hereto.

     

    
      	
              COMPANY:

            
	 
	
              WUHAN
                GENERAL GROUP (CHINA), INC.

            
	 
	
              By:

            	 
	
              Name:

            	 
	
              Title:

            	 
	 	 
	
              PARTICIPANT:

            
	 
	 
	
              Participant

            

    

     

    
      
         

        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    EXHIBIT
      A

    Vesting
      Provisions

    

    Except
      as
      provided in paragraphs
      3, 4, 5
      or 6 of the Agreement, this Option shall become exercisable as set forth below.
      

     

    1. Regular
      Vesting

    

    Service-Based
      Vesting 

    [
      ] The
      Option shall become exercisable with respect to [_______]
      percent
      ([___]%)
      of the
      shares of Common Stock subject to the Option on the [_______]
      annual
      anniversaries of the Date of Grant and then with respect to the remaining
[_______]
      ([____]%)
      percent of the shares of Common Stock subject to the Option on the [_______]
      annual
      anniversary of the Date of Grant, provided the Participant is still employed
      by
      the Company or any Affiliate at each such time. 

    

    Performance
      and Service-Based Vesting

    [
      ] The
Option
      shall become exercisable with respect to the percentage of shares of Common
      Stock set forth below with respect to each applicable vesting date, provided
      that, at each such time, (a) the Participant is still employed by the Company
      or
      any Affiliate and (b) the performance measures set forth below have been met.
      Notwithstanding the foregoing, if the applicable performance measures are not
      met at a specified vesting date, but the cumulative performance measures are
      met
      at a subsequent vesting date, then the Option shall become exercisable with
      respect to that percentage of shares of Common Stock specified for the
      applicable vesting date plus the percentage of shares of Common Stock for prior
      vesting dates that did not become exercisble solely because of a failure to
      meet
      the performance measures for the prior vesting dates. 

     

    
      	
              Vesting
                Date

            	
               

            	
              Performance
                Target

            	
               

            	
              Percentage of Shares
                

              for which Option may
                

              be Exercised

            	
               

            	
              Cumulative
                

              Performance
                

              Target

            
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 

    

     

    
      
         

        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    2. Accelerated
      Vesting

    

    Vesting
      upon Death 

    [
      ]
      Notwithstanding the foregoing, the Option shall become exercisable with respect
      to one-hundred percent (100%) of the shares of Common Stock subject to the
      Option if the Participant dies while still employed by the Company or any
      Affiliate. 

    

    Vesting
      upon Disability

    [
      ]
      Notwithstanding the foregoing, the Option shall become exercisable with respect
      to one-hundred percent (100%) of the shares of Common Stock subject to the
      Option if the Participant becomes Disabled while still employed by the Company
      or any Affiliate. 

    

    Vesting
      upon Retirement 

    [
      ]
      Notwithstanding the foregoing, the Option shall become exercisable with respect
      to one-hundred percent (100%) of the shares of Common Stock subject to the
      Option if the Participant retires from the Company and its Affiliates after
      reaching age 65. 

    

    Vesting
      upon a Change in Control

    [
      ]
      Notwithstanding the foregoing, the Option shall become exercisable with respect
      to one-hundred percent (100%) of the shares of Common Stock subject to the
      Option upon a Change in Control, provided the Participant is still employed
      by
      the Company or any Affiliate at such time. 

    
      
         

        
        

      

      
        7Exhibit
      10.4

     

    OUTSIDE
      DIRECTOR COMPENSATION PACKAGE

     

    Effective
      January 1, 2007, Wuhan General Group (China), Inc. (the “Company”) shall pay
      each outside director who is independent in accordance with the Nasdaq and
      SEC
      rules governing director independence (an “Eligible Director”) the following for
      service to the Company:

     

    
      
        	
                Annual
                  Cash Retainer

              	 	
                $

              	
                15,000

              	 
	 	 	 	 	 
	
                Attendance
                  Fee for Each Board or Committee Meeting attended
                  by Eligible Directors residing in Wuhan, China or attended
                  by telephone for Eligible Directors residing outside
                  of Wuhan, China

              	 	
                
                

                $

              	
                
                

                1,000

              	 
	 	 	 	 	 
	
                Attendance
                  Fee for Each Board or Committee Meeting attended
                  in person by an Eligible Director residing outside of
                  Wuhan, China

              	 	
                
                

                $

              	
                
                

                5,000

              	 

      

    

    

    In
      addition, the Chairman of the Company’s Audit Committee will receive an
      additional annual fee of $5,000. 

     

    In
      addition, each Eligible Director will receive the option to purchase 20,000
      shares of the Company’s Common Stock per year. The stock options will vest in
      four equal quarterly installments over one year.

     

    The
      Company will also reimburse all reasonable out-of-pocket expenses that are
      incurred in connection with service to the Company.

     

    If
      the
      Company’s Common Stock becomes listed on NASDAQ, the annual cash retainer will
      increase to $20,000 per year.

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