Document:

Exhibit 10.2

 

INDEMNIFICATION AGREEMENT

 

This Indemnification Agreement (the “Agreement”) is
entered into as of
                    
by and between Lentuo International Inc., a Cayman Islands company (the “Company”)
and the undersigned, a director or officer of the Company (the “Indemnitee”).

 

RECITALS

 

1.                                       The Company
recognizes that highly competent persons are becoming more reluctant to serve
corporations as directors or in other capacities unless they are provided with
adequate protection through insurance or adequate indemnification against risks
of claims and actions against them arising out of their services to the
corporation.

 

2.                                       The Board of
Directors of the Company (the “Board”) has determined that the inability to
attract and retain highly competent persons to serve the Company is detrimental
to the best interests of the Company and its shareholders and that it is
reasonable and necessary for the Company to provide adequate protection to such
persons against risks of claims and actions against them arising out of their
services to the corporation.

 

3.                                       The Company and
the Indemnitee do not regard the indemnities available under the Company’s
current memorandum and articles of association (the “Articles of Association”)
as adequate to protect the Indemnitee against the risks associated with his
service to the Company.

 

4.                                       The Company is
willing to indemnify the Indemnitee to the fullest extent permitted by
applicable law, and the Indemnitee is willing to serve and continue to serve
the Company on the condition that he be so indemnified.

 

AGREEMENT

 

In consideration of the premises and the covenants
contained herein, the Company and the Indemnitee do hereby covenant and agree
as follows:

 

I.                                       Definitions

 

The following terms shall have the meanings defined
below:

 

Disinterested Director means a director of the Company who is not and was not a party to the
Proceeding in respect of which indemnification is sought by the Indemnitee.

 

Change in Control shall be deemed to have occurred if, on or after the date of this
Agreement, (i) any “person” (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)), other than (a) a trustee or other fiduciary holding securities
under an employee benefit plan of the Company acting in such capacity;
(b) a corporation owned directly or indirectly by the shareholders of the
Company in substantially the same proportions as their ownership of 

 

 

ordinary shares of the Company; or (c) any
current beneficial shareholder or group, as defined by Rule 13d-5 of the
Exchange Act, including the heirs, assigns and successors thereof, of
beneficial ownership, within the meaning of Rule 13d-3 of the Exchange
Act, of securities possessing more than 50% of the total combined voting power
of the Company’s outstanding securities; hereafter becomes the “beneficial
owner” (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing more than 20% of the
total combined voting power represented by the Company’s then outstanding
ordinary shares, (ii) during any period of two consecutive years,
individuals who at the beginning of such period constitute the Board and any
new director whose election by the Board or nomination for election by the
Company’s shareholders was approved by a vote of at least two thirds
(2/3) of the directors then still in office who either were directors at
the beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a majority thereof,
or (iii) the shareholders of the Company approve a merger or consolidation
of the Company with any other corporation other than a merger or consolidation
which would result in the ordinary shares of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into ordinary shares of the surviving entity)
at least 80% of the total voting power represented by the ordinary shares of
the Company or such surviving entity outstanding immediately after such merger
or consolidation, or the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of (in one transaction or a series of related transactions) all or
substantially all of the Company’s assets.

 

Expenses shall include damages, judgments, fines, penalties, settlements and
costs, attorneys’ fees and disbursements and costs of attachment or similar
bond, investigations, liabilities, losses, taxes, any expenses paid or incurred
in connection with investigating, defending, being a witness in, participating
in (including on appeal), or preparing for any of the foregoing in, any
Proceeding, and any taxes, interests, assessments or other charges imposed as a
result of the actual or deemed receipt of any payments under this Agreement.

 

Indemnifiable Event means any event or occurrence that takes place either before or after
the execution of this Agreement, related to the fact that the Indemnitee is or
was a director or an officer 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 or other entity, including
services with respect to employee benefit plans, or was a director or officer
of an entity that was a predecessor of the Company or another entity at the
request of such predecessor entity, or related to anything done or not done by
the Indemnitee in any such capacity.

 

Independent Counsel means a law firm, or a member of a law firm, that is experienced in
matters of corporation law and neither presently is, nor in the past five
(5) years has been, retained to represent (i) the Company or the
Indemnitee in any matter material to either such party (other than with respect
to matters concerning the Indemnitee under this Agreement, or of other
indemnitees under similar indemnification agreements), or (ii) any other
party to the Proceeding giving rise to a claim for indemnification hereunder.
Notwithstanding the foregoing, the term “Independent 

 

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Counsel” shall not include any person who, under
the applicable standards of professional conduct then prevailing, would have a
conflict of interest in representing either the Company or the Indemnitee in an
action to determine the Indemnitee’s rights under this Agreement.

 

Participant means a person who is a party to, or witness or participant (including
on appeal) in, a Proceeding.

 

Proceeding means any threatened, pending, or completed action, suit or proceeding,
or any inquiry, hearing or investigation, whether civil, criminal,
administrative, investigative or other, including any appeal thereof, in which
the Indemnitee may be or may have been involved as a party or otherwise by
reason of an Indemnifiable Event, including, without limitation, any
threatened, pending, or completed action, suit or proceeding by or in the right
of the Company.

