3. **Term****.**(a) The initial term of this Agreement (the “Term”) shall be for a period of one (1) yearcommencing on May 12, 2008 and terminating on May 11, 2009, and unless terminated as providedbelow, shall continue for 2 consecutive terms of one (1) year starting at the anniversary of theinitial term _____ Notwithstanding the foregoing, this Agreement shall terminate immediately upon thedeath or disability of Employee and may be terminated immediately by the Company at any time, forcause, which cause shall include, but not be limited to:(i) (x) habitual alcohol**,**drug or controlled substance abuse by Employee;or (y) the refusal or failure, if requested by the Company, to submit totesting for the improper or illegal use of alcohol, drugs, or controlledsubstances, or (z) Employee’s improper or illegal use of alcohol, drugs orcontrolled substances as indicated by any such testing(ii) (y) the indictment of, or filing of a criminal information against,Employee or conviction of Employee, in any such case for a felony, anycrime involving money or other property of the Company or any crimeinvolving moral turpitude; or (x) accusations supported by reasonableevidence or facts that Employee shall have committed any felony, any crimeinvolving money or other property of the Company or any crime involvingmoral turpitude which accusations or the alleged circumstances of suchconduct, in the judgment of the Board of Directors, materially adverselyaffect the business or reputation of the Company or the ability of Employeeeffectively to perform his duties as an employee of the Company under thisAgreement;(iii) prolonged or repeated absence from duty in excess of any permittedleave, without the consent of the Company;(iv) violation in any respect by Employee of any provision of thisAgreement or any published policy of the Company applicable to Employee; or(v) (w) Employee’s failure or refusal to perform his duties in accordancewith this Agreement; (x) habitual neglect of Employee’s duties as anemployee of the Company; (y) engaging by Employee in any activity which isin conflict with or adverse to the legitimate business interests of theCompany; or (z) willful or serious misconduct on the part of Employeerelating to the performance of his duties or which is injurious to theCompany; and(vi) any conduct which reflects unfavorably on Company, all in Company’ssole discretion.(b) Employee acknowledges that Company has no duty or obligation to retain his services andmay discharge him at any time without any opportunity for any hearing or right to cure any defector failure of performance. Each party exercising the right to terminate this Agreement shallprovide the non- terminating party with a 30 days written notice.(c) If this Agreement and Employee’s employment hereunder are terminated during the Term bythe Company for cause, or by Employee for no reason, or by the death or disability of Employee,the Company shall pay to Employee (i) all compensation and benefits due to him through theeffective date of termination, in the same amounts, at the same time, and in the same manner asset forth in Sections 2 of this Agreement, and (ii) all expense reimbursement amounts accruedthrough the date of termination, if any. Upon such payment the Company shall have no furtherobligation to Employee except as required by applicable law, and Employee shall be entitled to noseverance compensation or benefits. Disability shall be defined as Employee’s inability tocompetently perform substantially all of Employee’s duties under this Agreement for thirty (30) ormore days, consecutively or cumulatively, during any three (3) month period of this Agreement dueto illness or other mental or physical ailment.
 
 

 
(d) If this Agreement and Employee’s employment hereunder are terminated during the Term bythe Company without cause or by the Employee for Constructive Termination, as defined herein, theCompany shall pay Employee (i) all compensation and benefits due to Employee through the date oftermination, in the same amounts, at the same time, and in the same manner as set forth in Section2 of this Agreement, and (ii) all expense reimbursement amounts accrued through the date oftermination, if any. In addition, the Company shall pay to Employee, in accordance with theCompany’s normal payroll, as severance to Employee, Employee’s base salary for a period of three(3) months. Employee shall not be entitled to any other compensation in the event of histermination.(e) “Constructive Termination” shall mean any of the following:(1) breach of any provision of this Agreement by the Company;(2) relocation of Employee’s principal office more than fifty (50) miles from the location towhich Employee is originally assigned; or(3) assignment to Employee of duties that are inconsistent with the duties described in thisAgreement, a reduction in the Employee’s duties or a reduction in Employee’s salary.If Employee determines that Constructive Termination exists for termination of this Agreementand his employment with the Company, Employee shall provide the Company with written notice of hisintention to terminate his employment including the grounds for termination. In the event theCompany does not cure such Constructive Termination within twenty (20) days of such writtennotice, Employee may terminate his employment and shall, receive the amount set forth in Section3(d) of this Agreement.(f) At the termination of this Agreement both parties shall have the affirmative obligationto undertake all reasonable steps to mitigate any damages suffered.4. **Expenses****.**(a) In addition to the above compensation, Company shall pay the reasonable and necessaryexpenses of Employee incurred in connection with the performance of his duties, includingtraveling expenses while absent from his regular place of residence, subject to such reporting andother requirements as are applicable to other Company personnel.(b) Company also agrees to pay to and / or for the Employee during the Term of this Agreementany annual fees to the State Bar of Nevada, the State Bar of New York and the Bar of the Districtof Columbia and any fees related to courses for continuing legal education necessary to retainEmployee’s Nevada license to practice law.(c) Company also agrees to pay to Employee certain relocation expenses not to exceed 510,000by advancing to Employee one thousand, six hundred and sixty-six dollars and sixty-six cents(51,666.66) per month which amount shall be paid in equal semi monthly installments during theTerm of this Agreement. The Employee shall submit copies of invoices for relocation expensessupporting such reimbursements.5. **Management Incentive Plan****.** Employee shall be a participant in Company’s ManagementIncentive Plan (the “Plan”) pursuant to the terms and conditions of such Plan as amended by theCompany from time to time. Employee’s incentive under the Plan shall be subject to the sameconditions, terms and requirements as are applied to incentives of other managers or seniorexecutives of Company.
 
