Document:

Exhibit

ALIGN TECHNOLOGY, INC.
AMENDED AND RESTATED 2005 INCENTIVE PLAN
NOTICE OF GRANT OF MARKET STOCK UNITS
Unless otherwise defined herein, the terms defined in the Amended and Restated 2005 Incentive Plan (the “Plan”) will have the same defined meanings in this Notice of Grant of Market Stock Units (the “Notice of Grant”).
Participant:    Joseph M. Hogan
Address:
You (the “Participant”) have been granted an award (“Award”) of market-performance based Restricted Stock Units (“Market Stock Units”), subject to the terms and conditions of the Plan, this Notice of Grant and the CEO Special Market Stock Unit Agreement attached hereto as Exhibit A (the “Agreement”) as follows:

	
		
	Date of Grant:
	June 22, 2018

	Target Number of Market Stock Units:
	43,100 (the “Target Number of Market Stock Units”)

	Maximum Number of Market Stock Units:
	129,300 (the “Maximum Number of Market Stock Units”)

	Performance Period:
	6/1/2018 to 6/1/2021  (the “Performance Period”), subject to Section 4 of Exhibit A

	Performance Matrix:
	The number of Market Stock Units in which Participant may vest in accordance with the Vesting Schedule will depend upon (i) the Relative TSR (as defined below) and (ii) the Company’s Ending Price (as defined below), and will be determined in accordance with Section 1 of Exhibit A.

	Vesting Schedule:
	Subject to Sections 4 and 5 of Exhibit A and the terms of the Plan, Participant will vest in his or her Eligible Market Stock Units (as defined below) on the date the Relative TSR and the Company’s Ending Price are determined by the Administrator (the “Vesting Date”).

By accepting this agreement online, you and the Company agree that this Award is granted under and governed by the terms and conditions of the Plan and the Agreement, each of which are made a part of this document.  You further agree to accept, acknowledge, and execute this Agreement as a condition to receiving any Market Stock Units under this Award.
Nothing in this Notice of Grant or in the attached Agreement or in the Plan shall confer upon Participant any right to continue in service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Company (or any Parent or Subsidiary employing or retaining Participant) or of Participant, which rights are hereby expressly reserved by each, to terminate Participant’s service at any time for any reason, with or without cause.

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EXHIBIT A
CEO SPECIAL MARKET STOCK UNIT AGREEMENT

1.Grant.

(a)The Company hereby grants to Participant under the Plan an Award of Market Stock Units, subject to all of the terms and conditions in the Notice of Grant, this Agreement, and the Plan.

(b)The number of Market Stock Units in which Participant may vest in accordance with the Vesting Schedule set forth in the Notice of Grant (“Eligible Market Stock Units”) will depend upon (i) the total stockholder return (“TSR”) of the Company during the Performance Period (the “Company TSR”) relative to the TSRs of the Indexed Companies during the Performance Period (each, an “Indexed Company TSR”) and (ii) the Company’s Ending Price.  The “Index” means the S&P 500 Index or any successor index thereto.  “Indexed Companies” means the companies that are in the Index as of the beginning of the Performance Period and remain in the Index through the end of the Performance Period (or if the Index ceases to exist prior to the end of the Performance Period, then the companies that were in the Index immediately before the Index ceased to exist and whose securities are actively traded on a nationally recognized stock exchange as of the end of the Performance Period).  The actual number of Market Stock Units that will vest on the Vesting Date will be determined as follows:

(i)Relative TSR Calculation.  Except as provided under Section 4  below, the Relative TSR will be determined as follows:

1.Step 1: Calculate the beginning price with respect to the Company and each Indexed Company by determining the average of the closing market prices of such company’s common stock on the principal exchange on which such stock is traded for the last thirty (30) market trading days prior to the commencement of the Performance Period (each, a “Beginning Price”).  For the purpose of determining Beginning Price, the value of dividends and other distributions (the ex-dividend date for which occurs during the thirty (30)-market-trading-day measurement period) will be determined by treating them as reinvested in additional shares of stock at the closing market price on the ex-dividend date.  

