Exhibit 10.12
NEITHERTHISWARRANTNORANYOFTHESECURITIES ISSUABLEUPONEXERCISEOFTHISWARRANTHAVEBEENREGISTEREDUNDERTHESECURITIESACTOF1933ORUNDERTHESECURITIESLAWSOFANYOTHERJURISDICTION.BYACQUIRINGTHISWARRANT,HOLDERAGREES TONOT SELL OROTHERWISEDISPOSEOFTHISWARRANT ORTHESECURITIESISSUABLE UPON EXERCISE OFTHISWARRANT WITHOUTREGISTRATION OR THEAPPLICABILITYOF ANEXEMPTION FROMREGISTRATIONUNDERTHEAFORESAIDACTS,ANDTHERULESANDREGULATIONSTHEREUNDER.
WARRANTTO PURCHASE COMMONSTOCK
Number of Shares ofCommon Stock:1,750,000
Date ofIssuance:December 22, 2015(“IssuanceDate”)
THISCERTIFIESTHAT,forvaluereceived, SlipstreamCommunications, LLC (includinganypermittedand registeredassigns,the “Holder”), is entitledtopurchasefromCreativeRealities,Inc., aMinnesotacorporation(the“Company”), up to1,750,000 shares ofCommon Stock oftheCompany (the“WarrantShares”) attheExercise Pricehereunder thenineffect.ThisWarrant toPurchaseCommonStock(this“Warrant”) isissued by theCompany inconnection with theCompany’soffer and saleto theHolder of a SecuredConvertiblePromissory Notepursuantto the terms andconditions of a SecuritiesPurchaseAgreement by andamong theCompany, Holder andotherpurchasers ofsuch notes,dated ofeven dateherewith (the“SecuritiesPurchaseAgreement,” and such notessoldthereunder, the“Notes”).For purposes ofthisWarrant,theterm“Exercise Price”shallmean $0.28 per share,subjecttoadjustmentas provided herein,andthe term “Exercise Period”shallmean the periodcommencing on theIssuanceDate andending on 5:00 p.m.New Yorktime on thefive-yearanniversary ofthe date of thisWarrant.
1. EXERCISE OFWARRANT.
(a) Mechanicsof Exercise.Subjecttotheterms and conditionshereof,including butnotlimited to the provisions of Section 1(c)below, therights representedby thisWarrantmay beexercised inwhole or inpart at anytime ortimes duringthe ExercisePeriod bydelivery of a writtennotice, inthe formattachedhereto asExhibit A(the“ExerciseNotice”),ofthe Holder’selectiontoexercisethisWarrant.The Holdershallnot be requiredto deliver theoriginalWarrantin ordertoeffectan exercisehereunder.Execution anddelivery ofthe Exercise Notice withrespect to less thanall of theWarrantShares shallhave thesameeffect as cancellation oftheoriginalWarrant andissuance of anewWarrantevidencingtherighttopurchase theremainingnumber ofWarrant Shares.On or before thethirdTrading Day (the“WarrantShareDeliveryDate”)following the date on which theCompany shallhavereceived theExercise Notice,and uponreceipt by theCompany of(i)payment to theCompany ofanamount equal totheapplicableExercise Price multipliedby thenumber ofWarrantShares astowhich thisWarrant isbeing exercised (the“AggregateExercise Price” and togetherwith theExerciseNotice,the“ExerciseDeliveryDocuments”) in cash or bywire transferofimmediately availablefunds or (ii)notification fromthe Holder thatthisWarrantis being exercisedpursuantto aCashlessExercise, as definedbelow, theCompany shallissue anddispatch by overnightcourier totheaddress as specifiedin theExerciseNotice, acertificate,registered intheCompany’s shareregister inthename of the Holder
or its designee,for thenumber of shares ofCommon Stock to which theHolder isentitledpursuant tosuchexercise (orcreditthe Holder’saccountthrough anelectronicdelivery ofCommon StockthroughtheDWAC systemof the Depository TrustCompany, if requested).Upon delivery oftheExerciseDeliveryDocuments, the Holder shall bedeemed for allcorporatepurposes to havebecome the holderofrecord of theWarrantShares withrespect towhichthisWarranthasbeenexercised,irrespectiveofthe date ofdelivery of thecertificatesevidencingsuchWarrant Shares.If thisWarrantissubmittedinconnectionwith any exercisepursuant toSection1(c) andthenumber of WarrantSharesrepresented bythisWarrant submitted for exerciseis greaterthan thenumber ofWarrantSharesbeing acquiredupon anexercise,then theCompanyshallas soon as practicable, andinno eventlater than threebusinessdaysafter anyexercise and atits ownexpense,issue a newWarrantrepresenting the rightto purchasethenumber of WarrantSharespurchasableimmediatelypriortosuchexercise underthisWarrant,less thenumber of WarrantShares with respect to whichthisWarrantisexercised.
