Document:

PLAN SUPPORT AGREEMENT

 

This PLAN SUPPORT AGREEMENT
(this “Agreement”), dated as of April 16, 2013, is made and entered into by and among KIT digital, Inc.
(the “Company”); and JEC Capital Partners, LLC (“JEC”),
Stichting Bewaarder Ratio Capital Partners (“Ratio”), and Prescott Group Capital Management, L.L.C. (“Prescott”;
and together with JEC and Ratio, the “Sponsors” and each a “Sponsor”).
Each of the Company and Sponsors are sometimes referred to herein as a “Party” and collectively
as the “Parties.”1

 

RECITALS

 

A.          The Sponsors
hold shares of common stock in the Company.

 

B.          JEC is the holder
of a promissory note, dated as of October 15, 2012, in the initial principal amount of $2,500,000 issued by the Company and holds
an unsecured claim in the approximate amount of at least $500,000 owing under that certain Consulting Agreement, dated December
27, 2012, between the Company and JEC.

 

C.          A
restructuring proposal term sheet (the “Term Sheet”), attached hereto as Exhibit A, sets forth
the principal terms and conditions for a restructuring of the Company’s indebtedness and certain related transactions to
be funded by the Sponsors (the “Restructuring”).

 

D.          This Agreement
contemplates the implementation of the Restructuring through a chapter 11 plan of reorganization to be proposed by the Company
substantially consistent in all material respects with the terms of the Term Sheet (the “Sponsored Restructuring”).
The Parties agree and acknowledge that the terms of this Agreement will play a central role in the successful Restructuring.

 

NOW, THEREFORE, in
consideration of the foregoing and the promises, mutual covenants and agreements set forth herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

 

Section
1.          Binding Term Sheet; Deposit; Financial Commitment

 

(a)       Notwithstanding
anything to the contrary contained in the Term Sheet, the Term Sheet shall be binding upon the Parties and shall be incorporated
by reference herein and be a part hereof. In the event of any inconsistency between the terms and conditions set forth in the Term
Sheet and this Agreement, the terms and conditions of the Term Sheet shall govern.

 

(b)       Within
two (2) days of the execution and delivery of this Agreement, the Sponsors shall deposit $1,500,000 (the “Deposit”)
with Wilmington Trust, N.A. (the “Escrow Agent”) pursuant to the terms of that certain escrow agreement,
to be dated as of the date the Deposit is made, by and among the Parties and the Escrow Agent. The Deposit will either be credited
towards the Purchase Price or disbursed by the Escrow Agent to the Sponsors or the Company, as the case may be, as set forth in
the Term Sheet.

 

 

1
All capitalized terms used, but not defined herein shall have the meanings ascribed to them in the Term Sheet:

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(c)       Simultaneously
with the execution and delivery of this Agreement, the Sponsors and the Company shall have entered into a funding commitment letter
(the “Commitment Letter”) providing for the Sponsors’ obligation to fund the Purchase Price, subject
to the terms and conditions set forth therein.

 

Section
2.          Support of Restructuring. 

 

(a)       During
the term of this Agreement, Sponsors shall, in their capacity as Sponsors (including in their capacity as shareholders arising
from any and all future purchases of common stock and as the holders of any unsecured or other claims against the Company) (and
shall cause each of their representatives, agents and employees to) (i) use their commercially reasonable efforts to facilitate
the solicitation, approval, confirmation and consummation of the Sponsored Restructuring on a timely basis; and (ii) not object
to, challenge, vote to reject, or otherwise take any action or commence or participate, directly or indirectly, in any proceeding
opposing any of the terms of the Sponsored Restructuring; provided, however, prior to voting on a plan of reorganization
(whether in accordance with the provisions of this Section 2(b) or any other provision of this Agreement), Sponsors shall have
received a disclosure statement in compliance with 11 U.S.C. § 1125.

 

(b)       During
the term of this Agreement, the Company shall (i) use its commercially reasonable efforts to facilitate the solicitation, approval,
confirmation and consummation of the Sponsored Restructuring on a timely basis; (ii) use commercially reasonable efforts to take,
or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or advisable under applicable laws
and regulations to consummate and make effective the Sponsored Restructuring at the earliest date practicable, including to file,
execute and deliver, as applicable, the Plan and all documents related thereto, the Disclosure Statement and any other documents
necessary to effectuate the Sponsored Restructuring; (iii) provide draft copies of all material pleadings and applications that
the Company intends to file in the Chapter 11 Case in support of the Sponsored Restructuring, including without limitation “first
day motions” as soon as reasonably practicable and to consult in good faith with the Sponsors regarding the form and substance
of any such proposed filing; and (iv) subject to Section 2(d), not take any action or commence or participate in any proceeding
opposing any of the terms of the Sponsored Restructuring, nor, directly or indirectly, seek or support or encourage or join with
any other person or entity in seeking, to challenge or otherwise oppose the Sponsored Restructuring.

 

(c)       During
the term of this Agreement, Sponsors shall not, in their capacity as shareholders or creditors (including in their capacity as
shareholders arising from any and all future purchases of common stock and as the holders of any claims against the Company), allow
any of their representatives, agents or employees to, directly or indirectly (including, without limitation, by encouraging any
other entity to), (i) solicit, support, prosecute, encourage or respond in the affirmative to any offer to
purchase the equity of the Company, all or substantially all of its assets or propose any plan of reorganization or plan of liquidation
to retain or dispose of all or any material portion of the equity of the Company or its assets, other than as part of the
Sponsored Restructuring (an “Alternate Transaction”) or negotiate, enter into, consummate or otherwise
participate in any Alternate Transaction, or (ii) take any other action that could reasonably be expected to hinder, block,
prevent, delay or impede the transactions contemplated by the Term Sheet, including, without limitation, commencing against the
Company any case, proceeding or action under any existing or future law of any jurisdiction relating
to bankruptcy, insolvency, reorganization or relief of debtors or exercising any remedies permitted under law.

 

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(d)       During
the term of this Agreement, the Company shall not allow any of its representatives, agents or employees to, directly or indirectly
(including, without limitation, by encouraging any other entity to), (i) solicit, support, prosecute, encourage or respond
in the affirmative to any Alternate Transaction or negotiate, enter into, consummate or otherwise participate in any Alternate
Transaction, or (ii) take any other action that could reasonably be expected to hinder, block, prevent, delay or impede the
transactions contemplated by the Term Sheet, including, without limitation, commencing against the Company
any case, proceeding or action under any existing or future law of any jurisdiction relating to bankruptcy, insolvency, reorganization
or relief of debtors; provided, however, as set forth in the Term Sheet, that
if after the date hereof the Board of Directors of the Company receives a written offer to enter into an Alternative Transaction
made after the date hereof in circumstances not involving a breach of this Section 2(d) and the Board of Directors of the Company
(a) believes in good faith that such Alternative Transaction is bona fide, (b) determines in good faith that such Alternative Transaction
constitutes or would reasonably be expected to lead to a superior proposal, it being understood and agreed that to the extent the
existing common stock of the Company receives consideration from the bankruptcy estate, the Company will, within the bounds of
its fiduciary duties, give greater consideration to transactions structured to allow the existing shareholders to retain an equity
interest in the reorganized Company, and (c) determines in good faith, after consulting with and receiving advice of its outside
counsel, that the failure to take such action would reasonably be expected to result in a breach of its fiduciary duties to the
Company’s stockholders under Delaware law, then the Company may, after providing the Sponsors not less than seventy-two (72)
hours written notice of their intention to take such actions (i) furnish information with respect to the Company to the third party
proposing such Alternative Transaction; provided that the Company, concurrently with its delivery to such third party, advises
the Sponsors of all non-public information delivered to such third party and delivers to the Sponsors all such information not
previously provided to the Sponsors, and (ii) consider and participate in discussions and negotiations with such third party or
its representatives regarding such Alternative Transaction. During such 72-hour period, if the Sponsors match any such Alternative
Transaction negotiated pursuant to this provision, then the Company shall pursue such Alternative Transaction with the Sponsors.
As set forth in the Term Sheet, if the Company, after satisfying the terms hereof and not in breach of its obligations hereunder,
the Company accepts or enters into an offer with respect to an Alternative Transaction with a third party, the Company shall pay
a break-up fee to the Sponsors of $1.5 million and the Expense Reimbursement.

 

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Section
3.          Transfer of Interests or Claims. 

