Document:

EMPLOYMENT AGREEMENT

Exhibit 10.3

EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT (“Agreement”), dated as of October 19, 2015, by and between Social Reality, Inc., a Delaware corporation (the “Employer”) and Erin DeRuggiero, an individual residing at 4502 Beard Ave South, Minneapolis, MN  55410 (the “Executive”).

RECITALS

WHEREAS, the Employer and the Executive are parties to that certain Employment Agreement dated January 1, 2012 (the “2012 Employment Agreement”).

WHEREAS, the Employer and the Executive desire wish to terminate the 2012 Employment Agreement and enter into a new employment agreement upon the terms and conditions set forth herein pursuant to which the Executive will be employed by the Employer as its Chief Innovations Officer.

NOW, THEREFORE, the Employer and the Executive hereby agree as follows:

1.

Employment.

(a)

The Employer shall employ the Executive, and the Executive agrees to be employed by the Employer, upon the terms and conditions hereinafter provided, for a term (the "Initial Term") commencing October 19, 2015 (the "Effective Date") and expiring October 18, 2017.  The Initial Term shall be automatically extended for additional successive periods of twelve (12) month renewal terms (each a "Renewal Term") unless either the Employer or the Executive provides notice to the other of its (or her) intent not to renew the Initial Term of the then current Renewal Term (as applicable) at least sixty (60) days prior to the expiration of the Initial Term or the then current Renewal Term (as applicable).  The Initial Term and any Renewal Terms are referred to herein as the "Term."

(b)

The Executive hereby represents and warrants that the Executive has the legal capacity to execute and perform this Agreement, that this Agreement is a valid and binding agreement enforceable against the Executive according to its terms, and that the execution and performance of this Agreement by the Executive does not violate the terms of any existing agreement or understanding to which the Executive is a party.

(c)

Upon execution of this Agreement by the Employer and the Executive, the 2012 Employment Agreement is terminated and superseded in its entirety by this Agreement.

2.

Duties.  The Executive shall report to the Chief Executive Officer of the Employer and have the title of Co-Founder, Chief Innovations Officer of the Employer, or similar title. The Executive shall have such duties as are consistent with the Executive’s experience, expertise and position as shall be assigned to the Executive from time to time by the Chief Executive Officer. During the Term, and except for vacation in accordance with the 

Employer’s standard paid time off policies or due to illness or incapacity, the Executive shall devote substantially all of the Executive’s business time, attention, skill and efforts to the business and affairs of the Employer and its parents, subsidiaries and affiliates. Notwithstanding the foregoing, the Executive may (1) make personal investments in such form or manner as will neither require the Executive’s services in the operation or affairs of the business in which such investments are made, and (2) serve as a director on the board of directors of other non-competing companies with prior written notice to the Board. The Executive agrees not to engage in any outside business activities that interfere with or delay the performance of the Executive’s duties hereunder (which duties shall be performed on a first-priority basis).

3.

Compensation.  For all services rendered by the Executive in any capacity required hereunder during the Term, including, without limitation, services as an officer, director, or member of any committee of the Employer or any parent, subsidiary, affiliate or division thereof, the Executive shall be compensated as follows:

(a)

Salary.  The Employer shall pay the Executive a fixed salary ("Base Salary") at a rate of $90,000.00 per annum.  The Base Salary shall be payable in accordance with the customary payroll practices of the Employer and may be increased at any time during the Term but not decreased, should the Compensation Committee of the Board of Directors deem appropriate.  Salary may also include stock options and other bonus given at Employer's discretion.

(b)

Commissions and Override.  In addition to the Base Salary, during the Term the Employer shall pay the Executive:

(i)

a commission (the “Commission”) at the rate of fifteen percent (15%) of the Net profit of the SRAX MD Business Unit (the “SRAX MD Business Unit”). “Net” shall be defined as the revenue for the SRAX MD Business Unit, excluding the Steel Media SRAX MD Revenue (as hereinafter defined), and less any and all expenses associated to the SRAX MD Business Unit as determined by the Employer in its absolute discretion. The Commission shall be paid on a monthly basis upon receipt of payment from client, but shall be adjusted on a quarterly basis should the SRAX MD Business Unit experience a Net loss in any given period. In the event that the SRAX MD Business Unit experiences a Net loss, the amount of any such loss shall be deducted from the calculation of Net in future period(s) prior to the calculation of any Commission.  Commissions for each period shall be paid upon receipt of revenue from customers.  

(ii)

from the date of this Agreement through October 31, 2016, an override (the “Override”) of ten percent (10%) of the net profit (the “Steel Media Net Profit”) of all sales of SRAX MD products and services that are recorded as revenues by Steel Media, a subsidiary of the Employer ("Steel Media"), that are defined as Steel Media SRAX MD Revenue (the "Steel Media SRAX MD Revenue") by the Employer and Richard Steel under the terms of the letter agreement of dated October 13, 2015 by and between the Employer and Mr. Steel. The Steel Media SRAX MD Revenue shall not be included in the Net calculation for the payment of the Commission in Section (i) hereof. For the purposes of this Agreement, "Steel Media Net Profit" shall be defined as the total media run in any 

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given period, less commissions paid to the Steel Media employees and independent contractors, and any cost or other expenses associated with said sale as determined by Steel Media. The Override shall be paid on a monthly basis upon receipt of payment from client, but shall be adjusted on a quarterly basis should Steel Media experience a loss in any given period. In the event that the Steel Media experiences a loss, the amount of any such loss shall be deducted from the calculation of the Steel Media Net Profit in future period(s) prior to the calculation of any Override.  

