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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;
 
 
a.
Provide advice relating to their capitalization;

 
 
b.
Evaluate alternative financing structures and arrangements and potential sources
of investment capital;

 
 
c.
Assist in developing appropriate acquisition criteria and identifying target
industries;

 
 
d.
Identify, evaluate, structure and provide advice in connection with potential
mergers and acquisitions, divestitures, spin-offs, joint ventures and other
corporate transactions;

 
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,
 

 
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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
 

 
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(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 company’s subsidiaries) that operates its business in
the Peoples Republic of China (the “PRC”).  
 
 
ii.           During the Consulting Period and for a period of two years
thereafter, the Consultant shall not, directly or indirectly, solicit or hire or
encourage the solicitation or hiring of any person who was an employee of Client
at any time on or after the date of such termination, exclusive of David Stein,
(unless more than six months shall have elapsed between the last day of such
person's employment by Client and the first date of such solicitation or
hiring).
 
b.      Confidential Information.  In the course of performing services under
this Agreement, Client may disclose to Consultant, and Consultant may otherwise
obtain knowledge of or access to, trade secrets and other proprietary and
confidential information concerning the Client, the Client products, financial
condition, services, research and development plans, and other matters
pertaining to the Client’s business (“Confidential Information”).  Consultant
agrees to treat and hold all Confidential Information as secret and
confidential, and to apply strict standards of care to maintain the secrecy of
the Confidential Information.  In this regard, Consultant agrees not to copy or
reproduce any Confidential Information and not to disclose the contents of any
Confidential Information to any person or entity, other than officers and
directors of the Client or with their written permission.  Consultant further
agrees to return to the Client written or other copies (including electronic
media containing Confidential Information) of any and all Confidential
Information in Consultant’s possession.  The provisions of this Section 6 shall
not apply to any Confidential Information that Consultant is obligated by law to
disclose to any court or any federal or state government agency; provided,
however, that in the event disclosure is required by law Consultant shall
provide the Client with prompt notice of such requirement so that the Client may
seek an appropriate protective order prior to such required disclosure by
Consultant.  In addition, Consultant hereby acknowledges that he is aware that
the United States securities laws may prohibit any person who has material,
nonpublic information concerning Client from purchasing or selling securities of
Client or from communicating such information to any other person under
circumstances in which it is reasonably foreseeable that such person is likely
to purchase or sell such securities.
 
 
7.           Relationship. Consultant shall be an independent contractor within
the meaning of all federal, state and local laws and regulations governing
employment insurance, workers' compensation, industrial accident, labor and
taxes. Consultant shall not, by reason of this Agreement, acquire any benefits,
privileges or rights under any benefit plan operated by the Company or its
subsidiaries or affiliates for the benefit of their employees, including,
without limitation, (i) any pension or profit-sharing plans or (ii) any plans
providing medical, dental, disability or life insurance protection.
 

 
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8.           Authority. Unless otherwise agreed by the Company and Consultant in
writing, during the term of this Agreement, Consultant shall not have the power
or authority to enter into, execute agreements or other documents that are
binding upon the Company or have the authority to direct the operations of the
Company, other than within the scope of the services provided for in this
Agreement.       
 
9.          Modifications.  This Agreement can only be modified by a written
agreement duly signed by persons authorized to sign agreements on behalf of
Client and Consultant, and variance from or addition to the terms and conditions
of this Agreement or other written notification will be of no effect.  The
failure of any Party to enforce any right it is granted herein, or to require
the performance by the other Party hereto of any provision of this Agreement, or
the waiver by any Party of any breach of this Agreement, shall not prevent a
subsequent exercise or enforcement of such provisions or be deemed a waiver of
any subsequent breach of this Agreement.
 
10.          Entire Understanding.  This Agreement represents the entire
understanding and agreement between the Parties with respect to the subject
matter hereof, and merges all prior discussions between them and supersedes and
replaces any and every other agreement or understanding which may have existed
between the Parties to the extent that any such agreement or understanding
relates to providing services to Client. To the extent, if any, that the terms
and conditions of Client’s orders or other correspondence are inconsistent with
this Agreement, this Agreement shall control.
 
11.          Force Majeure.  No delay, failure or default in performance of any
obligation by either Party, excepting all obligations to make payments
hereunder, shall constitute a breach of this Agreement to the extent caused by,
in whole or in part, the other Party (and within the other party’s reasonable
control) or an act of God, war, civil disturbance, terrorist act, court order,
labor dispute, or other cause beyond its reasonable control, and such
nonperformance will not be a default under this Agreement.
 
