UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
(Rule
14a-101)
INFORMATION
REQUIRED IN PROXY STATEMENT
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed
by the Registrant [X]
Filed
by a Party other than the Registrant
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Check
the appropriate box:
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Preliminary
Proxy Statement
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Confidential,
for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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[X]
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Definitive
Proxy Statement
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Definitive
Additional Materials
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Soliciting
Material Pursuant to §240.14a-12
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BOXLIGHT
CORPORATION
(Name
of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement,
if Other Than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
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[X]
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No
fee required.
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title
of each class of securities to which transaction applies:
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(2)
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Aggregate
number of securities to which transaction applies:
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(3)
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Per
unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4)
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Proposed
maximum aggregate value of transaction:
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(5)
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Total
fee paid:
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Fee
paid previously with preliminary materials:
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Check box if any part
of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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(1)
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Amount
Previously Paid:
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(2)
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Form,
Schedule or Registration Statement No.:
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(3)
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Filing
Party:
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Boxlight
Corporation
1045
Progress Circle
Lawrenceville,
Georgia 30043
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
to
be held on September 7, 2018
TO
THE STOCKHOLDERS OF BOXLIGHT CORPORATION:
The
Annual Meeting of the stockholders of Boxlight Corporation, a Nevada corporation (“Company”), will be held on September
7, 2018, at 10:00 a.m. (EST), at the offices of the Company, located at 1045 Progress Circle, Lawrenceville, Georgia 30043, for
the following purposes:
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1.
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To
elect seven (7) directors;
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2.
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To
ratify appointment of GBH CPAS, PC , as Company’s independent accountants, for the fiscal year ending December 31, 2018;
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3.
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To
conduct an advisory vote approving executive compensation;
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4.
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To
conduct an advisory vote regarding the frequency of advisory votes to approve executive compensation; and
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5.
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To
amend the Company’s Stock Incentive Plan to increase the number of shares of Common Stock authorized for issuance under
the plan by 300,000 shares;
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6.
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To
transact any other business as may properly be presented at the Annual Meeting or any adjournment thereof.
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A
proxy statement, providing information, and a form of proxy to vote, with respect to the foregoing matters accompany this notice.
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By
Order of the Board of Directors,
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/s/ James Mark Elliott
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James Mark Elliott
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Chief Executive
Officer
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Dated:
July 19, 2018
IMPORTANT
Whether
you expect to attend the Annual Meeting, please complete, date, and sign the accompanying proxy, and return it promptly in the
enclosed return envelope or follow the instructions contained in the Notice of Availability of Proxy Materials to vote on the
Internet or by telephone. If you grant a proxy, you may revoke it at any time prior to the Annual Meeting or nevertheless vote
in person at the Annual Meeting.
PLEASE
NOTE: If your shares are held in street name, your broker, bank, custodian, or other nominee holder cannot vote your shares in
the election of directors, unless you direct the nominee holder how to vote, by marking your proxy card.
Boxlight
Corporation
1045
Progress Circle
Lawrenceville,
Georgia 30043
PROXY
STATEMENT
for
Annual
Meeting of Stockholders
to
be held on September 7, 2018
PROXY
SOLICITATION
The
Company is soliciting proxies on behalf of the Board of Directors in connection with the annual meeting of stockholders on September
7, 2018, and at any adjournment thereof. The Company will bear the entire cost of preparing, assembling, printing and mailing
this Proxy Statement, the accompanying proxy, and any additional material that may be furnished to stockholders. Broadridge Financial
Solutions, Inc. has been engaged to solicit proxies and distribute materials to brokers, banks, custodians, and other nominee
holders for forwarding to beneficial owners of the Company stock, and Company will pay Broadridge Financial Solutions, Inc. for
these services and reimburse certain of its expenses; in addition, Company will reimburse nominee holders their forwarding costs.
Proxies also may be solicited through the mails or direct communication with certain stockholders or their representatives by
Company officers, directors, or employees, who will receive no additional compensation therefor.
On
or about August 2, 2018, the Company shall mail to all stockholders of record, as of the Record Date, a Notice of Availability
of Proxy Materials (the “Notice”). Please carefully review the Notice for information on how to access the Notice
of Annual Meeting, Proxy Statement, proxy card and Annual Report on www.proxyvote.com, in addition to instructions on how you
may request to receive a paper or email copy of these documents. There is no charge to you for requesting a paper copy of these
documents.
GENERAL
INFORMATION ABOUT VOTING
Who
can vote?
You
can vote your shares of Class A Common Stock if our records show that you owned the shares on the Record Date. As of the close
of business on the Record Date, a total of 10,056,095shares of Class A Common Stock are entitled to vote at the Annual Meeting.
Each share of Class A Common Stock is entitled to one vote on matters presented at the Annual Meeting.
How
do I vote by proxy?
If
you have received a printed copy of these materials by mail, you may simply complete, sign and return your proxy card. If you
did not receive a printed copy of these materials by mail and are accessing them on the Internet, you may simply follow the instructions
below to submit your proxy on the Internet.
What
if I received a Notice of Availability of proxy materials?
In
accordance with rules and regulations adopted by the Securities and Exchange Commission (the “SEC”), instead of mailing
a printed copy of our proxy materials to each stockholder of record, we may now furnish proxy materials to our stockholders on
the Internet. If you received a Notice by mail, you will not receive a printed copy of the proxy materials. Instead, the Notice
will instruct you as to how you may access and review all of the important information contained in the proxy materials. The Notice
also instructs you as to how you may submit your proxy on the Internet. If you received a Notice by mail and would like to receive
a printed copy of our proxy materials, including a proxy card, you should follow the instructions for requesting such materials
included in the Notice.
If
I am a stockholder of record, how do I cast my vote?
If
you are a stockholder of record, you may vote in person at the Annual Meeting. We will give you a ballot when you arrive.
If
you do not wish to vote in person or you will not be attending the Annual Meeting, you may vote by proxy. If you received a printed
copy of these proxy materials by mail, you may vote by proxy using the enclosed proxy card, complete, sign and date your proxy
card and return it promptly in the envelope provided.
If
you received a Notice by mail, you may vote by proxy over the Internet by going to www.proxyvote.com to complete an electronic
proxy card.
If
you vote by proxy, your vote must be received by 5:00 p.m. U.S. Eastern Standard Time on September 6, 2018 to be counted.
We
provide Internet proxy voting to allow you to vote your shares on-line, with procedures designed to ensure the authenticity and
correctness of your proxy vote instructions. However, please be aware that you must bear any costs associated with your Internet
access, such as usage charges from Internet access providers and telephone companies.
What
if other matters come up at the Annual Meeting?
The
matters described in this proxy statement are the only matters we know of that will be voted on at the Annual Meeting. If other
matters are properly presented at the meeting, the proxy holders will vote your shares as they see fit..
Can
I change my vote after I return my proxy card?
Yes.
You can revoke your proxy at any time before it is exercised at the Annual Meeting in any of three ways:
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by
submitting written notice revoking your proxy card to the Secretary of the Company;
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by
submitting another proxy via the Internet or by mail that is later dated and, if by mail, that is properly signed; or
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by
voting in person at the Annual Meeting.
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Can
I vote in person at the Annual Meeting rather than by completing the proxy card?
Although
we encourage you to complete and return the proxy card or vote by proxy on the Internet to ensure that your vote is counted, you
can attend the Annual Meeting and vote your shares in person.
How
are votes counted?
We
will hold the Annual Meeting if holders representing a majority of the shares of Common Stock present in person or by proxy at
such meeting and entitled to vote either sign and return their proxy cards, submit their proxy on the Internet, or attend the
meeting. If you sign and return your proxy card, or submit your proxy on the Internet, your shares will be counted to determine
whether we have a quorum even if you abstain or fail to vote on any of the proposals listed on the proxy card.
The
election of directors under Proposal 1 will be by the affirmative vote of a plurality of the shares of Common Stock, represented
in person or by proxy at the Annual Meeting.
Proposal
2, 3, 4 and 5 shall be approved upon the vote of a majority of shares present in person or by proxy at such meeting and entitled
to vote. An abstention with respect to the foregoing proposals, will have the effect of a vote “AGAINST” such proposal.
Who
pays for this proxy solicitation?
We
do. In addition to sending you these materials and posting them on the Internet, some of our employees may contact you by telephone,
by mail, by fax, by email, or in person. None of these employees will receive any extra compensation for doing this. We may reimburse
brokerage firms and other custodians for their reasonable out-of-pocket costs in forwarding these proxy materials to stockholders.
Why
are we seeking stockholder approval for these proposals?
Proposal
No. 1
: The Nevada Revised Statutes, as amended and the NASDAQ Stock Market require corporations to hold elections for directors
each year.
Proposal
No. 2
: The Company appointed GBH CPAS, PC to serve as the Company’s independent auditors for the 2018 fiscal year. The
Company elects to have its stockholders ratify such appointment.
Proposal
No. 3
: The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”), provides
an advisory vote by stockholders to approve the compensation paid to the Company’s named executive officers.