2.Step 2: Calculate the ending price with respect to the Company and each Indexed Company by determining the average of the closing market prices of such company’s common stock on the principal exchange on which such stock is traded for the thirty (30) consecutive market trading days ending on the last trading day of the Performance Period (each, an “Ending Price”).  For the purpose of determining Ending Price, the value of dividends and other distributions (the ex-dividend date for which occurs during the Performance Period) will be determined by treating them as reinvested in additional shares of stock at the closing market price on the ex-dividend date.  

3.Step 3: Calculate the Company TSR and each Indexed Company TSR by applying the following formula: (Ending Price/Beginning Price)-1.  The Company TSR and each Indexed Company TSR will each be expressed as a percent of increase (i.e., a positive percent) or decrease (i.e., a negative percent) rounded to two decimal places (applying standard rounding principles).  

4.Step 4: Calculate the Company TSR’s percentile ranking among the Indexed Company TSRs (the “Relative TSR”) by ranking the Company TSR and the Indexed Company TSRs from highest (highest positive percentage) to lowest (highest negative percentage).

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(ii)Eligible Market Stock Unit Calculation.  Based on the Relative TSR and the Company’s Ending Price, the number of Eligible Market Stock Units will be the product of (x) the Applicable Percentage (in the table below) multiplied by (y) the Target Number of Market Stock Units, with the number of resulting Shares rounded to the nearest whole Share (applying standard rounding principles).
The Applicable Percentage will be determined as follows: 
	
						
	 
	 
	Relative TSR

	 
	 
	Below 60th percentile
	60th percentile
	70th percentile
	80th percentile

	Company’s Ending Price
	Greater than $500.00
	150%
	200%
	250%
	300%

	At least $475.00 but less than $500.00
	100%
	150%
	200%
	250%

	At least $450.00 but less than $475.00
	50%
	100%
	150%
	200%

	At least equal to the Company’s Beginning Price but less than $450.00
	0%
	50%
	100%
	150%

	Less than the Company’s Beginning Price
	0%
	50%
	100%
	100%

If (i) the Company TSR ranks among the Indexed Company TSRs at a percentile that falls between the percentile thresholds set forth above and/or (ii) the Company’s Ending Price falls between the thresholds set forth above, the Applicable Percentage will be determined based on a linear interpolation between the corresponding Applicable Percentages for such thresholds.  Notwithstanding the foregoing, the Applicable Percentage may not exceed 100% if the Company TSR is less than zero.
All determinations regarding the Beginning Price, the Ending Price, the Company TSR, the Indexed Company TSRs, the Relative TSR, and the Applicable Percentage will be made by the Committee in its sole discretion and all such determinations will be final and binding on all parties.  
(iii)Examples (for illustration purposes only).  If (i) the Company TSR ranks among the Indexed Company TSRs at the 65th percentile and (ii) the Company’s Ending Price is $465.00, then 155% of the Target Number of Market Stock Units would be Eligible Market Stock Units and would vest on the Vesting Date.

2.Company’s Obligation to Pay.  Each Market Stock Unit represents a value equal to the Fair Market Value of a Share on the date it is granted.  Unless and until the Market Stock Units will have vested in the manner set forth in Sections 3, 4 and 5, Participant will have no right to payment of any such Market Stock Units.  Prior to actual payment of any vested Market Stock Units, such Market Stock Unit will represent an unsecured obligation of the Company, payable (if at all) only from the general assets of the Company.  Payment of any vested Market Stock Units will be made in whole Shares only and any fractional Shares will be forfeited at the time of payment.

3.Vesting Schedule.  Subject to Sections 4 and 5, the Market Stock Units awarded by this Agreement will vest in Participant according to the Vesting Schedule set forth on the attached Notice of Grant, subject to Participant continuing to be a Service Provider through each such date.

