EMPLOYMENT AGREEMENT

 

This Employment Agreement (this “Agreement”) is made this 1st day of July, 2011
(the “Effective Date”) by and between KIT DIGITAL, INC., a multi-national
corporation with its headquarters located in Prague, Czech Republic (the
“Employer” or the “Company”) and Barak Bar-Cohen, an individual resident of
Princeton, New Jersey, (the “Employee”), collectively (the “Parties).

 

AGREEMENT

 

The parties, intending to be legally bound, agree as follows:

 

1.             DEFINITIONS

 

For the purposes of this Agreement, the following terms have the meanings
specified or referred to in this Section 1:

 

“Agreement”-- this Employment Agreement, including the Schedules and Exhibits,
if any, attached hereto, as amended from time to time.

 

“Basic Compensation”-- Salary and Benefits.

 

“Benefits”-- as defined in Section 3.1(c).

 

“Board of Directors”-- the board of directors of Employer.

 

“Bonus” — as defined in Section 3.1(b).

 

“Chief Executive Officer” or “CEO” -- Kaleil Isaza Tuzman

 

“Change in Control” -- shall be deemed to have occurred when, after the
Effective Date, any new person or entity becomes the beneficial owner, directly
or indirectly, of 50% or more of the voting power of the Employer’s then
outstanding securities.

 

“Confidential Information”-- any and all:

 

(a) trade secrets concerning the business and affairs of Employer (including any
and all Confidential Information of Employee’s former employer), product
specifications, data, know-how, formulae, compositions, processes, designs,
sketches, photographs, graphs, drawings, samples, inventions and ideas, past,
current, and planned research and development, current and planned manufacturing
or distribution methods and processes, customer lists, current and anticipated
customer requirements, price lists, market studies, business plans, computer
software and programs (including object code and source code), computer software
and database technologies, systems, structures, and architectures (and related
formulae, compositions, processes, improvements, devices, know-how, inventions,
discoveries, concepts, ideas, designs, methods and information); and

 

 

 

 

(b) proprietary information concerning the business and affairs of Employer
(which includes historical financial statements, financial projections and
budgets, historical and projected sales, capital spending budgets and plans, the
names and backgrounds of key personnel, personnel training and techniques and
materials), however documented; and

 

(c) notes, analysis, compilations, studies, summaries, and other material
prepared by or for Employer containing or based, in whole or in part, on any
information included in the foregoing.

 

“Disability”-- as defined in Section 4.2.

 

“Effective Date”-- the date stated in the first paragraph of the Agreement.

 

“Employer” - defined as the KIT DIGITAL, Inc.

 

“Employee Invention”-- any idea, invention, technique, modification, process, or
improvement (whether patentable or not), any industrial design (whether
registrable or not), any mask work, however fixed or encoded, that is suitable
to be fixed, embedded or programmed in a product (whether recordable or not),
and any work of authorship (whether or not copyright protection may be obtained
for it) created, conceived, or developed by Employee, either solely or in
conjunction with others, during the Employment Period, or a period that includes
a portion of the Employment Period, that relates in any way to, or is useful in
any manner in, the business then being conducted or proposed publicly to be
conducted by Employer, and any such item created by Employee, either solely or
in conjunction with others, following termination of Employee’s employment with
Employer, that is based upon or uses Confidential Information. The term
“Employee Invention” includes but is not limited to the inventions, techniques,
and specially commissioned works described in Schedule 6.2(b).

 

“Employment Period”-- the term of Employee’s employment under this Agreement.

 

“Fiscal Year”-- Employer’s fiscal year, as it exists on the Effective Date or as
changed from time to time.

 

“For cause”-- as defined in Sections 4.3 and 4.4.

 

“General Profitability” -- defined as Earnings Before Interest, Taxes,
Depreciation and Amortization (“EBITDA”) minus Capital Expenditures, as defined
in section 3.1.b.i.

 

“Non-Competition Agreement”-- as defined in Section 6.2

 

“Person”-- any individual, corporation (including any non-profit corporation),
general or limited partnership, limited liability company, joint venture,
estate, trust, association, organization, or governmental body.

 

“President” -- Gavin Campion

 

“Proprietary Items”-- as defined in Section 5.2(a) (iv)

 

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“Salary”-- as defined in Section 3.1(a)

 

“Severance”-- as defined in Section 4.5(c)

 

2.             EMPLOYMENT TERMS AND DUTIES

 

2.1              EMPLOYMENT

 

Employer hereby employs Employee, and Employee hereby accepts employment by
Employer, upon the terms and conditions set forth in this Agreement.

