NOTICE
OF GRANT OF STOCK APPRECIATION RIGHTS AWARD

    


    ZST
DIGITAL NETWORKS, INC.

    2010
OMNIBUS INCENTIVE PLAN

     

    FOR GOOD
AND VALUABLE CONSIDERATION, ZST Digital Networks, Inc. (the “Company”) hereby
grants, pursuant to the provisions of the Company’s 2010 Omnibus Incentive Plan
(the “Plan”), to the Participant designated in this Notice of Grant of Stock
Appreciation Rights Award (the “Notice”) the right to the appreciation in value
from the Date of Grant with respect to the aggregate number of Shares of the
Company’s Common Stock set forth in this Notice, subject to certain restrictions
as outlined below in this Notice and the additional provisions set forth in the
attached Terms and Conditions of Stock Appreciation Rights Award (collectively,
the “Agreement”). Also enclosed is a copy of the information statement
describing important provisions of the Plan.

     

    
      	
              Grantee:         ____________________

            	
              Date of
      Grant:               ____________

            
	 
      	 
      
	
              Exercise Price per
      Share:           $_______

            	
              Expiration
      Date:                ____________

            
	 
      	 
      
	
              Total Number of Shares in
      respect of which Stock Appreciations Rights
      Granted:                   _______

            	
              Total Exercise
      Price:                              $______

            
	 
      	 
      
	
              Vesting
      Schedule:    __________________________________

            
	 
      
	
              Exercise After Termination of
      Employment:
 

              Termination of Employment for
      any reason: any non-vested portion of the Award expires
      immediately;
 

              Termination of Employment due
      to death or Disability: vested portion of the Award is exercisable
      by the Grantee (or, in the event of the Grantee’s death, the Grantee’s
      legal personal representative) for twelve months after the Grantee's
      Termination;
 

              Termination of Employment for
      any reason other than death or Disability: vested portion of the
      Award expires immediately.
 

              In no event may this Award be
      exercised after the Expiration Date as provided
    above.

            
	 
      
	
              [Performance
      Conditions:] [insert as
      appropriate]

            


    

     

    By
signing below, the Grantee agrees that this Stock Appreciation Rights Award is
granted under and governed by the terms and conditions of the Company’s 2010
Omnibus Incentive Plan, this Notice and the attached Terms and
Conditions.

    


    
      
        
          	
                  Grantee

                	
                  ZST
      Digital Networks, Inc.

                
	 
      	 
      
	 
      	
                  By:

                	 
      
	 
      	
                  Title:

                	 
      
	
                  Date:

                	 
      	 
      	
                  Date:

                	 
      


        

      

    


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      TERMS
AND CONDITIONS OF STOCK APPRECIATION RIGHTS AWARD

    

     

    1.           Grant of
SAR.  The Stock Appreciation Rights ("SAR") granted to the
Grantee and described in the Notice of Grant of Stock Appreciation Rights Award
(the "Notice") is subject to the provisions of the Plan, which is incorporated
by reference in its entirety into these Terms and Conditions of Stock
Appreciation Rights Award (these "Terms and Conditions").

     

    The Board
of Directors of the Company has authorized and approved the 2010 Omnibus
Incentive Plan (the “Plan”), and the Plan has been approved by the Company’s
stockholders.  The Committee has approved an award to the Grantee of a
SAR to acquire the value of the appreciation in the Company’s Common Stock
following the Date of Grant, conditional on the Grantee’s acceptance of the
provisions set forth in the Plan, the Notice and these Terms and Conditions
within 60 days after the Notice and these Terms and Conditions are presented to
the Grantee for review.  For purposes of the Notice and these Terms
and Conditions, any reference to the Company shall include a reference to any
Affiliate.

     

    The
Company intends that this SAR not be considered to provide for the deferral of
compensation under Section 409A of the Code and that this Agreement shall be so
administered and construed.  Further, the Company may modify the Plan
and this Award to the extent necessary to fulfill this intent.