 

 
**6. ****Other Benefits****.** Employee shall be eligible to participate in Company’s regular health,life, and vacation plans in accordance with their respective terms including two (2) weeks of paidvacation during the Tern of this Agreement. The paid vacation shall increase to three (3) weeksstarting the third anniversary of this Agreement.**7. ****Amendments to Management Incentive Plan amid Other Benefits****.** Nothing herein shall beconstrued to limit the Company’s discretion to amend, alter or otherwise modify its incentive orother plans or benefit programs.**8. ****Stock Option****.** Subject to the approval of the Board of Directors, Employee shall beentitled to an option to purchase up to fifty thousand (50,000) shares of the Company’s commonstock subject to the terms and conditions of the Company Stock Option Plan and Stock OptionAgreement to be executed by Employee and Company at the earliest practical time after execution ofthis Employment Agreement. The terms and conditions of the option including but not limited to theprice and vesting shall be as set forth in the Stock Option Plan and the Stock Option AgreementThe option exercise price shall be the greater of $1.21 or the share market price upon the date ofissuance of the option.9. **Conflicts of Interest/Business Opportunities****.** Employee shall not engage in anyactivity which is in conflict with the Company’s legitimate business interests without the priorwritten consent of the Company.10. **Non-Competition and Non-Solicitation****.**(a) Non-Compete**.** Employee covenants and agrees that during the Term and for two (2)years after termination of his employment, Employee shall not, directly or indirectly, without theprior written consent of the Company, enter into or directly or indirectly engage in, or own anyinterest in, any business which is in or assist any person in engaging in, competition with theCompany, any entity controlled by or under common control with the Company, or any of itsaffiliates, either as an individual, shareholder, partner, joint venturer, an employee, officer,director, member, agent or in any other capacity or respect in the Geographic Area. The GeographicArea shalt be defined as the USA. The foregoing shall net restrict stock ownership by Employee ofless than one percent (1%) of the shares of capital stock or other securities of any publiccorporation.(b) Non-Solicitation. Employee will not, directly or indirectly, employ, solicit foremployment, or advise or recommend to any other person that they employ or solicit for employmentor engagement, any employee or contractor of the Company, during the period of Employee’semployment by the Company and for a period of two years thereafter, nor shall Employee seek todivert any business from the Company during the Term or such two year period thereafter.(c) Severability of Covenants. If any court determines that any part of thenon-compete covenants and agreements contained in Subsection 10(a) (the “Non-Compete”) is invalidand unenforceable, the remainder of the Non-Compete shall not be affected and shall be given fulleffect without regard to the invalid portion.(d) Blue-Pencil Line. If any court determines that any part of the Non-Compete isunenforceable because of the duration or geographical scope of such provisions, such court also 11have the power to reduce the duration or scope of such provision and, in its reduced form, suchprovision shall then be enforceable.
 
