Exhibit 10.7

 

SECURITIES PURCHASE AGREEMENT

 

This Securities Purchase Agreement (this “Agreement”) is dated as of June 23,
2015, by and among (i) Creative Realities, Inc., a Minnesota corporation (the
“Company”), Creative Realities, LLC, a Delaware limited liability company, and
Wireless Ronin Technologies Canada, Inc., a Canada corporation (such entities,
together with the Company, the “Company Parties”) and (ii) those parties
signatory hereto and identified on the signature page hereof as “Purchaser” (the
“Purchasers”).

 

WHEREAS, subject to the terms and conditions set forth in this Agreement and
pursuant to an exemption from the registration requirements of Section 5 of the
Securities Act contained in Section 4(a)(2) thereof and/or Regulation D
thereunder, the Company Parties desire to issue and sell to Purchaser, and
Purchaser desires to purchase from the Company Parties, securities of the
Company and the Company Parties as more fully described in this Agreement;

 

NOW, THEREFORE, in consideration of the mutual covenants contained in this
Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company Parties and Purchaser
hereby agree as follows:

 

ARTICLE I.

DEFINITIONS

 

1.1         Definitions. In addition to the terms defined elsewhere in this
Agreement, (a) capitalized terms that are not otherwise defined herein have the
meanings given to such terms in the Notes, as defined herein, and (b) the
following terms have the meanings set forth in this Section 1.1:

 

“Action” shall have the meaning ascribed to such term in Section 3.1(j).

 

“Affiliate” means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with a
Person as such terms are used in and construed under Rule 405 under the
Securities Act.

 

“Board of Directors” means the Board of Directors of the Company.

 

“Business Day” means any day except any Saturday, any Sunday, any day which is a
federal legal holiday in the United States, or any day on which banking
institutions in the State of New York are authorized or required by law or other
governmental action to close.

 

“Closing” means any closing of the purchase and sale of the Securities pursuant
to Section 2.1.

 

“Closing Date” means the Trading Day on which all of the Transaction Documents
have been executed and delivered by the parties thereto, and all conditions
precedent to (i) the Purchaser’s obligations to pay the Purchase Amount and (ii)
the obligations of the Company Parties to deliver the Securities, in each case,
have been satisfied or waived, but in no event later than the third Trading Day
following the date hereof, all as contemplated in Section 2.1.

 

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

 

 

 

 

“Common Stock” means the common stock of the Company, par value $0.01 per share,
and any other class of securities into which such securities may hereafter be
reclassified or changed.

 

“Common Stock Equivalents” means any securities of the Company or the
Subsidiaries, which would entitle the holder thereof to acquire at any time
Common Stock.

 

“Company Counsel” means Maslon LLP, with offices located at 3300 Wells Fargo
Center, 90 South Seventh Street, Minneapolis, Minnesota 55402.

 

“Conversion Price” shall have the meaning ascribed to such term in the Notes.
“Conversion Shares” shall have the meaning ascribed to such term in the Notes.

 

“Disclosure Schedules” means the Disclosure Schedules of the Company delivered
concurrently herewith.

 

“Exchange Act” means the Securities Exchange Act of 1934, and the rules and
regulations thereunder.

 

“GAAP” shall have the meaning ascribed to such term in Section 3.1(h).
“Indebtedness” shall have the meaning ascribed to such term in Section 3.1(p).
“Laws” shall have the meaning ascribed to such term in Section 3.1(k).

 

“Lien” means a lien, charge, pledge, security interest, encumbrance, right of
first refusal, preemptive right or other restriction.

 

“Material Adverse Effect” means any event, occurrence, fact, condition or change
that is, or could reasonably be expected to become, individually or in the
aggregate, materially adverse to: (i) the legality, validity or enforceability
of any Transaction Document, (ii) the results of operations, assets, business,
prospects or condition (financial or otherwise) of the Company and the
Subsidiaries, taken as a whole, or (iii) the Company’s ability to perform in any
material respect on a timely basis its obligations under any Transaction
Document.

 

“Notes” means the Secured Convertible Promissory Notes of the Company offered
and sold pursuant to this Agreement, the form of which is attached hereto as
Exhibit A, in a maximum aggregate amount equal to $[$3.0 million, less all
principal and accrued but unpaid interest under the Slipstream Note converted
into “Notes”]

 

“Person” means an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or instrumentality of a government).

 

“Principal Market” means the primary national securities exchange on which the
Common Stock is then traded.

 

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“Proceeding” means an action, claim, suit, investigation or proceeding
(including, without limitation, an informal investigation or partial proceeding,
such as a deposition), whether commenced or threatened.

 

“Purchase Amount” means the aggregate amount to be paid for the Notes and
associated Warrants purchased hereunder as specified below the Purchaser’s name
on the signature page of this Agreement and next to the heading “Purchase
Amount,” in United States dollars and in immediately available funds. In the
case, however, of Slipstream Communications, LLC, the parties agree that the
“Purchase Amount” shall be all amounts owing under that certain Slipstream Note,
evidenced by the surrender of the Slipstream Note to the Company at the initial
Closing.

 

“Purchaser Party” shall have the meaning ascribed to such term in Section 4.2.
“Required Approvals” shall have the meaning ascribed to such term in Section
3.1(e).

 

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended or interpreted from time to time, or
any similar rule or regulation hereafter adopted by the Commission having
substantially the same purpose and effect as such Rule.

