Document:

REGISTRATION RIGHTS AGREEMENT

Exhibit 10.26

REGISTRATION RIGHTS AGREEMENT

This REGISTRATION RIGHTS AGREEMENT (as same may be amended, restated, supplemented or otherwise modified from time to time, this “Agreement”), dated as of October 30, 2014, is entered into by and among Social Reality, Inc., a Delaware corporation (the “Company”), and the lender(s) listed on the Schedule of Buyers attached hereto (each, a “Buyer” and, collectively, the “Buyers”).

WHEREAS:

A.

In connection with the Financing Agreement, by and among the Company, the Buyers and the other parties thereto, dated of even date herewith (the “Financing Agreement”), the Company has agreed, upon the terms and subject to the conditions of the Financing Agreement, to issue and sell at the Closing (as defined in the Financing Agreement) to the Buyers warrants to purchase shares of the Company’s Class A Common Stock, par value $0.001 per share (the “Common Stock”) (such warrants, together with any warrants issued in exchange or substitution therefor or replacement thereof, and as the same may be amended, restated or modified and in effect from time to time, the “Warrants”; and the shares of Common Stock issuable upon exercise of the Warrants being referred to as the “Warrant Shares”); and

B.

To induce the Buyers to execute and deliver the Financing Agreement, the Company has agreed to provide certain registration rights under the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor statute (collectively, the “1933 Act”), and applicable state securities laws.

NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and each of the Buyers hereby agree as follows:

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DEFINITIONS.

As used in this Agreement, the following terms shall have the following meanings:

(a)

“Escrow Shares” means 2,386,863 shares of Common Stock held in escrow pursuant to the terms of that certain Escrow Agreement, dated October 30, 2014, by and among the Company, Richard Steel and Lowenstein Sandler LLP, as escrow agent.

(b)

“Investor” means a Buyer, any permitted transferee or assignee of Registrable Securities to whom a Buyer assigns its rights under this Agreement in accordance with the provisions of this Agreement (including Section 9) and who agrees to become bound by the provisions of this Agreement in accordance with Section 9 and any permitted transferee thereof to whom a transferee or assignee of Registrable Securities assigns its rights under this Agreement in accordance with the provisions of this Agreement (including Section 9) and who agrees to become bound by the provisions of this Agreement in accordance with Section 9.

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(c)

“Permitted Registrable Shares” means with respect to Registration Statements for resales pursuant to Rule 415 a number of Registrable Securities equal to the least of (i) the number of Registrable Securities not then covered by an effective Registration Statement that is available for resales pursuant to Rule 415, (ii) the number of Registrable Securities requested to be included in the Registration Statement for a Proposed Registration, and (iii) the maximum number of Registrable Securities the Company is permitted to include in such Registration Statement by the SEC, provided that the Company shall have used diligent efforts to advocate with the SEC for the registration of all of the Registrable Securities required or requested to be included in the Registration Statement (considering in good faith the input of the Investors and Legal Counsel (as defined below)), in accordance with applicable SEC guidance.

(d)

“Private Placement Securities” means the shares of Common Stock issued and issuable upon the exercise of Class A Common Stock purchase warrants (excluding, for the avoidance of doubt, the Warrants and any Registrable Securities), which warrants were issued by the Company on October 30, 2014 pursuant to the private placement consummated on October 30, 2014; provided, however, that any such securities shall cease to be Private Placement Securities for purposes of this Agreement when (i) a Form S-1 registration statement or Form S-3 registration statement covering such securities has been declared effective by the SEC and has not been withdrawn or suspended, or (ii) such securities shall have ceased to be outstanding or have been sold.

(e)

“register,” “registered” and “registration” refer to a registration effected by preparing and filing one or more Registration Statements in compliance with the 1933 Act, and the declaration or ordering of effectiveness of such Registration Statement(s) by the SEC.

(f)

“Registrable Securities” means (i) any Warrant Shares issued or issuable upon exercise of the Warrants; and (ii) any shares of capital stock of the Company (including any shares of Common Stock) issued or issuable in exchange for or with respect to the Warrant Shares or the Warrants as a result of any stock split, stock dividend, recapitalization, exchange, adjustment or similar event or otherwise; provided, however, that any Registrable Securities shall cease to be Registrable Securities when (A) a Registration Statement with respect to the sale of such securities becomes effective under the 1933 Act and such securities are disposed of in accordance with such Registration Statement, (B) such securities are sold in accordance with Rule 144 or (C) (x) all of such securities are eligible to be sold by the holder thereof pursuant to Rule 144 without limitation, restriction or condition thereunder, assuming, for the avoidance of doubt, that, with respect to any Warrants that have not been exercised, such Warrants will be exercised on a cash basis, and (y) none of such securities are covered by, or subject to, any restrictive legend or any other restriction or limitation on transfer of any kind imposed by or on behalf of the Company or the transfer agent for the securities of the class of such Registrable Securities.

(g)

“Registration Statement” means a registration statement or registration statements of the Company filed under the 1933 Act covering Registrable Securities.

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(h)

“Required Holders” means the holders of at least a majority of the Registrable Securities.

(i)

“Rule 144” means Rule 144 under the 1933 Act or any successor rule.

(j)

“Rule 415” means Rule 415 under the 1933 Act or any successor rule providing for offering securities on a continuous or delayed basis.

(k)

“SEC” means the United States Securities and Exchange Commission.

(l)

“Steel Shares” means the then outstanding shares of Common Stock held by Richard Steel that were originally issued to Richard Steel pursuant to that certain Stock Purchase Agreement, dated as of the date of this Agreement, by and among Richard Steel, Steel Media and the Company, as in effect on the date of this Agreement without amendment or other modification.

Capitalized terms used herein and not otherwise defined herein shall have the respective meanings set forth in the Financing Agreement.

2.

PIGGYBACK REGISTRATIONS.

(a)

Each time that the Company proposes for any reason to register any of its Common Stock under the 1933 Act (a “Proposed Registration”) pursuant to a registration statement filed or proposed to be filed during the period beginning with the date of this Agreement and ending on the Expiration Date (as such term is defined in the Warrants) (the “Piggyback Registration Period”), other than pursuant to a registration statement on Form S-4 or Form S-8 (or similar or successor forms), unless a registration statement has been previously filed (and not withdrawn) covering the resale of all of the Registrable Securities and is then effective and, other than during a Grace Period, available for resale of all of the Registrable Securities, the Company shall promptly give written notice (the “Piggyback Notice”) of such Proposed Registration to each of the Investors (which notice shall be given not less than thirty (30) days prior to the expected effective date of the Company’s registration statement, and in any event within five (5) Business Days after its receipt of notice of any exercise of demand registration rights) and shall offer the Investors the right to include any of their Registrable Securities in the Proposed Registration; provided, however, that if the Proposed Registration is for an offering pursuant to Rule 415, the Company shall only be required to include the Permitted Registrable Shares.  

(b)

Each Investor shall have twenty (20) days from the date of receipt of the Piggyback Notice to deliver to the Company a written request specifying the number of Registrable Securities such Investor intends to sell and such Investor’s intended method of disposition. Any Investor shall have the right to withdraw such Investor’s request for inclusion of such Investor’s Registrable Securities in any registration statement pursuant to this Section 2 by giving written notice to the Company of such withdrawal.  Subject to Section 2(c) and Section 2(d) below, the Company shall include in such registration statement all such Registrable Securities so requested to be included therein.

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(c)

If the Proposed Registration includes an underwritten primary public offering on behalf of the Company and the managing underwriter or underwriters of the Proposed Registration advises the Company that the total number of shares of Common Stock (including Registrable Securities) that the Investors and any other Persons intend to include in the offering exceeds the number that can be sold in such offering without being likely to have a material adverse effect on the price, timing or distribution of the Common Stock offered or the market for the Common Stock, then the Common Stock to be included in such underwritten primary public offering shall include the number of securities of the Company that such managing underwriter or underwriters advises the Company in writing can be sold without having such material adverse effect, with such number to be allocated (i) first, to the securities that the Company proposes to sell, (ii) second, to the Registrable Securities requested to be included in such registration by the Investors, the Private Placement Securities requested to be included therein by the holder or holders thereof, and the Steel Shares requested to be included therein by the holder thereof, pro rata among the Investors, the holder or holders of such Private Placement Securities, and the holder of such Steel Shares on the basis of the number of shares of Registrable Securities owned by the Investors, the number of Private Placement Securities owned by such holder or holders and the number of Steel Shares owned by such holder, with further successive pro rata allocations among the Investors, the holder or holders of such Private Placement Securities and the holder of such Steel Shares if any such Investor or any such holder has requested the registration of less than all of the Registrable Securities, Private Placement Securities or Steel Shares that such Investor or such holder, as applicable, is entitled to register, and (iii) third, to any other securities requested to be included in such registration.