 

2.2              TERM

 

Subject to the provisions of Section 4, the term of Employee’s employment under
this Agreement will be two (2) years (the “Employment Period”), beginning on the
Effective Date and ending on the second (2nd) anniversary of the Effective Date.
Subject to the provisions of Sections 3 and 4 below, this Agreement shall be
automatically renewed for a period of two years unless either party provides
written notice at least one hundred twenty (120) days prior to the expiration of
the current period of its intention not to renew the Agreement, and the
Agreement shall automatically renew for subsequent 2 year periods unless
terminated in accordance with Sections 3 and 4 below or by one of the parties
providing written notice at least one hundred twenty (120) days prior to the
expiration of the current period of its intention not to renew the Agreement.

 

2.3              DUTIES

 

Throughout the Employment Period, Employee will serve as Chief Administrative
Officer of the Employer and shall have the ordinary and customary duties
attendant with that title. Employee shall have such power and authority in the
assigned position as delegated from time to time by the President. Employee will
devote his time, attention, skill, and energy to the business of Employer, will
use his good faith efforts to promote the success of Employer’s business, and
will cooperate fully with the CEO and President in the advancement of the best
interests of Employer.

 

2.4              LOCATION

 

During the first twelve (12) months of this Agreement, the Employee shall render
his services in the Company’s Prague Headquarters in the Czech Republic. After
this twelve (12) month period, Employer and Employee shall, upon mutual consent,
determine the location from which the Employee shall continue to render his
services in the Company.

 

3.             EMPLOYMENT COMPENSATION

 

3.1              COMPENSATION PACKAGE

 

Employee’s compensation and any and all other rights of Employee under this
Agreement are included in the following compensation package (the “Compensation
Package”). This Compensation Package shall contain certain financial terms and
conditions addressed below (salary, health care, Company benefits and life and
disability insurance, etc.).

 

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(a)            Salary. Employee will be paid an annual base salary of
$240,000.00 U.S. subject to adjustments as provided below (the “Salary”),
payable according to the Employer’s customary payroll practices. The Salary is
contemplated by the Parties to increase after 12 months or earlier and will be
reviewed by the Compensation Committee not less frequently than annually, and
may be adjusted from time to time by the Compensation Committee commensurate
with Employee’s performance and duties.

 

(b)           Performance-Based Cash Bonus. Employer and the Employee agree that
the Employee shall be entitled to performance based cash bonuses of seventy
percent (70%) of Employee’s base salary, as defined in section 3.1.a above. For
the annual period ending December 31, 2011, Employee shall be entitled to this
performance-based cash bonus upon the achievement of the following Key
Performance Indicators (KPIs):

 

(i)            Corporate KPIs

a.Achievement of at least 21% General Profitability defined as Earnings Before
Interest, Taxes, Depreciation and Amortization (“EBITDA”) minus Capital
Expenditures.

b.Achievement of a 50% improvement in the Customer Satisfaction Index, as
defined and measured by the Employer.

 

(ii)           Departmental KPIs

a.The successful implementation of the Finance NetSuite module by September 30,
2011

b.Consolidation of the US, Australia, Singapore, UK, Czech Republic, and Italy
payroll systems onto the centralized ADP payroll system by December 31, 2011 and
all other country payroll systems across the Company by March 31, 2012.

c.Implementation of the eTrade system for the top 40 managers in the Company by
September 30, 2011 and for all employees by November 30, 2011.

d.The successful implementation of a company-wide Performance Management System
including Employee reviews, KPI definition, and automated HR reporting in
NetSuite by November 30, 2011.

e.The successful implementation of a company-wide Employee Satisfaction Survey
(ESS) by November 30, 2011 with a KPI for improving the ESS to be determined
upon the completion and review of the initial results.

f.Building of Corporate Dashboards based on NetSuite information for adherence
to and complete compliance with the PR/PO, Travel and Entertainment, and Mobile
Usage policies by November 30, 2011.

g.The successful management of legal fees through the implementation of a Legal
Support Request form in NetSuite and spending in line with the revised 2011
budget by October 31, 2011.

h.The successful implementation of a company-wide cost reduction program
achieving 25% in people-related cost savings defined as salaries plus related
employer taxes as measured by comparing these costs in Q4 2010 as compared to Q4
2011.

 

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For subsequent calendar years, Employee and Employer will define mutually agree
to KPIs which shall drive the performance based cash bonuses of seventy percent
(70%) of Employee’s base salary, as defined in section 3.1.a above.