 

“SEC Reports” shall have the meaning ascribed to such term in Section 3.1(h).
“Securities” means the Notes, the Warrants and the Underlying Shares.

 

“Securities Act” means the Securities Act of 1933, and the rules and regulations
thereunder.

 

“Security Agreement” means that certain Security Agreement by and among the
Company Parties in favor of the Purchasers, and pursuant to which the
above-named corporate parties shall grant a security interest in substantially
all of their respective assets as collateral security for the obligations of the
Company under the Notes. The form of Security Agreement is attached hereto as
Exhibit C.

 

“Short Sales” means all “short sales” as defined in Rule 200 of Regulation SHO
under the Exchange Act (but shall not be deemed to include the location and/or
reservation of borrowable shares of Common Stock).

 

“Slipstream Note” means that certain Subordinated Secured Promissory Note of the
Company, in favor of Slipstream Communications, LLC, a Purchaser under this
Agreement, in original principal amount of $465,000 dated as of May 20, 2015.

 

“Slipstream Pledge Agreement” means that certain Slipstream Pledge Agreement by
and among Slipstream Communications, LLC, a Delaware limited liability company,
in favor of the Purchasers, and pursuant to which Slipstream Communications, LLC
shall grant a security interest in its shares of [Gyro], and related proceeds,
as collateral security for the obligations of the Company under the Notes. The
form of Slipstream Pledge Agreement is attached hereto as Exhibit D.

 

“Subsidiary” means any subsidiary of the Company as set forth on Schedule
3.1(a).

 

“Trading Day” means (i) any day on which the Common Stock is listed or quoted
and traded on its Principal Market, (ii) if the Common Stock is not then listed
or quoted and traded on any national securities exchange, then a day on which
trading occurs on any over-the-counter markets, or (iii) if trading does not
occur on the over-the-counter markets, any business day.

 

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“Transaction Documents” means this Agreement, the Notes, the Warrants, the
Security Agreement, the Slipstream Pledge Agreement, and all exhibits and
schedules hereto and thereto and any other documents or agreements executed in
connection with the transactions contemplated hereunder and thereunder.

 

“Underlying Shares” means the Conversion Shares and the Warrant Shares.

 

“Warrants” means, collectively, the Common Stock purchase warrants delivered to
the Purchasers at the Closing in accordance with Section 2.2(a) hereof, which
Warrants shall be in the form of Exhibit B attached hereto.

 

“Warrant Shares” means the shares of Common Stock issuable upon exercise of the
Warrants.

 

ARTICLE II.

PURCHASE AND SALE

 

2.1         Closing. On the Closing Date, and upon the terms and subject to the
conditions set forth herein, substantially concurrent with the execution and
delivery of this Agreement by the parties hereto, the Company agrees to sell,
and the Purchaser agrees to purchase, $1,000,000 in principal amount of Notes
(at face value), and (ii) a number of Warrants as determined pursuant to Section
2.2(a)(iii). Each Purchaser shall deliver to the Company, via wire transfer of
immediately available funds equal to its Purchase Amount as set forth on the
signature page hereto executed by such Purchaser, and the Company shall deliver
to the Purchaser an executed Note and a Warrant as determined pursuant to
Section 2.2(a). In addition, the Company Parties and the Purchaser shall deliver
the other items set forth in Section 2.2 at the Closing. Upon satisfaction of
the covenants and conditions set forth in Sections 2.2 and 2.3, the initial
Closing shall occur at the offices of Company Counsel or such other location as
the parties shall mutually agree. Later Closings may occur with respect to a
Purchaser if so indicated on such Purchaser’s signature page to this Agreement.

 

2.2         Deliveries.

 

(a)         On or prior to the relevant Closing Date, the Company shall deliver
or shall have earlier delivered to the Purchaser the following:

 

(i)           this Agreement duly executed by the Company Parties;

 

(ii)          a Note registered in the name of the Purchaser and in the original
principal amount equal to the Purchase Amount of such Purchaser (for such
Closing);

 

(iii)         a Warrant registered in the name of such Purchaser to purchase, at
any time and from time to time, an aggregate number of shares of Common Stock
equal to 50% of the number of Conversion Shares issuable upon any conversion of
the Note(s) purchased by such Purchaser, as determined at the time issued to the
Purchaser at the Closing and at the initial Conversion Price;

 

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(iv)         at the initial Closing only, the Security Agreement duly executed
by each corporate party thereto;

 

(v)          at the initial Closing only, the Slipstream Pledge Agreement duly
executed by Slipstream Communications, LLC; and

 

(vi)         at the initial Closing only, a legal opinion from Company Counsel,
in customary form and substance for transactions of the nature contemplated by
this Agreement.

 

(b)         On or prior to the relevant Closing Date, the Purchaser shall
deliver or shall have earlier delivered to the Company the following:

 

(i)           this Agreement duly executed by such Purchaser; and

 

(ii)          Purchaser’s Purchase Amount for such Closing, by wire transfer to
the account specified in writing by the Company.

 

2.3          Closing Conditions.

 

(a)         The obligations of the Company hereunder in connection with any
Closing are subject to the following conditions being met:

 

(i)           the accuracy in all material respects on the Closing Date of the
representations and warranties of the Purchaser contained herein (unless as of a
specific date therein in which case they shall be accurate as of such date);

 

(ii)          all obligations, covenants and agreements of the Purchaser
required to be performed at or prior to the Closing Date shall have been
performed;

 

(iii)         there shall have been no Material Adverse Effect with respect to
the Company since the date hereof; and

 

(iv)         the delivery by the Purchaser of the items set forth in Section
2.2(b) of this Agreement.