(c)

Determination of Amounts of Commission and Override. The amounts of any Commission, bonus and Override, if any, that the Executive is entitled to receive as additional compensation under the terms of this Agreement shall be determined by the Employer, based upon its consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles, consistently applied.

(d)

Benefits. Except as set forth in this Agreement, the Executive shall be entitled to participate in all employee benefit plans or programs, and to receive all benefits, perquisites and emoluments, which are approved by the Board and are generally made available by the Employer to salaried employees of the Employer, to the extent permissible under the general terms and provisions of such plans or programs and in accordance with the provisions thereof. Notwithstanding the foregoing, nothing in this Agreement shall require any particular plan or program to be continued nor preclude the amendment or termination of any such plan or program, provided that such amendment or termination is applicable generally to the employees of the Employer.

(e)

Paid Time Off. The Executive shall be entitled to thirty (30) days of paid time off (“PTO”) per calendar year during the Term. The Executive will not forfeit accrued PTO that is not used by the end of the calendar year; provided, however, once the Executive has forty-five (45) days of accrued, but unused, PTO days (the “PTO Accrual Cap”), the Executive will not accrue any additional PTO time until she reduces the balance of her accrued PTO days below the PTO Accrual Cap.

4.

Business Expenses.  The Employer shall pay or promptly reimburse the Executive for all necessary expenses reasonably incurred by the Executive in connection with the performance of the Executive’s duties and obligations under this Agreement, subject to the Executive’s presentation of appropriate vouchers in accordance with such expense account policies and approval procedures as the Employer may from time to time reasonably establish for employees (including but not limited to prior approval of extraordinary expenses). With the exception of travel expenses, Executive agrees to obtain prior written approval from the Employer before incurring any single out-of-pocket expense in connection with the Executive’s performance of her duties and obligations under this Agreement in excess of $2,500.00 (or such higher limit as permitted by the Employer’s Chief Executive Officer).

5.

Effect of Termination of Employment.

(a)

Termination Generally; Accrued Obligations. The date specified in any notice of termination as the Executive’s final day of employment shall be referred to herein as the “Termination Date.” Except as set forth in this Section 5, in the event that the Executive’s 

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employment hereunder is terminated for any reason, then the Executive shall be entitled to no compensation or other benefits of any kind whatsoever, other than: (i) payment of the Executive’s unpaid Base Salary under Section 3(a) through the Termination Date, payable on the Employer’s next regular pay date following the Termination Date (or such earlier date as may be required by applicable law); (ii) payment of any earned but unpaid Commission and/or Override under Section 3(b), payable in accordance with the provisions of Section 3(b)(i), (ii) or (iii), as applicable; (iii) payment of any unused PTO that accrued through the Termination Date, payable on the Employer’s next regular pay date following the Termination Date (or such earlier date as may be required by applicable law); (iv) expenses reimbursable under Section 4 incurred on or prior to the Termination Date, but not yet reimbursed, which reimbursable (but not yet reimbursed) expenses, if any, shall be paid on the next regular payroll date of the Employer that occurs after the Termination Date (or as soon thereafter as administratively practicable); (v) payment of any other unpaid amounts due and owing under any benefit, fringe or equity plans, programs, policies and/or practices, in accordance with such plan, program, policy or practice; and (vi) the opportunity to continue health coverage under the Employer’s group health plan in accordance with “COBRA” (“COBRA Coverage”) (the foregoing payments and benefits collectively referred to herein as “Accrued Obligations”).

(b)

Termination Without Cause; Resignation for Good Reason. In the event that the Employer terminates the Executive’s employment hereunder during the Term without “Cause” or the Executive resigns for “Good Reason”, then the Executive shall be entitled to no compensation or other benefits of any kind whatsoever, other than: (i) the Accrued Obligations; (ii) the Severance Amount (defined below), which Severance Amount shall be payable, subject to Section 16, in equal installments over the Severance Period (defined below) in accordance with the Employer’s normal payroll practices, commencing on the first regular pay date of the Employer that occurs after the Termination Date; (iii) the Executive's stock options and/or restricted shares granted to the Executive during the Term (to the extent not fully vested as of the Termination Date), shall become fully vested as of the Termination Date, and the Executive shall be permitted to exercise such options for up to twelve (12) months following the Termination Date (unless otherwise agreed to by the Executive and the Employer in the case of any stock options or restricted shares granted after the Effective Date); and (iv) if the Executive elects COBRA Coverage following the Termination Date, the Employer shall waive the cost of such coverage (for the Executive and her eligible dependents) during the Severance Period (or such earlier date that COBRA coverage expires). Notwithstanding anything contained herein to the contrary, the Executive shall not be entitled to any Severance under this Section in the event the Executive's salary is reduced and/or her position is changed due to non-performance of the SRAX MD Business Unit in the Employer's sole discretion.

(c)

Death or Disability.  The Executive’s employment with the Employer shall terminate upon Executive’s death or “Disability” (defined below), in which case the Executive (or her estate and heirs) shall be entitled to no compensation or other benefits of any kind whatsoever for any period after the Executive’s date of termination other than: (i) the Accrued Obligations; and (ii) if the Executive and/or her eligible dependents elect COBRA coverage, the Employer shall waive the cost of such coverage (for the Executive and her eligible dependents) during the Severance Period (or such earlier date that COBRA coverage expires). In addition, the Executive (or her estate and heirs) shall be permitted to exercise the Executive’s 

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stock options granted to the Executive during the Term (to the extent vested as of the Termination Date) for up to six (6) months following the Termination Date.

