Document:

form10ksb123107ex10-6.htm

    EXHIBIT  10.6   2005
Equity Plan

    

    

    CHINA
DIRECT TRADING CORPORATION

    (Hereinafter
referred to as the “Company”)

    2005
EQUITY INCENTIVE PLAN

     

    1. PURPOSE. The purpose of the
Plan is to provide incentives to attract, retain and motivate eligible persons
whose present and potential contributions are important to the success of the
Company and its Subsidiaries by offering them an opportunity to participate in
the Company’s future performance through awards of Options, Restricted Stock,
Stock Bonuses, Stock Appreciation Rights (SARs) and Restricted Stock Units.
Capitalized terms not defined in the text are defined in
Section 26.

     

    
      	
              2. SHARES SUBJECT TO THE
      PLAN.

            

    

     

    2.1
Number of Shares Available. Subject to Sections 2.2 and 21, twenty million
(20,000,000) Shares are available for grant and issuance under the Plan. Shares
that are subject to: (a) issuance upon exercise of an Option or SAR granted
under this Plan but cease to be subject to the Option or SAR for any reason
other than exercise of the Option; (b) an Award granted under this Plan but
are forfeited or are repurchased by the Company at the original issue price; or
(c) an Award granted under this Plan that otherwise terminates without
Shares being issued, will return to the pool of Shares available for grant and
issuance under this Plan. No more than 6,000,000 Shares may be made subject to
Awards having an Exercise Price or Purchase Price per Share that is less than
Fair Market Value on the date of grant. In order that ISOs may be granted under
this Plan, no more than 3,000,000 shares shall be issued as ISOs. The Company
may issue Shares, which are authorized but unissued, or treasury shares pursuant
to the Awards granted under this Plan. At all times the Company will reserve and
keep available a sufficient number of Shares to satisfy the requirements of all
outstanding Options and SARs granted under the Plan and all other outstanding
but unvested Awards granted under the Plan.

     

    2.2
Adjustment of Shares. If the number of outstanding Shares is changed by a stock
dividend, recapitalization, stock split, reverse stock split, subdivision,
combination, reclassification or similar change in the capital structure of the
Company, without consideration, then (a) the number of Shares reserved for
issuance under the Plan set forth in Section 2.1, (b) the Exercise
Prices of and number of Shares subject to outstanding Options and SARs,
(c) the number of Shares subject to other outstanding Awards, (d) the
6,000,000 maximum number of shares that may be issued as ISOs set forth in
Section 2.1; (e) the 2,000,000 and 3,000,000 maximum number of shares
that may be issued to an individual in any one calendar year set forth in
Section 3; (f) the 2,000,000 Share limit on the aggregate number of
Shares that may be made subject to Awards having an Exercise Price or Purchase
Price per Share that is less than Fair Market Value on the date of grant; and
(g) the number of Shares that are granted as Options to Non-Employee
Directors as set forth in Section 10, will be proportionately adjusted,
subject to any required action by the Board or the stockholders of the Company
and compliance with applicable securities laws; provided that fractions of a
Share will not be issued

    
      
         

      

      
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    but will
either be replaced by a cash payment equal to the Fair Market Value of such
fraction of a Share or will be rounded up to the nearest whole Share, as
determined by the Committee; and provided further that the Exercise Price of any
Option may not be decreased to below the par value of the Shares.

     

    3. ELIGIBILITY. ISOs may be
granted only to employees (including officers and directors who are also
employees) of the Company or of a Subsidiary. All other Awards may be granted to
employees (including officers and directors who are also employees), directors
and professional advisors, consultants of the Company or any Subsidiary;
provided that such consultants, contractors and advisors render bona fide
services not in connection with the offer and sale of securities in a
capital-raising transaction. The Committee (or its designee under 4.1(c)) will
from time to time determine and designate among the eligible persons who will be
granted one or more Awards under the Plan. A person may be granted more than one
Award under the Plan. However, no person will be eligible to receive more than
2,000,000 Shares issuable under Awards granted in any calendar year, other than
new employees of the Company or of a Subsidiary (including new employees who are
also officers and directors of the Company or any Subsidiary), who are eligible
to receive up to a maximum of 3,000,000 Shares issuable under Awards granted in
the calendar year in which they commence their employment.

     

    
      	
              4. ADMINISTRATION.

            

    

     

    4.1
Committee Authority. The Plan shall be administered by the Committee or by the
Board acting as the Committee. Except for automatic grants to Non-Employee
Directors pursuant to Section 10 hereof, and subject to the general
purposes, terms and conditions of the Plan, the Committee will have full power
to implement and carry out the Plan. Without limiting the previous sentence, the
Committee will have the authority to:

     

    (a)         construe
and interpret the Plan, any Award Agreement and any other agreement or document
executed pursuant to the Plan;

     

    (b)         prescribe,
amend and rescind rules and regulations relating to the Plan or any Award,
including determining the forms and agreements used in connection with the Plan;
provided that the Committee may delegate to the Chief Executive Officer or
President or the officer in charge of Human Resources, in consultation with the
General Counsel, the authority to approve revisions to the forms and agreements
used in connection with the Plan that are designed to facilitate Plan
administration, and that are not inconsistent with the Plan or with any
resolutions of the Committee relating to the Plan;

     

    (c)         select
persons to receive Awards; provided that the Committee may delegate to one or
more Executive Officers (who would also be considered “officers” under Florida
law) the authority to grant an Award under the Plan to Participants who are not
Insiders;

     

    (d)         determine
the terms of Awards;

     

    (e)         determine
the number of Shares or other

    
      
         

      

      
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    consideration
subject to Awards;

     

    (f)         determine
whether Awards will be granted singly, in combination, or in tandem with, in
replacement of, or as alternatives to, other Awards under the Plan or any other
incentive or compensation plan of the Company or any Subsidiary;

     

    (g)         grant
waivers of Plan or Award conditions;

     

    (h)         determine
the vesting, exercisability, transferability, and payment of
Awards;

     

    (i)         correct
any defect, supply any omission, or reconcile any inconsistency in the Plan, any
Award or any Award Agreement;

     

    (j)         determine
whether an Award has been earned;

     

    (k)         amend
the Plan; or

     

    (l)         make
all other determinations necessary or advisable for the administration of the
Plan.

     

    4.2
Committee Interpretation and Discretion. Except for automatic grants to
Non-Employee Directors pursuant to Section 10 hereof, any determination
made by the Committee with respect to any Award shall be made in its sole
discretion at the time of grant of the Award or, unless in contravention of any
express term of the Plan or Award, at any later time, and such determination
shall be final and binding on the Company and all persons having an interest in
any Award under the Plan. Any dispute regarding the interpretation of the Plan
or any Award Agreement shall be submitted by the Participant or Company to the
Committee for review. The resolution of such a dispute by the Committee shall be
final and binding on the Company and Participant. The Committee may delegate to
one or more Executive Officers, the authority to review and resolve disputes
with respect to Awards held by Participants who are not Insiders, and such
resolution shall be final and binding on the Company and
Participant.

     

    5. OPTIONS. The Committee may
grant Options to eligible persons and will determine (a) whether the
Options will be ISOs or NQSOs; (b) the number of Shares subject to the
Option, (c) the Exercise Price of the Option, (d) the period during
which the Option may be exercised, and (e) all other terms and conditions
of the Option, subject to the provisions of this Section 5 and the Plan.
Options granted to Non-Employee Directors pursuant to Section 10 hereof
shall be governed by that Section.

     

    5.1 Form
of Option Grant. Each Option granted under the Plan will be evidenced by a Stock
Option Agreement that will expressly identify the Option as an ISO or NQSO.
Except as otherwise required by the terms of Options to Non-Employee Directors
as provided in the terms of Section 10 hereof, the Stock Option Agreement
will be substantially in a form and contain such provisions (which need not be
the same for each Participant) that the Committee or an officer of the Company
(pursuant to Section 4.1(b)) has from time to time approved, and will
comply with and be subject to the terms and conditions of the
Plan.

    
      
         

      

      
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    5.2 Date
of Grant. The date of grant of an Option will be the date on which the Committee
makes the determination to grant the Option, unless a later date is otherwise
specified by the Committee. The Stock Option Agreement, and a copy of the Plan
and the current Prospectus for the Plan (plus any additional documents required
to be delivered under applicable laws), will be delivered to the Participant
within a reasonable time after the Option is granted. The Stock Option
Agreement, Plan, the Prospectus and other documents may be delivered in any
manner (including electronic distribution or posting) that meets applicable
legal requirements.

     

    5.3
Exercise Period and Expiration Date. An Option will be exercisable within the
times or upon the occurrence of events determined by the Committee and set forth
in the Stock Option Agreement governing such Option, subject to the provisions
of Section 5.6, and subject to Company policies established by the
Committee (or by individuals to whom the Committee has delegated responsibility)
from time to time with respect to vesting during leaves of absences. The Stock
Option Agreement shall set forth the last date that the Option may be exercised
(the “Expiration Date”); provided that no Option will be exercisable after the
expiration of seven years from the date the Option is granted; and provided
further that no ISO granted to a Ten Percent (10%) Stockholder will be
exercisable after the expiration of five years from the date the Option is
granted. The Committee also may provide for Options to become exercisable at one
time or from time to time, periodically or otherwise (including, without
limitation, upon the attainment during a Performance Period of performance goals
based on Performance Factors), in such number of Shares or percentage of Shares
subject to the Option as the Committee determines.

     

    5.4
Exercise Price. The Exercise Price of an Option will be determined by the
Committee when the Option is granted and, subject to the 2,000,000 Share limit
of Section 2.1 hereof on the aggregate number of Shares that may be made
subject to Awards having an Exercise Price or Purchase Price per Share that is
less than Fair Market value on the date of grant, may be less than Fair Market
Value (but not less than the par value of the Shares); provided that
(i) the Exercise Price of an ISO will not be less than the Fair Market
Value of the Shares on the date of grant and (ii) the Exercise Price of any
ISO granted to a Ten Percent (10%) Stockholder will not be less than 110% of the
Fair Market Value of the Shares on the date of grant. Payment for the Shares
purchased must be made in accordance with Section 11 of the Plan and the
Stock Option Agreement.

     

    5.5
Procedures for Exercise. A Participant or Authorized Transferee may exercise
Options by following the procedures established by the Company’s Stock
Administration Department, as communicated and made available to Participants by
the Company.

     

    
      	
              5.6
      Termination.

            

    

     

    (a) Vesting.
Any Option granted to a Participant will cease to vest on the Participant’s
Termination Date, if the Participant is Terminated for any reason other than
“total disability” (as defined in this Section 5.6(a)) or death. Any Option
granted to a Participant who is an employee who has been actively employed by
the Company or any

    
      
         

      

      
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    Subsidiary
for one year or more or who is a director, will vest as to 100% of the Shares
subject to such Option, if the Participant is Terminated due to “total
disability” or death. For purposes of this Section 5.6(a), “total
disability” shall mean: (i) (A) for so long as such definition is used for
purposes of the Company’s group life insurance and accidental death and
dismemberment plan or group long term disability plan, that the Participant is
unable to perform each of the material duties of any gainful occupation for
which the Participant is or becomes reasonably fitted by training, education or
experience and which total disability is in fact preventing the Participant from
engaging in any employment or occupation for wage or profit; or, (B) if
such definition has changed, such other definition of “total disability” as
determined under the Company’s group life insurance and accidental death and
dismemberment plan or group long term disability plan; and (ii) the Company
shall have received from the Participant’s primary physician a certification
that the Participant’s total disability is likely to be permanent. Any Option
held by an employee who is Terminated by the Company, or any Subsidiary within
one year following the date of a Corporate Transaction, will immediately vest as
to such number of Shares as the Participant would have been vested in twelve
(12) months after the date of Termination had the Participant remained employed
for that twelve month period.