 

Sponsors hereby agree
not to sell, assign, transfer, hypothecate or otherwise dispose of, directly or indirectly (each, a “Transfer”),
all or any of their shares (or any option thereon or any right or interest related thereto, including any voting rights associated
with such shares) or claims, unless the transferee thereof (the “Transferee”) agrees in writing, by executing
a joinder in a reasonable form requested by the Company and the other Sponsors to (a) assume this Agreement and (b) assume the
obligations of the Sponsors under this Agreement, in their capacity as Sponsors, and deliver such joinder to the Company and remaining
Sponsors at least one (1) Business Day prior to the relevant Transfer (each such Transferee becoming, upon such Transfer, a Party
and, for the purposes of this Agreement, a Sponsor). Any Transfer by a Sponsor that does not comply with the requirements set forth
in this Section 3 shall be null and void and shall be treated as if it never occurred.

 

Section
4.          Representations and Warranties. 

 

(a)       Each
of the Sponsors, severally, but not jointly represents and warrants to the Company that the following statements are true, correct
and complete as of the date hereof:

 

(i)       (x)
It is the beneficial owner of the common stock of the Company and claims against the Company, as more fully set forth on
Schedule I and (y) except as set forth on Schedule I, it has no agreements, arrangements or understanding with any other
person (except among themselves) with respect to the Company or with respect to any other equity securities or indebtedness
of the Company except for the transactions contemplated by this Agreement.

 

(ii)       The Commitment
Letter is in full force and effect and is valid and enforceable against the parties thereto in accordance with its terms, except
as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or limiting
creditors’ rights generally, or by equitable principles relating to enforceability; and

 

(iii)       The Sponsors
are acquiring the Sponsor Common Stock for their own account, for investment purposes only and not with a view to the distribution
(as such term is used in Section 2(a)(11) of the Securities Act of 1933, as amended and the rules and regulations thereunder (the
“Securities Act”)). The Sponsors understand that the Sponsor Common Stock will not have been registered
under the Securities Act and may not be sold unless subsequently registered under the Securities Act, or an exemption from such
registration is available. Each of the Sponsors is an “accredited investor” as defined under Regulation D of the Securities
Act.

 

(b)       Each
Party, severally, but not jointly, represents and warrants to the other Parties that the following statements are true, correct
and complete as of the date hereof:

 

(i)       It has all requisite
corporate, partnership, limited liability company or similar authority to enter into this Agreement and carry out the transactions
contemplated hereby and perform its obligations contemplated hereunder, and the execution and delivery of this Agreement and the
performance of such Party’s obligations hereunder have been duly authorized by all necessary corporate, limited liability,
partnership or other similar action on its part;

 

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(ii)       The execution,
delivery, and performance by such Party of this Agreement does not and shall not (i) violate any provision of law, rule or regulation
applicable to it or any of its subsidiaries or its charter or bylaws (or other similar governing documents) or those of any of
its subsidiaries, or (ii) conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default
under any material contractual obligation to which it or any of its subsidiaries is a party;

 

(iii)       The execution,
delivery, and performance by such Party of this Agreement, subject in the case of the Company to the approval of the Bankruptcy
Court to the extent required, does not and shall not require any registration or filing with, consent or approval of, or notice
to, or other action to, with or by, any federal, state or governmental authority or regulatory body of which any Party is presently
aware; and

 

(iv)       This Agreement,
subject in the case of the Company to the approval of the Bankruptcy Court to the extent required, is the legally valid and binding
obligation of it, enforceable in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or limiting creditors’ rights generally, or by equitable principles relating
to enforceability.

 

Section
5.          Third-Party Beneficiaries. Nothing in this Agreement, express or implied,
shall give to any person, other than the Parties and their respective successors, assigns, heirs, executors, administrators and
representatives, any benefit or any legal or equitable right, remedy or claim under this Agreement. 

 

Section
6.          Settlement Discussions. This Agreement and the Term Sheet are part
of a proposed settlement of matters that could otherwise be the subject of litigation among the parties hereto. Nothing herein
shall be deemed an admission of any kind. Pursuant to Federal Rules of Evidence 408 and any applicable state rules of evidence,
this Agreement and all negotiations relating thereto shall not be admissible into evidence in any proceeding other than a proceeding
to enforce the terms of this Agreement. 

 

Section
7.          Effectiveness. This Agreement (including the Term Sheet) shall become
effective and binding against the Sponsors upon execution of this Agreement.

 

Section
8.          Termination. This Agreement may be terminated by the Sponsors or the
Company, as the case may be, upon the occurrence of the events set forth in the Term Sheet (each a “Termination
Event”). In addition, the following events shall be additional Termination
Events:

 

(a)       Denial
of the Company’s motion for approval of the Expense Reimbursement;

 

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(b)       Failure
to obtain entry of an interim order approving JEC’s proposed debtor-in-possession financing arrangement within five (5) business
days after the commencement of Company’s chapter 11 case;

 

(c)       Failure
to obtain entry of a final order approving JEC’s proposed debtor-in-possession financing arrangement within twenty-one (21)
calendar days after the commencement of Company’s chapter 11 case;

 

(d)       An
event of default occurs under the Company’s debtor-in-possession financing arrangement that is not cured within the relevant
cure period, if any, and the DIP Loan has been accelerated, unless such default is waived by the DIP Lender;

 

(e)       Entry
of an order by the Bankruptcy Court, or any other court of competent jurisdiction, declaring this Agreement to be unenforceable;

 

(f)       Consummation
of the Plan; and

 

(g)       Filing
with the Bankruptcy Court by the Company of (i) plan of reorganization other than the Plan; (ii) a motion to approve an Alternative
Transaction; or (iii) a withdrawal of the Plan or motion to withdraw the Plan.

 

Section
9.          Effect of Termination.

 

(a)       Upon
the occurrence of the Termination Events set forth in Section 8(a), (b) or (c), this Agreement shall terminate with respect to
the obligations of all Parties hereto upon delivery of written notice thereof from the Sponsors to the Company;

 

(b)       Upon
the occurrence of the Termination Event set forth in Section 8(d) or (e), this Agreement shall terminate automatically with respect
to the obligations of all Parties hereto and without further notice to or further act or failure to act by any Party; and

 

(c)       Upon
the occurrence of the Termination Event set forth in Section 8(f) or any of the Termination Events specified in the Term Sheet,
this Agreement shall terminate with respect to the obligations of all Parties hereto upon written notice thereof from the Party
exercising such termination right:

 

provided, however, that any claim for
breach of this Agreement shall survive termination and all rights and remedies with respect to such claims shall not be prejudiced
in any way whatsoever; provided further however, that any breach of this Agreement by one or more Sponsors
shall not create any rights or remedies against any other non-breaching Sponsors.

 

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Section
10.          Governing Law; Jurisdiction. This Agreement and the transactions
contemplated hereby shall be construed in accordance with, and governed by, the laws of the State of New York. Each of the parties
hereto agrees that any proceeding brought to enforce the rights or obligations of any party hereto under this Agreement (including
the Exhibits attached hereto) shall be commenced and maintained in the Bankruptcy Court, and the Bankruptcy Court shall have exclusive
jurisdiction over any such proceeding. By its execution and delivery of this Agreement, each Party (i) submits to the exclusive
jurisdiction of the Bankruptcy Court and (ii) hereby waives and agrees not to assert in any such dispute, to the fullest extent
permitted by applicable law, any claim that (A) such Party is not personally subject to the jurisdiction of such court, (B) such
Party and such Party’s property is immune from any legal process issued by such court or (C) any litigation or other proceeding
commenced in such court is brought in an inconvenient forum. The Parties agree that mailing of process or other papers in connection
with any such action or proceeding in the manner provided in Section 17,
or in such other manner as may be permitted by applicable law, shall be valid and sufficient service thereof and hereby waive any
objections to service accomplished in the manner herein provided.

 

Section
11.          Waiver of Jury Trial. EACH PARTY HEREBY WAIVES ALL RIGHTS TO TRIAL
BY JURY IN ANY JURISDICTION IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE AMONG THE PARTIES UNDER THIS AGREEMENT,
WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.

 

Section
12.          Complete Agreement, Interpretation and Modification.

 

(a)       This
Agreement, the Commitment Letter, and the Term Sheet attached hereto, constitute the complete agreement among the Parties with
respect to the subject matter hereof and supersede all prior agreements, oral or written, between or among the Parties with respect
thereto.

 

(b)       This
Agreement is the product of negotiation by and among the Parties. There shall be no presumption concerning whether to interpret
this Agreement for or against any Party by reason of that Party having drafted this Agreement, or any portion thereof, or caused
it or any portion thereof to be drafted.

