cdiiex10-4.htm


     

    
      

      

    

    

      CHINA
DIRECT, INC.

      Lock-Up
Agreement

      


      January
23, 2009

      China
Direct, Inc.

      431
Fairway Drive, Suite 200

      Deerfield
Beach, FL 33441

      


      


      Re:  Marc Siegel/China Direct, Inc.
– Lock-Up
Agreement

      


      Dear
Sirs:

      


      This
Lock-Up Agreement (“Lock-Up Agreement”) is dated as of January 23, 2009 by and
among China Direct, Inc. (the “Company”) and Marc Siegel (“Siegel”) with respect
to the sale of the Company’s common stock, $.0001 par value per share (the
“Common Stock”) owned by Siegel.

      


      In
connection with the January 23, 2009 Separation and Severance Agreement entered
into by and between the Company and Siegel (the “Separation Agreement”), Siegel
agrees that, commencing on the date hereof and ending when Siegel no longer owns
any shares of the Company’s Common Stock (the “Lock-Up Period”), except for
Excepted Sales, as defined herein, Siegel will not sell, offer to sell, make any
short sale or otherwise dispose of any shares of the Common Stock owned by
Siegel (including Common Stock held indirectly or as a custodian by
Siegel).

      


      The term
“Excepted Sales” for purposes of this Lock-Up Agreement shall mean the
following:

      


      (i)  For
a period commencing on the date hereof and concluding on the 90 day anniversary
of this Lock-Up Agreement (the “Private Transaction Lock-Up Period”), Siegel may
offer and sell up to a maximum of 700,000 shares of Common Stock plus the
Severance Shares as that term is defined in the Separation Agreement (the
“Private Transaction Shares”) in one or more private
transactions.  Siegel agrees not to remove the restrictive legend on
the Private Transaction Shares pursuant to Rule 144 under the Securities Act of
1933 or any other applicable rule or regulation until a definitive and binding
agreement to sell those shares in a private transaction has been entered into
between Siegel and the buyer of such shares; and

      


      (ii)  A
number of shares of the Common Stock owned by Siegel in amounts that do not
exceed 10% of the daily trading volume of the Company’s Common Stock at the
Volume-Weighted Average Price (VWAP) of the Common Stock.

      


      Siegel agrees that any breach of this
Lock-Up agreement will entitle the Company to terminate the January 23, 2009
Consulting Agreement entered into by and among the Company and
Siegel.  In addition, in the event Siegel breaches any of the terms of
this Lock-Up Agreement, and if requested by the Company, Siegel shall pay to the
Company an amount equal to 50% of the proceeds from such sales in violation of
this Lock-Up Agreement as liquidated damages.  If legal and collection
actions are required to enforce the terms of this Lock-Up Agreement, Siegel
shall be liable for legal fees and collections fees incurred by the Company in
connection with such action.  In no event shall the Company exercising
its rights under this section be precluded by the exercise of such rights from
pursuing, subject to the terms of this Agreement and applicable law, any cause
of action or other claim it may then or at any time thereafter have against
Siegel in respect of any breach or default by Siegel hereunder.


      
        
           


        

        
           


          
            

          

        

        
           


          
            


            China
Direct, Inc.

            January
23, 2009

            Page
2

            


            


          

        

      


      Notwithstanding
the foregoing, Siegel may transfer the Common Stock he owns (i) as a bona fide gift or gifts,
provided that the donee or donees thereof agree to be bound in writing by the
restrictions set forth herein or (ii) to any trust for the direct or indirect
benefit of Siegel or the immediate family of Siegel, provided that the trustee
of the trust agrees to be bound in writing by the restrictions set forth herein,
and provided further that any such transfer shall not involve a disposition for
value.  For purposes of this Lock-Up Agreement, “immediate family”
shall mean any relationship by blood, marriage or adoption, not more remote than
first cousin.  Siegel now has, and, except as contemplated by clauses
(i) and (ii) above, for the duration of this Lock-Up Agreement will have, good
and marketable title to the Common Stock, free and clear of all liens,
encumbrances, and claims whatsoever.  Siegel also agrees and consents
to the entry of stop transfer instructions with the Company’s transfer agent and
registrar against the transfer of Common Stock owned by Siegel except in
compliance with the foregoing restrictions.  In addition, Siegel may
sell such additional shares of the Common Stock he owns as may be approved in
writing by the Company from time to time in the Company’s absolute
discretion.

      


      Siegel
understands and agrees that this Lock-Up Agreement is irrevocable and shall be
binding upon Siegel’s heirs, legal representatives, successors, and
assigns.

      


      This
Lock-Up Agreement may be executed in two counterparts, each of which shall be
deemed an original but both of which shall be considered one and the same
instrument.

      


      This
Lock-Up Agreement will be governed by and construed in accordance with the laws
of the State of Florida, without giving effect to any choice of law or
conflicting provision or rule that would cause the laws of any jurisdiction
other than the State of Florida to be applied.  In furtherance of the
foregoing, the internal laws of the State of Florida will control the
interpretation and construction of this Lock-Up Agreement, even if under such
jurisdiction's choice of law or conflict of law analysis, the substantive law of
some other jurisdiction would ordinarily apply.

       

      
        
          	 	 	 	
                   Very
      truly yours,

                   

                	 
	
                   

                	 	 	
                  /s/
      Marc Siegel

                	 
	
                   

                	 	 	
                  Marc
      Siegel

                	 
	
                   

                	 	 	
                   

                	 


        

      

       

      Agreed to
and Acknowledged:

       

      

        
          
            
              	
                      China
      Direct, Inc.

                    	 
      	 
      	
                       

                    	 
      
	
                      By:
      /s/James Wang

                    	 
      	 
      	
                       

                    	 
      
	
                      Name:
      Yuejian (James) Wang

                    	 
      	 
      	
                       

                    	 
      
	
                      Title:  Chief
      Executive Officer, Chairman of the Board of Directors