Exhibit 10.12

 

NEITHER THIS WARRANT NOR ANY OF THE SECURITIES ISSUABLE UPON EXERCISE OF THIS
WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER THE
SECURITIES LAWS OF ANY OTHER JURISDICTION. BY ACQUIRING THIS WARRANT, HOLDER
AGREES TO NOT SELL OR OTHERWISE DISPOSE OF THIS WARRANT OR THE SECURITIES
ISSUABLE UPON EXERCISE OF THIS WARRANT WITHOUT REGISTRATION OR THE APPLICABILITY
OF AN EXEMPTION FROM REGISTRATION UNDER THE AFORESAID ACTS, AND THE RULES AND
REGULATIONS THEREUNDER.

 

WARRANT TO PURCHASE COMMON STOCK

 

Number of Shares of Common Stock: 1,750,000

Date of Issuance: December 22, 2015 (“Issuance Date”)

 

THIS CERTIFIES THAT, for value received, Slipstream Communications, LLC
(including any permitted and registered assigns, the “Holder”), is entitled to
purchase from Creative Realities, Inc., a Minnesota corporation (the “Company”),
up to 1,750,000 shares of Common Stock of the Company (the “Warrant Shares”) at
the Exercise Price hereunder then in effect. This Warrant to Purchase Common
Stock (this “Warrant”) is issued by the Company in connection with the Company’s
offer and sale to the Holder of a Secured Convertible Promissory Note pursuant
to the terms and conditions of a Securities Purchase Agreement by and among the
Company, Holder and other purchasers of such notes, dated of even date herewith
(the “Securities Purchase Agreement,” and such notes sold thereunder, the
“Notes”). For purposes of this Warrant, the term “Exercise Price” shall mean
$0.28 per share, subject to adjustment as provided herein, and the term
“Exercise Period” shall mean the period commencing on the Issuance Date and
ending on 5:00 p.m. New York time on the five-year anniversary of the date of
this Warrant.

 

1.                  EXERCISE OF WARRANT.

 

(a)                Mechanics of Exercise. Subject to the terms and conditions
hereof, including but not limited to the provisions of Section 1(c) below, the
rights represented by this Warrant may be exercised in whole or in part at any
time or times during the Exercise Period by delivery of a written notice, in the
form attached hereto as Exhibit A (the “Exercise Notice”), of the Holder’s
election to exercise this Warrant. The Holder shall not be required to deliver
the original Warrant in order to effect an exercise hereunder. Execution and
delivery of the Exercise Notice with respect to less than all of the Warrant
Shares shall have the same effect as cancellation of the original Warrant and
issuance of a new Warrant evidencing the right to purchase the remaining number
of Warrant Shares. On or before the third Trading Day (the “Warrant Share
Delivery Date”) following the date on which the Company shall have received the
Exercise Notice, and upon receipt by the Company of (i) payment to the Company
of an amount equal to the applicable Exercise Price multiplied by the number of
Warrant Shares as to which this Warrant is being exercised (the “Aggregate
Exercise Price” and together with the Exercise Notice, the “Exercise Delivery
Documents”) in cash or by wire transfer of immediately available funds or (ii)
notification from the Holder that this Warrant is being exercised pursuant to a
Cashless Exercise, as defined below, the Company shall issue and dispatch by
overnight courier to the address as specified in the Exercise Notice, a
certificate, registered in the Company’s share register in the name of the
Holder

 

 

 

or its designee, for the number of shares of Common Stock to which the Holder is
entitled pursuant to such exercise (or credit the Holder’s account through an
electronic delivery of Common Stock through the DWAC system of the Depository
Trust Company, if requested). Upon delivery of the Exercise Delivery Documents,
the Holder shall be deemed for all corporate purposes to have become the holder
of record of the Warrant Shares with respect to which this Warrant has been
exercised, irrespective of the date of delivery of the certificates evidencing
such Warrant Shares. If this Warrant is submitted in connection with any
exercise pursuant to Section 1(c) and the number of Warrant Shares represented
by this Warrant submitted for exercise is greater than the number of Warrant
Shares being acquired upon an exercise, then the Company shall as soon as
practicable, and in no event later than three business days after any exercise
and at its own expense, issue a new Warrant representing the right to purchase
the number of Warrant Shares purchasable immediately prior to such exercise
under this Warrant, less the number of Warrant Shares with respect to which this
Warrant is exercised.

