On March 30, 2017, Dolphin Digital Media, Inc. (the Company)
entered into a Membership Interest Purchase Agreement (the
Purchase Agreement), by and among the Company and Leslee Dart,
Amanda Lundberg, Allan Mayer and the Beatrice B. Trust (the
Sellers). to the Purchase Agreement, on March 30, 2017, the
Company acquired from the Sellers 100% of the membership
interests of 42West, LLC, a Delaware limited liability company
(42West) and 42West became a wholly-owned subsidiary of the
Company (the 42West Acquisition). 42West is an entertainment
public relations agency offering talent publicity, strategic
communications and entertainment content marketing…

The consideration paid by the Company in connection with the
42West Acquisition was approximately $18.7 million in shares of
common stock of the Company, par value $0.015 (the Common Stock),
based on the Companys 30-trading-day average stock price prior to
the closing date of $4.61 per share (less certain working capital
and closing adjustments, transaction expenses and payments of
indebtedness), plus the potential to earn up to an additional
$9.3 million in shares of Common Stock. As a result, the Company
(i) issued 1,230,280 shares of Common Stock on the closing date
(the Initial Consideration), (ii) will issue (a) 344,550 shares
of Common Stock to certain employees within 30 days of the
closing date, (b) 118,655 shares of Common Stock as bonuses
during 2017 and (c) approximately 1,961,821 shares of Common
Stock on January 2, 2018 (the “Post-Closing Consideration”) and
(iii) may issue approximately 1,963,126 shares of Common Stock
based on the achievement of specified financial performance
targets over a three-year period as set forth in the Purchase
Agreement (the “Earn-Out Consideration”, and together with the
Initial Consideration and the Post-Closing Consideration, the
“Consideration”).

Each of Leslee Dart, Amanda Lundberg and Allan Mayer (the
Principal Sellers) has entered into employment agreements with
the Company and will continue as employees of the Company for a
three-year term after the closing of the 42West Acquisition. Each
of the employment agreements of the Principal Sellers contains
lock-up provisions to which each Principal Seller has agreed not
to transfer any shares of Common Stock in the first year, no more
than 1/3 of the Initial Consideration and Post-Closing
Consideration received by such Seller in the second year and no
more than an additional 1/3 of the Initial Consideration and
Post-Closing Consideration received by such Seller in the third
year, following the closing date. The non-executive employees of
42West are expected to be retained as well. The Purchase
Agreement contains customary representations, warranties and
covenants.

In connection with the 42West Acquisition, on March 30, 2017, the
Company entered into put agreements (thePut Agreements) with each
of the Sellers. to the terms and subject to the conditions set
forth in the Put Agreements, the Company has granted the Sellers
the right, but not obligation, to cause the Company to purchase
up to an aggregate of 2,374,187 of their shares of Common Stock
received as Consideration for a purchase price equal to $4.61 per
share during certain specified exercise periods set forth in the
Put Agreements up until December 2020.

In addition, in connection with the 42West Acquisition, on March
30, 2017, the Company entered into a registration rights
agreement with the Sellers (the Registration Rights Agreement) to
which the Sellers are entitled to rights with respect to the
registration under the Securities Act of 1933, as amended (the
Securities Act). All fees, costs and expenses of underwritten
registrations under the Registration Rights Agreement will be
borne by the Company. At any time after the one-year anniversary
of the Registration Rights Agreement, the Company will be
required, upon the request of such Sellers holding at least a
majority of the Consideration received by the Sellers, to filea
registration statement on Form S-1 and use its reasonable efforts
to effect a registration covering up to 25% of the Consideration
received by the Sellers. In addition, if the Company is eligible
to filea registration statement on FormS-3, upon the request of
such Sellers holding at least a majority of the Consideration
received by the Sellers, the Company will be required to use its
reasonable efforts to effect a registration of such shares on
Form S-3 covering up to an additional 25% of the Consideration
received by the Sellers. The Company is required to effect only
one registration on Form S-1 and one registration statement on
Form S-3, if eligible. The right to have the Consideration
received by the Sellers registered on FormS-1 or Form S-3 is
subject to other specified conditions and limitations.

The foregoing descriptions of the Purchase Agreement, the Form of
Put Agreement and the Registration Rights Agreement do not
purport to be complete and are qualified in their entirety by
reference to the Purchase Agreement, Form of Put Agreement and
Registration Rights Agreement that will be filed.