     

    2.           Exercise of
SAR.

     

    (a)           Right to
Exercise.  This SAR shall be exercisable, in whole or in part,
during its term in accordance with the vesting schedule set out in the Notice
and with the applicable provisions of the Plan and this Agreement.  No
Shares shall be issued pursuant to the exercise of this SAR Award unless the
issuance and exercise comply with applicable laws.  Assuming such
compliance, for income tax purposes the Shares shall be considered transferred
to the Grantee on the date on which the SAR is exercised with respect to such
Shares.  To the extent permitted under Section 6.03 of the Plan, the
Committee may, in its discretion, (i) accelerate vesting of the SAR, or (ii)
extend the applicable exercise period.

     

    (b)           Method of
Exercise.  The Grantee may exercise the SAR by delivering an
exercise notice in a form approved by the Company (the “Exercise Notice”) which
shall state the election to exercise the SAR, the number of Shares with respect
to which the SAR is being exercised, and such other representations and
agreements as may be required by the Company.  Subject to Section 7 of
these Terms and Conditions, this SAR Award shall be deemed to be exercised upon
receipt by the Company of such fully executed Exercise Notice.

     

    (c)           Acceleration of Vesting on
Change in Control.  Subject to the exceptions contained in
Section 6.05 of the Plan, in the event of a Change in Control, all SAR Awards
outstanding on the date of the Change in Control that have not previously vested
or terminated under the terms of this Agreement shall be immediately and fully
vested and exercisable.

     

    3.           Method of
Payment.  Upon exercise of a SAR, in whole or in part, by
delivery of an Exercise Notice to the Company, the Grantee shall be entitled to
receive a number of Shares (the “Net SAR Shares”) equal to the quotient obtained
by dividing x by y, where:

     

    x = the
number of Shares being exercised multiplied by the excess, if any, of (A) the
Fair Market Value of a Share on the date of exercise over (B) the Exercise
Price, and

     

    y = the
Fair Market Value of a Share on the date of exercise.

     

    
      
         


      

      
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    Notwithstanding
the foregoing, the Committee may in its discretion pay the value of the Net SAR
Shares (i) all in cash, (ii) all in Shares or (iii) in any combination of cash
or Shares (including payment in cash of any fractional Net SAR
Share).

     

    4.           Restrictions on
Exercise.  This SAR may not be exercised if the issuance of the
Shares upon exercise or the method of payment of consideration for those shares
would constitute a violation of any applicable law or regulation.

     

    5.           Non-Transferability of
SAR.  This SAR may not be transferred in any manner (other than
on death to the legal personal representatives of the Grantee) and may be
exercised during the lifetime of the Grantee only by the Grantee.  The
terms of the Plan and this Agreement shall be binding upon the legal personal
representatives of the Grantee.

     

    6.           Term of
SAR.  This SAR may be exercised only within the term set out in
the Notice, and may be exercised during such term only in accordance with the
Plan and the terms of this Agreement.

     

    7.           Withholding.

     

    (a)      
    The Committee shall determine the amount of any
withholding or other tax (together "Tax") required by law to be withheld or paid
by the Company with respect to any income recognized by the Grantee with respect
to the SAR Award.

     

    (b)   
       The Grantee shall be required to meet
any applicable tax withholding obligation in accordance with the provisions of
Section 11.05 of the Plan.

     

    (c)       
    Subject to any rules prescribed by the Committee, the
Grantee agrees that the Company may withhold or collect any Tax payable in
respect of the SAR or Shares acquired pursuant to the SAR (i) by withholding
from this Award at the appropriate time that number of whole Shares whose Fair
Market Value is equal to the amount of any Tax required to be withheld with
respect to such Award, (ii) by requesting direct and immediate payment to the
Company in cash of the amount of any Tax required to be withheld with respect to
such Award or (iii) by deduction of such Tax from any salary, fees or any other
payment payable to the Grantee by the Company at any time on or after the date
the Tax charge arises.