 

(b)               No Fractional Shares. No fractional shares shall be issued
upon the exercise of this Warrant as a consequence of any adjustment pursuant
hereto. All Warrant Shares (including fractions) issuable upon exercise of this
Warrant may be aggregated for purposes of determining whether the exercise would
result in the issuance of any fractional share. If, after aggregation, the
exercise would result in the issuance of a fractional share, the Company shall,
in lieu of issuance of any fractional share, pay the Holder otherwise entitled
to such fraction a sum in cash equal to the product resulting from multiplying
the then current fair market value of a Warrant Share by such fraction.

 

(c)                Cashless Exercise. The Holder may, in its sole discretion,
exercise this Warrant in whole or in part and, in lieu of making the cash
payment otherwise contemplated to be made to the Company upon such exercise in
payment of the Aggregate Exercise Price, elect instead to receive upon such
exercise the “Net Number” of shares of Common Stock determined according to the
following formula (a “Cashless Exercise”):

 

Net Number = (A x B) - (A x C)
                                      B

 

For purposes of the foregoing formula:

 

A = the total number of shares with respect to which this Warrant is then being
exercised.

 

B = the Weighted Average Price of the shares of Common Stock for the five
consecutive Trading Days ending on the date immediately preceding the date of
the Exercise Notice.

 

C = the Exercise Price then in effect for the applicable Warrant Shares at the
time of such exercise.

 

(d)               Compensation for Buy-In on Failure to Timely Deliver Warrant
Shares. In addition to any other rights available to the Holder, if the Company
fails to deliver (or cause its transfer agent to deliver) to the Holder the
Warrant Shares pursuant to an exercise on or before the Warrant Share Delivery
Date, and if after such date the Holder is required by its broker to purchase
(in an open-

 

 

 

market transaction or otherwise), or the Holder’s brokerage firm otherwise
purchases, shares of Common Stock to deliver in satisfaction of a sale by the
Holder of the Warrant Shares which the Holder anticipated receiving upon such
exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the
amount, if any, by which (x) the Holder’s total purchase price (including
brokerage commissions, if any) for the shares of Common Stock so purchased
exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares
that the Company was required to deliver to the Holder in connection with the
exercise at issue, times (2) the price at which the sell order giving rise to
such purchase obligation was executed, and (B) at the option of the Holder,
either reinstate the portion of the Warrant and equivalent number of Warrant
Shares for which such exercise was not honored (in which case such exercise
shall be deemed rescinded) or deliver to the Holder the number of shares of
Common Stock that would have been issued had the Company timely complied with
its exercise and delivery obligations hereunder. For example, if the Holder
purchases Common Stock having a total purchase price of $11,000 to cover a
Buy-In with respect to an attempted exercise of shares of Common Stock with an
aggregate sale price giving rise to such purchase obligation of $10,000, under
clause (A) of the immediately preceding sentence the Company shall be required
to pay the Holder $1,000. The Holder shall provide the Company written notice
indicating the amount payable to the Holder in respect of the Buy-In and, upon
request of the Company, evidence of the amount of such loss. Nothing herein
shall limit a Holder’s right to pursue any other remedies available to it
hereunder, at law or in equity, including without limitation a decree of
specific performance or other injunctive relief with respect to the Company’s
failure to timely deliver shares of Common Stock upon exercise of the Warrant as
required pursuant to the terms hereof.