Proposal
No. 4
: The Dodd-Frank Act also enables the Company’s stockholders to indicate how frequently they believe the Company
should seek an advisory vote on the compensation of the Company’s named executive officers, such as Proposal 3 above.
Proposal
No. 5
: The NASDAQ Stock Market requires a stockholder vote in connection with the establishment or material amendment to an
equity compensation plan.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth as of July 18, 2018, the number of shares of our Class A common stock beneficially owned by (i) each
person who is known by us to be the beneficial owner of more than five percent of the Company’s Class A common stock; (ii)
each director; (iii) each of the Named Executive Officers in the Summary Compensation Table; (iv) each Executive Officer, and
(v) all directors and executive officers as a group. As of July 18, 2018, 10,056,095 shares of our Class A common stock were issued
and outstanding.
Beneficial
ownership is determined in accordance with SEC rules and generally includes voting or investment power with respect to securities.
Unless otherwise indicated, the stockholders listed in the table have sole voting and investment power with respect to the shares
indicated. Unless otherwise noted, the principal address of each of the stockholders, directors and officers listed below c/o
Boxlight Corporation, 1045 Progress Circle, Lawrenceville, Georgia 30043.
All
share ownership figures include shares of our common stock issuable upon securities convertible or exchangeable into shares of
our common stock within sixty (60) days of July 18, 2018, which are deemed outstanding and beneficially owned by such person for
purposes of computing his or her percentage ownership, but not for purposes of computing the percentage ownership of any other
person
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Name and Address of Beneficial Owner
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Amount and Nature of Beneficial Ownership
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Percentage of Outstanding Shares of Common Stock
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Named Executive Officers
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James Mark Elliott
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564,285
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(1)
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5.31
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%
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Henry(“Hank”) Nance
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255,052
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(2)
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2.47
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%
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Takesha Brown
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27,500
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(3)
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*
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%
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Michael Pope
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336,667
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(4)
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3.24
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%
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Executive Officers
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John Patrick Henry
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6,061
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(5)
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*
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%
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Lori Page
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3,125
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(6)
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*
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%
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Darin Beamish
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142,857
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(7)
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1.4
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%
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Directors
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%
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Tiffany Kuo
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3,125
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*
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%
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Rudolph F. Crew
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54,875
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*
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%
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Steve Hix
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37,500
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*
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%
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Dale Strang
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37,500
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*
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Harold Bevis
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12,500
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*
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All Directors and Executive Officers as a Group(12 persons)
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Beneficial Owners of 5% or More of Our Outstanding Common Stock
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Everest Display, Inc.
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2,468,708
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19.71
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%
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AEL Irrevocable Trust
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1,912,350
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(8)
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15.98
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%
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Dynamic Capital, LLC
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817,476
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(9)
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7.52
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%
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*
Less than one percent
(1)
Includes 398,500 shares of Class A common stock issuable upon exercise of a stock option and 165,777 shares of Class A common
stock.
(2)
Includes 169,338 shares of Class A common stock issuable upon exercise of a stock option and 85,714 shares of Class A common stock.
(3)
Includes 27,500 shares of Class A common stock issuable upon exercise of a stock option.
(4)
Includes 66,667 and 270,000 shares of Class A common stock issuable upon exercise of a stock option and warrant, respectively.
(5)
Includes 6,061 shares of Class A common stock issuable upon exercise of a stock option.
(6)
Includes 3,125 shares of Class A common stock issuable upon exercise of a stock option.
(7)
Includes 142,857 shares of Class A common stock.
(8)
Mr. Edwin Hur, 11441 Beach St., Cerritos, CA 90703 is trustee of AEL Irrevocable Trust, established for the benefit of the family
of Adam Levin. Mr. Hur has sole investment and voting power with respect to the shares. In 2017, AEL Irrevocable Trust pledged
the shares to a lender in connection with its guaranty of loans made to unrelated companies affiliated with the AEL Irrevocable
Trust and Adam Levin.
(9)
Consists of 817,476 shares issuable upon exercise of warrants issued to Dynamic Capital, LLC. Dynamic Capital is owned by Adam
E. Levin.
PROPOSAL
NO. 1
ELECTION
OF DIRECTORS
Nominees
of the Board of Directors
The
Board of Directors has nominated the persons identified below for election as directors, to serve until the next annual meeting
and their successors have been elected and qualified If any nominee becomes unavailable for election, which is not expected, the
persons named in the accompanying proxy intend to vote for any substitute whom the Board nominates.
Name
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Age
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Position(s)
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James
Mark Elliott
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66
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Chief
Executive Officer and Director
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Michael
Pope
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38
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President
and Director
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Tiffany
Kuo
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28
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Non-Executive
Director
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Rudolph
F. Crew
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67
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Independent
Director (1) (2) (3)
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Steve
Hix
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79
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Independent
Director (1) (3)
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Dale
Strang
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58
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Independent
Director (1) (2) (3)
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Harold
Bevis
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58
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Independent
Director (2) (3)
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(1)
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Member of the Audit
Committee.
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(2)
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Member of the Compensation
Committee.
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(3)
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Member of the Nominating
and Corporate Governance Committee.
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The
business experience during at least the last five years of each of these individuals is as follows:
James
Mark Elliott, Chief Executive Officer and Director
Mr.
Elliott has served as our Chief Executive Officer and a director since September 18, 2014. From 2012 to date, he has also served
as the President of Genesis. From 2005 through 2012, he was the President of Promethean, Inc., a manufacturer and distributor
of whiteboards and interactive learning devices and led the team that grew Promethean in the Americas from $5 million in revenue
to $250 million, with over 1,300,000 interactive whiteboards installed around the world. Throughout his career, Mr. Elliott has
held senior executive roles, including president, senior vice president or director roles with Apple Computer, Lawson Software,
E3 Corporation, PowerCerv Technologies, Tandem Computers, and Unisys/Burroughs. Mr. Elliott received a BBA in Economics from the
University of North Georgia and a Master of Science degree in Industrial Management from Georgia Institute of Technology. Based
on Mr. Elliott’s position as the chief executive officer of both the Company and Genesis, and his executive level experience
in interactive learning devices and computer technology industries, our board of directors believes that Mr. Elliott has the appropriate
set of skills to serve as a member of the board.
Michael
Pope, President and Director
Mr.
Pope has served as our President since July 15, 2015 and has been a director of our Company since September 18, 2014. Mr. Pope
served as Managing Director of Vert Capital Corp., a private equity and business advisory firm, and its affiliates from October
2011 to October 2016, managing portfolio holdings in education, consumer products and digital media. From May 2008 to October
2011, Mr. Pope was Chief Financial Officer and Chief Operating Officer for the Taylor Family, managing family investment holdings
in consumer products, professional services, real estate and education. Mr. Pope also held positions including senior SEC reporting
at Omniture and Assurance Associate at Grant Thornton. Mr. Pope holds an active CPA license and serves on the boards of various
organizations. Mr. Pope earned his undergraduate and graduate degrees in accounting from Brigham Young University.
Tiffany
Kuo, Non-Executive Director
Ms.
Kuo has been a director of our Company since September 18, 2014. Ms. Kuo has been a General Management Consultant in Strategy
and Operations for Deloitte Consulting, LLP in Houston, TX since August 2011. Ms. Kuo graduated from Rice University with a Bachelor
of Science and Masters of Science in Electrical Engineering in 2011 and is currently in the Sloan Masters of Business Administration
Program at The Massachusetts Institute of Technology. We believe that Ms. Kuo should serve as a member of our board of directors
due to her experience in business strategy and operations at Deloitte Consulting, LLP.
Rudolph
F. Crew, Independent Director
Dr.
Crew has been a director of our Company since April 1, 2015. Since August 2013, Dr. Crew has served as the president of Medgar
Evers College. From July 2012 to July 2013, he was the chief education officer at Oregon Education Investment Board, overseeing
the PK-16 system. From September 2011 to July 2012, Dr. Crew served as the president of K12 Division at Revolution Prep, a company
that offers preparation courses for the SAT and ACT standardized achievement tests. Prior to that, from January 2009 to July 2013,
he was a professor at USC Rossier School of Education, teaching graduate school courses. From January 2009 to September 2011,
Dr. Crew also served as the president of Global Partnership Schools, an organization offers planning support services and collaborative
programs to public schools and school districts. Dr. Crew received his bachelor’s degree in management from Babson College
in 1972. He earned his master’s degree in urban education in 1973 and his degree of doctor of education in educational administration
in 1978, both from University of Massachusetts. We believe that Dr. Crew’s in-depth knowledge and extensive experience in
education field make him a valuable member of our board of directors.
Steve
Hix, Independent Director, Chairman of Audit Committee
Mr.