 

(c)           Stock Option Grants. The Parties acknowledge that the Employer is
a publicly traded company with its common stock being listed on NASDAQ. As
additional compensation to the Employee, the Employer shall grant employee stock
options (the “Grant”) under the Employer’s 2008 Incentive Stock Plan (or any
subsequent employee benefit plan adopted by the Employer’s Board of Directors
and ratified by the Employer’s stockholders), attached hereto as Schedule A (the
“Plan”) in the amount of thirty four thousand (34,000) stock options. Each of
the stock options included in the Grant gives the Employee the right to acquire
one underlying common share at a price of US$10.88 per share, the closing price
of our common stock on the NASDAQ on Friday, May 9, 2011.

 

(d)           Performance Contingent Restricted Stock Units (“PCRSU”) Grant. As
additional compensation to the Employee, the Employer shall grant employee
performance contingent restricted stock units (the “Grant”) under the Employer’s
2008 Incentive Stock Plan (or any subsequent employee benefit plan adopted by
the Employer’s Board of Directors and ratified by the Employer’s stockholders),
attached hereto (the “Plan”) in the amount of eighty-thousand (80,000)
performance contingent restricted stock units. The terms and conditions of these
PCRSU are outlined in the PCRSU documentation in Schedule B.

 

The Employer represents and warrants to the Employee that the Stock Options and
PCRSUs, when issued and delivered to the Employee, have been duly authorized and
validly issued and are fully paid and nonassessable. The Employer Shares will be
issued under the Employer’s 2008 Incentive Stock Plan (or any subsequent
employee benefit plan adopted by the Employer’s Board of Directors and ratified
by the Employer’s stockholders) and covered by an effective registration
statement on Form S-8 on file with the SEC. The Employer acknowledges that the
Employee, even though acquiring the Employer Shares for investment, wishes to be
legally permitted to sell the Employer Shares when he deems appropriate after
receipt of such shares and being able to sell such Employer Shares in accordance
with the terms of the Employer’s insider trading policy, including through the
establishment of a Rule 10b5-1 stock trading plan. In that regard, the Employee
is encouraged to enter into a Rule 10b5-1 stock trading plan with an investment
bank or other financial institution prior to any sale of securities of the
Employer. These types of plans, when executed according to applicable
provisions, enable the Employee to sell Employer securities on pre-specified
conditions (e.g., when the price of a share of Employer common stock reaches a
certain amount) and, therefore, allow the Employee to sell outside quarterly
“trading windows,” whether or not the Employee then possesses material
non-public information. The Employer agrees to cooperate with the Employee in
connection with establishing such a plan for the Employer Shares. A summary of
Employee’s option and restricted stock grants to date are included in Schedule
C.

 

(e)           Benefits. During the Employment Period, the Employee shall be
entitled to the following benefits, programs and arrangements of the Employer in
effect during the Employment Period which are generally available to the
executive employees of the Employer, subject to and on a basis consistent with
terms, conditions and overall administration of such plans, programs and
arrangements.

 

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(i)            Insurance. Employee shall be entitled to participate in all
fringe benefit programs, including health insurance, vision insurance, dental
insurance, life insurance, accident insurance and short and long term disability
insurance, as well as any other similar insurance programs offered by Employer
to individuals employed in executive positions. It is acknowledged by the
Parties that the family health and medical insurance to be provided by and paid
for in full by the Employer to the Employee must include coverage for
international travel as the Employee is expected to be traveling extensively in
furtherance of his duties.

 

(ii)           Moving Expenses. Employer agrees to reimburse Employee for all
costs associated with moving the belongings and possessions of Employee and his
family (including but not limited to shipping, taxes, insurance, storage costs,
and one-way airfare for Employee and his family) from Prague, Czech Republic
back to Princeton, New Jersey, or another destination as determined, upon mutual
consent, by Employee and Employer. It is anticipated that these costs shall not
exceed $25,000 plus the cost of one-way airfare for employee and his family.

 

(iii)          Rental Fee Expenses. Employer agrees to reimburse Employee for
all costs associated with renting Employee’s residence at 256 Snowden Lane,
Princeton, New Jersey 08540 (including but not limited to real estate agent fee,
taxes, and listing fees) It is anticipated that these costs shall not exceed
$10,000.

 

 (iv)        Family Travel Expenses. Employer agrees to reimburse Employee for
the cost of airfare for Employee and his family (including but not limited to
airfare and associated travel taxes) to be used over during the next 12-months
for round-trip travel back to the United States to visit friends and family. It
is anticipated that these costs shall not exceed $10,000 and shall not include
the cost of hotel accommodations or car rental.