 

(b)         The obligations of the Purchaser hereunder in connection with the
Closing are subject to the following conditions being met:

 

(i)           the accuracy in all material respects when made and on the Closing
Date of the representations and warranties of the Company contained herein
(unless as of a specific date therein);

 

(ii)          all obligations, covenants and agreements of the Company required
to be performed at or prior to the Closing Date shall have been performed;

 

(iii)         the delivery by the Company of the items set forth in Section
2.2(a) of this Agreement; and

 

(iv)         there shall have been no Material Adverse Effect with respect to
the Company since the date hereof.

 

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ARTICLE III.

REPRESENTATIONS AND WARRANTIES

 

3.1         Representations and Warranties of the Company. Except as set forth
in the Disclosure Schedules, which Disclosure Schedules shall be deemed a part
hereof and shall qualify any representation or otherwise made herein to the
extent of the disclosure contained in the corresponding section of the
Disclosure Schedules, the Company hereby makes the following representations and
warranties to each Purchaser:

 

(a)          Subsidiaries. All of the direct and indirect subsidiaries of the
Company are set forth on Schedule 3.1(a). The Company owns, directly or
indirectly, all of the capital stock or other equity interests of each
Subsidiary free and clear of any Liens, and all of the issued and outstanding
shares of capital stock of each Subsidiary are validly issued and are fully
paid, non-assessable and free of preemptive and similar rights to subscribe for
or purchase securities.

 

(b)          Organization and Qualification. The Company and each of the
Subsidiaries is an entity duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization, with the requisite power and authority to own and
use its properties and assets and to carry on its business as currently
conducted. Neither the Company nor any Subsidiary is in violation nor default of
any of the provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter documents. Each of the
Company and the Subsidiaries is duly qualified to conduct business and is in
good standing as a foreign corporation or other entity in each jurisdiction in
which the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, could not have or reasonably be expected to result
in a Material Adverse Effect.

 

(c)          Authorization; Enforcement. The Company Parties have the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by this Agreement and each of the other Transaction Documents, as
applicable, and otherwise to carry out its obligations hereunder and thereunder.
The execution and delivery of this Agreement and each of the other Transaction
Documents by the Company and the consummation by it of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
action on the part of the Company and no further action is required by the
Company, the Board of Directors or the Company’s shareholders in connection
herewith or therewith other than in connection with the Required Approvals. The
execution and delivery of the applicable Transaction Documents by the other
Company Parties, as applicable, and the consummation by the Subsidiaries of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary action on the part of the Company and no further action is required by
the Company or the boards of directors or other governing bodies of such other
Company Parties in connection herewith or therewith other than in connection
with the Required Approvals. This Agreement and each other Transaction Document
to which it is a party has been (or upon delivery will have been) duly executed
by the Company and the other Company Parties, as applicable, and, when delivered
in accordance with the terms hereof and thereof, will constitute the valid and
binding obligation of the Company and such other Company Parties, enforceable
against them in accordance with its terms, except (i) as limited by general
equitable principles and applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of
creditors’ rights generally, (ii) as limited by laws relating to the
availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may be
limited by applicable law.

 

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(d)          No Conflicts. The execution, delivery and performance by the
Company and the other Company Parties, as applicable, of this Agreement and the
other Transaction Documents to which they are a party, the issuance and sale of
the Securities and the consummation by the Company and the Subsidiaries, as
applicable, of the transactions contemplated hereby and thereby do not and will
not (i) conflict with or violate any provision of any Company Party’s
certificate or articles of incorporation, bylaws or other organizational or
charter documents, or (ii) conflict with, or constitute a default (or an event
that with notice or lapse of time or both would become a default) under, result
in the creation of any Lien upon any of the properties or assets of any Company
Party, or give to others any rights of termination, amendment, acceleration or
cancellation (with or without notice, lapse of time or both) of, any agreement,
credit facility, debt or other instrument (evidencing a Company Party debt or
otherwise) or other understanding to which the any Company Party is a party or
by which any property or asset of any Company Party is bound or affected, or
(iii) subject to the Required Approvals, conflict with or result in a violation
of any law, rule, regulation, order, judgment, injunction, decree or other
restriction of any court or governmental authority to which a Company Party is
subject (including federal and state securities laws and regulations), or by
which any property or asset of a Company Party is bound or affected; except in
the case of each of clauses (ii) and (iii), such as could not have or reasonably
be expected to result in a Material Adverse Effect.

 

(e)          Filings, Consents and Approvals. The Company is not required to
obtain any consent, waiver, authorization or order of, give any notice to, or
make any filing or registration with, any court or other federal, state, local
or other governmental authority or other Person in connection with the
execution, delivery and performance by the Company of the Transaction Documents,
other than: (i) the notice and/or application(s) to each applicable Trading
Market for the issuance and sale of the Securities and the listing of the Shares
and Underlying Shares for trading thereon in the time and manner required
thereby, if any, and (ii) the filing of Form D with the Commission and such
filings as are required to be made under applicable state securities laws, which
filings will be made by the Company within the time period required by such laws
(collectively, the “Required Approvals”).