Hix has been a director of our company since June 30, 2017. He is a business executive and founder of numerous public and private
companies spanning his 40-year business career. Since 2012, Mr. Hix has served as the President of Circle Technology, a wireless
presentation company. Previously, he was the Founder & CEO of InFocus Systems from 1987-1993 (projector company) which grew
to nearly $1 billion in sales and had a market value of more than $2 billion as a public company. He was also the Founder, CEO
& President of Phix Focus (R&D in Display Technology and Touch Screen Technology) 2005-2012, CEO of i3 Identification
International (finger printing technology company) 2005-2010, Founder of Advan Media (Advertising Trucks with Digital Display
Screens) 2003-2005, Founder & CEO of SARIF (High Temperature Poly-silicon LCD) 1993-2002, founder of Motif, Inc. (High Speed
LCD Technology) 1990-1993, and co-Founder of Planar Systems (Electroluminescence Technology) 1983-1987. Mr. Hix has nearly a dozen
patents in the display technology and wireless transmission space and continues to be a pioneer in the industry. He began his
career serving the US Navy as Naval Intelligence and sits on the board of several companies including Melexis, Community Foundation
of Southwest Washington and Puget Sound Blood Center.
Dale
Strang, Independent Director
Mr.
Strang has been a director of our company since August 10, 2017. He has served as a Senior Vice President of Media Strategy &
Operations at Healthline Networks since 2015. Mr. Strang was President and Chief Executive officer of SpinMedia from 2013 to 2015.
Mr. Strang was the Chief Executive Officer and President at Viximo from 2010 to 2012. Mr. Strang has over 25 years of media experience
with successful businesses including IDG, Ziff-Davis and IGN/Fox Interactive. Mr. Strang has more than 18 years of experience
in consumer technology and video game publishing, including 14 years at the senior management level. He served as Executive Vice
President and General Manager, Media Division, of IGN Entertainment. In this position, he oversaw advertising sales, marketing
and the production of editorial content for all IGN entertainment media properties.
Harold
Bevis, Independent Director
Mr.
Bevis has served as a Director since March 2018. He has 25 years of business leadership experience, including 15 years as a Chief
Executive Officer. He was a business leader at both GE and Emerson Electric. He has led or directed 8 businesses in 6 industries,
148 plants in 22 countries, 12 new business/new plant startups, 11 acquisitions, 24 business/plant expansions, and over 10,000
employees. Mr. Bevis is currently President of OmniMax International, a portfolio of building products businesses, since October
2017. Mr. Bevis earned a BS degree in industrial engineering from Iowa State University and an MBA degree from Columbia Business
School. He is a member of the National Association of Corporate Directors and has served on 5 Boards of Directors. Since June
2014, he has served at Commercial Vehicle Group, a NASDAQ listed company, where he serves as a member of the audit and compensation
committees.
There
are no family relationships between the directors and executive officers.
Dr.
Rudy Crew, Steve Hix, Dale Strang and Harold Bevis are our independent directors. As a Nasdaq listed company, we believe that
the foregoing directors satisfy the definition of “Independent Director” under Nasdaq Rule 5605(a)(2). In making this
determination, our board of directors considered the relationships that each of these non-employee directors has with us and all
other facts and circumstances our board of directors deemed relevant in determining their independence. As required under applicable
NASDAQ rules, we anticipate that our independent directors will meet on a regular basis as often as necessary to fulfill their
responsibilities, including at least annually in executive session without the presence of non-independent directors and management.
Board
Operations
All
directors hold office until the next annual meeting of shareholders and until their successors have been duly elected and qualified.
Directors are elected at the annual meetings to serve for one-year terms. Officers are elected by, and serve at the discretion
of, the board of directors. Our board of directors shall hold meetings on at least a quarterly basis.
Mr.
Elliott holds the positions of chief executive officer and chairman of the board of the Company. The board believes that Mr. Elliott’s
services as both chief executive officer and chairman of the board is in the best interest of the Company and its shareholders.
Mr. Elliott possesses detailed and in-depth knowledge of the issues, opportunities and challenges facing us in our business and
is thus best positioned to develop agendas that ensure that the Board’s time and attention are focused on the most critical
matters relating to the business. His combined role enables decisive leadership, ensures clear accountability, and enhances the
Company’s ability to communicate its message and strategy clearly and consistently to our shareholders, employees and customers.
The
Board has not designated a lead director. The independent directors can call and plan their executive sessions collaboratively
and, between meetings of the Board, communicate with management and one another directly. Under these circumstances, the directors
believe designating a lead director to take on responsibility for functions in which they all currently participate might detract
from rather than enhance performance of their responsibilities as directors.
The
Board of Directors receives regular reports from the Chief Executive Officer and members of senior management on operational,
financial, legal and regulatory issues and risks. The Audit Committee of the Board additionally is charged under its charter with
oversight of financial risk, including the Company’s internal controls, and it receives regular reports from management,
the Company’s internal auditors and the Company’s independent auditors. When-ever a committee of the Board receives
a report involving risk identification, risk management or risk mitigation, the chairman of the committee reports on that discussion,
as appropriate, to the full Board during the next Board meeting.
The
Board of Directors held 3 meetings during 2017. During 2017, no director attended fewer than 75% of the meetings of the Board
of Directors and Board committees of which the director was a member.
It
is the policy of the Board of Directors that all directors should attend the annual meetings in person or by teleconference. Last
year seven directors attended.
Board
Committees
The
Board of Directors has standing audit, compensation, and nominating committees, comprised solely of independent directors. Each
committee has a charter, which is available at Company’s website, www.boxlightcorp.com.
Audit
Committee
According
to its charter, the Audit Committee consists of at least three members, each of whom shall be a non-employee director who has
been determined by the Board to meet the independence requirements of NASDAQ, and also Rule 10A-3(b)(1) of the SEC, subject to
the exemptions provided in Rule 10A-3(c). A copy of our Audit Committee Charter is located under the “Corporate Governance”
tab on our website at www.boxlight.com. The Audit Committee members shall consist of Mr. Hix, serving as our Audit Chair, Mr.
Strang and Dr. Crew. All members of the Audit Committee are independent directors. The Audit Committee will assist the Board by
overseeing the performance of the independent auditors and the quality and integrity of our internal accounting, auditing and
financial reporting practices. The Audit Committee is responsible for retaining (subject to stockholder ratification) and, as
necessary, terminating the engagement of, the independent auditors, annually reviews the qualifications, performance and independence
of the independent auditors and the audit plan, fees and audit results, and pre-approves audit and non-audit services to be performed
by the auditors and related fees. Our board has determined that we have at least one “audit committee financial expert,”
as defined by the rules and regulations of the SEC and that is Mr. Hix.
The
Audit Committee held 1 meeting during 2017.
Audit
Committee Report
With
respect to the audit of Company’s financial statements for the year ended December 31, 2017, the Audit Committee
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has
reviewed and discussed the audited financial statements with management;
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has
discussed with Company’s independent accountants the matters required to be discussed by the statement on Auditing Standards
No. 61, as amended (AICPA, Professional Standards, Vol. 1, AU section 380), as adopted by the Public Company Accounting Oversight
Board in Rule 3200T; and
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has
received the written disclosures and the letter from the independent accountant required by applicable requirements of the
Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee
concerning independence and has discussed with the independent accountant the independent accountant’s independence.
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Based
on these reviews and discussions, the Audit Committee recommended to the Board of Directors that the audited financial statements
be included in the company’s annual report on Form 10-K for the year ended December 31, 2017.
Steve
Hix, Chair
Dale
Strang
Rudolph
F. Crew
Compensation
Committee
The
Compensation Committee members are Mr. Strang, Dr. Crew and Mr. Bevis. The Compensation Committee shall make recommendations to
the Board concerning salaries and incentive compensation for our officers, including our principal executive officer, and employees
and administers our stock option plans. A copy of our Compensation Committee Charter is located under the “Corporate Governance”
tab on our website at www.boxlight.com.
The
Compensation Committee did not hold any meetings during 2017.
Nominating
and Corporate Governance Committee
The
Corporate Governance and Nominating Committee members are Dr. Crew, Mr. Hix, Mr. Bevis and Mr. Strang. All members of the Corporate
Governance and Nominating Committee are independent directors. The Corporate Governance and Nominating Committee assists the Board
in identifying qualified individuals to become board members, in determining the composition of the Board and in monitoring the
process to assess Board effectiveness. A copy of our Corporate Governance and Nominating Committee Charter is located under the
“Corporate Governance” tab on our website at www.boxlight.com.
The
Nominating and Corporate Governance Committee did not hold any meetings during 2017.
Material
Changes to the Procedures by which Security Holders May Recommend Nominees to the Board
We
do not currently have a procedure by which security holders may recommend nominees to the Board. Prior to the listing of our common
stock on NASDAQ, as a private company with a limited shareholder base, we did not believe that it was important to provide such
a procedure. However, as a publicly traded NASDAQ company with the requirement to hold annual shareholder meetings, we will consider
implementing such a policy in the future.
Director
Qualifications
The
Board of Directors is responsible for overseeing the Company’s business consistent with their fiduciary duty to the stockholders.
This significant responsibility requires highly-skilled individuals with various qualities, attributes and professional experience.
There are general requirements for service on the Board that are applicable to directors and there are other skills and experience
that should be represented on the Board as a whole but not necessarily by each director. The Corporate Governance and Nominating
Committee considers the qualifications of director candidates individually and in the broader context of the Board’s overall
composition and the Company’s current and future needs.
