Exhibit 10.24

 

EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT is made as of August 7, 2008 by and between China
Direct, Inc., a Florida corporation (the “Company”), and David Stein
(“Employee”).

 

WITNESSETH:

 

WHEREAS, Employee wishes to be employed by the Company with the duties and
responsibilities as hereinafter described, and the Company desires to assure
itself of the availability of Employee’s services in such capacity.

 

NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the Company and Employee hereby agree as follows:

 

1.         EMPLOYMENT. The Company hereby agrees to employ Employee, and
Employee hereby agrees to serve the Company, upon the terms and conditions
hereinafter set forth.

 

2.         TERM. The employment of Employee by the Company pursuant to this
Agreement shall be for a sixty five (65) month period commencing on August 1,
2008 (the “Employment Term”).

 

3.         DUTIES. Employee shall, subject to overall direction consistent with
the legal authority of the Chief Executive Officer and President, serve as, and
have all power and authority inherent in the offices of Chief Operating Officer
of the Company and shall be responsible for those areas in the conduct of the
business reasonably assigned to him by the Chief Executive Officer and the
President. Employee shall devote substantially all his business time and efforts
to the business of the Company; provided, however, that it is understood and
agreed that, while Employee may devote time to other business matters in which
he may have an interest, in the event of a conflict, Employee’s first and
primary responsibility shall be to the performance of his duties for the
Company.

 

4.         COMPENSATION AND OTHER PROVISIONS. Employee shall be entitled to the
compensation and benefits hereinafter described in subparagraphs (A) through (D)
(such compensation and benefits being hereinafter referred to as “Compensation
Benefits”).

 

A.  BASE SALARY. The Company shall pay to Employee a base salary (the “Base
Salary”) as follows:

 

i.          $240,000 per annum (pro rated to $100,000) for the period commencing
on August 1, 2008 and ending on December 31, 2008;

 

ii.         $250,000 per annum for the period commencing on January 1, 2009 and
ending on December 31, 2009;

 

iii.        $300,000 per annum for the period commencing on January 1, 2010 and
ending on December 31, 2010;

 

iv.        $325,000 per annum for the period commencing on January 1, 2011 and
ending on December 31, 2011;

 

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v.         $350,000 per annum for the period commencing on January 1, 2012 and
ending on December 31, 2012; and

 

vi.        $375,000 per annum for the period commencing on January 1, 2013 and
ending on December 31, 2013.

 

B.  COMPENSATION ADJUSTMENT. The Base Salary and Employee’s other compensation
will be reviewed by the Board of Directors of the Company (the “Board”) at least
annually and may be increased (but not decreased) from time to time as the Board
may determine.

 

C.  PARTICIPATION IN BENEFIT PLANS. During the Employment Term, Employee shall
be eligible to participate in all Employee benefit plans and arrangements now in
effect or which may hereafter be established, including, without limitation, all
life, group insurance and medical care plans and all disability, retirement and
other Employee benefit plans of the Company. Should the Employee not want to
participate in the Company’s health plan, with Board approval, the company will
reimburse the Employee for the expense incurred in participating in another
plan.

 

D.  OTHER PROVISIONS. During the Employment Term, Employee shall be entitled to
(i) four (4) weeks paid vacation per annum, (ii) an automobile allowance of $750
per month (pro rated) which shall increase at five percent (5%) per annum
beginning on January 1, 2009 and each year thereafter, and (iii) receive a
mobile phone allowance of $500 per month (pro rated) which shall increase five
percent (5%) per annum beginning on January 1, 2009 and each year thereafter.
Employee shall make himself available via email enabled mobile phone (such as a
blackberry, iphone or similar mobile device) during periods in which they are
not in the offices of the Company. Employee shall be reimbursed for all
reasonable expenses incurred by him in the performance of his duties, including,
but not limited to, entertainment, travel and other expenses incurred in
connection with such duties.

 

E.  DISCRETIONARY BONUSES. Employee shall be entitled to receive annual and/or
interim cash bonuses and/or other bonuses (“Bonus Payments”) when and in such
amounts as may be determined by the Board, pursuant to a recommendation by the
compensation committee of the Board. The Board shall meet at least annually to
review Employee’s Bonus Payments and such Bonus Payments shall be based upon
Employee’s performance of the duties assigned to him by the Board, the Company’s
satisfaction of stated performance objectives known to Employee and/or other
relevant factors.

