Exhibit 10.1

 

EXECUTION COPY

 

KIT digital FZ-LLC

 

KIT digital, Inc.

 

and

 

Content Solutions International N.V.

  

 

 

AGREEMENT ON THE SALE AND
PURCHASE OF SHARES IN
THE COMPANIES

 

 

 

26 June 2012

 

 

 

 

THIS AGREEMENT is made on 26 June 2012:

 

BETWEEN:

 

(1)KIT digital FZ-LLC, a corporation duly incorporated under the laws of the
Dubai Technology and Media Free Zone, Dubai, United Arab Emirates having its
principal place of business at 2304A, Business Central Towers, Dubai Media City,
Dubai UAE, ("Seller Dubai"); and

 

(2)KIT digital, Inc., a corporation duly incorporated under the laws of the laws
of the state of Delaware, with a place of business at 168 5th Ave, Suite # 301,
New York, NY 10010-5952 ("Seller US"); and

 

(3)Content Solutions International N.V., a corporation incorporated and
registered under the laws of the Kingdom of the Netherlands, having its seat in
Amsterdam, Keizersgracht 62, 1015 CS, the Netherlands, Registration number:
55571891 ("Purchaser");

 

BACKGROUND:

 

(A)The Sellers are the owners of Shares in the Companies and wish to sell the
Shares to the Purchaser on the terms set out in this Agreement.

 

(B)The Purchaser wishes to purchase all the Shares in the Companies free of any
Encumbrance on the terms set out in this Agreement.

 

IT IS AGREED as follows:

 

1.DEFINITIONS AND INTERPRETATION

 

1.1In addition to the terms defined elsewhere in this Agreement, and unless the
context otherwise requires:

 

"Accounting Standards" means the mandatory accounting principles and standards
that apply to the Companies;

 

"Accounts" means the financial statements (i.e. balance sheet and cash flow
statement) of the Companies for the period ending at the Accounts Date prepared
in accordance with Accounting Standards, and attached as Schedule 1;

 

"Accounts Date" means 31 May 2012;

 

"Affiliate" means in relation to anybody corporate or its successors, any
holding company or subsidiary of such body corporate or its successors, or any
subsidiary of a holding company of such body corporate or its successors;

 

"Business" means the business of the Companies as conducted by the Companies at
the Date of this Agreement;

 

"Business Day" means a day (other than a Saturday or Sunday) on which banks are
generally open for normal business in New York and in the Kingdom of the
Netherlands;

 

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"Change of Control" means (a) the sale, transfer or other conveyance of all or
substantially all of the assets of the Purchaser other than sales, transfers of
assets and mergers and company transformations within the group of Companies,
(b) the merger or consolidation of the Purchaser with or into any other person
whereafter the stockholders of the Purchaser, immediately prior to such merger
or consolidation, fail to ultimately own fifty per cent (50%) or more of the
voting power of the surviving person, (c) the sale (whether through one sale or
multiple sales to a single person or group of related persons during any period
of time after the date hereof) by the stockholders of the Purchaser of an
aggregate of fifty per cent (50%) or more of the capital stock (by voting power)
of the Purchaser owned by such stockholders in the aggregate, immediately prior
to such sale or sales or (d) the sale or exclusive licensing (whether through
one sale or multiple sales to a single person or group of related persons during
any period of time after the date hereof) of a majority of the assets of the
Purchaser and the Companies taken as a whole. It is however agreed and
understood that an event approved by Seller Dubai shall not constitute a Change
of Control event.

 

"Companies" means the companies listed in Schedule 5, and a "Company" means any
of them;

 

"Compensation" has the meaning given to it in Clause 7.1;

 

"Confidential Information" means all information of a confidential nature which
is used in or otherwise relates to the Companies or their business, including
but not limited to:

 

(a)the accounts, finance or contractual arrangements or other dealings,
transactions or affairs of the Companies;

 

(b)the marketing of goods or services, including customer names and lists and
other details of customers, sales targets, sales statistics, market share
statistics, prices, market research reports and surveys, and advertising or
other promotional materials;

 

(c)future projects, business development or planning, commercial relationships
and negotiations; or

 

(d)the sale and purchase of the Shares under this Agreement and its other terms,

 

but excluding information made public with the prior consent of the Parties;

 

"Date of this Agreement" means the date on which the Parties duly executed this
Agreement;

 

"Disclosure Letter" means the letter from the Sellers to the Purchaser in
relation to the Sellers' Warranties of the same date as this Agreement and which
has been delivered to the Purchaser before signing of this Agreement and is
attached as Schedule 6;

 

"Earn-Out" means a series of payments as part of the Purchase Price hereunder to
be made by Purchaser to Sellers in accordance with Clause 4.4. The initial
payment shall be in an amount equal to $1,650,000 and all subsequent payments
shall be $2,018,750 (“Base Payments”), except as otherwise adjusted pursuant to
either the next sentence. The initial payment shall be adjusted (upward or
downward) based on the percentage that the aggregate consolidated gross revenues
of Purchaser and the Companies determined in accordance with GAAP during the
period July 1, 2012 through November 30, 2012 are above or below 5/6th of the
budgeted revenue amount for second half of the 2012 as set forth on Schedule
4.4. Base Payments shall be adjusted (upward or downward) based on the
percentage that the aggregate consolidated gross revenues of Purchaser and the
Companies determined in accordance with GAAP are above or below the budgeted
revenue amount for such period set forth on Schedule 4.4; provided that if the
initial payment or any Base Payment is at any time reduced below its then
current amount (e.g., any reduction from a previously increased amount as result
of a previous GAAP earnings based reduction) then all subsequent payments shall
be increased by an amount equal such shortfall divided by the number of
remaining payments to be made pursuant to Clause 4.4 assuming that no event
occurs terminating the accrual of Earn-Out payments before January 1, 2017.

 

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"Employees" means the Companies' employees listed in Schedule 4, and an
"Employee" means any of them;

 

"Encumbrance" means any encumbrance including, without limitation, a mortgage,
pledge, attachment, note (or existence of other pending proceedings or
litigation), unresolved restitution claim, easement, right of retention,
assignment by way of security, option, retention of title, pre emptive right,
right of first refusal, prescription of right, lease or any other right or
preferential arrangement held, or obligation to create any of the foregoing, or
a claim that could be raised, by a third party; regardless of whether these
facts are obvious from a register or records;

 

"Formal Consummation" means the formal consummation of the sale of the Shares
under this Agreement described in the Clause 5, which the parties acknowledge is
ministerial in nature;

 

"Formal Consummation Actions Agreement" has the meaning ascribed to it in Clause
5.1;

 

"Formal Consummation Date" means the date when all actions under the Formal
Consummation Actions Agreement are fully completed or such other date as may be
agreed upon by the Purchaser and the Sellers in writing;

 

"Governmental Authority" means in relation to a person, any governmental
agencies, departments, commissions, boards, bureaus, instrumentalities, courts
or tribunals of competent jurisdiction or other authority with binding
jurisdiction over such person;

 

"Initial Purchase Price" has the meaning given to it in Clause 4.1;

 

"Intellectual Property Rights" means (i) patents, inventions, utility models,
industrial designs, copyright and related rights, database rights, trade marks
and trade names (whether registered or unregistered), and rights to apply for
registration for any of the foregoing; (ii) proprietary rights in domain names;
(iii) know-how and confidential information; (iv) applications, extensions and
renewals in relation to any of these rights; and (v) all other rights of a
similar nature or having an equivalent effect anywhere in the world;

 

"Intra-Group Debts" means all Companies' debts payable to the Sellers or their
affiliates (other than Companies) as of the Date of this Agreement listed in
Schedule 11;

 

"Maximum Amount" has the meaning ascribed to such term in Clause 4.4;

 

"Parties" means the parties to this Agreement and includes their respective
successors;

 

"Purchase Price" means the sum of the Initial Purchase Price, the Second Payment
and the Earn-Out;

 

"Purchaser's Bank Account" means Account 57.78.12.947, USD
IBANNL67ABNA0577840576, ABN AMRO Bank N.V., Leidseplein 29, 1017 PS Amsterdam;

 

"Purchaser's Group" means the Purchaser and its holding company (if any) and any
subsidiary of the Purchaser or such holding company (if any) or a person related
to those companies and a "Purchaser's Group Companies" means any of them;

 

"Purchaser’s Warranties" means the statements of the Purchaser set out in
Schedule 7;

 

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"Restricted Period" means the period of two (2) years commencing on the Date of
this Agreement, or such shorter period of time recognised by applicable law;

 

“Second Payment” has the meaning ascribed to such term in Clause 4.1.2;

 

"Sellers" means collectively the Seller Dubai and the Seller US and a "Seller"
means any of them;

 

"Sellers' Bank Account" means the bank account of the Sellers set out in
Schedule 8;

 

"Sellers' Group" means the Sellers and their holding company or companies (if
any) and any subsidiary of the Sellers (excluding the Companies) or such holding
company or companies (if any) or a person related to those companies and a
"Sellers' Group Companies" means any of them;

 

"Sellers' Warranties" means the statements of the Sellers set out in Schedule 9;

 

"Shares" means all issued and outstanding shares in the Companies owned by the
Sellers, the details of which are set out in Schedule 5;

 

"Tax" or "Taxation" means without limitation and whatever the means by which it
is levied all forms of statutory taxation, governmental, state and municipal
impositions, duties contributions and levies including but not limited to any
tax imposed on any income, withholding tax, value added tax ("VAT"), road tax,
real estate tax, real estate transfer tax, gift tax, inheritance tax, excise
duties, customs or other duty, employment related levies, including social
security contributions and contributions to complementary welfare and health
insurance, including both principal and potential related interest and
penalties, levied elsewhere;

 

"Tax Sellers' Warranties" means the Sellers' Warranties contained in Paragraphs
10 and 11.8 of Schedule 9;

 

"USD" means the United States Dollar;

 

"Warranty Claim" means a claim for compensation in relation to any of the
Sellers' Warranties being, or allegedly being, untrue, inaccurate, incomplete or
misleading; and

 

"Warranty Tax Claim" means a Warranty Claim in relation to any of the Sellers'
Tax Warranties being, or allegedly being, untrue, inaccurate, incomplete or
misleading.

