cdii_10-47.htm


     

    
      

      

    

     

    

      Exhibit
10.46

       

      SEVERANCE
AGREEMENT

       

      This
Severance Agreement (the “Agreement”) is entered into as of May 23,
2008  between China Direct, Inc., a Florida corporation (the
“Company”) and Lazarus Rothstein (“Employee”).

       

              WHEREAS,
the Company desires to employ Employee as its Vice President, Secretary and
General Counsel and Employee desires to serve in such capacity on behalf of the
Company.

       

              NOW,
THEREFORE, in consideration of the promises and of the mutual covenants and
agreements hereinafter set forth, the Company and the Executive hereby agree as
follows:

       

              1.
Definitions

       

      For
purposes of this Agreement, the following capitalized terms shall have the
meanings set forth below.  Non-capitalized terms shall have their
ordinary meanings.

       

      “Affiliate” shall mean
any person, limited liability company, corporation, partnership, association or
any other entity controlling, controlled by or under common control with the
Company. “Control” shall mean the ownership by the Company of greater than fifty
(50%) of the voting interests of such person or any other such arrangement
as constitutes the possession, directly or indirectly, of power to direct or
cause the direction of management or policies of any such person, corporation or
entity, through ownership of voting securities, by contract or
otherwise.

       

      “Base Salary” shall
mean the weekly or monthly base salary, as the context requires, of Employee as
of the effective date of termination of Employee’s employment.

       

      “Cause” shall
mean

       

      (a) any
violation by Employee of the Company’s Code of Business Conduct or any other
material Company policy applicable to Employee;

       

      (b) the
commission of an intentional act of fraud, embezzlement, theft or dishonesty
against the Company by Employee;

       

      (c) the
conviction of Employee for (or the pleading by Employee of nolo contendere to) any crime
which constitutes a felony, or a misdemeanor involving moral turpitude, or
which, in the reasonable opinion of the Company, has caused material
embarrassment to the Company;

       

      (d) the
gross neglect or willful failure by Employee to perform his duties and
responsibilities in all material respects, if such breach of duty is not cured
within 10 days after receipt of written notice thereof to Employee by the
Company or its Board of Directors; or

       

      (e)
Employee’s failure to obey the reasonable and lawful orders or instructions of
the Chief Executive Officer, Employee’s supervisor or the Board of Directors,
unless such failure is cured within 10 days after receipt of written notice
thereof to Employee by the Company or the Board of Directors.

       

      For
purposes of clause (d), no act, or failure to act, on the part of Employee shall
be deemed “willful” unless done, or omitted to be done, by Employee other than
in good faith and without reasonable belief that such act, or failure to act,
was in the best interest of the Company.

       


      
        
           


        

        
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      “Change of Control”
shall mean the occurrence of any of the following events:

       

      (i) the
consummation of any transaction or series of transactions (including, without
limitation, any merger or consolidation) the result of which is that any
“person” (as such term is used in Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)) becomes the “beneficial
owner” (as such term is defined in Rule 13d–3 and Rule 13d–5 under the Exchange
Act), directly or indirectly, of  50% or more of the voting interests of
the Company; or

       

      (ii) the
Company’s Board of Directors shall approve a sale, lease, transfer, conveyance
or other disposition of all or substantially all of the assets of the Company,
and such transaction shall have been consummated; or

       

      (iii) the
Company’s Board of Directors shall approve any merger, consolidation, or like
business combination or reorganization of the Company, the consummation of which
would result in the occurrence of any event described in clause (i) above,
and such transaction shall have been consummated.

       

       “Good Reason” shall
mean

       

      (a) that
without Employee’s prior written consent and in the absence of Cause, one or
more of the following events occurs:

       

      (i) any
materially adverse change in Employee’s authority, duties, or responsibilities
or any assignment to Employee of duties and responsibilities materially
inconsistent with those normally associated with Employee’s position;
or

       

      (ii) a
reduction in Employee’s salary or benefits, to the extent a reduction in
benefits represent reductions not experienced in general by other senior
executives; or

       

      (iii) Employee
is required to be primarily based at any office more fifty (50) miles
outside the metropolitan area of Employee’s then current business address,
excluding travel reasonably required in the performance of Employee’s
responsibilities; and

       

      (b)
within sixty (60) calendar days of learning of the occurrence of any event
specified in clause (a), and in the absence of any circumstances that constitute
Cause, Employee terminates employment with the Company, by written notice to the
Company; provided, however, that the events set forth in subparagraphs (a)(i),
(a)(ii) or (a)(iii) shall not constitute Good Reason for purposes of this
Agreement unless, within thirty (30) calendar days of Employee’s learning
of such event, Employee gives written notice of the event to the Company, and
the Company fails to remedy such event within thirty (30) calendar days of
receipt of such notice.