(b) NoFractional Shares.Nofractionalshares shall beissuedupon theexercise ofthisWarrantas aconsequence of anyadjustment pursuanthereto. AllWarrantShares (includingfractions) issuable uponexercise ofthisWarrant may be aggregated forpurposes ofdeterminingwhetherthe exercisewould resultintheissuanceofanyfractional share.If,after aggregation,theexercisewould resultintheissuanceofafractional share, the Company shall,in lieu ofissuance ofanyfractional share, paytheHolderotherwiseentitledto such fraction a sumin cashequalto theproductresultingfrommultiplying the thencurrent fair market value of aWarrant Share bysuchfraction.
(c) CashlessExercise.TheHoldermay,in its sole discretion,exercisethisWarrantin whole orin part and,in lieu ofmaking thecashpayment otherwise contemplated tobemade to theCompany upon suchexercise inpayment of the AggregateExercisePrice, electinstead to receive uponsuchexercise the “NetNumber” of shares ofCommonStockdeterminedaccording tothefollowingformula (a “CashlessExercise”):
NetNumber=(A x B) -(A x C)
B
For purposes oftheforegoingformula:
A =thetotalnumber ofshares withrespect to whichthisWarrant isthen beingexercised.
B =theWeighted Average Price of the shares ofCommonStockfor the fiveconsecutiveTradingDays ending onthe dateimmediately precedingthedate of theExerciseNotice.
C =the ExercisePricethenineffectfor theapplicableWarrantShares at the time ofsuchexercise.
(d) Compensation for Buy-In onFailureto TimelyDeliverWarrant Shares.Inaddition toany otherrightsavailable to theHolder, if theCompanyfails todeliver(or causeitstransferagent todeliver)totheHolder theWarrantShares pursuanttoanexerciseon or beforetheWarrantShareDelivery Date,and ifaftersuch datethe Holderisrequired byitsbroker topurchase (inan open-
market transactionor otherwise),or the Holder’s brokerage firmotherwise purchases,shares ofCommon Stock todeliver insatisfaction of a sale by theHolder of theWarrantShares which theHolderanticipatedreceiving upon such exercise (a“Buy-In”),thentheCompany shall(A) pay in cashto theHolder the amount, if any, by which (x) theHolder’s total purchase price (including brokeragecommissions, if any)for the sharesofCommon Stock sopurchasedexceeds (y)theamount obtained bymultiplying(1) thenumber ofWarrant Shares that theCompany wasrequiredtodeliver tothe Holderinconnectionwith theexerciseatissue,times (2)the price atwhich thesellordergivingriseto suchpurchaseobligation wasexecuted,and (B) attheoption oftheHolder,either reinstate the portionof theWarrant andequivalentnumber ofWarrantShares forwhich suchexercise was nothonored (inwhichcase suchexercise shall bedeemedrescinded) ordeliver tothe Holderthe number of shares ofCommonStockthat would havebeen issuedhad theCompanytimely complied with itsexerciseand deliveryobligations hereunder.Forexample, if the Holderpurchases Common Stock having a total purchase price of$11,000 to cover aBuy-In withrespecttoanattemptedexercise of shares ofCommon Stockwith an aggregatesalepricegivingrise to such purchaseobligation of $10,000, under clause(A) oftheimmediatelypreceding sentencethe Company shall be required to paythe Holder$1,000. The Holdershallprovide theCompany writtennotice indicating theamountpayableto the Holder inrespectoftheBuy-In and,upon request oftheCompany,evidence of the amount ofsuch loss. Nothing hereinshalllimit a Holder’srighttopursue anyotherremedies availabletoithereunder, atlaw orin equity,includingwithoutlimitationadecreeofspecificperformance or other injunctivereliefwith respectto theCompany’s failure to timelydeliver shares ofCommon Stock upon exercise oftheWarrant asrequired pursuant tothe terms hereof.