     

    (b) Post-Termination
Exercise Period. Following a Participant’s Termination, the Participant’s Option
may be exercised to the extent vested as set forth in
Section 5.6(a):

     

    (i) no
later than 90 days after the Termination Date if a Participant is
Terminated for any reason except death or Disability, unless a longer time
period, not exceeding five years, is specifically set forth in the Participant’s
Stock Option Agreement; provided that no Option may be exercised after the
Expiration Date of the Option; or

     

    (ii) no
later than (A) twelve months after the Termination Date in the case of
Termination due to Disability or (B) eighteen months after the Termination
Date in the case of Termination due to death or if a Participant dies within
three months of the Termination Date, unless a longer time period, not exceeding
five years, is specifically set forth in the Participant’s Stock Option
Agreement; provided that no Option may be exercised after the Expiration Date of
the Option.

     

    5.7
Limitations on Exercise. The Committee may specify a reasonable minimum number
of Shares that may be purchased on any exercise of an Option; provided that the
minimum number will not prevent a Participant from exercising an Option for the
full number of Shares for which it is then exercisable.

     

    5.8
Limitations on ISOs. The aggregate Fair Market Value (determined as of the date
of grant) of Shares with respect to which ISOs are exercisable for the first
time by a Participant during any calendar year (under the Plan or under any
other incentive stock option plan of the Company or any Subsidiary) shall not
exceed $100,000. If the Fair Market Value of Shares on the date of grant with
respect to which ISOs are exercisable for the first time by a Participant during
any calendar year exceeds $100,000, the Options for the first $100,000 worth of
Shares to become exercisable in that calendar year will be

    
      
         

      

      
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    ISOs, and
the Options for the Shares with a Fair Market Value in excess of $100,000 that
become exercisable in that calendar year will be NQSOs. If the Code is amended
to provide for a different limit on the Fair Market Value of Shares permitted to
be subject to ISOs, such different limit shall be automatically incorporated
into the Plan and will apply to any Options granted after the effective date of
the Code’s amendment.

     

    5.9
Notice of Disqualifying Dispositions of Shares Acquired on Exercise of an ISO.
If a Participant sells or otherwise disposes of any Shares acquired pursuant to
the exercise of an ISO on or before the later of (a) the date two years
after the Date of Grant, and (b) the date one year after the exercise of
the ISO (in either case, a “Disqualifying Disposition”), the Company may require
the Participant to immediately notify the Company in writing of such
Disqualifying Disposition.

     

    5.10
Modification, Extension or Renewal. The Committee may modify, extend or renew
outstanding Options and authorize the grant of new Options in substitution
therefor; provided that any such action may not, without the written consent of
Participant, impair any of Participant’s rights under any Option previously
granted; and provided, further that without stockholder approval, the modified,
extended, renewed or new Option may not have a lower Exercise Price than the
outstanding Option. Any outstanding ISO that is modified, extended, renewed or
otherwise altered shall be treated in accordance with Section 424(h) of the
Code. The Committee may reduce the Exercise Price of outstanding Options without
the consent of Participants affected, by a written notice to them; provided,
however, that unless prior stockholder approval is secured, the Exercise Price
may not be reduced below that of the outstanding Option.

     

    5.11 No
Disqualification. Notwithstanding any other provision in the Plan, no term of
the Plan relating to ISOs will be interpreted, amended or altered, and no
discretion or authority granted under the Plan will be exercised, so as to
disqualify the Plan under Section 422 of the Code or, without the consent
of the Participant affected, to disqualify any ISO under Section 422 of the
Code.

     

    
      	
              6. RESTRICTED STOCK
      AWARDS.

            

    

     

    6.1
Awards of Restricted Stock. A Restricted Stock Award is an offer by the Company
to sell to an eligible person Shares that are subject to restrictions. The
Committee will determine to whom an offer will be made, the number of Shares the
person may purchase, the Purchase Price, the restrictions under which the Shares
will be subject and all other terms and conditions of the Restricted Stock
Award, subject to the following:

     

    6.2
Restricted Stock Purchase Agreement. All purchases under a Restricted Stock
Award will be evidenced by a Restricted Stock Purchase Agreement, which will be
in substantially a form (which need not be the same for each Participant) that
the Committee or an officer of the Company (pursuant to Section 4.1(b)) has
from time to time approved, and will comply with and be subject to the terms and
conditions of the Plan. A Participant accepts a Restricted Stock Award by
signing and delivering to the Company a Restricted Stock
Purchase

    
      
         

      

      
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    Agreement
with full payment of the Purchase Price, within thirty days from the date the
Restricted Stock Purchase Agreement was delivered to the Participant. If the
Participant does not accept the Restricted Stock Award within thirty days, then
the offer of the Restricted Stock Award will terminate, unless the Committee
determines otherwise.

     

    6.3
Purchase Price. The Purchase Price for a Restricted Stock Award will be
determined by the Committee and, subject to the 2,000,000 Share limit of
Section 2.1 hereof on the aggregate number of Shares that may be made
subject to Awards having an Exercise Price or Purchase Price per Share that is
less than Fair Market Value on the date of grant, may be less than Fair Market
Value (but not less than the par value of the Shares) on the date the Restricted
Stock Award is granted. Payment of the Purchase Price must be made in accordance
with Section 11 of the Plan and the Restricted Stock Purchase Agreement,
and in accordance with any procedures established by the Company’s Stock
Administration Department, as communicated and made available to Participants by
the Company.

     

    6.4 Terms
of Restricted Stock Awards. Restricted Stock Awards will be subject to such
restrictions as the Committee may impose. These restrictions may be based on
completion of a specified number of years of service with the Company or upon
completion of the performance goals based on Performance Factors during any
Performance Period as set out in advance in the Participant’s Restricted Stock
Purchase Agreement. Prior to the grant of a Restricted Stock Award, the
Committee shall: (a) determine the nature, length and starting date of any
Performance Period for the Restricted Stock Award; (b) select from among the
Performance Factors to be used to measure performance goals, if any; and
(c) determine the number of Shares that may be awarded to the Participant.
Prior to the payment for Shares to be purchased under any Restricted Stock
Award, the Committee shall determine the extent to which such Restricted Stock
Award has been earned. Performance Periods may overlap and a Participant may
participate simultaneously with respect to Restricted Stock Awards that are
subject to different Performance Periods and having different performance goals
and other criteria. 

     

    6.5
Termination During Performance Period. If a Participant is Terminated during a
Performance Period or vesting period, for any reason, then such Participant will
be entitled to payment (whether in Shares, cash or otherwise) with respect to
the Restricted Stock Award only to the extent earned as of the date of
Termination in accordance with the Restricted Stock Purchase Agreement, unless
the Committee will determine otherwise.

     

    
      	
              7. STOCK BONUS
      AWARDS.

            

    

     

    7.1
Awards of Stock Bonuses. A Stock Bonus Award is an award to an eligible person
of Shares (which may consist of Restricted Stock or Restricted Stock Units) for
services to be rendered or for past services already rendered to the Company or
any Subsidiary. All Stock Bonus Awards shall be made pursuant to a Stock Bonus
Agreement, which shall be in substantially a form (which need not be the same
for each Participant) that the Committee or an officer of the Company (pursuant
to Section 4.1(b)) has from time to time approved, and
will

    
      
         

      

      
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    comply
with and be subject to the terms and conditions of the Plan. No payment will be
required for Shares awarded pursuant to a Stock Bonus Award. Stock Bonus Awards
shall be subject to the 2,000,000 share limit of Section 2.1 hereof on the
aggregate number of Shares that may be made subject to Awards having an Exercise
Price or Purchase Price per Share that is less than the Fair Market Value on the
date of grant.

     

    7.2 Terms
of Stock Bonus Awards. The Committee will determine the number of Shares to be
awarded to the Participant under a Stock Bonus Award and any restrictions
thereon. These restrictions may be based upon completion of a specified number
of years of service with the Company or upon satisfaction of performance goals
based on Performance Factors during any Performance Period as set out in advance
in the Participant’s Stock Bonus Agreement. If the Stock Bonus Award is to be
earned upon the satisfaction of performance goals, the Committee shall:
(a) determine the nature, length and starting date of any Performance
Period for the Stock Bonus Award; (b) select from among the Performance
Factors to be used to measure performance goals; and (c) determine the
number of Shares that may be awarded to the Participant. Prior to the issuance
of any Shares or other payment to a Participant pursuant to a Stock Bonus Award,
the Committee will determine the extent to which the Stock Bonus Award has been
earned. Performance Periods may overlap and a Participant may participate
simultaneously with respect to Stock Bonus Awards that are subject to different
Performance Periods and different performance goals and other criteria. The
number of Shares may be fixed or may vary in accordance with such performance
goals and criteria as may be determined by the Committee. The Committee may
adjust the performance goals applicable to a Stock Bonus Award to take into
account changes in law and accounting or tax rules and to make such adjustments
as the Committee deems necessary or appropriate to reflect the impact of
extraordinary or unusual items, events or circumstances to avoid windfalls or
hardships.

     

    7.3 Form
of Payment to Participant. The Committee will determine whether the earned
portion of a Stock Bonus Award will be paid to the Participant currently or on a
deferred basis with such interest or dividend equivalent, if any, as the
Committee may determine. To the extent permissible under law, the Committee may
also permit a Participant to defer payment under a Stock Bonus Award to a date
or dates after the Stock Bonus Award is earned. Payment may be made in the form
of cash, whole Shares, or a combination thereof, based on the Fair Market Value
of the Shares earned under a Stock Bonus Award on the date of payment, and in
either a lump sum payment or in installments.

     

    7.4
Termination of Participant . In the event of a Participant’s Termination during
a Performance Period or vesting period, for any reason, then such Participant
will be entitled to payment (whether in Shares, cash or otherwise) with respect
to the Stock Bonus Award only to the extent earned as of the date of Termination
in accordance with the Stock Bonus Agreement, unless the Committee determines
otherwise.

     

    
      	
              8. STOCK APPRECIATION
      RIGHTS.

            

    

     

    8.1
Awards of SARs. A Stock Appreciation Right (“SAR”) is

    
      
         

      

      
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    an award
to an eligible person that may be settled in cash, or Shares (which may consist
of Restricted Stock), having a value equal to the value determined by
multiplying the difference between the Fair Market Value on the date of exercise
over the Exercise Price and the number of Shares with respect to which the SAR
is being settled. The SAR may be granted for services to be rendered or for past
services already rendered to the Company, or any Subsidiary. All SARs shall be
made pursuant to a SAR Agreement, which shall be in substantially a form (which
need not be the same for each Participant) that the Committee or an officer of
the Company (pursuant to Section 4.1(b)) has from time to time approved,
and will comply with and be subject to the terms and conditions of this
Plan.