 

Reviewing Party means (A) the Board by a majority vote of a quorum consisting of
Disinterested Directors, or (B) if a quorum of the Board consisting of
Disinterested Directors is not obtainable or, even if obtainable, said
Disinterested Directors so direct, Independent Counsel in a written
opinion to the Board, a copy of which shall be delivered to the Indemnitee.

 

II.                                   Agreement To Indemnify

 

1.                                       General
Agreement.  In the
event the Indemnitee was, is, or becomes a Participant in, or is threatened to
be made a Participant in, a Proceeding, the Company shall indemnify the
Indemnitee from and against any and all Expenses which the Indemnitee incurs or
becomes obligated to incur in connection with such Proceeding, to the fullest
extent permitted by applicable law.

 

2.                                       Partial
Indemnification.  If the
Indemnitee is entitled under any provision of this Agreement to indemnification
by the Company for a portion of Expenses, but not for the total amount of
Expenses, the Company shall indemnify the Indemnitee for the portion of such
Expenses to which the Indemnitee is entitled.

 

3.                                       Exclusions.  Notwithstanding anything in this Agreement to
the contrary, the Indemnitee shall not be entitled to indemnification under
this Agreement:

 

(a)                                  to the extent
that payment is actually made to the Indemnitee under a valid, enforceable and
collectible insurance policy;

(b)                                 to the extent
that the Indemnitee is indemnified and actually paid other than pursuant to
this Agreement;

(c)                                  in connection
with any Proceeding initiated by the Indemnitee against the Company, any
director or officer of the Company or any other party, and not by way of
defense, unless (i) the Company has joined in or the Reviewing Party (as
hereinafter defined) has consented to the initiation of such Proceeding; or
(ii) the Proceeding is one to enforce indemnification rights under this
Agreement or any applicable law;

 

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(d)                                 for a
disgorgement of profits made from the purchase and sale by the Indemnitee of
securities pursuant to Section 16(b) of the Exchange Act or similar
provisions of any applicable U.S. state statutory law or common law;

(e)                                  brought about
by the dishonesty or fraud of the Indemnitee seeking payment hereunder;
provided, however, that the Indemnitee shall be protected under this Agreement
as to any claims upon which suit may be brought against him by reason of any
alleged dishonesty on his part, unless a judgment or other final adjudication
thereof adverse to the Indemnitee establishes that he committed (i) acts
of active and deliberate dishonesty, (ii) with actual dishonest purpose
and intent, and (iii) which acts were material to the cause of action so
adjudicated;

(f)                                    for any
judgment, fine or penalty which the Company is prohibited by applicable law
from paying as indemnity;

(g)                                 arising out of
the Indemnitee’s personal tax matter; or

(h)                                 arising out of
the Indemnitee’s breach of an employment agreement with the Company (if any) or
any other agreement with the Company or any of its subsidiaries.

 

4.                                       No Employment
Rights.  Nothing in this Agreement is
intended to create in the Indemnitee any right to continued employment with the
Company.

 

5.                                       Contribution.  If the indemnification provided in this
Agreement is unavailable and may not be paid to the Indemnitee for any reason
other than those set forth in Section II. 3, then the Company shall
contribute to the amount of Expenses 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 by the Indemnitee on the other hand from the transaction
from which such Proceeding arose, and (ii) the relative fault of the
Company on the one hand and of the Indemnitee on the other hand in connection
with the events which resulted in such Expenses, 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 hand 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 II.
5 were determined by pro rata allocation or any other method of allocation
which does not take account of the foregoing equitable considerations.

 

III.                               Indemnification Process

 

1.                                       Notice and
Cooperation By the Indemnitee.  The Indemnitee shall give the Company notice
in writing as soon as practicable of any claim made against the Indemnitee for
which indemnification will or could be sought under this Agreement.  Notice to the Company shall be given in
accordance with Section VI.7 below. 
In 

 

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addition,
the Indemnitee shall give the Company such information and cooperation as the
Company may reasonably request.

 

2.                                       Indemnification
Payment.

 

(a)                                  Reimbursement of Expenses.  To the extent the Indemnitee
has not requested any advanced payment of Expenses from the Company, the
Indemnitee shall be entitled to receive reimbursement for the Expenses incurred
in connection with a Proceeding from the Company as soon as practicable after the
Indemnitee makes a written request to the Company for reimbursement.