 

(e)                Beneficial Ownership Restrictions. Notwithstanding anything
to the contrary in this Warrant, the Company shall not effect any exercise of
this Warrant, and a Holder shall not have the right to exercise any portion of
this Warrant, to the extent that, after giving effect to the exercise set forth
on the applicable Exercise Notice, such Holder (together with such Holder’s
“affiliates,” as such term is defined in Rule 405 under the Securities Act of
1933, and any Persons acting as a group together with such Holder or any of such
Holder’s affiliates) would beneficially own in excess of the Beneficial
Ownership Limitation, as defined below. For purposes of the foregoing sentence,
the number of shares of Common Stock beneficially owned by such Holder and its
affiliates shall include the number of shares of Common Stock issuable upon
exercise of this Warrant with respect to which such determination is being made,
but shall exclude the number of shares of Common Stock which are issuable upon
(i) conversion of the remaining unexercised portion of this Warrant beneficially
owned by such Holder or any of its affiliates and (ii) exercise or conversion of
the unexercised or unconverted portion of any other securities of the Company
that are subject to a limitation on conversion or exercise analogous to the
limitation contained herein beneficially owned by such Holder or any of its
affiliates. Except as set forth in the preceding sentence, for purposes of this
Section, beneficial ownership shall be calculated in accordance with Section
13(d) of the Securities Exchange Act of 1934 (the “Exchange Act”). To ensure
compliance with this restriction, each Holder will be deemed to represent to the
Company each time it delivers an Exercise Notice that such Exercise Notice has
not violated the restrictions set forth in this Section 1(e) and the Company
shall have no obligation to verify or confirm the accuracy of such
determination. In addition, a determination as to any group status as
contemplated above shall be determined in accordance with Section 13(d) of the
Exchange Act.

 

For purposes of this Section 1(e), in determining the number of outstanding
shares of Common Stock, a Holder may rely on the number of outstanding shares of
Common Stock as stated in

 

 

 

the most recent of the following: (i) the Company’s most recent periodic or
annual report filed with the

U.S. Securities and Exchange Commission, as the case may be, (ii) a more recent
public announcement by the Company, or (iii) a more recent written notice by the
Company or its transfer agent setting forth the number of shares of Common Stock
outstanding. Upon the written or oral request of a Holder, the Company shall
within two Trading Days confirm to such Holder the number of shares of Common
Stock then outstanding. In any case, the number of outstanding shares of Common
Stock shall be determined after giving effect to the conversion or exercise of
securities of the Company, including this Warrant, by such Holder or its
affiliates. The “Beneficial Ownership Limitation” shall be 4.99% of the number
of shares of the Common Stock outstanding immediately after giving effect to the
issuance of shares of Common Stock issuable upon exercise of this Warrant. Upon
no fewer than 61 days’ prior notice to the Company, a Holder may increase or
decrease the Beneficial Ownership Limitation provisions of this paragraph,
provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of
the number of shares of the Common Stock outstanding immediately after giving
effect to the issuance of shares of Common Stock upon exercise of this Warrant
held by the Holder and the provisions of this paragraph shall continue to apply.
Any such increase or decrease will not be effective until the 61st day after
such notice is delivered to the Company and shall only apply to such Holder and
no other Holder. The limitations contained in this paragraph shall apply to a
successor Holder of this Warrant.

 

2.                  ADJUSTMENTS. The Exercise Price and the number of Warrant
Shares shall be adjusted from time to time as follows:

 

(a)                Subdivision or Combination of Common Stock. If the Company at
any time on or after the date of the Note subdivides (by any stock split, stock
dividend, recapitalization or otherwise) one or more classes of its outstanding
shares of Common Stock into a greater number of shares, the Exercise Price in
effect immediately prior to such subdivision will be proportionately reduced and
the number of Warrant Shares will be proportionately increased. If the Company
at any time on or after the date of the Note combines (by combination, reverse
stock split or otherwise) one or more classes of its outstanding shares of
Common Stock into a smaller number of shares, the Exercise Price in effect
immediately prior to such combination will be proportionately increased and the
number of Warrant Shares will be proportionately decreased. Any adjustment under
this Section 2(a) shall become effective at the close of business on the date
the subdivision or combination becomes effective.