(d)

If the Proposed Registration is an underwritten public offering on behalf of holders of the Company’s securities and the managing underwriter or underwriters of the Proposed Registration advises the Company that the total number of shares of Common Stock (including Registrable Securities) that the Investors and any other Persons intend to include in the offering exceeds the number that can be sold in such offering without being likely to have a material adverse effect on the price, timing or distribution of the Common Stock offered or the market for the Common Stock, then the Common Stock to be included in such underwritten public offering shall include the number of securities of the Company that such managing underwriter or underwriters advises the Company in writing can be sold without having such material adverse effect, with such number to be allocated (i) first, to the securities requested to be included therein by the holders requesting such registration, to the Registrable Securities requested to be included in such registration by the Investors, to the Private Placement Securities requested to be included therein by the holder or holders thereof, and to the Steel Shares requested to be included therein by the holder thereof, pro rata among the holders of such securities, the Investors, the holder or holders of such Private Placement Securities and the holder of such Steel Shares on the basis of the number of shares of Common Stock owned by such holders, the number of Registrable Securities owned by the Investors, the number of Private Placement Securities owned by such holder or holders and the number of Steel Shares owned by such holder, with further successive pro rata allocations among such holders, the Investors, the holder or holders of such Private Placement Securities and the holder of such Steel Shares if any such holder, Investor, holder of such Private 

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Placement Securities or holder of such Steel Shares has requested the registration of less than all of the shares of Common Stock, Registrable Securities, Private Placement Securities or Steel Shares that such holder or Investor, as applicable, is entitled to register, and (ii) second, to any other securities requested to be included in such registration.

(e)

If the Proposed Registration is for an offering pursuant to Rule 415 and the number of Registrable Securities requested by the Investors to be included therein exceeds the number of Permitted Registrable Shares, the initial number of Registrable Securities included in any Registration Statement in respect of such Proposed Registration and each increase in the number of Registrable Securities included therein shall be allocated pro rata among the Investors holding Registrable Securities on the basis of the number of Registrable Securities owned by such Investors, with further successive pro rata allocations among the Investors if any such Investor has requested the registration of less than all of the Registrable Securities such Investor is entitled to register. In the event that an Investor sells or otherwise transfers any of such Investor’s Registrable Securities, each transferee shall be allocated a pro rata portion of the then remaining number of Registrable Securities included in such Registration Statement for such transferor. Any shares of Common Stock included in such Registration Statement that remain allocated to any Person that ceases to hold any Registrable Securities covered by such Registration Statement shall be allocated to the remaining Investors, pro rata based on the number of Registrable Securities then held by such Investors that are covered by such Registration Statement.  Notwithstanding anything to the contrary contained in this Section 2(e), if the Proposed Registration to be filed by the Company is the first registration statement filed with the SEC that includes any Private Placement Securities for an offering pursuant to Rule 415, and the total number of securities proposed to be included therein exceeds the maximum number of securities of the Company that the Company is permitted to include in such registration statement by the SEC in accordance with applicable SEC rules and regulations, the initial number of securities included in any registration statement in respect of such Proposed Registration and each increase in the number of securities included therein shall be allocated (i) first, to such Private Placement Securities which have not been previously included in a registration statement, and (ii) second, pro rata among the Investors and the holder of the Steel Shares on the basis of the number of the Registrable Securities and the Escrow Shares owned by the holder of the Steel Shares, with further successive pro rata allocations among the Investors and the holder of the Steel Shares if the Investor or such holder, as applicable, has requested the registration of less than all of the Registrable Securities or Escrow Shares, as applicable, that the Investor or such holder of Steel Shares is entitled to register.  

(f)

If any Proposed Registration is in the form of an underwritten public offering, the Company shall select and obtain a recognized investment bank or investment bankers and manager or managers that will administer the offering; provided, that such investment banker(s) and manager(s) must be approved (which approval shall not be unreasonably withheld) by the Investors holding at least a majority of the Registrable Securities requested to be registered.  

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(g)

At any time during the Piggyback Registration Period that a Shelf Registration Statement covering Registrable Securities is effective and the Company, on behalf of itself or holders of securities of the Company, intends to effect an underwritten offering of any securities of the Company of the type included on such Shelf Registration Statement (a “Shelf Underwritten Offering”), the Company shall promptly deliver to each of the Investors a notice (a “Take-Down Notice”) stating such intention.  In connection with any such Shelf Underwritten Offering, the Company shall permit each Investor to include its Registrable Securities in the Shelf Underwritten Offering if such Investor notifies the Company within five (5) Business Days after its receipt of the Take-Down Notice.  In connection with the Company’s delivery of a Take-Down Notice pursuant to this Section 2(f) and a Shelf Underwritten Offering, the Company shall amend or supplement the Shelf Registration Statement as may be necessary in order to enable the Registrable Securities to be distributed pursuant to the Shelf Underwritten Offering.  In connection with any such Shelf Underwritten Offering, in the event that the managing underwriter or underwriters determines that marketing factors (including an adverse effect on the per share offering price) require a limitation on the number of shares which would otherwise be included in the Shelf Underwritten Offering, the managing underwriter or underwriters may limit the number of shares which would otherwise be included in such Shelf Underwritten Offering in the same manner as is described in Section 2(c) and Section 2(d), as applicable, with respect to a limitation of shares to be included in an underwritten public offering.

(h)

Notwithstanding anything to the contrary contained herein, if for any reason the SEC asserts or proposes a limitation on the securities to be included in any Registration Statement filed pursuant to this Section 2 in which the Registrable Securities are to be included, the Company shall use diligent efforts to advocate with the SEC for the registration of all of the securities required or requested to be included in such Registration Statement (considering in good faith the input of the Investors and Legal Counsel), in accordance with applicable SEC guidance.

3.

RELATED OBLIGATIONS.

Whenever during the Piggyback Registration Period holders of Registrable Securities request that any Registrable Securities be registered pursuant to this Agreement, the Company shall use its reasonable best efforts to effect the registration of the Registrable Securities in accordance with the intended method of disposition thereof and, pursuant thereto, the Company shall have the following obligations:

(a)

The Company shall use its reasonable best efforts to respond to written comments received from the SEC upon a review of the Registration Statement within ten (10) Business Days. The Company shall submit to the SEC, within three (3) Business Days after the Company learns that no review of a particular Registration Statement will be made by the staff of the SEC or that the staff of the SEC has no further comments on a particular Registration Statement, as the case may be, a request for acceleration of effectiveness of such Registration Statement to a time and date not later than two (2) Business Days after the submission of such request.  By 9:30 a.m. (New York City time) on the second (2nd) Business Day after such Registration Statement becomes effective, 

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the Company shall file with the SEC in accordance with Rule 424 under the 1933 Act the final prospectus to be used in connection with sales pursuant to such Registration Statement.  The Company shall keep each Registration Statement effective at all times until the earlier of (i) the date as of which (x) all of the Investors may sell all of the Registrable Securities covered by such Registration Statement pursuant to Rule 144 without restriction or condition thereunder (assuming, for the avoidance of doubt, that, with respect to any Warrants held thereby that have not been exercised, such Warrants will be exercised on a cash basis), and (y) none of such Registrable Securities are covered by, or subject to, any restrictive legend or any other restriction or limitation on transfer of any kind imposed by or on behalf of the Company or the transfer agent for the securities of the class of such Registrable Securities, or (ii) the date on which the Investors shall have sold all of the Registrable Securities covered by such Registration Statement (the “Registration Period”).  Each Investor shall provide notice to the Company of the occurrence of either of the events described in clauses (i) and (ii) of the immediately preceding sentence with respect to such Investor’s Registrable Securities promptly after the occurrence of such event.  The Company shall ensure that each Registration Statement (including any amendments or supplements thereto and prospectuses contained therein) shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

(b)

The Company shall prepare and file with the SEC such amendments (including post-effective amendments) and supplements to a Registration Statement and the prospectus used in connection with such Registration Statement, which prospectus supplements shall be filed pursuant to Rule 424 (or successor thereto) promulgated under the 1933 Act, as may be necessary to keep such Registration Statement effective at all times during the Registration Period (except as provided in Section 3(g)), and, during such period, comply with the provisions of the 1933 Act with respect to the disposition of all Registrable Securities covered by such Registration Statement until such time as all of such Registrable Securities shall have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof as set forth in such Registration Statement.  In the case of any amendment or supplement to a Registration Statement or prospectus that is required to be filed pursuant to this Agreement (including pursuant to this Section 3(b)) by reason of the Company filing a report on Form 10-K, Form 10-Q or Form 8-K or any analogous report under the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder, or any similar successor statute (the “1934 Act”), the Company shall have incorporated such report by reference into such Registration Statement, if applicable, or shall file such amendment or supplement with the SEC as expeditiously as practicable on or following the date on which the 1934 Act report is filed which created the requirement for the Company to amend or supplement such Registration Statement.