 

(b)                                 Determination by the Reviewing Party.  Notwithstanding the foregoing,
(i) the obligations of the Company under Section II.1 shall be
subject to the condition that the Reviewing Party shall not have determined (in
a written opinion, in any case in which the Independent Counsel referred to in Section III.2(e) hereof
is involved) that the Indemnitee would not be permitted to be indemnified under
applicable law or the Company’s Articles of Association, and (ii) the
obligation of the Company to make an advance payment of Expenses to the
Indemnitee pursuant to Section III. 2(a) shall be subject to the
condition that, if, when and to the extent that the Reviewing Party determines
that the Indemnitee would not be permitted to be so indemnified under
applicable law or the Company’s Articles of Association, the Company shall be
entitled to be reimbursed by the Indemnitee (who hereby agrees to reimburse the
Company) for all such amounts theretofore paid; provided, however, that if the
Indemnitee has commenced or thereafter commences legal proceedings in a court
of competent jurisdiction to secure a determination that the Indemnitee should
be indemnified under applicable law, any determination made by the Reviewing
Party that the Indemnitee would not be permitted to be indemnified under
applicable law shall not be binding and the Indemnitee shall not be required to
reimburse the Company for any advanced Expenses until a final judicial
determination is made with respect thereto (as to which all rights of appeal
therefrom have been exhausted or lapsed). The the Indemnitee’s obligation to
reimburse the Company for any advanced Expenses shall be unsecured and no
interest shall be charged thereon. If there has not been a Change in Control,
the Reviewing Party shall be selected by the Board, and if there has been such
a Change in Control (other than a Change in Control which has been approved by
a majority of the Company’s Board who were directors immediately prior to such
Change in Control), the Reviewing Party shall be the Independent Counsel
referred to in Section III.2(e) hereof.

 

(c)                                  Enforcement of Indemnification Rights.  If there has been no
determination by the Reviewing Party or if the Reviewing Party determines that
the Indemnitee substantively would not be permitted to be indemnified in whole
or in part under applicable law, or if the Indemnitee has not otherwise been
paid in full within 30 days after a written demand has been received by the Company,
the Indemnitee shall have the right to commence litigation in any court having
subject matter jurisdiction thereof and in which venue is proper to recover the
unpaid amount of the demand (an “Enforcement Proceeding”) and, if successful in
whole or in part, the Indemnitee shall be entitled to be paid any and all
Expenses in connection with such Enforcement Proceeding. The Company hereby
consents to service of process and to appear in any such proceeding.

 

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(d)                                 Change in Control.  The Company agrees that if there is a Change
in Control of the Company (other than a Change in Control which has been
approved by a majority of the Company’s Board who were directors immediately
prior to such Change in Control) then, with respect to all matters thereafter
arising concerning the rights of Indemnitees to payments of Expenses under this
Agreement or any other agreement or under the Company’s Articles of Association
as now or hereafter in effect, Independent Counsel shall be selected by
the Indemnitee and approved by the Company (which approval shall not be
unreasonably withheld). Such counsel, among other things, shall render its
written opinion to the Company and the Indemnitee as to whether and to what
extent the Indemnitee would be permitted to be indemnified under applicable
law, and the Company agrees to abide by such opinion. The Company agrees to pay
the reasonable fees of the Independent Counsel referred to above and to fully
indemnify such counsel against any and all expenses (including attorneys’
fees), claims, liabilities and damages arising out of or relating to this
Agreement or its engagement pursuant hereto.

 

3.                                       Assumption of
Defense.  In the event the Company is
obligated under this Agreement to advance or bear any Expenses for any
Proceeding against the Indemnitee, the Company shall be entitled to assume the
defense of such Proceeding, with counsel approved by the Indemnitee, upon
delivery to the Indemnitee of written notice of its election to do so. After
delivery of such notice, approval of such counsel by the Indemnitee in writing
and the retention of such counsel by the Company, the Company will not be
liable to the Indemnitee under this Agreement for any fees of counsel
subsequently incurred by the Indemnitee with respect to the same Proceeding,
unless (i) the employment of counsel by the Indemnitee has been previously
authorized by the Company, (ii) the Indemnitee shall have reasonably
concluded that, based on written advice of counsel, there may be a conflict of
interest of such counsel retained by the Company between the Company and the
Indemnitee in the conduct of any such defense, or that counsel selected by the
Company may not be adequately representing the Indemnitee, or (iii) the
Company ceases or terminates the employment of such counsel with respect to the
defense of such Proceeding, in any of which events the fees and expenses of the
Indemnitee’s counsel shall be at the expense of the Company. At all times, the
Indemnitee shall have the right to employ counsel in any Proceeding at the
Indemnitee’s expense.

 

4.                                       Defense to
Indemnification, Burden of Proof and Presumptions.  It shall be a defense to any action brought
by the Indemnitee against the Company to enforce this Agreement that it is not
permissible under this Agreement or applicable law for the Company to indemnify
the Indemnitee for the amount claimed. In connection with any such action or
any determination by the Reviewing Party or otherwise as to whether the
Indemnitee is entitled to be indemnified under this Agreement, the burden of
proving such a defense or determination shall be on the Company. Neither the
failure of the Reviewing Party or the Company to have made a determination
prior to the commencement of such action by the Indemnitee that indemnification
is proper under the circumstances because the Indemnitee has met the standard
of conduct set forth in applicable law, nor an actual determination by the
Reviewing Party or the Company that the Indemnitee had not met such applicable
standard of conduct shall be a defense to the 

 

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action
or create a presumption that the Indemnitee has not met the applicable standard
of conduct.

