CONSULTING
AGREEMENT
This Consulting Agreement
(“Agreement”) is made as of January 23, 2009 by and
between China Direct, Inc., a Florida corporation
(“Client”) and Marc Siegel
(“Consultant”). Client and Consultant may
collectively be referred to as the
“Parties”.
W I T N E S S E T
H:
WHEREAS, the Client deems it advisable to retain
the Consultant to provide consulting and advisory services, and the
Consultant is willing to provide such services to the Client on the
terms and conditions described herein.
NOW, THEREFORE, in consideration of the mutual
covenants and agreements contained in this Agreement, the parties
hereto agree as follows:
1.
Consulting Services . Upon the terms and subject
to the conditions contained in this Agreement, Consultant hereby
agrees that it shall, during the term of this Agreement, undertake
the performance of the following services for Client’s
consulting companies (the “Services”):
a. Upon
request of Client, familiarize himself, to the extent appropriate
and feasible, with the business, operations, properties, financial
condition, management and prospects of Client and its client
consulting companies;
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Provide advice
relating to their capitalization;
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Evaluate
alternative financing structures and arrangements and potential
sources of investment capital;
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Assist in
developing appropriate acquisition criteria and identifying target
industries;
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Identify,
evaluate, structure and provide advice in connection with potential
mergers and acquisitions, divestitures, spin-offs, joint ventures
and other corporate transactions;
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b. Assist in
evaluating and make recommendations concerning the relationships
among Client's and its client consulting companies various lines of
business and potential areas for business growth; and
c. Provide
such other services upon which the Parties may mutually
agree.
The services to
be provided hereunder may be performed at Client's office located
in Deerfield Beach, Florida. Consultant shall be
provided with office accommodations located among the senior
executive officers of Client.
2.
Term . This Agreement shall commence as of the effective
date of this Agreement and terminate on December 31,
2009.
3.
Compensation . Upon execution of this Agreement, the Client
shall issue to Consultant
a. Client
shall pay to Consultant $120,000 in either cash or Common Stock, at
the option of the Client (the “Consulting Shares”). The
number of Consulting Shares, if issued in lieu of the cash
amount,
shall be equal to the result of dividing
$120,000 by the per share closing price of the Common Stock on the
business day immediately following the Company’s filing of a
public announcement disclosing the resignation of Marc
Siegel. The Consulting Shares shall be payable in
four equal installments payable on March 31, 2009, June 30, 2009,
September 30, 2009 and December 31, 2009. The Severance
Shares shall be issued pursuant to the Company’s 2008
Non-Executive Stock Incentive Plan and are subject to approval of
the Compensation Committee of the Company’s board of
directors. The award of the Severance Shares are
intended to be exempt from Section 16(b) of the Securities Exchange
Act of 1934 (the “Act”) pursuant to Rule 16b-3 of the
Act. In the event the Client elects to pay Consultant in
cash, such cash payments shall be made quarterly as follows:
$30,000 on March 31, 2009, $30,000 on or before June 30, 2009,
$30,000 on or before September 30, 2009, and $30,000 on or before
December 31, 2009.
4.
Warranties . Consultant warrants that the
Services to be provided under this Agreement shall be performed in
a professional manner employing reasonable commercial
efforts. This warranty shall be valid for a period of
thirty (30) days from the performance of the
Services. Except as specifically provided in this
Section 4, Consultant disclaims any and all other warranties with
respect to the services provided hereunder, including without
limitation any implied warranty of merchantability or fitness for a
particular purpose. Consultant does not warrant the results of any
services. In addition, Client acknowledges and agrees that
Consultant is not engaged in the practice of law or the provision
of legal services, and that Client alone is completely and
independently responsible for compliance with all state, federal
and international laws applicable to Client and the operation of
its business. Consultant’s entire liability to
Client (or any other person or entity) for any loss or damages
resulting from any breach of this Agreement, claims, demands or
actions arising out of or relating to the Services, whether in
contract, tort (including negligence) or otherwise, shall not
exceed the sum of $5,000. Except for the intentional
conduct of Consultant, Consultant will not be liable for any
damages caused by the Client's action or inaction, or for any
indirect, incidental, consequential, special, punitive or exemplary
damages or lost profits, including, but not limited to, damages for
loss of business profits, business interruption, loss of business
information, data, goodwill or other pecuniary loss arising from
Consultant’s failure to provide the Services even if
Consultant has been advised of the possibility of such
damages.
5.
Termination . This Agreement may be terminated by
the Consultant upon at least 30 days' written notice to the
Company to such effect or by the Company with "Cause" (as defined
below). As used in this Agreement, "Cause" shall mean a
termination of the Consulting Period based upon:
(i) misconduct by the Consultant or
any of his employees to the material and demonstrable detriment of
the Company;
(ii) the conviction (by a court
of competent jurisdiction, not subject to further appeal) of, or
pleading guilty to, a felony by the Consultant;
(iii) the Consultant's continued and
ongoing gross negligence in the performance of his duties and
responsibilities to the Company as described in this
Agreement;
(iv) the Consultant's material
failure to perform his duties and responsibilities to the Company
as described in this Agreement (other than any such failure
resulting from the Consultant's incapacity due to physical or
mental illness), in either case after written notice from Client to
the Consultant of the specific nature of such material failure and
the failure of the Consultant to cure such material failure within
thirty (30) days following receipt of such notice;
or
(v) a breach by Consultant of the
Lock-Up Agreement entered into between Consultant and the
Company.
Upon termination of this Agreement pursuant to
Section 5, the Consultant and the Company shall not have any
further obligation under this Agreement, except for the obligations
of the Consultant under Section 6 below.
6.
Non-Compete and Confidential Information .
a.
Non-Competition Covenant .
i. During
the term of this Agreement, the Consultant shall not, directly or
indirectly, become a consultant (including, but not limited to,
through any entity of which the Consultant is an employee, officer,
director or advisor), employee, director or advisor of, or
otherwise affiliated with, any company (including such
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