 

(f)           Issuance of the Securities. The Notes are duly authorized and,
when issued and paid for in accordance with the applicable Transaction
Documents, will be a duly and validly issued security of the Company, free and
clear of all Liens imposed by the Company other than restrictions on transfer
provided for in the Transaction Documents. The Underlying Shares, when issued in
accordance with the terms of the Transaction Documents, will be validly issued,
fully paid and non-assessable, free and clear of all Liens imposed by the
Company other than restrictions on transfer provided for in the Transaction
Documents.

 

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(g)          Capitalization. The capitalization of the Company as of May 31,
2015, is as set forth on Schedule 3.1(g). The Company has not issued any capital
stock since that date except as may be disclosed in SEC Reports, other than
pursuant to the exercise of employee stock options, or pursuant to the
conversion or exercise of Common Stock Equivalents. No Person has any right of
first refusal, preemptive right, right of participation, or any similar right to
participate in the transactions contemplated by the Transaction Documents.
Except as a result of the purchase and sale of the Securities, there are no
outstanding options, warrants, rights to subscribe to, calls or commitments of
any character whatsoever relating to, or securities, rights or obligations
convertible into or exercisable or exchangeable for, or giving any Person any
right to subscribe for or acquire, any shares of Common Stock, or contracts,
commitments, understandings or arrangements by which the Company or any
Subsidiary is or may become bound to issue additional shares of Common Stock or
Common Stock Equivalents, except as set forth on Schedule 3.1(g). Except with
respect to the holders of the Company’s Series A Preferred Convertible Stock and
warrants issued in association therewith (and the conversion prices and exercise
prices thereof, respectively, both of which will be adjusted as a result of the
issuance of the Securities pursuant to this Agreement), the issuance and sale of
the Securities will not obligate the Company to issue shares of Common Stock or
other securities to any Person (other than the Purchaser) and will not result in
a right of any holder of Company securities to adjust the exercise, conversion,
exchange or reset price under any of such securities.

 

(h)          SEC Reports; Financial Statements. The Company has filed all
reports, schedules, forms, statements and other documents required to be filed
by the Company under the Securities Act and the Exchange Act, including pursuant
to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof
(the foregoing materials, including the exhibits thereto and documents
incorporated by reference therein, being collectively referred to herein as the
“SEC Reports”) on a timely basis or has received a valid extension of such time
of filing and has filed any such SEC Reports prior to the expiration of any such
extension, except as set forth on Schedule 3.1(h). As of their respective dates,
the SEC Reports complied in all material respects with the requirements of the
Securities Act and the Exchange Act, as applicable, and none of the SEC Reports,
when filed, contained any untrue statement of a material fact or omitted 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. The Company has never been an issuer subject to Rule
144(i) under the Securities Act. The financial statements of the Company
included in the SEC Reports have been prepared in accordance with United States
generally accepted accounting principles applied on a consistent basis during
the periods involved (“GAAP”), except as may be otherwise specified in such
financial statements or the notes thereto and except that unaudited financial
statements may not contain all footnotes required by GAAP, and fairly present
the financial position of the Company and its consolidated Subsidiaries as of
and for the dates thereof and the results of operations and cash flows for the
periods then ended, subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments.

 

(i)           Material Changes; Undisclosed Events, Liabilities or Developments.
Since the date of the latest SEC Report, (i) there has been no event, occurrence
or development that has had or that could reasonably be expected to result in a
Material Adverse Effect, (ii) the Company has not incurred any liabilities
(contingent or otherwise) other than (A) trade payables and accrued expenses
incurred in the ordinary course of business consistent with past practice and
(B) liabilities not required to be reflected in the Company’s financial
statements pursuant to GAAP or disclosed in filings made with the Commission,
(iii) the Company has not altered its method of accounting, (iv) the Company has
not declared or made any dividend or distribution of cash or other property to
its shareholders or purchased, redeemed or made any agreements to purchase or
redeem any shares of its capital stock and (v) the Company has not issued any
equity securities to any officer, director or Affiliate, except pursuant to
existing Company stock option plans. The Company does not have pending before
the Commission any request for confidential treatment of information.

 

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(j)           Litigation. There is no action, suit, inquiry, notice of
violation, proceeding or investigation pending or, to the knowledge of the
Company, threatened against or affecting the Company, any Subsidiary or any of
their respective properties before or by any court, arbitrator, governmental or
administrative agency or regulatory authority (federal, state, county, local or
foreign) (collectively, an “Action”) which could reasonably be expected to have
a Material Adverse Effect or that adversely affects or challenges the legality,
validity or enforceability of any of the Transaction Documents or the
Securities. Attached as Schedule 3.1(j) is a summary of currently pending
Actions involving the Company and the Subsidiaries. The Commission has not
issued any stop order or other order suspending the effectiveness of any
registration statement filed by the Company under the Exchange Act or the
Securities Act.

 

(k)          Compliance. No Company Party: (i) is in default under or in
violation of (and no event has occurred that has not been waived that, with
notice or lapse of time or both, would result in a default by the Company or any
Subsidiary under), nor has the Company or any Subsidiary received notice of a
claim that it is in default under or that it is in violation of, any indenture,
loan or credit agreement or any other agreement or instrument to which it is a
party or by which it or any of its properties is bound (whether or not such
default or violation has been waived), (ii) is in violation of any judgment,
decree or order of any court, arbitrator or other governmental authority or
(iii) is or has been in violation of any statute, rule, ordinance or regulation
of any governmental authority, including without limitation all foreign,
federal, state and local laws relating to taxes, environmental protection,
occupational health and safety, product quality and safety and employment and
labor matters (collectively, “Laws”), except in each case as is set forth on
Schedule 3.1(k).