 

F.   INCENTIVE COMPENSATION. Employee shall be entitled to receive incentive
compensation pursuant to Exhibit A based on the performance of the calendar year
2008, and/or interim cash bonuses and/or other bonuses as compensation
(“Incentive Compensation”). Additional compensation for the year 2009 and beyond
shall be determined by the Board at a future date.

 

G.  INDEMNIFICATION. The Company shall indemnify and hold harmless Employee to
the fullest extent permitted by law for any action or inaction of Employee while
serving as an officer and director of the Company or, at the Company’s request,
as an officer or director of any other entity affiliated with the Company, or as
a fiduciary of any benefit plan. The Company shall include the Employee under
the Company’s directors and officers’ liability insurance in the same amount and
to the same extent as the Company covers its other officers and directors both
(i) during the Employment Term, and (ii) for a five (5) year period after the
Employment Term.

 

5.         TERMINATION. Employee’s employment hereunder shall terminate as a
result of any of the following events:

 

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A.  Employee’s death;

 

B.  Employee shall be unable to perform his duties hereunder by reason of
illness, accident or other physical or mental disability for a continuous period
of at least three (3) months or an aggregate of nine (9) months during any
continuous eighteen (18) month period (“Disability”);

 

C.  voluntary resignation by Employee;

 

D.  termination by the Company with Cause, where “Cause” shall mean: (i) final
non-appealable adjudication of Employee of a felony, which would have a material
or adverse effect on the business of the Company; or (ii) the determination of
the Board (other than Employee) that Employee has engaged in intentional
misconduct or the gross neglect of his duties, which has a continuing material
adverse effect on the business of the Company; or

 

E.  termination by the Company for any reason other than Cause.

 

Any termination pursuant to subparagraph B, C, D or E of this Section shall be
communicated by a written notice (“Notice of Termination”), such notice to set
forth with specificity the grounds for termination if termination is for
“Cause”. Employee’s employment under this Agreement shall be deemed to have
terminated as follows: (i) if Employee’s employment is terminated pursuant to
subparagraph A above, on the date of his death; (ii) if Employee’s employment is
terminated pursuant to subparagraph B, D or E above, on the date the Notice of
Termination is received by Employee; and (iii) if Employee’s employment is
terminated pursuant to subparagraph C above, thirty (30) days after the date on
which the Company receives Notice of Termination from Employee. The date on
which termination is deemed to have occurred pursuant to this paragraph is
hereinafter referred to as the “Date of Termination”. If the Notice of
Termination is sent to Employee by Company, then it shall be sent to Employee
pursuant to the terms set forth in Section 14 of this Agreement.

 

6.         PAYMENTS ON TERMINATION. In the event that Employee’s employment is
terminated pursuant to Sections 5 A, B, or E above, the Company shall pay to
Employee and or his estate, (i) all of the Compensation Benefits Employee is
entitled to through the Date of Termination (ii) all Incentive Compensation,
benefits and other compensation, if any, due and owing as of the Date of
Termination, and (iii) any Severance Payments that the Employee may be entitled
to pursuant to Section 15(C).

 

7.         LIFE INSURANCE. If requested by the Company, Employee shall submit to
such physical examinations and otherwise take such actions and execute and
deliver such documents as may be reasonably necessary to enable the Company to
obtain life insurance on the life of Employee for the benefit of the Company.

 

8.         REPRESENTATIONS AND WARRANTIES. Employee represents and warrants to
the Company that he is under no contractual or other restriction or obligation
that would prevent the performance of his duties hereunder or interfere with the
rights of the Company hereunder.

 

9.         DISCLOSURE AND PROTECTION OF CONFIDENTIAL INFORMATION.

 

A.  For purposes of this Agreement, “Confidential Information” means knowledge,
information and material which is proprietary to the Company, of which Employee
may obtain knowledge or access through or as a result of his employment by the
Company (including information conceived, originated, discovered or developed in
whole or in part by Employee). Confidential Information includes, but is not
limited to, (i) technical knowledge, information and material such as trade
secrets, processes, formulas, data, know-how, improvements, inventions, computer
programs, drawings, patents, and experimental and

 

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development work techniques, and (ii) marketing and other information, such as
supplier lists, customer lists, marketing and business plans, business or
technical needs of customers, consultants, licensees or suppliers and their
methods of doing business, arrangements with customers, consultants, licensees
or suppliers, manuals and personnel records or data. Confidential Information
also includes any information described above which the Company obtains from
another party and which the Company treats as proprietary or designates as
confidential, whether or not owned or developed by the Company. Notwithstanding
the foregoing, any information which is or becomes available to the general
public other than by breach of this Section 9 shall not constitute Confidential
Information for purposes of this Agreement.