 

(c)       This
Agreement may only be modified, altered, amended or supplemented by an agreement in writing signed by the Sponsors and the Company.
No waiver of any provision of this Agreement or any default, misrepresentation, or breach of any representation, warranty or covenant
hereunder, whether intentional or unintentional, shall be valid unless the same is made in a writing signed by the Party making
such waiver, nor will such waiver be deemed to extend to any prior or subsequent default, misrepresentation, or breach of any representation,
warranty or covenant hereunder, or affect in any manner any rights arising by virtue of any prior or subsequent default, misrepresentation,
or breach of any representation, warranty or covenant. The Parties expressly agree that this Agreement may not be modified, revised,
or amended by the exchange of electronic messages, including, but not limited to, e-mail and text messaging.

 

Section
13.          Specific Performance. The Parties understand and agree that money
damages would not be a sufficient remedy for any breach of this Agreement (including the Term Sheet or the Commitment Letter) by
any Party, and further understand and agree that each non-breaching Party shall be entitled to the remedy of specific performance
and injunctive or other equitable relief as a non-exclusive remedy of any such breach without the need to post a bond or other
surety.

 

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Section
14.          Execution of Agreement. This Agreement may be executed and delivered
(by facsimile, pdf or otherwise) in any number of counterparts, each of which, when executed and delivered, shall be deemed an
original, and all of which together shall constitute the same Agreement. Each individual executing this Agreement on behalf of
a Party has been duly authorized and empowered to execute and deliver this Agreement on behalf of such Party.

 

Section
15.          No Solicitation. While the Parties agree herein to vote in favor
of the Plan, this Agreement is not and shall not be deemed to be a solicitation for votes in favor of any chapter 11 plan or consent
to the Plan in contravention of applicable non-bankruptcy law or section 1125(b) of the Bankruptcy Code. Notwithstanding anything
to the contrary contained herein, the acceptance of any Sponsor shall not be solicited until, and any obligation to support confirmation
of the Plan is expressly conditioned on the receipt by such Sponsor of the Plan and a copy of the disclosure statement that shall
have previously been approved by the Bankruptcy Court, after notice and a hearing, as containing adequate information as required
by section 1125 of the Bankruptcy Code. Notwithstanding the foregoing provisions, nothing in this Agreement shall require any Party
to take any action prohibited by the Bankruptcy Code, the Securities Act of 1933 (as amended), the Securities Exchange Act of 1934
(as amended), any rule or regulations promulgated thereunder, or by any other applicable law or regulation or by an order or direction
of any court or any state or federal governmental authority.

 

Section
16.          Automatic Stay. The Parties acknowledge that the giving of notice
or termination by any Party pursuant to this Agreement shall not be violation of the automatic stay of section 362 of the Bankruptcy
Code.

 

Section
17.          Notices. All notices hereunder (including, without limitation, any
notice of termination in accordance with Section 9) shall be deemed given if in writing and delivered, if sent by telecopy, courier
or by registered or certified mail (return receipt requested) to the following addresses and telecopier numbers (or at such other
addresses or telecopier numbers as shall be specified by like notice):

 

(a)          If
to the Company:

 

KIT digital, Inc.

26 West 17th Street,
2nd Floor

New York, New York 10011

Attn: Fabrice Hamaide

Facsimile: (212) 206-7059

 

with copies to:

 

Bracewell & Giuliani LLP

1251 Avenue of the Americas

New York, New York 10020

Attn: Robb Tretter and Jennifer
Feldsher

Facsimile: (212) 508-6101

 

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(b)          If
to the Sponsors:

 

JEC Capital LLC

68 Mazzeo Drive

Randolph, Massachusetts 02368

Attn: Michael Torok

Facsimile: (480) 772-4733

with copies to:

 

Kasowitz, Benson, Torres & Friedman
LLP

1633 Broadway

New York, New York 10019

Attention: Andrew K. Glenn, Esq.

Telecopy: (212) 506-1800

Telephone: (212) 506-1747

 

and

 

Prescott Group Capital Management

1924 South Utica, Suite 1120

Tulsa, OK 74104

Attn: Duminda Desilva

Facsimile: (918) 742-7303

 

with copies to:

 

Frederic Dorwart, Lawyers

124 East Fourth Street

Tulsa, Oklahoma 74103-5010

Attn: Samuel S. Ory

Facsimile: (918) 583-8251

 

and

 

Stichting Bewaarder Ratio Capital Partners

Utrechtseweg 31 d

3811NA Amersfoort

The Netherlands

 

 

Any notice given by
delivery, mail or courier shall be effective when received. Any notice given by telecopier shall be effective upon oral or machine
confirmation of transmission.

 

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Section
18.          Severability. If any term, provision, covenant or restriction contained
in this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder
of the terms, provisions, covenants and restrictions contained in this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated, and this Agreement shall be reformed, construed and enforced in such jurisdiction
as if such invalid, illegal or unenforceable term, provision, covenant or restriction or any portion thereof had never been contained
herein.

 

 

[Remainder of Page Intentionally Left Blank]

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IN WITNESS WHEREOF, the Parties have executed
this Agreement on the day and year first written above.

 

 

	 	KIT DIGITAL, INC.

 

	 	By:	/s/ Fabrice Hamaide	 
	 	 	Name: 	Fabrice Hamaide	 
	 	 	Title: 	CFO	 

 

 

	 	JEC CAPITAL PARTNERS, LLC 

 

	 	By:	/s/ Michael Torok	 
	 	 	Name: 	Michael Torok	 
	 	 	Title: 	Managing Director	 

 

 

	 	STICHTING BEWAARDER RATIO CAPITAL PARTNERS

 

	 	By:	E.A. Kuijl	 
	 	 	Name: 	E.A. Kuijl	 
	 	 	Title: 	Director	 

 

	 	By:	/s/ G. B. Oldekamp	 
	 	 	Name: 	G. B. Oldekamp	 
	 	 	Title: 	Authorized Signatory A	 

 

 

	 	PRESCOTT GROUP CAPITAL MANAGEMENT, L.L.C.

 

	 	By:	/s/ Phil Frohlich	 
	 	 	Name: 	Phil Frohlich	 
	 	 	Title: 	Manager	 

 

[Signature Page to
Plan Support Agreement]

    	 

    	 

    

Exhibit A

 

 

 

 

 

    	 

    	 

    

Execution Version

KIT DIGITAL, INC. (and its Subsidiaries)

PLAN TERM SHEET

 

April 16, 2013

 

THIS SUMMARY IS NOT AN OFFER WITH
RESPECT TO ANY SECURITIES OR SOLICITATION OF ACCEPTANCES OF A CHAPTER 11 PLAN PURSUANT TO SECTION 1125 OF THE BANKRUPTCY CODE.
ANY SUCH OFFER OR SOLICITATION WILL BE MADE ONLY IN COMPLIANCE WITH ALL APPLICABLE SECURITIES LAWS AND PROVISIONS OF THE BANKRUPTCY
CODE. THIS OUTLINE IS BEING PROVIDED IN FURTHERANCE OF SETTLEMENT DISCUSSIONS AND IS ENTITLED TO PROTECTION PURSUANT TO FED. R.
EVID. 408 AND ANY SIMILAR RULE OF EVIDENCE. THE TRANSACTIONS DESCRIBED IN THIS OUTLINE ARE SUBJECT IN ALL RESPECTS TO, AMONG OTHER
THINGS, COMPLETION OF DEFINITIVE DOCUMENTATION, INCLUDING THE PLAN OF REORGANIZATION, DISCLOSURE STATEMENT, PLAN SUPPORT AGREEMENT
AND RELATED DOCUMENTS. NO PARTY TO THIS TERM SHEET SHALL HAVE ANY OBLIGATIONS UNLESS AND UNTIL THE EXECUTION OF ALL DEFINITIVE
DOCUMENTATION CONTEMPLATED BY THIS TERM SHEET. ALL TERMS OF THIS TERM SHEET, INCLUDING THE PROPOSAL TO MAKE DIRECT EQUITY INVESTMENTS
AND TO UNDERWRITE A RIGHTS OFFERING, ARE SUBJECT TO SATISFACTION OF ALL CLOSING CONDITIONS, THE NON-OCCURRENCE OF ALL TERMINATION
EVENTS, AND THE EXECUTION AND DELIVERY OF DEFINITIVE DOCUMENTATION.