(d)

Termination Due to Non-Renewal. If the Executive’s employment with the Employer terminates due to the Employer’s notice of non-renewal of the Term in accordance with Section 1(a), then the Executive shall be entitled to no compensation or other benefits of any kind whatsoever, other than: (i) the Accrued Obligations. In addition, the Executive shall be permitted to exercise the Executive’s stock options granted to the Executive during the Term (to the extent vested as of the Termination Date) for up to six (6) months following the Termination Date. Notwithstanding anything contained herein to the contrary, the Executive shall not be entitled to any Severance under this Section in the event the Executive's salary is reduced and/or her position is changed due to non-performance of the SRAX MD Business Unit in the Employer's sole discretion.

(e)

Termination With Cause. The Employer may terminate this Agreement immediately for “Cause” by giving written notice to the Executive. In the event that this Agreement is terminated pursuant to this Section 5(e), the Executive shall be entitled to no compensation or other benefits of any kind whatsoever for any period after the Termination Date set forth in the notice given by the Employer to the Executive, except for the Accrued Obligations. Further, if the Executive’s employment is terminated for Cause pursuant to this Section 5(e), the stock options granted to the Executive during the Term, to the extent vested, but not exercised, as of the Termination Date, shall be forfeited.

(f)

Definitions. For purposes of this Agreement:

(i)

“Cause” shall mean: (1) the Executive’s negligence in the performance of the material responsibilities of her office or position; (2) the Executive’s failure to perform the material responsibilities of her office or position, including, but not limited to, following the lawful directives of the Board; (3) any conviction by a court of law of, or entry of a pleading of guilty by the Executive with respect to a felony; (4) the Executive’s embezzlement or intentional misappropriation of any property of the Employer (other than good faith expense account disputes); (5) fraud by the Executive resulting in harm to the Employer; or (6) the Executive’s breach of this Agreement. The Executive shall be given prior written notice of the termination of her employment for Cause. If the Executive shall be terminated pursuant to clause (1), (2) or (6) above, the Executive shall be given a reasonable period of time, not to exceed thirty (30) days, to cure the matter (if curable). In all other cases, including if the Executive shall be terminated pursuant to clause (3), (4) or (5) above, termination shall be effective as of the date notice is given.

(ii)

“Disability” shall mean that the Executive is incapable of performing her principal duties due to physical or mental incapacity or impairment for 180 consecutive days, or for two hundred forty (240) non-consecutive days, during any twelve (12) month period.

(iii)

“Good Reason” shall mean the occurrence of any of the following: (a) any reduction, without the Executive’s consent, of the Executive’s Base Salary, except to the extent the compensation of the Employer’s Chief Executive Officer is similarly and 

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proportionately reduced; or (b) a breach by the Employer of a material term of the Agreement; provided, however, that the Executive must notify the Employer within ninety (90) days of the occurrence of any of the foregoing conditions that she considers it to be a “Good Reason” condition and provide the Employer with at least thirty (30) days in which to cure the condition. If the Executive fails to provide this notice and cure period prior to her resignation, or resigns more than six (6) months after the initial existence of the condition, her resignation will not be deemed to be for “Good Reason.”

(iv)

“Severance Amount,” shall equal the sum of: (a) an amount equal to eighteen (18) months of the Executive’s Base Salary at the rate in effect as of the Executive’s Termination Date (b) or, in the case of a termination for Good Reason due to the reduction in the Executive’s Base Salary, the Base Salary rate in effect immediately prior to such reduction.

(v)

“Severance Period,” shall mean a period of eighteen (18) months following the Termination Date.

(g)

No Mitigation. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement, nor shall the amount of any payment hereunder be reduced by any compensation earned by the Executive as a result of subsequent employment.

6.

Confidentiality.  The Executive shall execute, and abide by the terms of, the confidentiality/non-disclosure agreement in the form annexed hereto as Exhibit A (the “Confidentiality Agreement”), the terms of which are incorporated herein.

7.

Assignment of Developments; Works for Hire. If at any time or times during Executive’s employment with the Employer, the Executive shall (either alone or with others) make, conceive, discover or reduce to practice any invention, modification, discovery, design, development, improvement, process, software program, work-of-authorship, documentation, formula, data, technique, know-how, secret or intellectual property right whatsoever or any interest therein (whether or not patentable or registrable under copyright or similar statutes or subject to analogous protection) (herein called “Developments”) that (a) relates to the business of the Employer (or any subsidiary of the Employer) or any customer of or supplier to the Employer (or any of its subsidiaries) or any of the products or services being developed, manufactured, sold or provided by the Employer or which may be used in relation therewith or (b) results from tasks assigned to the Executive by the Employer, such Developments and the benefits thereof shall immediately become and/or be considered as the sole and absolute property of the Employer and its assigns as a work for hire, and the Executive shall promptly disclose to the Employer (or any persons designated by it) each such Development and hereby assigns any rights the Executive may have or acquire in the Developments and benefits and/or rights resulting therefrom to the Employer and its assigns without further compensation and shall communicate, without cost or delay, and without publishing the same, all available information relating thereto (with all necessary documentation, plans and models) to the Employer. Upon disclosure of each Development to the Employer, the Executive will, during the Term and at any time thereafter, at the request and cost of the Employer, sign, 

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execute, make and do all such deeds, documents, acts and things as the Employer and its duly authorized agents may reasonably require:

(a)

to apply for, obtain and vest in the name of the Employer alone (unless the Employer otherwise directs) letters patent, copyrights, trademarks, service marks or other analogous protection in any country throughout the world and when so obtained or vested to renew and restore the same; and

(b)

to defend any opposition proceedings in respect of such applications and any opposition proceedings or petitions or applications for revocation of such letters patent, copyrights, trademarks, service marks or other analogous protection.