 

 
11. **Inventions****.**(a) Ownership and Disclosure. Any and all inventions, products, discoveries,improvements, processes, methods and techniques, designs and styles, and methods of business(“Inventions”) made, developed or created by Employee alone or in conjunction with others, duringregular hours of work or otherwise during the Term that may be directly or indirectly useful in orrelated to the business of the Company shall be promptly disclosed by Employee to the Company, andshall be the Company’s property.(b) Documentation. Employee will, upon the Company’s request, execute any documentsreasonably necessary or advisable in the opinion of the Company’s counsel to direct issuance ofpatents or copyrights to the Company with respect to Inventions that are the Company’s propertyunder this Section or to vest in the Company title to such Inventions, the expense of securing anypatent or copyright, however, to he borne by the Company.12. **Taxes****.** Employee hereby agrees that Company may deduct and withhold from thecompensation or other amounts payable to him hereunder the amounts required to be deducted andwithheld by Company under the provisions of any applicable statute, regulation, ordinance ororder.13. **Confidentiality Provision****.** Employee agrees that at all times both during hisemployment and after termination hereof, he shall not divulge to any other person, firm or entity,or in any way use for his own benefit, except as required in the conduct of Company’s business oras authorized in writing on behalf of Company, any trade secrets or confidential informationobtained during the course of his employment with Company including but not limited to informationrelating to products, sales volume, strategy, suppliers or customers, or in any way relating tothe affairs or business of Company. “Trade secrets or confidential information,” as used herein,shall include, but not be limited to, products, producer, supplier, customer or client listsrecorded by any means now or hereinafter known. Employee also agrees that he will not, eithersubsequent to termination of his employment or during his employment, interfere with or disturb orattempt to interfere with or disturb the contractual or business relationships or arrangements ofCompany with any of its employees, agents, suppliers or customer, as the case may be.14. **Products of Employment****.** Employee hereby grants to Company in perpetuity, exclusively,and **throughout**the world, all rights to the extent the same may be vested in Employee, of everykind, whether or not such tights are now known or later recognized, which relate to Employee’semployment hereunder and the products, concepts and/or results of such employment.15. **Breach of Covenants; Attorneys’ Fees and Costs****.** In the event of a default or breachof any provision of this Agreement by a party to this Agreement, the other party to this Agreementshall be entitled to exercise any and all remedies, including but not limited to an action forinjunctive relief, available to it/her at law or in equity. The parties agree that the remediesfor breach of this Agreement are cumulative**.**The prevailing party in any action at law or inequity shall be entitled to recover its/her reasonable attorneys’ fees and costs from thenon-prevailing party in addition to any other relief to which it/she may be entitled.14. **General****.**(a) Successors, Binding Agreement. This Agreement shall inure to the benefit of andbe enforceable by the parties and their respective legal representatives, executors,administrators, successors, heirs, distributees, devisees and legatees.(b) Notice. Any and all notices, requests or other communications shall be given inwriting and sent by hand-delivery or by recognized overnight delivery or by registered orcertifiedmail, return receipt requested, with postage prepaid. Such notice shall be addressed to theparties at their respective addresses set forth in this Agreement, unless notice of a change inaddress is furnished in the manner provided in this Section. Any notice which is required to bemade within a stated period of lime shall be considered timely if delivered before 5:00 P.M.,Pacific Time, on the last day of such period.
 
 

 
(c) Waiver. No provision of this Agreement may be modified, waived or dischargedunless such waiver, modification or discharge is agreed to in writing signed by the parties. Nowaiver by a party or any breach or noncompliance by the other party of any condition or provisionof this Agreement to be performed by such party shall be deemed a waiver of similar or dissimilarprovisions or conditions existing at the same time or at any prior or subsequent time.(d) Validity. The invalidity or unenforceability of any provision of this Agreementshall not affect the validity or enforceability of any other provision of this Agreement, whichshall remain in bull farce and effect.(e) Choice of Law. This Agreement shall be governed, construed and enforced inaccordance with the internal laws, and not the taws of conflicts, of the State of Nevada. Anyaction brought pursuant to this Agreement shall be brought in the state courts located in ClarkCounty, Nevada.(f) Advice of Counsel. Employee represents and warrants that he has had theopportunity to have this Agreement reviewed an her behalf by Employee’s independent legal counsel,and he has had the opportunity to discuss the terms and conditions contained in this Agreementwith her legal counsel. Employee represents that she fully read and understands and agrees to allof the terms and provisions contained in this Agreement.(g) Entire Agreement. This Agreement constitutes the entire agreement between theparties with respect to the employment of Employee. There are no other written, verbal, express,or implied agreements, understandings, or representations between the parties, except as expresslyset forth in this Agreement.(h) Recitals. The recitals set forth in this Agreement are hereby incorporated intothis Agreement.**IN WITNESS WHEREOF,**the parties hereto have executed this Agreement the day and year fastabove written.      DigitalFX International, Inc.