4.Change in Control.  In the event of a Change in Control, the Performance Period shall be deemed to end upon the closing of the Change in Control for purposes of determining the Ending Price for the Company and each Indexed Company, the Company TSR, the Indexed Company TSRs, and the Relative TSR (such shortened Performance Period, the “Adjusted Performance Period”), and any references to the “Performance Period” under Section 1(b) will refer to the “Adjusted Performance Period.”  The number of Market Stock Units that are Eligible Market Stock Units will be determined in accordance with Section 1(b)(ii).  Participant shall vest in 100% of the 

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number of Eligible Market Stock Units on the last day of the originally scheduled Performance Period set forth in the Notice of Grant, subject to Participant continuing to be a Service Provider through such date.  The Administrator shall not be entitled to eliminate or reduce the number of Eligible Market Stock Units determined in accordance with this Section 4 following a Change in Control.

5.Termination in Connection With a Change in Control.  In the event Participant’s employment with the Company is terminated in connection with a Change in Control that occurs prior to the end of the Performance Period,  the Market Stock Units that become Eligible Market Stock Units pursuant to Section 4 will be subject to any vesting acceleration provisions set forth in any agreement that, prior to and effective as of the date of this Agreement, has been entered into between Participant and the Company or any Subsidiary that includes any provisions applicable to such Eligible Market Stock Units.

6.Forfeiture upon Termination of Status as a Service Provider.  Subject to the provisions of Section 5, if Participant ceases to be a Service Provider for any or no reason, the then-unvested Market Stock Units awarded by this Agreement will thereupon be forfeited at no cost to the Company and Participant will have no further rights thereunder.

7.Payment after Vesting.  Any Market Stock Units that vest in accordance with Sections 3, 4 and 5 will be paid to Participant (or in the event of Participant’s death, to his or her estate) in whole Shares, subject to Participant satisfying any applicable tax withholding obligations as set forth in Section 9.  Subject to the provisions of Section 21, any Shares will be issued to Participant as soon as practicable after the relevant vesting date, but in any event, within the period ending on the later to occur of the date that is two-and-one-half months from the end of (a) Participant’s tax year that includes the vesting date, or (b) the Company’s tax year that includes the vesting date.

8.Payments after Death.  Any distribution or delivery to be made to Participant under this Agreement will, if Participant is then deceased, be made to Participant’s designated beneficiary, or if no beneficiary survives Participant, the administrator or executor of Participant’s estate.  Any such transferee must furnish the Company with (a) written notice of his or her status as transferee, and (b) evidence satisfactory to the Company to establish the validity of the transfer and compliance with any laws or regulations pertaining to said transfer.

9.Withholding of Taxes.

(a)Generally.  Participant is ultimately liable and responsible for all taxes owed in connection with the Market Stock Units, regardless of any action the Company or any of its Subsidiaries takes with respect to any tax withholding obligations that arise in connection with the Market Stock Units.  Neither the Company nor any of its Subsidiaries makes any representation or undertaking regarding the treatment of any tax withholding in connection with the grant or vesting of the Market Stock Units or the subsequent sale of Shares issuable pursuant to the Market Stock Units.  The Company and its Subsidiaries do not commit and are under no obligation to structure the Market Stock Units to reduce or eliminate Participant’s tax liability.

(b)Payment of Withholding Taxes.  Notwithstanding any contrary provision of this Agreement, no Shares will be issued to Participant, unless and until satisfactory arrangements (as determined by the Administrator) will have been made by Participant with respect to the payment of any taxes which the Company determines must be withheld with respect to the Market Stock Units.  The Administrator, in its sole discretion and pursuant to such procedures as it may specify from time to time, may satisfy such tax withholding obligations, in whole or in part, by withholding otherwise deliverable Shares having an aggregate fair market value equal to the amount required to be withheld or such greater amount as the Administrator may determine if such amount would not have adverse accounting consequences, as the Administrator determines in its sole discretion.  In addition and to the maximum extent permitted by law, the Company has the right to retain without notice from salary or other amounts payable to Participant, cash having a value sufficient to satisfy any tax withholding obligations that cannot be satisfied by the withholding of otherwise deliverable Shares.