In the event the Employer is unable, after reasonable effort, to secure the Executive’s signature on any letters patent, copyrights, trademarks, service marks or other analogous protection relating to a Development, whether because of the Executive’s physical or mental incapacity or for any other reason whatsoever, the Executive hereby irrevocably designates and appoints the Employer and its duly authorized officers and agents as the Executive’s agent and attorney-in-fact, to act for and on her behalf and stead to execute and file any such application or applications and to do all other lawfully permitted acts to further the prosecution and issuance of any such letters patent, copyrights, trademarks, service marks and other analogous protection thereon with the same legal force and effect as if executed by the Executive.

8.

Withholding Taxes.  The Employer may directly or indirectly withhold from any payments to be made under this Agreement all federal, state, city or other taxes and all other deductions as shall be required pursuant to any law or governmental regulation or ruling or pursuant to any contributory benefit plan maintained by the Employer.

9.

Notices.  All notices, requests, demands and other communications required or permitted hereunder shall be given in writing, and shall be deemed effective upon (a) personal delivery, if delivered by hand, (b) three (3) days after the date of deposit in the mails, postage prepaid, if mailed by certified or registered United States mail, or (c) the next business day, if sent by a prepaid overnight courier service, and in each case addressed as follows:

(a)

To the Employer:

Social Reality, Inc. 

456 Seaton Street

Los Angeles, CA 90013

Attention: Christopher Miglino, Chief Executive Officer

(b)

To the Executive:

to the Executive at the Executive’s address listed above.

or to such other address as either party shall have previously specified in writing to the other.

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10.

Binding Agreement; No Assignment.  This Agreement shall be binding upon, and shall inure to the benefit of, the Executive, the Employer and their respective permitted successors, assigns, heirs, beneficiaries and representatives. This Agreement is personal to the Executive and may not be assigned by the Executive without the prior written consent of the Board, as evidenced by a resolution of the Board. Any attempted assignment in violation of this Section 10 shall be null and void.

11.

Governing Law; Consent to Jurisdiction; Arbitration.  This Agreement, and all matters arising directly or indirectly from this Agreement, shall be governed by, and construed and interpreted in accordance with, the laws of the State of California, without giving effect to the choice of law provisions thereof. Any unresolved controversy or claim arising out of or relating to this Agreement, shall be submitted to arbitration pursuant to the terms set forth in Exhibit B.

12.

Entire Agreement.  This Agreement, including all Exhibits hereto shall constitute the entire agreement between the parties with respect to the matters covered hereby and supersedes all previous written, oral or implied understandings between them with respect to such matters, including without limitation, any “employment” or similar agreements (whether written, oral or implied) between the Employer and the Executive. Notwithstanding anything in this Agreement to the contrary, the Executive shall have no liability to the Employer or any other person or entity (and all such liability is hereby irrevocably waived, discharged and released, which such waiver, discharge and release are a material inducement to the Executive for entering into this Agreement) whatsoever of any kind with respect to any termination of her employment for any consequential, special, punitive or other similar damages, whether foreseeable, known to Executive, or even if Executive was advised thereof.

13.

Amendments.  This Agreement may only be amended or otherwise modified by a writing executed by each of the parties hereto.

14.

Survivorship.  The provisions of Sections 5 through 17, as well as Exhibits A and B hereto, shall survive the termination of this Agreement.

15.

Indemnification/D&O Insurance.  The Employer shall indemnify, defend and hold the Executive harmless from and against all claims, suits, actions and/or proceeding arising by reason of the Executive’s status as an officer, director, employee and/or agent of the Employer to the fullest extent provided (a) by Employer’s Certificate of Incorporation and/or Bylaws, (b) under Employer’s Directors and Officers Liability and general insurance policies, and (c) under the Delaware General Corporation Law, as each may be amended from time to time. Employer agrees (i) that the Executive shall be covered by Directors and Officers insurance coverage on the same basis as the Employer maintains such coverage for other officers  and directors, (ii) Executive shall be covered by such policies in accordance with their terms to the maximum extent of the coverage available under such policies, and (iii) Executive shall continue to be covered by such policies both during the Term and following the termination of the Executive’s employment with Employer so long as Executive shall be or may be subject to any claims, suits, actions and/or proceedings by reason of the Executive’s status as (or former status as) an officer, director, employee and/or agent of Employer. For 

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the avoidance of doubt, nothing in this Section 15 shall entitle the Executive to indemnification for actions or omissions with respect to which the Employer is prohibited from providing indemnification pursuant to the Delaware General Corporation Law.

16.