 

1.2In this Agreement:

 

1.2.1singular words include the plural and vice-versa and words in a particular
gender include all genders, unless the context requires otherwise;

 

1.2.2references to a "person" includes legal entities, associations and
partnerships without legal personality and natural persons;

 

1.2.3words "includes" or "including" must be construed without limitation;

 

1.2.4a document is in an "agreed form" if it has been approved and initialled by
each Party;

 

1.2.5reference to any law shall include:

 

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1.2.5.1that law as respectively amended, modified, consolidated or re-enacted
from time to time; and

 

1.2.5.2any law which that law re-enacts (with or without modification); and

 

1.2.5.3any subordinate legislation made under that law (as so amended, modified,
consolidated or re-enacted) in each case before the Date of this Agreement;

 

1.2.6where any statement is qualified by the expression "so far as the Sellers
are aware" or "to the best of the Sellers' knowledge" or any similar expression
that statement shall include the knowledge the Sellers should have had as the
owner of 100% of the Shares of the Companies, provided that, for avoidance of
doubt, any matter known to Petr Stransky or members of the Companies management
who remain with the Companies following the Date of this Agreement shall not be
attributed to the Sellers, but will be deemed disclosed in the Disclosure Letter
as contemplated by Clause 6.4;

 

1.2.7references to Sections, Clauses and Schedules are references to the
sections of, and the schedules to, this Agreement, unless the context requires
otherwise;

 

1.2.8Schedules form an integral part of this Agreement;

 

1.2.9headings in this Agreement are for convenience only and do not affect
interpretation of this Agreement; and

 

1.2.10references to times of the day refer to the time in Prague (CET).

 

2.SALE AND PURCHASE OF THE SHARES

 

2.1On the terms of this Agreement, the Sellers hereby sell, and the Purchaser
hereby purchases, all of Sellers right, title and beneficial interest in the
Shares effective as of the Date of this Agreement. Legal title for the Shares of
each of the Companies will remain with the Sellers until such time as
certificates, where applicable, for such Shares are transferred of record to the
Purchaser. All of the Shares will be transferred to the Purchaser free from
Encumbrances and together with all rights attached to them at the Formal
Consummation Date. The parties hereto acknowledge that the Formal Consummation
is ministerial in nature and the Purchaser shall be entitled to the benefit of
ownership of the Companies as of the Date of this Agreement as well as assume
all obligations arising therefrom. With respect to any shares owned beneficially
or of record by an Affiliate of Sellers, Sellers must ensure that such
beneficial or of record ownership is transferred free from Encumbrances to the
Purchaser so that the Purchaser becomes beneficial or of record owner of such
shares.

 

2.2Subject to Section 3.2.3, the Sellers shall procure that on or before Formal
Consummation Date any and all rights of pre-emption over the Shares or any of
them are waived irrevocably by the persons entitled thereto.

 

3.EFFECTIVE DATE

 

3.1The effective date of the transactions pursuant to this Agreement is the Date
of this Agreement.

 

3.2The Purchaser shall as from the Date of this Agreement assume full
responsibility to:

 

3.2.1operate and manage the Companies;

 

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3.2.2provide the Companies with the funds required to conduct their business;

 

3.2.3promptly prepare and, upon approval and execution by the Sellers, if
applicable, file or otherwise process proxies and stock transfer documents;

 

3.2.4take all actions reasonably necessary or appropriate to ensure that the
Formal Completion occurs as soon as possible after the Date of this Agreement.

 

3.3The Employees shall cease being considered by the Sellers or their Affiliates
at the Date of this Agreement.

 

3.4The Sellers shall as from the Date of this Agreement until Formal
Consummation Date:

 

3.4.1refrain from interfering with the Purchaser's management of the Companies;

 

3.4.2issue proxies and other documents as prepared by the Purchaser and
reasonably approved by the Sellers to allow the Purchaser to operate and manage
the Companies;

 

3.4.3cooperate with the Purchaser to effectuate the Formal Consummation;

 

3.4.4subject to Clause 3.1, refrain from anything that could turn the Sellers'
Warranties untrue, inaccurate, incomplete or misleading;

 

3.4.5refrain from exerting any influence on the Companies except with the
Purchaser's written consent and in accordance with such consent.

 

3.5The Purchaser, and where applicable the Sellers too, shall as from the Date
of this Agreement until Formal Consummation Date procure that the Companies:

 

3.5.1do not pay any of the Intra-Group Debts;

 

3.5.2allow the Parties and their agents, upon reasonable notice, access to, and
to take copies of, the books, records and documents of or relating in whole or
in part to the Companies.

 

3.6From the Date of this Agreement until Formal Consummation Date, the Sellers
must promptly notify the Purchaser in writing if they become aware of the fact
or circumstance which:

 

3.6.1constitutes (or would after the lapse of time constitute) a breach of any
of the obligations on the part of the Sellers under this Agreement or makes any
Sellers' Warranty untrue, inaccurate, incomplete or misleading; or

 

3.6.2would mean (or be likely to mean) that any of the Sellers' Warranties would
be untrue, inaccurate, incomplete or misleading; or

 

3.6.3might otherwise reasonably be expected to have an adverse effect on the
financial condition, prospects or business (as presently carried on) of the
Companies.

 

4.PURCHASE PRICE

 

4.1The consideration for the purchase of the Shares under this Agreement amounts
to the sum of:

 

4.1.1USD $250,000 (the "Initial Purchase Price");

 

4.1.2USD $750,000 (the “Second Payment”); and

 

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4.1.3the Earn-Out.

 

4.2Within one (1) Business Day following the Date of this Agreement, the
Purchaser shall:

 

4.2.1instruct the bank maintaining the Purchaser's Bank Account to transfer from
the Purchaser's Bank Account the amount of the Initial Purchase Price to the
Sellers' Bank Accounts; and

 

4.2.2deliver to the Sellers the written payment order for the bank maintaining
the Purchaser's Bank Account; and

 

4.2.3procure that the bank maintaining the Purchaser's Bank Account issues and
delivers to the Sellers the written confirmation on payment of the amount of the
Initial Purchase Price to the Sellers' Bank Accounts.

 

4.3Prior to June 30, 2012, the Purchaser shall:

 

4.3.1instruct the bank maintaining the Purchaser's Bank Account to transfer from
the Purchaser's Bank Account the amount of the Second Payment to the Sellers'
Bank Accounts; and

 

4.3.2deliver to the Sellers the written payment order for the bank maintaining
the Purchaser's Bank Account; and

 

4.3.3procure that the bank maintaining the Purchaser's Bank Account issues and
delivers to the Sellers the written confirmation on payment of the amount of the
Second Payment to the Sellers' Bank Accounts.

 

4.4The initial Earn-Out payment must be actually received by Sellers prior to
December 31, 2012. Thereafter, within 30 days following each subsequent June
30th and December 31st, Purchaser will provide Seller Dubai with the calculation
of the Earn-Out payment alongside an audit report on the period revenue. The
Purchaser and Seller Dubai shall approve the amount of the Earn-Out payment and
within 30 days following the approval the Purchaser will send to Sellers an
amount equal to the Earn-Out payment then due. No further Earn-Out payments will
accrue after the earlier of (a) January 1, 2017 (b) such time as Sellers have
received aggregate Earn-Out Payments in an amount equal to $17,800,000 (as so
adjusted, the “Maximum Amount”), or (c) the occurrence of a Change of Control;
provided that all accrued but unpaid Earn-Out payments will remain due and
payable.

 

4.5Upon the occurrence of a Change of Control, Purchaser shall without undue
delay either (i) pay to Seller Dubai an amount equal to the Maximum Amount less
the aggregate Earn-Out payments made to Seller Dubai prior to such date, or (ii)
arrange for a third person assuming all obligations hereunder to the Seller's
Dubai satisfaction.

 

5.FORMAL CONSUMMATION

 

5.1The Parties shall agree on the steps to effectuate Formal Consummation
("Formal Consummation Actions Agreement") as soon as reasonably possible
following the Date of this Agreement. The Formal Consummation Actions Agreement
shall include the allocation of the Purchase Price to individual Shares and
Sellers.

 

5.2The individual actions of the Formal Consummation shall take place on a
rolling basis with the final actions taking place and on the date and time as
the Sellers and the Purchaser agree.

 

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5.3If either the Sellers or the Purchaser fails to (i) agree on the terms of the
Formal Consummation Actions Agreement, or (ii) comply with any material
obligation under the Formal Consummation Actions Agreement, the other Party(ies)
shall be entitled to claim damages, including lost profits, consequential
damages.

 

5.4The Parties shall provide each other with all necessary assistance and
co-operation and, as need be, any documents necessary for successful Formal
Consummation.

 

6.SELLERS' WARRANTIES

 

6.1The Sellers warrant to the Purchaser that, in all material respects, each of
the Sellers' Warranties is true, accurate, complete and not misleading at the
Date of this Agreement.

 

6.2The Sellers acknowledge that the Purchaser is entering into this Agreement in
reliance on the Sellers' Warranties.

 

6.3The Sellers' Warranties are provided to the Purchaser as the legal basis for
making Warranty Claims and receiving the Compensation.

 

6.4The Sellers' Warranties are given subject to matters fully and fairly
disclosed in the Disclosure Letter with sufficient detail to identify the nature
and scope of the matters disclosed. Except in relation to matters fairly
disclosed in the Disclosure Letter, none of the Sellers' Warranties will be
qualified by any actual, imputed or constructive knowledge on the part of
Purchaser, its agents or advisers and no such knowledge shall prejudice or be
used as a defence to any Warranty Claim or otherwise operate to reduce the
amount recoverable; provided that anything that Petr Stransky and the members of
the Companies' management knew or should have known shall be deemed to have been
disclosed in the Disclosure Letter and Sellers’ Warranties shall be deemed
modified as though such information was set forth in the Disclosure Letter.

 

6.5Each of the Sellers' Warranties is separate and independent and is not
limited by reference to any other Sellers' Warranty or by anything in this
Agreement.

 

6.6None of the Sellers' Warranties will be deemed in any way modified or
discharged by reason of Formal Consummation.

 

7.PURCHASER'S REMEDIES

 

7.1If any of the Sellers' Warranties is materially untrue, inaccurate,
incomplete or materially misleading as of the Date of this Agreement, the
Sellers must pay the Purchaser the compensation ("Compensation"). The
Compensation will be equal to an amount sufficient to put the Companies into the
position which would have existed if the Sellers' Warranties had been true,
accurate, complete and not misleading when given or repeated together with all
costs, expenses and disbursements suffered or incurred, directly or indirectly,
by the Purchaser or the Companies which would not have existed or arisen if the
relevant Sellers' Warranty had not been untrue, incomplete, inaccurate or
misleading.