 

5.                                       No Settlement
Without Consent.  Neither
party to this Agreement shall settle any Proceeding in any manner that would
impose any damage, loss, penalty or limitation on the Indemnitee without the
other party’s written consent. Neither the Company nor the Indemnitee shall
unreasonably withhold its consent to any proposed settlement.

 

6.                                       Company
Participation.  Subject to Section II.5,
the Company shall not be liable to indemnify the Indemnitee under this
Agreement with regard to any judicial action if the Company was not given a
reasonable and timely opportunity, at its expense, to participate in the
defense, conduct and/or settlement of such action.

 

IV.                              Director and Officer Liability Insurance

 

1.                                       Liability
Insurance.  The Company
shall obtain and maintain a policy or policies of insurance with reputable insurance
companies providing the officers and directors of the Company with coverage for
losses incurred in connection with their services to the Company or to ensure
the Company’s performance of its indemnification obligations under this
Agreement.  To the extent the Company
determines that it is no longer practicable for the Company to maintain such
insurances, it shall notify promptly its directors and officers before it
terminates such insurances and such termination must be approved by a majority
of the Company’s directors.

 

2.                                       Coverage of the
Indemnitee.  To the
extent the Company maintains an insurance policy or policies providing
directors’ and officers’ liability insurance, the Indemnitee shall be covered
by such policy or policies, in accordance with its or their terms, to the
maximum extent of the coverage available for any of the Company’s directors or
officers.

 

3.                                       No Obligation.  Notwithstanding the foregoing, the Company
shall have no obligation to obtain or maintain any director and officer insurance
policy if a majority of the Company’s directors determines in good faith that
such insurance is not reasonably available in the case that (i) premium
costs for such insurance are disproportionate to the amount of coverage
provided, (ii) the coverage provided by such insurance is limited by
exclusions so as to provide an insufficient benefit, or (iii) the
Indemnitee is covered by similar insurance maintained by a parent or subsidiary
of the Company.

 

V.                                  Non-Exclusivity; Federal Preemption; Term

 

1.                                       Non-Exclusivity.  The indemnification provided by this
Agreement shall not be deemed exclusive of any rights to which the Indemnitee
may be entitled under the Articles of Association, any vote of shareholders or
directors, applicable law or any written agreement between the Indemnitee and
the Company (including its subsidiaries and affiliates).  The indemnification provided under this
Agreement shall continue to be available to the Indemnitee for any action taken
or not taken while serving in an 

 

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indemnified
capacity even though he may have ceased to serve in any such capacity at the
time of any Proceeding.

 

2.                                       Federal
Preemption. 
Notwithstanding the foregoing, both the Company and the Indemnitee
acknowledge that in certain instances, U.S. federal law or public policy may
override applicable law and prohibit the Company from indemnifying its
directors and officers under this Agreement or otherwise.  Such instances include, but are not limited
to, the U.S. Securities and Exchange Commission’s (the “SEC”)
prohibition on indemnification for liabilities arising under certain U.S.
federal securities laws.  The Indemnitee
understands and acknowledges that the Company has undertaken or may be required
in the future to undertake with the SEC to submit the question of
indemnification to a court in certain circumstances for a determination of the
Company’s right under public policy to indemnify the Indemnitee.

 

3.                                       Duration of
Agreement.  All
agreements and obligations of the Company contained herein shall continue
during the period the Indemnitee is an officer and/or a director 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 or
other enterprise) and shall continue thereafter so long as the Indemnitee shall
be subject to any Proceeding by reason of his former or current capacity at the
Company or any other enterprise, including service with respect to employee
benefit plans) at the Company’s request, whether or not he is acting or serving
in any such capacity at the time any Expense is incurred for which
indemnification can be provided under this Agreement. This Agreement shall
continue in effect regardless of whether the Indemnitee continues to serve as
an officer and/or a director of the Company or any other enterprise at the
Company’s request.

 

VI.                              Miscellaneous

 

1.                                       Amendment of
this Agreement.  No
supplement, modification, or amendment of this Agreement shall be binding
unless executed in writing by the parties hereto. No waiver of any of the
provisions of this Agreement shall operate as a waiver of any other provisions
(whether or not similar), nor shall such waiver constitute a continuing waiver.
Except as specifically provided in this Agreement, no failure to exercise or
any delay in exercising any right or remedy shall constitute a waiver.

 

2.                                       Subrogation.  In the event of payment to the Indemnitee by
the Company 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 papers required and shall do everything that may be necessary to
secure such rights, including the execution of such documents necessary to
enable the Company to bring suit to enforce such rights.

 

3.                                       Assignment;
Binding Effect.  Neither
this Agreement nor any of the rights or obligations hereunder may be assigned
by either party hereto without the prior written consent of the other party;
except that the Company may, without such consent, assign all such rights and
obligations to a successor in interest to the Company which assumes all
obligations of the Company under this Agreement in a written agreement in form
and 

 

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substance
satisfactory to the Indemnitee. 
Notwithstanding the foregoing, this Agreement shall be binding upon and
inure to the benefit of and be enforceable by and against the parties hereto
and the Company’s successors (including any direct or indirect successor by
purchase, merger, consolidation, or otherwise to all or substantially all of
the business and/or assets of the Company) and assigns, as well as the
Indemnitee’s spouses, heirs, and personal and legal representatives.