409A Compliance.  All payments under this Agreement are intended to comply with or be exempt from the requirements of Section 409A of the Code and regulations promulgated thereunder (“Section 409A”). As used in this Agreement, the “Code” means the Internal Revenue Code of 1986, as amended. To the extent permitted under applicable regulations and/or other guidance of general applicability issued pursuant to Section 409A, the Employer reserves the right to modify this Agreement to conform with any or all relevant provisions regarding compensation and/or benefits so that such compensation and benefits are exempt from the provisions of 409A and/or otherwise comply with such provisions so as to avoid the tax consequences set forth in Section 409A and to assure that no payment or benefit shall be subject to an “additional tax” under Section 409A. To the extent that any provision in this Agreement is ambiguous as to its compliance with Section 409A, or to the extent any provision in this Agreement must be modified to comply with Section 409A, such provision shall be read in such a manner so that no payment due to the Executive shall be subject to an “additional tax” within the meaning of Section 409A(a)(1)(B) of the Code. If necessary to comply with the restriction in Section 409A(a)(2)(B) of the Code concerning payments to “specified employees,” any payment on account of the Executive’s separation from service that would otherwise be due hereunder within six (6) months after such separation shall be delayed until the first (1st) business day of the seventh (7th) month following the Termination Date and the first such payment shall include the cumulative amount of any payments (without interest) that would have been paid prior to such date if not for such restriction. Each payment in a series of payments hereunder shall be deemed to be a separate payment for purposes of Section 409A. In no event may the Executive, directly or indirectly, designate the calendar year of payment. All reimbursements provided under this Agreement shall be made or provided in accordance with the requirements of Section 409A, including, where applicable, the requirement that (i) any reimbursement is for expenses incurred during the Executive’s lifetime (or during a shorter period of time specified in this Agreement), (ii) the amount of expenses eligible for reimbursement during a calendar year may not affect the expenses eligible for reimbursement in any other calendar year, (iii) the reimbursement of an eligible expense will be made on or before the last day of the calendar year following the year in which the expense is incurred, and (iv) the right to reimbursement is not subject to liquidation or exchange for another benefit. Notwithstanding anything contained herein to the contrary, the Executive shall not be considered to have terminated employment with the Employer for purposes of Section 5(b), 5(c) or 5(d) unless the Executive would be considered to have incurred a “termination of employment” from the Employer within the meaning of Treasury Regulation §1.409A-1(h)(1)(ii).

17.

Section 280G Limitation.  If any payment(s) or benefit(s) the Executive would receive pursuant to this Agreement and/or pursuant to any other agreement or arrangement would (a) constitute a “parachute payment” within the meaning of Section 280G of the Code, and (b) but for this Section 17, be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then such payment(s) or benefit(s) (collectively, “Payments”) shall be reduced to the Reduced Amount. The “Reduced Amount” shall be the largest portion of the Payments that can be paid or provided without causing any portion of the Payments 

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being subject to the Excise Tax. If a reduction in payments or benefits constituting “parachute payments” is necessary so that the Payments equal the Reduced Amount, reduction shall occur in the following order: (i) first, the Severance Payment under this Agreement, (ii) second, any other cash payments due under any other agreement between the Employer and the Executive; (iii) third, cancellation of the acceleration of vesting of any stock options, and (iv) lastly, other non-cash forms of benefits. Calculations of the foregoing will be performed at the expense of the Employer by an accounting firm selected by the Employer. The determinations of such accounting firm shall be final, binding and conclusive upon the Employer and the Executive.

18.

Key Man Life Insurance.  The Executive agrees to cooperate with the Employer in obtaining any key man life insurance coverage insuring the Executive’s life and to submit to such physical examinations as may be needed to secure such coverage.

19.

Counterparts.  This Agreement may be executed in any number of counterparts or facsimile copies, each of which when executed shall be deemed to be an original and all of which together shall be deemed to be one and the same instrument.

IN WITNESS WHEREOF, the Employer has caused this Agreement to be executed and delivered by its duly authorized officer and the Executive has signed this Agreement, all as of the first date written above.

			
	 
	SOCIAL REALITY, INC.

	 
	 
	 

	 
	 
	 

	 
	By:  

	/s/ Christopher Miglino

	 
	 
	Christopher Miglino

	 
	 
	Chief Executive Officer

	 
	 
	 

	 
	 
	 

	 
	EXECUTIVE:

	 
	 
	 

	 
	 
	 

	 
	/s/ Erin DeRuggiero

	 
	Erin DeRuggiero

10INSIDER TRADING POLICY

EXHIBIT 10.45

INSIDER TRADING POLICY

Adopted by the Board of Directors on February 23, 2016

Social Reality, Inc. has adopted this Statement of Policy on Securities Trading by Company personnel and consultants (this “Policy Statement”) governing securities transactions by officers, directors, employees and consultants (including entities over the individual has influence or control, including corporations, limited liability companies, partnerships or trusts) of Social Reality, Inc. and its subsidiaries (collectively, with Social Reality, Inc., the “Company”).

The Insider Trading and Securities Fraud Enforcement Act of 1988 (the “Act”) authorizes the Securities and Exchange Commission and the Justice Department to vigorously prosecute insider trading that is based on information acquired in the workplace and imposes substantial penalties on individuals for insider trading. In addition, the Act places direct responsibility on companies to monitor the securities transactions of their employees. Onerous penalties may be assessed against the Company for the insider trading violations of its employees. Accordingly, if the Company does not take active steps to adopt preventive policies and procedures covering securities transactions by Company personnel, the consequences could be severe.