 

(b)               Distribution of Assets. If the Company shall declare or make
any dividend or other distribution of its assets (or rights to acquire its
assets) to holders of shares of Common Stock, by way of return of capital or
otherwise (including without limitation any distribution of cash, stock or other
securities, property or options by way of a dividend, spin off,
reclassification, corporate rearrangement or other similar transaction) (a
“Distribution”), at any time after the issuance of this Warrant, then, in each
such case:

 

(i)                 any Exercise Price in effect immediately prior to the close
of business on the record date fixed for the determination of holders of shares
of Common Stock entitled to receive the Distribution shall be reduced, effective
as of the close of business on such record date, to a price determined by
multiplying such Exercise Price by a fraction of which (i) the numerator shall
be the Closing Sale Price of the shares of Common Stock on the Trading Day
immediately preceding such record date minus the value of the Distribution (as
determined in good faith by the Company’s Board of

 

 

 

Directors) applicable to one share of Common Stock, and (ii) the denominator
shall be the Closing Sale Price of the shares of Common Stock on the Trading Day
immediately preceding such record date; and

 

(ii)               the number of Warrant Shares shall be increased to a number
of shares equal to the number of shares of Common Stock obtainable immediately
prior to the close of business on the record date fixed for the determination of
holders of shares of Common Stock entitled to receive the Distribution
multiplied by the reciprocal of the fraction set forth in the immediately
preceding clause (i); provided, however, that in the event that the Distribution
is of shares of common stock of a company (other than the Company) whose common
stock is traded on a national securities exchange or a national automated
quotation system (“Other Shares of Common Stock”), then the Holder may elect to
receive a warrant to purchase Other Shares of Common Stock in lieu of an
increase in the number of Warrant Shares, the terms of which shall be identical
to those of this Warrant, except that such warrant shall be exercisable into the
number of shares of Other Shares of Common Stock that would have been payable to
the Holder pursuant to the Distribution had the Holder exercised this Warrant
immediately prior to such record date and with an aggregate exercise price equal
to the product of the amount by which the exercise price of this Warrant was
decreased with respect to the Distribution pursuant to the terms of the
immediately preceding clause (i) and the number of Warrant Shares calculated in
accordance with the first part of this clause (ii).

 

(c)                Other Events. If any event occurs of the type contemplated by
the provisions of this Section 2(a) or (b) but not expressly provided for by
such provisions (including without limitation the granting, on a pro rata basis
to the holders of the Common Stock, of stock-appreciation rights, phantom stock
units or other shareholder rights with equity features), then the Company’s
Board of Directors will make an appropriate adjustment in the Exercise Price and
the number of Warrant Shares so as to protect the rights of the Holder. For the
avoidance of doubt, the parties agree this Section 2(c) shall not apply to (i)
the issuance of Common Stock upon the exercise of options or warrants not
granted to the shareholders of the Company as a whole, or (ii) the issuance of
Common Stock, stock options, stock-appreciation rights, restricted stock units,
or other forms of equity or equity-linked compensation under the Company’s
equity incentive or purchase plans duly adopted by a majority of the non-
employee members of the Board of Directors of the Company or a committee of
non-employee directors established for such purpose.

 

(d)               Weighted-Average Adjustment to Exercise Price. If the Company,
at any time while this Warrant is outstanding, shall issue any Common Stock or
Common Stock Equivalents entitling any person to acquire shares of Common Stock,
at an effective price per share less than the then-current Exercise Price, as
adjusted hereunder (any such issuance, other than an issuance of Common Stock or
Common Stock Equivalents in respect of an Exempt Issuance, being referred to as
a “Dilutive Issuance”), then the Exercise Price shall be adjusted in accordance
with the following formula:

 

AEP = EP * [OS + ((DIS * DIP)/EP)]

(OS + DIS)

 

For purposes of the foregoing formula: AEP = Adjusted Exercise Price

 

 

 

EP = Exercise Price (as in effect immediately prior to adjustment)

 

OS = Total number of shares of Common Stock and Common Stock Equivalents
outstanding immediately prior to the Dilutive (excluding, however, Common Stock
and Common Stock Equivalents outstanding on account of Exempt Issuances)

 

DIS = Total number of shares of Common Stock and Common Stock Equivalents issued
in the Dilutive Issuance

 