(e) BeneficialOwnershipRestrictions.Notwithstandinganything to thecontrary inthisWarrant, theCompany shallnot effect anyexercise ofthisWarrant,and a Holder shall nothave therighttoexercise anyportion of thisWarrant, totheextentthat, aftergivingeffect tothe exercisesetforth on theapplicableExercise Notice, such Holder(together with suchHolder’s“affiliates,” assuchtermis defined in Rule405 under the SecuritiesAct of 1933, and any Persons actingas a group togetherwith such Holder or anyofsuch Holder’saffiliates) wouldbeneficiallyown inexcessof theBeneficialOwnershipLimitation,as definedbelow. For purposes ofthe foregoingsentence,thenumber of sharesof Common Stockbeneficiallyowned by such Holder andits affiliates shallinclude thenumber ofshares ofCommonStock issuableuponexerciseofthisWarrant withrespect towhich suchdetermination is beingmade, butshallexclude the number of shares ofCommonStock which areissuableupon (i)conversion of theremainingunexercised portion of this Warrantbeneficially owned bysuch Holder or any of itsaffiliates and (ii)exercise orconversion of theunexercised orunconvertedportion ofany othersecurities of the Company that aresubject to a limitation onconversion orexercise analogoustothelimitationcontainedhereinbeneficiallyowned by such Holder oranyofitsaffiliates. Except asset forth inthe precedingsentence,forpurposes of thisSection,beneficialownershipshall becalculatedin accordancewith Section13(d) of theSecuritiesExchange Act of1934 (the “ExchangeAct”). Toensurecompliancewith thisrestriction, eachHolderwill bedeemed to representto theCompany eachtime it delivers anExerciseNotice thatsuchExerciseNotice has not violated the restrictions setforth in this Section 1(e) and theCompany shall have noobligation to verify orconfirm theaccuracyof suchdetermination.In addition, adetermination as to anygroup statusascontemplatedabove shallbedetermined inaccordance with Section 13(d)ofthe Exchange Act.
For purposesof this Section1(e), indeterminingthenumber ofoutstanding shares ofCommon Stock, a Holdermay rely on thenumber ofoutstandingshares ofCommon Stock as statedin
themost recent ofthefollowing:(i) theCompany’smost recent periodicor annualreportfiledwith the
U.S. Securities andExchangeCommission,as the casemay be, (ii) amore recent publicannouncementby theCompany, or (iii)amore recent writtennotice by theCompany or its transferagent settingforththenumber of shares ofCommon Stockoutstanding. Upon the written or oralrequestof aHolder, theCompany shallwithintwo Trading Days confirmto suchHolder thenumber of sharesof CommonStock thenoutstanding. In any case,thenumber ofoutstanding shares ofCommon Stock shall bedetermined aftergiving effect to theconversion or exerciseof securitiesof theCompany,including thisWarrant, by suchHolder or its affiliates.The“BeneficialOwnershipLimitation”shall be 4.99%of thenumber of shares of theCommon Stock outstandingimmediatelyaftergivingeffect totheissuanceofshares ofCommonStock issuableuponexerciseof thisWarrant.Upon nofewer than61 days’priornoticeto the Company, a Holdermayincrease ordecrease theBeneficial OwnershipLimitationprovisionsof thisparagraph, provided thattheBeneficialOwnershipLimitation in no eventexceeds9.99% of thenumber of shares of theCommon Stockoutstandingimmediatelyaftergivingeffect totheissuance ofshares ofCommonStock uponexercise ofthisWarrant heldby the Holder and the provisionsof thisparagraphshall continuetoapply.Any such increaseor decreasewill not beeffective untilthe61st day after suchnotice isdelivered totheCompany and shallonly apply tosuch Holder and no otherHolder. Thelimitationscontainedinthisparagraphshallapplyto asuccessor Holder of thisWarrant.
2. ADJUSTMENTS. The Exercise Price and thenumber ofWarrantShares shallbeadjustedfromtime totime asfollows:
(a) SubdivisionorCombination ofCommon Stock.If theCompany at any time on orafter thedate ofthe Notesubdivides (by anystock split,stock dividend, recapitalization orotherwise)one ormore classes ofits outstandingshares ofCommon Stock into agreaternumber of shares, theExercise Price ineffectimmediatelypriorto suchsubdivisionwill beproportionately reduced and thenumber of WarrantShares will beproportionatelyincreased.If theCompany at any time on or after thedate of theNotecombines (by combination,reverse stocksplitorotherwise) oneormoreclasses ofitsoutstandingshares ofCommonStock into asmallernumber of shares, theExercise Price ineffectimmediately priorto suchcombination will beproportionatelyincreasedand the number ofWarrantShares willbeproportionatelydecreased.Anyadjustment underthis Section2(a)shallbecomeeffectiveat thecloseof businesson the datethesubdivision orcombinationbecomeseffective.