(c)

Subject to Section 5 hereof, the holders of at least a majority of the Registrable Securities to be registered under a Registration Statement pursuant to this Agreement shall have the right to select one legal counsel to review and oversee any registration pursuant to Section 2 (“Legal Counsel”), which shall be Katten Muchin Rosenman LLP or such other counsel as thereafter designated by the holders of at least a 

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majority of the Registrable Securities to be registered under such Registration Statement. The Company and Legal Counsel shall reasonably cooperate with each other in performing the Company’s and the Investors’ respective obligations under this Agreement.

(d)

The Company shall (A) permit Legal Counsel to review and comment upon (i) a Registration Statement at least five (5) Business Days prior to its filing with the SEC and (ii) all amendments and supplements to all Registration Statements (except for Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K and any similar or successor reports) within a reasonable number of days prior to their filing with the SEC, and (B) not file any Registration Statement or amendment or supplement thereto in a form to which Legal Counsel reasonably objects; provided, that the failure of any Investor or Legal Counsel to respond to such proposed documents within five (5) Business Days after receipt thereof shall be deemed confirmation of no objection to same. The Company shall promptly furnish to Legal Counsel, without charge, copies of any correspondence from the SEC or the staff of the SEC to the Company or its representatives relating to any Registration Statement, shall permit Legal Counsel to review and comment upon the Company’s responses to any such correspondence and shall not submit any such responses in a form to which Legal Counsel reasonably objects; provided, that the failure of any Investor or Legal Counsel to respond to such proposed documents within three (3) Business Days after receipt thereof shall be deemed confirmation of no objection to same.  The Company shall reasonably cooperate with Legal Counsel in performing the Company’s obligations pursuant to this Section 3.

(e)

The Company shall furnish to Legal Counsel and each Investor whose Registrable Securities are included in any Registration Statement, without charge, (i) promptly after the same is prepared and filed with the SEC, if requested by an Investor and not otherwise available on the EDGAR (or any successor) system, at least one copy of such Registration Statement and any amendments or supplement thereto, including financial statements and schedules, all documents incorporated therein by reference, all exhibits and each preliminary prospectus, (ii) upon the effectiveness of any Registration Statement, a copy of the prospectus included in such Registration Statement and all amendments and supplements thereto (or such other number of copies as such Investor may reasonably request) and (iii) such other documents, including copies of any prospectus (preliminary, final, summary or free writing), as such Investor may reasonably request from time to time in order to facilitate the disposition of the Registrable Securities owned by such Investor.

(f)

The Company shall use its reasonable best efforts to (i) register and qualify, unless an exemption from registration and qualification applies, the resale by Investors of the Registrable Securities covered by a Registration Statement under such other securities or “blue sky” laws of all applicable jurisdictions in the United States, (ii) prepare and file in those jurisdictions such amendments (including post-effective amendments) and supplements to such registrations and qualifications as may be necessary to maintain the effectiveness thereof during the Registration Period, (iii) take such other actions as may be necessary to maintain such registrations and qualifications 

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in effect at all times during the Registration Period and (iv) take all other actions reasonably necessary or advisable to qualify the Registrable Securities for sale in such jurisdictions or obtain exemptions from the registration and qualification requirements of such jurisdictions; provided, however, that the Company shall not be required in connection therewith or as a condition thereto to (x) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(f), (y) subject itself to general taxation in any jurisdiction or (z) file a general consent to service of process in any jurisdiction in which it is not currently so qualified or subject to general taxation or has not currently so consented.  The Company shall promptly notify Legal Counsel and each Investor that holds Registrable Securities of the receipt by the Company of any notification with respect to the suspension of the registration or qualification of any of the Registrable Securities for sale under the securities or “blue sky” laws of any jurisdiction in the United States or its receipt of actual notice of the initiation or threatening of any proceeding for such purpose.

(g)

The Company shall notify Legal Counsel, any underwriter of such registered offering and each Investor in writing (each such notice to Legal Counsel and the Investors, a “Suspension Notice”) of the happening of any of the following events, as promptly as practicable after becoming aware of such event: (i) any request by the SEC or any other federal or state governmental authority, during the period of effectiveness of the Registration Statement, for amendments or supplements to such Registration Statement or related prospectus or for additional information; (ii) the issuance by the SEC or any other federal or state governmental authority of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose; (iii) the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; or (iv) any event or circumstance which necessitates the making of any changes to the Registration Statement or related prospectus, or any document incorporated or deemed to be incorporated therein by reference, so that, in the case of the Registration Statement, it will not include any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein not misleading and, in the case of the prospectus, it will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made therein, in the light of the circumstances under which they were made, not misleading, and, subject to Section 3(r), promptly prepare a supplement or amendment to such Registration Statement to correct such untrue statement or omission, and deliver a copy of such supplement or amendment to Legal Counsel, any underwriter of such registered offering and each Investor (or such other number of copies as Legal Counsel, such underwriter or such Investor may reasonably request). The Company shall also promptly notify Legal Counsel, any underwriter of such registered offering and each Investor in writing (x) when a prospectus or any prospectus supplement or post-effective amendment has been filed, and when a Registration Statement or any post-effective amendment has become effective (notification of such effectiveness shall be delivered to Legal Counsel and each Investor by facsimile on the same day of such effectiveness and by overnight mail) and (y) of the Company’s reasonable determination that a post-effective amendment to a Registration Statement would be appropriate.

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(h)

The Company shall use its reasonable best efforts to prevent the issuance of any stop order or other suspension of effectiveness of the Registration Statement (other than during an Allowable Grace Period, as defined below), or the suspension of the qualification of any of the Registrable Securities for sale in any jurisdiction and, if such an order or suspension is issued, to obtain the withdrawal of such order or suspension as soon as reasonably practicable consistent with the provisions of Section 3(g) and to notify Legal Counsel and each Investor who holds Registrable Securities being sold of the issuance of such order or suspension and the resolution thereof or its receipt of actual notice of the initiation or threat of any proceeding for such purpose.

(i)

At the reasonable request of any Investor with respect to a Registration Statement in which such Investor is required under applicable securities law or as determined by the SEC to be described in the Registration Statement as an underwriter, the Company shall furnish to such Investor, on the date of the effectiveness of the Registration Statement and thereafter from time to time on such dates as such Investor may reasonably request (i) a “comfort letter”, dated such date, from the Company’s independent registered certified public accountants in form and substance as is customarily given by independent registered certified public accountants to underwriters in an underwritten public offering, addressed to the Investors, and (ii) an opinion, dated as of such date, of counsel representing the Company for purposes of such Registration Statement, in form, scope and substance as is customarily given in an underwritten public offering, addressed to the Investors. 

(j)

At the reasonable written request (in the context of the securities laws) of any Investor or, in the case of an underwritten offering, upon the request of any underwriter, in connection with such Investor’s due diligence requirements if any, the Company shall make available for inspection by (i) any Investor, (ii) Legal Counsel, (iii) any underwriter participating in any disposition pursuant to the Registration Statement, (iv) legal counsel representing any such underwriter with respect to any disposition pursuant to the Registration Statement and (v) one firm of accountants or other agents retained by the Investors (collectively, the “Inspectors”) all pertinent financial, corporate and other records (collectively, the “Records”) as shall be reasonably deemed necessary by each Inspector to fulfill due diligence obligation of such Investor and cause the Company’s chief executive officer, chief financial officer, executive vice presidents and secretary to be reasonably available to the Inspectors for questions regarding the Records and to supply all information which any Inspector may reasonably request; provided, however, that each Inspector shall agree in writing to hold in strict confidence and shall not make any disclosure (except to any other Inspector that is subject to its own confidentiality agreement) or use of any Record or other information which the Company determines in good faith to be confidential, and of which determination the Inspectors are so notified, unless (x) the release of such Records is ordered pursuant to a subpoena or a final, non-appealable order from a court or government body of competent jurisdiction or (y) the information in such Records has been made generally available to the public other than by disclosure in violation of this or any other Transaction Document. Nothing herein (or in any other confidentiality agreement between the Company and any Investor) shall be deemed to limit the Investors’ ability to sell Registrable Securities in a manner that is 

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otherwise consistent with this Agreement and the other Transaction Documents, applicable laws and regulations.