DIP = The per-share price at which Common Stock or Common Stock Equivalents were
issued in the Dilutive Issuance

 

Any such adjustment shall be made whenever such Common Stock or Common Stock
Equivalents are issued; provided, however, that (i) if an adjustment is made on
account of a Dilutive Issuance of Common Stock Equivalents, then the subsequent
issuance of actual Common Stock upon conversion or exercise of such Common Stock
Equivalents will not result in a second adjustment, and (ii) notwithstanding
anything in this Warrant to the contrary, no adjustments shall be made under
this Section 2(d) in respect of an Exempt Issuance. The Company shall notify the
Holder in writing, no later than the third Trading Day following any Dilutive
Issuance (other than an Exempt Issuance), indicating therein the applicable
per-share price at which Common Stock or Common Stock Equivalents were issued.

 

3. FUNDAMENTAL TRANSACTIONS. If, at any time while this Warrant is outstanding,
(i)   the Company effects any merger of the Company with or into another entity
and the Company is not the surviving entity, (ii) the Company effects any sale
of all or substantially all of its assets in one or a series of related
transactions, (iii) any tender offer or exchange offer (whether by the Company
or by another individual or entity, and approved by the Company) is completed
pursuant to which holders of Common Stock are permitted to tender or exchange
their shares of Common Stock for other securities, cash or property or (iv) the
Company effects any reclassification of the Common Stock or any compulsory share
exchange pursuant to which the Common Stock is effectively converted into or
exchanged for other securities, cash or property (other than as a result of a
subdivision or combination of shares of Common Stock covered by Section 2(a)
above) (in any such case, a “Fundamental Transaction”), then, upon any
subsequent exercise of this Warrant, the Holder shall have the right to receive
the number of shares of Common Stock of the successor or acquiring corporation
or of the Company and any additional consideration (the “Alternate
Consideration”) receivable upon or as a result of such reorganization,
reclassification, merger, consolidation or disposition of assets by a holder of
the number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such event (disregarding any limitation on exercise
contained herein solely for the purpose of such determination). For purposes of
any such exercise, the determination of the Exercise Price shall be
appropriately adjusted to apply to such Alternate Consideration based on the
amount of Alternate Consideration issuable in respect of one share of Common
Stock in such Fundamental Transaction, and the Company shall apportion the
Exercise Price among the Alternate Consideration in a reasonable manner
reflecting the relative value of any different components of the Alternate
Consideration. If holders of Common Stock are given any choice as to the
securities, cash or property to be received in a

 

 

Fundamental Transaction, then the Holder shall be given the same choice as to
the Alternate Consideration it receives upon any exercise of this Warrant
following such Fundamental Transaction. To the extent necessary to effectuate
the foregoing provisions, any successor to the Company or surviving entity in
such Fundamental Transaction shall issue to the Holder a new warrant consistent
with the foregoing provisions and evidencing the Holder’s right to exercise such
warrant into Alternate Consideration.

 

4. NON-CIRCUMVENTION. The Company covenants and agrees that the Company will
not, by amendment of its articles of incorporation, bylaws or through any
reorganization, transfer of assets, consolidation, merger, scheme of
arrangement, dissolution, issue or sale of securities, or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms
of this Warrant, and will at all times in good faith carry out all the
provisions of this Warrant and take all action as may be required to protect the
rights of the Holder. Without limiting the generality of the foregoing, the
Company (i) shall not increase the par value of any shares of Common Stock
receivable upon the exercise of this Warrant above the Exercise Price then in
effect, (ii) shall take all such actions as may be necessary or appropriate in
order that the Company may validly and legally issue fully paid and non-
assessable shares of Common Stock upon the exercise of this Warrant, and (iii)
shall, so long as this Warrant is outstanding, have authorized and reserved,
free from preemptive rights, a sufficient number of shares of Common Stock to
provide for the exercise of the rights represented by this Warrant (without
regard to any limitations on exercise).