     

    8.2 Terms
of SARs. The Committee will determine the terms of a SAR including, without
limitation: (a) the number of Shares deemed subject to the SAR;
(b) the Exercise Price and the time or times during which the SAR may be
settled; (c) the consideration to be distributed on settlement of the SAR;
and (d) the effect on each SAR of the Participant’s Termination. The
Exercise Price of the SAR will be determined by the Committee when the SAR is
granted and, subject to the 2,000,000 Share limit of Section 2.1 hereof on
the aggregate number of Shares that may be made subject to Awards having an
Exercise Price or Purchase Price per Share that is less than Fair Market value
on the date of grant, may be less than Fair Market Value (but not less than the
par value of the Shares. A SAR may be awarded upon satisfaction of such
performance goals based on Performance Factors during any Performance Period as
are set out in advance in the Participant’s individual SAR Agreement. If the SAR
is being earned upon the satisfaction of performance goals, then the Committee
will: (x) determine the nature, length and starting date of any Performance
Period for each SAR; and (y) select from among the Performance Factors to
be used to measure the performance, if any. Prior to settlement of any SAR
earned upon the satisfaction of performance goals pursuant to a SAR Agreement,
the Committee shall determine the extent to which such SAR has been earned.
Performance Periods may overlap and Participants may participate simultaneously
with respect to SARs that are subject to different performance goals and other
criteria. The Exercise Price of an outstanding SAR may not be reduced without
stockholder approval.

     

    8.3
Exercise Period and Expiration Date. A SAR will be exercisable within the times
or upon the occurrence of events determined by the Committee and set forth in
the SAR Agreement governing such SAR. The SAR Agreement shall set forth the last
date that the SAR may be exercised (the “Expiration Date”); provided that no SAR
will be exercisable after the expiration of seven years from the date the SAR is
granted. The Committee may also provide for SARs to become exercisable at one
time or from time to time, periodically or otherwise (including, without
limitation, upon the attainment during a Performance Period of performance goals
based on Performance Factors), in such number of Shares or percentage of the
Shares subject to the SAR as the Committee determines. 8.4 Form and Timing of
Settlement. The portion of a SAR being settled may be paid currently or on a
deferred basis with such interest or dividend equivalent, if any, as the
Committee determines. Payment may be made in the form of cash or whole Shares or
a combination thereof, either in a lump sum payment or in installments, as the
Committee determines.

     

    
      	
              9. RESTRICTED STOCK
      UNITS

            

    

     

    9.1
Awards of Restricted Stock Units. A Restricted Stock Unit (“RSU”) is an award to
an eligible person covering a number of Shares that may be settled in cash, or
by issuance of those Shares (which may consist of Restricted Stock) for services
to be rendered or for past services already rendered to the Company or any
Subsidiary. The Committee may authorize the issuance of RSUs to certain eligible
persons who elect to defer cash compensation. All RSUs shall be made pursuant to
a RSU Agreement, which shall be in substantially a form (which need not be the
same for each Participant) that the Committee or an officer of the Company
(pursuant to Section 4.1(b)) has from time to time approved, and will
comply with and be subject to the terms and conditions of the Plan. RSUs are
subject to the 2,000,000 share limit of Section 2.1 hereof on the aggregate
number of Shares that may be made subject to Awards having an Exercise Price or
Purchase Price per Share that is less than the Fair Market Value on the date of
grant.

     

    9.2 Terms
of RSUs. The Committee will determine the terms of a RSU including, without
limitation: (a) the number of Shares deemed subject to the RSU;
(b) the time or times during which the RSU may be exercised; (c) the
consideration to be distributed on settlement, and the effect on each RSU of the
Participant’s Termination. A RSU may be awarded upon satisfaction of such
performance goals based on Performance Factors during any Performance Period as
are set out in advance in the Participant’s individual RSU Agreement. If the RSU
is being earned upon satisfaction of performance goals, then the Committee will:
(x) determine the nature, length and starting date of any Performance
Period for the RSU; (y) select from among the Performance Factors to be
used to measure the performance, if any; and (z) determine the number of
Shares deemed subject to the RSU. Prior to settlement of any RSU earned upon the
satisfaction of performance goals pursuant to a RSU Agreement, the Committee
shall determine the extent to which such SAR has been earned. Performance
Periods may overlap and participants may participate simultaneously with respect
to RSUs that are subject to different Performance Periods and different
performance goals and other criteria. The number of Shares may be fixed or may
vary in accordance with such performance goals and criteria as may be determined
by the Committee. The Committee may adjust the performance goals applicable to
the RSUs to take into account changes in law and accounting and to make such
adjustments as the Committee deems necessary or appropriate to reflect the
impact of extraordinary or unusual items, events or circumstances to avoid
windfalls or hardships.

     

    9.3 Form
and Timing of Settlement. The portion of a RSU being settled may be paid
currently or on a deferred basis with such interest or dividend equivalent, if
any, as the Committee determines. To the extent permissible under law, the
Committee may also permit a Participant to defer payment under a RSU to a date
or dates after the RSU is earned. Payment may be made in the form of cash or
whole Shares or a combination thereof, either in a lump sum payment or in
installments, all as the Committee determines.

     

    
      	
              10. AUTOMATIC GRANTS TO
      NON-EMPLOYEE DIRECTORS.

            

    

     

    10.1
Eligibility. Non-Employee Directors are eligible for options granted pursuant to
this Section 11.

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

      

    10.2
Initial Grant. Each Non-Employee Director who first becomes a member of the
Board on or after the Effective Date will automatically be granted an option for
25,000 Shares on the date such Non-Employee Director first becomes a member of
the Board. Each Non-Employee Director who became a member of the Board prior to
the Effective Date and who did not receive a prior option grant in connection
with his or her appointment from the Company, will receive an Initial Grant on
the Effective Date. Each Option granted pursuant to this Section 10.2 shall
be called an “Initial Grant”.

     

    10.3
Succeeding Grant. On each anniversary of an Initial Grant under this Plan, each
Non-Employee Director who has served continuously as a member of the Board
during that period will automatically be granted an Option for 15,000 Shares.
Each Option granted pursuant to this Section 10.3 shall be called a
“Succeeding Grant”.

     

    10.4
Audit Committee Grants. Each Non-Employee Director who is appointed a new member
to the Audit Committee on or after the Effective Date, will automatically be
granted an Option for 5,000 Shares on the day he or she is appointed. On each
anniversary of a Non-Employee Directors first grant (a) pursuant to this
Section 10.4, on which the Non-Employee Director is a member of the Audit
Committee, the Non-Employee Director will automatically be granted an Option for
5,000 Shares. Each Option granted pursuant to this Section 10.4 shall be
called an “Audit Committee Grant”.

     

    10.5
Compensation and Organizational Development Committee Grants. Each Non-Employee
Director who is appointed a new member to the Compensation and Organizational
Development Committee on or after the Effective Date, will automatically be
granted an Option for 5,000 Shares on the day he or she is appointed. On each
anniversary of a Non-Employee Directors first grant (a) pursuant to this
Section 10.5, on which the Non-Employee Director is a member of the
Compensation and Organizational Development Committee, the Non-Employee Director
will automatically be granted an Option for 5,000 Shares. Each Option granted
pursuant to this Section 10.5 shall be called a “Compensation Committee
Grant”.

     

    10.6
Nominating & Governance Committee Grants. Each Non-Employee Director who is
appointed a new member to the Nominating & Governance Committee on or after
the Effective Date, will automatically be granted an Option for 5,000 Shares on
the day he or she is appointed. On each anniversary of a Non-Employee Directors
first grant (a) pursuant to this Section 10.6, on which the
Non-Employee Director is a member of the Nominating & Governance Committee,
the Non-Employee Director will automatically be granted an Option for 5,000
Shares. Each Option granted pursuant to this Section 10.6 shall be called a
“Nominating & Governance Committee Grant”.

     

    
      	
              10.7
      Vesting and Exercisability

            

    

     

    (a) Initial
Grants shall become exercisable as they vest as to 25% of the Shares upon the
first anniversary of the date such Option is granted and an additional 2.0833%
of the shares each month thereafter and become fully vested on the fourth
anniversary

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    of the
date of grant, so long as the Non-Employee Director continuously remains a
director or a consultant of the Company.

     

    (b) Succeeding
Grants shall become exercisable as they vest as to 50% of the Shares upon the
first anniversary of the date such Option is granted and an additional 4.1666%
of the Shares each month thereafter and become fully vested on the second
anniversary of the date of grant, so long as the Non-Employee Director
continuously remains a director or a consultant of the Company.

     

    (c) Each
Audit Committee Grant, Compensation and Organizational Development Committee
Grant and Nominating & Governance Committee Grant shall become exercisable
as they vest as to 8.333% of the Shares each month following the date of grant
and become fully vested on the first anniversary of the date of grant, so long
as the Non-Employee director continuously remains a director or a consultant of
the Company.

     

    (d) Any
Option granted to a Non-Employee Director will vest as to 100% of the Shares
subject to such Option, if the Non-Employee Director ceases to be a member of
the Board or a consultant of the Company due to “total disability” or death. For
purposes of this Section 10.7(d), “total disability” shall mean: (1)
(i) for so long as such definition is used for purposes of the Company’s
group life insurance and accidental death and dismemberment plan or group long
term disability plan, that the Non-Employee Director is unable to perform each
of the material duties of any gainful occupation for which the Non-Employee
Director is or becomes reasonably fitted by training, education or experience
and which total disability is in fact preventing the Non-Employee Director from
engaging in any employment or occupation for wage or profit or (ii) if such
definition has changed, such other definition of “total disability” as
determined under any Company’s group life insurance and accidental death and
dismemberment plan or group long term disability plan (if any); and (2) the
Company shall have received from the Non-Employee Director’s primary physician a
certification that the Non-Employee Director’s total disability is likely to be
permanent.

     

    (e) In
the event of a Corporate Transaction, the vesting of all Options granted to
Non-Employee Directors pursuant to this Section 10 will accelerate and such
Options will become exercisable in full prior to the consummation of such event
at such time and on such conditions as the Committee determines, and if such
Options are not exercised on or prior to the consummation of the corporate
transaction, they shall terminate.

     

    10.8 Form
of Option Grant. Each Option granted under this Section 10 shall be a NQSO
and shall be evidenced by a Non-Employee Director Stock Option Grant Agreement
in such form as the Committee shall from time to time approve and which shall
comply with and be subject to the terms and conditions of this
Plan.

     

    10.9
Exercise Price. Each Option granted under this Section 10 shall be the Fair
Market Value of the Share on the date the Option is granted. The Exercise Price
of an outstanding Option may not be reduced without stockholder
approval.

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    10.10
Termination of Option. Except as provided in Section 10.7(e) or this
Section 10.10, each Option granted under this Section 10 shall expire
seven (7) years after its date of grant. The date on which the Non-Employee
Director ceases to be a member of the Board or a consultant of the Company shall
be referred to as the “Non-Employee Director Termination Date” for purposes of
this Section 10.10. An Option may be exercised after the Non-Employee
Director Termination Date only as set forth below:

     

    (a) Termination
Generally. If the Non-Employee Director ceases to be a member of the Board or
consultant of the Company for any reason except death or Disability, then each
Option, to the extent then vested pursuant to Section 10.7 above, then held by
such Non-Employee Director may be exercised by the Non-Employee Director within
seven months after the Non-Employee Director Termination Date, but in no event
later than the Expiration Date.

     

    (b) Death
or Disability. If the Non-Employee Director ceases to be a member of the Board
or consultant of the Company because of his or her death or Disability, then
each Option, to the extent then vested pursuant to Section 10.7 above, then held
by such Non-Employee Director may be exercised by the Non-Employee Director or
his or her legal representative within twelve months after the Non-Employee
Director Termination Date, but in no event later than the Expiration
Date.