 

7.2In no event shall the Sellers have any liability from the Sellers' Warranties
for lost profits, consequential damages.

 

7.3The Sellers' obligation to pay the Compensation is the sole remedy that
Purchaser has with respect to any breach of the Sellers’ Warranties.

 

7.4The Sellers' obligation to pay the Compensation is subject to the limitations
set out in Clause 8.

 

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8.SELLERS' WARRANTIES LIMITS

 

8.1The Sellers will not be liable in respect of any Warranty Claim:

 

8.1.1if the fact, circumstance or occurrence giving rise to or forming the basis
of the Warranty Claim has been fairly disclosed (or deemed disclosed) to the
Purchaser in the Disclosure Letter;

 

8.1.2to the extent that provision or allowance for the matter or liability has
been made in the Accounts or is otherwise taken account of, or reflected in, the
Accounts;

 

8.1.3to the extent that the Warranty Claim would not have arisen but for a
change in law made after the Date of this Agreement;

 

8.1.4to the extent the liability of the Sellers in respect of the Warranty Claim
is affected by any voluntary act of the Purchaser or of the Companies carried
out on or after the Date of this Agreement but only in that extent.

 

8.2The Sellers will not be liable for breach of any Sellers' Warranty unless a
notice of the Warranty Claim is given by the Purchaser to the Sellers:

 

8.2.1in the case of any Warranty Claim within one (1) year after the Date of
this Agreement; and

 

8.2.2in the case of any Warranty Tax Claim, within four (4) years after the Date
of this Agreement unless the relevant Tax authority initiated any proceedings or
Tax audit in relation to a matter constituting a claim under the Sellers' Tax
Warranty before the expiry of that period of time in which case the Sellers
shall cease to be liable for the relevant claim if the Purchaser does not serve
the notice of the Warranty Claim on the Seller within seven (7) years after the
Date of this Agreement.

 

8.3The Sellers will not be liable for breach of any Sellers' Warranty in respect
of any Warranty Claim:

 

8.3.1where the liability in respect of any such Warranty Claim for which the
Sellers would otherwise be liable (disregarding the provisions of this Clause
8.3) does not exceed USD 10,000; where the liability in respect of any such
Warranty Claim exceeds USD 10,000, the Sellers will be liable for the whole
amount of the Warranty Claim and not for the excess only; and

 

8.3.2except to the extent that the aggregate amount of all Warranty Claims for
which the Sellers would otherwise be liable subject to Clause 8.3.1
(disregarding the provisions of this Clause 8.3.2) exceeds USD 20,000;
whereupon, the Sellers will be liable for the aggregate amount of all Warranty
Claims and not for the excess only.

 

8.4The aggregate liability of the Sellers in respect of all breaches of the
Sellers' Warranties will not exceed the lesser of (a) 35% of the Purchase Price
or (b) USD 70,000.

 

8.5The Parties must take and procure that all reasonable steps are taken and all
reasonable assistance is given in order to avoid or mitigate the amount of the
Compensation.

 

8.6The limitations contained in this Clause 8 will apply to all Warranty Claims,
excepting only any Warranty Claim arising pursuant to Paragraphs 1, 3.8, 7, 13
of Schedule 9 or any Tax Warranty Claim to the extent that (and only to the
extent that) such Warranty Claim or Tax Warranty Claim arises or is increased,
as the consequence of, or which is delayed as a result of, fraud, wilful
misconduct, wilful concealment or gross negligence by the Sellers or any of
their respective directors, officers, employees or persons in similar positions,
where no limits apply.

 

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9.PURCHASER'S WARRANTIES

 

9.1The Purchaser warrants to the Sellers that, in all material respects, each of
the Purchaser's Warranties is true, accurate, complete and not misleading at the
Date of this Agreement.

 

10.PURCHASER'S WARRANTIES LIMITS

 

10.1Clause 8, 7.2 and 7.3 shall apply mutatis mutandis to the Purchaser's
liability in respect of any claim from the Purchaser's Warranties.

 

11.RESTRICTIONS ON THE SELLERS

 

11.1The Sellers undertake that they will not and undertake to procure that no
Sellers' Group Companies from time to time will:

 

11.1.1during the Restricted Period, be concerned in any business carrying on
business which is competitive or likely to be competitive with any of the
businesses carried on by the Companies at the Date of this Agreement; or

 

11.1.2during the Restricted Period, induce or attempt to induce any supplier of
the Companies to cease to supply, or to restrict or vary the terms of supply, to
the Companies; or

 

11.1.3during the Restricted Period, induce or attempt to induce any key Employee
of the Companies to leave the employment or a similar position of the Companies;
or

 

11.1.4during the Restricted Period, do anything with the intent of harming the
reputation of the Companies; or

 

11.1.5misuse Confidential Information.

 

11.2The restrictions in Clause 11.1 shall not operate to prohibit the Sellers
and any Sellers' Group Companies from:

 

11.2.1holding or being interested in up to five (5) per cent of the registered
capital of a company listed on any recognised stock exchange.

 

11.3Each of the restrictions in Clause 11.1 shall be enforceable independently
of each of the others and its validity shall not be affected if any of the
others is invalid.

 

11.4If any of those restrictions is invalid but would be valid if some part of
the restriction were deleted, the restriction shall apply with such modification
as may be necessary to make it valid.

 

11.5The Sellers acknowledge that the provisions of Clause 11.1 are no more
extensive than is reasonable to protect the Purchaser as the purchaser of the
Shares.

 

12.ADDITIONAL TERMS AND CONDITIONS

 

12.1No more than 30 days after the Date of this Agreement, the Sellers and the
Sellers' affiliates shall undertake the appropriate accounting and legal
measures to eliminate the Intra-Group Debts. The Parties acknowledge and agree
that the Earn-Out to be paid hereunder has been agreed upon in exchange for the
cancellation of the Intra-Group Debts between the Companies and Sellers.

 

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12.2Promptly following the Date of this Agreement, the Sellers and the Purchaser
shall, or the Purchaser will procure that any of the Companies shall, enter into
a reseller agreement in such form as shall be mutually agreed by the Parties
("Reseller Agreement").

 

12.3Subject to the last sentence of this Section 12.3, the Purchaser and the
Companies shall be entitled to use those current names of each of the Companies
that include a word "KIT" and the domain names and e-mail addresses including
“KIT” or any derivation thereof for a period of from the Date of this Agreement
until December 31, 2012. If a Seller at any time changes its name or loses right
to use “KIT” as part of its name, the Purchaser shall promptly change (and cause
the Companies to change) the name of the Purchaser or the Companies, as
applicable, whose current names include a word "KIT" to such name as the
Purchaser shall in its sole discretion determine which does not include “KIT” or
any derivation thereof. The Sellers grant the Purchaser a license to permit any
of the Companies to use the name "KIT digital Content Solutions" in the form as
used at the Date of this Agreement from the Date of this Agreement until
December 31, 2012. Such license is non-assignable except for assignments within
the Purchaser's Group. The license to use the name “KIT digital Content
Solutions” shall immediately terminate if at any time Seller US is determined by
any court to not legally be entitled to use the “KIT” name (or otherwise ceases
to use the KIT name) and at such time Purchaser and the Companies shall
immediate cease using “KIT” or any derivation thereof in their respective legal
names, as part of any trade name, trademark, logo or otherwise.

 

12.4The Purchaser and the Companies shall be entitled to use the Sellers'
internal accounting and financial system until 31 March 2013 and the Sellers
shall maintain the system and provide the Purchaser and the Companies with the
support; provided that Purchaser shall promptly upon invoice reimburse Sellers
the reasonable costs incurred by them in connection with the Purchaser and
Companies to utilize such system and any support.

 

12.5No more than 30 days after the Date of this Agreement, the Sellers shall
transfer possession (and title if not already in the name of the Companies) of
all equipment predominantly used by the Companies in Los Angeles, California,
London and in Prague for no consideration to the Purchaser or a Company
designated by the Purchaser. Promptly following the Date of this Agreement, the
Sellers shall procure that their Affiliate enters into a sublease agreement
regarding the lease of the Prague offices in the extent as currently used by the
Companies with the Company selected by the Purchaser; provided that should the
Sellers or their Affiliate enter into an agreement with the landlord of such
offices to vacate such space, then the Purchaser shall either (a) enter into a
lease directly with such landlord if it wishes to remain a tenant in such
building or (b) vacate such offices no later than the date that Sellers or their
Affiliates vacate them. The Sellers agree that the Companies will use the
Sellers' or their Affiliate's offices in Singapore on substantially same terms
as before the Date of this Agreement. The Sellers agree that the Companies will
use the Sellers' or their Affiliate's offices in London on substantially same
terms as before the Date of this Agreement during the period of three months
following the Date of this Agreement.

 

12.6Before the Date of this Agreement, the Sellers have assigned for no
consideration all of their rights and obligations under the certain Securities
Purchase Agreement dated as of 21 September 2011 between the Sellers and the
stockholders of Digital Media Production a.s., a company existing under the laws
of the Czech Republic ("DMP"), as such agreement is amended and in effect on the
date hereof ("DMP SPA"), to KIT digital Content Solutions s.r.o. and arranged
for that Brickbox UK assumed all of the Sellers' obligations under the DMP SPA.
The Purchaser agrees to procure that the earn-out liability under the DMP SPA be
paid and settle same if and when due. The Purchaser shall indemnify the Seller
Dubai on a USD 1.00 one basis for any liability (including reasonable legal fees
and expenses) if it fails to meet such obligation (without regard to baskets).
The Purchaser covenants to run the DMP business as a stand-along unit with
separate books and records (auditable by the Sellers) until such time as the
Sellers are fully released from any further earn-out liability with respect to
the DMP SPA.

 

11

 

 

12.7The Purchaser agrees to grant to the Sellers and any representative of the
Sellers access to and the books and records of the Companies after the Date of
this Agreement until such time that the Purchaser has paid the Purchase Price in
full.