 

5. WARRANT HOLDER NOT DEEMED A SHAREHOLDER. Except as otherwise specifically
provided herein, this Warrant, in and of itself, shall not entitle the Holder to
any voting rights or other rights as a shareholder of the Company. In addition,
nothing contained in this Warrant shall be construed as imposing any liabilities
on the Holder to purchase any securities (upon exercise of this Warrant or
otherwise) or as a shareholder of the Company, whether such liabilities are
asserted by the Company or by creditors of the Company.

 

6. REISSUANCE OF WARRANTS.

 

(a)                Lost, Stolen or Mutilated Warrant. If this Warrant is lost,
stolen, mutilated or destroyed, the Company will, on such terms as to indemnity
or otherwise as it may reasonably impose (which shall, in the case of a
mutilated Warrant, include the surrender thereof), issue a new Warrant of like
denomination and tenor as this Warrant so lost, stolen, mutilated or destroyed.

 

(b)               Issuance of New Warrants. Whenever the Company is required to
issue a new Warrant pursuant to the terms of this Warrant, such new Warrant
shall be of like tenor with this Warrant, and shall have an issuance date, as
indicated on the face of such new Warrant which is the same as the Issuance
Date.

 

7. TRANSFER.

 

(a)                Notice of Transfer. The Holder, by acceptance hereof, agrees
to give written notice to the Company before transferring this Warrant or
transferring any Warrant Shares of such Holder’s intention to do so, describing
briefly the manner of any proposed transfer. Promptly upon receiving such
written notice, the Company shall present copies thereof to the Company’s
counsel. If

 

 

 

the proposed transfer may be effected without registration or qualification
(under any federal or state securities laws), the Company, as promptly as
practicable, shall notify the Holder thereof, whereupon the Holder shall be
entitled to transfer this Warrant or to dispose of Warrant Shares received upon
the previous exercise of this Warrant, all in accordance with the terms of the
notice delivered by the Holder to the Company; provided, however, that an
appropriate legend may be endorsed on this Warrant or the certificates for such
Warrant Shares respecting restrictions upon transfer thereof necessary or
advisable in the opinion of counsel and satisfactory to the Company to prevent
further transfers which would be in violation of Section 5 of the Securities Act
of 1933 and applicable state securities laws; and provided further that the
prospective transferee or purchaser shall execute an Assignment of Warrant in
substantially the form attached hereto as Exhibit B and such other documents and
make such representations, warranties, and agreements as may be required solely
to comply with the exemptions relied upon by the Company for the transfer or
disposition of the Warrant or Warrant Shares.

 

(b)               If the proposed transfer or disposition of this Warrant or
such Warrant Shares described in the written notice given pursuant to this
Section 7 may not be effected without registration or qualification of this
Warrant or such Warrant Shares, the Holder will limit its activities in respect
to such transfer or disposition as are permitted by law.

 

8.                  NOTICES. Whenever notice is required to be given under this
Warrant, unless otherwise provided herein, such notice shall be given in
accordance with the notice provisions contained in the Note. The Company shall
provide the Holder with prompt written notice (i) immediately upon any
adjustment of the Exercise Price, setting forth in reasonable detail, and
certifying, the calculation of such adjustment and (ii) at least 20 days prior
to the date on which the Company closes its books or takes a record (A) with
respect to any dividend or distribution upon the shares of Common Stock, (B)
with respect to any grants, issuances or sales of any stock or other securities
directly or indirectly convertible into or exercisable or exchangeable for
shares of Common Stock or other property, pro rata to the holders of shares of
Common Stock or (C) for determining rights to vote with respect to any
Fundamental Transaction, dissolution or liquidation, provided in each case that
such information shall be made known to the public prior to or in conjunction
with such notice being provided to the Holder.

 

9.                  AMENDMENT AND WAIVER. The terms of this Warrant may be
amended or waived (either generally or in a particular instance and either
retroactively or prospectively) only with the written consent of the Company and
the Holder.

 

10.              GOVERNING LAW. This Warrant and all rights, obligations and
liabilities hereunder shall be governed by, and construed in accordance with,
the internal laws of the State of New York, without giving effect to the
conflicts-of-law principles thereof.