(b) Distributionof Assets.IftheCompany shalldeclare ormake any dividend orotherdistribution ofits assets (orrights toacquire its assets)toholders ofshares ofCommonStock, byway ofreturn ofcapitalorotherwise (includingwithoutlimitation anydistribution ofcash, stockorothersecurities,propertyor optionsby way ofa dividend,spin off, reclassification,corporaterearrangement orothersimilartransaction) (a“Distribution”),at anytimeafter the issuance of thisWarrant,then, in eachsuchcase:
(i) anyExercise Priceineffectimmediatelyprior to theclose ofbusinessonthe recorddate fixed forthedetermination of holders of shares of Common Stock entitled toreceive theDistributionshallbereduced,effective as of the close of business on suchrecorddate,to a pricedetermined bymultiplying such ExercisePriceby a fractionofwhich (i)thenumerator shall be theClosing Sale Price of theshares ofCommonStock on the Trading Dayimmediately precedingsuchrecorddate minus the value of theDistribution(asdetermined in goodfaith by theCompany’s Board of
Directors)applicable toone share ofCommon Stock, and (ii)thedenominator shallbethe ClosingSalePrice of theshares ofCommonStock on the Trading Dayimmediately precedingsuch recorddate; and
(ii) thenumber ofWarrant Sharesshallbe increasedto anumber of sharesequal tothe number of shares ofCommonStockobtainableimmediatelypriorto theclose of businesson therecord date fixedfor thedetermination of holders ofshares ofCommonStock entitledto receivetheDistributionmultiplied by thereciprocal ofthe fraction setforth in theimmediatelyprecedingclause(i);provided, however, that intheevent that the Distributionis of shares ofcommon stock of acompany(otherthantheCompany) whosecommon stock is traded on anational securitiesexchange or anationalautomated quotation system(“Other Shares ofCommon Stock”), thentheHoldermayelect toreceive awarranttopurchaseOther Shares ofCommon Stock in lieuof an increasein thenumber ofWarrantShares, the terms of which shall be identical tothose of this Warrant,exceptthat suchwarrantshall beexercisable into thenumber of shares ofOther Shares ofCommon Stock that wouldhave beenpayableto theHolder pursuant tothe Distribution had theHolderexercised thisWarrantimmediatelyprior tosuchrecord date andwith an aggregateexercisepriceequaltothe productoftheamount by which theexerciseprice of thisWarrant wasdecreased withrespecttotheDistribution pursuant to theterms of theimmediatelypreceding clause(i)andthenumber ofWarrant Sharescalculatedinaccordance withthe first part ofthis clause(ii).
(c) OtherEvents. If any event occursof the typecontemplated by the provisions ofthisSection2(a) or(b)but notexpresslyprovidedfor by suchprovisions (includingwithoutlimitationthegranting,on a prorata basis tothe holders oftheCommon Stock,of stock-appreciation rights,phantomstock unitsor othershareholderrights withequityfeatures),thentheCompany’s Board ofDirectorswillmake anappropriateadjustment intheExercise Priceand thenumber ofWarrant Sharesso as toprotecttherights ofthe Holder. For theavoidanceofdoubt, thepartiesagreethisSection2(c)shallnot apply to (i) the issuance ofCommon Stock upon theexercise of options orwarrantsnot grantedto theshareholders of theCompany as a whole, or (ii) the issuanceofCommon Stock, stockoptions,stock-appreciationrights,restrictedstock units, orotherformsof equityor equity-linkedcompensationunder theCompany’s equityincentiveorpurchase plansdulyadoptedby amajorityofthe non-employeemembers of the Board ofDirectors of theCompany or acommittee of non-employeedirectorsestablishedfor suchpurpose.
(d) Weighted-AverageAdjustment toExercisePrice.If theCompany, at any timewhilethisWarrant isoutstanding,shallissue any Common Stock orCommonStockEquivalentsentitlinganyperson toacquire shares ofCommon Stock, at aneffective price persharelessthan thethen-currentExercise Price, as adjusted hereunder (any suchissuance,other thananissuance ofCommon Stock orCommonStockEquivalents in respect ofanExemptIssuance,beingreferredto asa“DilutiveIssuance”), then the Exercise Priceshall be adjusted inaccordance withthe followingformula:
AEP= EP *[OS + ((DIS *DIP)/EP)]
(OS + DIS)
For purposes oftheforegoingformula:AEP= AdjustedExercise Price
EP= Exercise Price (asineffectimmediatelypriorto adjustment)
OS= Totalnumber of sharesofCommon Stock andCommon StockEquivalentsoutstanding immediately priorto the Dilutive(excluding,however,CommonStock andCommon StockEquivalentsoutstanding on accountofExemptIssuances)
DIS= Totalnumber of sharesofCommon Stock andCommon StockEquivalentsissued in the DilutiveIssuance
DIP= Theper-shareprice atwhichCommon Stock or Common Stock Equivalentswere issuedin theDilutiveIssuance
Any suchadjustmentshall bemade wheneversuchCommonStock orCommonStockEquivalents areissued;provided, however,that (i) if anadjustment ismade onaccount of a DilutiveIssuance ofCommon Stock Equivalents,thenthe subsequentissuanceofactualCommonStockuponconversion or exerciseof suchCommon StockEquivalentswillnot result inasecond adjustment, and (ii)notwithstanding anything inthis Warrant tothe contrary,noadjustmentsshall bemadeunder thisSection2(d) in respectof anExempt Issuance.The Company shallnotifythe Holder inwriting, no laterthan the third Trading Day followinganyDilutive Issuance (otherthanan ExemptIssuance),indicatingtherein theapplicable per-share priceat whichCommon StockorCommonStock Equivalents wereissued.