     

    
      	
              11. PAYMENT FOR SHARE
      PURCHASES.

            

    

     

                    11.1 Payment. Payment
for Shares purchased pursuant to the Plan may be made by any of the following
methods (or any combination of such methods) that are described in the
applicable Award Agreement and that are permitted by law:

     

    
      	
              (a)

            	
              in
      cash (by check);

            

    

     

    (b)         in
the case of exercise by the Participant, Participant’s guardian or legal
representative or the authorized legal representative of Participants’ heirs or
legatees after Participant’s death, by cancellation of indebtedness of the
Company to the Participant;

     

    (c)         by
surrender of shares of the Company’s Common Stock that either: (1) were
obtained by the Participant or Authorized Transferee in the public market; or
(2) if the shares were not obtained in the public market, they have been
owned by the Participant or Authorized Transferee for more than six months and
have been paid for within the meaning of SEC Rule 144 (and, if the shares
were purchased from the Company by use of a promissory note, the note has been
fully paid with respect to the shares);

     

    (d)         in
the case of exercise by the Participant, Participant’s guardian or legal
representative or the authorized legal representative of Participants’ heirs or
legatees after Participant’s death, by waiver of compensation due or accrued to
Participant for services rendered;

     

    
      	
              (e)

            	
              by
      tender of property; or

            

    

     

    (f)         with
respect only to purchases upon exercise of an Option, and provided that a public
market for the Company’s stock exists:

     

    (1)         through
a “same day sale” commitment from the Participant or Authorized Transferee and
an NASD Dealer meeting the requirements of the Company’s “same day sale”
procedures and in accordance with law; or

     

    (2)         through
a “margin” commitment from Participant or Authorized Transferee and an NASD
Dealer meeting the requirements of the Company’s “margin” procedures and in
accordance with law.

     

    11.2
Issuance of Shares. Upon payment of the applicable Purchase Price or Exercise
Price (or a commitment for payment from the NASD Dealer designated by the
Participant or Authorized Transferee in the case of an exercise by means of a
“same-day sale” or “margin” commitment), and compliance with other conditions
and procedures established by the Company for the purchase of shares, the
Company shall issue the Shares registered in the name of Participant or
Authorized Transferee (or in the name of the NASD Dealer designated by the
Participant or Authorized Transferee in the case of an exercise by means of a
“same-day sale” or “margin” commitment) and shall deliver certificates
representing the Shares (in physical or electronic form, as appropriate). The
Shares may be subject to legends or other restrictions as described in Section
15 of the Plan.

     

    
      	
              12. WITHHOLDING
      TAXES.

            

    

     

    12.1
Withholding Generally. Whenever Shares are to be issued in satisfaction of
Awards granted under the Plan, the Company may require the Participant to remit
to the Company an amount sufficient to satisfy federal, state and local
withholding tax requirements prior to the delivery of any certificate(s) for the
Shares. If a payment in satisfaction of an Award is to be made in cash, the
payment will be net of an amount sufficient to satisfy federal, state, and local
withholding tax requirements.

     

    12.2
Stock Withholding. When, under applicable tax laws, a Participant incurs tax
liability in connection with the exercise or vesting of any Award that is
subject to tax withholding and the Participant is obligated to pay the Company
the amount required to be withheld, the Committee may, in its sole discretion,
allow the Participant to satisfy the minimum withholding tax obligation by
electing to have the Company withhold from the Shares to be issued that number
of whole Shares having a Fair Market Value equal to the minimum amount required
to be withheld, determined on the date that the amount of tax to be withheld is
to be determined. All elections by a Participant to have Shares withheld for
this purpose shall be made in accordance with the requirements established by
the Committee and be in writing in a form acceptable to the
Committee.

     

    13. PRIVILEGES OF STOCK OWNERSHIP.
No Participant or Authorized Transferee will have any rights as a stockholder of
the Company with respect to any Shares until the Shares are issued to the
Participant or

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    Authorized
Transferee. After Shares are issued to the Participant or Authorized Transferee,
the Participant or Authorized Transferee will be a stockholder and have all the
rights of a stockholder with respect to the Shares including the right to vote
and receive all dividends or other distributions made or paid with respect to
such Shares; provided, that if the Shares are Restricted Stock, any new,
additional or different securities the Participant or Authorized Transferee may
become entitled to receive with respect to the Shares by virtue of a stock
dividend, stock split or any other change in the corporate or capital structure
of the Company will be subject to the same restrictions as the Restricted Stock;
provided further, that the Participant or Authorized Transferee will have no
right to retain such dividends or distributions with respect to Shares that are
repurchased at the Participant’s original Exercise Price or Purchase Price
pursuant to Section 15.

     

    14. TRANSFERABILITY. No Award and
no interest therein, shall be sold, pledged, assigned, hypothecated, transferred
or disposed of in any manner other than by will or by the laws of descent and
distribution, and no Award may be made subject to execution, attachment or
similar process; provided, however that with the consent of the Committee a
Participant may transfer a NQSO to an Authorized Transferee. Transfers by the
Participant for consideration are prohibited. Without such permission by the
Committee, a NQSO shall like all other Awards under the Plan be exercisable
(a) during a Participant’s lifetime only by the Participant or the
Participant’s guardian or legal representative; and (b) after Participant’s
death, by the legal representative of the Participant’s heirs or
legatees.

     

    15. RESTRICTIONS ON SHARES. At the
discretion of the Committee, the Company may reserve to itself and/or its
assignee(s) in the Award Agreement a right to repurchase all or a portion of a
Participant’s Shares that are not “Vested” (as defined in the Award Agreement),
following the Participant’s Termination, at any time within ninety days after
the later of (a) the Participant’s Termination Date or (b) the date
the Participant purchases Shares under the Plan, for cash or cancellation of
purchase money indebtedness with respect to Shares, at the Participant’s
original Exercise Price or Purchase Price; provided that upon assignment of the
right to repurchase, the assignee must pay the Company, upon assignment of the
right to repurchase, cash equal to the excess of the Fair Market Value of the
Shares over the original Purchase Price.

     

    16. CERTIFICATES. All certificates
for Shares or other securities delivered under the Plan (whether in physical or
electronic form, as appropriate) will be subject to stock transfer orders,
legends and other restrictions that the Committee deems necessary or advisable,
including without limitation restrictions under any applicable federal, state or
foreign securities law, or any rules, regulations and other requirements of the
SEC or any stock exchange or automated quotation system on which the Shares may
be listed.

     

    17. ESCROW. To enforce any
restrictions on a Participant’s Shares, the Committee may require the
Participant to deposit all certificates representing Shares, together with stock
powers or other transfer instruments approved by the Committee, appropriately
endorsed in blank, with the Company or an agent designated by the Company,
to

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    hold in
escrow until such restrictions have lapsed or terminated, and the Committee may
cause a legend or legends referencing such restrictions to be placed on the
certificates.

     

    18. SECURITIES LAW AND OTHER REGULATORY
COMPLIANCE. An Award shall not be effective unless the Award is in
compliance with all applicable state, federal and foreign securities laws, rules
and regulations of any governmental body, and the requirements of any stock
exchange or automated quotation system on which the Shares may then be listed,
as they are in effect on the date of grant of the Award and also on the date of
exercise or other issuance. Notwithstanding any other provision in the Plan, the
Company shall have no obligation to issue or deliver certificates for Shares
under the Plan prior to (a) obtaining any approvals from governmental
agencies that the Company determines are necessary or advisable, and/or (b)
completion of any registration or other qualification of such shares under any
state, federal or foreign law or ruling of any governmental body that the
Company determines to be necessary or advisable. The Company shall be under no
obligation to register the Shares with the SEC or to effect compliance with the
registration, qualification or listing requirements of any state, federal or
foreign securities laws, stock exchange or automated quotation system, and the
Company shall have no liability for any inability or failure to do
so.

     

    19. NO OBLIGATION TO EMPLOY.
Nothing in the Plan or any Award granted under the Plan shall confer or be
deemed to confer on any Participant any right to continue in the employ of, or
to continue any other relationship with, the Company or Subsidiary or limit in
any way the right of the Company or any Subsidiary to terminate Participant’s
employment or other relationship at any time, with or without
cause.

     

    20. REPRICING PROHIBITED; EXCHANGE AND
BUYOUT OF AWARDS. The repricing of Options or SARs is prohibited without
prior stockholder approval. The Committee may, at any time or from time to time,
authorize the Company, with prior stockholder approval, in the case of an Option
or SAR exchange, and the consent of the respective Participants, to issue new
Awards in exchange for the surrender and cancellation of any or all outstanding
Awards. The Committee may at any time buy from a Participant an Option
previously granted with payment in cash, Shares or other consideration, based on
such terms and conditions as the Committee and the Participant shall
agree.

     

    
      	
              21. CORPORATE
      TRANSACTIONS.

            

    

     

    21.1
Assumption or Replacement of Awards by Successor. In the event of a Corporate
Transaction any or all outstanding Awards may be assumed or replaced by the
successor corporation, which assumption or replacement shall be binding on all
Participants. In the alternative, the successor corporation may substitute
equivalent Awards or provide substantially similar consideration to Participants
as was provided to stockholders (after taking into account the existing
provisions of the Awards). The successor corporation may also issue, in place of
outstanding Shares of the Company held by the Participant, substantially similar
shares or other property subject to repurchase restrictions no less favorable to
the Participant. In the event such successor corporation, if any, refuses to
assume or replace the Awards, as provided above, pursuant to

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    a
Corporate Transaction or if there is no successor corporation due to a
dissolution or liquidation of the Company, such Awards shall immediately vest as
to 100% of the Shares subject thereto at such time and on such conditions as the
Board shall determine and the Awards shall expire at the closing of the
transaction or at the time of dissolution or liquidation.

     

    21.2
Other Treatment of Awards. Subject to any greater rights granted to Participants
under Section 21.1, in the event of a Corporate Transaction, any
outstanding Awards shall be treated as provided in the applicable agreement or
plan of merger, consolidation, dissolution, liquidation or sale of
assets.

     

    21.3
Assumption of Awards by the Company. The Company, from time to time, also may
substitute or assume outstanding awards granted by another company, whether in
connection with an acquisition of such other company or otherwise, by either
(a) granting an Award under the Plan in substitution of such other
company’s award, or (b) assuming such award as if it had been granted under
the Plan if the terms of such assumed award could be applied to an Award granted
under the Plan. Such substitution or assumption shall be permissible if the
holder of the substituted or assumed award would have been eligible to be
granted an Award under the Plan if the other company had applied the rules of
the Plan to such grant. In the event the Company assumes an award granted by
another company, the terms and conditions of such award shall remain unchanged
(except that the exercise price and the number and nature of Shares issuable
upon exercise of any such option will be adjusted appropriately pursuant to
Section 424(a) of the Code). In the event the Company elects to grant a new
Option rather than assuming an existing option, such new Option may be granted
with a similarly adjusted Exercise Price.

     

    22. ADOPTION AND STOCKHOLDER APPROVAL.
The Plan was adopted by the Board of Directors on January 20, 2005. The
Plan shall become effective upon approval by stockholders of the Company,
consistent with applicable laws.

     

    23. TERM OF PLAN. The Plan will
terminate two years following the date it became effective upon approval by
stockholders of the Company.