(k)

The Company shall hold in confidence and not make any disclosure of information concerning an Investor provided to the Company unless (i) disclosure of such information is necessary to comply with federal or state securities laws, (ii) the disclosure of such information is necessary to avoid or correct a misstatement or omission in any Registration Statement, (iii) the release of such information is ordered pursuant to a subpoena or final, non-appealable order from a court or government body of competent jurisdiction, or (iv) such information has been made generally available to the public other than by disclosure in violation of this Agreement or any other Transaction Document. The Company agrees that it shall, upon learning that disclosure of such information concerning an Investor is sought in or by a court or government body of competent jurisdiction or through other means, give prompt written notice to such Investor and allow such Investor, at the Investor’s expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, such information.

(l)

The Company shall use its reasonable best efforts to (i) cause all the Registrable Securities covered by the Registration Statement to be listed or quoted on each securities exchange or trading market on which securities of the same class or series issued by the Company are listed or quoted, and (ii) without limiting the generality of the foregoing, arrange for at least three market makers to register with the Financial Industry Regulatory Authority, Inc. (“FINRA”) as such with respect to such Registrable Securities, with each such market maker posting quotations with respect to the Registrable Securities on each of the OTC Bulletin Board and the OTC Markets.  The Company shall pay all fees and expenses in connection with satisfying its obligation under this Section 3(l).

(m)

The Company shall cooperate with the Investors that hold Registrable Securities being offered and the underwriters, if any, and, to the extent applicable pursuant to the Transaction Documents, facilitate the timely preparation and delivery of certificates (not bearing any restrictive legend) representing the Registrable Securities to be offered pursuant to a Registration Statement and enable such certificates to be in such names and denominations or amounts, as the case may be, and/or the timely issuance of the Registrable Securities to be offered pursuant to a Registration Statement through the Direct Registration System (DRS) of DTC or crediting of the Registrable Securities to be offered pursuant to a Registration Statement to the applicable account (or accounts) with DTC through its Deposit/Withdrawal At Custodian (DWAC) system, in any such case as the Investors may reasonably request.

(n)

If requested by an Investor, and if Company’s counsel reasonably deems such inclusion not inconsistent with the 1933 Act or the 1934 Act or other applicable law, the Company shall (i) as soon as practicable incorporate in a prospectus supplement or post-effective amendment such information as an Investor reasonably requests to be included therein relating to the sale and distribution of Registrable Securities, including information with respect to such Investor, the number of Registrable Securities being offered or sold by such Investor, the purchase price being paid therefor and any other 

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terms of the offering of the Registrable Securities to be sold in such offering; (ii) as soon as practicable make all required filings of such prospectus supplement or post-effective amendment after being notified of the matters to be incorporated in such prospectus supplement or post-effective amendment; and (iii) as soon as practicable supplement or make amendments to any Registration Statement if reasonably requested by an Investor holding any such Registrable Securities.

(o)

The Company shall make generally available to its security holders as soon as practicable, but not later than ninety (90) days after the close of the period covered thereby, an earnings statement (in form complying with, and in the manner provided by, the provisions of Rule 158 under the 1933 Act) covering a twelve (12) month period beginning not later than the first day of the Company’s fiscal quarter next following the effective date of a Registration Statement.

(p)

The Company shall otherwise use its reasonable best efforts to comply with all applicable rules and regulations of the SEC in connection with any registration hereunder.

(q)

Within two (2) Business Day after the Registration Statement which covers Registrable Securities is declared effective by the SEC, the Company shall deliver, or shall cause legal counsel for the Company to deliver, to the transfer agent for such Registrable Securities (with copies to the Investors whose Registrable Securities are included in such Registration Statement) confirmation that such Registration Statement has been declared effective by the SEC in the form attached hereto as Exhibit A, provided, that if the Company changes its transfer agent, it shall timely deliver any previously delivered notices under this Section 3(q) and any subsequent notices to such new transfer agent. 

(r)

Notwithstanding anything to the contrary in Section 3(g), at any time after the effective date of the applicable Registration Statement, the Company may delay the disclosure of material non-public information concerning the Company the disclosure of which at the time is not, in the good faith opinion of the Board of Directors of the Company and its counsel, in the best interest of the Company and not, in the opinion of counsel to the Company, otherwise required (a “Grace Period”); provided, that the Company shall (i) promptly notify the Investors in writing of the existence of material non-public information giving rise to a Grace Period (provided that, during an MNPI Restriction Period with respect to an Investor, in any notice to such Investor the Company shall not disclose the content of such material non-public information to such Investor) and the date on which the Grace Period will begin, and (ii) as soon as such date may be determined, promptly notify the Investors in writing of the date on which the Grace Period ends; and, provided, further, that (A) no Grace Period shall exceed twenty-five (25) consecutive days, (B) during any three hundred sixty five (365) day period, such Grace Periods shall not exceed an aggregate of seventy five (75) days, and (C) the first day of any Grace Period must be at least ten (10) trading days after the last day of any prior Grace Period (each Grace Period that satisfies all of the requirements of this Section 3(r) being referred to as an “Allowable Grace Period”).  For purposes of determining the length of a Grace Period above, the Grace Period shall begin on and include the date the 

12

Investors receive the notice referred to in clause (i) and shall end on and include the later of the date the Investors receive the notice referred to in clause (ii) and the date referred to in such notice.  The provisions of Section 3(h) hereof shall not be applicable during the period of any Allowable Grace Period.  Upon expiration of the Grace Period, the Company shall again be bound by the first sentence of Section 3(g) with respect to the information giving rise thereto unless such material non-public information is no longer applicable.  Notwithstanding anything to the contrary, the Company shall cause its transfer agent to deliver unlegended shares of Common Stock to a transferee of an Investor in accordance with the terms of the Financing Agreement in connection with any sale of Registrable Securities with respect to which an Investor has entered into a contract for sale, and delivered a copy of the prospectus included as part of the applicable Registration Statement, in each case prior to the Investor’s receipt of the Suspension Notice related to the Grace Period and for which the Investor has not yet settled.

(s)

The Company shall engage and maintain a transfer agent and registrar of all such Registrable Securities not later than the effective date of the applicable Registration Statement.

(t)

The Company shall use its reasonable best efforts to cause the Registrable Securities covered by the applicable Registration Statement to be registered with or approved by such other governmental agencies or authorities in the United States as may be necessary to consummate the disposition of such Registrable Securities.

(u)

To the extent not made by the underwriters in the case of an underwritten offering, the Company shall make such filings with FINRA, pursuant to FINRA Rule 5110 or otherwise (including providing all required information and paying required fees thereto), as and when requested by any Investor, or in the case of an underwritten offering, by any underwriter, and make all other filings and take all other actions reasonably necessary to expedite and facilitate the disposition by the Investors of Registrable Securities pursuant to a Registration Statement, including promptly responding to any comments received from FINRA.

(v)

The Company shall not register any of its securities for sale for its own account (other than for issuance to employees, directors and consultants, of the Company under an employee benefit plan or for issuance in a business combination transaction), except pursuant to a firm commitment underwritten public offering.  

(w)

The Company shall enter into such customary agreements (including, in the case of underwritten offering, an underwriting agreement) and take such other actions as any of the Investors or underwriters, if any, may reasonably request in order to expedite and facilitate the disposition of the Registrable Securities covered by a Registration Statement.

4.

OBLIGATIONS AND COVENANTS OF THE INVESTORS.

(a)

Each Investor, by such Investor’s acceptance of the Registrable Securities, agrees to cooperate with the Company as reasonably requested by the Company in 

13

connection with the preparation and filing of any Registration Statement hereunder, unless such Investor has not elected to include any of such Investor’s Registrable Securities in such Registration Statement pursuant to Section 2 hereof.  It shall be a condition precedent to the obligations of the Company to complete any registration pursuant to this Agreement with respect to Registrable Securities of a particular Investor that such Investor shall furnish to the Company such information regarding itself, the Registrable Securities held by it and the intended method of disposition of the Registrable Securities held by it as shall be reasonably required to effect and maintain the effectiveness of the registration of such Registrable Securities.

(b)

Each Investor agrees that, upon receipt of any Suspension Notice from the Company, such Investor will discontinue disposition of Registrable Securities pursuant to any Registration Statement covering such Registrable Securities until such Investor’s receipt of the copies of the supplemented or amended prospectus contemplated by Section 3(g) or receipt of notice from the Company in writing that no supplement or amendment is required. 