Code
of Business Conduct and Ethics
We
have adopted a written code of business conduct and ethics that applies to our directors, officers and employees, including our
principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar
functions. A copy of the code will be made available on the Corporate Governance section of our website, which is located at www.boxlight.com.
If we make any substantive amendments to, or grant any waivers from, the code of business conduct and ethics for any officer or
director, we will disclose the nature of such amendment or waiver on our website or in a current report on Form 8-K.
Stockholder
Communications
Stockholders
can mail communications to the Board of Directors, c/o Secretary, Boxlight Corporation, 1045 Progress Circle, Lawrenceville, Georgia
30043, who will forward the correspondence to each addressee.
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Securities Exchange Act of 1934 requires Company’s directors and executive officers and any beneficial owner
of more than 10% of any class of Company equity security to file reports of ownership and changes in ownership with the Securities
and Exchange Commission and furnish copies of the reports to Company. Based solely on the Company’s review of copies of
such forms and written representations by Company’s executive officers and directors received by it, Company believes that
during 2017, all such reports were filed timely; except for the following:
Name
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Late Reports
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Transactions
Covered
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Number
of
Shares
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Michael Pope
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Form 3
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Common stock
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637,453
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Warrants
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199,203
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Form 5
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Common stock
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659,987
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Steven Hix
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Form 3
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Common stock
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-
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Form 5
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Stock options
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50,000
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Dale Strang
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Form 3
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Common stock
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-
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Form 5
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Stock options
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50,000
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John Patrick Henry
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Form 3
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Common stock
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-
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Form 5
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Stock options
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8,990
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Everest Display Inc.
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Form 3
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Common stock
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565,122
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Form 4
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Common stock
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1,903,586
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Executive
Compensation
Summary
Compensation Table
The
following table sets forth information regarding the total compensation received by, or earned by, our Chief Executive Officer,
our President and Chief Operating Officer and our Chief Financial Officer (collectively, the “named executive officers”)
during the years ended December 31, 2017 and 2016.
Name and
Principal Position
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Year
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Salary
($)
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Option
Awards ($)
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Total
($)
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James Mark Elliott, Chief Executive Officer
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2016
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125,000
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-
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(2)
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125,000
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2017
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129,884
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-
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(2)
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129,884
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|
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Michael Pope, President
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2016
|
|
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23,885
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|
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-
|
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23,885
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2017
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|
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163,419
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|
|
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-
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|
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163,419
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|
|
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Henry (“Hank”) Nance, Chief Operating Officer
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2016
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130,545
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-
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130,545
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2017
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|
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147,606
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|
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126,452
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(5)
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274,058
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|
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|
|
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|
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Sheri Lofgren, former Chief Financial Officer (1)
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2016
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170,000
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|
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484,235
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(3)
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654,235
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2017
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|
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227,500
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|
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204,397
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(3)
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431,897
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Takesha Brown, Chief Financial Officer (1)
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2016
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-
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-
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-
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|
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2017
|
|
|
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98,116
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|
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6,617
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(4)
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104,733
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(1)
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On
March 15, 2018, Sheri Lofgren, the Chief Financial Officer of the Company tendered her resignation from such position. On
the same date, the Board appointed Ms. Takesha Brown to serve as the new Chief Financial Officer of the Company.
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(2)
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On
September 18, 2014, the Company granted 331,841 options to Mark Elliott Chief Executive Officer, with an exercise price of
$0.13 per share, a term of 5 years and vesting over a 3-year period. The options have a fair value of $1 at grant date using
the Black-Scholes option-pricing model. Variables used in the Black-Scholes option-pricing model include: (1) discount rate
of 2.09% (2) expected life of 5.75 years, (3) expected volatility of 69%, and (4) zero expected dividends. During the years
ended December 31, 2017 and 2016, the Company recorded $0 stock compensation expense.
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(3)
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On
September 18, 2014, the Company granted 291,402 options to Sheri Lofgren, former Chief Financial Officer, with an exercise
price of $0.13 per share, a term of 5 years and vesting over a 3-year period. The options have a fair value of $1 at grant
date using the Black-Scholes option-pricing model. Variables used in the Black-Scholes option-pricing model include: (1) discount
rate of 2.09% (2) expected life of 5.75 years, (3) expected volatility of 69%, and (4) zero expected dividends.
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On
November 1, 2016, the Company entered into an amended employment agreement with its Chief Financial Officer, which amended
the exercise price of the 291,402 options granted from $0.13 to $0.0001 per share. The options vesting term was changed to
(i) 50% of the remaining unvested options shall vest immediately following the agreement, (ii) all remaining unvested options
shall vest on March 31, 2017. Pursuant to the amendment of employment agreement, the fair value of options granted was changed
to approximately $484,000 using the Black-Scholes option-pricing model.
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In
November 2017, the Company granted options to purchase 29,200 options at $0.0001 per share to its former Chief Financial Officer
for services. These options vested immediately and expire 5 years from the date of grant. The options had a fair value of
approximately $204,000 on the grant date that was calculated using the Black-Scholes option-pricing model.
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(4)
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On
April 4, 2017, the Company granted options to purchase 18,000 shares of Series A common stock at $5.60 per share to the Chief
Financial Officer for services. These options vest in four years and commenced in the quarter ended June 30, 2017 and expire
5 years from the date of grant. The options have a fair value of approximately $7,000 that was calculated using the Black-Scholes
option-pricing model.
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(5)
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In
November 2017, the Company granted options to purchase 37,829 options at $7.00 per share to its Chief Operating Officer for
service. These options vest in 3 years and expire 5 years from the date of grant. The options had a fair value of approximately
$126,000 on grant date that was calculated using the Black-Scholes option-pricing model.
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Employment
Agreements
We
entered into employment agreements with Mr. Elliott, Mr. Nance, Ms. Lofgren, Mr. Pope and Ms. Brown, the terms of which are set
forth below.
James
Mark Elliott
We
entered into an employment agreement with Mr. Elliott dated as of November 30, 2017, pursuant to which Mr. Elliott shall receive
a base salary of $195,000 per year and shall, upon evaluation of his performance and at the discretion of the our Board of Directors,
be awarded a cash bonus in the amount of $25,000 on a quarterly basis commencing on the quarter ending December 31, 2017. In addition
to (and not in lieu of) the base salary, we shall grant Mr. Elliott employee stock options to purchase up to 100,000 shares of
common stock (vesting in equal monthly installments over a one-year period, commencing on January 31, 2018), pursuant to the our
2014 Stock Incentive Plan.
Mr.
Elliott’s agreement contains confidentiality and non-competition and non-solicitation covenants that continue during and
for two years following the expiration or termination of his employment agreement; provided, that such restrictive covenants expire
immediately if Mr. Elliott terminates his employment agreement for “good reasons” or, in nine months if we elect to
terminate his employment prior to the expiration of the term of the agreement without “cause”.
Michael
Pope
We
entered into an employment agreement with Mr. Pope dated as of November 30, 2017, pursuant to which Mr. Pope shall receive a base
salary of $195,000 per year and shall, upon evaluation of his performance and at the discretion of our Chief Executive Officer,
be awarded a cash bonus in the amount of $25,000 on a quarterly basis commencing on the quarter ending December 31, 2017. In addition
to (and not in lieu of) the base salary, we shall grant Mr. Pope employee stock options to purchase up to 100,000 shares of common
stock (vesting in equal monthly installments over a one-year period, commencing on January 31, 2018), pursuant to our 2014 Stock
Incentive Plan.
Mr.
Pope’s agreement contains confidentiality and non-competition and non-solicitation covenants that continue during and for
two years following the expiration of his employment agreement; provided, that such restrictive covenants expire immediately if
we breach his employment agreement or, in nine months, if we elect to terminate his employment prior to the expiration of the
term of the agreement for reasons other than for cause (as defined in the employment agreement).
Henry
“Hank” Nance
We
entered into an employment agreement with Mr. Nance, dated as of November 30, 2017, pursuant to which Mr. Nance shall receive
a base salary of $195,000 per year and shall, upon evaluation of his performance and at the discretion of the Company’s
chief executive officer, be awarded a cash bonus in the amount of $25,000 on a quarterly basis commencing on the quarter ending
December 31, 2017. In addition to (and not in lieu of) the base salary, we shall grant Mr. Nance employee stock options to purchase
up to 200,000 shares of common stock (vesting in equal monthly installments over a one-year period, commencing on January 31,
2018), pursuant to our 2014 Stock Incentive Plan.
Mr.
Nance’s agreement contains confidentiality and non-competition and non-solicitation covenants that continue during and for
two years following the expiration of his employment agreement; provided that such restrictive covenants expire immediately if
we breach his employment agreement or, in nine months, if we elect to terminate his employment prior to the expiration of the
term of the agreement for reasons other than cause (as defined in the employment agreement).
