ZST Digital Networks, Inc.

 

DIRECTOR AGREEMENT

 

This Director Agreement (the "Agreement") is made and entered into as of May 29,
2012, by and between ZST Digital Networks, Inc., a Delaware company (the
"Company"), and Li Jian Hui, an individual (the "Director").

 

 

I. SERVICES

 

1.1 Board of Directors. Director has been appointed as an Independent Director
of the Company's Board of Directors (the "Board"), effective upon May 29, 2012
(the "Effective Date"), until the earlier of the date on which Director ceases
to be a member of the Board for any reason or the date of termination of this
Agreement in accordance with this Section 5.2 hereof (such earlier date being
the "Expiration Date"). The Board shall consist of the Director and such other
members as nominated and elected pursuant to the then current Memorandum and
Articles of Association of the Company (the "Articles").

 

1.2 Director Services. Director's services to the Company hereunder shall
include service on the Board to manage the business of the Company in accordance
with applicable law and the then current Articles, and such other services
mutually agreed to by Director and the Company (the "Director Services").

 

II. COMPENSATION

 

2.1 Expense Reimbursement. The Company shall reimburse Director for all
reasonable travel and other out-of-pocket expenses incurred in connection with
the Director Services rendered by Director.

 

2.2 Fees to Director. The Company agrees to pay Director the following fees for
the Director Services: an annual retainer of RMB 100,000. In the event Director
ceases to serve on the Board for any reason, Director shall be entitled to the
pro rata portion of the annual fee for the number of months he has served on the
Board in a given year.

 

2.3 Director and Officer Liability Insurance. The Company's proposed director
and officer liability insurance policy shall provide Director with coverage for
damages and losses incurred in connection with the Director Services.

 

III. DUTIES OF DIRECTOR

 

3.1 Fiduciary Duties. In fulfilling his managerial responsibilities, Director
shall be charged with a fiduciary duty to the Company and all of its
shareholders. Director shall be attentive and inform himself of all material
facts regarding a decision before taking action. In addition, Director's actions
shall be motivated solely by the best interests of the Company and its
shareholders.

 

3.2 Confidentiality. During the term of this Agreement, and for a period of one
(1) year after the Expiration Date, Director shall maintain in strict confidence
all information he has obtained or shall obtain from the Company which the
Company has designated as "confidential" or which is, by its nature
confidential, relating to the Company's business, operations, properties,
assets, services, condition (financial or otherwise), liabilities, employee
relations, customers (including customer usage statistics), suppliers,
prospects, technology, or trade secrets, except to the extent such information
(i) is in the public domain through no act or omission of the Company, (ii) is
required to be disclosed by law or a valid order by a court or other
governmental body, or (iii) is independently learned by Director outside of this
relationship (the "Confidential Information").

 

 

 

 

3.3 Nondisclosure and Nonuse Obligations. Director will use the Confidential
Information solely to perform the Director Services for the benefit of the
Company. Director will treat all Confidential Information of the Company with
the same degree of care as Director treats his own Confidential Information, and
Director will use his best efforts to protect the Confidential Information.
Director will not use the Confidential Information for his own benefit or the
benefit of any other person or entity, except as may be specifically permitted
in this Agreement. Director will immediately give notice to the Company of any
unauthorized use or disclosure by or through him, or of which he becomes aware,
of the Confidential Information. Director agrees to assist the Company in
remedying any such unauthorized use or disclosure of the Confidential
Information.

 

3.4 Return of the Company Property. All materials furnished to Director by the
Company, whether delivered to Director by the Company or made by Director in the
performance of Director Services under this Agreement (the "Company Property")
are the sole and exclusive property of the Company. Director agrees to promptly
deliver the original and any copies of the Company Property to the Company at
any time upon the Company's request. Upon termination of this Agreement by
either party for any reason, Director agrees to promptly deliver to the Company
or destroy, at the Company's option, the original and any copies of the Company
Property. Director agrees to certify in writing that Director has so returned or
destroyed all such the Company Property.