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10.Rights as Stockholder.  Neither Participant nor any person claiming under or through Participant will have any of the rights or privileges of a stockholder of the Company in respect of any Shares deliverable hereunder, unless and until certificates representing such Shares will have been issued, recorded on the records of the Company or its transfer agents or registrars, and delivered to Participant.

11.No Effect on Service.  Participant acknowledges and agrees that the vesting of the Market Stock Units pursuant to Sections 3, 4 or 5 hereof is earned only by Participant continuing to be a Service Provider through the applicable vesting dates (and not through the act of being hired or acquiring Shares hereunder).  Participant further acknowledges and agrees that this Agreement, the transactions contemplated hereunder and the vesting schedule set forth herein do not constitute an express or implied promise of Participant continuing to be a Service Provider for the vesting period, for any period, or at all, and will not interfere with Participant’s right or the right of the Company (or the Affiliate employing or retaining Participant) to terminate Participant as a Service Provider at any time, with or without cause.

12.Address for Notices.  Any notice to be given to the Company under the terms of this Agreement will be addressed to the Company, in care of Stock Administrator at Align Technology, Inc., 2820 Orchard Parkway, San Jose, CA 95134, or at such other address as the Company may hereafter designate in writing.

13.Grant is Not Transferable.  Except to the limited extent provided in Section 8, this grant and the rights and privileges conferred hereby will not be transferred, assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) and will not be subject to sale under execution, attachment or similar process.  Upon any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of this grant, or any right or privilege conferred hereby, or upon any attempted sale under any execution, attachment or similar process, this grant and the rights and privileges conferred hereby immediately will become null and void.

14.Binding Agreement.  Subject to the limitation on the transferability of this grant contained herein, this Agreement will be binding upon and inure to the benefit of the heirs, legatees, legal representatives, successors and assigns of the parties hereto.

15.Additional Conditions to Issuance of Stock.  If at any time the Company will determine, in its discretion, that the listing, registration or qualification of the Shares upon any securities exchange or under any state or federal law, or the consent or approval of any governmental regulatory authority is necessary or desirable as a condition to the issuance of shares to Participant (or his estate), such issuance will not occur unless and until such listing, registration, qualification, consent or approval will have been effected or obtained free of any conditions not acceptable to the Company.  Where the Company determines that the delivery of the payment of any Shares will violate federal securities laws or other applicable laws, the Company will defer delivery until the earliest date at which the Company reasonably anticipates that the delivery of Shares will no longer cause such violation.  The Company will make all reasonable efforts to meet the requirements of any such state or federal law or securities exchange and to obtain any such consent or approval of any such governmental authority.

16.Plan Governs.  This Agreement is subject to all terms and provisions of the Plan.  In the event of a conflict between one or more provisions of this Agreement and one or more provisions of the Plan, the provisions of the Plan will govern.

17.Administrator Authority.  The Administrator will have the power to interpret the Plan and this Agreement and to adopt such rules for the administration, interpretation and application of the Plan as are consistent therewith and to interpret or revoke any such rules (including, but not limited to, the determination of whether or not any Market Stock Units have vested).  All actions taken and all interpretations and determinations made by the Administrator in good faith will be final and binding upon Participant, the Company and all other interested persons.  No member of the Administrator will be personally liable for any action, determination, or interpretation made in good faith with respect to the Plan or this Agreement.

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18.Electronic Delivery.  The Company may, in its sole discretion, decide to deliver any documents related to Market Stock Units awarded under the Plan or future Market Stock Units that may be awarded under the Plan by electronic means or request Participant’s consent to participate in the Plan by electronic means.  Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company.

19.Captions.  Captions provided herein are for convenience only and are not to serve as a basis for interpretation or construction of this Agreement.