 

11.              DISPUTE RESOLUTION. In the case of a dispute as to the
determination of the Exercise Price, the Closing Sale Price, or the arithmetic
calculation of the Warrant Shares, the Company or the Holder (as the case may
be) shall submit the disputed determinations or arithmetic calculations via
facsimile (a) within two business days after receipt of the applicable notice
giving rise to such dispute to the Company or the Holder, as the case may be, or
(b) if no notice gave rise to such dispute, at any time after the Holder learned
of the circumstances giving rise to such dispute. If the Holder and the Company
are unable to agree upon such determination or calculation of the Exercise
Price, Closing Sale Price or the Warrant Shares within three business days of
such disputed determination or arithmetic calculation

 

 

 

being submitted to the Company or the Holder, as the case may be, then the
Company shall, within two business days thereafter submit via facsimile (x) the
disputed determination of the Exercise Price or Closing Sale Price to an
independent, reputable investment bank selected by the Company and approved by
the Holder or (y) the disputed arithmetic calculation of the Warrant Shares to
the Company’s independent, outside accountant. The Company shall cause at its
expense the investment bank or the accountant, as the case may be, to perform
the determinations or calculations and notify the Company and the Holder of the
results no later than ten business days from the time it receives the disputed
determinations or calculations. Such investment bank’s or accountant’s
determination or calculation, as the case may be, shall be binding upon all
parties absent manifest error.

 

12.              ACCEPTANCE. Receipt of this Warrant by the Holder shall
constitute acceptance of and agreement to all of the terms and conditions
contained herein.

 

13.              CERTAIN DEFINITIONS. For purposes of this Warrant, the
following terms shall have the following meanings:

 

(a)                “Bloomberg” means Bloomberg Financial Markets.

 

(b)               “Closing Sale Price” means, for any security as of any date,
(i) the last closing trade price for such security on the Principal Market, as
reported by Bloomberg, or, if the Principal Market begins to operate on an
extended hours basis and does not designate the closing trade price, then the
last trade price of such security prior to 4:00 p.m., New York time, as reported
by Bloomberg, or

(ii)   if the foregoing does not apply, the last trade price of such security in
the over-the-counter market for such security as reported by Bloomberg, or (iii)
if no last trade price is reported for such security by Bloomberg, the average
of the bid and ask prices of any market makers for such security as reported by
the OTC Markets. If the Closing Sale Price cannot be calculated for a security
on a particular date on any of the foregoing bases, the Closing Sale Price of
such security on such date shall be the fair market value as mutually determined
by the Company and the Holder. All such determinations to be appropriately
adjusted for any stock dividend, stock split, stock combination or other similar
transaction during the applicable calculation period.

 

(c)                “Common Stock” means (i) the Company’s common stock, par
value $0.01 per share, and (ii) any share capital into which such common stock
shall have been changed or any share capital resulting from a reclassification
of such common stock.

 

(d)               “Common Stock Equivalents” means any securities of the Company
that would entitle the holder thereof to acquire at any time Common Stock,
including without limitation any debt, preferred stock, rights, options,
warrants or other instrument that is at any time convertible into or exercisable
or exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock.

 

(e)                “Exempt Issuance” means the issuance of (i) shares of Common
Stock or options to employees, officers, directors or unaffiliated consultants
of the Company pursuant to any stock or option plan duly adopted by a majority
of the non-employee members of the Board of Directors of the Company or a
majority of the members of a committee of non-employee directors established for
such purpose, (ii) any securities upon the exercise or conversion of any
securities issued pursuant to the Securities Purchase Agreement or agreements in
substantially similar form pursuant to which Notes and

 

 

Warrants were or are sold, (iii) any Common Stock upon the exercise or
conversion of securities that are issued and outstanding as of the date of the
Securities Purchase Agreement, (iv) securities issued pursuant to or in
connection with acquisitions or strategic transactions approved by a majority of
the disinterested directors of the Company, (v) shares of Common Stock issued or
issuable in connection with regularly scheduled dividend payments on the
Company’s Series A Preferred Stock, and (vi) shares of Common Stock issued
pursuant to any loan or leasing arrangement, real property leasing arrangement,
or debt financing from a bank approved by the Board of Directors of the Company.