 

B.  During the period in which the Employee is employed by the Company and for
two (2) years thereafter, Employee agrees, to hold in confidence all
Confidential Information and not to use such information for Employee’s own
benefit or to reveal, report, publish, disclose or transfer, directly or
indirectly, any Confidential Information to any person or entity, or to utilize
any Confidential Information for any purpose, except in the course of Employee’s
work for the Company or as required by law.

 

C.  Employee will abide by any and all policies and procedures, whether formal
or informal, that may from time to time be imposed by the Company for the
protection of Confidential Information, and will inform the Company of any
defects in, or improvements that could be made to, such policies and procedures.

 

D.  Employee will notify the Company in writing immediately upon receipt of any
subpoena, notice to produce, or other compulsory order or process of any court
of law or government agency which requires or may require the disclosure or
other transfer of Confidential Information.

 

E.  Upon termination of Employee’s employment with the Company, Employee will
deliver to the Company or destroy (at Employee’s election) any and all records
and tangible property that contain Confidential Information that are in his
possession or under his control.

 

10.       COVENANT NOT TO COMPETE.

 

A.  In consideration for the Company entering into this Agreement, Employee
covenants and agrees that during the period in which the Employee is employed by
the Company and for one (1) year thereafter, Employee will not, without the
express prior written consent of the Company, directly or indirectly, compete
with the business of the Company anywhere within the United States of America or
the Peoples Republic of China. Employee will not undertake any activities that
are competitive with or acquire interests in an entity which is competitive with
the business of the Company, whether alone, as a partner, or as an officer,
director, Employee, independent contractor, consultant or shareholder holding 5%
or more of the outstanding voting stock of any other corporation, or as a
trustee, fiduciary or other representative of any other person or entity.

 

B.  During the period in which the Employee is employed by the Company and for
one (1) year thereafter, Employee will not, directly or indirectly, solicit or
induce any Employee of the Company or any Employee of a subsidiary of the
Company to leave his or her employment, or solicit or induce any consultant or
independent contractor to sever that person’s relationship with the Company.

 

C.  If any court shall determine that the duration or geographical limit of any
covenant contained in this Section 10 is unenforceable, it is the intention of
the parties that covenant shall not be terminated but shall be deemed amended to
the extent required to render it valid and enforceable, such amendment to apply
only in the jurisdiction of the court that has made such adjudication.

 

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D.  Employee acknowledges and agrees that (i) the covenants contained in
Sections 9 and 10 hereof are of the essence in this Agreement and that such
covenants are reasonable and necessary to protect and preserve the interests,
properties, and business of the Company, and (ii) irreparable loss and damage
will be suffered by the Company should Employee breach any of such covenants.

 

11.       AVAILABILITY OF INJUNCTIVE RELIEF. Employee acknowledges and agrees
that any breach by him of the provisions of Sections 9 or 10 hereof will cause
the Company irreparable injury and damage for which it cannot be adequately
compensated in damages. Employee therefore expressly agrees that the Company
shall be entitled to seek injunctive and/or other equitable relief, on a
temporary or permanent basis to prevent an anticipatory or continuing breach of
this Agreement. Nothing herein shall be construed as a waiver by the Company of
any right it may have or hereafter acquired to monetary damages by reason of any
injury to its property, business or reputation or otherwise arising out of any
wrongful act or omission of it.

 

12.       SURVIVAL. The covenants, agreements, representations and warranties
contained in or made pursuant to this Agreement shall survive Employee’s
termination of employment, irrespective of any investigation made by or on
behalf of any party.

 

13.       MODIFICATION. This Agreement sets forth the entire understanding of
the parties with respect to the subject matter hereof, supersedes all existing
agreements between them concerning such subject matter, and may be modified only
by a written instrument duly executed by each party.

