Master Distributor Agreement
On June 19, 2020 (the “Effective Date”), Creative Realities, Inc. (the “Company”) entered into a Master Distribution Agreement (the “Distribution Agreement”) with InReality, LLC (“InReality”), pursuant to which the Company will serve as the exclusive master distributor of InReality’s ThermalMirror product (the “Product”) in the United States and Canada. The initial term of the Distribution Agreement is twelve months, and the term will automatically renew for successive twelve-month periods until InReality gives the Company proper notice of non-renewal or the Distribution Agreement is otherwise terminated according to its terms.
As the master distributor in the United States and Canada, the Company will purchase Products from InReality at varying prices determined based on order volume, and sell Products to distributors, resellers and end users in the United States and Canada. The Company must satisfy minimum purchase requirements in each calendar quarter of the initial term beginning October 1, 2020 in order to maintain its status as exclusive distributor of the Product in the United States and Canada. The Company may establish distributor, reseller and referral programs to sell the Products at its sole discretion. The Company will develop marketing campaigns and strategies to promote Product sales with InReality’s cooperation. The Company will install the Product at the end user’s site and perform basic repairs, troubleshooting, and helpdesk services. InReality will provide escalated technical support for the Product and associated software and platform. The Company and InReality will split revenues derived from activations and subscriptions to the Product’s associated software-as-a-service platform sold by the Company.
The Distribution Agreement contains other customary terms. The foregoing description of the Distributor Agreement is not complete and is qualified in its entirety by reference to the full text of the Distributor Agreement, a copy of which is filed herewith as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Sales Agreement
On June 19, 2020, the Company entered into a Sales Agreement (the “Agreement”) with Roth Capital Partners, LLC (“Roth”) under which the Company may offer and sell, from time to time at its sole discretion, shares of its common stock, par value $0.01 per share (the “Common Stock”), having an aggregate offering price of up to $8,000,000 through Roth as the Company’s sales agent.
Roth may sell the Common Stock by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415 of the Securities Act of 1933, as amended. Subject to the terms of the Agreement, Roth will use its commercially reasonable efforts to sell the Common Stock from time to time, based upon instructions from the Company (including any price, time or size limits or other customary parameters or conditions the Company may impose). The Company or Roth may suspend the offering of the Common Stock being made through Roth under the Agreement upon proper notice to the other party. The Company will pay Roth a commission of 3.0% of the gross sales proceeds of any Common Stock sold through Roth under the Agreement, and also has provided Roth with customary indemnification rights.
The Company is not obligated to make any sales of Common Stock under the Agreement. The offering of shares of Common Stock pursuant to the Agreement will terminate upon the earlier of (i) the sale of all Common Stock subject to the Agreement or (ii) termination of the Agreement in accordance with its terms.
The foregoing description of the Agreement is not complete and is qualified in its entirety by reference to the full text of the Agreement, a copy of which is filed herewith as Exhibit 1.1 to this Current Report on Form 8-K and is incorporated herein by reference.
The shares of Common Stock being offered pursuant to the Agreement will be offered and sold pursuant to the Company’s shelf registration statement on Form S-3 (File No. 333-238275). On June 19, 2020, the Company filed a prospectus supplement relating to this offering with the Securities and Exchange Commission.
The legal opinion of Maslon LLP relating to the Common Stock being offered pursuant to the Agreement is filed as Exhibit 5.1 to this Current Report on Form 8-K.