 

4.                                       Severability
and Construction.  Nothing in
this Agreement is intended to require or shall be construed as requiring the
Company to do or fail to do any act in violation of applicable law. The Company’s
inability, pursuant to a court order, to perform its obligations under this
Agreement shall not constitute a breach of this Agreement.  In addition, if any portion of this Agreement
shall be held by a court of competent jurisdiction to be invalid, void, or
otherwise unenforceable, the remaining provisions shall remain enforceable to
the fullest extent permitted by applicable law. 
The parties hereto acknowledge that they each have opportunities to have
their respective counsels review this Agreement.  Accordingly, this Agreement shall be deemed
to be the product of both of the parties hereto, and no ambiguity shall be
construed in favor of or against either of the parties hereto.

 

5.                                       Counterparts.  This Agreement may be executed in two
counterparts, both of which taken together shall constitute one instrument.

 

6.                                       Governing Law.  This agreement and all acts and transactions
pursuant hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the State of
New York, U.S.A., without giving effect to conflicts of law provisions thereof.

 

7.                                       Notices.  All notices, demands, and other
communications required or permitted under this Agreement shall be made in
writing and shall be deemed to have been duly given if delivered by hand,
against receipt, on the date of delivery, or mailed, on the third business day
after mailing, postage prepaid, certified or registered mail, return receipt
requested, and addressed to the Company at:

 

Lentuo International Inc.

A-18 Huagong Road, Guangqumenwai

Chaoyang District, Beijing 100124

People’s Republic of China

Attention: [·]

 

and to the Indemnitee at:

 

[Name]

[Address]

 

Notice of change of address shall be effective only
when done in accordance with this Section.

 

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8.                                       Certain
Relationships.  The
obligations and rights created under this Agreement shall not be affected by
any amendment to the Company’s Articles of Association or any other agreement
or instrument to which the Indemnitee is not a party, and shall not diminish
any other rights which the Indemnitee now or in the future has against the
Company or any other person or entity.

 

9.                                       Acknowledgment.  The Company expressly acknowledges that it
has entered into this Agreement and assumed the obligations imposed on the
Company under this Agreement in order to induce the Indemnitee to serve or to
continue to serve as a director or officer and acknowledges that the Indemnitee
is relying on this Agreement in serving or continuing to serve in such
capacity.  The Company further agrees to
stipulate in any court proceeding that the Company is bound by all of the
provisions of this Agreement.

 

10.                                 Period of
Limitations.  No legal
action shall be brought and no cause of action shall be asserted by or in the
right of the Company against the Indemnitee, or the Indemnitee’s estate, heirs,
executors, administrators or personal or legal representatives after the
expiration of two years from the date of accrual of such cause of action, and
any claim or cause of action of the Company shall be extinguished and deemed
released unless asserted by the timely filing of a legal action within such
two-year period; provided, however, that if any shorter period of limitations
is otherwise applicable to any such cause of action, such shorter period shall
govern.

 

11.                                 Entire
Agreement.  This
Agreement constitutes the entire agreement and supersedes all prior agreements
and understandings, both written and oral, between the parties with respect to
the subject matter hereof.

 

(Signature page follows)

 

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IN WITNESS WHEREOF, the parties hereto execute this
Agreement as of the date first written above.

 

 

Lentuo International Inc.

 

 

	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  

INDEMNITEE

	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  

 

11Exhibit 10.3

 

Form of Key Employee Agreement

 

Date:

 

Name:

Address:

 

Dear
Mr./Ms. [·]:

 

On
behalf of Lentuo International Inc., a limited liability company organized
under the laws of the Cayman Islands (the “Company”), I am pleased to
offer you the following appointment upon and subject to the following terms and
conditions:

 

1.                                      Position and Duties

 

Your
position will be [·].  In this role, you will report directly to [·].  Your
duties will be commensurate with your position.

 

Except
as may otherwise be approved in advance by the
Board of Directors, and except during vacation periods and reasonable
periods of absence due to sickness, personal injury or other disability, you
shall devote your full working time during the term of this letter of agreement
to the services required of you under this letter of agreement.  You shall render your services exclusively to
the Company during the term of
this letter of agreement, and you shall use your best efforts, judgment and
energy to improve and advance the business and interests of the Company in a manner consistent with the duties of your position.

 

Notwithstanding
any contrary provision herein, during the term of this letter of agreement, (i) you
shall not work, in an independent, dependent or other capacity, for another
company or entity directly or indirectly competing with the Company, and (ii) you
shall not establish, purchase or acquire a direct or indirect interest in any
other company or entity that directly or indirectly competes with the Company,
provided that nothing in this clause shall preclude you from holding up to one
percent (1%) of shares or other securities of any company or entity directly or
indirectly competing with the Company that is listed on any securities exchange
or recognized securities market anywhere.