Takesha
Brown
We
entered into an employment agreement with Ms. Brown, dated as of March 19, 2018, pursuant to which Ms. Brown shall receive a base
salary of $165,000 per year and shall, upon evaluation of her performance and at the discretion of our chief executive officer,
be awarded a cash bonus in the amount of $12,500 on a quarterly basis commencing on the quarter ending June 30, 2018. In addition
to (and not in lieu of) the base salary, we shall grant Ms. Brown employee stock options to purchase up to 35,000 shares of common
stock (vesting in equal monthly installments over a one-year period, commencing on March 19, 2018), pursuant to our 2014 Stock
Incentive Plan.
Ms.
Brown’s agreement contains confidentiality and non-competition and non-solicitation covenants that continue during and for
two years following the expiration of her employment agreement; provided, that such restrictive covenants expire immediately if
we breach her employment agreement or, in nine months, if we elect to terminate her employment prior to the expiration of the
term of the agreement for reasons other than for cause (as defined in the employment agreement).
Sheri
Lofgren
We
entered into an employment agreement with Ms. Lofgren dated as of November 30, 2017, pursuant to which Ms. Lofgren shall receive
a base salary of $195,000 per year and shall, upon evaluation of her performance and at the discretion of our Chief Executive
Officer, be awarded a cash bonus in the amount of $25,000 on a quarterly basis commencing on the quarter ending December 31, 2017.
In addition to (and not in lieu of) the base salary, we shall grant Ms. Lofgren employee stock options to purchase up to 100,000
shares of common stock (vesting in equal monthly installments over a one-year period, commencing on January 31, 2018), pursuant
to the Corporation’s 2014 Stock Incentive Plan.
Ms.
Lofgren’s agreement contains confidentiality and non-competition and non-solicitation covenants that continue during and
for two years following the expiration of her employment agreement; provided, that such restrictive covenants expire immediately
if we breach her employment agreement or, in nine months, if we elect to terminate her employment prior to the expiration of the
term of the agreement for reasons other than for cause (as defined in the employment agreement).
On
March 15, 2018, Sheri Lofgren, tendered her resignation as Chief Financial Officer. Ms. Lofgren’s resignation was for personal
reasons and not as the result of disagreements between Ms. Lofgren and us on any matter relating to the Company’s operations,
policies or practices.
Outstanding
Equity Awards at Fiscal Year-End
The
following table provides information regarding outstanding equity awards held by our named executive officers as of December 31,
2017. All share amounts and exercise prices in the following table reflects stock splits after grant date.
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|
Option
Awards
|
Name
|
|
Grant Date
|
|
Number
of Securities Underlying Options (#) Exercisable
|
|
|
Number
of Securities Underlying Options (#) Unexercisable
|
|
|
Option
Exercise Price ($)
|
|
|
Option Expiration
Date
|
James Mark Elliott
|
|
September 18, 2014
|
|
|
331,841
|
|
|
|
-
|
|
|
$
|
0.13
|
|
|
September 18, 2024
|
Sheri Lofgren
|
|
September 18, 2014 and amended at November 1, 2016
|
|
|
29,200
|
|
|
|
-
|
|
|
$
|
0.0001
|
|
|
November 30, 2022
|
Henry Nance
|
|
December 31, 2014
|
|
|
12,001
|
|
|
|
132,091
|
|
|
$
|
0.13-7.00
|
|
|
November 30, 2022
|
Takesha Brown
|
|
April 4, 2017
|
|
|
3,375
|
|
|
|
14,625
|
|
|
$
|
5.60
|
|
|
April 4, 2022
|
Director
Compensation
We
reimburse all members of our board of directors for their direct out of pocket expenses incurred in attending meetings of our
board. This table summarizes the compensation paid to each of our independent directors who served in such capacity during the
fiscal year ended December 31, 2017.
Name
|
|
Fees
Earned
or
Paid in
Cash ($)
|
|
|
Stock
Awards
($)
|
|
|
Total($)
|
|
|
|
|
|
|
|
|
|
|
|
Rudolph F. Crew
|
|
|
50,000
|
|
|
|
370,995
|
|
|
|
420,995
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steve Hix
|
|
|
5,000
|
|
|
|
159,466
|
|
|
|
164,466
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dale Strang
|
|
|
-
|
|
|
|
159,466
|
|
|
|
159,466
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robin D. Richards*
|
|
|
-
|
|
|
|
930,987
|
|
|
|
930,987
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tiffany Kuo
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
*
On February 23, 2018, Mr. Robin D. Richards resigned from the Board of Directors for personal reasons.
Director
Compensation Arrangements
Rudolph
F. Crew
Dr.
Crew receives an annual fee of $50,000, payable monthly, which commenced on March 26, 2016. In addition, in connection with the
listing on NASDAQ, Dr. Crew was entitled to a one-time purchase, at par value, of 53,000 shares of our Class A common stock.
Dr.
Crew will not be permitted to sell any of his shares for the six months immediately following the consummation of this public
offering and thereafter, not more than 50% of his shares between the seventh month and 12th month after the consummation of this
public offering, and not more than 50% of the remaining shares between the 12th month and 18th months after the consummation of
this public offering.
Steve
Hix
Mr.
Hix receives an annual fee of $10,000 for serving as the Chair of our Audit Committee. The fee is payable quarterly, with the
first payment to be made on September 30, 2017. On November 30, 2017, Mr. Hix was granted stock options to purchase 50,000 shares
of our Class A common stock exercisable at $7.00 per share with vesting over one year.
Dale
Strang
On
November 30, 2017, Mr. Strang was granted stock options to purchase 50,000 shares of our Class A common stock exercisable at $7.00
per share with vesting over one year.
Robin
D. Richards
On
November 30, 2017, Mr. Richards purchased, at the par value, 133,000 shares of our common stock, representing 1.25% of the number
of fully diluted shares of common stock after giving effect to the acquisitions of the Boxlight Group and Genesis.
Mr.
Richards is not permitted to sell any of his shares until May 30, 2018, which is six months following the consummation of our
public offering and thereafter, not more than 50% of his shares between the seventh month and 12th month after the consummation
of our public offering, and not more than 50% of the remaining shares between the 12th month and 18th months after the consummation
of our public offering.
Certain
Relationships and Related Transactions
On
September 30, 2014, we entered into a line of credit agreement with Vert Capital. The line of credit allowed the Company to borrow
up to $900,000 as amended. The funds accrued interest at 10% per annum. The interest rate decreased to 5.75% pursuant to the amendment
to the purchase agreement with EDI entered in September 2016. Interest on any advanced funds accrued monthly and all outstanding
principal and accrued interest was due in full from the proceeds of our initial public offering. On December 1, 2017, the outstanding
principal and accrued interest in the amount of $775,259 was paid in full.
Effective
November 30, 2017, the Company entered into a management agreement with Dynamic Capital, LLC, a Delaware limited liability company
owned and managed by Adam Levin (“Dynamic Capital”). Pursuant to the agreement, Dynamic Capital shall perform consulting
services for the Company relating to, among other things, sourcing and analyzing strategic acquisitions and introductions to various
financing sources. Dynamic Capital shall receive a management fee payable in cash equal to 1.125% of total consolidated net revenues
for the fiscal years ended December 31, 2017 and 2018, payable in monthly installments. The annual fee is subject to a cap of
$750,000 in each of 2017 and 2018. At its option, Dynamic Capital may defer payment until the end of each year and receive payment
in the form of shares of Class A common stock of the Company As of March 31, 2018 and December 31, 2017, the Company had a payable
of $94,998 and $35,632, respectively, pursuant to the agreement.
On
November 7, 2014, the Company issued to Vert Capital and a consultant five-year warrants to purchase 796,813 and 23,904 shares
of our Class A common stock, respectively, at an exercise price, equal to 110% of the per share initial public offering price
($7.70). Effective as of October 12, 2016, and as a result of Adam Levin and Michael Pope no longer being employed at Vert Capital,
Boxlight Parent cancelled the Vert Capital warrants and reissued 597,610 and 199,203 warrants under the same terms to Dynamic
Capital, LLC and Canaan Parish LLC, entities affiliated with Adam Levin and Michael Pope, respectively. These warrants expire
on December 31, 2019. Among other provisions, such warrants contain “cashless” exercise rights, certain warrant coverage
provisions and net cash settlement rights. Specifically, the holders of the 2016 warrants were entitled to receive additional
warrants to purchase up to 20% of the number of shares of Class A common stock in total (or securities convertible or exercisable
for Class A common stock) that are issued by Boxlight Parent in connection with a qualified equity financing or acquisition event
as defined in the warrants. The November 2014 warrants had a fair value of $2,087,840 on the measurement date using the Black-Scholes
Option-pricing Model and were immediately exercisable upon the closing of the IPO. Subsequent to completion of our IPO, and in
connection with securities issuances from equity financings and acquisition events, Dynamic Capital and Canaan Parish were entitled
to receive additional warrants to purchase up to 219,866 and 66,146 shares of common stock, respectively, at exercise prices ranging
from $5.58 to $9.84 per share of the Company’s Class A common stock. Effective as of May 31, 2018, with the consent of Canaan
Parish and the consultant, we cancelled and terminated, ab initio, all warrants previously issued and issuable to Canaan Parish
and the consultant.