 

	Plan Sponsor Group	JEC Capital Partners, LLC (“JEC”), Prescott Group Capital Management, L.L.C. (“Prescott”) and Stichting Bewaarder Ratio Capital Partners (“Ratio”) (collectively, the “Plan Sponsor Group”) shall collectively act as the sponsor of a Plan (as defined below).  Contemporaneously with execution of this Term Sheet, the Plan Sponsor Group will execute and deliver a binding commitment to purchase (the “Commitment Letter”), pro rata based on their respective commitments, for the aggregate sum of $25 million (the “Purchase Price”), shares of Class B Common Stock to be issued pursuant to the Plan, which upon issuance will represent 89.29% of the total number of shares of Class A Common Stock (as defined below) and Class B Common Stock outstanding (together, the “Common Stock”), subject to the terms and conditions of the Commitment Letter, the Plan Support Agreement (as defined below) and the Plan. On or before April 16, 2013 the Plan Sponsor Group and KIT digital, Inc. (“KIT”) shall enter into a Plan Support Agreement (the “Plan Support Agreement”), in form and substance reasonably  acceptable to the Plan Sponsor Group and KIT, to effectuate the terms hereof. Simultaneous with the execution and delivery of the Plan Support Agreement, the Plan Sponsor Group shall deposit or cause to be deposited $1.5 million in cash with an escrow agent reasonably acceptable to the Plan Sponsor Group and KIT, in accordance with the terms and conditions of an escrow agreement consistent with this Term Sheet and reasonably acceptable to the Plan Sponsor Group and KIT, with such sum (i) to be credited to the Purchase Price, if the Plan is consummated or (ii) upon the occurrence of a termination of this Term Sheet or the Plan Support Agreement other than due to a Plan Sponsor Breach (as defined below), or in the event that any of the terms and conditions in this Term Sheet or the Plan Support Agreement are not satisfied timely (unless waived or extended in accordance with the terms hereof or thereof) or the break-up fee becomes payable to the Plan Sponsor Group, the full amount of the deposit, plus accrued interest, shall be paid or returned to the Plan Sponsor Group. The deposit shall not be considered or become property of KIT’s estate unless and until there is a Plan Sponsor Breach or, such amounts are credited to the Purchase Price. In the event that the Plan Support Group breaches the Plan Support Agreement as determined by a final ruling of the Bankruptcy Court (a "Plan Sponsor Breach"), KIT shall be entitled to receive and retain the Deposit, it being understood that the deposit shall remain in escrow pending such final determination.  Upon execution of the Plan Support Agreement, the Plan Sponsor Group shall have earned a Commitment Fee (the “Commitment Fee”) equal to two percent (2%) of the Purchase Price payable, if the Plan is consummated, on the Effective Date of the Plan, in either cash or in Class A Common Stock or a combination thereof, as determined in the sole discretion of the Plan Sponsor Group.  KIT agrees that it will file and seek approval as part of its first day motions a motion seeking approval of the Plan Support Agreement and the Plan Sponsor Group’s reasonable-out of pocket expenses incurred and to be incurred in connection with the approval and consummation of the Plan or the transactions contemplated thereby, up to a maximum aggregate amount of $500,000 (the “Expense Reimbursement”).  

 

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	Plan of Reorganization:	The recapitalization and debt restructuring of KIT and certain of its wholly owned direct and indirect subsidiaries (collectively, the “Company”) is to be effectuated through a pre-negotiated plan of reorganization (the “Plan”) to be filed by the Company with the support of the Plan Sponsor Group in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”). The Plan shall be (i) acceptable in all respects to the Company in its reasonable discretion and (ii) acceptable in all respects to the Plan Sponsor Group, in its reasonable discretion. The Company shall not amend, withdraw or revoke the Plan or waive or amend any provision thereof without the consent of the Plan Sponsor Group, which consent shall not be unreasonably withheld, conditioned, or delayed.  The Plan Sponsor Group shall have the right, at any time, in its reasonable discretion, to implement a sale pursuant to section 363 of the Bankruptcy Code of certain assets of KIT to the Plan Sponsor Group in a form acceptable to Plan Sponsor Group, in its sole discretion, in lieu of the transactions contemplated by the Plan; provided, that such change to a 363 sale shall require the consent of the Company, which consent shall not be unreasonably withheld or delayed.   
	Issuance of Common Stock	Shares of Class B Common Stock representing 89.29% of the Common Stock (the "Sponsor Group Common Stock") of reorganized KIT ("Reorganized KIT") shall be distributed to the members of the Plan Sponsor Group, on a pro rata basis, on the effective date of the Plan (the “Effective Date”) in exchange for payment of the Purchase Price, all pursuant to the terms of the Plan Support Agreement and the Plan, such stock having the rights and terms provided below.  
	Terms of Sponsor Group Class B Common Stock	The Plan shall provide that the Common Stock shall be subject
        to dilution only by the Management Equity Plan and the Commitment Fee.

 

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        The Class B Common Stock shall be identical in
right to the Class A Common Stock, except that: Class B Common Stock shall be subject to (i) redemption upon exercise of the Warrants
and (ii) automatic conversion to Class A Common upon the expiration of the exercise period of the Warrants.

         

        There shall be no preemptive rights, The Common Stock shall
        have such other rights, if any, as are reasonable and customary for a company of the same type as Reorganized KIT emerging from
        bankruptcy, and which may include, without limitation, any one or more of the following: rights of first refusal, rights of first
        offer, tag-along or co-sale rights, drag-along rights, and similar rights.

         

        The Warrants shall not be transferrable. There shall be no issuances
        or transfers of fractional shares.

         

        The Plan Sponsor Group must be reasonably satisfied that the
        issuance of the Reorganized Common Stock, including the Sponsor Group Common Stock is exempt from registration with the Securities
        and Exchange Commission.

         

	Use of Proceeds of Sponsor Group Stock Purchase	The proceeds of the Purchase Price, together with Company resources, will be used to satisfy Plan Distributions as set forth below, it being understood that the Plan Sponsor Group is only committed to fund the Purchase Price pursuant to the Commitment Letter.
	Warrants	Pursuant to Section 1145 of the Bankruptcy Code, on the Effective Date, Reorganized KIT will distribute warrants (the “Warrants”) to purchase the Class A Common Stock to the current equity holders of the Company. The Warrants shall be on the following terms: (i) one Warrant for each outstanding share of existing common stock of KIT, (ii) a warrant exercise price equal to the per share price paid by the Plan Sponsor Group for the Sponsor Group Common Stock, (iii) the Warrant to be exercisable for 30 days following the distribution of such warrants pursuant to the Plan; (iv) each Warrant will be exercisable in full only, and not in part; and (v) exercise price proceeds will be used to redeem, at the same price per share paid for such redeemed shares, up to fifty percent (50%)  of the  shares of Sponsor Group Common Stock with the balance, if any, being used for working capital purposes.
	DIP Loan	JEC Capital Partners, LLC or its designee (the “DIP Lender”) will provide the Company with a $3,000,000 debtor-in possession loan (the “DIP Loan”), secured by a junior lien (junior only to (i) that certain Loan and Security Agreement, dated as of April 15, 2010, between KIT and Venture Lending & Leasing V, Inc. and that certain Loan and Security Agreement, dated as of May 16, 2011, between KIT and Venture Lending & Leasing VI, Inc. (as the same have been and may be amended, restated, supplemented or modified from time to time, collectively, the “WTI Loan”) on the Company’s assets with priority no less than that provided by Sections 364 (1), (2) and (3) of the Bankruptcy Code. The DIP Loan shall include payment of a $125,000 agent fee and shall bear interest at 13% per annum, payable in cash and shall have such other terms and conditions as are reasonably satisfactory to the DIP Lender and KIT.  Upon confirmation of the Plan, the DIP Loan shall be paid and satisfied in full by (i) the payment in cash of all accrued interest, and (ii) the payment of principal by the issuance to the DIP Lender of shares of Class A Common Stock (“Class A Common Stock”) representing 10.71% of the outstanding shares of the Common Stock.

 

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	Board of Directors	The Plan will provide for a board consisting of five directors.  Three directors shall be appointed by the Plan Sponsor Group with one independent director to be selected by the Plan Sponsor Group.   The other director shall be the Chief Executive Officer of KIT.
	Charter/By-Laws	Reorganized KIT shall adopt articles of incorporation, by-laws and other governing documents in accordance with the Plan, in form and substance acceptable to the Plan Sponsor Group in its sole discretion.
	Releases	The Plan will contain releases customary for a transaction of this type, it being understood that such releases will include releases for any employees or directors who remain employees or directors as of the day prior to the Effective Date of the Plan.
	Plan Distributions:	 
	
        Administrative Claims and Priority Claims

         

         

         
	Paid in full in cash.
	Secured Tax Claims, Other Secured Claims	Unimpaired.
	