 

2.                                      Employment Term

 

Your
employment with the Company shall commence on [date] (the “Commencement Date”).  This letter of agreement shall have an
initial term of [nine (9)] years, commencing on the Commencement Date, unless
terminated earlier pursuant to the terms of this letter of agreement.  On every expiration date (the first
expiration date being the fifth anniversary of the Commencement Date), this
letter of agreement automatically shall renew for an additional one (1) year
(the last day of each such one-year period also to be considered an expiration
date) unless either you or the Company provides written notice of non-renewal
to the other party at least three 

 

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(3) months
prior to the automatic renewal date.  The
period of your employment under this letter of agreement is referred to herein
as the “Employment Term.”

 

3.                                      Working Hours, Compensation
and Benefits

 

i.                                          Working Hours.

 

Normal work hours shall be eight (8) hours
each day not including meals and rest, five (5) days per week, Monday to
Friday.  The parties agree that your base
salary specified in 3ii below takes into consideration the work you may
undertake outside normal office hours and your working hours shall be the “flexible
work hours,” which can ensure the proper completion of your work assignments
hereunder.

 

ii.                                       Gross Base Salary.

 

Your
gross base salary shall be RMB [·] per calendar year (pro rated for any portion
thereof), subject to any change in your position.  Base salary shall be paid in accordance with
the Company’s standard payroll practices.

 

iii.                                    Equity Compensation.

 

The Company may grant to you, under the Company’s
2010 Equity Incentive Plan, an option to purchase certain amount of ordinary
shares of the Company.  The exercise
price for this option shall be the “fair market value” of the Company’s
ordinary shares on the date of grant. 
The option shall vest according to the Company’s Equity Incentive Plan
and grant agreements.

 

iv.                                   Other Benefits.

 

You
will be eligible to participate in, and receive benefits in accordance with the
terms and conditions of, the Company’s standard benefits programs, which
currently include vacation, health care and pension.  The Company’s benefits programs may be
changed by the Company in its sole discretion at any time.  You are responsible for paying all taxes that
arise as a result of your participation in any benefit program.

 

v.                                      Expenses.

 

The
Company will reimburse you for reasonable travel and other expenses incurred in
the performance of your duties, in accordance with the Company’s expense
reimbursement policies.

 

4.                                      Confidentiality/Intellectual Property Rights

 

You
shall not, at any time during the Employment Term or after the termination of
your employment with the Company for any reason whatsoever (without limit in
point of time), unless authorized to do so by the Company or a court of
competent jurisdiction or pursuant to applicable laws, divulge or communicate
to any person, use for your own purposes or for any purposes other than those
of the Company, or cause any unauthorized disclosure or publication of, any
trade secrets, know-how or financial, trading or other information (i) relating
to the business and affairs of the Company or any Affiliate (as defined below) of the Company or any of their (the Company’s
or any Affiliate’s) customers,
clients, suppliers or business associates, (ii) relating to 

 

2

 

any
research, method, technique, process, design or invention which is carried out
or used by the Company, any Company Affiliate, or
any of their (the Company’s or any Affiliate’s)
customers, clients, suppliers or business associates, or (iii) in respect
of which the Company or any Affiliate of the
Company is bound by an obligation of confidence towards any third party (the “Confidential
Information”).  These restrictions shall
cease to apply to any information or knowledge that may (other than through any
unauthorized disclosure or default on your part) become available to the public
generally.  For purposes of this letter
of agreement, “Affiliate” of a specified Person means a Person who directly or
indirectly through one or more intermediaries, controls, is controlled by, or
is under common control with, the specified Person.  As used in the foregoing sentence, the term “control”
(including, with correlative meaning, the terms “controlling,” “controlled by”
and “under common control with”) means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract or
otherwise, or such other relationship as, in fact, constitutes actual control.   “Person” means
any natural person, corporation, limited liability corporation, unincorporated
organization, partnership, association, joint stock company, joint venture,
trust or government, or any agency or political subdivision of any government,
or any other entity.

 

As
a condition to your employment with the Company, you further agree that all
intellectual property rights (including, without limitation, copyright, design
right, trademark, know-how and patent, whether, as applicable, registered or
unregistered, filed or not filed) subsisting in all drawings, plans,
specifications, designs and other documents, assignments and works prepared or
produced by you at any time in the course of your employment with the Company
shall be the absolute property of the Company, and you shall, as soon as
possible upon the Company’s request and at your own expense, execute such
documents or do such other acts and things as the Company may require to vest
such rights in full in the Company.  You
agree to notify the Company promptly of any potential intellectual property
created by you during the Employment Term.

 

In the event the Company incurs damages by your breach
of the above confidentiality/intellectual property obligations, you shall pay
default damages in an amount equal to twelve (12) times  your
average monthly compensation during the twelve (12) months immediately
preceding your actual termination of employment (or, for purposes of the
average monthly compensation calculation, the actual working months if your
employment with the Company has been less than twelve (12) months).  If the Company’s damages cannot be fully
recovered by the foregoing, the Company is entitled to institute a claim for
damage through civil litigation.