The Company has also adopted this Policy Statement to avoid damage to its reputation for integrity and ethical conduct. We all strive to establish a reputation for observing the highest standards of conduct, and even the appearance of improper conduct must be avoided.

Consequences of Insider Trading Violations

The civil and criminal penalties for insider trading violations under the Act are as follows:

For individuals who trade on inside information (or who tip information to others):

·

A civil penalty of up to three times the profit gained or loss avoided;

·

A criminal fine (no matter how small the profit) of up to $1 million; and

·

A maximum jail term of 10 years.

For a company (as well as possibly any supervisory person) that fails to take appropriate steps to prevent illegal trading:

·

A civil penalty of the greater of $1 million or three times the profit gained or loss avoided as a result of the employee’s violation; and

·

A maximum criminal penalty of $2.5 million.

Moreover, anyone who fails to comply with any of the policies or procedures set forth in this Policy Statement may be disciplined or terminated at the Company’s sole discretion, whether or not such individual’s failure to comply results in a violation of law. Needless to say, a violation of law, or even a Securities and Exchange Commission investigation that does not result in prosecution, can tarnish one’s reputation and irreparably damage a career.

In this regard, every officer, director, employee and consultant is responsible for the actions of his or her immediate family and personal household as well as family members who do not live with you but whose transactions in the Company's securities are directed by you or subject to your influence or control. Prohibited securities transactions by an employee’s spouse, for example, could have the same consequences as trading initiated directly by the employee.

Prohibited Use of Material Information

If a director, officer, employee or consultant knows of material nonpublic information relating to the Company, it is our policy that neither that person nor any related person may buy or sell the Company’s securities or engage in any other action to take advantage of, or pass on to others, that information.

In addition, it is the policy of the Company that no director, officer, employee or consultant of the Company who, in the course of working for the Company, learns of material nonpublic information about a company with which the Company does business, including a customer or supplier of the Company, may trade in that company’s securities until the information becomes public or is no longer material.

Transactions that may be necessary or justifiable for independent reasons (such as the need to raise money for an emergency expenditure) are not exempt from this policy. The securities laws do not recognize such mitigating circumstances, and, in any event, even the appearance of an improper transaction must be avoided to preserve the Company’s reputation for adhering to the highest standards of conduct.

For purposes of this Policy Statement, “material information” means any information that a reasonable investor would consider important in a decision to buy, hold, or sell stock of the Company or of any other company. In short, any information is material if it could reasonably affect the price of the stock.

Common examples of information that will frequently be regarded as material are:

·

Projections of future earnings or losses;

·

Earnings that are inconsistent with the consensus expectations of the investment community;

·

News of a pending or proposed merger, acquisition, or similar transaction;

·

News of a significant sale of assets or the disposition of a subsidiary;

·

Changes in dividend policies, the declaration of a stock split, or the offering of additional securities;

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SOCIAL REALITY, INC. INSIDER TRADING POLICY

·

Entering into contracts that could lead to significant revenue;

·

Changes in management;

·

Institution of or changes in the status of governmental investigations;

·

Significant new products or discoveries;

·

Impending bankruptcy or financial liquidity problems; and

·

The gain or loss of a substantial customer.

Twenty-Twenty Hindsight

If your securities transactions become the subject of investigation, they will be viewed by the Securities and Exchange Commission after the fact with the benefit of hindsight. Therefore, before engaging in any transaction, you may want to consult with your own attorney (in addition to clearing the transaction with Pearlman Schneider, LLP, the Company’s outside securities counsel), and carefully consider how regulators and others might view the transaction in hindsight.

Trading After Public Announcements

It is also Company policy that, except as discussed below under “Preplanned Trading Programs,” no officer, director, employee or consultant, nor anyone related to any such person, may enter into a trade immediately after the Company has publicly announced material information, including earnings releases. Because the Company’s stockholders and the investing public should be allowed time to receive the information and digest it sufficiently, as a general rule such persons should not engage in any transactions until at least two business days after the information has been released. Moreover, because the Company’s press releases are typically not reported by the financial press, it may be necessary in certain situations to delay a trade for an even longer period of time.

Stock Option Exercises

The Company’s insider trading policy does not apply to the exercise of an employee or consultant stock option, or to the exercise of a tax withholding right pursuant to which you elect to have the Company withhold shares subject to an option to satisfy tax withholding requirements. The policy does apply, however, to any sale of stock as part of a broker-assisted cashless exercise of an option, or any other market sale for the purpose of generating the cash needed to pay the exercise price of an option.

Preplanned Trading Program

A preplanned trading program, if properly structured and implemented, can be a better way to facilitate trading in the Company’s securities than our regular system of trading windows and black-out periods. The Company, therefore, will permit trading in its securities under preplanned trading programs that satisfy the requirements of Securities and Exchange Commission Rule 10b5-1 and the policies set forth in this Policy Statement.

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SOCIAL REALITY, INC. INSIDER TRADING POLICY

All preplanned trading programs must be pre-cleared and coordinated with the Company as described below under “Pre-Clearance of All Trades and “Broker Interface Procedures.” Once the preplanned trading program has been pre-cleared, the actual transactions in the Company’s securities effected pursuant to the program will not require any further clearance as long as there have been no modifications or changes to the program as pre-cleared.

Gifts

A gift of Company securities to a family member, charitable organization or any other person (including a transfer to a family trust) should be pre-cleared as described below under “Pre-Clearance of All Trades” and may not be made during a black-out period described below under "Black-Out Periods." 