3.FUNDAMENTALTRANSACTIONS.If, at anytime while thisWarrantisoutstanding, (i) theCompanyeffects anymerger of theCompany with orinto another entity and theCompany is notthesurvivingentity, (ii) theCompanyeffects any sale ofallorsubstantially all ofits assets in oneor aseries ofrelatedtransactions, (iii)any tenderoffer or exchange offer (whether by theCompany or byanotherindividualorentity, andapprovedby the Company) iscompleted pursuant towhichholders ofCommon Stock arepermitted totender orexchange their shares ofCommonStock for othersecurities,cash orproperty or (iv) theCompany effects anyreclassification of theCommon Stock or anycompulsory shareexchange pursuant to whichtheCommonStock is effectivelyconvertedintoorexchanged for othersecurities, cashor property (other than as a result of asubdivisionorcombination of shares ofCommonStock covered bySection 2(a) above) (inanysuchcase,a “FundamentalTransaction”),then,upon any subsequentexercise ofthisWarrant, theHolder shallhave therighttoreceive thenumber of shares ofCommon Stock of thesuccessor oracquiring corporation or oftheCompany and anyadditionalconsideration (the “AlternateConsideration”) receivable upon or asa resultof such reorganization,reclassification,merger, consolidation ordisposition of assets by a holderofthenumberof shares ofCommonStockforwhich thisWarrantisexercisableimmediatelyprior tosuchevent(disregarding anylimitationon exercisecontainedherein solely for thepurpose of suchdetermination).Forpurposes of any such exercise, thedeterminationof the ExercisePriceshallbeappropriately adjusted toapply tosuchAlternate Consideration based on theamountofAlternateConsideration issuable inrespect of one share ofCommonStock in such FundamentalTransaction,and theCompany shall apportiontheExercise Price among the AlternateConsiderationin areasonablemannerreflectingtherelativevalue of anydifferent components of theAlternate Consideration.Ifholders ofCommonStock aregivenany choice as to thesecurities,cashorproperty to be receivedin a
Fundamental Transaction, then theHolder shallbe given thesame choice as to theAlternateConsideration itreceivesuponany exercise ofthisWarrantfollowing such FundamentalTransaction.Totheextentnecessaryto effectuatetheforegoingprovisions,any successor totheCompany or survivingentityin suchFundamentalTransaction shall issueto theHolder a newwarrant consistent withtheforegoingprovisionsandevidencing theHolder’srightto exercise suchwarrantintoAlternate Consideration.
4. NON-CIRCUMVENTION. TheCompanycovenants and agreesthat theCompany willnot, byamendmentof its articles ofincorporation, bylaws orthrough any reorganization, transfer ofassets, consolidation, merger,scheme ofarrangement, dissolution,issueor sale ofsecurities, or anyothervoluntary action, avoid or seekto avoid theobservanceorperformance of any ofthetermsof thisWarrant,andwillat alltimes in goodfaithcarryout all theprovisions of thisWarrantand takeallactionasmay be requiredto protect therights of the Holder.Without limitingthegenerality of theforegoing,theCompany (i)shallnotincrease the parvalueofany shares of Common Stockreceivable upontheexercise ofthisWarrantabove theExercisePrice then ineffect,(ii) shalltakeall such actions as may benecessary orappropriate in orderthattheCompany may validly and legally issue fully paid andnon-assessableshares of CommonStock upontheexercise ofthisWarrant,and (iii)shall,solong as thisWarrant isoutstanding,haveauthorized andreserved, freefrompreemptive rights, asufficientnumberofshares ofCommon Stock toprovide for theexercise of therightsrepresented bythisWarrant (withoutregardtoany limitations on exercise).
5. WARRANTHOLDERNOTDEEMED ASHAREHOLDER.Except asotherwisespecifically providedherein, thisWarrant,in andofitself, shall not entitlethe Holdertoany votingrights or otherrights asa shareholder ofthe Company. Inaddition, nothingcontained in thisWarrantshallbe construedasimposingany liabilities onthe Holderto purchase any securities(uponexerciseofthisWarrantorotherwise)or asashareholder of theCompany,whethersuchliabilities areasserted bytheCompanyor bycreditors of theCompany.