20.Agreement Severable.  In the event that any provision in this Agreement will be held invalid or unenforceable, such provision will be severable from, and such invalidity or unenforceability will not be construed to have any effect on, the remaining provisions of this Agreement.

21.Section 409A.  Notwithstanding anything in the Plan or this Agreement to the contrary, if the vesting of the balance, or some lesser portion of the balance, of the Market Stock Units is accelerated in connection with Participant’s termination as a Service Provider (provided that such termination is a “separation from service” within the meaning of Section 409A, as determined by the Company), other than due to death, and if (x) Participant is a “specified employee” within the meaning of Section 409A at the time of such termination as a Service Provider and (y) the payment of such accelerated Market Stock Units will result in the imposition of additional tax under Section 409A if paid to Participant on or within the six (6) month period following Participant’s termination as a Service Provider, then the payment of such accelerated Market Stock Units will not be made until the date six (6) months and one (1) day following the date of Participant’s termination as a Service Provider, unless Participant dies following his or her termination as a Service Provider, in which case, the Market Stock Units will be paid in Shares to Participant’s estate as soon as practicable following his or her death.  It is the intent of this Agreement to comply with the requirements of Section 409A so that none of the Market Stock Units provided under this Agreement or Shares issuable thereunder will be subject to the additional tax imposed under Section 409A, and any ambiguities herein will be interpreted to so comply.  For purposes of this Agreement, “Section 409A” means Section 409A of the Code, and any proposed, temporary, or final Treasury Regulations and Internal Revenue Service guidance thereunder, as each may be amended from time to time.

22.Governing Law.  This Agreement shall be governed by the laws of the State of California, without giving effect to the conflict of law principles thereof.  For purposes of litigating any dispute that arises under this Award of Market Stock Units or this Agreement, the parties hereby submit to and consent to the jurisdiction of the State of California, and agree that such litigation shall be conducted in the courts of Santa Clara County, California, or the federal courts for the United States for the Northern District of California, and no other courts, where this Award of Market Stock Units is made and/or to be performed.
[Remainder of Page Intentionally Left Blank]

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By Participant’s acceptance of this Agreement, Participant represents that he or she is familiar with the terms and provisions of the Plan, and hereby accepts this Agreement subject to all of the terms and provisions thereof.  Participant has reviewed the Plan and this Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Agreement, and fully understands all provisions of this Agreement.  Participant agrees to accept as binding, conclusive, and final all decisions or interpretations of the Administrator upon any questions arising under the Plan or this Agreement.  Participant further agrees to notify the Company upon any change in the residence indicated in the Notice of Grant of Market Stock Units.

7Exhibit
10.25

 

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: 5,882,352 (subject to adjustment as provided herein) Date of Issuance: November 13, 2017 (“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 5,882,352
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 Term Promissory Note pursuant to the terms and conditions of a Loan and Security Agreement
by and among the Company, certain of its subsidiaries, and Slipstream Communications, LLC, dated of even date herewith (the “Loan
and Security Agreement,” and the note sold thereunder, the “Note”). 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.

 

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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 Issuance Date 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 Issuance Date 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, then 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

 

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(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)

 

    	 	4	 

     

    

 

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 Issuance (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.

 

(e) Additional
Loans under the Loan and Security Agreement. If at any time that an Advance (as defined in the Loan and Security
Agreement) is made under the Loan and Security Agreement and the aggregate amount of all Advances made under the Loan and
Security Agreement (whether or not outstanding) exceeds $3,000,000, then the number of Warrant Shares issuable upon exercise
of this Warrant shall be increased by the product of (the quotient of the amount of such most recent Advance divided by
$0.255) multiplied by 0.5.

 

 

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.

 

    	 	5	 

     

    

 

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 date such new Warrant is issued.

 

    	 	6	 

     

    

 

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.

 

    	 	7	 

     

    

 

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 email or 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 or email (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.