Tipping Information to Others

Whether the information is proprietary information about the Company or information that could have an impact on the Company’s stock price, you must not pass it on to others. The penalties set forth above apply, whether or not you derive any benefit from someone else’s actions. In one case, for example, the Securities and Exchange Commission imposed a $470,000 penalty on a tipper even though he did not profit personally from his tippees’ trading.

This policy also serves the Company’s broader interest in preserving the confidentiality of its proprietary information.

Additional Prohibited Transactions

Because we believe it is improper and inappropriate for any Company personnel to engage in short-term or speculative transactions involving the Company’s securities, it is the Company’s policy that directors, officers, employees and consultants should not engage in any of the following activities with respect to the Company’s securities:

1.

Trading on a short-term basis. Any Company securities purchased in the open market must be held for a minimum of six months and preferably longer. (Note that the Securities and Exchange Commission’s short-swing profit rule requires disgorgement of profits made by officers and directors from selling any Company securities within six months of a purchase. For some of the same policy reasons, we are simply expanding this rule to all employees. However, the rule does not apply to stock option exercises and subsequent sales of the underlying securities, except to the extent required by law for officers and directors.)

2.

Short selling. Short sales of the Company’s securities evidence an expectation on the part of the seller that the securities will decline in value, and therefore signal to the market that the seller has no confidence in the Company or its short-term prospects. In addition, short sales may reduce the seller’s incentive to improve the Company’s performance. For these reasons, short sales of the Company’s securities are prohibited by this Policy Statement. In addition, Section 16(c) of the Securities Exchange Act of 1934 prohibits officers and directors from engaging in 

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SOCIAL REALITY, INC. INSIDER TRADING POLICY

short sales. This prohibition extends to so-called short sales against the box, where the seller may own the securities being sold, but may not deliver those securities to cover the sale order.

3.

Publicly Traded Options. A transaction in options is, in effect, a bet on the short-term movement of the Company’s stock and therefore creates the appearance that the individual is trading based on inside information. Transactions in options also may focus the individual’s attention on short-term performance at the expense of the Company’s long-term objectives. Accordingly, transactions in puts, calls or other derivative securities, on an exchange or in any other organized market, are prohibited by this Policy Statement. Option positions arising from certain types of hedging transactions are governed by the section below captioned “Hedging Transactions.”

4.

Hedging Transactions. Certain forms of hedging or monetization transactions, such as zero-cost dollars and forward sale contracts, allow an individual to lock in much of the value of his or her stock holdings, often in exchange for all or part of the potential for upside appreciation in the stock. These transactions allow the individual to continue to own the covered securities, but without the full risks and rewards of ownership. When that occurs, the individual may no longer have the same objectives as the Company’s other stockholders. Therefore, the Company strongly discourages you from engaging in such transactions. Any person wishing to enter into such an arrangement must first pre-clear the proposed transaction with the Company's Chief Executive Officer. Any request for pre-clearance of a hedging or similar arrangement must be submitted to the Chief Executive Officer at least two weeks prior to the proposed execution of documents evidencing the proposed transaction and must set forth a justification for the proposed transaction.

5.

Margin Accounts and Pledges. Securities held in a margin account may be sold by the broker without the customer’s consent if the customer fails to meet a margin call. Similarly, securities pledged (or hypothecated) as collateral for a loan may be sold in foreclosure if the borrower defaults on the loan. Because a margin sale or foreclosure sale may occur at a time when the pledgor is aware of material nonpublic information or otherwise is not permitted to trade in Company securities, directors, officers, employees and consultants are prohibited from holding Company securities in a margin account or pledging Company securities as collateral for a loan, without obtaining prior approval. An exception to this prohibition may be granted where a person wishes to pledge Company securities as collateral for a loan (not including margin debt) and clearly demonstrates the financial capacity to repay the loan without resort to the pledged securities. Any person who wishes to pledge Company securities as collateral for a loan must submit a request for approval to the Chief Executive Officer at least two weeks prior to the proposed execution of documents evidencing the proposed pledge. This prohibition does not apply to pledges of securities in effect prior to the adoption of this Policy Statement.

Pre-Clearance of All Trades

To provide assistance in preventing inadvertent insider trading violations and avoiding the appearance of an improper transaction (which could result, for example, when an employee engages in a trade while unaware of a pending major development), and also to comply with recent accelerated reporting requirements of insider transactions, all transactions in the 

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SOCIAL REALITY, INC. INSIDER TRADING POLICY

Company’s securities (acquisitions, dispositions, transfers, etc.) by any officer, director, employee or consultant, together with their family members, must be pre-cleared by the Chief Executive Officer. 

If you contemplate a transaction, you should contact the Chief Executive Officer at least two business days in advance. The Chief Executive Officer is under no obligation to approve a trade submitted for pre-clearance, and may determine not to permit the trade after review of the legal considerations applicable to the proposed trade. In the absence of the Chief Executive Officer, all of the foregoing transactions should be cleared by James M. Schneider, Esq. of Pearlman Schneider LLP, the Company’s outside securities counsel.  Any clearance by Mr. Schneider, however, is not to be construed as legal advice to you and you remain responsible for complying with this Policy Statement.  Transactions of the foregoing type by the Chief Executive Officer must be cleared by either the Company’s Chairman of the Board or Chairman of the Audit Committee.