     

    24. AMENDMENT OR TERMINATION OF PLAN.
The Board may at any time terminate or amend the Plan in any respect,
including without limitation amendment of any form of Award Agreement or
instrument to be executed pursuant to the Plan. Notwithstanding the foregoing,
neither the Board nor the Committee shall, without the approval of the
stockholders of the Company, amend the Plan in any manner that requires such
stockholder approval pursuant to the Code or the regulations promulgated
thereunder as such provisions apply to ISO plans, or pursuant to the Exchange
Act or any rule promulgated thereunder. In addition, no amendment that is
detrimental to a Participant may be made to any outstanding Award without the
consent of the Participant.

     

    25. NONEXCLUSIVITY OF THE PLAN; UNFUNDED
PLAN. Neither the adoption of the Plan by the Board, the submission of
the Plan to the stockholders of the Company for approval, nor any provision of
the Plan shall be construed as creating any limitations on the power of the
Board to adopt such additional compensation arrangements as it may
deem

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

    desirable,
including, without limitation, the granting of stock options and bonuses
otherwise than under the Plan, and such arrangements may be either generally
applicable or applicable only in specific cases. The Plan shall be unfunded.
Neither the Company nor the Board shall be required to segregate any assets that
may at any time be represented by Awards made pursuant to the Plan. Neither the
Company, the Committee, nor the Board shall be deemed to be a trustee of any
amounts to be paid under the Plan.

     

    26. DEFINITIONS. As used in the
Plan, the following terms shall have the following meanings:

     

    (a) ”Authorized
Transferee” means the permissible recipient, as authorized by this Plan and the
Committee, of an NQSO that is transferred during the Participant’s lifetime by
the Participant by gift or domestic relations order. For purposes of this
definition a “permissible recipient” is: (i) a child, stepchild,
grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling,
niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law or sister-in-law of the Participant, including any such person
with such relationship to the Participant by adoption; (ii) any person
(other than a tenant or employee) sharing the Participant’s household;
(iii) a trust in which the persons in (i) or (ii) have more than
fifty percent of the beneficial interest; (iv) a foundation in which the
persons in (i) or (ii) or the Participant control the management of
assets; or (v) any other entity in which the person in (i) or
(ii) or the Participant own more than fifty percent of the voting
interest.

     

    (b) ”Award”
means any award under the Plan, including any Option, Restricted Stock, Stock
Bonus, Stock Appreciation Right or Restricted Stock Unit.

     

    (c) ”Award
Agreement” means, with respect to each Award, the signed written agreement
between the Company and the Participant setting forth the terms and conditions
of the Award.

     

    
      	
              (d) ”Board”
      means the Board of Directors of the
Company.

            

    

     

    (e) ”Code”
means the Internal Revenue Code of 1986, as amended, and the regulations
promulgated thereunder.

     

    (f) ”Committee”
means the Compensation and Organizational Development Committee of the Board or
such other committee appointed by the Board to administer the Plan, or if no
committee is appointed, the Board. Each member of the Committee shall be
(i) a “non-employee director” for purposes of Section 16 and
Rule 16b-3 of the Exchange Act, and (ii) an “outside director” for
purposes of Section 162(m) of the Code, unless the Board has fewer than two such
outside directors.

     

    (g) ”Company”
means China Direct Trading Corporation, a corporation organized under the laws
of the State of Florida, or any successor corporation.

     

    (h) ”Corporate
Transaction” means (a) a merger or consolidation in which the Company is
not the surviving corporation (other than a merger or consolidation with a
wholly-owned subsidiary, a reincorporation of the Company in a different
jurisdiction, or other

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

    transaction
in which there is no substantial change in the stockholders of the Company and
the Awards granted under the Plan are assumed or replaced by the successor
corporation, which assumption shall be binding on all Participants), (b) a
dissolution or liquidation of the Company, (c) the sale of substantially
all of the assets of the Company, (d) a merger in which the Company is the
surviving corporation but after which the stockholders of the Company
immediately prior to such merger (other than any stockholder that merges, or
which owns or controls another corporation that merges, with the Company in such
merger) cease to own their shares or other equity interest in the Company; or
(e) any other transaction which qualifies as a “corporate transaction”
under Section 424(a) of the Code wherein the stockholders of the Company give up
all of their equity interest in the Company (except for the acquisition, sale or
transfer of all or substantially all of the outstanding shares of the
Company).

     

    (i) ”Disability”
means a disability within the meaning of Section 22(e)(3) of the Code, as
determined by the Committee.

     

    (j) ”Effective
Date” means the date stockholders approve the Plan pursuant to Section 22
of the Plan.

     

    (k) ”Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the regulations
promulgated thereunder.

     

    (l) ”Executive
Officer” means a person who is an “executive officer” of the Company as defined
in Rule 3b-7 promulgated under the Exchange Act.

     

    (m) ”Exercise
Price” means the price at which a Participant who holds an Option or SAR may
purchase the Shares issuable upon exercise of the Option or SAR.

     

    (n) ”Fair
Market Value” means, as of any date, the value of a share of the Company’s
Common Stock determined as follows:

     

    (1)         if
such Common Stock is then quoted on the NASDAQ National Market, its closing
price on the NASDAQ National Market on such date or if such date is not a
trading date, the closing price on the NASDAQ National Market on the last
trading date that precedes such date;

     

    (2)         if
such Common Stock is publicly traded and is then listed on a national securities
exchange, the last reported sale price on such date or, if no such reported sale
takes place on such date, the average of the closing bid and asked prices on the
principal national securities exchange on which the Common Stock is listed or
admitted to trading;

     

    (3)         if
such Common Stock is publicly traded but is not quoted on the NASDAQ National
Market nor listed or admitted to trading on a national securities exchange, the
average of the closing bid and asked prices on such date, as reported by The Wall Street Journal, for
the over-the-counter market; or

     

    (4)        if
none of the foregoing is applicable, by the Board of Directors in good
faith.

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

     

    (o) ”Insider”
means an officer or director of the Company or any other person whose
transactions in the Company’s Common Stock are subject to Section 16 of the
Exchange Act.

     

    (p) ”ISO”
means an Incentive Stock Option within the meaning of the Code.

     

    (q) ”NASD
Dealer” means broker-dealer that is a member of the National Association of
Securities Dealers, Inc.

     

    (r) ”NQSO”
means a nonqualified stock option that does not qualify as an ISO.

     

    
      	
              (s) ”Option”
      means an Award pursuant to Section 5 of the
  Plan.

            

    

     

    (t) ”Non-Employee
Director” means a member of the Company’s Board of Directors who is not a
current or former employee of the Company or any Subsidiary.

     

    (u) ”Parent”
means any corporation (other than the Company) in an unbroken chain of
corporations ending with the Company, if at the time of the granting of an Award
under the Plan, each of such corporations other than the Company owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.

     

    
      	
              (v) ”Participant”
      means a person who receives an Award under the
  Plan.

            

    

     

    (w) ”Performance
Factors” means the factors selected by the Committee from among the following
measures to determine whether the performance goals established by the Committee
and applicable to Awards have been satisfied:

     

    
      	
              (1)

            	
              Net
      revenue and/or net revenue growth;

            

    

     

    (2)         Earnings
before income taxes and amortization and/or earnings before income taxes and
amortization growth;

     

    
      	
              (3)

            	
              Operating
      income and/or operating income
growth;

            

    

     

    
      	
              (4)

            	
              Net
      income and/or net income growth;

            

    

     

    
      	
              (5)

            	
              Earnings
      per share and/or earnings per share
growth;

            

    

     

    (6)         Total
stockholder return and/or total stockholder return growth;

     

    
      	
              (7)

            	
              Return
      on equity;

            

    

     

    
      	
              (8)

            	
              Operating
      cash flow return on income;

            

    

     

    
      	
              (9)

            	
              Adjusted
      operating cash flow return on
income;

            

    

     

    
      	
              (10)

            	
              Economic
      value added; and

            

    

     

      

    
      	
              (11)

            	
              Individual
      business objectives.

            

    

     

    (x) ”Performance
Period” means the period of service determined by the Committee, not to exceed
five years, during which years of service or performance is to be measured for
the Award.

     

    (y) ”Plan”
means this China Direct Trading Corporation 2005 Equity Plan, as amended from
time to time.

     

    (z) ”Prospectus”
means the prospectus relating to the Plan, as amended from time to time, that is
prepared by the Company and delivered or made available to Participants pursuant
to the requirements of the Securities Act.

     

    (aa) ”Purchase
Price” means the price to be paid for Shares acquired under the Plan, other than
Shares acquired upon exercise of an Option.

     

    (bb) ”Restricted
Stock Award” means an award of Shares pursuant to Section 6 of the
Plan.

     

    (cc) ”Restricted
Stock Unit” means an Award granted pursuant to Section 9 of the
Plan.

     

    (dd) ”RSU
Agreement” means an agreement evidencing a Restricted Stock Unit Award granted
pursuant to Section 9 of the Plan.

     

    (ee) ”SAR
Agreement” means an agreement evidencing a Stock Appreciation Right granted
pursuant to Section 8 of the Plan.

     

    
      	
              (ff) ”SEC”
      means the Securities and Exchange
Commission.

            

    

     

    (gg) ”Securities
Act” means the Securities Act of 1933, as amended, and the regulations
promulgated thereunder.

     

    (hh) ”Shares”
means shares of the Company’s Common Stock $0.0001 par value, reserved for
issuance under the Plan, as adjusted pursuant to Sections 2 and 21, and any
successor security.

     

    (ii) ”Stock
Appreciation Right” means an Award granted pursuant to Section 8 of the
Plan.

     

    (jj) ”Stock
Bonus” means an Award granted pursuant to Section 7 of the
Plan.

     

    (kk) ”Stock
Option Agreement” means the agreement which evidences a Stock Option, granted
pursuant to Section 5 of the Plan.

     

    (ll) ”Subsidiary”
means any corporation (other than the Company) in an unbroken chain of
corporations beginning with the Company if, at the time of granting of the
Award, each of the corporations other than the last corporation in the unbroken
chain owns stock possessing 50% or more of the total combined voting power of
all classes of stock in one of the other corporations in such
chain.

     

    (mm) ”Ten
Percent Stockholder” means any person who directly or by attribution owns more
than ten percent of the total combined voting

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

    power of
all classes of stock of the Company or any Subsidiary.

     

    (nn) ”Termination”
or “Terminated” means, for purposes of the Plan with respect to a Participant,
that the Participant has ceased to provide services

     

    as an
employee, director, consultant, independent contractor or adviser, to the
Company or a Subsidiary; provided that a Participant shall not be deemed to be
Terminated if the Participant is on a leave of absence approved by the Committee
or by an officer of the Company designated by the Committee; and provided
further, that during any approved leave of absence, vesting of Awards shall be
suspended or continue in accordance with guidelines established from time to
time by the Committee. Subject to the foregoing, the Committee shall have sole
discretion to determine whether a Participant has ceased to provide services and
the effective date on which the Participant ceased to provide services (the
“Termination Date”).

     

    19form10ksb123107ex10-7.htm

    Exhibit
10.7  Employment Agreement with Stewart Wallach

    

    EXECUTIVE
EMPLOYMENT AGREEMENT

     

                               
STEWART WALLACH

     

    This
Executive Employment Agreement (“Agreement”) is made and entered into as
of  February 5, 2008  by and between CHDT Corporation
(“Company”) and Stewart Wallach , a natural person (the “Executive”). The
Company and the Executive may also hereinafter be referred to individually as a
“party” and collectively as the “parties.”