       

      “Permanent Disability”
shall mean Employee’s inability to perform such Employee’s duties and
responsibilities for a period of 90 consecutive days or 120 non-consecutive
days, in either event in any 12 month period, due to illness, accident or any
other physical or mental incapacity, as reasonably determined by a physician
selected in good faith by the Company.

       

      2.  Employment.  The
Company hereby employs Employee as its Vice President, Secretary and General
Counsel in accordance with the terms set forth in Offer Letter attached hereto
as Exhibit “A”.

       

      3.
Termination without Cause.  Subject to the provisions of
Section 4 below, in the event that the employment of Employee is terminated
by the Company without Cause (other than (i) after a Change of

       


      
        
           


        

        
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      Control
as discussed in Section 3 below; (ii) upon the death or Permanent
Disability of Employee); (iii) a Change of Control occurs and the employment of
Employee is terminated (other than upon the death or Permanent Disability of
Employee) either (a) without Cause within two years of the Change of
Control, or (b) by Employee for Good Reason within two years of the Change
of Control, Employee shall be entitled to a lump sum severance payment equal to
six (6) months of Base Salary.

       

      4.
Conditions to and Timing of Payments.  No severance payment shall be
made to Employee under this Agreement unless such Employee shall have first
executed and delivered to the Company a waiver, general release and separation
agreement in favor of the Company and its Affiliates releasing the Company and
its Affiliates from any and all claims relating to such Employee’s
(i) employment with the Company and (ii) termination of employment
(the “Release”). The Release shall include confidentiality and non-disparagement
provisions and shall otherwise be in form and substance satisfactory to the
Company.

       

                  5.
Agreement Changes.  The Company reserves the right to amend or modify
this Agreement at any time without prior notice, provided that, without the
written approval of the Employee, no such amendment or modification made
subsequent to the occurrence of a Change of Control shall alter or impair the
benefits that might be payable to Employee hereunder as a result of a
termination of employment following such Change of Control.

       

      6.   Entire
Agreement; Effectiveness of Agreement. This Agreement and the accompanying offer
letter sets forth the entire agreement of the parties hereto and shall supersede
any and all prior agreements and understandings concerning the Employee's
employment by the Company. This Agreement may be changed only by a written
document signed by the Employee and the Company.

       

      7.   Severability.
If any one or more of the provisions, or portions of any provision, of the
Agreement shall be held to be invalid, illegal or unenforceable, the validity,
legality or enforceability of the remaining provisions or parts hereof shall not
in any way be affected or impaired thereby.

       

                 8.   Governing
Law. This agreement shall be governed by, and construed and enforced in
accordance with, the substantive and procedural laws of the state of Florida
without regard to rules governing conflicts of law.

       

      9.   Arbitration.
Any controversy, claim or dispute arising out of or relating to this Agreement
or the Employee's employment by the Company, including, but not limited to,
common law and statutory claims for discrimination, wrongful discharge, and
unpaid wages, shall be resolved by arbitration in Broward County, Florida
pursuant to the prevailing National Rules for the Resolution of Employment
Disputes of the American Arbitration Association.  The prevailing
party in any such action or litigation involving this Agreement shall be
entitled to recover attorney’s fees and costs from the non-prevailing
party.

       

      10.   Indemnification.
During the period of time Employee is employed by the Company, the Employee
shall be entitled to indemnification and insurance coverage for directors and
officers liability, fiduciary liability and other liabilities arising out of the
Employee's position with the Company in any capacity, in an amount not less than
the highest amount available to any other senior level executive or member of
the Board and to the full extent provided by the Company's certificate of
incorporation or by-laws, and such coverage and protections, with

       


      
        
           


        

        
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      respect
to the various liabilities as to which the Employee has been customarily
indemnified prior to termination of employment, shall continue for at least six
years following Employee’s date of termination of employment. Any
indemnification agreement entered into between the Company and the Employee
shall continue in full force and effect in accordance with its terms following
the termination of this Agreement.

       

      11.   Notices.
All notices and other communications hereunder shall be in writing and shall be
given by hand delivery to the other party or by registered or certified mail,
return receipt requested, postage prepaid, or by facsimile or nationally
recognized overnight courier service, addressed as follows:

       

      
        	
                If
      to Employee:

                6935
      NW 108 Ave

                Parkland,
      FL 33076

                 

              	
                If
      to the Company:

                China
      Direct, Inc.

                431
      Fairway Drive

                Deerfield
      Beach, FL 33441

              


      

      


       

      or to
such other address as either party shall have furnished to the other in writing
in accordance herewith. Notice and communications shall be effective when
actually received by the addressee.