 

(l)           Title to Assets. The Company Parties do not own any real property.
The Company and the Subsidiaries have good and marketable title in all personal
property owned by them that is material to their respective businesses, in each
case free and clear of all Liens, except for (i) Liens as do not materially
interfere with the use made and proposed to be made of such property by the
Company Parties and (ii) Liens for the payment of federal, state or other taxes,
for which appropriate reserves have been made in accordance with GAAP and, the
payment of which is neither delinquent nor subject to penalties.

 

(m)         Fees. No brokerage or finder’s fees or commissions are or will be
payable by the Company Parties to any broker, financial advisor or consultant,
finder, placement agent, investment banker, bank or other Person with respect to
the transactions contemplated by the Transaction Documents.

 

(n)          Private Placement. Assuming the accuracy of the Purchaser’s
representations and warranties set forth in Section 3.2, no registration under
the Securities Act is required for the offer and sale of the Notes, Warrants and
Underlying Shares by the Company to the Purchaser as contemplated hereby. The
issuance and sale of the Securities hereunder does not contravene the rules and
regulations of the Trading Market.

 

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(o)          Disclosure. The Company acknowledges and agrees that the Purchaser
has not made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in Section 3.2.

 

(p)          Indebtedness. Schedule 3.1(p) sets forth, all outstanding secured
and unsecured Indebtedness of the Company or any Subsidiary, or for which the
Company or any Subsidiary has commitments. For the purposes of this Agreement,
the term “Indebtedness” means (y) any liabilities for borrowed money or amounts
owed in excess of $50,000 (other than trade accounts payable incurred in the
ordinary course of business); (z) all guaranties, endorsements and other
contingent obligations in respect of indebtedness of others, whether or not the
same are or should be reflected in the Company’s consolidated balance sheet (or
the notes thereto), except guaranties by endorsement of negotiable instruments
for deposit or collection or similar transactions in the ordinary course of
business. Except as set forth on Schedule 3.1(p), neither the Company nor any
Subsidiary is in default with respect to any Indebtedness.

 

(q)          Tax Status. Except as set forth on Schedule 3.1(q), the Company and
its Subsidiaries each (i) has made or filed all United States federal, state and
local income and all foreign income and franchise tax returns, reports and
declarations required by any jurisdiction to which it is subject, (ii) has paid
all taxes and other governmental assessments and charges that are material in
amount, shown or determined to be due on such returns, reports and declarations
and (iii) has set aside on its books provision reasonably adequate for the
payment of all material taxes for periods subsequent to the periods to which
such returns, reports or declarations apply. There are no unpaid taxes in any
material amount claimed to be due by the taxing authority of any jurisdiction,
and the officers of the Company or of any Subsidiary know of no basis for any
such claim.

 

The Purchasers acknowledge and agree that the representations contained in
Section 3.1 shall not affect the Company’s right to rely on representations and
warranties of the Purchasers contained in this Agreement or any representations
and warranties contained in any other Transaction Document or any other document
or instrument executed or delivered in connection with this Agreement or the
consummation of the transaction contemplated hereby.

 

3.2         Representations and Warranties of the Purchasers. Each Purchaser
hereby represents and warrants with respect to such Purchaser, severally but not
jointly, as of the date hereof and as of the Closing Date to the Company as
follows (unless as of a specific date therein):

 

(a)          Organization; Authority. The Purchaser is an entity duly
incorporated, validly existing and in good standing under the laws of the
jurisdiction of its incorporation with full right, corporate power and authority
to enter into and to consummate the transactions contemplated by the Transaction
Documents and otherwise to carry out its obligations hereunder and thereunder.
The execution and delivery of the Transaction Documents and performance by the
Purchaser of the transactions contemplated by the Transaction Documents have
been duly authorized by all necessary corporate action, as applicable, on the
part of the Purchaser. Each Transaction Document to which it is a party has been
duly executed by the Purchaser, and when delivered by such Purchaser in
accordance with the terms hereof, will constitute the valid and legally binding
obligation of such Purchaser, enforceable against it in accordance with its
terms, except: (i) as limited by general equitable principles and applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors’ rights generally, (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies and (iii) insofar as indemnification and
contribution provisions may be limited by applicable law.

 

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(b)          Understandings or Arrangements. The Purchaser is acquiring the
Securities hereunder in the ordinary course of its business. The Purchaser
understands that the Notes, Warrants and Underlying Shares are “restricted
securities” and will not have been registered under the Securities Act or any
applicable state securities law, and represents that it is acquiring the
Securities as principal for its own account and not with a view to or for
distributing or reselling such Securities or any part thereof in violation of
the Securities Act or any applicable state securities law.

 

(c)          Opportunity to Obtain Information. The Purchaser acknowledges that
representatives of the Company have made available to the Purchaser the
opportunity to review the books and records of the Company and its Subsidiaries
and to ask questions of and receive answers from such representatives concerning
the business and affairs of the Company and its Subsidiaries.

 

(d)          Purchaser Status. At the time the Purchaser was offered the
Securities, it was, and as of the date hereof it is, and on each date on which
it converts any portion of the Notes or exercises any Warrants, it will be an
“accredited investor” as defined in Rule 501 under the Securities Act.