 

14.       NOTICES. Any notice required or permitted hereunder shall be deemed
validly given if delivered by hand, verified overnight delivery, or by first
class, certified mail to the following addresses (or to such other address as
the addressee shall notify in writing to the other party):

 

 

If to Employee

David Stein

 

 

If to the Company:

431 Fairway Drive, Suite 200

Deerfield Beach, FL 33441

 

15.       SEVERANCE PROVISIONS. Upon the occurrence of a Triggering Event, as
hereinafter defined, Employee shall be entitled to the immediate receipt of all
Severance Payments from the Company in accordance with the terms hereinafter set
forth:

 

A.  TRIGGERING EVENT. The occurrence of any of the following events shall be
defined as a “Triggering Event” for purposes of this Agreement:

 

i.          The Company’s termination of Employee’s employment for any reason
whatsoever (other than for Cause);

 

ii.         The voluntary resignation of Employee for any reason whatsoever
within ninety (90) days following a Change of Control; or

 

iii.        The voluntary resignation of Employee for "good reason", which for
purposes hereof shall include, without limitation, (i) a demotion, (ii) a
reduction in salary, benefits, bonuses, incentives or perquisites, or (iii) the
relocation of the principal office of the Company or the relocation of Employee
outside of Broward or Palm Beach Counties, Florida; or

 

iv.       The death or Disability of Employee.

 

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B.  CHANGE OF CONTROL. For purposes of this Agreement, the term "Change of
Control" shall mean the occurrence of any of the following events:

 

i.          Twenty five percent (25%) or more of the Company's voting stock
shall be acquired by any person (other than executives of the Company as of the
date hereof ), entity or affiliated group;

ii.         If any individuals who at the beginning of any calendar year who
were members of the Board ("Incumbent Directors") cease for any reason (other
than death) to constitute at least a majority thereof; provided that each new
director whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the directors
then still in office who were directors at the beginning of such period shall be
deemed an Incumbent Director unless such approval was made directly or
indirectly in connection with an actual or threatened election contest with
respect to directors or as a result of any other actual or threatened
solicitation of proxies or consents by or on behalf of any person other than the
Board;

iii.        Any merger, consolidation or business combination pursuant to which
the Company is not the surviving corporation or twenty five percent (25%) or
more of the Company's voting stock shall be owned or controlled by any person
(other than executives of the Company as of the date hereof), entity or
affiliated group;

iv.       A liquidation or dissolution of the Company; or

v.      The sale of all or substantially all of the Company's assets.

 

C.  SEVERANCE PAYMENTS. For purposes of this Agreement, the term “Severance
Payment” shall mean that:

 

i.          Employee shall receive a lump sum payment equal to the sum of (i)
the product of (x) two (2) and (y) the Employee’s highest annual Base Salary as
of the date of termination; and (ii) the product of (x) two (2) and (y) the sum
of (A) highest Bonus Payment, (B) highest Incentive Compensation that Employee
was entitled to receive pursuant to Exhibit A in respect of any year within the
three (3) years preceding the Triggering Event and (C) any other compensation
payments the Employee is entitled pursuant to Section 4(D).

 

SEVERANCE PAYMENT FORMULA:

 

Severance Payment = [(2)(highest Base Salary)] + [(2)( highest Bonus Payment +
highest Incentive Compensation + other compensation payments)]

 

ii.         All stock options, warrants, Incentive Compensation other stock
appreciation rights and other similar securities shall accelerate and become
immediately and fully vested and all conditions applicable to all contingently
issued options, warrants, stock appreciation rights and other similar securities
shall be deemed waived by the Company. In addition, the Company will maintain in
effect a registration statement covering the Employee’s Shares, as hereinafter
defined.

 

iii.        All common shares underlying any stock options, warrants, Incentive
Compensation, or other stock appreciation rights shall be covered by the Company
by an effective or current registration statement under the Securities Act of
1933, as amended (the “Securities Act”);

 

iv.        All Compensation Benefits applicable to Employee and his family
members under Sections 4.A, B and C of the Agreement shall continue for a period
of two (2) years following the later of

 

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(i) the Triggering Event or (ii) the expiration of the Employment Term (as if
the Triggering Event had not occurred);

 

v.         In the event that Severance Payments are deemed to be “excess
parachute payments” as defined under Section 280G of the Internal Revenue Code,
then the Company shall pay to Employee an additional lump sum cash payment as
shall be necessary to provide Employee with the same “after-tax” compensation
and benefits as if no such excise tax had been imposed;

 

vi.        The Company shall pay, as and when due, any and all attorneys’ fees
and costs that Employee may incur in connection with the enforcement of his
rights under this Agreement or any dispute or settlement in connection herewith;

 

vii.       Notwithstanding the forgoing, if a Triggering Event occurs on or
prior to the first date that an Incentive Compensation payment is to be made to
Employee, then the Incentive Compensation for purposes of this Section 15 shall
be deemed to be the greater of (i) one hundred percent (100%) of Employee’s Base
Salary, or (ii) the amount earned pursuant to the terms set forth in Exhibit A;

 

viii.      Severance Payments will not be subject to mitigation in any respect;
and

 

ix.        The non-competition and non-solicitation periods described in Section
10 of this Agreement shall be reduced from one (1) year to three (3) months
(other than by virtue of the expiration of the Employee’s period of employment
under this Agreement or section 5 C).