 

(v)           Leave. The Employee shall be entitled to twenty five (25) days of
vacation leave and ten (10) days of sick leave each year, during which time his
compensation shall continue to be paid in full. Employee may carry forward up to
ten (10) days of vacation leave from year to year.

 

(vi)          Business Expenses. The Employer shall reimburse the Employee, or
provide him with a Company credit card, for the reasonable amount of hotel,
travel, entertainment and other expenses necessarily incurred by the Employee in
the discharge of his duties for the Employer. Employee will adhere to the KIT
Travel and Entertainment Policy when traveling.

 

(vii)         Indemnification; Insurance Against Liability. Employer will
indemnify, save harmless, and defend Employee, and all of Employee’s heirs and
assigns, (collectively “indemnified parties”) from and against any and all
claims, damages, losses, liabilities, suits, actions, demands, proceedings
(whether legal or administrative) and expenses (including but not limited to
reasonable attorneys’ fees and costs) (collectively, “Losses”) arising out of,
resulting from, or relating to the services Employee provides Employer under
this Agreement, including, without limitation, any claims from or by third
parties to the extent permitted by applicable law of the state of incorporation
of Employer (Delaware at the date hereof); provided that if it is determined by
a non- appealable judicial ruling that Employee committed any criminal or
unlawful acts, Employer will be entitled to recover from Employee all costs,
fees and expenses relating to Losses directly resulting from Employee’s criminal
or unlawful acts. Such claims shall include, but shall not be limited to, claims
based upon trademark, service mark, trade name, copyright and patent
infringement, trademark dilution, tortious interference with contract or
prospective business relations, unfair competition, defamation or injury to
reputation, or other injuries or damage to business. The Employer shall secure
an officer’s and director’s liability insurance policy for the Employee designed
to insulate and protect the Employee from personal liability for claims arising
against him through the proper execution of his duties for the Employer.

 

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4.             TERMINATION

 

4.1           EVENTS OF TERMINATION

 

The Employment Period, Employee’s Compensation and any and all other rights of
Employee under this Agreement or otherwise as an employee of Employer will
terminate (except as otherwise provided in this Section 4):

 

(a)           upon the death of Employee; or

 

(b)           upon the disability of Employee (as defined in Section 4.2)
immediately upon the determination of a disability in the manner provided for in
Section 4.2; or

 

(c)           for cause by the Employer (as defined in Section 4.3), immediately
upon notice from Employer to Employee, or at such later time as such notice may
specify; or

 

(d)           for cause by the Employee (as defined in Section 4.4) immediately
upon notice from Employee to Employer, or at such later time as such notice may
specify; or

 

(e)           at Employee’s election upon not less than thirty (30) days prior
written notice of termination (as defined in Section 4.5); or

 

(f)            by Employer without cause, subject to the payment of any
Severance hereunder.

 

4.2           DEFINITION OF DISABILITY

 

For purposes of Section 4.1, Employee will be deemed to have a “disability” if,
for physical or mental reasons, Employee is unable to perform the essential
functions of Employee’s duties under this Agreement for 90 consecutive days, or
180 days during any twelve month period, as determined in accordance with this
Section 4.2. The disability of Employee will be determined by a medical doctor
selected by written agreement of Employer and Employee upon the request of
either party by notice to the other. If Employer and Employee cannot agree on
the selection of a medical doctor, each of them will select a medical doctor and
the two medical doctors will select a third medical doctor who will determine
whether Employee has a disability. The determination of the medical doctor
selected under this Section 4.2 will be binding on both parties. The Employee
must submit to a reasonable number of examinations by the medical doctor making
the determination of disability under this Section 4.2, and Employee hereby
authorizes the disclosure and release to Employer (but to no other person) of
such determination and all supporting medical records, all of which Employer
shall keep strictly confidential. If Employee is not legally competent,
Employee’s legal guardian or duly authorized attorney-in-fact will act in
Employee’s stead, under this Section 4.2, for the purposes of submitting
Employee to the examinations, and providing the authorization of disclosure,
required under this Section 4.2.