6.REISSUANCEOFWARRANTS.
(a) Lost,Stolenor MutilatedWarrant.If thisWarrant is lost,stolen,mutilated ordestroyed,theCompany will, onsuchterms as to indemnity orotherwiseas itmay reasonablyimpose(whichshall, in thecaseofamutilatedWarrant, includethe surrender thereof), issuea newWarrant oflikedenomination andtenor asthisWarrant solost,stolen,mutilated ordestroyed.
(b) IssuanceofNewWarrants.Whenever theCompany isrequiredtoissuea newWarrant pursuant tothe terms of thisWarrant, such newWarrant shallbeof liketenor withthisWarrant,and shallhave anissuance date,as indicated ontheface of such newWarrant whichis thesame as theIssuanceDate.
7.TRANSFER.
(a) Notice ofTransfer. TheHolder, byacceptance hereof, agreesto givewrittennoticeto the Company beforetransferringthisWarrant ortransferringanyWarrantShares ofsuchHolder’sintentionto do so, describingbrieflythemanner of any proposed transfer.Promptly uponreceivingsuch writtennotice, theCompany shallpresentcopies thereoftotheCompany’scounsel.If
theproposed transfermaybeeffected withoutregistration orqualification (under anyfederal orstatesecuritieslaws), theCompany, aspromptly aspracticable,shallnotifythe Holderthereof,whereuponthe Holdershall be entitled totransfer thisWarrant or todispose of Warrant Sharesreceivedupon thepreviousexercise ofthisWarrant, all inaccordance with the terms of the noticedelivered by the Holderto theCompany;provided,however, that anappropriatelegendmay be endorsed on thisWarrantor thecertificatesfor suchWarrant Shares respectingrestrictionsupon transferthereofnecessary oradvisablein theopinion of counsel andsatisfactory totheCompany to preventfurther transferswhich would be inviolation ofSection 5 oftheSecurities Act of 1933 and applicablestate securitieslaws; andprovidedfurtherthatthe prospectivetransferee orpurchaser shallexecuteanAssignment ofWarrant insubstantiallytheformattached heretoasExhibitBand such otherdocuments andmake suchrepresentations, warranties, andagreements asmay berequiredsolely tocomply with theexemptionsrelied uponby theCompany for thetransfer ordisposition oftheWarrantorWarrant Shares.
(b) If theproposedtransfer or dispositionof thisWarrant or such WarrantSharesdescribed inthewrittennotice givenpursuant to this Section7may not beeffected withoutregistrationorqualification ofthis Warrant or suchWarrantShares, theHolderwilllimit itsactivities inrespect tosuchtransfer ordisposition as arepermitted by law.
8. NOTICES.Whenever noticeisrequiredto begiven underthisWarrant,unlessotherwiseprovidedherein, suchnotice shall begiven inaccordancewith thenoticeprovisionscontainedin theNote. TheCompany shallprovide the Holder withprompt writtennotice (i)immediately uponanyadjustment of the Exercise Price,setting forthin reasonabledetail, and certifying,the calculationofsuchadjustmentand (ii) at least 20 days prior tothedate onwhichtheCompany closesitsbooks or takes arecord (A)with respectto anydividend ordistribution uponthe shares ofCommon Stock, (B) withrespect toany grants,issuances orsales of any stock or othersecurities directly orindirectly convertibleinto or exercisable or exchangeableforshares ofCommon Stock or otherproperty,pro ratato theholders ofshares ofCommonStockor (C)fordetermining rights tovotewith respectto anyFundamentalTransaction,dissolution orliquidation,provided in eachcasethat suchinformation shallbemade known to thepublicpriortoor inconjunction withsuchnoticebeingprovided to the Holder.
9. AMENDMENTANDWAIVER.Theterms of thisWarrantmay be amended orwaived(eithergenerallyor in aparticularinstance andeitherretroactively orprospectively) only withthewrittenconsent of theCompany and the Holder.
10. GOVERNING LAW.ThisWarrant and allrights,obligations andliabilitieshereundershallbegoverned by,and construedinaccordance with, theinternal lawsofthe StateofNew York,withoutgivingeffect to theconflicts-of-law principles thereof.