        Senior Secured Term Loan

         

         

         
	The WTI Loan shall be impaired. The WTI Loan shall be paid on the Effective Date in cash at par, without any accrued post-petition interest, premium or penalty, including any pre-payment or change of control penalty.  
	General Unsecured Claims	Each holder of an allowed General Unsecured claim shall receive cash for the full amount of its allowed claim, without post-petition interest.
	Securities Litigation Claims	Each holder of an allowed Securities Litigation Claim (i.e., the pending securities class action lawsuit and pending stockholder derivative suits) shall be paid pro rata from all rights of the Company in and to available insurance proceeds.
	All Equity Interests and Subordinated Claims (other than Securities Litigation Claims).	In return for their equity interests in the Debtor the holders of equity interests shall receive the Warrants.  Holders of allowed Subordinated Claims, to the extent not otherwise covered by insurance proceeds, shall be entitled to receive the Warrants on a pro rata basis along with equity interests as a single class.
	Closing Conditions:	 
	 	(1)   the filing
of chapter 11 petitions for KIT by April 24, 2013 (the “Filing Date”) in the Bankruptcy Court together with
first day orders satisfactory to the Plan Sponsor Group in its reasonable discretion;

 

(2)   the filing
with the Bankruptcy Court by the Filing Date of the Plan satisfactory to the Plan Sponsor Group in its reasonable discretion;

 

(3)   the filing
with the Bankruptcy Court by May 7, 2013 of the Disclosure Statement satisfactory to the Plan Sponsor Group in its reasonable discretion;

 

(4)   execution, delivery, and filing with the
Bankruptcy Court of all related documentation embodying the remaining terms of the Term Sheet satisfactory to the Plan Sponsor
Group in its reasonable discretion;

 

 

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	 	(5)   there
shall not have occurred any Event (as defined below) which has had, or is reasonably likely to result in, a Material Adverse Effect
(as defined below);

         

        (6)   the
        entry of a final and non-appealable order confirming the Plan, the terms of such order being satisfactory to the Plan Sponsor Group
        in its reasonable discretion (the “Confirmation Order”), within ninety (90) days of the Filing Date;

         

        (7)   the
        Plan Sponsor Group shall have approved the assumption or rejection of all executory contracts and unexpired leases in their sole
        discretion.

         

         

         

        “Material Adverse Effect” shall mean
        any event, change, effect, development, state of facts, condition, circumstance or occurrence (each, an “Event”)
        that individually or taken together with other Events, has or would reasonably be expected to have, a material adverse effect on
        the business, assets, liabilities, results of operation or financial condition of KIT and its subsidiaries, taken as a whole, except
        to the extent that such material adverse effect results from or is attributable to any of the following: (i) any Events in general
        United States or global economic conditions; (ii) any regulatory, legislative or political or geopolitical Events or securities,
        credit, currency, financial or other capital markets Events, in each case in the United States, or any other jurisdiction or geographical
        area where KIT does business; (iii) the execution and delivery of this Term Sheet or the Plan Support Agreement, or the public
        announcement or pendency of the Term Sheet or the Plan Support Agreement, any bankruptcy filing or any of the other transactions
        contemplated hereby; (iv) any adoption, implementation, enforcement, promulgation, repeal, amendment, interpretation, reinterpretation
        or other change, or proposed adoption, implementation, enforcement, promulgation, repeal, amendment, interpretation, reinterpretation
        or change, in generally accepted accounting principles (or other accounting standards applicable to KIT or its subsidiaries) or
        in any law applicable to KIT or its subsidiaries; (v) any man-made or natural disasters or other force majeure Events or the outbreak
        or escalation of hostilities, any acts of war, sabotage, terrorism or military actions, or any escalation or worsening of any such
        hostilities, acts of war, sabotage, terrorism or military actions threatened or underway as of the date of this Term Sheet (whether
        or not pursuant to the declaration of a national emergency or war); (vi) taking any action or refraining to take any action in
        accordance with the terms of this Term Sheet or the Plan Support Agreement or otherwise taken or refrained from being taken in
        accordance with the written instructions of the Plan Support Group; or (vii) the financial irregularities and related financial
        restatement required by KIT in connection with the events previously publicly disclosed by the KIT in its public filings made since
        January 1, 2012; provided, however, that any Event referred to in clauses (i), (ii) or (v) shall not be excluded pursuant to such
        clauses to the extent (and only to the extent) it disproportionately affects KIT and its Subsidiaries, taken as a whole, relative
        to other similarly situated companies in the industries and countries and regions in which KIT and its subsidiaries operate.

         

 

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	Management  Equity Plan:	An appropriate management equity incentive plan, as determined by the Plan Sponsor Group in its sole discretion, will be established pursuant to the Plan (the “Management Equity Plan”).
	Fiduciary Out:	From the date of execution by KIT of this Term Sheet through the earlier of (a) the Effective Date of the Plan and (b) the date that is 120 days from the date of execution by of this Term Sheet, KIT shall not solicit or negotiate with respect to other offers to purchase the equity of KIT, all or substantially all of its assets or propose any plan of reorganization or plan of liquidation to retain or dispose of all or any material portion of the equity of KIT or its assets (an “Alternative Transaction”); provided, however, that if after the date hereof the Board of Directors of KIT receives a written offer to enter into an Alternative Transaction made after the date hereof in circumstances not involving a breach of this section and the Board of Directors of KIT (a) believes in good faith that such Alternative Transaction is bona fide, (b) determines in good faith that such Alternative Transaction constitutes or would reasonably be expected to lead to a superior proposal, it being understood and agreed that to the extent the existing common stock of KIT  receives consideration from the bankruptcy estate, KIT will, within the bounds of its fiduciary duties, give greater consideration to transactions structured to allow the existing shareholders to retain an equity interest in the Reorganized KIT, and (c) determines in good faith, after consulting with and receiving advice of its outside counsel, that the failure to take such action would reasonably be expected to result in a breach of its fiduciary duties to the KIT’s stockholders under Delaware law, then the KIT may, after providing the Plan Sponsor Group not less than seventy-two (72) hours written notice of their intention to take such actions (i) furnish information with respect to KIT to the third party proposing such Alternative Transaction; provided that KIT, concurrently with its delivery to such third party, advises the Plan Support Group of all non-public information delivered to such third party and delivers to the Plan Support Group all such information not previously provided to the Plan Support Group, and (ii) consider and participate in discussions and negotiations with such third party or its representatives regarding such Alternative Transaction.  During such 72-hour period, if the Plan Support Group matches any such Alternative Transaction negotiated pursuant to this provision, then KIT shall pursue such Alternative Transaction with the Plan Support Group. If KIT, after satisfying the terms hereof and not in breach of its obligations hereunder, KIT accepts or enters into an offer with respect to an Alternative Transaction with a third party, KIT shall pay a break-up fee to the Plan Sponsor Group of $1.5 million and the Expense Reimbursement.
	Termination
    Events:	Any of the following events entitle the
Plan Sponsor Group to terminate all of the agreements contemplated by this Term Sheet, including without limitation the Commitment
Agreement:

 

(1)   The failure
to file Chapter 11 cases and the Plan on or before April 24, 2013;

 

(2)   The failure to file with the Bankruptcy Court a disclosure statement for the Plan containing
all necessary information for approval on or before May 7, 2013 and to obtain approval within forty-seven (47) days of the Filing
Date;

 

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        (3)  
        An         order confirming the Plan shall not have been entered and does not become final and non-appealable on or before
        within ninety (90)         days of the Filing Date;

         

        (4)   The         Effective Date has not occurred on or before ninety five (95) days of the Filing Date;

         

        (5) 
          The         Company shall have entered into an Alternative Transaction;

         

        (6)  
         KIT         shall have materially breached the Plan Support Agreement

         

        (7)  
         There         shall have occurred any event or circumstance which has had, or is reasonably likely to result in, a
        Material Adverse Effect, as         determined by the Plan Sponsor Group in its reasonable discretion; and

         

        (8)     The appointment of
        a Chapter 11 trustee, the dismissal or conversion of the cases to Chapter 7 of the Bankruptcy Code, the appointment of an examiner
        with expanded powers including, without limitation, any involvement in KIT’s operations, any change in management, or any
        change in KIT’s board of directors.

         

         

         

        KIT shall be entitled
        to terminate all of the agreements contemplated by this Term Sheet if:

         

        (1)   
        The Plan Sponsor Group shall have materially breached the Plan Support Agreement;

         

        (2)  
         The Company shall have entered into an Alternative Transaction; and

         

        (3) The Effective Date has not
        occurred on or before one hundred fifty (150) days of the Filing Date.

         

         

         

	Publicity:	The Plan Sponsor Group and the Company will agree on a time to issue a press release or other public statement and the content of such release.  Prior to the issuance of such press release or other public statement, neither shall make any announcement regarding such transaction, except to the extent (based on the advice of counsel) required by law.
	Governing Law:	
        This Plan Term Sheet shall be governed by the laws of the State
        of New York.