 

12.8Within sixty (60) days following the Date of this Agreement, the Purchaser
shall acquire and thereafter maintain until such time as the Earn-Out is paid in
full and no further Earn-Out payments shall accrue pursuant to Clause 4.4, a
term life insurance on the life of Petr Stransky in such amount as may be
purchased from a reputable insurance company with annual premiums in an amount
of around USD 50,000. In addition, until such time as the Earn-Out is paid in
full and no further Earn-Out payments shall accrue pursuant to Clause 4.4
neither the Purchaser nor any of the Companies shall, without the prior written
consent of Seller Dubai, (a) pay any dividends or make any distributions with
respect to any securities of such entity other than to extract cash to be paid
as the Earn-Out under this Agreement, (b) pay any compensation (directly or
indirectly) to any senior officer of the Purchaser or any of the Companies above
market rate compensation, or (c) engage in any transactions with the purpose of
evading the obligation of the Purchaser to accrue or pay the Earn-Out in full
and on a time basis. The Purchaser shall be responsible for ensuring that the
Companies comply with the requirements of this Clause 12.8. Purchaser must
notify Seller Dubai of any breach of the foregoing restrictions and Seller Dubai
must provide the Purchaser with a reasonable period of time to remedy the
breach. If the Purchaser fails to remedy the breach of the foregoing
restrictions, all future Earn-Out payments will automatically become payable as
if there has been a Change of Control event pursuant to Clause 4.5.

 

12.9Without providing the Purchaser with at least twenty (20) days advance
notice the Purchaser shall not engage in any transaction or series of
transactions that would result in a Change of Control.

 

13.EMPLOYMENT AND RELATED MATTERS

 

13.1The employment of other persons may be transferred from the Sellers to one
of the Companies upon the mutual agreement of the Sellers and the Purchaser.

 

13.2Promptly following the Date of this Agreement, the Sellers must, or the
Sellers must procure their Affiliate that upon termination of Consultancy
Agreement with Mr. Petr Stransky, Mr. Petr Stránský will be paid severance pay
in the amount of six (6) times average monthly fee paid to Mr. Petr Stránský
during the term of the agreement.

 

13.3All warrants outstanding, employee stock options and other incentive
programs of the Sellers held by any Employee of the Companies at the Date of
this Agreement (or those employees of Sellers or their Affiliates transferred by
the Sellers or their Affiliates to a Company within thirty (30) days following
the Date of this Agreement) shall continue as non-incentive stock options for
the shorter period of (a) 12 months, (b) such period of time following the Date
of this Agreement as the Purchaser and/or the Companies act as a reseller of KIT
products pursuant to the Reseller Agreement, or (c) the date that any such
person ceases to be employed by one the Companies.

 

12

 

  

14.DEBT AND GUARANTEES

  

14.1Any shareholder loans, third party loans and other financing for borrowed
monies provided to the Companies are set out in Schedule 11.

 

14.2The Purchaser undertakes with the Sellers to procure, within seven (7)
months from Date of this Agreement, the release of the Sellers from all
guarantees, indemnities, bonds, letters of comfort, undertakings, licenses and
other arrangements to which they or any of them are a party in respect of the
Companies or their business or the leased properties (and to indemnify and hold
harmless and to keep indemnified and held harmless on a continuing basis the
Sellers from all claims, liabilities, costs and expenses (including without
limitation, reasonable legal and other professional advisers' fees and
disbursements) arising in respect or by reason thereof. During the period of
time referred to above, the Sellers shall continue to support the Companies'
bank financing to the extent that this will be required to maintain the
Companies' current bank financing as at the the Date of this Agreement. The
foregoing notwithstanding, without the prior written consent of Sellers, neither
the Purchaser nor any of the Companies shall extend, renew or amend any
obligation for which any of the Sellers are obligated under any guarantees,
indemnities, bonds, letters of comfort, undertakings, licenses or other
arrangements unless Sellers are released from any further liability thereunder
from any after the date of such extension, renewal or amendment.

 

15.CONFIDENTIALITY

 

15.1Neither Party may communicate or disclose Confidential Information to any
third party without the prior written consent of the other Party. This
restriction does not apply to any disclosure:

 

15.1.1required by law, by a ruling issued by a governmental authority, or by the
listing authority or a stock exchange; the Party under obligation to make a
disclosure must use its best efforts to notify the other Party before making the
disclosure; or

 

15.1.2made to either Party’s professional advisers if they are bound by
confidentiality undertakings at least equivalent to those contained in this
Agreement.

 

16.ANNOUNCEMENTS

 

16.1Without prejudice to Clause 15.1, no announcement in connection with the
existence or the subject matter of this Agreement shall be made or issued by or
on behalf of a Party without the prior written approval of the other Party
except to the extent required by applicable law or by the requirements of any
exchange or market on which the common stock of Seller US is listed for trading.

 

17.NOTICES

 

17.1All notices or other communications under this Agreement must be in writing
in the English language and must be:

 

17.1.1delivered personally; or

 

17.1.2sent by fax; or

 

17.1.3sent by courier; or

 

17.1.4sent by registered post

 

to the following persons and addresses:

 

13

 

 

If to the Purchaser:Content Solutions International N.V.

;;;Keizersgracht 62, 1015 CJ,

the Netherlands

EUROPE

Fax: +31(0)20-5207577

Attn: Jop Fellinger

 

If to the Sellers:KIT digital, FZ-LLC

c/o KIT digital, Inc.

168 5th Ave, Suite 301
New York, NY 10010-5952

Facsimile: +1 (212) 937-3999

Attn:Barak Bar-Cohen, CEO

 

With a copy to: Pedley & Gordinier, PLLC

10600 Timberwood Circle, Unit 1

Louisville, KY 40223

Tel: +502-214-3141

Fax: +502-214-3121

Attn:David M. Pedley

 

17.2A Party may change its communication address for the purpose of this
Agreement by giving a notice of such change to the other Party in accordance
with the provisions of this Clause 17.

 

17.3In the absence of evidence of an earlier receipt, a notice or other
communication is deemed given:

 

17.3.1if delivered personally, when delivered;

 

17.3.2if sent by fax, when the fax machine of the sender prints out a
confirmation of the successful dispatch of the message to the fax number of the
recipient provided, however, that if this confirmation occurs at any time other
than on a Business Day between 09:00 and 18:00 hours local time at the location
of the recipient’s fax machine, such notice will be deemed to have been
delivered at 10:00 hours local time at the location of the recipient’s fax
machine on the first Business Day after the date of dispatch;

 

17.3.3if sent by courier, at the end of the day shown as the day of the receipt;

 

17.3.4if sent by registered post with on the fifth (5th) Business Day after the
day when it was posted.

 

18.DEFAULTS

 

18.1No interest shall accrue or be payable to the Purchaser or the Companies if
the Sellers fail to pay any amount payable by it under this Agreement when due.

 

18.2In the event the Purchaser fails to pay the Initial Purchase Price or Second
Payment in accordance with the terms of this Agreement, the Sellers shall
provide the Purchaser with written notice of default of the relevant payment
amount giving the Purchaser thirty (30) days to cure the default, failing which
the Sellers may require the Purchaser to transfer the Shares to the Sellers for
the amount of the Purchase Price paid by the Purchaser as at the date of
default, less 20% or the sum of USD 100,000 whichever is lower shall be paid to
the Sellers as agreed liquidated damages.

 

14

 

 

19.JOINT AND SEVERAL LIABILITY

 

19.1Except for the obligation to transfer the Shares under Clause 2.1 which is
several, the Sellers will be jointly and severally liable to the Purchaser with
respect to their obligations under this Agreement.

 

19.2The Sellers may only exercise their rights under this Agreement jointly.

 

20.COSTS AND DISBURSEMENTS

 

20.1Except as expressly provided to the contrary in this Agreement, each Party
must bear all costs and expenses incurred by it in connection with the entering
into, and performance of, this Agreement.

 

21.ASSIGNMENT

 

21.1Save as set out in Clause 21.2 and 21.3, none of the rights or obligations
under this Agreement may be assigned or transferred without the prior written
consent of the other Party.

 

21.2The Purchaser may, without the consent of the Sellers, assign to any
Purchaser's Group Companies the benefit of the whole or any part of this
Agreement provided that if the assignee ceases to be a member of the Purchaser's
Group it must before so leaving assign the benefit so far as assigned to it to
another Purchaser's Group Companies.

 

21.3Except as otherwise expressly provided in this Agreement, the Sellers may,
without the consent of the Purchaser, assign to any Sellers' Group Companies the
benefit of the whole or any part of this Agreement provided that if the assignee
ceases to be a member of the Sellers' Group it must before so leaving assign the
benefit so far as assigned to it to another Sellers' Group Companies.

 

22.SEVERABILITY

 

22.1The unenforceability or invalidity of any provision of this Agreement, in
whole or in part, may not affect the enforceability or validity of the remainder
of this Agreement.

 

23.WHOLE AGREEMENT

 

23.1This Agreement together with the exhibits, schedules, Disclosure Letter and
other agreements referenced herein contains the whole agreement between the
Parties relating to the subject matter of this Agreement at the Date of this
Agreement to the exclusion of any non-mandatory terms implied by law and
supersedes any previous written or oral agreement between the Parties in
relation to the matters dealt with in this Agreement.

 

24.AMENDMENTS AND WAIVERS

 

24.1No amendment of this Agreement will be valid and effective unless in writing
and signed by or on behalf of each of the Parties.

 

24.2No failure to exercise and no delay on the part of any Party in exercising
any right under this Agreement and no course of dealing between the Parties may
be construed or operate as a waiver thereof, nor may any single or partial
exercise of any right preclude any other or further exercise thereof, or the
exercise of any other right.

 

15

 

 

24.3Any waiver of a breach of any of the terms of this Agreement or of any
default under this Agreement may not be deemed to be a waiver of any subsequent
breach or default and may in no way affect the other terms of this Agreement.

 

25.FURTHER ASSURANCES

 

25.1Each Party must take (or procure that a third party, as the case may be,
takes) any action not expressly provided for in this Agreement which may be
necessary or desirable for the consummation of the transfer of the Shares free
of any Encumbrances or which otherwise may be necessary to give full effect to
this Agreement.

 

26.NET OF VAT AND TAX

 

26.1All amounts payable under this Agreement are expressed net of VAT, which (to
the All amounts payable under this Agreement) are expressed net of VAT, which
must be paid in addition to such amounts in the rate applicable from time to
time. Purchaser shall pay any stamp, transfer taxes or similar fees or expenses
incurred in connection with the transfer of the Shares and shall indemnify and
hold the Sellers harmless against same.