(c)

Upon a request by the Company, each Investor will, as soon as practicable, but in no event later than two (2) Business Days after such request, notify the Company whether such Investor continues to hold Registrable Securities.

(d)

No Investor may participate in any registration hereunder which is underwritten unless such Investor (i) agrees to sell such Investor’s Registrable Securities on the basis provided in any underwriting arrangements and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements; provided, that no holder of Registrable Securities included in any underwritten registration shall be required to make any representations or warranties to the Company or the underwriters (other than representations and warranties regarding such holder, such holder's ownership of its shares of Common Stock to be sold in the offering and such holder's intended method of distribution) or to undertake any indemnification obligations to the Company or the underwriters with respect thereto, except as otherwise provided in Section 6.

5.

EXPENSES OF REGISTRATION.

All expenses, other than underwriting discounts and commissions or other charges of any broker-dealer acting on behalf of the Investors, incurred in connection with registrations, filings or qualifications pursuant to Sections 2 and 3, including all registration, listing and qualifications fees, printers and accounting fees and fees and disbursements of counsel for the Company shall be paid by the Company. The Company shall also reimburse the Investors for the reasonable fees and disbursements of Legal Counsel in connection with registrations, filings or qualifications pursuant to Sections 2 and 3 of this Agreement, up to an aggregate of $50,000 per registration.

6.

INDEMNIFICATION.

In the event any Registrable Securities are included in a Registration Statement (provided, that for the purpose of this Section 6, the term “Registration Statement” shall include 

14

any preliminary prospectus, final prospectus, free writing prospectus, exhibit, supplement or amendment included in or relating to, and any document incorporated or deemed to be incorporated by reference in, the Registration Statement, as defined in Section 1(e): 

(a)

The Company agrees to indemnify, hold harmless and defend each Investor, the directors, officers, partners, managers, members, investment managers, employees, affiliates, agents and representatives of, and each Person, if any, who controls, any Investor within the meaning of the 1933 Act or the 1934 Act (each, an “Indemnified Person”), against any losses, claims, damages, liabilities, judgments, fines, penalties, charges, costs, reasonable attorneys’ fees, amounts paid in settlement (if such settlement is effected with the written consent of the party from which indemnification is sought, which consent shall not be unreasonably withheld, conditioned or delayed) or expenses, joint or several (collectively, “Claims”), incurred in investigating, preparing or defending any action, claim, suit, inquiry, proceeding, investigation or appeal taken from the foregoing by or before any court or governmental, administrative or other regulatory agency, body or the SEC, whether pending or threatened (“Indemnified Damages”), to which any of them may become subject insofar as such Claim (or actions or proceedings, whether commenced or threatened, in respect thereof) or Indemnified Damages arise out of, or are based upon: (i) any untrue statement or alleged untrue statement of a material fact in the Registration Statement or any post-effective amendment thereto or in any filing made in connection with the qualification of the offering under the securities or other “blue sky” laws of any jurisdiction in which Registrable Securities are offered (“Blue Sky Filing”), or the omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements made therein not misleading, (ii) any untrue statement or alleged untrue statement of a material fact contained in any prospectus, including any preliminary prospectus, free writing prospectus or final prospectus (as amended or supplemented, if the Company files any amendment thereof or supplement thereto with the SEC, and including all information incorporated by reference therein), or the omission or alleged omission to state therein any material fact necessary to make the statements made therein, in the light of the circumstances under which they were made, not misleading, (iii) any violation or alleged violation by the Company of the 1933 Act, the 1934 Act, any other law, including any state securities law, or any rule or regulation thereunder relating to the offer or sale of Registrable Securities pursuant to a Registration Statement or (iv) any breach of this Agreement (the matters in the foregoing clauses (i) through (iv) being, collectively, “Violations”).  Subject to Section 6(c), the Company shall reimburse the Indemnified Persons, promptly as such expenses are incurred and are due and payable, for any legal fees or other reasonable expenses incurred by them in connection with investigating or defending any such Claim. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 6(a): (x) shall not apply to a Claim or Indemnified Damages sought by an Indemnified Person to the extent arising out of or based upon a Violation which occurs in reliance upon and in conformity with information furnished in writing to the Company by such Indemnified Person expressly for use in connection with the preparation of the Registration Statement or any such amendment thereof or supplement thereto; and (y) shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Company, which consent shall not be unreasonably withheld, conditioned or delayed. Such indemnity shall 

15

remain in full force and effect regardless of any investigation made by or on behalf of the Indemnified Person and shall survive the transfer of the Registrable Securities by the Investors pursuant to Section 9. 

(b)

In connection with any Registration Statement in which an Investor’s Registrable Securities are included, such Investor agrees to severally and not jointly indemnify, hold harmless and defend the Company, each of its directors, each of its officers who signs the Registration Statement and each Person, if any, who controls the Company within the meaning of the 1933 Act (each, an “Indemnified Party”), to the same extent and in the same manner as is set forth in Section 6(a) with respect to the Indemnified Persons, against any Claim or Indemnified Damages to which any of them may become subject insofar as such Claim or Indemnified Damages arise out of or are based upon (i) any Violation, to the extent, and only to the extent, that such Violation occurs in reliance upon and in conformity with written information furnished to the Company by such Investor expressly for use in connection with the preparation of the Registration Statement or any amendment thereof or supplement thereto; or (ii) the use by such Investor of an outdated or defective prospectus after the Company has notified such Investor, through the Company’s delivery of a Suspension Notice, that the prospectus is outdated or defective; and, subject to Section 3(c), such Investor will reimburse any legal or other expenses reasonably incurred by an Indemnified Party in connection with investigating or defending any such Claim; provided, however, that the indemnity agreement contained in this Section 6(b) and the agreement with respect to contribution contained in Section 7 shall not apply to amounts paid in settlement of any Claim or Indemnified Damages if such settlement is effected without the prior written consent of such Investor, which consent shall not be unreasonably withheld, conditioned or delayed; provided, further, that an Investor shall be liable under this Section 6(b) for only that amount of a Claim or Indemnified Damages as does not exceed the net proceeds to such Investor as a result of the sale of Registrable Securities pursuant to the Registration Statement giving rise to such indemnification obligation. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Indemnified Party and shall survive the transfer of the Registrable Securities by the Investors pursuant to Section 9.

(c)

Promptly after receipt by an Indemnified Person or Indemnified Party under this Section 6 of the written threat of or notice of the commencement of any action or proceeding (including any governmental action or proceeding) involving a Claim or Indemnified Damages, such Indemnified Person or Indemnified Party shall, if a Claim in respect thereof is to be made against any indemnifying party under this Section 6, promptly deliver to the indemnifying party a written notice of the written threat of or notice of the commencement of such action or proceeding. In case any such action or proceeding is brought against any Indemnified Party or Indemnified Person and such Indemnified Party or Indemnified Person seeks or intends to seek indemnity from an indemnifying party, the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel mutually satisfactory to the indemnifying party and the Indemnified Person or the Indemnified Party, as the case may be; provided, however, that an Indemnified Party or Indemnified 

16

Person shall have the right to retain its own counsel with the fees and expenses of such counsel for such Indemnified Party or Indemnified Person (as applicable) to be paid by the indemnifying party if the defendants in any such action or proceeding include both the Indemnified Party or Indemnified Person, on the one hand, and the indemnifying party, on the other hand, and, the Indemnified Party or Indemnified Person (as applicable) shall have concluded, based on an opinion of counsel reasonably satisfactory to the indemnifying party, that the representation by such counsel of the Indemnified Person or Indemnified Party (as applicable) and the indemnifying party would be inappropriate due to actual or potential differing interests between such Indemnified Person or Indemnified Party and any other party represented by such counsel in such proceeding and/or that there may be legal defenses available to it and/or any other Indemnified Party or Indemnified Person which are different from or additional to those available to the indemnifying party; provided, further, that the indemnifying party shall not be responsible for the reasonable fees and expenses of more than one (1) separate legal counsel for all such Indemnified Persons or Indemnified Parties. In the case of an Indemnified Person, legal counsel referred to in the immediately preceding sentence shall be selected by the Investors holding at least a majority of the Registrable Securities included in the Registration Statement to which the Claim or Indemnified Damages relate. The Indemnified Party or Indemnified Person shall reasonably cooperate with the indemnifying party in connection with any negotiation or defense of any such action or proceeding or Claim or Indemnified Damages by the indemnifying party and shall furnish to the indemnifying party all information reasonably available to the Indemnified Party or Indemnified Person which relates to such action or proceeding or Claim or Indemnified Damages. The indemnifying party shall keep the Indemnified Party or Indemnified Person reasonably apprised at all times as to the status of the defense or any settlement negotiations with respect thereto. No indemnifying party shall be liable for any settlement of any action or proceeding effected without its prior written consent; provided, however, that the indemnifying party shall not unreasonably withhold, delay or condition its consent. No indemnifying party shall, without the prior written consent of the Indemnified Party or Indemnified Person, as the case may be, consent to entry of any judgment or enter into any settlement or other compromise which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party or Indemnified Person (as applicable) of a full release from all liability with respect to such Claim or Indemnified Damages or which includes any admission as to fault or culpability on the part of such Indemnified Party or Indemnified Person.  The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action or proceeding shall not relieve such indemnifying party of any liability to the Indemnified Person or Indemnified Party under this Section 6, except to the extent that the indemnifying party is materially prejudiced in its ability to defend such action or proceeding as a result of such failure.