 

5.                                      Non-Competition

 

i.                                          Non-Competition

 

By
signing this letter of agreement, you agree that for a period of maximum two (2) years
immediately following the termination of your relationship with the Company
(the “Non-Compete Period”) for any reason, whether with or without good cause
or for any or no cause, at the option either of the Company or yourself, with
or without notice, to the greatest extent permitted by applicable law, you will
not, without the prior written consent of the Company, (i) serve as a
partner, employee, consultant, officer, director, manager, agent, associate,
investor, or otherwise for, (ii) directly or indirectly, own, purchase,
organize or take preparatory steps for the organization of, (iii) build,
design, finance, acquire, lease, operate, manage, invest in, work or consult
for or otherwise affiliate with, any business competitive with or similar to,
or reasonably expected to be 

 

3

 

competitive
with or similar to, that engaged in, or reasonably expected to be engaged in,
by the Company or any Affiliate, including without limitation, providing research or product
development services to other companies. 
“Territory” shall mean the territory of the People’s Republic of China
(the “PRC”), including Hong Kong, Macau and Taiwan for the purpose of this
agreement.

 

By
signing this letter of agreement, you acknowledge that you will derive
significant value from the Company’s agreement to provide you with the
Confidential Information to enable you to optimize the performance of your
duties for the Company.  You further
acknowledge that your fulfillment of the obligations contained in this letter
of agreement, including, but not limited to, your obligation neither to
disclose nor to use the Confidential Information other than for the Company’s
exclusive benefit and your obligation not to compete contained in this
subsection (i) above, is necessary to protect the Confidential Information
of the Company and, consequently, to preserve the value and goodwill of the
Company.  You further acknowledge the
time, geographic and scope limitations of your obligations under this
subsection (i) above are reasonable, especially in light of the Company’s
desire to protect the Confidential Information, and that you will not be
precluded from gainful employment if you are obligated not to compete with the
Company during the period and within the Territory as described above.

 

The
covenants contained in this subsection (i) above shall be construed as a
series of separate covenants, one for each city, county, province, and state of
any geographic area in the Territory. 
Except for geographic coverage, each such separate covenant shall be
deemed identical in terms to the covenant contained in this subsection (i) above.  If, in any arbitration or litigation proceeding, the arbitration panel or court refuses to enforce any of such separate
covenants, then such unenforceable covenant shall be eliminated from this
letter of agreement to the extent necessary to permit the remaining separate
covenants (or portions thereof) to be enforced. 
In the event the provisions of this subsection (i) above are deemed
to exceed the time, geographic or scope limitations permitted by applicable
law, then such provisions shall be reformed to the maximum time, geographic or
scope limitations, as the case may be, then permitted by applicable law.

 

You
further agree that in the event that you leave the employ of the Company, you
hereby grant consent to notification by the Company to your new employer about
your rights and obligations under this letter of agreement.

 

ii.                                       Non-Solicit

 

You
agree that for a period of maximum seven (7) years immediately following
the termination of your relationship with the Company for any reason, whether
with or without cause or for any or no cause, you shall not either directly or
indirectly solicit, induce, hire or encourage any employees of the Company to
leave their employment, or take away such employees, or attempt to solicit,
induce, recruit, encourage, hire or take away employees of the Company or any
suppliers, customers or consultants of the Company, either for yourself or for
any other person or entity.

 

iii.                                    Non-Disparage

 

Following
the termination of your employment, you agree to refrain from any
disparagement, criticism, defamation, or slander of the Company, Company
Affiliates, 

 

4

 

and
their (the Company’s and Affiliate’s) directors, officers, and employees.  The foregoing restriction will not apply to
any statements that are made truthfully in response to, or in connection with,
a compulsory legal process.

 

6.                                      Termination of
Employment

 

i.                                          Termination Without Cause.

 

General.  The Company shall have the right
to terminate your employment for any ground permitted under applicable
law.  If, prior to the expiration of this letter of agreement, your employment is terminated by the Company without Cause (as defined below),
then, subject to your signing and not revoking a general release of claims in a
form satisfactory to the Company (if permitted by applicable law), the Company shall pay you severance
pay that is equal to
your monthly salary times the number of full calendar years you have been
employed by the Company as of the date of termination (which number shall not
exceed twelve (12) in any case).  Other than payment of Base Salary as then in
effect through and including the date of termination and the severance
pay, you shall have no further right to receive any other compensation
after such termination of employment. 
For purposes of this subsection 6i and the severance pay hereunder, a
resignation for Good Reason shall constitute a termination by the Company
without Cause.

 

Date
of Termination.  The date of termination of employment without
Cause shall be the date specified in a written notice of termination to you
(which generally will be the date of the notice).

 

ii.                                       Termination for Cause; Resignation.

 

General.  If, prior to the expiration of
this letter of agreement, your employment is terminated by the Company for
Cause, or you resign from your employment hereunder, you
shall be entitled only to payment of your Base Salary as then in effect through
and including the date of termination or resignation and shall have no further
right to receive any other compensation after such termination or resignation
of employment.  For purposes of this
subsection 6ii, a conclusion of the Employment Term specified in section 2
shall constitute your resignation from employment if the Company proposes a
renewal of the Employment Term which you do not accept.