 

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4.3           DEFINITION OF “FOR CAUSE” BY EMPLOYER

 

For purposes of Section 4.1, the phrase “for cause” means: (a) Employee’s
material breach of this Agreement, material non-performance of any assigned
duties, material breach of the Non-Competition provisions hereof and Employee’s
failure to cure such material breach within thirty (30) days following receipt
of notice of the same from Employer; (b) the appropriation (or attempted
appropriation) of a material business opportunity of Employer, including
attempting to secure or securing any profit, for himself or others, in
connection with any transaction entered into on behalf of Employer; (c) the
misappropriation (or attempted misappropriation) of any of Employer’s funds or
property; or (d) the conviction of, the indictment for (or its procedural
equivalent), or the entering of a guilty plea or plea of no contest with respect
to, a felony, the equivalent thereof, or any other crime based upon moral
turpitude with respect to which imprisonment is a possible punishment.

 

4.4           DEFINITION OF “FOR CAUSE” BY EMPLOYEE

 

As used herein, the phrase “for cause” for use by the Employee shall mean the
occurrence of any of the following: (a) the assignment to the Employee of duties
materially inconsistent with Employee’s position as described in Section 2.3
hereof, or any signification diminution in the Employee’s duties,
responsibilities or compensation, other than in connection with the termination
of the Employee’s employment for cause, disability or as a result of Employee’s
death or by Employee other than for cause; (b) the change in the location of the
Employee’s office from primarily New York City and secondarily Prague without
the Employee’s consent; (c) any material breach of this Agreement by the Company
which is continuing; (d) a Change in Control, provided that a Change in Control
shall only constitute cause if the Employee terminates his employment within six
(6) months following the Change in Control; provided, however, the Employee
shall not be deemed to have cause pursuant to clauses (a) or (c) above unless
the Employee gives the Employer written notice of the specified conduct or event
which has occurred and the Employer fails to cure such conduct or event within
thirty (30) days of receipt of such notice.

 

4.5           TERMINATION PAY

 

Effective upon the termination of this Agreement, Employer will be obligated to
pay Employee (or, in the event of his death, his designated beneficiary as
defined below) only such compensation as is provided in this Section 4.5. For
purposes of this Section 4.5, Employee’s designated beneficiary will be such
individual beneficiary or trust, as Employee may designate by notice to Employer
from time to time.

 

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(a)           Termination upon Disability. If this Agreement is terminated by
either party as a result of Employee’s disability, as determined under Section
4.2, Employer will pay Employee, promptly upon such termination, his Salary
through the remainder of the calendar month during which such termination occurs
and for the lesser of (i) three consecutive months thereafter, or (ii) the date
that disability insurance benefits commence under the disability insurance
coverage furnished by Employer to Employee, if any, and the total amount
outstanding of the Bonus

 

(b)           Termination upon Death. If this Agreement is terminated because of
Employee’s death, Employer will pay Employee, promptly upon his termination, (i)
his Salary through the end of the third calendar month from which his death
occurs, (ii) all expenses and other amounts reimbursable or otherwise payable to
Employee under this Agreement, including also any then accrued but unused paid
vacation leave, up to any maximum accrued vacation limit, and (iii) the total
amount outstanding of the Bonus.

 

(c)          Termination by the Employer Without Cause. If the Employer
terminates the Employee without cause, the Employer will pay the Employee in
accordance with its regular payroll schedule, subject to standard withholdings
and deductions, the Employee’s then current Salary for a period of six (6)
months (the “Severance”) and the total amounts outstanding from any
Performance-based Cash Bonuses, as defined in section 3.1.b.

 

(d)          Termination by the Employee Without Cause. If the Employee severs
his employment relationship with the Employer, upon at least thirty (30) days
prior written notice, the Employer will pay the Employee in accordance with its
regular payroll schedule, subject to standard withholdings and deductions, the
Employee’s then current salary up to and until the date the employment
relationship is terminated.

 

(e)           Termination by the Employer For Cause. If the Employer terminates
the Employee for cause, the Employer will pay the Employee in accordance with
its regular payroll schedule, subject to standard withholdings and deductions,
the Employee’s then current salary up to and until the date that the Employee is
terminated.

 

(f)           Termination by Employee For Cause. If the Employee terminates his
employment for cause, the Employer shall pay the Employee the Severance and the
total amount outstanding of the Bonus.

 

(g)          Benefits. The Employee’s accrual of, or participation in plans
providing for, the Benefits will cease at the effective date of the termination
of this Agreement, and Employee will be entitled to accrued Benefits pursuant to
such plans only as provided in such plans, to and including all COBRA rights
with regard to health insurance plans.