On
July 18, 2016, Boxlight Holdings, Inc., a newly formed Delaware subsidiary of Boxlight Parent, consummated the acquisition of
the Boxlight Group under a share purchase agreement, dated May 10, 2016, with Everest Display, Inc., a Taiwan corporation (“EDI”)
and its subsidiary, Guang Feng International Ltd. (“Guang Feng”) subsidiary, the former shareholder of the Boxlight
Group. K Laser Technology, Ltd., a Taiwan corporation (“K Laser”) is the majority shareholder of EDI and one of our
major shareholders. Under the terms of the share purchase agreement, we issued EDI 270,000 shares of our Series C Preferred Stock,
that has a stated or liquidation value of $20.00 per share. Upon completion of our initial public offering on November 30, 2017,
the Series C Preferred Stock automatically converted into shares of our Class A common stock. Such newly converted shares of Class
A common stock, (including certain bonus shares of Class A common stock represented 8% of the shares issuable upon conversion
of the Series C Preferred Stock) to be issued to EDI or its subsidiaries and totaled 2,055,872 shares of our Class A common stock,
representing approximately 22.22% of our fully-diluted common stock as defined in the purchase agreement. Hank Nance, our Chief
Operating Officer and the President of the Boxlight Group, received 85,714 of these shares.
On
May 5, 2016, pursuant to a membership interest purchase agreement, dated as of April 1, 2016, Boxlight Parent acquired 100% of
the membership interest in Mimio, from Mim Holdings, LLC., a Delaware limited liability company wholly-owned by the Marlborough
Brothers Trust, a trust established for the benefit of members of the families of Adam Levin and Michael Pope, our President and
Director, in exchange for a 4% $2,000,000 unsecured convertible promissory note due March 31, 2019, and the assumption of a 6%,
$3,425,000 senior secured note of Mim Holdings that was due July 3, 2016 and was payable to Skyview Capital, LLC, (“Skyview”),
the former equity owner of Mimio (the “Skyview Note”). For purposes of the purchase agreement, the sale to Boxlight
Parent was deemed to have been consummated as of April 1, 2016.
The
Skyview Note was issued by Mim Holdings to Skyview on November 4, 2015 as payment for the acquisition of 100% of the membership
equity of Mimio. Skyview Note was guaranteed and secured by a lien and security interest on all of the assets of Mimio. Prior
to the sale of Mimio to Boxlight Parent, VC2 Partners LLC (the former owner of Mim Holdings) assigned its equity in Mim Holdings
to the Marlborough Brothers Family Trust (the “Marlborough Trust”). Adam Levin and Michael Pope and members of their
families, are beneficiaries of the Marlborough Trust and other trusts who are principal stockholders of Boxlight Parent. See “Security
Ownership of Certain Beneficial Owners and Management”.
In
connection with the acquisition of Mimio by Boxlight Parent, in May 2016 we issued a $2,000,000 note payable to Mim Holdings,
Inc., the former stockholder of Mimio. In June 2017 this convertible promissory note was converted into 330,135 shares of our
Class A common stock at $6.30 per share.
Mim
Holdings is wholly-owned by the Marlborough Brothers Family Trust, a trust established for the benefit of members of the families
of Adam Levin and Michael Pope. Mr. Pope is the President and a member of our board of directors.
On
September 28, 2016, we sold to K Laser an aggregate of 178,572 shares of our Class A common stock at a purchase price of $5.60
per share and received net proceeds of $1,000,003. The private placement was conducted through the efforts of our management and
with the assistance of K Laser and its affiliates. No commissions or other compensation was paid in connection with such private
placement.
In
October 2016, the Company issued 73,266 shares to Mark Elliott, the Company’s CEO, at $1.055 per share to settle accounts
payable of $77,268. In June 2018, Mr. Elliott agreed to amend the Company’s $50,000 note payable to eliminate the conversion
provision of the note.
On
November 30, 2017, in connection with the listing on NASDAQ, Dr. Crew purchased, at the par value, 53,000 shares of our Class
A common stock representing 0.5% of the number of fully diluted shares of Class A common stock after giving effect to the acquisitions
of the Boxlight Group and Genesis and our initial public offering. If we file a registration statement registering for resale
shares held by its officers or directors, Dr. Crew may request that we include his shares in such registration statement. Dr.
Crew will not be permitted to sell any of his shares until May 30, 2018 (six months following the consummation of our public offering)
and thereafter, not more than 50% of his shares between the seventh month and 12th month after the consummation our public offering,
and not more than 50% of the remaining shares between the 12th month and 18th months after the consummation of our public offering.
On
November 30, 2017, in connection with the listing on NASDAQ, Mr. Richards purchased, at the par value, 133,000 shares of our Class
A common stock representing 1.25% of the number of fully diluted shares of Class A common stock after giving effect to the acquisitions
of the Boxlight Group and Genesis and our initial public offering.
On
June 21, 2018, the board of directors authorized the issuance of a warrant to purchase 270,000 and 25,000 shares of Class A common
stock to Canaan Parish and a consultant, respectively, for future advisory services. The warrants (a) are exercisable by the holder
only after October 1, 2018 (b) expires on December 31, 2021 and (c) are exercisable at a price of $6.00 per share. The exercise
price is adjustable pursuant to lower revaluation events as defined in the agreement.
Policies
and Procedures For Related Party Transactions
Our
Audit Committee Charter provides that our Audit Committee will be responsible for reviewing and approving in advance any related
party transaction. Transactions requiring such pre-approval will include, with certain exceptions set forth in Item 404 of Regulation
S-K, any transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships in which
we were or are to be a participant, where the amount involved exceeds $120,000 and a related person had or will have a direct
or indirect material interest, including, without limitation, purchases of goods or services by or from the related person or
entities in which the related person has a material interest, indebtedness, guarantees of indebtedness and employment by us of
a related person.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE “
FOR
” THE ELECTION OF ALL OF
THE
BOARD OF DIRECTORS’ NOMINEES.
PLEASE
NOTE: If your shares are held in street name, your broker, bank, custodian, or other nominee holder cannot vote your shares in
the election of directors, unless you direct the holder how to vote, by marking your proxy card.
PROPOSAL
NO. 2
RATIFICATION
OF THE APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The
Audit Committee has appointed GBH CPAS, PC as independent accountants for the fiscal year ended December 31, 2018, subject to
the ratification by stockholders. Representatives of GBH CPAS, PC may be present by tele-conference at the Annual Meeting to respond
to appropriate questions and will have an opportunity to make a statement, if they so desire.
In
the event the stockholders fail to ratify the selection of GBH CPAS, PC, the Audit Committee will reconsider whether or not to
retain the firm. Even if the selection is ratified, the Audit Committee and the Board of Directors in their discretion may direct
the appointment of a different independent accounting firm at any time during the year if they determine that such a change would
be in the best interests of the Company and its stockholders.
Services
and Fees of Independent Accountants
Aggregate
fees billed to the Company by GBH CPAS, during the last two fiscal years were as follows:
Fees
|
|
2016
|
|
|
2017
|
|
Audit Fees(1)
|
|
$
|
277,987
|
|
|
$
|
293,075
|
|
Audit Related Fees (2)
|
|
$
|
–
|
|
|
|
43,910
|
|
Tax Fees (3)
|
|
$
|
–
|
|
|
$
|
–
|
|
All Other Fees
|
|
$
|
–
|
|
|
|
–
|
|
Total
|
|
$
|
277,987
|
|
|
$
|
336,985
|
|
(1)
Audit fees consist of fees for professional services rendered by the principal accountant for the audit of the Company’s
annual financial statements and review of the financial statements included in the Company’s Form 10-Q and for services
that are normally provided by the accountant in connection with statutory and regulatory filings or engagements.
(2)
Audit-related fees consist primarily of fees for assurance and related services by the accountant that are reasonably related
to the performance of the audit or review of the Company’s financial statements.
(3)
Tax fees include the preparation of federal tax returns as well as tax planning and consultation on new tax legislation, regulations,
rulings, and developments.
Pre-Approval
of Services
In
accordance with the SEC’s auditor independence rules, the Audit Committee has established the following policies and procedures
by which it approves in advance any audit or permissible non-audit services to be provided to the Company by its independent auditor.
Prior
to the engagement of the independent auditor for any fiscal year’s audit, management submits to the Audit Committee for
approval lists of recurring audit, audit-related, tax and other services expected to be provided by the auditor during that fiscal
year. The Audit Committee adopts pre-approval schedules describing the recurring services that it has pre-approved, and is informed
on a timely basis, and in any event by the next scheduled meeting, of any such services rendered by the independent auditor and
the related fees.
The
fees for any services listed in a pre-approval schedule are budgeted, and the Audit Committee requires the independent auditor
and management to report actual fees versus the budget periodically throughout the year. The Audit Committee will require additional
pre-approval if circumstances arise where it becomes necessary to engage the independent auditor for additional services above
the amount of fees originally pre-approved. Any audit or non-audit service not listed in a pre-approval schedule must be separately
pre-approved by the Audit Committee on a case-by-case basis. Every request to adopt or amend a pre-approval schedule or to provide
services that are not listed in a pre-approval schedule must include a statement by the independent auditors as to whether, in
their view, the request is consistent with the SEC’s rules on auditor independence.