 

Date of Termination.  The date of termination for Cause shall be
the date specified in a written notice of termination to you.  In the event of your resignation, the date of
termination shall be (a) in the event of resignation without Good Reason,
the date specified in the written notice of resignation from you to the Company
which shall not be within ninety (90) days of the date of the written notice,
or if no date is specified therein, the
ninetieth (90th) day  after receipt by the Company of written notice of resignation from you,
and (b) in the event of resignation for Good Reason, the date of your
actual resignation after the required cure period as specified in subsection
6iv.

 

iii.                                    Cause.

 

For
purposes of this letter of agreement, termination for “Cause” shall mean
termination of your employment
because of:

 

5

 

(a) any act or
omission that constitutes a breach by you of any of your obligations under this
letter of agreement;

 

(b) your criminal liability being pursued in
accordance with applicable law;

 

(c) any willful
violation or breach by you of any material corporate rule or policy of the
Company; or

 

(d) any intentional
misconduct, gross negligence, or act of dishonesty or fraud by you in
connection with the performance of your duties that causes significant losses
to the Company.

 

iv.                                   Good Reason.

 

For
purposes of this letter of agreement, “Good Reason” shall mean any of the
following:

 

(a) a failure by the Company to pay material compensation due and payable to
you in connection with your employment; or

 

(b) a material diminution of your authority, responsibilities or positions
from those set forth in
this letter of agreement other than in connection with a medical disability as
a result of which you are unable to substantially perform your duties for a
period of at least 30 consecutive days;

 

provided,
however, that no event or condition shall constitute Good Reason unless (1) you give the Company written notice of
your objection to such event or condition within ten (10) days of the
occurrence of such event or condition, (2) such event or condition is not
corrected by the Company within 20 days of its receipt of such notice and (3) you resign your employment with the
Company not more than ten (10) days following the expiration of the 20-day
period described in the foregoing clause (2).

 

v.                                      Return of Property.

 

All documents, designs, plans, information, data,
recordings, or other property, whether tangible or intangible, including all
information stored in electronic form, obtained or prepared by or for you, utilized
by you in the course of your employment, belonging or relating to the Company,
or its business, services, customers, clients, prospective clients and
suppliers, (including all copies) and all Confidential Information in your
possession or control including all or any copies of the same shall remain the
exclusive property of the Company and are to be returned on demand and by no
later than the termination of your employment.

 

7.                                      Miscellaneous

 

You shall provide the Company with certificates or
information regarding your ID, passport, working experience and working skills.  You shall warrant the authenticity of the
aforesaid certificates or information.  You
also warrant that currently you do not have any employment relationship with
any other companies or entities, that you are not subject to any non-compete
obligations on any other obligations that would interfere with your employment,
that you are not involved in any disputes with a previous employer, that you
have returned all property of your 

 

6

 

previous employers, and that you will not use any
information from a prior employer in connection with your employment with the
Company.  Any false statement by you on
the aforesaid matters would constitute serious violation of the policies of the
Company, and the Company shall be entitled to terminate this letter of
agreement without any additional compensation to you.

 

You
agree to strictly comply with any and all of the provisions in this letter of
agreement and all other Company policies as amended from time to time at the
Company’s sole discretion.

 

Any
dispute, difference, controversy, or claim of any kind whatsoever that arises
or occurs between the parties in relation to any thing or matter arising under,
out of, or in connection with this letter of agreement shall first be resolved
by the parties through consultation.  In
case any dispute fails to be resolved through consultation within thirty (30)
days as of either party’s delivery to the other of a written notice for
consultation, either party hereto may, within sixty (60) days following the
occurrence of such dispute, submit such dispute to the Beijing Municipal Labor
Dispute Arbitration Committee (the “Committee”) for arbitration.  Should either party hereto refuse to accept
an arbitral award by the Committee, such party may submit such dispute to any
competent court within fifteen (15) days after the receipt of such an award, to
which all such courts’ jurisdiction the parties hereby submit.

 

This
letter of agreement shall be governed by and construed in accordance with the
law of the Hong Kong Special Administrative Region, the People’s Republic of
China.

 

This
letter of agreement and all other documents referred to in this letter of
agreement shall supersede all prior agreements and other documents of a similar
nature addressing your employment with the Company.

 

(Signature Page Follows)

 

7

 

Please
sign on the duplicate copy of this letter to confirm your acceptance of our
offer and return it to us as soon as possible. 
Upon the signing of this letter by you and us, this letter will be
binding on both you and us.

 

 

Yours
sincerely,

 

 

	
   

  	
   

  
	
  [·]

  	
   

  
	
  Chairman

  	
   

  
	
  Lentuo
  International Inc.

  	
   

  
	
  [Address]

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Date:
  [·]

  	
   

  

 

 

I
accept the Company’s offer of employment, and acknowledge and agree to the
above terms and conditions.

 

 

	
   

  	
   

  
	
  [Name
  of Employee]

  	
   

  
	
  [Address]

  	
   

  
	
  Date:
  [·]

  	
   

  

 

8

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