 

(e)          Experience of Such Purchaser. The Purchaser has such knowledge,
sophistication and experience in business and financial matters so as to be
capable of evaluating the merits and risks of the prospective investment in the
Securities, and has so evaluated the merits and risks of such investment. The
Purchaser is able to bear the economic risk of an investment in the Securities
and, at the present time, is able to afford a complete loss of such investment.

 

(f)           General Solicitation. The Purchaser is not purchasing the
Securities as a result of any advertisement, article, notice or other
communication regarding the Securities published in any newspaper, magazine or
similar media or broadcast over television or radio or presented at any seminar
or any other general solicitation or general advertisement.

 

(g)          Certain Transactions and Confidentiality. Other than consummating
the transactions contemplated hereunder, the Purchaser has not, nor has any
Person acting on behalf of or pursuant to any understanding with such Purchaser,
directly or indirectly executed any purchases or sales, including Short Sales,
of the securities of the Company during the period commencing as of the time
that such Purchaser first received a term sheet (written or oral) from the
Company or any other Person representing the Company setting forth the material
terms of the transactions contemplated hereunder and ending immediately prior to
the execution hereof. Other than to other Persons party to this Agreement, the
Purchaser has maintained the confidentiality of all disclosures made to it in
connection with this transaction (including the existence and terms of this
transaction).

 

11

 

 

The Company acknowledges and agrees that the representations contained in
Section 3.2 shall not affect such Purchaser’s right to rely on the Company’s
representations and warranties contained in this Agreement or any
representations and warranties contained in any other Transaction Document or
any other document or instrument executed and/or delivered in connection with
this Agreement or the consummation of the transaction contemplated hereby.

 

ARTICLE IV.

OTHER AGREEMENTS OF THE PARTIES

 

4.1         Indemnification. Subject to the provisions of this Section, the
Company will indemnify and hold the Purchaser and their directors, officers,
employees and agents (each, a “Purchaser Party”) harmless from any and all
losses, liabilities, obligations, claims, contingencies, damages, costs and
expenses, including all judgments, amounts paid in settlements, court costs and
reasonable attorneys’ fees and costs of investigation that any such Purchaser
Party may suffer or incur as a result of or relating to (a) any breach of any of
the representations, warranties, covenants or agreements made by the Company in
this Agreement or in the other Transaction Documents or (b) any action
instituted against the Purchaser Parties in any capacity, or any of them or
their respective Affiliates, by any shareholder of the Company who is not an
Affiliate of such Purchaser Party, with respect to any of the transactions
contemplated by the Transaction Documents (unless such action is based upon a
breach of such Purchaser Party’s representations, warranties or covenants under
the Transaction Documents or any agreements or understandings such Purchaser
Party may have with any such shareholder or any violations by such Purchaser
Party of state or federal securities laws or any conduct by such Purchaser Party
which constitutes fraud, gross negligence, willful misconduct or malfeasance).
If any action shall be brought against any Purchaser Party in respect of which
indemnity may be sought pursuant to this Agreement, such Purchaser Party shall
promptly notify the Company in writing, and the Company shall have the right to
assume the defense thereof with counsel of its own choosing reasonably
acceptable to the Purchaser Party. Any Purchaser Party shall have the right to
employ separate counsel in any such action and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such Purchaser Party except to the extent that (i) the employment thereof has
been specifically authorized by the Company in writing, (ii) the Company has
failed after a reasonable period of time to assume such defense and to employ
counsel, or (iii) in such action there is, in the reasonable opinion of counsel,
a material conflict on any material issue between the position of the Company
and the position of such Purchaser Party, in which case the Company shall be
responsible for the reasonable fees and expenses of no more than one such
separate counsel in the aggregate (i.e., for all Purchaser Parties). The Company
will not be liable to any Purchaser Party under this Agreement (y) for any
settlement by a Purchaser Party effected without the Company’s prior written
consent, which shall not be unreasonably withheld or delayed, or (z) to the
extent, but only to the extent, that a loss, claim, damage or liability is
attributable to any Purchaser Party’s breach of any of the representations,
warranties, covenants or agreements made by such Purchaser Party in this
Agreement or in the other Transaction Documents.

 

4.2         Reservation of Securities. The Company shall maintain a reserve from
its duly authorized shares of Common Stock for issuance pursuant to the
Transaction Documents in such amount as may then be required to issue all of the
Underlying Shares.

 

12

 

 

4.3         Certain Transactions and Confidentiality. Each Purchaser covenants
that neither it nor any Affiliate acting on its behalf or pursuant to any
understanding with it will execute any purchases or sales, including Short Sales
of any of the Company’s securities during the period commencing with the
execution of this Agreement and ending at such time that the transactions
contemplated by this Agreement are first publicly announced by the Company.
Furthermore, each Purchaser covenants that until such time as the transactions
contemplated by this Agreement are publicly disclosed by the Company, such
Purchaser will maintain the confidentiality of the existence and terms of this
transaction and the information included in the Transaction Documents and the
Disclosure Schedules.

 

4.4         Transfer Restrictions.

 

(a)         The Securities may only be disposed of in compliance with state and
federal securities laws. In connection with any transfer of any Securities other
than pursuant to an effective registration statement or Rule 144, or to the
Company, the Company may require the transferor thereof to provide to the
Company an opinion of counsel selected by the transferor and reasonably
acceptable to the Company (the fees and expenses of which shall be paid by such
transferor), the form and substance of which opinion shall be reasonably
satisfactory to the Company, to the effect that such transfer does not require
registration of such transferred Securities under the Securities Act. As a
condition of transfer, any such transferee shall agree in writing to be bound by
the terms of this Agreement and shall have the rights and obligations of a
Purchaser under this Agreement.