     

                                        RECITALS:

     

    WHEREAS,
the Company desires to employ Executive on a full-time basis and Executive
wishes to be employed by the Company on the terms and conditions set forth in
this Agreement; and

     

    WHEREAS,
the parties wish this Agreement to supersede all prior employment agreements
between the parties.

     

    NOW
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Company and Executive agree as
follows:

     

     

    
      	
               
      

            	
              1.

            	
              Term of
      Employment.

            

    

     

    Initial Employment
Period.  The Company agrees to employ the Executive as the
Chief Executive Officer and President of the Company, and the Executive accepts
employment with the Company, upon the terms set forth in this Agreement, for the
period beginning on 12:01 a.m., local Miami, Florida time, on February 5, 2008,
and ending on 11:59 p.m., local Miami, Florida time, on February 5,
2011  (the “Employment Period”), during which time Executive will
devote his full business time to providing services hereunder. During the
Employment Period, this Agreement shall remain in force unless sooner
terminated

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    in
accordance with the provisions of this Agreement pursuant to Section 5
below.  The Executive agrees that the consideration provided hereunder
is fair and adequate consideration for all services provided in each of the
aforesaid capacities.  Executive further agrees that this Agreement
shall not constitute an employment agreement for services rendered to any
company other than the Company.  Any employment agreement with any
other company shall be and must be a separate written agreement with such other
company or companies.

    

     

    Extension of the Employment
Period.  The parties may extend the Employment Period of this
Agreement by mutual agreement, provided that such agreement must be approved by
the Company Board of Directors in writing and no extension may exceed three (3)
years in length.

    

     

    Termination of all Prior
Employment Agreement.  Executive hereby knowingly,
intentionally and voluntarily terminates any and all prior employment agreements
between the Company or any of its subsidiaries and the
Executive.  Executive agrees and understands that this Agreement sets
forth all of the terms and conditions of his employment by the Company and that
all rights, benefits and claims under any prior employment agreement, whether
written or oral, are expressly waived and terminated by this
Agreement.

    

     

    
      	
               
      

            	
              2.

            	
              Employment.

            

    

     

    Position and
Duties.  During the Employment Period, the Company hereby
agrees to employ Executive as Chief Executive Officer and President on the terms
set forth herein. In such capacity, Executive has responsibility for the
executive oversight and strategic planning for the Company and its subsidiaries,
especially in terms of producing and implementing the Company’s and its
subsidiaries’ strategic marketing and sales plan and strategic business
development plan.  The Company may also assign Executive to other
duties commensurate with Executive’s skills and experience. Executive reports
to, and is directed by, the Board of Directors of the Company. Executive agrees
to devote his business time, ability, knowledge and attention solely to the
Company’s business affairs and interests and to faithfully and diligently
perform such services and assume such duties and responsibilities as are
assigned to the best of Executive’s abilities, skills and efforts and to abide
by applicable Company policies and directives as they exist from time to
time.

     

    Location.  The
Executive shall render his services under this Agreement in the principal
executive offices of the Company which shall be in the greater Fort
Lauderdale-Miami consolidated metropolitan area. Under no circumstances shall
the Executive be required to relocate from more than twenty miles (20) from said
metropolitan area or provide services under this Agreement in any other location
other than in connection with reasonable and customary business travel. The
Company reserves the right to make a temporary reassignment of the location for
the performance of Executive’s services hereunder for a period not to exceed
forty five (45) days, which relocation shall not constitute a breach of this
Agreement.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    2.3 Limitations on Outside
Activities.  Nothing in this Agreement shall preclude the
Executive from devoting reasonable time and attention to (i) serving, with the
approval of the Company’s Board of Directors, which shall not be unreasonably
withheld, as a director, trustee or member of any committee of any organization,
(ii) engaging in charitable and community activities and (iii) managing his
personal investments and affairs; provided that such activities
do not involve any material conflict of interest with the interests of the
Company or, individually or collectively, interfere materially with the
performance by the Executive of his duties and responsibilities under this
Agreement. Notwithstanding the foregoing and except as expressly provided
herein, during the Employment Period, the Executive may not accept employment
with any other individual or entity, or engage in any other venture which is
directly or indirectly in conflict or competition with the business of the
Company.

     

    

     

    
      	
               
      

            	
              3.

            	
              Compensation.

            

    

     

    Base
Salary.  In consideration of Executive’s services to the
Company, the Company will pay Executive a gross base salary of TWO HUNDRED AND
TWENTY FIVE THOUSAND DOLLARS AND NO CENTS ($225,000.00) per
annum.  The Executive’s base salary will be paid in equal installments
in accordance with the Company’s standard payroll schedule, and the Company will
withhold from such salary all applicable federal, state and local taxes as
required by applicable laws.  The Compensation Committee will review
the Executive’s base salary at least annually during his/her employment, and
make such adjustments as determined in its discretion; however there will be a
minimum increase of five (5) % per year.  The Executive may elect to
accept additional cash compensation awards in Company “restricted” (as defined
in Rule 144 under the Securities Act of 1933, as amended) shares of Company
Common Stock, $0.0001 par value, (“Shares”), which payments shall be made in
semi-annual installments.  The Company hereby grants “piggy-back”
registration rights to the Executive for all such Shares that are issued
hereunder (expressly excepting any registration on Form S-8 or Form S-4, or any
successor form to those two forms).  The value of the Shares in
respect of the cash compensation being replaced by such Shares shall be
determined by the average closing BID price for the Shares (as quoted on www.bloomberg.com)
for the first twenty (20) consecutive trading days for each month in which
Shares will be substituted for cash compensation hereunder.

     

    Bonus.  In
addition, Executive will participate in any bonus program adopted by the Company
for senior officers in accordance with its terms as they exist from time to
time, or such other bonus or incentive compensation plan or arrangement that is
made available to full-time executive officers of the Company.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    

     

    

     

    
      	
               
      

            	
              4.

            	
              Benefits and
      Reimbursements.

            

    

     

    Insurance.                                Executive
shall be entitled to participate in any fringe benefit programs, including
health insurance, dental insurance, vision insurance, life insurance, accident
insurance and short and long term disability insurance, as well as any similar
insurance programs offered by the Company to individuals employed by the Company
as executives or in otherwise similar positions.

     

    Leave.  Executive
shall be entitled to thirty (30) days of paid vacation and seven (7) days of
paid personal leave each year (during which time his compensation shall continue
to be paid in full). Executive shall also be entitled to five (5) days of sick
leave, during which time his compensation shall continue to be paid in full.
Executive may carry over up to five (5) days of unused vacation/personal leave
from contract year to contract year. For purposes of this Agreement, “contract
year” means from January 1st to December 31st each
year.

     

    Stock Option, Savings or
Retirement Plans.  Executive shall be entitled to participate
in any pension, profit-sharing, deferred compensation plans, bonuses, stock
option or other incentive compensation plans as are offered by the Company to
individuals employed by the Company as full-time executive and subject to the
same qualifications as other full-time executive employees.

     

    

    Expenses.  The
Company shall reimburse Executive for the reasonable amount of hotel, travel,
entertainment and other expenses necessarily incurred by Executive in the
discharge of his duties to the Company, subject to the Company’s expense
policy.

     

    Technology.                                
The Company shall provide Executive with a laptop computer and a cellular phone
for his use during the Employment Period. These shall remain the property of the
Company, and shall be returned to the Company upon the termination of the
Executive’s employment.

     

     

    
      	
               
      

            	
              5.

            	
              Termination.

            

    

     

    The
employment of Executive by Company and the Employment Period shall terminate
upon the occurrence of any of the following conditions:

     

    Expiration.  Immediately
upon the expiration of the Employment Period set forth in Section 1 above,
including any extension of the Employment Period as agreed upon in writing
pursuant to Section 1

     

    Death.  Immediately
upon the death of Executive.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    Disability.  Immediately
upon the Disability of Executive. Immediately upon the death or disability of
the Executive. As used herein, the term “Disability” shall mean either (i) the
Executive’s inability, by reason of physical or mental incapacity or impairment,
to perform his duties and responsibilities under this Agreement for a period of
more than 60 consecutive days, or for more than 120 days, whether or not
consecutive, within the preceding 365-day period, or (ii) the receipt by the
Executive of disability benefits for permanent and total disability under any
long-term disability income policy held by or on behalf of the
Executive.

     

    By the Company for
Cause.  Immediately upon provision of written notice to the
Executive by the Company that his employment is being terminated for Cause, as
defined below. “Cause” for termination means:

     

    (i)           Executive’s
willful and intentional refusal to perform or observe any of his material
duties, responsibilities or obligations set forth in this Agreement; provided, however, that the
Company shall not be deemed to have Cause pursuant to this clause (i) unless the
Company gives the Executive written notice that the specified conduct has
occurred and making specific reference to this Section 5.4(i) and the Executive
fails to cure the conduct within thirty (30) days after receipt of such
notice;

     

    (ii)                      Any
willful and intentional act of the Executive involving fraud, theft,
misappropriation of funds, or embezzlement affecting the Company or its
subsidiaries;

     

    (iii)                      Executive’s
conviction of, or a plea of guilty or nolo contendere to, an
offense which is a felony or a misdemeanor evincing moral
turpitude;

     

    (iv)                      Executive’s
material breach of this Agreement which is not remedied within fifteen (15) days
after receipt of a written demand to remedy from the Company; or

     

    (v)           Gross
misconduct by Executive that is of such a serious or substantial nature that a
substantial likelihood exists that such misconduct would injure the public
business reputation of the Company if the Executive were to remain employed by
the Company; or

     

    (vi)                      Issuance
of any prohibition by the U.S. Securities and Exchange  Commission or
“SEC” against the Executive serving as an officer or director of a public
company and the period for appeal of such prohibition has expired without the
Executive filing an appeal; or

     

    (vii)   the
Company files for Chapter 7 protection from creditors and the bankruptcy
petition is not withdrawn or dismissed within sixty days after the filing date;
or

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    (viii)   Executive
intentionally refuses to follow a lawful, commercially reasonable directive of
the Company Board of Directors, such directive concerns an action or matter
within the purview of the Executive’s customary and usual duties and the refusal
of the Executive results in the Company or any of its subsidiaries suffering a
material liability or loss (for purposes of this Agreement, “material” shall
mean an amount equal to or exceeding One Hundred Thousand Dollars and No Cents
($100,000.00).

     

    

     

    5.4A  Termination of the Executive
for Cause shall be communicated by a Notice of
Termination.  For purposes of this Agreement, a “Notice of
Termination” shall mean delivery to the Executive of written notice from duly
authorized officers of the Company stating that in the good faith determination
of the Company the Executive was guilty of conduct constituting Cause and failed
to cure such conduct within the applicable time period. For purposes of this
Agreement, no such purported termination of the Executive’s employment shall be
effective without such Notice of Termination.

     

               By Company Without
Cause.  At the election of the Company after serving the
Executive with at least three (3) months notice of the Company’s intent to
termination his employment Without Cause. The Company shall have the right to
pay the Executive the notice period in lieu of notice.

     

    

    By Executive for Good
Reason.  As used herein, the term “Good Reason” means the
occurrence of any of the following, without the prior written consent of the
Executive:

     

    (i)           assignment
to the Executive of duties materially inconsistent with the Executive’s
positions as described in Section 2.1 hereof, or any significant diminution in
the Executive’s duties or responsibilities, other than in connection with the
termination of the Executive’s employment for Cause, Disability or as a result
of the Executive’s death or by the Executive other than for Good
Reason;

     

    (ii)                      the
change in the location of the Company’s principal executive offices or of the
Executive’s principal place of employment to a location outside the greater Fort
Lauderdale-Miami, Florida metropolitan area/more than twenty five miles from the
current location. The Executive will have the option to transfer to the new
location, in the same or equivalent position at a reasonable expense to the
Company.