(d)

No Person involved in the sale of Registrable Securities who is guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) in connection with such sale shall be entitled to indemnification from any Person who is not guilty of such fraudulent misrepresentation.

17

(e)

The indemnification required by this Section 6 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or Indemnified Damages are incurred.

(f)

The indemnity agreements contained herein shall be in addition to (i) any cause of action or similar right of the Indemnified Party or Indemnified Person against the indemnifying party or others, and (ii) any liabilities the indemnifying party may be subject to pursuant to the law.  Notwithstanding the foregoing, in the event that any of the provisions of Section 13.12 of the Financing Agreement and this Section 6 may be deemed to both be applicable to any of the same losses, claims, damages, liabilities, judgments, fines, penalties, charges, costs, reasonable attorneys’ fees, amounts paid in settlement or expenses incurred in investigating, preparing or defending any action, claim, suit, inquiry, proceeding, investigation or appeal taken from the foregoing by or before any court or governmental, administrative or other regulatory agency, body or the SEC, whether pending or threatened, the provisions of this Section 6 shall control and such provisions of Section 13.12 of the Financing Agreement shall be inoperative.

7.

CONTRIBUTION.

To the extent any indemnification by an indemnifying party is prohibited or limited by law, the indemnifying party agrees to, in lieu of indemnifying such Indemnified Person or Indemnified Party, as applicable, make the maximum contribution with respect to any amounts for which it would otherwise be liable under Section 6 to the fullest extent permitted by law; provided, however, that: (i) no contribution shall be made under circumstances where the maker would not have been liable for indemnification under the fault standards set forth in Section 6 of this Agreement; (ii) no Person involved in the sale of Registrable Securities which Person is guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) in connection with such sale shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation; and (iii) contribution by any seller of Registrable Securities shall be limited in amount to the net amount of proceeds received by such seller from the sale of such Registrable Securities pursuant to such Registration Statement, less the amount of any damages that such Investor has otherwise been required to pay in connection with such sale.

8.

REPORTS UNDER THE 1934 ACT; FILINGS

(a)

With a view to making available to the Investors the benefits of Rule 144 promulgated under the 1933 Act or any other similar rule or regulation of the SEC that may at any time permit the Investors to sell securities of the Company to the public without registration (“Rule 144”), at all times during which there are shares of Registrable Securities outstanding (or issuable upon exercise of outstanding Warrants or other securities, without giving effect to any limitations on exercise of the Warrants or other securities) that have not been previously (i) sold to or through a broker or dealer or underwriter in a public distribution or (ii) sold in a transaction exempt from the registration and prospectus delivery requirements of the 1933 Act under Section 4(a)(1) thereof, in the case of either clause (i) or clause (ii) in such a manner that, upon the consummation of such sale, all transfer restrictions and restrictive legends with respect to such shares are removed upon the consummation of such sale, the Company agrees to:

18

(i)

make and keep public information available, as those terms are understood and defined in Rule 144;

(ii)

file with the SEC in a timely manner all reports and other documents required of the Company under the 1934 Act, so long as the Company remains subject to such requirements and the filing of such reports and other documents is required for the applicable provisions of Rule 144; and

(iii)

furnish to each Investor so long as such Investor owns Registrable Securities, promptly upon request, (i) a written statement by the Company, if true, that it has complied with the reporting requirements of Rule 144 and the 1934 Act, (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (iii) such other information as may be reasonably requested to permit the Investors to sell such securities pursuant to Rule 144 without registration.

(b)

For so long as the Principal Market is not a National Exchange, the Company shall use its reasonable best efforts to facilitate trading of the Common Stock on the Principal Market and, without limiting the foregoing, the Company shall file all necessary reports, at its expense, to publish all information so as to have available “current public information” in Standard & Poor’s Corporation Records or Mergent’s Manual for state “blue sky” exemption purposes.

9.

ASSIGNMENT OF REGISTRATION RIGHTS.

The rights under this Agreement shall be automatically assignable by the Investors to any transferee or assignee of all or any portion of such Investor’s Registrable Securities (or of any Warrants or other securities upon exercise, conversion or exchange of which Registrable Securities are issuable) if: (i) the Investor agrees in writing with the transferee or assignee to assign such rights, and a copy of such agreement is furnished to the Company within a reasonable time after such assignment; (ii) the Company is, within a reasonable time after such transfer or assignment, furnished with written notice of (a) the name and address of such transferee or assignee and (b) the securities with respect to which such registration rights are being transferred or assigned; (iii) immediately following such transfer or assignment the further disposition of such securities by the transferee or assignee is restricted under the 1933 Act or applicable state securities laws; (iv) at or before the time the Company receives the written notice contemplated by clause (ii) of this sentence the transferee or assignee agrees in writing with the Company to be bound by all of the applicable provisions contained herein; and (v) such transfer or assignment shall have been made in accordance with the applicable requirements of the Financing Agreement and the Transaction Documents, as applicable.

10.

AMENDMENT OF REGISTRATION RIGHTS.

Provisions of this Agreement may be amended and the observance thereof may be waived (either generally or in a particular instance and either, retroactively or prospectively) only with the written consent of the Company and the Required Holders. Any amendment or waiver effected in accordance with this Section 10 shall be binding upon each Investor and the 

19

Company. No such amendment shall be effective to the extent that it applies to less than all of the holders of the Registrable Securities. No consideration shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of any of this Agreement unless the same consideration also is offered to all of the Investors.

11.

MISCELLANEOUS.

(a)

A Person is deemed to be a holder of Registrable Securities (or a transferee or assignee of Registrable Securities, as applicable) whenever such Person owns or is deemed to own of record such Registrable Securities (or the Warrants or other securities upon exercise, conversion or exchange of which such Registrable Securities are issuable, without giving effect to any limitations on exercise of the Warrants or other securities).  If the Company receives conflicting instructions, notices or elections from two or more Persons with respect to the same Registrable Securities, the Company shall act upon the basis of instructions, notice or election received from the record owner of such Registrable Securities (or the Warrants or other securities upon exercise, conversion or exchange of which such Registrable Securities are issuable).

(b)

Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one (1) Business Day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:

		
	If to the Company:

	 

	 
	 

	Social Reality, Inc.

456 Seaton Street

Los Angeles, CA 90013

Attention:  Christopher Miglino

Telephone:  (323) 283-8505

Email:chris@socialreality.com

	 

	 
	 

	with a copy (for informational purposes only) to:

	 

	 
	 

	Sidley Austin LLP

787 Seventh Avenue

New York, NY 10019

Telephone: (212) 839-5480

Attention:  Alan Jakimo

	 

20

		
	If to Legal Counsel:

	 

	 
	 

	Katten Muchin Rosenman LLP

525 West Monroe Street

Chicago, Illinois 60661

Telephone: 

(312) 902-5297 and (312) 902-5612

Facsimile:

(312) 577-4408 and (312) 577-4423

Attention:

Mark R. Grossmann, Esq. and

Mark J. Reyes, Esq.

	 

	 
	 

If to a Buyer, to its address and facsimile number set forth on the Schedule of Buyers attached hereto, with copies to such Buyer’s representatives as set forth on such Schedule of Buyers, or in any case to such other address and/or facsimile number and/or to the attention of such other individual as the recipient party has specified by written notice given to each other party five (5) days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender’s facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (C) provided by a courier or overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile deposit with a nationally recognized overnight delivery service in accordance with clause (i), (ii) or (iii) above, respectively.  Notwithstanding the foregoing, the Company or its counsel may transmit versions of any Registration Statement (or any amendments or supplements thereto) to Legal Counsel in satisfaction of its obligations under Sections 3(c) and (d) to permit Legal Counsel to review such Registration Statement prior to filing (and solely for such purpose) by email to mg@kattenlaw.com and mark.reyes@kattenlaw.com (or such other e-mail address as has been provided for such purpose by Legal Counsel) and provided that delivery and receipt of such transmission shall be confirmed by electronic, telephonic or other means.