 

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

 

(g) “SEC” means the U.S. Securities and Exchange Commission.

 

(h) “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.

 

(i) “Weighted Average Price” means, for any security as of any date, (i) the
dollar- volume weighted-average price for such security on the Principal Market
during the period beginning at 9:30 a.m., New York City time, and ending at 4:00
p.m., New York City time, as reported by Bloomberg or (ii) if the foregoing does
not apply, the dollar-volume weighted-average price of such security in the
over-the-counter market for such security during the period beginning at 9:30
a.m., New York City time, and ending at 4:00 p.m., New York City time, as
reported by Bloomberg, or (iii) if no dollar-volume weighted-average price is
reported for such security by Bloomberg for such hours, the average of the
highest closing bid price and the lowest closing ask price of any of the market
makers for such security as reported in OTC Markets. If the Weighted Average
Price cannot be calculated for such security on such date on any of the
foregoing bases, the Weighted Average Price of such security on such date shall
be the fair market value as mutually determined by the Company and the Holder.
If the Company and the Holder are unable to agree upon the fair market value of
such security, then such dispute shall be resolved pursuant to Section 12 with
the term “Weighted Average Price” being substituted for the term “Exercise
Price.” All such determinations shall be appropriately adjusted for any share
dividend, share split or other similar transaction during such period.

 

 

 

* * * * * * *

 

 

 

IN WITNESS WHEREOF, the Company has caused this Warrant to Purchase Common Stock
to be duly executed as of the date indicated above.

 

 

CREATIVE REALITIES, INC.

 

/s/ John Walpuck

John Walpuck

Chief Financial Officer

 

 

 

EXHIBIT A

 

FORM OF EXERCISE NOTICE

 

(To be executed by the registered holder to exercise this Warrant to Purchase
Common Stock)

 

 

THE UNDERSIGNED holder hereby exercises the right to purchase of the shares of
Common Stock (“Warrant Shares”) of Creative Realities, Inc., a Minnesota
corporation (the “Company”), evidenced by the attached copy of the Warrant to
Purchase Common Stock

(the “Warrant”). Capitalized terms used herein and not otherwise defined shall
have the respective meanings set forth in the Warrant.

 

1.Form of Exercise Price. The Holder intends that payment of the Exercise Price
shall be made as (check one):

 

□ a cash exercise with respect to Warrant Shares; and/or

 

□ a “Cashless Exercise” with respect to Warrant Shares.

 

2.Payment of Exercise Price. In the event that the holder has elected to
exercise some or all of the Warrant Shares to be issued pursuant hereto, the
holder shall pay the Aggregate Exercise Price in the sum of $ to the Company in
accordance with the terms of the Warrant.

 

3.Delivery of Warrant Shares. The Company shall deliver to the holder Warrant
Shares in accordance with the terms of the Warrant.

 

 

Date: ___________________________

 

 

 

 

___________________________________

 

 

(Print Name of Registered Holder)

 

By:

Name:

Title:

 

 

 

EXHIBIT B

 

FORM OF ASSIGNMENT OF WARRANT

 

(To be signed only upon authorized transfer of the Warrant)

 

 

FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers unto
___________________ the right to purchase ___________ shares of common stock of
Creative Realities, Inc., to which the within Warrant to Purchase Common Stock
relates and appoints ________________, as attorney-in-fact, to transfer said
right on the books of Creative Realities, Inc. with full power of substitution
and re-substitution in the premises. By accepting such transfer, the transferee
has agreed to be bound in all respects by the terms and conditions of the within
Warrant.

 

 

Dated: ____________________

 

 

 

 

(Signature) *

 

 

 

(Name)

 

 

 

(Address)

 

 

 

(Social Security or Tax Ident. No.)

 

 

 

* The signature on this Assignment of Warrant must correspond to the name as
written upon the face of the Warrant to Purchase Common Stock in every
particular without alteration or enlargement or any change whatsoever. When
signing on behalf of a corporation, partnership, trust or other entity, please
indicate your position(s) and title(s) with such entity.