 

26.2If a payment under this Agreement is subject to a deduction or withholding
required by law, the sum due must be increased to the extent necessary to ensure
that, after making of any deduction or withholding, the Party to whom the amount
is due receives the sum equal to the sum it would have received had no deduction
or withholding been made.

 

27.NO RESCISSION

 

27.1Neither Party may rescind or otherwise unilaterally terminate this Agreement
other than due to the reasons expressly set out in this Agreement. The Parties
expressly disapply all non-mandatory statutory provisions which may otherwise
give either of the Parties the right to rescind this Agreement.

 

28.LANGUAGE AND NUMBER OF COUNTERPARTS

 

28.1This Agreement is executed in three (3) originals in the English language
version, each Party receiving one (1) original.

 

29.NO STRICT CONSTRUCTION

 

29.1The Parties have participated jointly in the negotiation and drafting of
this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the Parties, and no presumption or burden of proof shall arise favouring or
disfavouring any Party by virtue of the authorship of any of the provisions of
this Agreement.

 

30.GOVERNING LAW AND JURISDICTION

 

30.1This Agreement shall be construed and enforced in accordance with, and the
rights of the Parties shall be governed by, the laws of the state of New York
without regard to its rules on conflict of law.

 

16

 

 

30.2The Parties will attempt in good faith to negotiate a settlement to any
claim or dispute between them arising out of or in connection with this
Agreement. If the matter is not resolved by negotiation within twenty (20) days
the Parties will refer the dispute to mediation in accordance with the rules of
the American Arbitration Association ("Mediation Rules"). Where the dispute is
not solved by mediation, within the period of time prescribed by the Mediation
Rules, the dispute shall be finally settled by arbitration in Vienna, Austria in
accordance with the rules of the International Chamber of Commerce (ICC). The
arbitral tribunal shall be composed of three (3) arbitrators appointed in
accordance with the rules of Arbitration of the International Chamber of
Commerce (ICC) and the language to be used in the arbitral proceedings shall be
English.

 

30.3The Parties undertake and agree that all mediation and arbitral proceedings
conducted with reference to this Clause 30 will be kept strictly confidential.
This confidentiality undertaking shall cover all information disclosed in the
course of such mediation and/or arbitral proceedings, as well as any decision or
award that is made or declared during the proceedings. Information covered by
this confidentiality undertaking may not, in any form, be disclosed to a third
party without the written consent of the other Party. This notwithstanding, a
Party shall not be prevented from disclosing such information in order to
safeguard in the best possible way his rights in connection with the dispute, or
if obligated to do so pursuant to statute, regulation, a decision by an
authority, a stock exchange agreement or similar.

 

17

 

 

IN WITNESS of which this Agreement is signed by the Parties.

 

SIGNED:

 

KIT digital FZ-LLC       By: /s/ Barak Bar-Cohen   Name: Barak Bar-Cohen  
Title: Chief Executive Officer   Location: Prague       KIT digital, Inc.      
    By: /s/ Barak Bar-Cohen   Name: Barak Bar-Cohen   Title: Chief Executive
Officer   Location: Prague       Content Solutions International N.V.       By:
/s/ Petr Stránský   Name: Petr Stránský   Title: Company director   Location:
Prague  

 

18

 

Schedule 4.4

 

   H2/2012 2012   H1/2013   H2/2013   H1/2014   H2/2014   H1/2015   H2/2015  
H1/2016   H2/2016   SUM*  Revenues  $7,500,000   $8,560,000   $9,159,200  
$9,800,344   $10,486,368   $11,220,414   $12,005,843   $12,846,252  
$13,745,489   $91,823,910                                                     
Earnout payment  $1,650,000   $2,018,750   $2,018,750   $2,018,750  
$2,018,750   $2,018,750   $2,018,750   $2,018,750   $2,018,750   $17,800,000 

 

For avoidance of doubt, if during H1/2013, Purchaser and the Companies achieve
aggregate revenues of only $7,000,000 then the Earn-Out payment actually due and
payable will be $ 1,650,846.96 (i.e., $2,018,750 * (7.0/8.56)) and the unpaid
$367,903.04 will result in an increase in the subsequent 7 periods to
$2,071,307.58 (i.e., $2,018,750 + ($367,903.04/7). Alternatively, if during
H1/2016, Purchaser and the Companies achieve aggregate revenues of only
$10,000,000 then the Earn-Out payment actually due and payable will be
$1,571,470.03 (i.e., $2,018,750 * ($10,000,000 /$12,846,252)) and the unpaid
$447,279.97 will result in an increase in the subsequent 1 period to
$2,466,029.97 (i.e., $2,018,750 + ($447,279.97/1).

 

19

 

 

Schedule 5

 

COMPANIES

   

Name of Company KIT digital Content Solutions s.r.o. ("KIT CZ")     Country of
incorporation Czech Republic     Date of Incorporation 7 June 2005    
Registration number Company identification number: 272 47 481; Section C, Insert
107427     Registered office Czech Republic, Praha 4, Nusle, Na Hřebenech II
1718/10, postal code 147 00     Accounting Reference date 1 September to 31
August     Directors (names and addresses)

(i) Ing. Daniel Hromádko

(ii) Gavin Alan Campion (not registered)

    Issued Share Capital CZK 6,000,000     Number of issued Shares not
applicable     Shareholders

(i) KIT DIGITAL Inc. (1%)

(ii) KIT digital FZ-LLC (99%)

 

Name of Company Digital Media Production a.s. ("DMP CZ")     Country of
incorporation Czech Republic     Date of Incorporation 30 December 1996    
Registration number Company identification number: 250 97 083; Section B, insert
4364.     Registered office Czech Republic, Praha 4, Mečislavova 164/7, postal
code 140 00     Accounting Reference date Calendar year     Directors (names and
addresses)

(i) Ing. Lubomír Celar

(ii) Ing. Vít Komrzý

(iii) Ing. Miroslav Kozel

    Issued Share Capital CZK 3,500,000     Number of issued Shares 125    
Shareholders KIT digital FZ-LLC (100%)

 

20

 

 

Name of Company BRICKBOX DIGITAL MEDIA Magyarország Korlátolt Felelösségü
Társaság ("Brickbox Hungary")     Country of incorporation Hungary     Date of
Incorporation 21 January 2010     Registration number Cg.01-09-932352    
Registered office Hungary, 1115 Budapest, Kelenföldi út 2.     Accounting
Reference date Calendar year     Directors (names and addresses) Gavin Alan
Campion     Issued Share Capital HUF 500,000     Number of issued Shares not
applicable     Shareholders KIT digital FZ-LLC (100%)

 

Name of Company BRICKBOX DIGITAL MEDIA S.R.L. ("Brickbox Romania")     Country
of incorporation Romania     Date of Incorporation 11 August 2010    
Registration number RO 27268367     Registered office Romania, Bucuresti, Str.
Paleologu 24, sector 3, postal code: 30552     Accounting Reference date
Calendar year     Directors (names and addresses) Robin Smyth     Issued Share
Capital RON 1,000     Number of issued Shares 100     Shareholders

KIT DIGITAL Inc. (1%)

KIT digital FZ-LLC (99%)

 

21

 

 

Name of Company BRICKBOX Ltd. ("Brickbox UK")     Country of incorporation
United Kingdom     Date of Incorporation 16 May 2000     Registration number
03994938     Registered office 1 Innovation Close, York Science Park, YO10 5ZD
York, United Kingdom     Accounting Reference date 31 December     Directors
(names and addresses)

Gavin Alan Campion

Robin Smyth

    Issued Share Capital GBP 1,000     Number of issued Shares 1,000    
Shareholders KIT digital FZ-LLC (100%)

 

Name of Company Brickbox Research And Development s.r.o. ("Brickbox Research")  
  Country of incorporation Czech Republic     Date of Incorporation 29 July 2008
    Registration number 282 98 128     Registered office Brno, Příkop
843/4, PSČ 602 00, Czech Republic     Accounting Reference date       Directors
(names and addresses) Ing. Daniel Hromádko, dat. nar. 9. dubna 1978     Issued
Share Capital 200, 000 CZK     Number of issued Shares Not applicable    
Shareholders KIT digital Content Solutions, s.r.o. (100%)

 

22

 

 

Name of Company KIT Digital Sweden AB ("KIT Sweden")     Country of
incorporation Sweden     Date of Incorporation 13 September 2004    
Registration number 556666-2135     Registered office Sweden, Stockholm,
Drottninggatan 92-94, 111 36     Accounting Reference date Calendar year    
Directors (names and addresses)

Gavin Alan Campion

Kaleil Isaza Tuzman

Robin Smyth

    Issued Capital       Number of issued Shares       Shareholders  

   

Name of Company Kit Digital Egypt l.l.c. ("KIT Egypt")     Country of
incorporation Egypt     Date of Incorporation       Registration number 48651  
  Registered office Egypt, 13, Al Gul Gamal St., El Mohandeseen     Accounting
Reference date       Representative (names)

Robin Smyth

Mohamed Mustapha

Dieter Axel Ruther

    Issued Share Capital Limited Liability Company     Number of issued Shares
Ioko365, Inc. 50% of Shares

KIT digital Czech Republic 50% of Shares

    Shareholders

Ioko365, Inc. 50% of

KIT digital Czech Republic

 

23

 

 

Name of Company International Digital Management LLC ("IDM US")     Country of
incorporation U.S.A.     Date of Incorporation 14 July 2008     Registration
number 200819810100     Registered office

5340 W 102nd Street

Los Angeles, CA 90045-6021

U.S.A.

1706 Morgan Ln, Redondo Beach, CA 90278

    Accounting Reference date Calendar year     Directors (names and addresses)
Not Applicable     Issued Share Capital Not Applicable     Number of issued
Shares 1,500 units     Shareholders

KIT digital FZ-LLC (15%)

Brickbox UK (85%)

 

Name of Company International Digital Management EOOD ("IDM Bulgaria")    
Country of incorporation Bulgaria     Date of Incorporation       Registration
number 131332400     Registered office Bulgaria, Sofia 1164, 2, James Bourchier
Blvd.     Accounting Reference date Calendar year     Directors (names and
addresses)

Gavin Alan Campion

Kaleil Isaza Tuzman

Robin Smyth

    Issued Share Capital BGN 5,000     Number of issued Shares 100    
Shareholders KIT digital FZ-LLC (100%)

  

24

 

  

Schedule 6

 

DISCLOSURE LETTER

In New York, NY 26 June 2012

Content Solutions International NV

Keizersgracht 62. 1015 CJ,

the Netherlands

Europe

 

Re: Disclosure Letter

 

This is the Disclosure Letter referred to in the Securities Purchase Agreement
dated 26 June 2012 between Content Solutions International NV on the one hand
and KIT digital, FZ-LLC and KIT digital, Inc. on the other hand ("SPA").