     

    (iii)                      any
material breach of this Agreement by the Company which is
continuing;

     

    (iv)                      a
Change in Control, provided that a Change of Control shall only constitute Good
Reason if the Executive terminates his employment within six (6) months
following a Change of Control;

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    provided, however, that the
Executive shall not be deemed to have Good Reason pursuant to clauses (i) or
(iii) above unless the Executive gives the Company written notice that the
specified conduct or event has occurred and the Company fails to cure such
conduct or event within thirty (30) days of the receipt of such notice. A
“Change of Control” shall be deemed to have occurred when any person, other than
Executive or his respective affiliates, associates, or estate, becomes, after
the date of grant, the beneficial owner, directly or indirectly, of securities
of the Company representing 50% or more of the combined voting power of the
Company’s then-outstanding securities;

     

    
      	
               
      

            	
              6.

            	
              Effect of Termination
      and Severance.

            

    

     

    If the Employment Period is terminated
by the Company for Cause, the Company will pay to the Executive his accrued and
unpaid base salary as well as all accrued but unused vacation through the date
of such termination;

     

    If the Employment Period is terminated
by the Executive other than because of death, Disability or for Good Reason, the
Company will pay to the Executive his accrued and unpaid base salary as well as
all accrued but unused vacation through the date of such
termination;

     

    

     

    If the Employment Period is terminated
upon the Executive’s death or Disability,

     

    (i)                      the
Company will pay to the Executive’s estate or the Executive, as the case may be,
a lump sum payment equal to the Executive’s base salary through the termination
date, plus a pro rata portion of the Executive’s bonus for the fiscal year in
which the termination occurred;

     

    (ii)                      the
Company will pay to the Executive’s estate or the Executive, as the case may be,
a lump sum payment equivalent to the sum of (x) one-year’s base salary at the
annual base salary rate Executive was earning as of the date of termination; (y)
the bonus payment(s) Executive received in the preceding fiscal year; and (z)
the cost of Executive’s health and dental insurance premiums for the preceding
fiscal year.

     

    If the Employment Period is terminated
by the Company without Cause or if the Executive terminates for Good
Reason,

     

    (i)                      the
Company shall pay the Executive a lump sum payment equal to the greater
of:  (A) the sum of (x) one-year’s base salary at the annual base
salary rate Executive was earning as of the date of termination and (y) the
bonus payment(s) Executive received in the preceding fiscal year; and (B) the
sum of (x) the base salary Executive would have earned had he remained employed
through the remainder of the Employment Period and (y) the bonus payment(s)
Executive received in the preceding fiscal year multiplied by the

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    number of
years remaining in the Employment Period (and adjusted on a pro rata basis for
any partial year remaining in the Employment Period);

     

    (ii)                      the
Company shall also continue in effect the Executive’s health and dental benefits
(or similar health and dental benefits paid to senior executives noted in
Section 3(c)) as follows:  If Executive is eligible for continued
health insurance benefits under the federal law known as COBRA and Executive
timely elects COBRA coverage and makes timely payment of required premiums, the
Company will reimburse Executive the cost of such COBRA coverage until the
earlier of (x) eighteen (18) months from the termination date or (y) the date on
which the Executive obtains health insurance coverage from a subsequent
employer. If Executive is not eligible for COBRA benefits, the Company will
reimburse Executive the cost of similar coverage Executive obtains until the
earlier of (x) eighteen (18) months from the termination date or (y) the date on
which the Executive obtains health insurance coverage from a subsequent
employer.

     

    
      	
               
      

            	
              7.

            	
              Confidential
      Information.

            

    

     

    Executive
acknowledges that he will occupy a position of trust and confidence with respect
to the Company’s affairs and business and that, in connection with the
performance of his services on behalf of the Company, Executive will be provided
access to the Company’s confidential and proprietary information and trade
secrets (“Company Confidential Information”) and confidential and proprietary
information of third parties (“Third Party Information”).

     

    Confidential Information
Defined.  The term “Company Confidential Information” shall
mean any and all confidential and/or proprietary information of the Company. By
way of illustration but not limitation, Company Confidential Information
includes: information and materials related to proprietary computer software,
hardware, including hard drives, electronic files and websites, research,
business procedures and strategies, marketing plans and strategies, member lists
and business histories, analyses of member information, employee or prospective
employee information, financial data of the Company or its customers or
employees, and any other information that is not generally known to the public
or within the industry in which the Company competes. Executive further
acknowledges that the Company has and in the future will receive from third
parties confidential and proprietary information (“Third Party Information”),
including but not limited to confidential and proprietary information of the
Company’s customers, subject to a duty on the Company’s part to maintain the
confidentiality of such information and to use it for certain limited purposes
for a period of two (2) years thereafter.

     

    Executive’s
Obligations.

     

    (i)           Non-Disclosure.  Executive
agrees that during Executive’s employment with the Company and thereafter,
Executive will not use, disclose, lecture upon, publish or transfer directly or
indirectly any Company Confidential Information or Third Party Information other
than as authorized by the Company, nor will Executive accept any employment or
other professional engagement that

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    likely
will result in the use or disclosure, even if inadvertent, of Company
Confidential Information or Third Party Information. Executive agrees that he
will not use in any way other than in furtherance of the Company’s business any
Company Confidential Information or Third Party Information. Executive will
obtain the Company’s written approval before publishing or submitting for
publication any material (written, verbal, or otherwise) that relates to
Executive’s work at the Company and/or incorporates any Confidential
Information. Executive hereby assigns to the Company any rights Executive may
have or acquire in such Confidential Information and recognizes that all
Confidential Information shall be the sole property of the Company and its/their
assigns.

     

    (ii)                      Disclosure
Prevention.  Executive agrees to take all reasonable steps to
preserve the confidential and proprietary nature of Company Confidential
Information and Third Party Information and to prevent the inadvertent or
accidental disclosure of Company Confidential Information and Third Party
Information.

     

    

     

    (iii)                      Removal of
Materials.  Executive agrees that Executive will not remove any
Company Confidential Information or Third Party information from the Company’s
premises or make copies of such materials except for use in the Company’s
business.

     

    

     

    (iv)                      Return of
Materials.  Executive agrees not to retain and further agrees
to return to the Company any tangible or intangible originals or copies of any
Company Confidential Information or Third Party Information after termination of
Executive’s employment, or earlier at the Company’s request for any reason.
Executive further agrees to provide the Company with access to any personal
computer equipment and/or devices that Executive has used during the term of
this Agreement, so that the Company may verify that all of its Company
Confidential Information or Third Party Information has been deleted from this
equipment.

     

    

     

    (v)           Copying.  Executive
agrees that copying of Company Confidential Information or Third Party
Information shall be done only as needed in furtherance of and for use in the
Company’s business. Executive further agrees that copies of Company Confidential
Information and Third Party Information shall be treated with the same degree of
confidentiality as the original information and shall be subject to the same
restrictions herein.

     

    

     

    (vi)                      Continuation of
Obligations.  Executive agrees that the obligations of this
Section shall continue after termination or Executive’s employment.

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     (vii)                      Computer
Security.  Executive agrees that, during his employment with
the Company, he will use computer resources (both on and off of the Company’s
premises) for which Executive has been granted access and then only to the
extent authorized. Executive agrees to comply with the Company’s policies and
procedures concerning computer security. Executive further acknowledges that
Executive will not alter, remove or destroy any Company Confidential Information
or Third Party Information stored on any electronic storage devices, including,
but not limited to, electronic media stored on servers, local hard drives,
lap-tops, “PDAs” or any other similar devices except in accordance with the
Company’s record retention and destruction policy.

     

    

     

    (viii)                      Email and
Internet.  Executive understands that the Company maintains an
electronic mail and Internet/World Wide Web (“Internet”) system, and related
facilities, for the purpose of business communications. Executive acknowledges
that the Company owns such a system and facilities, and that the Company retains
the right to review any and all electronic mail and Internet communications, and
to review his use of the Internet, with or without notice, at any time.
Executive further acknowledges that he has no right to privacy to any e-mail or
Internet communications, or to his use of the Internet. Executive further agrees
to comply with the Company’s procedures concerning the use of e-mail and the
Internet, including compliance with any destruction and/or retention policies
for e-mail communications.

     

    Known
Knowledge.  Subject to the foregoing obligations, it is
understood that Executive is free at all times to use information which is
generally known in the trade or industry (except such information which becomes
so because of a breach of this Agreement by Executive) and further that
Executive’s general knowledge, skill and experience shall not be deemed to be
Confidential Information.

     

    
      	
               
      

            	
              8.

            	
              Assignment of
      Inventions.

            

    

     

    Definitions.  The
term “Proprietary Rights” shall mean all trade secret, patent, copyright, mask
work and other intellectual property rights or “moral rights” throughout the
world. “Moral rights” refers to any rights to claim authorship of an Invention
or to object to or prevent the modification of any Invention, or to withdraw
from circulation or control the publication or distribution of any Invention,
and any similar right, existing under judicial or statutory law of any country
in the world, or under any treaty, regardless of whether or not such right is
denominated or generally referred to as a “moral right.”

     

    Assignment of
Inventions.  Executive hereby assigns and agrees to assign in
the future (when any such Inventions or Proprietary Rights are first reduced to
practice or first fixed in a tangible medium, as applicable) to the Company all
his or her right, title and interest in and to any and all Inventions (and all
Proprietary Rights with respect thereto) whether or not patentable or
registrable under copyright or similar statutes, made or conceived
or

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    reduced
to practice or learned by the Executive, either alone or jointly with others,
during the period of his or her employment with the Company. Inventions assigned
to the Company, or to a third party as directed by the Company, are hereinafter
referred to as “Company Inventions.”

     

    Unassigned
Inventions.  This Agreement will not be deemed to require
assignment of any invention that was (1) developed entirely on the Executive’s
own time without using the Company’s equipment, supplies, facilities, or
Proprietary Information and (2) is not related to the Company’s actual or
anticipated business, research or development and (3) has not resulted from work
performed by Executive for the Company.  Attached as Exhibit One
hereto is a complete list of all Inventions that the Executive has
conceived, developed or reduced to practice prior to the Effective Date of this
Agreement, alone or jointly with others, that are the Executive’s sole property
or the property of third parties and which are excluded from the scope of this
Agreement.

     

    Works for
Hire.  Executive acknowledges that all original works of
authorship which are made by the Executive (solely or jointly with others)
within the scope of Executive’s employment and which are protectable by
copyright are “works made for hire,” pursuant to United States Copyright Act (17
U.S.C., Section 101).

     

    Enforcement of Proprietary
Rights.  Executive agrees to assist the Company in every proper
way to obtain, and from time to time enforce, United States and foreign
Proprietary Rights relating to Company Inventions in any and all countries. To
that end Executive agrees to execute, verify and deliver such documents and
perform such other acts (including appearances as a witness) as the Company may
reasonably request for use in applying for, obtaining, perfecting, evidencing,
sustaining and enforcing such Proprietary Rights and the assignment thereof. In
addition, Executive will execute, verify and deliver assignments of such
Proprietary Rights to the Company or its designee. Executive’s obligation to
assist the Company with respect to Proprietary Rights relating to such Company
Inventions in any and all countries shall continue beyond the termination of his
or her employment, but the Company shall compensate Executive at a reasonable
rate after Executive’s termination for the time actually spent by Executive at
the Company’s request on such assistance.