This requirement does not apply to stock option exercises, but does cover market sales of option stock.

Broker Interface Procedures

The accelerated reporting of transactions pursuant to the Sarbanes-Oxley Act of 2002, which applies to directors and executive officers, will require tight interface with brokers handling transactions for our directors and executives. A knowledgeable, alert broker can act as a gatekeeper, helping ensure compliance with our pre-clearance procedures and helping prevent inadvertent violations.

We will require that all directors and executives officers and their brokers sign the enclosed Broker Instruction/Representation Form which imposes two requirements on the broker handling transactions in Company securities:

Not to enter any order (except for orders under pre-approved Rule 10b5-1 plans) without:

(a)

first verifying with the Company that the transaction was pre-cleared; and

(b)

complying with the brokerage firm’s compliance procedures (e.g., Rule 144).

To report immediately to the Company via:

(a)

telephone; and

(b)

in writing (via e-mail or fax) the details of every transaction involving Company securities, including gifts, transfers, pledges, and all 10b5-1 transactions.

Each director and executive officer should sign, and also have his broker sign, the enclosed Broker Instruction/Representation Form and return it to us as soon as possible following receipt of this Policy Statement so that we can work out with the brokers a coordinated procedure for handling any trades in the Company’s securities.

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SOCIAL REALITY, INC. INSIDER TRADING POLICY

Black-Out Periods 

1.

Quarterly Black-Out Periods. Unless made pursuant to a Preplanned Trading Program as permitted above, transactions in the Company’s securities can only be made outside of “black-out” periods. The standard black-out periods begin on the 30th day in the month before the end of a fiscal quarter or fiscal year and end two business days after public release of quarterly or annual financial results for that fiscal period.

2.

Event-Specific Black-Out Periods. The Company may on occasion issue interim earnings guidance or other potentially material information by means of a press release, Securities and Exchange Commission filing on Form 8-K or other means designed to achieve widespread dissemination of the information. You should anticipate that trades are unlikely to be pre-cleared while the Company is in the process of assembling the information to be released and until the information has been released and fully absorbed by the market. The Company generally will not disclose the reason for additional black-out periods.

3.

Hardship Exceptions. A person who is subject to a quarterly earnings black-out period and who has an unexpected and urgent need to sell Company stock in order to generate cash may, in appropriate circumstances, be permitted to sell Company stock even during the black-out period. Hardship exceptions may be granted only by the Chief Executive Officer and must be requested at least two days in advance of the proposed trade. A hardship exception may be granted only if the Chief Executive Officer concludes that the Company’s earnings information for the applicable quarter does not constitute material nonpublic information. Under no circumstance will a hardship exception be granted during an event-specific black-out period.

Transactions by Family Members

This Policy Statement also applies to your family members who reside with you, anyone else who lives in your household, and any family members who do not live in your household but whose transactions in Company securities are directed by you or are subject to your influence or control, such as parents or children who consult with you before they trade in Company securities. You are responsible for the transactions of these other persons and therefore should make them aware of the need to confer with you before they trade in Company securities.

Post-Termination Transactions

This Policy Statement continues to apply to your transactions in Company securities even after you have terminated employment or are no longer serving the Company as a director or consultant. If you are in possession of material nonpublic information when your employment or your service as a director or consultant terminates, you may not trade in Company securities until that information has become public or is no longer material.

In all other respects, the procedures set forth in this Policy Statement will cease to apply to your transactions in Company securities upon the expiration of any “black-out period” that is applicable to your transactions at the time of your termination of service.

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SOCIAL REALITY, INC. INSIDER TRADING POLICY

A Special Note to Affiliates

Officers, directors and 10% or greater stockholders of the Company are considered "affiliates" under Federal securities laws.  Affiliates are reminded that in addition to compliance with this Policy Statement, you are also required to comply with the provisions of Rule 144 of the Securities Act of 1933 in any sales or dispositions of Company securities.

Company Assistance

Any person who has any questions about specific transactions may obtain additional guidance from the Chief Executive Officer. However, the ultimate responsibility for adhering to this Policy Statement and avoiding improper transactions rests with you. Therefore, it is imperative that you use good judgment with respect to all your transactions in Company securities.

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SOCIAL REALITY, INC. INSIDER TRADING POLICY

BROKER INSTRUCTION/REPRESENTATION FORM

The undersigned executive officer or director of Social Reality, Inc. and its subsidiaries (collectively, with Social Reality, Inc., the “Company”) and such person’s securities broker hereby acknowledge and agree to the following in order to comply with the accelerated two-day reporting requirements of the Sarbanes-Oxley Act of 2002:

1.

Not to enter any order (except for orders under pre-approved Rule 10b5-1 plans) without:

(a)

first verifying with the Company that such transaction was pre-cleared, and

(b)

complying with the brokerage firm’s compliance procedures (e.g., Rule 144).

2.

To report immediately to the Company to the attention of the Chief Executive Officer via:

(a)

telephone, and

(b)

in writing (via e-mail or fax) the details of every transaction involving Company stock, including gifts, transfers, pledges, and all 10b5-1 transactions.

Dated: ___________________, 201_

__________________________________

Signature

Print name: _________________________

Title: _______________________________

Brokerage Firm

Dated: ___________________, 201_

___________________________________

[Print name of firm]

By: ________________________________

Print name: _________________________

Title: _______________________________

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SOCIAL REALITY, INC. INSIDER TRADING POLICY

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