 

(b)         The Purchasers agree to the imprinting, so long as is required by
this Agreement, of a legend on any of the Notes, Warrants and Underlying Shares
in the following form:

 

[NEITHER] THIS SECURITY [NOR THE SECURITIES INTO WHICH THIS SECURITY IS
[EXERCISABLE] [CONVERTIBLE]] HAS [NOT] BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON
AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933 (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AND, AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE
TRANSFEROR TO SUCH EFFECT, TO THE EXTENT REQUIRED BY THE SECURITIES PURCHASE
AGREEMENT DATED AS OF FEBRUARY [ ], 2015, BY AND BETWEEN THE ISSUER AND MILL
CITY VENTURES III, LTD., THE SUBSTANCE OF WHICH OPINION SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY.

 

4.5         General Covenants. During any such time as the Note(s) remain
outstanding, the Company shall not take any of the following actions without the
prior written approval of Purchasers (or its assignees) holding at least a
majority in then-outstanding principal amount of the Note(s): (a) declare or pay
any cash dividends on account of any Common Stock; (b) redeem any capital stock
of the Company; or (c) incur any debt for borrowed money that is senior to the
obligations under the Notes in respect of payment or in respect of the
“Collateral,” as such term is defined in the Security Agreement.

 

13

 

 

ARTICLE V.

GENERAL PROVISIONS

 

5.1         Termination. This Agreement may be terminated by the Purchaser by
written notice to the Company if the initial Closing has not been consummated on
or before 30 days of the date hereof.

 

5.2         Fees and Expenses. Except as expressly set forth in the Transaction
Documents to the contrary, each party shall pay the fees and expenses of its
advisers, counsel, accountants and other experts, if any, and all other expenses
incurred by such party incident to the negotiation, preparation, execution,
delivery and performance of this Agreement. The Company shall pay all transfer
agent fees, stamp taxes and other taxes and duties levied in connection with the
delivery of any Securities to the Purchasers.

 

5.3         Entire Agreement. The Transaction Documents, together with the
exhibits and schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and thereof and supersede all prior
agreements and understandings, oral or written, with respect to such matters,
which the parties acknowledge have been merged into such documents, exhibits and
schedules.

 

5.4         Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of: (a) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
set forth on the signature pages attached hereto at or prior to 5:30 p.m. (New
York, New York time) on a Trading Day, (b) the next Trading Day after the date
of transmission, if such notice or communication is delivered via facsimile at
the facsimile number set forth on the signature pages attached hereto on a day
that is not a Trading Day or later than 5:30 p.m. (New York, New York time) on
any Trading Day, (c) the second Trading Day following the date of mailing, if
sent by U.S. nationally recognized overnight courier service or (d) upon actual
receipt by the party to whom such notice is required to be given. The address
for such notices and communications shall be as set forth on the signature pages
attached hereto.

 

5.5         Amendments; Waivers. No provision of this Agreement may be waived,
modified, supplemented or amended except in a written instrument signed, in the
case of an amendment or waiver of rights hereunder, by the Company and the
Purchasers (or their assignees) holding at least a majority in the
then-outstanding principal amount of the Notes; provided, however, that any
single party may waive rights under this Agreement pursuant to a written
instrument signed by such party. No waiver of any default with respect to any
provision, condition or requirement of this Agreement shall be deemed to be a
continuing waiver in the future or a waiver of any subsequent default or a
waiver of any other provision, condition or requirement hereof, nor shall any
delay or omission of any party to exercise any right hereunder in any manner
impair the exercise of any such right.

 

5.6         Headings. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.

 

14

 

 

5.7         Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted assigns.
Any Purchaser may assign any or all of its rights under this Agreement to any
Person to whom such Purchaser assigns or transfers any Securities, provided that
such transferee agrees in writing to be bound, with respect to the transferred
Securities, by the provisions of the Transaction Documents that apply to the
“Purchaser.”

 

5.8         Third-Party Beneficiaries. Other than the provisions of Section 4.1,
this Agreement is intended for the benefit of the parties hereto and their
respective successors and permitted assigns and is not for the benefit of, nor
may any provision hereof be enforced by, any other Person.

 

5.9         Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of the Transaction Documents shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the conflicts-of-law principles thereof. Each party
agrees that all legal proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by this Agreement and any other
Transaction Documents (whether brought against a party hereto or its respective
affiliates, directors, officers, shareholders, partners, members, employees or
agents) shall be commenced exclusively in the state and federal courts sitting
in New York, New York. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in New York, New York, for
the adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with respect to
the enforcement of any of the Transaction Documents), 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 improper or is an inconvenient venue for such
proceeding. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect for 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 other
manner permitted by law. If either party shall commence an action, suit or
proceeding to enforce any provisions of the Transaction Documents, then the
prevailing party in such action, suit or proceeding shall be reimbursed by the
other party for its reasonable attorneys’ fees and other costs and expenses
incurred with the investigation, preparation and prosecution of such action or
proceeding.

 

5.10       Execution. This Agreement may be executed in counterparts, all of
which when taken together shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to each other party, it being understood that the parties need not
sign the same counterpart. If any signature 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.

 

5.11       Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their commercially reasonable efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.