 

IV. COVENANTS OF DIRECTOR

 

4.1 No Conflict of Interest. In one year from the Effective Date, or if the term
of this Agreement is longer, then during the term of this Agreement, Director
shall not be employed by, own, manage, control or participate in the ownership,
management, operation or control of any business entity that is competitive with
the Company or otherwise undertake any obligation inconsistent with the terms
hereof, provided that Director may own equity of certain business entity
engaging in similar business as that of the Company subject to the prior
approval by the Board, and provided further that Director may continue
Director's current affiliation or other current relationships with the entity or
entities described on Exhibit A (all of which entities are referred to
collectively as "Current Affiliations"). For a period of one (1) year after the
Expiration Date, Director shall not be employed by, operate or manage any
business entity that is competitive with the Company. This Agreement is subject
to the current terms and agreements governing Director's relationship with
Current Affiliations, and nothing in this Agreement is intended to be or will be
construed to inhibit or limit any of Director's obligations to Current
Affiliations. Director represents that nothing in this Agreement conflicts with
Director's obligations to Current Affiliations. A business entity shall be
deemed to be "competitive with the Company" for purpose of this Article IV only
if and to the extent it engages in the business substantially similar to the
Company's online video and mobile video businesses.

 

4.2 Noninterference with Business. During the term of this Agreement, and for a
period of one (1) year after the Expiration Date, Director agrees not to
interfere with the business of the Company in any manner. By way of example and
not of limitation, Director agrees not to solicit or induce any employee,
independent contractor, customer or supplier of the Company to terminate or
breach his or her employment, contractual or other relationship with the
Company.

 

V. TERM AND TERMINATION

 

5.1 Term. This Agreement is effective on the Effective Date and will continue
for one year or such longer period as the parties may agree upon.

 

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5.2 Termination. Either party may terminate this Agreement at any time upon
thirty (30) days prior written notice to the other party, or such shorter period
as the parties may agree upon.

 

5.3 Survival. The rights and obligations contained in Articles III and IV will
survive any termination or expiration of this Agreement.

 

VI. MISCELLANEOUS

 

6.1 Assignment. Except as expressly permitted by this Agreement, neither party
shall assign, delegate, or otherwise transfer any of its rights or obligations
under this Agreement without the prior written consent of the other party.
Subject to the foregoing, this Agreement will be binding upon and inure to the
benefit of the parties hereto and their respective heirs, legal representatives,
successors and assigns.

 

6.2 No Waiver. The failure of any party to insist upon the strict observance and
performance of the terms of this Agreement shall not be deemed a waiver of other
obligations hereunder, nor shall it be considered a future or continuing waiver
of the same terms.

 

6.3 Notices. Any notice required or permitted by this Agreement shall be in
writing and shall be delivered as follows with notice deemed given as indicated:
(i) by personal delivery when delivered personally; (ii) by overnight courier
upon written verification of receipt; (iii) by facsimile transmission upon
acknowledgment of receipt of electronic transmission; or (iv) by certified or
registered mail, return receipt requested, upon verification of receipt. Notice
shall be sent to the addresses set forth below or such other address as either
party may specify in writing.

 

To the Company:

 

ITC Kung Kuan, No. 206 Tongbai Road, 3rd Floor, No.2 Building, Zhengzhou City,
Henan

 

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Attention: Chief Executive Officer

 

To Director:

 

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6.4 Governing Law. This Agreement shall be governed in all respects by the laws
of the United States of America and by the laws of the State of Delaware,
without regard to conflicts of law principles thereof.

 

6.5 Severability. Should any provisions of this Agreement be held by a court of
law to be illegal, invalid or unenforceable, the legality, validity and
enforceability of the remaining provisions of this Agreement shall not be
affected or impaired thereby.

 

6.6 Entire Agreement. This Agreement constitutes the entire agreement between
the parties relating to this subject matter and supersedes all prior or
contemporaneous oral or written agreements concerning such subject matter. The
terms of this Agreement will govern all Director Services undertaken by Director
for the Company.

 

6.7 Amendments. This Agreement may only be amended, modified or changed by an
agreement signed by the Company and Director. The terms contained herein may not
be altered, supplemented or interpreted by any course of dealing or practices.

 

6.8 Counterparts. This Agreement may be executed in two counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

 

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

 

Company:   ZST Digital Networks Inc.               By: /s/ Zhong Bo       Name:
Zhong Bo       Title: Chairman & CEO             Independent Director:          
            /s/ Li Jian Hui       Name:  Li Jian Hui  

 

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