11. DISPUTERESOLUTION. In the case ofadispute as to thedeterminationof theExercise Price, theClosing SalePrice, or the arithmeticcalculation ofthe WarrantShares, theCompanyor the Holder (asthecasemay be) shallsubmitthe disputeddeterminations orarithmeticcalculations viafacsimile (a)within twobusinessdays afterreceipt of theapplicablenotice givingriseto suchdispute totheCompany or theHolder, asthe casemay be, or(b)if no notice gaverise to suchdispute, at anytimeafter theHolder learnedofthecircumstances givingrise tosuchdispute.If the Holder and theCompanyare unable to agreeupon suchdetermination orcalculationofthe Exercise Price, Closing SalePrice ortheWarrantShareswithin threebusiness days of such disputeddetermination orarithmetic calculation
beingsubmittedto theCompany orthe Holder,as the casemay be, then theCompany shall,within twobusinessdaysthereaftersubmit viafacsimile (x) the disputeddetermination of the ExercisePriceorClosing Sale Priceto anindependent, reputableinvestment bankselectedby theCompany andapprovedby theHolder or(y)thedisputedarithmeticcalculation ofthe WarrantShares to the Company’sindependent,outsideaccountant.TheCompany shallcause at itsexpensethe investment bank or theaccountant,as thecase may be, to performthedeterminations or calculations andnotify theCompanyand theHolder of the results nolaterthan tenbusiness daysfromthetime itreceivesthe disputeddeterminations or calculations. Suchinvestment bank’s oraccountant’sdeterminationorcalculation, asthe casemaybe, shallbe binding upon allparties absentmanifest error.
12. ACCEPTANCE. Receipt of thisWarrant by theHolder shallconstituteacceptance ofandagreement to all oftheterms and conditions containedherein.
13. CERTAINDEFINITIONS. For purposes of thisWarrant,the followingterms shallhavethefollowingmeanings:
(a) “Bloomberg”meansBloombergFinancial Markets.
(b) “Closing SalePrice”means, for any security as ofany date,(i) the lastclosingtrade pricefor suchsecurity on thePrincipalMarket, as reported byBloomberg, or, if thePrincipalMarketbegins to operate on anextended hours basis and doesnotdesignate theclosingtrade price,thenthe last tradeprice ofsuch security prior to4:00p.m., New Yorktime, as reported byBloomberg, or
(ii) if theforegoing doesnot apply,the last tradeprice of such security intheover-the-countermarketfor suchsecurityasreported byBloomberg, or(iii) if nolast trade priceis reportedforsuch security byBloomberg, theaverageofthe bid and askprices ofanymarketmakers for suchsecurity asreported bythe OTCMarkets.If theClosing Sale Pricecannot becalculated for asecurity on aparticular dateonany of the foregoingbases, theClosing Sale Priceofsuch security onsuchdate shall be the fairmarketvalue asmutuallydetermined by the Company and the Holder. All suchdeterminations to beappropriately adjustedfor any stockdividend,stock split,stockcombination orother similartransactionduring theapplicablecalculationperiod.
(c) “Common Stock”means (i) theCompany’scommon stock, par value$0.01 pershare, and(ii) any sharecapital intowhich suchcommon stock shallhave been changed or anysharecapitalresulting fromareclassification ofsuchcommon stock.
(d) “Common StockEquivalents”meansanysecurities of theCompany that wouldentitletheholderthereof to acquireat anytimeCommon Stock,including withoutlimitationanydebt,preferredstock,rights, options,warrants orotherinstrumentthat is at any time convertibleinto orexercisableor exchangeable for, or otherwise entitlestheholder thereofto receive,Common Stock.
(e) “Exempt Issuance”meanstheissuance of (i)shares ofCommon Stock oroptionstoemployees,officers,directors orunaffiliatedconsultantsoftheCompany pursuant to anystockoroption plandulyadopted by amajorityof thenon-employeemembers of the Board ofDirectors of theCompanyor amajorityof themembersof acommittee of non-employee directors established for suchpurpose, (ii)anysecurities upon the exerciseor conversion ofanysecuritiesissuedpursuant to theSecuritiesPurchaseAgreement oragreementsinsubstantiallysimilarformpursuant to which Notes and
Warrantswere or aresold, (iii) anyCommon Stock upon theexercise orconversion ofsecurities that areissued andoutstandingas of the dateofthe SecuritiesPurchaseAgreement, (iv)securitiesissuedpursuant toor inconnection with acquisitionsor strategictransactionsapproved by a majority of thedisinteresteddirectors oftheCompany, (v)sharesofCommon Stock issued orissuable inconnectionwithregularlyscheduleddividendpayments on theCompany’sSeries APreferredStock, and(vi) sharesof Common Stock issuedpursuant toany loan orleasingarrangement, real property leasingarrangement, or debtfinancing fromabankapproved by theBoard ofDirectors of theCompany.