 

15

 

 

5.12       Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, the Purchaser
and the Company will be entitled to specific performance under the Transaction
Documents. The parties agree that monetary damages may not be adequate
compensation for any loss incurred by reason of any breach of obligations
contained in the Transaction Documents and hereby agree to waive and not to
assert in any action for specific performance of any such obligation the defense
that a remedy at law would be adequate.

 

5.13      Saturdays, Sundays, Holidays, etc. If the last or appointed day for
the taking of any action or the expiration of any right required or granted
herein shall not be a Business Day, then such action may be taken or such right
may be exercised on the next succeeding Business Day.

 

5.14      Construction. The parties agree that each of them and/or their
respective counsel have reviewed and had an opportunity to revise the
Transaction Documents and, therefore, the normal rule of construction to the
effect that any ambiguities are to be resolved against the drafting party shall
not be employed in the interpretation of the Transaction Documents or any
amendments thereto.

 

5.15      WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY
JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH
KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW,
HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER
TRIAL BY JURY.

 

* * * * * * *

 

16

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.

 

COMPANY PARTIES       CREATIVE REALITIES, INC.         By: /s/ John Walpuck    
John Walpuck     Chief Financial Officer         CREATIVE REALITIES, LLC        
By: /s/ John Walpuck     John Walpuck     Chief Executive Officer        
WIRELESS RONIN TECHNOLOGIES CANADA, INC.         By: /s/ John Walpuck     John
Walpuck     Chief Financial Officer  

 

Address for Notice to the Company Parties:

 

55 Broadway, 9th Floor

New York, New York 10006

Facsimile: 973-244-1535

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOR PURCHASER FOLLOWS]

 

 

 

 

[PURCHASER SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]

 

IN WITNESS WHEREOF, the undersigned has caused this Securities Purchase
Agreement to be duly executed by its respective authorized signatories as of the
date first indicated above.

 

Name of Purchaser:
____________________________________________________________________

 

Signature of Authorized Signatory of Purchaser:
_____________________________________________

 

Name of Authorized Signatory:
___________________________________________________________

 

Title of Authorized Signatory:
____________________________________________________________

 

Email Address of Authorized Signatory:
____________________________________________________

 

Facsimile Number of Authorized Signatory:
__________________________________________________

 

Address for Notice to Purchaser:
__________________________________________________________

 

Address for Delivery of Note and Warrants to Purchaser (if not same as address
for notice):

 

 

 

 

Purchase Amount: $1,500,000, of which—   - $400,000 shall be advanced at the
initial Closing;   - $100,000 shall be advanced as soon as possible after the
initial Closing; and   - $1,000,000 on or prior to July 15

 

 

 

Warrant Shares: ___________________________

 

EIN Number:       ___________________________

 

 

 

 

Exhibit A

 

Attached is the form of Notes

 

 

 

 

Exhibit B

 

Attached is the form of Warrant

 

 

 

 

Exhibit C

 

Attached is the form of Security Agreement

 

 

 

 

Exhibit D

 

Attached is the form of Slipstream Pledge Agreement

 

 

 

 

Schedule 3.1(a)
Subsidiaries

 

Parent Subsidiary   Jurisdiction of Organization Creative Realities, LLC  
Delaware Wireless Ronin Technologies Canada, Inc.   Canada Broadcast
International, Inc.   Utah Interact Devices, Inc.   California

 

 

 

 

Schedule 3.1(g)
Capitalization

 

[ex10vii_001.jpg]

 

Notes: (1) “Convertible Preferred” is presented on an as-converted basis, and
the 281,120 shares presented in the Creative Realities, Inc. column are shares
issued as in-kind dividends in connection with a 12/31/2014 dividend payment.
(2) “Debt Conversions” are common shares issued upon the conversion of debt that
took place coincident with the closing of the merger transaction with Creative
Realities, LLC in August 2014. Thus, those shares should be understood as being
issued and outstanding.

 

 

 

 

Schedule 3.1(j)
Actions

 

Company vs. HMN, Inc.

In August 2014, we initiated a breach-of-contract lawsuit against a customer and
certain parties related to that customer for failure to pay. The defendants have
answered and asserted counterclaims. In the event we are unable to reach a
negotiated settlement with the defendants, we intend to litigate our claims and
contest the defendants’ counterclaims. At this time, we do not believe this
matter is likely to have a material and adverse impact on the Company.

 

Company vs. Core Technologies, Inc.

In November 2014, a former vendor alleging our failure to pay outstanding
invoices initiated a breach-of-contract lawsuit against us. We have answered and
asserted certain counterclaims. In the event we are unable to reach a negotiated
settlement with the vendor, we intend to litigate our counterclaims and contest
those claims made against us. At this time, we do not believe this matter is
likely to have a material and adverse impact on the Company.

 

 

 

 

Schedule 3.1(k)
Compliance

 

Broadcast International, Inc. entered into certain agreements in settlement of
various payables coincident with the closing of the merger transaction of that
corporation with the Company (which was effected on August 1, 2014). Certain of
the closing and post-closing payments required by those settlement agreements
have not been made. No actions have been instituted by any of the contracting
parties relating to that Subsidiary’s non-performance.

 

 

 

 

Schedule 3.1(p)

Indebtedness

 

Creative Realities, LLC is a party to a three-year master lease agreement with
Dell Computer including a $50,000 leasing line established December 2014.
Presently, we have used approximately $15,500 of this line to purchase computer
equipment. The lease contains a $1 buyout at the end of the term.

 

 

 

 

Schedule 3.1(q)

Tax Status

 

None.