       

      12.   Withholding.
The Company may withhold from amounts payable under this Agreement any and all
federal, state, and local taxes that are required to be withheld by any
applicable laws and regulations. The Company may also withhold any amounts
necessary pursuant to the benefit plans, policies, or arrangements of the
Company or otherwise, in accordance with any applicable Company policies, laws
and/or regulations.

       

              IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
and year first above written.

       

      China Direct, Inc.

      


      


      By: /s/ Marc
Siegel

      Title: President

      


      


      /s/ Lazarus
Rothstein

      Lazarus Rothstein

       

       


      
        
           


        

        
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      May 27,
2008

       

      Lazarus
Rothstein, Esq.

      6935 NW
108 Ave

      Parkland,
FL 33076

      


       

      Re: Employment Offer with
China Direct, Inc. (the “Company”)

       

       

      Dear
Laz:

       

      We are pleased to extend you an offer
of employment with the Company under the following terms:

      


      
        	
                ·POSITION

              	
                Vice
      President, Secretary and General Counsel

              
	
                ·REPORTING
      TO

              	
                James
      Wang, Marc Seigel and David Stein

              
	
                ·LOCATION

              	
                Deerfield
      Beach, Florida Corporate Office

              
	
                ·EFFECTIVE
      DATE

              	
                June
      1, 2008

              
	
                ·SALARY

              	
                $160,000.00
      per annum, payable in accordance with the Company’s standard payroll
      practices.

              
	
                ·SEVERANCE

              	
                See
      the attached Severance Agreement.

              
	
                ·EQUITY
      AWARD

              	
                A
      number of shares of the Company’s Restricted Common Stock with a value of
      $50,000 as of the date of grant using the closing price of the Company’s
      common stock as of the date of ratification of such grant by the Board of
      Directors.

              


      

      


      As an
employee of the Company, you will become eligible to participate in the
Company’s health, dental and life insurance benefit plan 90 days after the
effective date of your employment.  Additional information on the
Company’s benefit plan will be made available to you during the new hire
process.

      


      The
Restricted Common Stock will vest 25% 12 months after the grant date, 25% 15
months after the grant date, 25% 18 months after the grant date and 25% 21
months after the grant date.  The grant of the Restricted Common Stock
is contingent on approval of the Company’s 2008 Non-Executive Stock Incentive
Plan at the Annual Meeting of Shareholders on May 30, 2008 and the Board of
Directors ratification of such grant after shareholder approval.

      


        The
Company shall reimburse you for all necessary and reasonable travel,
entertainment and other business expenses incurred by you in the performance of
your duties hereunder in accordance with such reasonable procedures as the
Company may adopt generally from time to time.


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      You are
entitled to vacation, holiday and sick leave at levels no less than commensurate
with those provided to any other vice presidents of the Company, in accordance
with the Company's vacation, holiday and other pay-for-time-not-worked
policies.

      


      We look
forward to you joining our team.

      


      Very
truly yours,

      


      /s/ David
Stein

      David
Stein, COO

      


      PLEASE
READ CAREFULLY AND SIGN BELOW

      


      I
understand that the Company is a drug free workplace.  I further understand that
this offer of employment is contingent upon satisfactory results of all
pre-employment screening including but not limited to reference and background
checks and drug test and should I fail to satisfy these requirements, the offer
will be withdrawn and/or I will be immediately released.  In addition,
you will be required to read and abide by the Company’s Code of Ethics and other
obligations and requirements for our employees as set forth in the Company’s
Employee Handbook, both of which may be amended from time to time by the
Company.  The Code of Ethics and Employee Handbook will be furnished
to you during the new hire process.  I acknowledge and agree that this
offer of employment does not constitute an employment contract and the Company
or I may terminate my employment at will without penalty.

      


      Other
than my obligations to wind down my legal practice over the next 30 days, my
employment with the Company will not breach any fiduciary or other duty or any
covenant, agreement or understanding (including, without limitation, any
agreement relating to any proprietary information, knowledge or data acquired by
me in confidence, trust or otherwise prior to my employment with the Company) to
which I am a party or by the terms of which I may be bound.  The
Company understands that I will be permitted a period of 30 days to wind down my
law practice and conclude any matters that I am working on.  I
covenant and agree that I shall not disclose to the Company, or induce the
Company to use, any such proprietary information, knowledge or data belonging to
any previous employer, contractor or others. I further covenant and agree not to
enter into any agreement or understanding, either written or oral, in conflict
with the provisions of this Offer Letter.

      


      I accept hereby accept the above terms
and the offer of employment.

      


      Sign
/s/ Lazarus
Rothstein

      Print
Lazarus
Rothstein

      


      Date 5-27-2008