         

 

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The parties hereto agree to the terms set forth in this Plan
Term Sheet, subject to the opening paragraph hereof.

 

JEC Capital Partners, LLC

 

 

By:  /s/ Michael Torok

 

Name: Michael Torok

Its: Managing Director

 

Prescott Group Capital Management, L.L.C.

 

 

By:  /s/ Phil Frohlich

 

Name: Phil Frohlich

Its: Manager

 

Stichting Bewaarder Ratio Capital Partners

 

 

By:  /s/ E.A. Kuijl

 

Name: E.A. Kuijl

Its: Director

 

By:  /s/ G.B. Oldekamp

 

Name: G.B. Oldekamp

Its: Authorized Signatory A

 

 

KIT digital, Inc., on behalf of itself and

its subsidiaries

 

By:  /s/ Fabrice Hamaide

 

Name: Fabrice Hamaide

Its: CFO

 

 

 

 

 

 

[Signature Page to Plan Term Sheet]

    	8FORBEARANCE AGREEMENT

 

THIS FORBEARANCE AGREEMENT
is dated as of the 10th day of April 2013 (the “Effective Date”), by and among KIT DIGITAL,
INC., a Delaware corporation (the “Borrower”), and VENTURE LENDING & LEASING V, INC. (“VLL5”)
and VENTURE LENDING & LEASING VI, INC. (“VLL6”), each a Maryland corporation (each individually,
a “Lender” and collectively, the “Lenders”).

 

RECITALS

 

A. Borrower and VLL5
entered into that certain Loan and Security Agreement, dated as of April 15, 2010 (as the same has been and may be amended, restated,
supplemented or modified from time to time, the “VLL5 Loan Agreement”), pursuant to which VLL5 made secured
term loans to Borrower. Borrower and VLL6 entered into that certain Loan and Security Agreement, dated as of May 16, 2011 (as the
same has been and may be amended, restated, supplemented or modified from time to time, the “VLL6 Loan Agreement”),
pursuant to which VLL6 made a secured term loan to Borrower. The VLL5 Loan Agreement and the VLL6 Loan Agreement each are referred
to herein, individually, as a “Loan Agreement” and collectively, as the “Loan Agreements.”
The terms defined in each Loan Agreement and its related Loan Documents are hereby incorporated by reference into this Agreement.

 

B. Events of Default
have occurred under each Loan Agreement as a result of (i) the matter described in Borrower’s November 21, 2012 8-K filing
and (ii) Borrower’s failure to have timely made to each Lender the payments due on April 1, 2013 under each Loan Agreement.

 

C. At the request of
Borrower, each Lender is willing to forbear from the further exercise of its rights and remedies under its Loan Agreement and its
other Loan Documents for a time, subject to and in accordance with the terms and conditions set forth in this Agreement.

 

NOW, THEREFORE, for
good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

 

ARTICLE 1

 

RECITALS AND DEFINITIONS

 

SECTION 1.1 Adoption
of Recitals. The foregoing Recitals are hereby adopted and made a part hereof. Borrower represents and warrants that the Recitals
are true and accurate.

 

SECTION 1.2 Definitions:
Controlling Document. In addition to the terms defined in each Loan Agreement, the following terms shall have the following
meanings in this Agreement (such meanings to be equally applicable to both the singular and plural forms of the terms defined).
In the event of an inconsistency or conflict between the provisions of the Loan Documents and this Agreement, this Agreement shall
control.

 

“Agreement”
means this Forbearance Agreement, as the same may be amended, restated, supplemented or otherwise modified from time to time.

 

“Borrower”
has the meaning set forth in the introductory paragraph hereto.

 

“Borrower
Releasors” has the meaning set forth in Section 2.4(a) hereof.

 

“Designated
Defaults” has the meaning set forth in Section 2.2(a) hereof.

 

“Effective
Date” has the meaning set forth in the introductory paragraph hereto.

 

“Forbearance
Period” has the meaning set forth in Section 4.1 hereof.

 

    	 

    	 

    

 

“Insolvency
Proceeding” has the meaning set forth in Section 6.1(a) hereof.

 

“Lender”
has the meaning set forth in the introductory paragraph hereto.

 

“Lender
Releasees” has the meaning set forth in Section 2.4(a) hereof.

 

“Loan Agreement”
has the meaning set forth in the Recitals.

 

“Released
Claims” has the meaning set forth in Section 2.4(a) hereof.

 

ARTICLE 2

 

ACKNOWLEDGMENT OF DEBT, RELEASE
OF CLAIMS

 

SECTION 2.1 Reaffirmation
of Loan Documents. Borrower hereby acknowledges and agrees that all terms, conditions and provisions of the Loan Agreements
and the other applicable Loan Documents continue in full force and effect and remain unaffected and unchanged, except as expressly
modified hereby. Except as expressly set forth herein, this Agreement is not intended to and shall not be construed to create or
constitute a modification of the terms and conditions of the outstanding Loans advanced to Borrower pursuant to a Loan Agreement
or a release or relinquishment of, and shall not affect, the liens, security interests and rights thereunder, all of which are
hereby ratified, confirmed, renewed and extended in all respects. Borrower reaffirms to Lender each of the covenants and agreements
of Borrower set forth in the Loan Agreements and the other applicable Loan Documents remain in full force and effect.

 

SECTION 2.2 Acknowledgments.

 

(a) Events of Default.
Borrower acknowledges that: (i) as of November 21, 2012, an Event of Default has occurred and is continuing under each Loan Agreement
as a result of the restatement of Borrower’s financial statements for the periods described in the 8-K report Borrower filed
on November 21, 2012; and (ii) as of April 5, 2012, an Event of Default has occurred and is continuing under each Loan Agreement
as a result of Borrower’s failure to have timely made to each Lender the payments due on April 1, 2013 under each Loan Agreement
(collectively, the “Designated Defaults”). Borrower acknowledges that such Events of Default exist as
of the Effective Date under each Loan Agreement and the other Loan Documents, without any requirement for any further notice, grace
or cure period.

 

(b) Interest Rate.
Borrower hereby acknowledges and agrees that as of the Effective Date interest on the Loans shall continue to accrue at the Designated
Rate (as defined in the applicable Loan Agreement and the other Loan Documents), notwithstanding the Designated Defaults have occurred
and are continuing. Borrower acknowledges that upon the termination of the Forbearance Period interest at the Default Rate shall
accrue on the unpaid amount of any principal, interest or Final Payment then due under the applicable Loan Documents until such
Obligations have been indefeasibly satisfied in full; provided, however, that nothing herein shall release or waive
Borrower’s obligation to continue paying all outstanding principal and unpaid interest accrued on the Loans on the first
(1st) day of each calendar month during the term of the Loans in accordance with the terms set forth in the Loan Agreements.

 

(c) Collateral.
Borrower acknowledges that all of the Collateral secures and shall continue to secure the Loans with valid first priority liens
and security interests (subject to Permitted Liens) and Borrower has taken no action which would cause the interruption, cessation
or other lapse of the aforesaid security interests in the Collateral for the Loans or loss of priority.

 

SECTION 2.3 No Defenses
or Claims. Borrower acknowledges and agrees that it has no defenses, counterclaims, offsets, cross-complaints, causes of action,
rights, claims or demands of any kind or nature whatsoever, including, without limitation, any usury or lender liability claims
or defenses, arising out of the Loans advanced to Borrower by each Lender pursuant to the applicable Loan Agreement, the other
Loan Documents, or the Collateral, or any past relationship between or among Borrower, each Lender or any of their respective past,
present and/or future parent, subsidiary and affiliated entities and, with respect to each of the foregoing, their respective past
and present officers, directors, shareholders, partners, limited partners, members, representatives, principals, owners, affiliates,
attorneys, accountants, agents and employees, and their successors, heirs and assigns and each of them, that can be asserted either
to reduce or eliminate all or any part of Borrower’s liability for the Loans or to seek affirmative relief or damages of
any kind or nature from each Lender. Borrower further acknowledges that to the extent that any such claim should exist, including,
without limitation, any usury or lender liability claim, it is being fully, finally and irrevocably released by Borrower as provided
in this Section 2.3 and Section 2.4 of this Agreement.

 

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SECTION 2.4 General
Release of Claims.