 

The capitalised terms in this letter have the meaning ascribed to them in the
SPA.

 

The purpose of this letter is to disclose matters that may be relevant for you
as buyers in relation to the Representations and Warranties of the Sellers,
which will be qualified by the facts disclosed in this letter.

 

The inclusion of any fact or item in a section on this letter, which section
requires the listing of a "material" item, is not deemed to be an admission or
representation that the included item is "material."

 

Any heading on any section of this letter is inserted for convenience only and
shall not create a different standard for disclosure than that provided for in
the SPA.

 

Any item, document or disclosure contained in one section o r sections of this
letter shall be deemed to also be disclosed in any other section or sections of
this letter in which it is applicable, but only if it is reasonably apparent on
the face of such other section or sections that such item, document or
disclosure was applicable to such other section or sections.

 

Specific matters:

 

The following matters are disclosed specifically in relation to the individual
representations and warranties of Sellers in the SPA:

 

Thank you

 

Yours sincerely

 

KIT DIGITAL, INC. KIT DIGITAL, FZ-LLC     By: By:     Name: Barak Bar Cohen
Name: Barak Bar Cohen     Title: Chief Executive Officer Title: Chief Executive
Officer

 

  

25

 

 

Receipt acknowledged effective as of June 26. 2012 by:

 

CONTENT SOLUTIONS INTERNATIONAL NV

 

By:

 

Name: Petr Stránský

 

Title: Company Director

 

26

 

 

Schedule 7

 

PURCHASER’S WARRANTIES

 

The Purchaser warrants to the Sellers that:

 

1.The Purchaser has the power to enter into and to perform its obligations under
this Agreement.

 

2.All necessary or appropriate corporate, governmental or statutory approvals
have been obtained by the Purchaser.

 

3.This Agreement will, when executed, constitute legally valid and binding
obligations, enforceable in accordance with its terms.

 

4.The execution of this Agreement and the fulfilment of its obligations do not
conflict with law or with the Purchaser's statutes, and do not constitute, and
will not result in a breach of, any agreement to which it is a party, nor shall
they conflict with any court, arbitration or administrative decision binding
upon the Purchaser.

 

5.There is no bankruptcy in respect of the Purchaser.

 

6.There are no actions, suits or proceedings pending or threatened, in respect
of the Purchaser that could have the effect of preventing, delaying or otherwise
interfering with the transactions contemplated by this Agreement.

 

7.The Purchaser has no liability or obligation to pay any fees or commissions to
any broker, finder, or agent with respect to the transactions contemplated by
this Agreement for which the Sellers could become liable or obligated.

 

8.The Purchaser has access to all funds necessary to pay the Purchase Price and
related fees and expenses, and the Purchaser has the financial capacity to
perform all of its other obligations under this Agreement.

 

27

 

 

Schedule 9

 

SELLERS' WARRANTIES

 

1.The Sellers

 

1.1The Seller Dubai is duly incorporated and validly existing under the laws of
the Dubai Technology and Media Free Zone, Dubai, United Arab Emirates.

 

1.2The Seller US is duly incorporated and validly existing under the laws of the
state of Delaware in the United States of America.

 

1.3The Sellers have the power to enter into and to perform its obligations under
this Agreement.

 

1.4All necessary or appropriate corporate or statutory approvals have been
obtained by the Sellers.

 

1.5This Agreement will, when executed, constitute legally valid and binding
obligations, enforceable in accordance with its terms.

 

1.6The execution of this Agreement and the fulfilment of its obligations do not
conflict with law or with the Sellers' organizational documents, and do not
constitute, and will not result in a breach of, any agreement to which it is a
party, nor shall they conflict with any court, arbitration or administrative
decision binding upon the Sellers.

 

1.7There is no bankruptcy in respect of the Sellers.

 

1.8There are no actions, suits or proceedings pending or threatened, in respect
of the Sellers that could have the effect of preventing, delaying or otherwise
interfering with the transactions contemplated by this Agreement.

 

2.Information

 

2.1All information provided by, or on behalf of, the Sellers and the Companies
to the Purchaser in the this Agreement, its Schedules and the Disclosure Letter
is true, accurate, complete and not misleading in all material respects.

 

3.Corporate

 

3.1The Companies incorporation

 

(a)The Companies are duly existing and its articles of association are in
accordance with all applicable laws.

 

3.2Powers of attorney

 

(a)The Companies have given no power of attorney or any other authority (express
or implied) which is still effective to any person to enter into any contract or
commitment or to do anything on its behalf.

 

3.3The Companies' documents, registers and minutes

 

(a)The minutes from the Companies' bodies meetings have been duly kept under
applicable law and are in the possession of the Companies.

 

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(b)All material documents required by law to be delivered to or registered in
public registries have been duly and correctly delivered or made on a timely
basis.

 

(c)The Companies operate and has always operated while owned by Sellers their
respective business in accordance with their articles of association at the
relevant time.

 

3.4The Companies' board members and directors

 

(a)Each director, member of the board of directors and supervisory board of the
Companies have been properly appointed, re-appointed or removed from the office.

 

(b)No director, member of the board of directors and supervisory board of the
Companies have any unsettled or outstanding claim against the Companies.

 

3.5The Companies' intra group relationships

 

(a)Except for KIT CZ and Brickbox UK, the Companies have no subsidiaries.

 

(b)The Companies are not a party to any control and/or profit transfer
agreement.

 

(c)The Companies have fully complied with all rules on intra group
relationships, duties to disclose information about transactions effected with
connected companies, and substantive rule enforcing fair dealings with connected
companies.

 

(d)Since the acquisition of the Companies by the Sellers, none of the Companies
have been involved in a corporate or group restructuring, including by way of
merger, de-merger or take-over of assets.

 

3.6Insolvency

 

(a)The Companies are not in bankruptcy.

 

3.7Winding-up

 

(a)No decision or resolution has been passed and no petition was filed for the
winding-up the Companies.

 

3.8The Shares

 

(a)The Sellers are the legal owners of the Shares and have the right to exercise
all voting and other rights over the Shares.

 

(b)The Shares comprise the whole of the issued share capital of the Companies
except as otherwise disclosed in Schedule 5.

 

(c)The Shares have been properly and validly issued and are each fully paid.

 

(d)To the knowledge of Sellers there has never been any contribution to the
Companies' equity outside the registered capital.

 

(e)No person has the right (whether exercisable now or in the future and whether
contingent or not) to call for the issue or transfer of any of the Companies'
shares.

 

(f)There is no Encumbrance on, over or affecting any of the Shares, nor is there
any commitment to give or create any of the foregoing, and no person has claimed
to be entitled to any of the foregoing.

 

29

 

 

(g)No rights, which may be detached from the Shares, have been detached and all
such rights remain associated only with the Shares.

 

(h)Subject to Clause 3.2.3, all consents for the transfer of the Shares have
been obtained or will be obtained by the Formal Consummation Date.

 

(i)The Shares have not been and are not listed on any stock exchange or
regulated market.

 

4.Assets

 

4.1Save as set out in the Disclosure Letter, the Companies owned at the Accounts
Date all the assets included in the Accounts.

 

4.2The assets comprise all assets owned or otherwise used by the Companies to
carry out their business except for (a) the accounting system of the Sellers and
(b) those located in Los Angeles, California, London and in Prague which are to
be transferred to the Purchaser or the Companies in accordance with the
Agreement.

 

4.3The Companies acquired all assets in compliance with applicable law and have
with respect to such assets a full and valid legal title to them, a valid
license to use them or a valid lease to such assets.

 

4.4Except as contemplated by this Agreement, none of the assets owned by the
Companies is subject to any Encumbrance or any agreement or commitment to give
or create any Encumbrance, and no person has claimed to be entitled to any of
the foregoing, except that if the Companies own any property under a
lease-purchase agreement they will be subject to Encumbrances in favour of the
sellers thereof.

 

4.5The Companies have not been a party to a transaction pursuant to or as a
result of which an asset owned, purportedly owned or otherwise held by the
Companies as at the Accounts Date, must be transferred or re-transferred to
another person or which gives or may give rise to a right of compensation or
payment in favour of another person.

 

5.Real estate

 

5.1The Companies do not own any real estate property.

 

5.2The leases pursuant to which the properties are occupied by the Companies
are, to the knowledge of the Sellers, valid and subsisting.

 

5.3So far as the Sellers are aware none of the landlords have issued any written
notices of breach in respect of the covenants, conditions and agreements
contained in the leases relating to the leased properties and there are no
breaches of the leases pursuant to which the properties are held (including,
without limitation, the obligation to keep the properties in a good state of
repair and condition).

 

5.4In addition to the premises leased by the Companies, the Companies occupy the
properties leased by the Sellers or their Affiliates and located in Prague, Na
Hřebenech II, in London, Curzon Street, and in Singapore.

 

6.Commercial

 

6.1To the knowledge of Sellers, the Companies are not a party to or subject to
any contract, transaction, arrangement, understanding or obligation which:

 

30

 

 

(a)is not in the ordinary and usual course of business;

 

(b)is not wholly on an arm’s length basis;

 

(c)is of a long term nature (that is, unlikely to have been fully performed, in
accordance with its terms, more than six (6) months after the date on which it
was entered into or undertaken or is incapable of termination in accordance with
its terms by the Companies on six (6) months’ notice or less);

 

(d)is of a loss-making nature (that is, known to be likely to result in material
loss on completion or performance);

 

(e)cannot readily be fulfilled or performed without undue or unusual expenditure
of money or effort; or

 

(f)restricts its freedom to carry on its business in any part of the world in
such manner as it thinks fit.

 

6.2To the knowledge of Sellers, the Companies are not party to any agency,
distributorship, marketing, purchasing, manufacturing or licensing agreement or
arrangement.