(c)

Failure of any party to exercise any right or remedy under this Agreement or otherwise, or delay by a party in exercising such right or remedy, shall not operate as a waiver thereof.

(d)

All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of Illinois, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Illinois or any other jurisdictions) that would cause the application of the laws of any jurisdiction other than the State of Illinois. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in The City of Chicago for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal 

21

service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

(e)

This Agreement, the other Transaction Documents and the instruments referenced herein and therein constitute the entire agreement among the parties hereto with respect to the subject matter hereof and thereof. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein and therein. This Agreement, the other Transaction Documents and the instruments referenced herein and therein supersede all prior agreements and understandings among the parties hereto with respect to the subject matter hereof and thereof.

(f)

Subject to the requirements of Section 9, this Agreement shall inure to the benefit of and be binding upon the permitted successors and assigns of each of the parties hereto.

(g)

The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

(h)

This Agreement and any amendments hereto may be executed and delivered in two or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement, and shall become effective when counterparts have been signed by each party hereto and delivered to the other parties hereto, it being understood that all parties need not sign the same counterpart.  In the event that any signature to this Agreement or any amendment hereto is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.  No party hereto shall raise the use of a facsimile machine or e-mail delivery of a “.pdf” format data file to deliver a signature to this Agreement or any amendment hereto or the fact that such signature was transmitted or communicated through the use of a facsimile machine or e-mail delivery of a “.pdf” format data file as a defense to the formation or enforceability of a contract and each party hereto forever waives any such defense.  

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(i)

Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

(j)

All consents and other determinations required to be made by the Investors pursuant to this Agreement shall be made, unless otherwise specified in this Agreement, by the Required Holders.

(k)

The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent and no rules of strict construction will be applied against any party.

(l)

Each Buyer and each holder of the Securities shall have all rights and remedies set forth in the Transaction Documents and all rights and remedies that such Buyers and holders have been granted at any time under any other agreement or contract and all of the rights that such Buyers and holders have under any law.  Any Person having any rights under any provision of this Agreement shall be entitled to enforce such rights specifically (without posting a bond or other security or proving actual damages), to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law or in equity.

(m)

This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns and, to the extent provided in Sections 6(a) and (b), each Indemnified Person and Indemnified Party, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person. 

(n)

The Company shall not grant any Person any registration rights with respect to shares of Common Stock or any other securities of the Company other than registration rights that will not adversely affect the rights of the Investors hereunder (including by limiting in any way the number of Registrable Securities that could be included in any Registration Statement pursuant to Rule 415), and shall not otherwise enter into any agreement that is inconsistent with the rights granted to the Investors hereunder.

(o)

The obligations of each Investor hereunder are several and not joint with the obligations of any other Investor, and no provision of this Agreement is intended to confer any obligations on any Investor vis-à-vis any other Investor. Nothing contained herein, and no action taken by any Investor pursuant hereto, shall be deemed to constitute the Investors as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Investors are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated herein.

(p)

Unless the context otherwise requires, (i) all references to Sections, Exhibits or Annexes are to Sections, Exhibits or Annexes contained in or attached to this Agreement, (ii) words in the singular or plural include the singular and plural and 

23

pronouns stated in either the masculine, the feminine or neuter gender shall include the masculine, feminine and neuter and (iii) the use of the word “including” in this Agreement shall be by way of example rather than limitation.

IN WITNESS WHEREOF, each Buyer and the Company has caused its signature page to this Agreement to be duly executed as of the date first written above.

				
	 
	COMPANY:

	 
	 

	 
	SOCIAL REALITY, INC.

	 
	 

	 
	By: 

	/s/ Christopher Miglino

	 
	Name:  

	Christopher Miglino

	 
	Title:

	 Chief Executive Officer

	 
	 

	 
	BUYERS: 

	 
	 

	 
	VPC SBIC I, LP

	 
	 

	 
	By:

	Victory Park Capital Advisors, LLC,

	 
	 
	its investment manager 

	 
	 
	 
	 

	 
	 
	By: 

	/s/ Scott Zemnick

	 
	 
	Name: 

	Scott Zemnick

	 
	 
	Title: 

	General Counsel

24

SCHEDULE OF BUYERS

			
	Buyer

	Buyer’s Address

and Facsimile Number

	Buyer’s Representative’s Address

and Facsimile Number

	 
	 
	 

	VPC SBIC I, LP

	227 W. Monroe Street, Suite 3900

Chicago, IL 60606

Attention: Scott Zemnick, Esq.

Facsimile: 312.701.0794

Telephone: 312.705.2786

	Katten Muchin Rosenman LLP

525 West Monroe Street, Suite 1900

Chicago, Illinois 60661

Telephone:

312.902.5297 and 

312.902.5612

Facsimile: 

312.577.4408 and 

312.577.4423

Attention:

Mark R. Grossmann, Esq. 

and Mark J. Reyes, Esq.

A-1EMPLOYMENT AGREEMENT

Exhibit 10.27

EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT (“Agreement”), dated as of October 30, 2014, by and between Social Reality, Inc., a Delaware corporation (the “Employer”) and Richard Steel, an individual residing at _______________ (the “Executive”).

RECITALS

WHEREAS, the Employer owns and operates an Internet-based advertising agency operating on a worldwide basis;

WHEREAS, the Employer wishes to employ the Executive as its President; and

WHEREAS, the Employer and the Executive desire to set forth the terms pursuant to which the Executive will be employed by the Employer as its President.

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

Section 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 30, 2014 (the “Effective Date”) and expiring October 30, 2018.  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 his) intent not to renew the Initial Term or 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. 

Section 2.

Duties.  

The Executive shall report to the Chief Executive Officer of the Employer and have the title of President of the Employer.  The Executive or a designee of the Executive (selected in the Executive’s sole discretion) shall be nominated for election as a member of the Employer’s board of directors (the “Board”) at each annual meeting of shareholders of the Employer occurring during the Term.  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 materially interfere with or materially delay the performance of the Executive’s duties hereunder (which duties shall be performed on a first-priority basis); provided, that, it is understood and agreed that service on a board of a non-competing company, in and of itself, shall not be deemed to so delay or interfere with the Executive’s duties hereunder, unless the Board shall have determined in good faith that such other company is directly competitive with the Employer.

Section 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 $114,000.00 per annum.  The Board may from time to time further increase, but not decrease, the Base Salary, in its sole discretion. The Base Salary shall be payable in accordance with the customary payroll practices of the Employer.  

(b)

Bonus.  Subject to Section 3(g), the Executive shall receive a guaranteed annual bonus of $136,000 payable on January 31st of each year (the “Annual Bonus”); provided, with respect to the period ending on the expiration of the Initial Term (October 30, 2018), the bonus for such period shall be payable on January 31, 2019.

(c)

Discretionary Bonus.  Subject to Section 3(g), at the sole discretion of the Board, the Executive shall be eligible to receive an annual discretionary bonus (the “Discretionary Bonus”) during the prior year.  Any awarded Discretionary Bonus shall be paid within sixty (60) days of being granted. Executive acknowledges that the Discretionary Bonus may be comprised of cash or non-cash compensation as determined at the sole discretion of the Board or its designee. The provisions of this Section 3(c) in no way guarantee or entitle the Executive to any discretionary bonus whatsoever, the award of which is entirely discretionary.

(d)

Equity Incentives. On the Effective Date, the Executive shall receive an option to purchase 600,000 shares of the Employer’s Class A common stock, 

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$0.001 par value per share at an exercise price of $1.50 per share (in each case subject to adjustment in the event of a stock split, stock dividend, recapitalization or similar event) (the “Option”).  The Option shall be granted under the Employer’s 2012 Equity Compensation Plan and, except as otherwise provided in Section 5 hereof, shall vest and become exercisable with respect to 50% of the shares subject thereto on the third (3) anniversary of the Effective Date and as to 50% of the shares subject thereto on the fourth anniversary of the Effective Date.  

(e)

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.  In addition, the Executive shall be entitled to obtain from the Employer’s PEO (at Employer’s sole cost and expense) an insurance policy on the Executive’s life for the benefit of the Executive and his designated beneficiaries in an amount equal to not less than two (2) times the sum of the Executive’s Base Salary (the “Life Insurance Policy”).  The Employer shall, on a monthly basis, promptly reimburse the Executive for the costs and expense (including the payment of any premium) related to such Life Insurance Policy.   Notwithstanding the foregoing and except with respect to the Life Insurance Policy, 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.  