12.          Laws, Severability, Venue, Waivers.  The validity of this Agreement
and the rights, obligations and relations of the Parties hereunder shall be
construed and determined under and in accordance with the laws of the State of
Florida, without regard to conflicts of law principles thereunder provided,
however, that if any provision of this Agreement is determined by a court of
competent jurisdiction to be in violation of any applicable law or otherwise
invalid or unenforceable, such provision shall to such extent as it shall be
determined to be illegal, invalid or unenforceable under such law be deemed null
and void, but this Agreement shall otherwise remain in full force.  Suit to
enforce any provision of this Agreement, or any right, remedy or other matter
arising therefrom, will be brought exclusively in the state or federal courts
located in Broward County, Florida.  Client agrees and consents to venue in
Broward County, Florida and to the in personam jurisdiction of these courts and
hereby irrevocably waives any right to a trial by jury.
 
13.          Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed, shall constitute an original copy
hereof, but all of which together shall consider but one and the same document.
 
14.          Disclaimer. Consultant acknowledges that it has and will during the
term of this Agreement, rely upon information provided by Client in connection
with the performance of the Services and in accepting the Client’s securities as
full or partial payment of the Compensation under this Agreement.
 
15.          Expenses. Client shall reimburse Consultant in cash for all
pre-approved expenses incurred by Consultant in regard to the performance of
services under this Agreement.  Such reimbursement shall be made by Client
within 5 days after Consultant submits a request for reimbursement for such
expenses  which request shall include receipts for such items.
 

 
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16.          Notices. All notices to be given hereunder shall be in writing by
mail and/or and delivery to:

Consultant:
Client:
 
Marc Siegel
943 Lake Wyman Road
Boca Raton, Florida 33431
China Direct, Inc.
431 Fairway Drive
Deerfield Beach, FL 33411
   

17.          Indemnification. Except for intentional acts of Consultant,
Consultant shall not be liable to the Client or to any officer, director,
employee, stockholders, or creditor of the Client, for any act or omission in
the course of or in connection with the provision of advice or assistance
hereunder.  The Client agrees to and shall defend, indemnify and hold Consultant
harmless from and against any and all suits, claims, demand, causes of action,
judgment damages, expenses and liability, (including court costs and attorney’s
fees paid in the defense of Consultant) which may in any way result from
services provided by Consultant pursuant to or in connection with this
Agreement. The Client agrees that if Consultant is made a party, is threatened
to be made a party, to any action, suit or proceeding, whether civil, criminal,
administrative, or investigative (a “Proceeding”), by reason of the fact that
Consultant is or was an employee of the Client, or is or was serving at the
request of the Client as an employee or agent of another corporation,
partnership, joint venture, trust, or other enterprise, including service with
respect to clients of the Client, whether or not the basis of such Proceeding is
Consultant’s alleged action in an official capacity while serving as an employee
or agent, Consultant shall be indemnified and held harmless by the Client, to
the same extent as the officers and directors of the Client, to the fullest
extent legally permitted against all cost, expense, liability, and loss
(including, without limitation, attorney’s fees, judgments, fines, ERISA excise
taxes or other liabilities or penalties and amounts paid or to be paid in
settlement) reasonably incurred or suffered by Consultant in connection
therewith, and such indemnification shall continue as to Consultant even if he
has ceased to be an employee or agent of the Client or other entity and shall
inure to the benefit of Consultant’s heirs, executors, and administrators.  In
return for the above provision, Consultant promises to cooperate with the Client
at its expense in his or the Client's defense of any actions taken by private
parties and/or federal or state governmental bodies against the Consultant or
the Client.

18.          Other Activities.  Except as provided for in Sections 6(a) and (b),
nothing contained herein shall prevent Consultant from acquiring or
participating in a transaction of any kind with any other entity.
 
19.          Disclaimer. Consultant acknowledges that he has relied upon the
information provided by Client. Consultant has in entering into this Amendment,
relied on the warranties or representations made by Client, its officers,
directors, agents, legal counsel or accountants concerning Client and/or its
stock as to matters past, present or future.
 
20.          Attorney’s fees. The Client shall pay, as and when due, any and all
attorneys’ fees and costs incurred by Consultant in connection with any dispute
or settlement arising from his affiliation with the Client, or as an employee or
agent of another corporation, partnership, joint venture, trust, or other
enterprise, including service with respect to clients of the Client, whether or
not the basis of such Proceeding is Consultant’s alleged action.  Consultant
shall be indemnified and held harmless by the Client, to the same extent as the
officers and directors of the Client, to the fullest extent legally permitted.

 
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IN WITNESS WHEREOF, the parties have executed this Agreement on the date first
above written.
 
Client:
 
China Direct, Inc.
   
 Consultant
 
Marc Siegel
 
By: /s/James Wang
   
By: /s/ Marc Siegel
 
Name: James Wang
   
Name: Marc Siegel
 
Title:  CEO, Chairman
   
 
 

 

 

 
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