 

6.3The Companies are, or have agreed to become, a member of any joint venture,
consortium, partnership or other unincorporated association (other than a
recognised trade association in relation to which the Companies have no
liability or obligation except for the payment of annual subscription or
membership fees).

 

6.4There are no existing contracts, arrangements or understandings between the
Companies and the Sellers or any person who is or was a shareholder in the
Companies or any other member of the Sellers' Group or any person connected with
any of them; except for any employment or acquisition related contracts or
obligations of Sellers, including without limitation options granted by Sellers.

 

6.5The Companies are not party to any contract, arrangement or understanding
with any current or former employee or current or former director of the
Companies or any person connected with any of such persons, or in which any such
person is interested (whether directly or indirectly), other than on normal
commercial terms in the ordinary and usual course of business; except for any
employment or acquisition related obligations of Sellers, including without
limitation options granted by Sellers.

 

6.6No person is entitled to receive from the Sellers any finder’s fee, brokerage
or other commission in connection with the acquisition of the Shares and the
Seller has not entered into any agreement providing for the Companies to be
obligated to pay any such fees or commissions.

 

6.7To the knowledge of Sellers:

 

(a)all the agreements, licences and concessions of whatever nature to which the
Companies are a party are valid, binding and enforceable obligations of the
parties thereto and the terms thereof have been complied with in all material
respects by the Companies and ,to the best of the Sellers' knowledge, by each
other party to such agreements;

 

(b)there are no grounds for termination of any of such agreements or matters
referred to in Paragraph (a) above and no notice of termination or of intention
to terminate has been received in respect of any of them.

 

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6.8To the knowledge of the Sellers, neither entering into, nor compliance with,
nor completion of this Agreement will, or is likely to:

 

(a)cause the Companies to lose the benefit of any right or privilege they
presently enjoy;

 

(b)cause any person who normally does business with or gives credit to the
Companies not to continue to do so on the same basis;

 

(c)prejudicially affect the attitude or action of customers, suppliers,
employees and other persons with regard to the Companies;

 

(d)result in a breach of, or give any third party a right to terminate or vary,
or result in any Encumbrance under, any contract or arrangement to which the
Companies are a party.

 

6.9Incentives and donations

 

(a)The Companies while owned by the Sellers have not obtained any incentive or
subsidy in relation to its business or investment, which could be re-claimed if
its conditions are not met.

 

(b)The Companies while owned by the Sellers have neither incurred any political
expenditure nor made any political donation nor is under any commitment to do
so.

 

6.10Product liability

 

(a)The Companies have not designed, manufactured, sold, distributed or supplied
products or services which are, or were, or are likely to become, or are alleged
to be, faulty, defective or contaminated, or which do not comply with any
warranties or representations expressly or impliedly made by the Companies, or
with any relevant law.

 

(b)There have not been any product recalls, reworks or post-sale warnings issued
by the Companies or by agents acting on its behalf relating to any product
designed, manufactured, distributed, sold or supplied by it nor any internal
investigation or consideration by the Companies of or decision concerning
whether or not to do so.

 

7.Anti-competitive arrangements

 

7.1The Companies are not and has not been a party to any agreement, arrangement,
concerted practice, business practice or course of conduct which:

 

(a)is or was subject to notification, registration or requires or required
approval or individual exemption under the Council Regulation EC 139/2004
("Regulation") or any merger regulation in any jurisdiction in which the
Companies carries on business or has assets or sales, or any other applicable
national competition law;

 

(b)infringes Article 81 or 82 (formerly Articles 85 and 86) of the Treaty
establishing the European Community or any other antitrust or similar law in any
jurisdiction in which the Companies carries on business or has assets or sales;

 

(c)is or has been subject to any notification or application for negative
clearance, exemption, early guidance, guidance or a decision made to the
Commission of the European Communities or any competition authority under any
applicable national competition law; or

 

32

 

 

(d)is invalid or unenforceable (whether in whole or in part) or may render the
Companies liable to proceedings under any such legislation as is referred to in
Paragraphs above.

 

7.2The Companies have not given any undertaking and no decision or order has
been made, against or in relation to the Companies pursuant to any antitrust or
similar legislation in any jurisdiction in which the Companies carries on
business or has assets or sales.

 

7.3No investigation, request for information, or statement of objections or
similar matter has been carried out or, as the case may be, received from any
court, tribunal, governmental, national or supra-national authority in respect
of the Companies.

 

7.4The Companies have not received any unlawful state aid.

 

8.Accounts

 

8.1General

 

To the knowledge of Seller Dubai, the Accounts:

 

(a)have been prepared on a proper and consistent basis in accordance with the
Accounting Standards and law and using methods which are consistent with those
used in the preparation of each of the accounts of the Companies for any
accounting period falling wholly or partly within the period of one (1) year
ended on the Accounts Date;

 

(b)correctly state the assets and liabilities of the Companies and give a true
and fair view of the state of affairs of the Companies as at the Accounts Date
and of the profit or loss of the Companies for the period ended on the Accounts
Date or in respect of the periods for which they were prepared;

 

(c)contain either provisions adequate to cover, or full particulars in notes of,
all Taxation (including deferred Taxation) and other liabilities (whether
quantified, contingent or otherwise) of the Companies as at the Accounts Date;

 

(d)fully provide for all bad and doubtful debts as at the Accounts Date;

 

(e)are not affected by any unusual or non-recurring items; and

 

(f)have been duly filed in accordance with applicable law.

 

In the Accounts reasonable provision has been made for redundant, obsolete,
unsaleable, deteriorated or slow moving stocks;

 

8.2Indebtedness, loans and bank accounts

 

(a)The Companies does not have outstanding any indebtedness for borrowed money
or any money raised (other than those truly and fully described in the
Disclosure Letter and Schedule 11) including money raised by promissory note or
debt factoring or any liability (whether present or future) in respect of any
guarantee or indemnity.

 

(b)The Companies have not lent any money which has not been repaid to them nor
do they own the benefit of any debt (whether present of future) other than debts
accrued to it in the ordinary course of its business.

 

33

 

 

(c)There is no indebtedness (actual or contingent) nor any indemnity, guarantee
or security arrangement between the Companies and any current or former
employee, current or former director or any current or former consultant of the
Companies or any person connected with any of such persons or in which any such
person is interested (whether directly or indirectly).

 

8.3Accounting records. To the knowledge of Seller Dubai:

 

(a)The Companies' accounting records are up-to-date, in its possession or under
its control and fully and accurately completed in accordance with law and the
Accounting Standards.

 

(b)The Companies have and after the Date of this Agreement will retain access to
their accounting records and all related documents.

 

8.4Capital commitments

 

Except as disclosed in the Accounts, the Companies have not made or agreed to
make any, or otherwise incurred, any commitment involving a capital expenditure.

 

8.5Derivative transactions and promissory notes

 

(a)The Companies do not have outstanding any obligations in respect of a
derivative transaction including any foreign exchange transaction.

 

(b)The Companies have not issued, nor are or may become liable under, promissory
notes or bills of exchange.

 

9.Changes from the Accounts Date

 

9.1Since the Accounts Date, to the knowledge of the Sellers:

 

(a)the Companies have carried on its business in the ordinary and usual course
and without any interruption or alteration in the nature, scope or manner
thereof;

 

(b)Companies have not acquired or disposed of any asset, assumed any liability,
made any payment or entered into any other transaction which was not in the
ordinary course of its business and for full value;

 

(c)the Companies have paid its creditors within the times agreed with them and
no debt owed by the Companies have been outstanding for more than 90 days;

 

(d)there has been no material deterioration in the financial position or
prospects of the Companies;

 

(e)no event has occurred which would entitle any third party to call for the
repayment of indebtedness of the Companies before the normal maturity date;

 

(f)no dividend or other distribution of profits or assets has been agreed,
declared, made or paid by the Companies;

 

(g)the Companies have not settled any existing litigation;

 

(h)no resolution of the Companies' general meeting has been adopted.

 

10.Tax

 

10.1General

 

34

 

 

(a)The Companies have duly made and filed with the Tax authority all returns,
provided all information and maintained all records in relation to Tax as they
are required to make, provide or maintain.

 

(b)The Companies have fully complied on a timely basis with all notices served
on them and any other requirements lawfully made of them by any Tax authority.

 

(c)No return (and nothing in a return) has been disputed or is yet to be
determined by, or is subject to an agreement with, a Tax authority.

 

(d)The Companies are not and do not expect to be involved in a dispute in
relation to Tax.

 

(e)The Companies have not been subject to any investigation, audit or visit by
any Tax authority and there is no fact or circumstance, which would suggest that
any such investigation, audit or visit should be expected in the next twelve
(12) months.

 

(f)The Companies have properly operated the system for payments on account of
Tax on the income it pays (or has paid in the past) to their employees and have
complied with each reporting obligation in connection with benefits provided for
the Companies' directors and employees.

 

10.2Secondary liability

 

(a)To the knowledge of Sellers, no event has occurred, which could result in the
Companies becoming liable for Tax, which is primarily or directly chargeable
against a third person or which is charged by reference to the income or gains
of a third person.

 

(b)The Companies will not incur any income or profit that would be subject to
Tax as a result of the transaction contemplated by this Agreement.

 

(c)The Companies are not liable for or in connection with Taxes payable by a
third party whether as a guarantor, a joint and several creditor, or otherwise.

 

10.3Payments

 

(a)The Companies have paid all Tax which they have become liable to pay and are
not liable to pay, and have never been liable to pay, a penalty, penalty
interest or similar penalty payment in connection with Tax. No penalties due to
unpaid Tax are threatened.

 

10.4Tax residence

 

(a)The Companies are and has always been resident only in the country of their
incorporation for Tax purposes. The Companies have no permanent establishment
for Tax purposes in any other country, and are not registered, subject to or
liable to Tax in any other country.

 

(b)The Companies are not liable to pay, and have at no time incurred any
liability to, Tax chargeable under the laws of any jurisdiction other than the
country of their incorporation.

 

10.5VAT

 

35

 

 

(a)The Companies are duly registered for the purposes of VAT in the country of
their incorporation.

 

(b)The Companies have no permanent establishment for VAT purposes outside the
country of their incorporation.

 

(c)The Companies have complied with law concerning VAT, including the making due
and accurate returns and payments and the maintenance of records.