The
Audit Committee will not grant approval for:
|
●
|
any
services prohibited by applicable law or by any rule or regulation of the SEC or other regulatory body applicable to the Company;
|
|
|
|
|
●
|
provision
by the independent auditor to the Company of strategic consulting services of the type typically provided by management consulting
firms; or
|
|
|
|
|
●
|
the
retention of the independent auditor in connection with a transaction initially recommended by the independent auditor, the
tax treatment of which may not be clear under the Internal Revenue Code and related regulations and which it is reasonable
to conclude will be subject to audit procedures during an audit of the Company’s financial statements.
|
Subject
to certain exceptions, tax services proposed to be provided by the auditor to any director, officer or employee of the Company
who is in an accounting role or financial reporting oversight role must be approved by the Audit Committee on a case-by-case basis
where such services are to be paid for by the Company, and the Audit Committee will be informed of any services to be provided
to such individuals that are not to be paid for by the Company.
In
determining whether to grant pre-approval of any non-audit services in the “all other” category, the Audit Committee
will consider all relevant facts and circumstances, including the following four basic guidelines
:
|
●
|
whether
the service creates a mutual or conflicting interest between the auditor and the Company;
|
|
|
|
|
●
|
whether
the service places the auditor in the position of auditing his or her own work;
|
|
|
|
|
●
|
whether
the service results in the auditor acting as management or an employee of the Company; and
|
|
|
|
|
●
|
whether
the service places the auditor in a position of being an advocate for the Company.
|
THE
BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “
FOR
” RATIFICATION OF
THE
APPOINTMENT OF THE INDEPENDENT ACCOUNTANTS.
PROPOSAL
NO. 3
ADVISORY
VOTE TO APPROVE EXECUTIVE COMPENSATION
Pursuant
to Securities Exchange Act Section 14A, we are submitting to stockholders an advisory vote to approve the compensation paid to
the Company’s named executive offices, as disclosed under the caption “Election of Directors—Executive Compensation”,
pursuant to Item 402 of Regulation S-K, including the compensation tables, and narrative discussion.
The
advisory vote is not binding on the Company, the Board of Directors, or management; if executive compensation is not approved
by the vote of a majority of shares present in person or by proxy at the meeting and entitled to vote, the Compensation Committee
will take account of this fact when considering executive compensation in future years.
THE
BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “
FOR
”
THE FOLLOWING ADVISORY RESOLUTION:
RESOLVED
,
that the compensation paid to Company’s named executive offices, as disclosed under the caption “Election of Directors—Executive
Compensation”, pursuant to Item 402 of Regulation S-K, including the compensation tables, and narrative discussion, be,
and hereby is, approved.
PROPOSAL
NO. 4
ADVISORY
VOTE TO APPROVE THE FREQUENCY OF
ADVISORY
VOTES ON EXECUTIVE COMPENSATION
Enacted
rules pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 also enable the Company’s stockholders
to indicate how frequently they believe the Company should seek an advisory vote on the compensation of the Company’s named
executive officers, such as Proposal 3 above. Stockholders may indicate whether they would prefer an advisory vote on named executive
officer compensation once every one, two, or three years or you may abstain. The Board recommends that the Company’s stockholders
select a frequency of three years, with the next such stockholder advisory vote to at the Company’s annual meeting for the
fiscal year 2021.
Although
the advisory vote is non-binding, the Board will review and consider the voting results when making future decisions regarding
the frequency of advisory votes on executive compensation.
THE
BOARD RECOMMENDS THAT YOU VOTE “
FOR
”
THE
ADVISORY VOTE ON COMPENSATION OF THE COMPANY’S
NAMED
EXECUTIVE OFFICERS TO BE HELD ONCE EVERY THREE YEARS.
PROPOSAL
NO. 5
RATIFICATION
OF AMENDMENT TO 2014 STOCK INCENTIVE PLAN
Summary
and Purpose of the Amended Equity Participation Plan
The
Board of Directors has voted to amend the 2014 Stock Incentive Plan (the “Plan”) to increase the number of shares
of Common Stock authorized for issuance under the Plan by 300,000 shares.
Increase
in Number of Authorized Shares
The
Plan has been in place since 2014. Currently, there are 2,390,438 shares of Common Stock authorized for issuance under the Plan.
However, as of the date hereof, the Company has 1,706,379 awards granted under the Plan, and only has 684,059 shares of Common
Stock remaining for future issuance under the Plan. The Board of Directors believes that the Company’s success depends in
large part on its ability to attract, retain, and motivate its executive officers and other key personnel and that grants of awards
under the Plan may be a significant element of compensation for such persons. The Board of Directors believes that the proposed
increase in the number of shares of Common Stock available for issuance as provided in the Plan will provide the Compensation
Committee with greater flexibility in the administration of the Plan and is appropriate in light of the growth of the Company
in order to attract and retain key individuals. Following the proposed increase, the total authorized number of shares under the
Plan will be 2,690,438 shares, which shall represent approximately 26.8% of the issued and outstanding shares of Common Stock
of the Company as of the date hereof.
The
amendment to the Plan is attached as Appendix A to this Proxy Statement.
Awards
to be Granted to Certain Individuals and Groups
As
of the date hereof, the Company cannot determine the benefits or amounts that will be received by or allocated to any individual
or group resulting from the approval of the amendment to the Plan.
Equity
Compensation Plan Information
The
following table provides information as of December 31, 2017 about our equity compensation plans and arrangements.
Plan category
|
|
Number of securities
to
be issued upon exercise
of outstanding options,
warrants and rights
|
|
|
Weighted-average
exercise price of
outstanding optio ns,
warrants and rights
|
|
|
Number of securities
remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
|
|
|
|
|
(a)
|
|
|
|
(b)
|
|
|
|
(c)
|
|
Equity compensation plans approved by security holders
|
|
|
812,574
|
|
|
$
|
3.01
|
|
|
|
1,577,864
|
|
Equity compensation plans not approved by
security holders
|
|
|
870,717
|
|
|
|
7.70
|
|
|
|
—
|
|
Total
|
|
|
1,683,291
|
|
|
$
|
|
|
|
|
|
|
A
vote of a majority of shares present in person or by proxy at such meeting and entitled to vote is required to approve Proposal
#5
THE
BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “
FOR
” THE
AMENDMENT
TO THE PLAN TO INCREASE THE NUMBER OF AWARDS AVAILABLE FOR
FUTURE
ISSUANCE.
PLEASE
NOTE: If your shares are held in street name, your broker, bank, custodian, or other nominee holder cannot vote your shares to
amend the Plan, unless you direct the holder how to vote, by marking your proxy card, or by following the instructions on the
proxy card to vote on the Internet.
OTHER
INFORMATION
Stockholders’
Proposals for the 2019 Annual Meeting
A
stockholder of record may present a proposal for action at the 2019 Annual Meeting provided that we receive the proposal at our
executive office no later than April 4, 2019. The proponent may submit a maximum of one (1) proposal of not more than five hundred
(500) words for inclusion in our proxy materials for a meeting of security holders. At the 2019 Annual Meeting, management proxies
will have discretionary authority, under Rule 14a-4 of the Securities Exchange Act of 1934, to vote on stockholder proposals that
are not submitted for inclusion in our proxy statement unless received by us before June 18, 2019.
Other
Business
The
Board of Directors knows of no business other than that set forth above to be transacted at the meeting, but if other matters
requiring a vote of the stockholders arise, the persons designated as proxies will vote the shares of Common Stock represented
by the proxies in accordance with their judgment on such matters. If a stockholder specifies a different choice on the proxy,
his or her shares of Common Stock will be voted in accordance with the specification so made.
Where
You Can Find More Information
We
file annual and quarterly reports, proxy statements and other information with the SEC. Stockholders may read and copy any reports,
statements or other information that we file at the SEC’s public reference rooms in Washington, D.C., New York, New York,
and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information about the public reference rooms. Our public
filings are also available from commercial document retrieval services and at the Internet Web site maintained by the SEC at www.sec.gov.
The Company’s Annual Report on Form 10-K is available on our website at www.boxlightcorp.com.
STOCKHOLDERS
SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROXY STATEMENT TO VOTE THEIR SHARES AT THE ANNUAL MEETING. NO ONE HAS BEEN
AUTHORIZED TO PROVIDE ANY INFORMATION THAT IS DIFFERENT FROM WHAT IS CONTAINED IN THIS PROXY STATEMENT. THIS PROXY STATEMENT IS
DATED JULY 19, 2018. STOCKHOLDERS SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN THIS PROXY STATEMENT IS ACCURATE AS OF ANY
DATE OTHER THAN THAT DATE, UNLESS OTHERWISE DISCLOSED.