 

(a) Effective on the
execution of this Agreement, Borrower, on its own behalf and on behalf of each of its respective past, present and future predecessors,
successors, subsidiaries, parent entities, assigns, shareholders, partners, members, owners, other principals, affiliates, managers,
and, with respect to Borrower and each of the other foregoing entities and individuals, each of their respective predecessors,
successors, assigns, and past and present shareholders, partners, members, owners, other principals, affiliates, managers, employees,
officers, directors, attorneys, agents, other representatives, insurers and any other individuals and entities claiming or acting
by, through, under or in concert with each such entity or individual (the “Borrower Releasors”), hereby
fully and forever release, relinquish, discharge and acquit each Lender and its past, present and future predecessors, successors,
subsidiaries, parent entities, assigns, participants, shareholders, partners, members, owners, other principals, affiliates, managers,
and, with respect to each of the foregoing entities and individuals, each of their respective predecessors, successors, assigns,
participants and past and present shareholders, partners, members, owners, other principals, affiliates, managers, employees, officers,
directors, attorneys, agents, other representatives, insurers and any other individuals and/or entities claiming or acting by,
through, under or in concert with each such entity or individual (the “Lender Releasees”), of and from
and against any and all claims, demands, obligations, duties, liabilities, damages, expenses, claims of offset, indebtedness, debts,
breaches of contract, duty or relationship, acts, omissions, misfeasance, malfeasance, causes of action, sums of money, accounts,
compensation, contracts, controversies, promises, damages, costs, losses and remedies therefor, choses in action, rights of indemnity
or liability of any type, kind, nature, description or character whatsoever, arising, directly or indirectly, that may have arisen
prior to the Effective Date in any manner from and/or out of (i) the Loan(s) made pursuant to the applicable Loan Agreement,
the other Loan Documents and/or the Collateral, (ii) each Lender’s acts, statements, conduct, representations and omissions
made in connection therewith, including, without limitation, the terms and conditions of this Agreement, or (iii) any fact,
matter, transaction or event relating thereto, whether known or unknown, suspected or unsuspected, whether now existing or hereafter
arising, which could, might or may be claimed to exist, whether liquidated or unliquidated, each though fully set forth herein
at length (the “Released Claims”); provided, however, that the foregoing release shall not apply
to any obligations, covenants or agreements of any of the released parties which arise under this Agreement.

 

(b) Borrower Releasors
hereby waive the provisions of any applicable laws restricting the release of claims which the releasing parties do not know or
suspect to exist at the time of release, which, if known, would have materially affected the decision to agree to these releases.
In this connection, Borrower Releasors hereby agree, represent and warrant to each Lender that they realize and acknowledge that
factual matters now unknown may have given or may hereafter give rise to causes of action, claims, demands, debts, controversies,
damages, costs, losses and expenses which are presently unknown, unanticipated and unsuspected, and Borrower Releasors further
agree, represent and warrant that the releases provided herein have been negotiated and agreed upon in light of that realization
and that Borrower Releasors nevertheless hereby intend to release, discharge and acquit the parties set forth hereinabove from
any such unknown causes of action, claims, demands, debts, controversies, damages, costs, losses and expenses which are in any
manner set forth in or related to the Loan(s) made pursuant to the applicable Loan Agreement and all dealings in connection therewith.

 

(c) Borrower Releasors
hereby acknowledge that they have not relied upon any representation of any kind made by either Lender in making the foregoing
release.

 

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(d) Borrower Releasors
represent and warrant to each Lender that they have not heretofore assigned or transferred, or purported to assign or to transfer,
to any person or entity any matter released by such party hereunder or any portion thereof or interest therein, and Borrower Releasors
agree to indemnify, protect, defend and hold each of the Lender Releasees harmless from and against any and all claims based on
or arising out of any such assignment or transfer or purported assignment or transfer by such party.

 

SECTION 2.5 This
Agreement Not to Supersede Loan Agreements or the other Loan Documents. Except as set forth herein, this Agreement does not
supersede the Loan Agreements and the other Loans Documents. The applicable Loan Documents shall continue to govern the applicable
Loans until such time as Lenders and Borrower agree (if at all) to enter into other documents governing such indebtedness and other
obligations. This Agreement does not waive, alter or modify each Lender’s rights under its Loan Documents or otherwise waive
or excuse any Defaults or Events of Default thereunder, except as provided for herein. This Agreement does not supersede, modify,
alter or amend any loan or other relationships between and among Borrower and each Lender, other than those specifically described
herein.

 

ARTICLE 3

 

REPRESENTATIONS AND WARRANTIES

 

To induce each Lender
to enter into this Agreement, Borrower makes the following representations and warranties as of the Effective Date:

 

SECTION 3.1 Power
and Authority. The execution, delivery and performance hereof by Borrower is not in contravention of law, or any indenture,
agreement or undertaking to which Borrower is a party to or by which Borrower is bound. No consent of any Person which has not
been obtained by Borrower is required under any contract, license, permit and approval or law binding on Borrower in connection
with the execution, delivery or performance of this Agreement.

 

SECTION 3.2 Valid
and Binding Obligations. The execution and delivery by Borrower of this Agreement and any other documents required hereunder
have been duly and properly made and authorized, and when executed and delivered by Borrower will constitute the legal, valid,
and binding obligations of Borrower enforceable in accordance with their respective terms.

 

SECTION 3.3 No Defenses.
Borrower’s obligations to each Lender under the applicable Loan Documents are valid and enforceable (except as may be limited
by bankruptcy, insolvency and similar laws affecting the enforcement of creditors’ rights in general, and subject to general
principals of equity) and Borrower has no defenses, offsets, counterclaims or other adverse claims of any kind whatsoever against
either Lender with respect to the indebtedness and obligations represented by such Lender’s Loan Documents, the Collateral
under the Loan Documents or any action or inaction of such Lender with respect thereto.

 

SECTION 3.4 No Default
Caused by Entry Into Agreement. The execution and delivery of this Agreement and the consummation of the transactions herein
contemplated will not violate any law, rule, regulation, order, writ, judgment, injunction, decree or award binding Borrower or
conflict with or constitute a default under or result in the creation or imposition of any lien pursuant to the terms of any indenture,
instrument or agreement to which Borrower is a signatory or otherwise bound.

 

SECTION 3.5 No Litigation.
There are no material actions, suits or proceedings at law or in equity by or before any governmental authority or person now pending
against or affecting the Collateral or Borrower, except as previously disclosed prior to the Effective Date in Borrower’s
SEC filings.

 

SECTION 3.6 No Bankruptcy
Filing. Borrower is not a debtor in any outstanding action or proceeding pursuant to any bankruptcy law.

 

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SECTION 3.7 No Further
Commitment for Additional Accommodations. Borrower expressly agrees and stipulates that, except as otherwise herein specifically
provided, Lenders have no obligation under the applicable Loan Documents, by law, by equity, by the existence of this Agreement,
or by any oral representation or communication of any sort from any Lender to refrain from exercising its rights under the Loan
Documents or under this Agreement, or to agree, either now or in the future, to any additional disbursements of sums under the
applicable Loan Documents, any further forbearances or extensions of time to pay the indebtedness, or provide any further accommodation
to Borrower under any circumstances whatsoever. Borrower acknowledges that as of the Effective Date, absent this Agreement, each
Lender has the full right and power to commence all remedies under the Loan Documents, including, without limitation, judicial
and non-judicial foreclosure, by reason of the Designated Defaults.

 

SECTION 3.9 Actions
by Governmental Authorities. There have been no actions taken by any governmental agency which may materially impair Borrower’s
ability to operate its business.

 

SECTION 3.9 Collateral.
There exists no lien, claim or encumbrance on any of the Collateral in which each Lender has been granted liens under the applicable
Loan Agreement, other than Lender’s security interest thereunder and Permitted Liens. No Person has any interest in any of
the collateral which is senior or subordinate to the security interest of Lenders therein, other than Permitted Liens.

 

ARTICLE
4

 

FORBEARANCE 

 

SECTION 4.1 Forbearance
Period. Each Lender agrees to forbear from exercising any of the rights or remedies provided for in the applicable Loan Agreement
or the other Loan Documents as a result of the Designated Defaults from the date hereof until 5:00 p.m. (Pacific Time) on April
23, 2013 (the “Forbearance Period”), subject to the conditions precedent in Section 5.1
and subject to the termination provisions of Section 4.2 below.

 

SECTION 4.2 Termination
of Forbearance. The Forbearance Period shall automatically terminate and this Agreement shall simultaneously terminate, without
further notice, act or instrument, upon the occurrence of any of the following events:

 

(a) Borrower repudiates,
or asserts a defense to, any obligation or liability under the applicable Loan Documents or this Agreement or makes or pursues
a claim against either Lender.

 

(b) any Default or Event
of Default occurs, other than the Designated Defaults.

 

(c) Borrower breaches
any of the covenants, agreements and obligations set forth in this Agreement.