 

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5.             NON-DISCLOSURE COVENANT; EMPLOYEE INVENTIONS

 

5.1              ACKNOWLEDGMENTS BY THE EMPLOYEE

 

The Employee acknowledges that (a) during the Employment Period and as a part of
his employment, Employee will be afforded access to Confidential Information;
(b) public disclosure of such Confidential Information could have an adverse
effect on Employer and its business; (c) because Employee possesses substantial
technical and business expertise and skill with respect to Employer’s business,
Employer desires to obtain exclusive ownership of each Employee Invention,
Employee trade secrets, and the Parties agree that Employer will be at a
substantial competitive disadvantage if it fails to acquire exclusive ownership
of each Employee Invention; (d) Employer has required that Employee make the
covenants in this Section 5 as a condition of the Transaction and Employee’s
interest therein; and (e) the provisions of this Section 5 are reasonable and
necessary to prevent the improper use or disclosure of Confidential Information
and to provide Employer with exclusive ownership of all Employee Inventions.

 

5.2           AGREEMENTS OF THE EMPLOYEE

 

In consideration of the compensation and benefits to be paid or provided to
Employee by Employer under this Agreement, Employee covenants as follows:

 

(a)            Confidentiality

 

(i)                 During and following the Employment Period, Employee will
hold in confidence all Confidential Information and will not disclose it to any
person except with the specific prior written consent of Employer or except as
otherwise expressly permitted by the terms of this Agreement.

 

(ii)               Any trade secrets of Employer will be entitled to all of the
protections and benefits under applicable law. If any information that Employer
deems to be a trade secret is found by a court of competent jurisdiction not to
be a trade secret for purposes of this Agreement, such information will,
nevertheless, be considered Confidential Information for purposes of this
Agreement. The Employee hereby waives any requirement that Employer submits
proof of the economic value of any trade secret or posts a bond or other
security.

 

(iii)             None of the foregoing obligations and restrictions applies to
any part of the Confidential Information that Employee demonstrates was or
became generally available to the public other than as a result of a disclosure
by Employee.

 

(iv)             Employee will not remove from Employer’s premises (except to
the extent such removal is for purposes of the performance of Employee’s duties
at home or while traveling, or except as otherwise specifically authorized by
Employer) any document, record, notebook, plan, model, component, device, or
computer software or code, whether embodied in a disk or in any other form
(collectively, the “Proprietary Items”). Employee recognizes that, as between
Employer and Employee, all of the Proprietary Items, whether or not developed by
Employee, are the exclusive property of Employer. Upon termination of this
Agreement by either party, or upon the request of Employer during the Employment
Period, Employee will return to Employer all of the Proprietary Items in
Employee’s possession or subject to Employee’s control, and Employee shall not
retain any copies, abstracts, sketches, or other physical embodiment of any of
the Proprietary Items.

 

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(b)           Employee Inventions. Each Employee Invention will belong
exclusively to Employer. The Employee acknowledges that all of Employee’s
writing, works of authorship, specially commissioned works listed in Schedule
5.2(b), and other Employee Inventions are works made for hire and the property
of Employer, including any copyrights, patents, or other intellectual property
rights pertaining thereto. If it is determined that any such works are not works
made for hire, Employee hereby assigns to Employer all of Employee’s right,
title, and interest, including all rights of copyright, patent, and other
intellectual property rights, to or in such Employee Inventions. The Employee
covenants that he will promptly:

 

(i)                disclose to Employer in writing any Employee Invention;

 

(ii)              assign to Employer or to a party designated by Employer, at
Employer’s request and without additional compensation, all of Employee’s rights
to Employee Inventions for the United States and all foreign jurisdictions;

 

(iii)             execute and deliver to Employer such applications,
assignments, and other documents as Employer may request in order to apply for
and obtain patents or other registrations with respect to any Employee Invention
in the United States and any foreign jurisdictions;

 

(iv)             sign all other papers necessary to carry out the above
obligations; and

 

(v)              give testimony and render any other assistance but without
expense to Employee in support of Employer’s rights to any Employee Invention.

 

5.3           DISPUTES OR CONTROVERSIES

 

The Employee recognizes that should a dispute or controversy arising from or
relating to this Agreement be submitted for adjudication to any court, the
preservation of the secrecy of Confidential Information may be jeopardized. All
pleadings, documents, testimony, and records relating to any such adjudication
will be maintained in secrecy and will be available for inspection by Employer,
Employee, and their respective attorneys and experts, who will agree, in advance
and in writing, to receive and maintain all such information in secrecy, except
as may be limited by them in writing.