     

    8.           Defined
Terms.  Capitalized terms used but not defined in the Notice
and these Terms and Conditions shall have the meanings set forth in the Plan,
unless such term is defined in any Employment Agreement between the Grantee and
the Company or an Affiliate.  Any terms used in the Notice and these
Terms and Conditions, but defined in the Grantee’s Employment Agreement are
incorporated herein by reference and shall be effective for purposes of the
Notice and these Terms and Conditions without regard to the continued
effectiveness of the Employment Agreement

     

    9.           Grantee
Representations.  The Grantee hereby represents to the Company
that the Grantee has read and fully understands the provisions of the Notice,
these Terms and Conditions and the Plan and the Grantee’s decision to
participate in the Plan is completely voluntary.  Further, the Grantee
acknowledges that the Grantee is relying solely on his or her own advisors with
respect to the tax consequences of this SAR Award.

     

    10.         Regulatory Limitations on
Exercises.  Notwithstanding the other provisions of this
Agreement, no exercise of the SAR or issuance of Shares pursuant to this
Agreement shall be effective if (i) the shares reserved under the Plan are not
subject to an effective registration statement at the time of such exercise or
issuance, or otherwise eligible for an exemption from registration, or (ii) the
Company determines in good faith that such exercise or issuance would violate
any Company policy or applicable securities or other law or
regulation.

     

    
      
         


      

      
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    11.         Miscellaneous.

     

    (a)           Notices.  All
notices, requests, deliveries, payments, demands and other communications which
are required or permitted to be given under these Terms and Conditions shall be
in writing and shall be either delivered personally or sent by registered or
certified mail, or by private courier, return receipt requested, postage prepaid
to the parties at their respective addresses set forth herein, or to such other
address as either shall have specified by notice in writing to the
other.  Notice shall be deemed duly given hereunder when delivered or
mailed as provided herein.

     

    (b)           Waiver.  The
waiver by any party hereto of a breach of any provision of the Notice or these
Terms and Conditions shall not operate or be construed as a waiver of any other
or subsequent breach.

     

    (c)           Entire
Agreement.  These Terms and Conditions, the Notice and the Plan
constitute the entire agreement between the parties with respect to the subject
matter hereof.

     

    (d)     
     Binding Effect;
Successors.  These Terms and Conditions shall inure to the
benefit of and be binding upon the parties hereto and to the extent not
prohibited herein, their legal personal representatives.  Nothing in
these Terms and Conditions, express or implied, is intended to confer on any
person other than the parties hereto and as provided above, their legal personal
representatives any rights, remedies, obligations or liabilities.

     

    (e)           Governing
Law.  The Notice and these Terms and Conditions shall be
governed by and construed in accordance with the laws of the State of
Delaware.

     

    (f)    
       Headings.  The
headings contained herein are for the sole purpose of convenience of reference,
and shall not in any way limit or affect the meaning or interpretation of any of
the terms or provisions of these Terms and Conditions.

     

    (g)     
     Conflicts;
Amendment.  The provisions of the Plan are incorporated in
these Terms and Conditions in their entirety.  In the event of any
conflict between the provisions of these Terms and Conditions and the provisions
of the Notice or the Plan, the provisions of the Notice or the Plan, as the case
may be, shall control.  The Agreement may be amended at any time by
written agreement of the parties hereto.

     

    (h)     
     No Right to Continued
Employment.  Nothing in the Notice or these Terms and
Conditions shall confer upon the Grantee any right to continue in the employ or
service of the Company or affect the right of the Company to terminate the
Grantee’s employment or service at any time.

     

    (i)      
     Further
Assurances.  The Grantee agrees, upon demand of the Company or
the Committee, to do all acts and execute, deliver and perform all additional
documents, instruments and agreements which may be reasonably required by the
Company or the Committee, as the case may be, to implement the provisions and
purposes of the Notice and these Terms and Conditions and the Plan.

     

    
      
         


      

      
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