     

    
      	
               
      

            	
              9.

            	
              Restrictive
      Covenants.

            

    

     

    Acknowledgements.  Executive
acknowledges that (i) his services to the Company will be special and unique and
that he will occupy a position of trust and confidence with respect to the
business affairs of the Company; (ii) that his engagement for the Company will
allow him access to the Company’s Confidential Information; (iii) that he will
have access to the customers and clients of the Company and will be working to
develop business relationships for the Company; (iv) that the Company would
not have entered into this Agreement with Executive, or engaged Executive, but
for the covenants and agreements contained in this Section; and (v) that the
agreements and covenants contained in this Section are

     

    
      
         

      

      
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    essential
to protect the business, good will, and confidential information of the
Company.

     

    Non-Competition.                                           During
the Employment Period and for eighteen (18) months thereafter, Executive shall
not, directly or indirectly, in any geographic area in which the Company
operates compete with the Company in the development, marketing, or sale of
products that compete with those developed, marketed, or sold by the
Company.

     

    Non-Solicitation of
Employees.                                                                                     During
the Employment Period and for eighteen (18) months thereafter, Executive shall
not, directly or indirectly, on his own behalf or on behalf of any other person
or entity, solicit for employment, hire, or engage, whether on a full-time,
part-time, consulting, advising, or any other basis, any persons who were
employees or Executives of the Company during the Employment
Period.

     

    Non-Solicitation of
Customers.                                                                                     During
the Employment Period and for [twelve (12) months] thereafter, Executive shall
not, in competition with the Company, directly or indirectly, on his own behalf
or on behalf of any other person or entity, solicit, accept business from, or
conduct business with, (i) any customer or client served by the Company prior to
or during the Employment Period with which Executive had contact or about which
Executive received information or knowledge during the Employment Period, or
(ii) any prospective customer or client of the Company with which Executive had
contact or about which Executive received information or knowledge during the
Employment Period.

     

     

    
      	
               
      

            	
              9.5

            	
              Independent
      Covenants.

            

    

     

    The
Restrictive Covenants set forth herein are each to be construed as a separate
agreement, independent of any other provisions of this Agreement. Therefore, the
Executive agrees that the existence of any claim or cause of action that
Executive may have against the Company, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by the Company of
any provision of this Section 9 against the Executive.

     

     

    
      	
               
      

            	
              10.

            	
              Enforcement.

            

    

     

    Equitable Relief
Authorized.  Executive acknowledges that in the event of a
violation of the provisions of Sections 7, 8 or 9 of this Agreement, Company’s
business interests will be irreparably injured, the full extent of Company’s
damages will be impossible to ascertain, monetary damages will not be an
adequate remedy for Company, and Company will be entitled to enforce this
Agreement to prevent a breach or threatened breach of the Agreement by
temporary, preliminary or permanent injunction or other equitable relief without
the necessity of proving actual damage and without the necessity of posting bond
or security, which Executive expressly waives. Executive also agrees that
Company may, in addition to injunctive relief, seek monetary damages for any
breach of the provisions contained in this Agreement in addition to equitable
relief

     

    
      
         

      

      
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    and that
the granting of equitable relief shall not preclude Company from recovering
monetary damages.

     

    Modification.  Company
and Executive represent that in entering into this Agreement it is their intent
to enter into an agreement that contains reasonable employment and
post-employment restrictions and that such restrictions be enforceable under
law. In the event that any court or other enforcement authority determines that
any provision of this Agreement is overbroad or unenforceable by reason of the
geographic scope, scope of prohibited activities, time frame, or any other
reason, the parties authorize such court or other enforcement authority to
modify the scope of the restriction so that it is enforceable to the greatest
extent permissible.

     

    Severability.  If
any provision of the Agreement is held to be invalid, illegal or unenforceable
for any reason, the validity, legality and enforceability of the remaining
provisions will not in any way be affected or impaired thereby.

     

    Notification of New
Employer.  In the event that Executive leaves the employ of the
Company for any reason, Executive agrees to inform any subsequent employer of
his rights and obligations under this Agreement. Executive further hereby
authorizes the Company to notify his new employer about Executive’s rights and
obligations under this Agreement, including by delivering a copy of this
Agreement, and any written modifications thereto, to any subsequent
employer.

     

     

    
      	
               
      

            	
              11.

            	
              General
      Terms.

            

    

     

    No Prior
Agreements.  Executive hereby represents and warrants to the
Company that the execution of this Agreement by Executive and his/her employment
by the Company and the performance of his/her duties hereunder will not violate
or be a breach of any agreement with or obligation to a former employer, client
or any other person or entity, and Executive agrees to indemnify the Company for
any costs and expenses arising out of a claim by any such third party has
against the Company based upon or arising out of any non-competition agreement
or other restrictive covenant, invention or confidentiality agreement between
Executive and such third party which was in existence as of the date of this
Agreement and which Executive is alleged to be in violation of.

     

    Indemnification; Insurance
Against Liability.  Executive will be entitled to such
prevailing rights and entitlements to indemnification, defense of claims and
insurance against liability as are generally provided to executives of the
Company, consistent with Company bylaws, insurance policies and contracts, and
applicable law.

     

    Governing Law;
Interpretation.  This Agreement will be governed by the
substantive laws of the State of  Florida, without regard to the
principles of conflicts of laws. This Agreement will be construed as a whole,
according to its fair meaning, and not in favor of or against any party,
regardless of which party may have initially drafted certain provisions set
forth herein.

     

    
      
         

      

      
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    Choice of Law and
Forum:  This Agreement shall be construed according to the laws
of the United States of America and the State of Florida, without regard to its
conflict of laws provisions. Executive hereby expressly consent to the personal
jurisdiction of the state and federal courts for Broward County, Florida in any
lawsuit filed there against the Executive by the Company arising from or related
to this Agreement, including any claims for infringement of the Company’s
Confidential Information, Inventions or Works for Hire or any update thereto.
Executive agrees that if Executive is not a resident of the State of Florida,
USA,  at the time of such action, then Executive hereby irrevocably
appoints the Secretary of the State of Florida,  as agent for the
purpose of accepting service of process in Florida and the United States.
Executive waives trial by jury in any action, proceeding, claim, or counterclaim
brought by any party in connection with any matter arising out of or in any way
connected with this Agreement, the relationship of Executive to the Company and
/or any claim of injury or damage arising in any way between and among the
Company and Executive. Provided, however, that Executive agrees that nothing in
this Section shall prohibit the Company from initiating legal action in any
court which has personal and subject matter jurisdiction over me in the event
that it is necessary for the Company to pursue equitable relief against me for a
breach of this Agreement.

     

    Assignment.  This
Agreement is personal to Executive and he may not assign it without prior
written consent of the Company. The Company may, without Executive’s consent,
assign the Agreement to any successor entity, including the Restrictive
Covenants of Section 9.

     

    Notices.  Any
notice required or permitted hereunder will be in writing and will be deemed to
have been duly given if delivered by hand or if sent by certified mail, postage
and certification prepaid, to Executive at his residence (as noted in the
Company’s records), or to the Company address, or to such other address or
addresses as either party may have furnished to the other in
writing.

     

    Entire Agreement;
Amendments.  This Agreement and any other exhibits and
attachments hereto constitutes the final and complete expression of all of the
terms of the understanding and agreement between the parties hereto with respect
to the subject matter hereof, and this Agreement replaces and supersedes any and
all prior or contemporaneous negotiations, communications, understandings,
obligations, commitments, agreements or contracts, whether written or oral,
between the parties respecting the subject matter hereof. This Agreement may not
be modified, amended, altered or supplemented except by means of the execution
and delivery of a written instrument mutually executed by both parties. No
action or omission by the Company shall be deemed to be a waiver of any of its
rights under this Agreement unless such waiver is set forth in writing and
identified as a waiver. Any waiver by the Company of any rights under this
Agreement shall not be deemed to be a waiver of any other right.

     

    Counterparts.  This
Agreement may be executed simultaneously in two (2) counterparts, each of which
shall be deemed

     

    
      
         

      

      
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    an
original and all of which together shall constitute but one and the same
instrument.

     

    Survival.  The
provisions of the various sections of this Agreement which by their terms call
for performance subsequent to the expiration or termination of this Agreement or
the Employment Period shall survive such expiration or termination.

     

    Withholdings.  The
parties agree that all payments to be made to the Executive by the Company
pursuant to this Agreement shall be subject to all applicable
withholdings.

     

    Headings.  The
Section headings contained in this Agreement are inserted for convenience only
and shall not affect in any way the meaning or interpretation of this
Agreement.

     

    No Contra
Proferentum.  The
parties agree that they have been represented by counsel during the negotiation
and execution of this Agreement, and, therefore, waive the application of any
law, regulation or holding or rule of construction providing that ambiguities in
an agreement or other document will be construed against the party drafting such
agreement or document.

     

    Capacity.  Each
of the parties hereto warrants that they are legally competent to execute this
Agreement and accepts full responsibility therefor.

     

    
      	
               
      

            	
              12.

            	
              Resolution
      of Disputes.

            

    

     

    Except as provided, herein, and in the
event of any claim, cause of action, dispute or controversy arising under this
Agreement or otherwise related to the parties’ employment relationship, the
parties shall negotiate in good faith for the purpose of resolving such dispute.
In the event that the parties cannot resolve the claim, cause of action, dispute
or controversy informally within fifteen (15) days, then such claim, cause of
action, dispute or controversy arising out of or relating to this Agreement or
the breach, termination, enforcement, interpretation or validity thereof,
including the determination of the scope or applicability of this agreement to
arbitrate, shall be determined by a mandatory arbitration in Miami, Florida
before one (1) arbitrator. The arbitration shall be administered by JAMS
pursuant to its Comprehensive Arbitration Rules and Procedures (Streamlined
Arbitration Rules and Procedures). Judgment on the Award may be entered in any
court having jurisdiction. This clause shall not preclude parties from seeking
provisional remedies in aid of arbitration from a court of appropriate
jurisdiction. Each party shall bear its own costs in the arbitration and shall
share equally the costs of the arbitration itself. Notwithstanding the
foregoing, and without undermining the agreement to arbitrate on any other
claim, cause of action, dispute or controversy, the Company shall at all times
have and retain the exclusive and unilateral right to seek immediate temporary
and preliminary injunctive relief in a court of law in the event of a violation
or alleged violation by the Executive of Sections 7, 8, or 9 of this Agreement.
In the event such judicial relief is granted, such relief shall remain binding
on the parties pending the outcome of arbitration. THE COMPANY AND EXECUTIVE ACKNOWLEDGE
THAT EACH HAD THE

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

    OPPORTUNITY
TO CONSULT WITH LEGAL AND FINANCIAL COUNSEL CONCERNING THE RIGHTS AND
OBLIGATIONS ARISING UNDER THIS AGREEMENT, THAT EACH HAS READ AND UNDERSTANDS
THIS AGREEMENT, AND THAT EACH ENTERS INTO IT WILLINGLY.

     

    

     

    This
Agreement is duly executed as of the day and year of the last signature
below.

     

    CHDT
CORP.                                                                                                STEWART
WALLACH

     

    

     

    By:                                                                Sign:

     

    

     

    Title:                                                                

     

    

     

    Date:                                                                Date:

     

    

     

    

     16

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