 

(d)The Companies have not made any exempt supplies in the current or preceding
VAT year applicable to them and there are no circumstances by reason of which
there might not be a full entitlement to credit for all VAT chargeable on
supplies and acquisitions received and imports made (or agreed or deemed to be
received or made) by them.

 

10.6VAT on import and duties

 

The Companies have paid all VAT payable on the import of goods and all customs
and excise duties payable to any Tax authority in respect of any asset
(including, without limitation, trading stock) imported or owned by the
Companies.

 

10.7Tax relieves

 

No relief (whether by way of deduction, reduction, write-off, exemption,
postponement, payment in instalments, allowance or otherwise) from, against, or
in respect of any Taxation has been claimed and/or given to the Companies which
could or might be effectively withdrawn, postponed, restricted, clawed back, or
otherwise lost as a result of any act, omission, event or circumstance arising
or occurring in the ordinary course of business.

 

10.8Arm's length dealings

 

(a)The Companies are not and have not been a party to or otherwise involved in
a transaction, agreement or other arrangement other than by way of a bargain at
arm's length.

 

(b)No transactions or arrangements involving the Companies have taken place or
are in existence which is such that any provision relating to transfer pricing
might be invoked by a Tax authority.

 

11.Employees

 

11.1General

 

(a)There is no employment contract between the Companies and any of its
Employees which cannot be terminated by the Companies by three (3) months’
notice or less without giving rise to a claim for damages or compensation (other
than a statutory redundancy payment or statutory compensation for unfair
dismissal).

 

(b)All agreements with the Employees are based on a standard agreement with no
unusual terms and conditions.

 

(c)No proposal, assurance or commitment has been communicated to any person
regarding any change to the terms of employment or working conditions or
regarding the continuance, introduction, increase or improvement of any benefit,
custom or any discretionary arrangement or practice.

 

36

 

 

(d)The Companies have not incurred a liability for breach or termination of an
employment contract including, without limitation, a redundancy payment,
protective award and compensation for unlawful dismissal and failure to comply
with an order for the reinstatement or re-engagement of an employee.

 

(e)None of the Employees is subject any secondment arrangement.

 

11.2No remuneration increase

 

The Companies are not obliged to increase the remuneration paid to the
Employees. Since the Accounts Date there was no increase in the remuneration
paid to the Employees by the Companies.

 

11.3Trade unions and work councils

 

The Employees are not organised in any form of trade union and the Companies
have no works council, staff association or other body representing employees
established.

 

11.4Collective Agreements

 

The Companies are not a party to any collective agreement or arrangement.

 

11.5Loans to Employees

 

The Companies have not made or promised loan or any advances to any of the
Employees.

 

11.6No consultancy or similar arrangements

 

There are no consultancy agreements or agreements similar to employment
agreements between the Companies and any person.

 

11.7Incentive schemes

 

The Companies does not have and is not proposing to introduce a share incentive,
share option, profit sharing, bonus or other incentive scheme for any of its
Employees.

 

11.8Social and health contributions

 

(a)The Companies have duly deducted and accounted for all amounts which they
have been obliged to deduct in respect of Taxation and, in particular, have
properly deducted Taxation, including all social and health insurance statutory
and mandatory contributions to the social and health insurance authorities, from
all payments made or treated as made to its employees or former employees, and
accounted to the relevant Tax authority for all Taxation deducted by them and
for all Taxation chargeable on benefits provided for their employees or former
employees.

 

(b)The Companies have not been liable to pay a penalty, penalty interest or
similar penalty payment in connection with all social and health insurance
statutory and mandatory contributions to the social and health insurance
authorities.

 

(c)There is no fact or circumstance by reason of which the Companies are likely
to become liable to pay any social and health insurance statutory and mandatory
contributions or any penalty, penalty interest or similar penalty relating
thereto for the period ending on the Date of this Agreement.

 

11.9Pensions

 

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The Companies are not committed towards its employees to operate, maintain or
contribute into any employee pension, social or other similar fund or scheme in
addition to the statutory system.

 

12.Compliance with law and licences

 

12.1Neither the Companies nor any of their officers, agents, employees or
persons in similar positions (during the course of their duties) has done or
omitted to do anything which is a contravention of any law, regulation or the
requirements of any regulatory body giving rise to any fine, penalty, other
liability or sanction on the part of the Companies and no complaints have been
received in respect of such matters.

 

12.2The Companies have valid and effective licences necessary to perform their
business and have complied in all material respects with all terms and
conditions of those licences. To the knowledge of Sellers, the licences will
remain valid and effective as result of transactions contemplated by this
Agreement.

 

13.Litigation

 

13.1Neither the Companies nor to the knowledge of Sellers any person for whose
acts the Companies are liable are involved whether as claimant, defendant nor
other party in any claim, legal action, proceeding, suit, litigation,
prosecution, investigation, enquiry, mediation nor arbitration (other than as
claimant in the collection of debts arising in the ordinary and usual course of
its business).

 

13.2No claim, legal action, proceeding, suit, litigation, prosecution,
investigation, enquiry, mediation or arbitration is pending or threatened in
writing by or against the Companies or, to the knowledge of Sellers, a person
for whose acts the Companies are liable.

 

13.3To the knowledge of Sellers, there are no investigations, disciplinary
proceedings or other circumstances likely to lead to any such claim or legal
action, proceeding, suit, litigation, prosecution, investigation, enquiry,
mediation or arbitration against the Companies or a person for whose acts the
Companies are liable.

 

13.4The Companies or their assets are not subject to any continuing injunction,
judgment or order of any court, arbitrator, governmental agency or regulatory
body, or in default under any order, licence, regulation or demand of any
governmental agency or regulatory body or with respect to any order, suit,
injunction or decree of any court.

 

14.Intellectual Property

 

14.1Each of the Companies is:

 

(a)The sole owner, holder or registered proprietor (where it is capable of
registration) of; and/or

 

(b)Entitled to use, either under binding and enforceable licence agreements or
otherwise under statutory law,

 

all Intellectual Property Rights that are required in connection with the
conduct of its activities as presently carried on and as expected to be carried
on in the future.

 

14.2All Intellectual Property Rights owned and/or used by the Companies are
valid and in full force and effect; they are not pledged, given as security or
subject to any Encumbrance, except as specified in the Disclosure Letter.

 

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14.3To the knowledge of Sellers, none of the licence agreements to which the
Companies are a party will or is likely to be terminated by the other party by
virtue of this Agreement. All parties to such licence agreements to the
knowledge of Sellers have fully complied with all obligations set out therein
and no disputes have arisen or are foreseeable in connection with such licence
agreements. Neither the Companies, nor to the knowledge of Sellers any third
party is in breach of any such licence agreement. All licence agreements to
which the Companies are a party which are subject to any registration
requirements have been duly registered.

 

14.4To the knowledge of Sellers, none of the activities, processes, or products
of the Companies or any licensee authorized by the Companies infringe, or could
be in conflict with, any Intellectual Property Rights of any other person and no
claim has been made against the Companies or any such licensee in respect of
such infringement.

 

14.5To the knowledge of Sellers, none of the Intellectual Property Rights owned
and/or used by the Companies are being used by, or are being or have been
claimed, disputed, opposed or attacked by any other person.

 

14.6Neither the Sellers nor the Companies are aware of any unauthorised use by
any person of any Intellectual Property Rights owned and/or used by the
Companies.

 

14.7No name or mark identical or similar to the Intellectual Property Rights
owned and/or used by the Companies (other than marks owned by KIT digital, Inc.
or its affiliates) have been registered or is being used by any person in the
same or similar business as the business of the Companies in the countries in
which the Companies have registered or is using such name or mark.

 

14.8To the knowledge of Sellers, nothing has been done or omitted to be done,
whether by the Companies or by any person, which would jeopardise the validity,
enforceability or subsistence of any Intellectual Property Rights owned and/or
used by the Companies or any licence agreements to which the Companies are a
party.

 

14.9Except in the ordinary course of business and on a strictly confidential
basis, no disclosure has been made of any of the confidential information,
know-how, technical processes, financial or trade secrets or customer or
supplier lists of the Companies.

 

14.10The Companies do not use any software products, materials or IT systems
which incorporate, contain, or use in any manner (in whole or in part) any open
source materials.

 

15.Computer Systems

 

For the purposes of this Paragraph:

 

"Hardware" means any computer equipment used by or for the benefit of the
Companies at any time but excluding all Software;

 

"Software" means any set of instructions for execution by microprocessor used by
or for the benefit of the Companies at any time, irrespective of application,
language or medium.

 

15.1The Hardware has been satisfactorily maintained and supported and has the
benefit of an appropriate maintenance and support agreement.

 

15.2Except for accounting and similar records and software owned or maintained
Sellers, where any of the records of the Companies are stored electronically,
the Companies are the owner of all hardware and software licences necessary to
enable them to keep, copy, maintain and use such records in the course of its
business and do not share any hardware or software relating to the records with
any person.

 

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16.Insurance

 

16.1All the assets of the Companies which are capable of being insured have at
all material times been and are insured for amounts and with deductibles and
excesses reasonably regarded as adequate taking into account the size and
operations of the Companies and the jurisdictions in which the operations of the
Companies are carried on against risks normally insured against by companies
carrying on similar businesses or owning assets of a similar nature.

 

16.2The Companies have at all material times been and are adequately (taking
into account the size and operations of the Companies and the jurisdictions in
which the operations of the Companies are carried on) covered against accident,
physical loss or damage, confiscation or expropriation of any such assets by any
foreign government, third party liability (including product liability),
environmental liability (to the extent that insurance is reasonably available),
and other risks normally covered by insurance by such companies.

 

16.3In respect of the insurances referred to in Paragraph 16.1 all the policies
are in full force and effect

 

16.4In respect of the insurances referred to in Paragraph 16.1 all premiums have
been duly paid to date.

 

16.5No act, omission, misrepresentation or non-disclosure by or on behalf of the
Companies have occurred which makes any of these policies invalid or
unenforceable.

 

16.6There has been no breach of the terms, conditions and warranties of any of
the policies that would entitle insurers to decline to pay all or any part of
any claim made under the policies or to terminate any policy.

 

16.7No insurance claim in excess of USD 100,000 is outstanding and no
circumstances exist which are likely to give rise to any insurance claim.

 

16.8Since May 1, 2012 no claim has been refused or settled below the amount
claimed.

 

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