 

D.  COMPLIANCE WITH CODE SECTION 409A.

 

i.          It is the intention of both the Company and Employee that the
benefits and rights to which Employee could be entitled pursuant to this
Agreement comply with Section 409A of the Code and the Treasury Regulations and
other guidance promulgated or issued thereunder (“Section 409A”), to the extent
that the requirements of Section 409A are applicable thereto, and the provisions
of this Agreement shall be construed in a manner consistent with that intention.
If Employee or the Company believes, at any time, that any such benefit or right
that is subject to Section 409A does not so comply, it shall promptly advise the
other and shall negotiate reasonably and in good faith to amend the terms of
such benefits and rights such that they comply with Section 409A (with the most
limited possible economic effect on Employee and on the Company).

 

ii.         If and to the extent required to comply with Section 409A, no
payment or benefit required to be paid under this Agreement on account of
termination of Employee’s employment shall be made unless and until Employee
incurs a “separation from service” within the meaning of Section 409A.

 

iii.        If Employee is a “specified employee,” then no payment or benefit
that is payable on account of Employee’s “separation from service”, as that term
is defined for purposes of Section 409A, shall be made before the date that is
six months after Employee’s “separation from service” (or, if earlier, the date
of Employee’s death) if and to the extent that such payment or benefit
constitutes deferred compensation (or may be nonqualified deferred compensation)
under Section 409A and such deferral is required to comply with the requirements
of Section 409A. Any payment or benefit delayed by reason of the prior sentence
shall be paid out or provided in a single lump sum at the end of such required
delay period in order to catch up to the original payment schedule.  For
purposes of this Section, Employee shall be considered to be a “specified
employee” if, at the time of his or her separation from service, Employee is a
“key employee”, within the meaning of Section 416(i) of the Code, of the Company
(or any person or entity with whom the Company would be considered a single
employer under Section

 

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414(b) or Section 414(c) of the Code) any stock in which is publicly traded on
an established securities market or otherwise.

 

iv.        Neither the Company nor Employee, individually or in combination, may
accelerate any payment or benefit that is subject to Section 409A, except in
compliance with Section 409A and the provisions of this Agreement, and no amount
that is subject to Section 409A shall be paid prior to the earliest date on
which it may be paid without violating Section 409A.

 

v.         For purposes of applying the provisions of Section 409A to this
Agreement, each separately identified amount to which Employee is entitled under
this Agreement shall be treated as a separate payment. In addition, to the
extent permissible under Section 409A, any series of installment payments under
this Agreement shall be treated as a right to a series of separate payments.

 

E.  INDEPENDENT COUNSEL. The Company and Employee agree that each of them have
been, or were advised and fully understand, that they are entitled to be
represented by independent legal counsel with respect to all matters
contemplated herein from the commencement of negotiations at all times through
the execution hereof

 

16.       WAIVER. Any waiver by either party of a breach of any provision of
this Agreement shall not operate as or be construed to be a waiver of any other
breach of such provision or of any breach of any other provision of this
Agreement. The failure of a party to insist upon strict adherence to any term of
this Agreement on one or more occasions shall not be considered a waiver or
deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement. All waivers must be in writing.

 

17.       BINDING EFFECT. The Company’s rights and obligations under this
Agreement shall not be transferable by assignment or otherwise, and any attempt
to do any of the foregoing shall be void. The provisions of this Agreement shall
be binding upon the Employee and his heirs and personal representatives, and
shall be binding upon and inure to the benefit of the Company, its successors
and assigns.

 

18.       HEADINGS. The headings in this Agreement are solely for convenience of
reference and shall be given no effect in the construction or interpretation of
this Agreement.

 

19.       GOVERNING LAW; VENUE. This Agreement is to be performed in the State
of Florida, and the validity, construction and enforcement of, and the remedies
under, this Agreement shall be governed in accordance with the laws of the State
of Florida, without giving effect to any choice of laws principles. In the event
of any litigation arising out of or relating to this Agreement, exclusive venue
shall be in Palm Beach County, Florida.

 

20.       ENTIRE AGREEMENT. This writing constitutes the binding and entire
agreement of the parties superseding and extinguishing all prior agreements or
understandings regarding the subject matter hereof, and may not be modified
without the written agreement by the parties.