(f)

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 he reduces the balance of his accrued PTO days below the PTO Accrual Cap.  

(g)

Earnout Consideration.  To the extent the payment of the Annual Bonus and the cash portion of any Discretionary Bonus would result in a reduction in the Earnout Consideration (as defined in the Stock Purchase Agreement, dated October 30, 2014, by and among the Employer, the Executive and Steel Media, Inc. (the “SPA”)) otherwise payable to the Executive thereunder by an amount greater than the sum of (x) the Annual Bonus and (y) the cash portion of any Discretionary Bonus, then the applicable portion of such Annual Bonus and/or Discretionary Bonus resulting in such reduction shall not be paid for the applicable period.

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Section 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).  The 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 his duties and obligations under this Agreement in excess of $2,500.00 (or such higher limit as permitted by the Board or the Employer’s CEO).

Section 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 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 unpaid bonus under Sections 3(b) and 3(c) for the preceding year, payable on the date that such bonus is due and payable (but not later than March 15th of the calendar year in which the Termination Date occurs); (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 

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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 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 his eligible dependents) during the Severance Period (or such earlier date that COBRA coverage expires).  For the avoidance of doubt, nothing in clause (iii) of this Section 5(b) shall apply to the Earnout Shares or the Escrow Shares (each as defined in the SPA).  

If the Executive resigns for Good Reason prior to the expiration of the Second Earnout Period (as defined in the SPA), then, notwithstanding anything in the SPA to the contrary, the Employer’s obligation to pay the Earnout Consideration on the Separation Date (as each such term is defined in the SPA) pursuant to Section 2.5(r) of the SPA shall be suspended if the Employer disputes in good faith the existence of Good Reason, by delivering a detailed written notice of the basis of such dispute to the Executive within five (5) days after the Termination Date.  The suspension shall, without further action, notice or deed, be lifted and the Earnout Consideration, together with accrued and unpaid interest thereon, shall be due and payable immediately upon the earliest to occur of (x) mutual written agreement of the Employer and the Executive, (y) a court of competent jurisdiction shall determine that the Executive’s resignation was for Good Reason, or (z) a Default or an Event of Default (as each of those terms is defined in that certain Financing Agreement, of even date herewith, by and among the Employer, as borrower, the guarantors from time to time party thereto, the lenders party thereto and Victory Park Management, LLC, as agent, as in effect on the date hereof) shall have occurred (whether or not waived, cured or otherwise resolved).  Interest shall accrue on the Earnout Consideration from and after the Termination Date, at the rate of 10% per annum, until the date of its indefeasible payment in full.

(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 his 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 his eligible dependents elect COBRA coverage, the Employer shall waive the cost of such coverage (for the Executive and his eligible dependents) during the Severance Period (or such 

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earlier date that COBRA coverage expires).  In addition, the Executive (or his estate and heirs) 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 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; (ii) the Severance Amount, which Severance Amount shall be payable, subject to Section 16, in equal installments over the Severance Period 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; and (iii) if the Executive elects COBRA coverage, the Employer shall waive the cost of such coverage (for the Executive and his eligible dependents) during the Severance Period (or such earlier date that COBRA coverage expires).  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.

(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)

During the Earnout Payment Period, “Cause” shall mean: (1) the Executive’s gross negligence in the performance of the material responsibilities of his office or position; (2) the Executive’s intentional failure to perform the material responsibilities of his 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 material breach of this Agreement.  The Executive shall be given prior written notice of 

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the termination of his 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 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)

After the expiration of the Earnout Payment Period, “Cause” shall mean: (1) the Executive’s negligence in the performance of the material responsibilities of his office or position; (2) the Executive’s failure to perform the material responsibilities of his 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 his 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 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.

(iii)

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

(iv)

During the Earnout Payment Period, “Good Reason” shall mean the occurrence of any of the following: (a) a reduction of the Executive’s authority, functions, duties or responsibilities, which would cause his position with the Employer to become of materially less responsibility, importance or scope than his position on the date of this Agreement (other than during any period of illness or disability); (b) the failure of the shareholders to appoint the Executive to the Board within sixty (60) days following the Effective Date, or the Executive’s removal as a director of the Board, in each case, without his consent; (c) a breach by the Employer of a material term of the Agreement; (d) the relocation of the Executive’s principal office location, without the Executive’s consent, to a location that is at least ten (10) miles from the prior location with the Executive’s consent; (e) 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 proportionately reduced; or (f) any failure of the Board to nominate the Executive or his designee for election to the Board at an annual meeting of shareholders or 

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failure of the shareholders of the Employer to elect the Executive or his designee to the Board at any annual meeting occurring during the Term (unless the Executive or any designee of the Executive is prohibited by law from serving as a director of the Board); provided, however, that the Executive must notify the Employer within ninety (90) days of the occurrence of any of the foregoing conditions that he 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 his resignation, or resigns more than six (6) months after the initial existence of the condition, his resignation will not be deemed to be for “Good Reason.” 

(v)

After the expiration of the Earnout Payment Period, “Good Reason” shall mean the occurrence of any of the following: (a) the failure of the shareholders to appoint the Executive to the Board within sixty (60) days following the Effective Date, or the Executive’s removal as a director of the Board, in each case, without his consent; (b) the relocation of the Executive’s principal office location, without the Executive’s consent, to a location that is at least ten (10) miles from the prior location with the Executive’s consent; (c) 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 proportionately reduced; (d) a breach by the Employer of a material term of the Agreement; or (e) any failure of the Board to nominate the Executive or his designee for election to the Board at an annual meeting of shareholders or failure of the shareholders of the Employer to elect the Executive or his designee to the Board at any annual meeting occurring during the Term (unless the Executive or any designee of the Executive is prohibited by law from serving as a director of the Board); provided, however, that the Executive must notify the Employer within ninety (90) days of the occurrence of any of the foregoing conditions that he 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 his resignation, or resigns more than six (6) months after the initial existence of the condition, his resignation will not be deemed to be for “Good Reason.” 

(vi) 

“Earnout Payment Period” means the period commencing on the Effective Date and ending on the earlier of (x) the date 100% of the Earnout Consideration (as defined in the SPA) is paid in full to the Executive pursuant to the SPA or (y) the date, following the expiration of the Second Earnout Period, on which the amount of the Earnout Consideration has been finally determined in accordance with Section 2.5 of the SPA and, to the extent determined due and payable, such Earnout Consideration has been indefeasibly paid in full to the Executive.

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(vii)

“Severance Amount,” for purposes of Sections 5(b) and 5(d), 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 (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); plus (b) an amount equal to the greater of (x) the most recent Bonus that would be payable to the Executive by the Employer, calculated on an annualized basis up to the month the Executive is terminated and (y) $136,000 (or, if the Termination Date occurs prior to January 1, 2015, then $136,000).

(viii)

“Severance Period,” for purposes of Sections 5(b), 5(c) and 5(d), 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.

Section 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. 

Section 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 

-9-

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, 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 his 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.

Section 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.

Section 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 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

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with a copy (which shall not be deemed notice) to:

Pearlman Schneider LLP

2200 Corporate Blvd., Suite 210

Boca Raton, FL 33431

Attention:  Jim Schneider, Esq.

(b)

To the Executive:

to the Executive at the Executive’s

address listed above.

with a copy (which shall not be deemed notice) to:

Lowenstein Sandler LLP

1251 Avenue of the Americas

New York, New York 10020

Attention:  Steven E. Siesser, Esq.

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

Section 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.

Section 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.  During the Earnout Payment Period, any and all actions arising out of this Agreement or the Executive’s employment by the Employer or termination therefrom shall be brought and heard in the state and federal courts of the State of California and the parties hereto hereby irrevocably submit to the exclusive jurisdiction of any such courts. After the expiration of the Earnout Payment Period, 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.

Section 12.

Entire Agreement. 

This Agreement, including all Exhibits hereto, but with the exception of the SPA, 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 

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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 his employment for any consequential, special, punitive or other similar damages, whether foreseeable, known to Executive, or even if Executive was advised thereof.

Section 13.

Amendments.  

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

Section 14.

Survivorship.  

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

Section 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 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.

Section 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 

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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 business day of the seventh 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).  

Section 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 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 

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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.

Section 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.

Section 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/ Chris Miglino

	 
	 
	Chris Miglino,

	 
	 
	Authorized representative for Social Reality, Inc.

	 
	 
	 

	 
	EXECUTIVE:

	 
	 
	 

	 
	/s/ Richard Steel

	 
	Richard Steel

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