 

    	 	8	 

     

    

 

(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 this Warrant or
other warrants issued under the Loan and Security Agreement, (iii) any Common Stock upon the exercise or conversion of securities
that are issued and outstanding as of the Issuance Date,

(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 or Series A-1 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 11 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.

 

    	 	9	 

     

    

 

14.
REGISTRATION RIGHTS.

 

(a)
Demand Registration. The Company shall file, within 45 days after written demand therefor by the Holder, and thereafter
use its commercially reasonable efforts to effect, registration under the Securities Act for the resale of the Warrant Shares;
provided, however, that (i) the Company shall not be obligated to take any action to effect any such registration if the Holder
fails to reasonably cooperate in providing the Company with all information reasonably required to be included in the applicable
registration statement or otherwise required to be obtained by the Company for purposes of preparing and filing the registration
statement and any amendments thereto, and (ii) the obligations of the Company upon any such demand shall be subject to the provisions
of paragraph (c) below. Once declared effective by the SEC, the Company shall use its best efforts to keep the applicable registration
statement effective until the earliest of (A) such time as all of the Warrant Shares shall have been sold or (B) at least three
years have passed since the Issuance Date (as applicable, the “Registration Expiration”).

 

(b)
Piggyback Registration.

 

(i)
If, but without any obligation under this Agreement to do so, the Company proposes to register, including for this purpose a
registration effected by the Company for holders of Company securities other than the Holder, any of its securities under
the Securities Act, other than a registration relating solely to the sale of securities to participants in an equity
incentive plan on Form S-8, or a registration on Form S-4 relating solely to a transaction pursuant to the SEC’s Rule
145 (or any successors to such forms), the Company shall at such time promptly give the Holder written notice of such
proposed registration. Upon the written request of the Holder given within 20 business days after the giving of notice by the
Company, the Company shall, subject to the provisions of paragraph (c) below, cause to be registered under the Securities Act
all of the Warrant Shares that the Holder shall have requested to be registered; provided, however, that the Company shall
not be obligated to take any action to effect any such registration if the Holder fails to reasonably cooperate in providing
the Company with all information reasonably required to be included in the applicable registration statement or otherwise
required to be obtained by the Company for purposes of preparing and filing that registration statement and any amendments
thereto.

 

(ii)
In connection with any offering involving an underwriting of the Company’s common securities, the Company shall not be required
under this Section 14(b) to include any of Holder’s Warrant Shares in such underwriting unless the Holder accepts the terms
of the underwriting as agreed upon between the Company and the underwriters selected by the Company (or by other persons entitled
to select the underwriters).

 

(iii)
No incidental right under this Section 14(b) shall be construed to limit any registration required under Section 14(a). The piggyback
registration rights in this Section 14(b) shall continue until the Registration Expiration.

 

(c)
Cut-Back Provision. With respect to any registration under Section 14(b), but not any registration under Section 14(a),
if, for any reason, the SEC, (in consultation with Company counsel, and based on existing written SEC guidance or applicable rules),
or one of the lead underwriters participating in an underwritten primary offering, requires that the number of Warrant Shares
to be registered for resale pursuant to the applicable registration statement be reduced (in order to comply with SEC rules or
guidance, or in order to facilitate the success of the offering as determined by the lead underwriters), then such reduction shall
be allocated pro rata among all holders whose shares (but not limited to Warrant Shares) have been included (or are eligible for
inclusion) for resale under the registration statement until the reduction so required shall have been effected.

 

(d)
Registration Expenses. All expenses incurred by the Company in complying with Section 14, including without limitation
all registration and filing fees, printing expenses (if required), fees and disbursements of counsel and independent public accountants
for the Company, fees of the FINRA, transfer taxes, and fees of transfer agents and registrars, are called “Registration
Expenses.” The Company will pay all Registration Expenses in connection with any registration hereunder.

 

 

*
* * * * * *

 

    	 	10	 

     

    

 

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
Executive Officer

 

 

11

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