 

21.       INVALIDITY. The invalidity or unenforceability of any term of this
Agreement shall not invalidate, make unenforceable or otherwise affect any other
term of this Agreement, which shall remain in full force and effect.

 

22.       ATTORNEYS’ FEES. Except for any disputes arising pursuant to Section
15 of this Agreement, if any dispute or litigation arises hereunder between any
of the parties hereto, then the prevailing party shall be entitled to all
reasonable costs and expenses incurred by it in connection therewith (including,

 

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without limitation, all reasonable attorneys’ fees and costs incurred before and
at any trial or other proceeding and at all tribunal levels), as well as all
other relief granted in any suit or other proceeding. As used herein, a party
shall be deemed “prevailing” when it recovers (i) as to a damage claim, an
aggregate of more than fifty percent (50%) of the damages which it seeks among
its various asserted claims exclusive of interest, attorney’s fees, costs
incurred and exemplary damages and (ii) as to an equity claim, substantial
injunctive or other equitable relief upon its asserted claim. Either of the
parties herein shall be entitled to request the trier of fact in any dispute,
litigation or arbitration between them, to determine which of the parties is
“prevailing”.

 

23.       DAMAGES. The Company and the Employee agree that the Employee will
suffer a monetary loss if the common shares underlying the stock options,
warrants, Incentive Compensation or other stock appreciation rights owned or
held by Employee (the “Employee’s Securities”) are not covered for resale under
a current registration statement under the Securities Act. Accordingly, so long
as the Company is subject to reporting and filing obligations under the
Securities Act of 1934, the Company shall deliver for each thirty (30)
consecutive day period that the Employee’s Securities are not covered by a
current registration statement (or such lessor pro-rata amount for any period of
less than thirty days) to the Employee as Liquidated Damages, an amount equal to
five percent (5%) of the total aggregate market value of the Employee’s
Securities. The Company must pay the Liquidated Damages in cash. The Liquidated
Damages must be paid within ten (10) days after the end of each thirty (30) day
period or shorter part thereof for which Liquidated Damages are payable.

 

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WITNESS WHEREOF, the parties have executed this Agreement as of the date first
hereinabove written.

 

China Direct, Inc., a Florida Corporation

 

Yuejian (James) Wang

Name

 

/s/ Yuejian (James) Wang

Signature

 

Chief Executive Office, Chairman of the Board

Title

 

 

Employee

 

David Stein, a Florida resident

 

David Stein

Name

 

/s/ David Stein

Signature

 

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EXHIBIT A

 

1.         Incentive Compensation: As compensation the Employee shall be
entitled to Incentive Compensation, in addition to Base Salary. Employee shall
be entitled to Incentive Compensation which shall be determined, and distributed
as follows;

 

(i)        Operating Results: The calculation of Operating Results will be made
by the Company on an annual basis as determined by the filing of audited
consolidated financial statements of the Company in its Form 10K filing. The
calculation of the “Operating Results” shall be made in accordance with the
following formula:

 

Total Consolidated Net Income

+  Non Cash Charges

+  Dividends

=  Operating Results

 

(ii)       “Total Consolidated Net Income” (after taxes) shall be defined as the
total consolidated net income as reflected in the consolidated statements of
operations of the Company and its subsidiaries for the year ended December 31,
2008 as reported in the audited consolidated financial statements (exclusive of
our minority interest) pursuant to generally accepted auditing standards as
established by the Auditing Standards Board (United States) and in accordance
with the auditing standards of the Public Company Accounting Oversight Board
(United States) (“GAAP”).

 

(iii)      “Non Cash Charges” shall include all non cash charges expensed in the
consolidated statements of operations of the Company and its subsidiaries for
the year ended December 31, 2008 as reported in the audited consolidated
financial statements pursuant to GAAP.

 

(iv)     “Dividends” shall include all payments, cash or other expenses by the
Company which are not related to the business operations of the subsidiaries of
the Company.

 

2.         Employee shall be entitled to Incentive Compensation which shall be
determined, and distributed, as a percentage of Base Salary in accordance with
the following schedule:

 

2008 Operating Results

%

 

 

$ 36,000,000

200%

$ 32,000,000

150%

$ 28,000,000

100%

$ 26,000,000

75%

 

3.         Employee shall be entitled to receive such Incentive Compensation in
accordance with the following schedule:

 

 

i.

25% of the Incentive Compensation shall be due on June 30, 2009

 

ii.

25% of the Incentive Compensation shall be due on September 30, 2009

 

iii.

50% of the Incentive Compensation shall be due on December 31, 2009

 

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