 

SECTION 4.3 Effect
of Termination. Upon expiration or early termination of the Forbearance Period without waiver of the Designated Defaults, each
Lender shall have the immediate right, without further notice, demand or grace period, to commence and prosecute all of such Lender’s
rights and remedies arising with respect to the Designated Defaults, including, without limitation, judicial and non-judicial foreclosure
and the appointment of a receiver for Borrower or the Collateral.

 

ARTICLE 5

 

CONDITIONS TO FORBEARANCE

 

SECTION 5.1 Conditions
Precedent. The obligations of each Lender to forbear as set forth in Article 4 shall be subject to the following
conditions precedent:

 

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(a) The execution and
delivery of this Agreement by Borrower.

 

(b) Receipt by (i) VLL5
of cash interest and principal payments in the amount of $100,000 payable by wire transfer to an account designated by VLL5 and
(ii) VLL6 of cash interest and principal payments in the amount of $150,000 payable by wire transfer to an account designated by
VLL6, it being agreed and understood that the Lenders shall apply such amounts to the payment of interest and principal outstanding
in connection with the respective Loans, with such payments being made on account of and credited as
partial payment of the monthly installments that became due under the Loan Agreements on April 1, 2013 (the balance of the unpaid
amounts being deferred and payable as provided in Section 6.2 hereof).

 

(c) All representations
and warranties contained herein or otherwise made by Borrower to Lenders in connection herewith shall be true, correct and complete
as of the Effective Date.

 

(d) The absence of any
Default or Event of Default under the applicable Loan Documents, other than the Designated Defaults.

 

ARTICLE 6

 

BANKRUPTCY MATTERS

 

SECTION 6.1 Stipulations.

 

(a) In the event of a
voluntary petition for bankruptcy under any chapter of the Bankruptcy Code, or any other proceeding to liquidate, reorganize or
rehabilitate Borrower under any state or other federal law or under any law of any foreign jurisdiction (collectively, an “Insolvency
Proceeding”) by, against or involving Borrower, Borrower hereby agrees that Borrower shall not contest any claim
or assertion by each Lender that its Loans and other Obligations are binding between the parties, and that valuable consideration
has been received by Borrower for same.

 

(b) It is specifically
intended and agreed that all of the foregoing provisions shall be binding upon the debtor and debtor-in-possession in any such
future bankruptcy case (and upon each of the other signatories to this Agreement who may not be a debtor in such case). The parties
acknowledge the possibility that some or all of the foregoing provisions may not be enforceable as to, or binding upon, other creditors
of the debtor (including any official committee of creditors that may be appointed), but fully intend and desire that the bankruptcy
court respect the agreement of the parties hereto with respect to each and all of such provisions.

 

SECTION 6.2 Covenant.
As additional consideration for Lenders’ agreement to forbear from exercising its rights following
the Designated Defaults, Borrower agrees to use its commercially reasonable efforts to provide
in any DIP financing for the payment to each Lender of the remaining portion of the interest and principal payments
that were due on April 1, 2013 under each Loan Agreement, to diligently and promptly pursue bankruptcy
court approval of such payments, and upon the Borrower’s receipt of proceeds from a DIP financing, to make such payments,
provided that each of the foregoing shall be subject to court approval.

 

ARTICLE 7

 

MISCELLANEOUS

 

SECTION 7.1 No Waiver,
Cumulative Remedies. No failure or delay on the part of each Lender in exercising any right, power or remedy hereunder or under
the other Loan Documents shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy hereunder or thereunder.
The remedies herein and therein provided are cumulative and not exclusive of any remedies provided by law or in equity. No waiver,
amendment or other variation of the terms, conditions or provisions of the Loan Documents shall be valid unless made in writing
and signed by Lender, and then only to the extent as specifically set forth in such writing.

 

    	6

    	 

    

 

SECTION 7.2 Addresses
for Notices, Etc. All notices, requests, demands and other communications provided for hereunder shall be in writing and delivered
and deemed delivered pursuant to the terms of Section 9.2 of the Loan Agreements.

 

SECTION 7.3 Survival
of Representations and Warranties. All representations, warranties, covenants and agreements contained herein or made in writing
by Borrower in connection herewith shall survive the execution and delivery of this Agreement and the Loan Documents and be true
and correct until all of the obligations hereunder have been satisfied in full pursuant to this Agreement.

 

SECTION 7.4 Time
of the Essence. Time is of the essence of this Agreement and the other Loan Documents.

 

SECTION 7.5 Headings.
The headings in this Agreement are intended to be for convenience of reference only, and shall not define or limit the scope, extent
or intent or otherwise affect the meaning of any portion hereof.

 

SECTION 7.6 Further
Assurances. Borrower and Lenders shall, from time to time, execute such additional documents as reasonably may be requested
by the other parties or its or their counsel and take such other actions, to carry out and fulfill the intent and purpose of this
Agreement, including, without limitation, the perfection and first priority of each Lender’s security interests under the
applicable Loan Agreement, and the conveyance of the Collateral to Lenders in the event of the termination of the forbearance hereunder.
Borrower agrees to execute, acknowledge and deliver such documents as reasonably requested by Lenders for such purposes and otherwise
to cooperate in Lenders’ efforts in this regard.

 

SECTION 7.7 Construction;
Voluntary Agreement. This Agreement has been prepared and negotiated through the efforts of Lenders and Borrower. This Agreement
was drafted initially by counsel for Lenders solely as a matter of convenience to the parties, and shall not be construed or interpreted
for or against any of the parties on the grounds that it was so initially drafted. Accordingly, regardless of which party drafted
a particular Loan Document, or a particular clause of this Agreement, any construction of this Agreement or of the Loan Documents
shall be made without any reference whatsoever as to which party drafted or insisted upon said Loan Document or clause in this
Agreement.

 

SECTION 7.8 Entire
Agreement. The Loan Documents and this Agreement and the documents executed pursuant hereto, embody the entire agreement and
understanding between Borrower and Lenders and supersede all prior agreements and understandings between said parties relating
to the subject matter thereof.

 

SECTION 7.9 Counterparts.
This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument. Any party may execute this Agreement by facsimile signature or scanned signature
in PDF (or like) format, and any such facsimile signature or scanned signature, if identified, legible and complete, shall be deemed
an original signature and each of the parties is hereby authorized to rely thereon.

 

SECTION 7.10 Counsel.
Counsel for all parties have reviewed and advised their clients with respect to the terms and conditions of this Agreement and
the parties’ respective rights and remedies. Lenders and Borrower have thoroughly and carefully read this Agreement and the
releases contained herein, and have entered into this Agreement freely and voluntarily, without duress or coercion of any kind,
and as a well reasoned exercise of their respective business judgments.

 

    	7

    	 

    

 

SECTION 7.11 Payment
of Lenders’ Costs and Expenses. Borrower shall pay all of Lenders’ reasonable and documented out-of-pocket costs
and expenses, including, without limitation, reasonable and documented out-of-pocket attorneys’ fees and costs, incurred
in connection with this Agreement and the matters contemplated hereby.

 

SECTION 7.12 Effectiveness.
This Agreement, together with all of its provisions, stipulations and representations, shall be effective as of the date it is
executed and delivered by all the parties hereto. Notwithstanding the foregoing, Lenders’ obligation to forbear shall be
limited to the express terms of this Agreement.

 

SECTION 7.13 No
Third Party Beneficiaries. This Agreement is solely between the parties hereto and no person not a party to this Agreement
shall have any rights or privileges hereunder.

 

SECTION 7.14 Governing
Law and Jurisdiction. Sections 9.12 and 9.13 of the Loan Agreements shall apply to this Agreement as if set forth mutatis
mutandis herein.

 

[signatures on following
page]

 

    	8

    	 

    

 

IN WITNESS WHEREOF,
each of the parties hereto has caused this Agreement to be executed, sealed and delivered, as applicable, on the day and year first
above written.

 

	BORROWER	 	 	 	 
	 	 	 	 	 	 
	KIT DIGITAL, INC.,
a Delaware corporation	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	By:	/s/ Fabrice Hamaide	 	 	 	 
	Name:	Fabrice Hamaide	 	 	 	 
	Title:	Chief Financial Officer	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	LENDERS	 	 	 	 
	 	 	 	 	 	 
	VENTURE LENDING & LEASING V, INC.,
a Maryland corporation	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	By:	/s/ David R. Wanek	 	 	 	 
	Name:	David R. Wanek	 	 	 	 
	Title:	Vice President	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	VENTURE LENDING & LEASING VI, INC.,
a Maryland corporation	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	By:	/s/ David R. Wanek	 	 	 	 
	Name:	David R. Wanek	 	 	 	 
	Title:	Vice President

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