 

6.            NON-COMPETITION AND NON-INTERFERENCE

 

6.1           ACKNOWLEDGMENTS BY THE EMPLOYEE

 

The Employee acknowledges that: (a) the services to be performed by him under
this Agreement are of a special, unique, unusual, extraordinary, and
intellectual in character; (b) Employer competes with other businesses in the IP
Video sector ; and (c) the provisions of this Section 6 are reasonable and
necessary to protect Employer’s business.

 

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6.2          COVENANTS OF THE EMPLOYEE

 

In consideration of the acknowledgments by Employee, and in consideration of the
compensation and benefits to be paid or provided to Employee by Employer,
Employee covenants that he will not, directly or indirectly:

 

(a)           during the Employment Period and for a period of one (1) year
after termination of the Agreement engage or invest in, own, manage, operate,
finance, control, or participate in the ownership, management, operation,
financing, or control of, be employed by, associated with, or in any manner
connected with, lend Employee’s name or any similar name to, lend Employee’s
credit to or render services or advice to, any business whose products or
activities directly compete in whole or in material part with the products or
activities of Employer ;

 

(b)           whether for Employee’s own account or for the account of any other
person, at any time during the Employment Period and for one (1) year following
termination of the Agreement, solicit business of the same or similar type being
carried on by Employer, from any person known by Employee to have been a
customer, client, prime contractor, subcontractor or strategic partner of
Employer during the Employment Period, where the Employee had personal contact
with such person or entity, or learned of such person or entity, during and by
reason of Employee’s employment with Employer;

 

(c)           whether for Employee’s own account or the account of any other
person (i) at any time during the Employment Period and for one (1) year
following termination of the Agreement, solicit, employ, or otherwise engage as
an employee, independent contractor, or otherwise, any person who is or was an
employee or contractor of Employer at any time during the Employment Period or
in any manner induce or attempt to induce any employee or contractor of Employer
to terminate his employment or consultancy with Employer; or (ii) at any time
during the Employment Period and for one (1) year following termination of the
Agreement, interfere with Employer’s relationship with any person, including any
person who at any time during the Employment Period was an employee, contractor
(prime or sub-), supplier, or customer of Employer; or

 

(d)          at any time during or after the Employment Period, disparage
Employer or any of its shareholders, directors, officers, employees, or agents.
Similarly, at no time during or after the Employment Period will the Employer
disparage the Employee.

 

If any covenant in this Section 6.2 is held to be unreasonable, arbitrary, or
against public policy, such covenant will be considered to be divisible with
respect to scope, time, and geographic area, and such lesser scope, time, or
geographic area, or all of them, as a court of competent jurisdiction may
determine to be reasonable, not arbitrary, and not against public policy, will
be effective, binding, and enforceable against Employee.

 

The period of time applicable to any covenant in this Section 6.2 will be
extended by the duration of any violation by Employee of such covenant.

 

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7.            GENERAL PROVISIONS

 

7.1           INJUNCTIVE RELIEF AND ADDITIONAL REMEDY

 

Employee acknowledges that the injury that would be suffered by Employer as a
result of a breach of the provisions of this Agreement (including any provision
of Sections 5 and 6) would be irreparable and that an award of monetary damages
to Employer for such a breach would be an inadequate remedy. Consequently,
Employer will have the right, in addition to any other rights it may have, to
seek injunctive relief to restrain any breach or threatened breach or otherwise
to specifically enforce any provision of this Agreement, and Employer will not
be obligated to post bond or other security in seeking such relief. Without
limiting Employer’s rights under this Section 7 or any other remedies of
Employer, if Employee breaches any of the provisions of Section 5 or 6, Employer
will have the right to cease making any payments otherwise due to Employee under
this Agreement until such breach has been remedied or cured.

 

7.2           COVENANTS OF SECTIONS 5 AND 6 ARE ESSENTIAL AND INDEPENDENT
COVENANTS

 

The covenants by Employee in Sections 5 and 6 are essential elements of this
Agreement and the Transaction, and without Employee’s agreement to comply with
such covenants, Employer would not have entered into the Transaction or this
Agreement or employed the Employee. Employer and Employee have independently
consulted their respective counsel and have been advised in all respects
concerning the reasonableness and propriety of such covenants, with specific
regard to the nature of the business conducted by Employer.

 

The Employee’s covenants in Sections 5 and 6 are independent covenants and the
existence of any claim by Employee against Employer under this Agreement or
otherwise or against Employer will not excuse Employee’s breach of any covenant
in Section 5 or 6.

 

If Employee’s employment hereunder expires or is terminated, this Agreement will
continue in full force and effect as is necessary or appropriate to enforce the
covenants and agreements of Employee in Sections 5 and 6.