(f) “PrincipalMarket”meansthe primary nationalsecuritiesexchangeon which theCommon Stock is thentraded.
(g) “SEC”means theU.S. Securitiesand ExchangeCommission.
(h) “TradingDay”means (i) any day on which theCommon Stock is listedorquotedandtradedon itsPrincipalMarket,(ii) if theCommon Stockis notthen listedor quoted andtraded onanynationalsecurities exchange,then a day on whichtrading occurs onany over-the-countermarkets,or(iii) if trading doesnot occur ontheover-the-countermarkets, anybusiness day.
(i) “WeightedAverage Price”means, for anysecurity as of anydate, (i) thedollar-volumeweighted-average pricefor such securityon the PrincipalMarket during theperiodbeginning at9:30a.m., New York Citytime, and ending at4:00p.m., NewYork Citytime, asreported byBloombergor (ii)if theforegoing does notapply, thedollar-volumeweighted-average price ofsuch securityin theover-the-countermarketfor suchsecurity duringthe periodbeginning at9:30a.m., New York Citytime,and endingat 4:00p.m., NewYork Citytime, as reported by Bloomberg, or(iii) if nodollar-volumeweighted-average priceis reported for suchsecurity by Bloomberg forsuch hours, theaverage ofthehighest closing bid priceand thelowest closingask price ofany of themarketmakers for suchsecurityas reportedinOTCMarkets. If theWeighted Average Price cannot be calculated forsuch security onsuch date onanyoftheforegoing bases, theWeighted Average Price ofsuch securityon such dateshallbe thefairmarketvalueasmutuallydetermined by theCompany and theHolder. IftheCompany andthe Holder are unable toagree uponthe fairmarketvalue of such security,then suchdispute shall beresolvedpursuant toSection 12 with the term“WeightedAverage Price”beingsubstituted for theterm“ExercisePrice.” Allsuchdeterminationsshallbeappropriatelyadjusted for any share dividend, sharesplitorothersimilartransaction during such period.
* * * * * * *
INWITNESSWHEREOF,theCompanyhascausedthisWarranttoPurchaseCommonStockto be dulyexecutedasofthedate indicatedabove.
CREATIVEREALITIES,INC.
/s/ John Walpuck
John Walpuck
Chief Financial Officer
EXHIBIT A
FORM OFEXERCISENOTICE
(To beexecuted by theregisteredholder toexercisethisWarrant toPurchaseCommon Stock)
THEUNDERSIGNEDholderherebyexercisesthe righttopurchaseoftheshares ofCommonStock(“Warrant Shares”) ofCreative Realities,Inc., aMinnesotacorporation(the“Company”),evidenced by theattachedcopy of theWarranttoPurchase Common Stock
(the“Warrant”).Capitalized terms usedhereinand not otherwisedefined shallhave therespectivemeanings set forth intheWarrant.
1. | Formof ExercisePrice.The Holderintendsthatpaymentof the ExercisePriceshall bemadeas (checkone): |
□a cashexercise withrespecttoWarrantShares;and/or
□a “CashlessExercise” with respect toWarrant Shares.
2. | Payment ofExercisePrice. Intheevent that the holder haselectedtoexercise some or all oftheWarrantShares to beissuedpursuanthereto,the holdershall paytheAggregateExercisePricein thesumof $ tothe Company inaccordance with the termsoftheWarrant. |
3. | DeliveryofWarrantShares.TheCompanyshalldelivertotheholderWarrant Shares in accordancewiththeterms of theWarrant. |
Date:___________________________
___________________________________
(Print Name of Registered Holder)
By:
Name:
Title:
EXHIBIT B
FORM OFASSIGNMENT OFWARRANT
(To be signed only upon authorizedtransfer of theWarrant)
FORVALUERECEIVED,theundersignedherebysells,assigns,andtransfersunto ___________________ the right topurchase ___________ shares ofcommon stock ofCreativeRealities,Inc., to which the withinWarranttoPurchase Common Stockrelates andappoints ________________, asattorney-in-fact,totransfersaidright onthe books of CreativeRealities,Inc. withfullpower ofsubstitutionandre-substitution in the premises.By accepting suchtransfer,thetransfereehas agreed tobe bound in allrespectsby thetermsandconditionsof the withinWarrant.
Dated: ____________________
(Signature) *
(Name)
(Address)
(SocialSecurityor Tax Ident. No.)
* The signature onthisAssignmentofWarrant mustcorrespond to the name as written upon theface oftheWarrantto Purchase Common Stock inevery particular without alteration orenlargement or anychangewhatsoever.Whensigningon behalf ofa corporation, partnership,trust orotherentity,pleaseindicateyourposition(s) and title(s)with suchentity.