 

7.3          REPRESENTATIONS AND WARRANTIES BY THE EMPLOYEE

 

Employee represents and warrants to Employer that the execution and delivery by
Employee of this Agreement do not, and the performance by Employee of Employee’s
obligations hereunder will not, with or without the giving of notice or the
passage of time, or both: (a) violate any judgment, writ, injunction, or order
of any court, arbitrator, or governmental agency applicable to Employee; or (b)
conflict with, result in the breach of any provisions of or the termination of,
or constitute a default under, any agreement to which Employee is a party or by
which Employee is or may be bound.

 

7.4           WAIVER

 

The rights and remedies of the parties to this Agreement are cumulative and not
alternative. Neither the failure nor any delay by either party in exercising any
right, power, or privilege under this Agreement will operate as a waiver of such
right, power, or privilege, and no single or partial exercise of any such right,
power, or privilege will preclude any other or further exercise of such right,
power, or privilege or the exercise of any other right, power, or privilege. To
the maximum extent permitted by applicable law, (a) no claim or right arising
out of this Agreement can be discharged by one party, in whole or in part, by a
waiver or renunciation of the claim or right unless in writing signed by the
other party; (b) no waiver that may be given by a party will be applicable
except in the specific instance for which it is given; and (c) no notice to or
demand on one party will be deemed to be a waiver of any obligation of such
party or of the right of the party giving such notice or demand to take further
action without notice or demand as provided in this Agreement.

 

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7.5           BINDING EFFECT; DELEGATION OF DUTIES PROHIBITED

 

This Agreement shall inure to the benefit of, and shall be binding upon (without
any further action by Employee required), the parties hereto and their
respective successors, assigns, heirs, and legal representatives, including any
entity with which Employer may merge or consolidate or to which all or
substantially all of its assets may be transferred. The duties and covenants of
Employee under this Agreement, being personal, may not be delegated.

 

7.6           NOTICES

 

All notices, consents, waivers, and other communications under this Agreement
must be in writing and will be deemed to have been duly given when (a) delivered
by hand (with written confirmation of receipt), (b) sent by facsimile (with
written confirmation of receipt), provided that a copy is mailed by registered
mail, return receipt requested, or (c) when received by the addressee, if sent
by a nationally recognized overnight delivery service (receipt requested), in
each case to the appropriate addresses and facsimile numbers or to such other
addresses and facsimile numbers as a party may designate by notice to the other
parties.

 

7.7           ENTIRE AGREEMENT; AMENDMENTS

 

This Agreement and the documents executed in connection with the Transaction
contain the entire agreement between the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings, oral or
written, between the parties hereto with respect to the subject matter hereof.
This Agreement may not be amended orally, but only by an agreement in writing
signed by the parties hereto.

 

7.8           CHOICE OF LAW; FORUM; LEGAL FEES

 

This Agreement shall be construed according to the laws of the United States of
America and the State of New York, without regard to its conflicts of laws
principles. Both Parties hereby expressly consent to the personal jurisdiction
of the State and Federal Courts located in the City of New York in any legal
action filed by either party arising from or related to this Agreement. In any
legal action brought by either party to enforce the terms of this Agreement, the
prevailing party shall be entitled to recover from the non-prevailing party the
cost of such action, including reasonable attorneys’ fees.

 

7.9           SECTION HEADINGS; CONSTRUCTION

 

The headings of Sections in this Agreement are provided for convenience only and
will not affect its construction or interpretation. All references to “Section”
or “Sections” refer to the corresponding Section or Sections of this Agreement
unless otherwise specified. All words used in this Agreement will be construed
to be of such gender or number as the circumstances require. Unless otherwise
expressly provided, the word “including” does not limit the preceding words or
terms.

 

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7.10         SEVERABILITY

 

If any provision of this Agreement is held invalid or unenforceable by any court
of competent jurisdiction, the other provisions of this Agreement will remain in
full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.

 

7.11          COUNTERPARTS

 

This Agreement may be executed in one or more counterparts, each of which will
be deemed to be an original copy of this Agreement and all of which, when taken
together, will be deemed to constitute one and the same agreement.

 

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

 

EMPLOYER:
KIT DIGITAL, INC.

By:/s/ Gavin Campion

 

Name: Gavin Campion

 

Title: President

 

Date: September 28, 2011

 

EMPLOYEE:

/s/ Barak Bar-Cohen

 

Name: Barak Bar-Cohen

 

Date: September 25, 2011

 

 

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