IT
IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. WE URGE YOU TO FILL IN, SIGN AND RETURN THE FORM OF PROXY IN THE PREPAID ENVELOPE
PROVIDED, NO MATTER HOW LARGE OR SMALL YOUR HOLDINGS MAY BE.
|
By
Order of the Board of Directors,
|
|
|
|
|
/s/
James Mark Elliott
|
|
Name:
|
James
Mark Elliott
|
|
Title:
|
Chief
Executive Officer
|
July
19, 2018
APPENDIX
A
Amendment
No. 1 to Boxlight Corporation 2014 Stock Incentive Plan
LOGICAL
CHOICE CORPORATION
2014
Stock Incentive Plan
TABLE
OF CONTENTS
SECTION
1. DEFINITIONS
|
1
|
“Acquired
Share(s)”
|
1
|
“Board
of Directors”
|
1
|
“Business
Day”
|
1
|
“Call
Price”
|
1
|
“Cause”
|
1
|
“Code”
|
1
|
“Committee”
|
1
|
“Common
Stock”
|
1
|
“Company”
|
1
|
“Competitor”
|
1
|
“Confidential
Information”
|
1
|
“Disability”
|
1
|
“Disloyal
Act”
|
2
|
“Disposition”
|
2
|
“Effective
Date of Termination”
|
2
|
“Exercise
Agreement”
|
2
|
“Exercise
Price”
|
2
|
“Family
Group”
|
2
|
“Fair
Value”
|
2
|
“Holding
Period”
|
3
|
“Incentive
Shares”
|
3
|
“Incentive
Stock Option” or “Qualified Stock Option”
|
3
|
“ISO-FMV”
|
3
|
“Non-Employee
Director”
|
3
|
“Non-Qualified
Stock Option”
|
4
|
“Offer”
|
4
|
“Option”
|
4
|
“Over
10% Owner”
|
4
|
“Parent”
|
4
|
“Participant”
|
4
|
“Plan”
|
4
|
“Prime
Rate”
|
4
|
“Proposed
Purchase Price”
|
4
|
“Proposed
Purchaser”
|
4
|
“Public
Offering”
|
4
|
“Resignation
For Good Reason”
|
4
|
“Restricted
Stock Award”
|
5
|
“Restricted
Stock Award Agreement”
|
5
|
“Stock
Appreciation Right”
|
5
|
“Stock
Appreciation Right Agreement”
|
5
|
“Stock
Incentive”
|
5
|
“Stock
Incentive Agreement”
|
5
|
“Stock
Option Agreement” or “Stock Option Certificate”
|
5
|
“Subsidiary”
|
5
|
“Tax
Date”
|
5
|
“Termination
of Employment”
|
5
|
“Trade
Secret(s)”
|
5
|
“Transaction”
|
6
|
“Transfer
Notice”
|
6
|
“Transferee”
|
6
|
“Withholding
Election”
|
6
|
Section
2. Stock Incentive Plan
|
6
|
Section
2.1. Plan Purpose.
|
6
|
Section
2.2. Stock Subject to the Plan.
|
6
|
Section
2.3. Plan Administration.
|
7
|
Section
2.4. Composition of Committee after Initial Public Offering.
|
7
|
Section
2.5. Eligibility and Limits.
|
7
|
|
|
Section
3. Terms and Conditions of All Stock Incentives
|
7
|
Section
3.1. Number of Shares.
|
7
|
Section
3.2. Stock Incentive Agreement.
|
7
|
Section
3.3. Date of Grant.
|
7
|
Section
3.4. Accelerated Vesting upon Consummation of a Transaction.
|
7
|
Section
3.5. Redemption of Stock Incentives.
|
8
|
Section
3.6. Certain Termination Events.
|
8
|
|
|
Section
4. Terms and Conditions of Options
|
9
|
Section
4.1. Type of Option.
|
9
|
Section
4.2. Exercise Price.
|
9
|
Section
4.3. Term of Option.
|
9
|
Section
4.4. Payment of Exercise Price.
|
9
|
Section
4.5. Vesting.
|
9
|
Section
4.6. Nontransferability of Options.
|
9
|
Section
4.7. Substitution of Previously Issued Options.
|
10
|
|
|
Section
5. Terms and Conditions of Stock Appreciation Rights
|
10
|
Section
5.1. Award.
|
10
|
Section
5.2. Payment under Stock Appreciation Right.
|
10
|
Section
5.3. Exercise.
|
10
|
Section
5.4. Nontransferability of Stock Appreciation Rights.
|
11
|
Section
5.5. Effect of Termination of Employment.
|
11
|
|
|
Section
6. Terms and Conditions of Restricted Stock Awards
|
11
|
Section
6.1. Award.
|
11
|
Section
6.2. Payment under Restricted Stock Award.
|
11
|
|
|
Section
7. Restrictions on Acquired Shares
|
11
|
Section
7.1. Restrictions on Transfer of Acquired Shares.
|
11
|
Section
7.2. Right of First Refusal.
|
12
|
Section
7.3. Right to Purchase Upon Termination of Employment.
|
13
|
Section
7.4. Determination of Call Price.
|
13
|
Section
7.5. Mandatory Sale.
|
14
|
Section
7.6. Disloyal Acts.
|
14
|
Section
7.7. Pledging of Shares.
|
14
|
Section
7.8. Delivery of Certificate.
|
14
|
Section
7.9. Lockup Agreement in Public Offering.
|
15
|
Section
7.10. Termination of Restrictions.
|
15
|
Section
7.11. Removal of Legends.
|
15
|
|
|
Section
8. General Provisions
|
15
|
Section
8.1. Withholding.
|
15
|
Section
8.2. Changes in Capitalization; Merger; Liquidation.
|
15
|
Section
8.3. Investment Representations.
|
16
|
Section
8.4. Compliance with Code.
|
17
|
Section
8.5. Set-Off.
|
17
|
Section
8.6. Right to Terminate Employment.
|
17
|
Section
8.7. Restrictions on Delivery and Sale of Shares.
|
17
|
Section
8.8. Shareholders Agreement.
|
17
|
Section
8.9. Plan Termination and Amendment.
|
17
|
Section
8.10. Effective Date of Plan.
|
17
|
Logical
Choice CORPORATION
2014 Stock Incentive Plan
SECTION
1. DEFINITIONS
The
following capitalized terms are used throughout the Plan, Stock Incentive Agreements, and Exercise Agreements with the meaning
thereafter ascribed:
“Acquired
Share(s)”
means any and all outstanding shares of Common Stock issued pursuant to Stock Incentives awarded under the
Plan. For purposes of the restrictions on transfer set forth in Section 7.1 hereof, “Acquired Shares” excludes shares
which have been sold and transferred: (a) in a Public Offering, (b) in a Transaction, (c) after compliance with the right of first
refusal in Section 7.2 hereof, and (d) after a Public Offering, in a transaction effected pursuant to Rule 144 promulgated under
the Securities Act.
“Board
of Directors”
means the board of directors of the Company.
“Business
Day”
means a day on which the New York Stock Exchange is open for trading.
“Call
Price”
means the purchase price, determined in accordance with Section 7.4 hereof, to be paid by the Company for each
Acquired Share repurchased by the Company in accordance with Section 7.3 hereof.
“Cause”
means conduct amounting to: (a) fraud or dishonesty against the Company, (b) willful misconduct, insubordination, or repeated
refusal or inability to follow the reasonable and lawful directives of the Board of Directors, (c) or knowing violation of law
in the course of performance of duties or services of a Participant’s employment or other relationship with the Company,
(d) repeated absences from work without a reasonable excuse, (e) intoxication with alcohol or drugs while on the Company’s
premises or during regular business hours, (f) a conviction or plea of guilty or
nolo contendere
to a felony or a crime
involving dishonesty, (g) a breach or violation of the terms of any employment or other agreement to which Participant and the
Company are party, (h) substandard or ineffective performance of the duties of employment as determined by the Committee, or (i)
a Disloyal Act.
“Code”
means the Internal Revenue Code, as amended from time to time.
“Committee”
means the committee appointed by the Board of Directors to administer the Plan or, in the absence of appointment of such committee,
the Board of Directors.
“Common
Stock”
means the Company’s common stock, or any successor securities thereto.
“Company”
means
Logical Choice Corporation
, a Nevada corporation.
“Competitor”
means a business which involves providing consulting, development, discovery, licensing, marketing and/or distribution of
software which provides linking or communications between imaging software and database software.
“Confidential
Information”
means information, other than Trade Secrets, that is of value to its owner and is treated as confidential,
including, but not limited to, future business plans, licensing strategies, advertising campaigns, information regarding executives
or employees, and the terms and conditions of the Plan and any Option Agreement.
“Disability”
means: (a) the inability to perform the duties of employment due to physical or emotional incapacity or illness, where such
inability is expected to be of long-continued and indefinite duration, or (b) a Participant shall be entitled to: (i) disability
retirement benefits under the federal Social Security Act, or (ii) recover benefits under any long-term disability plan or policy
maintained by the Company. In the event of a dispute, the determination of Disability shall be made by the Committee and shall
be supported by advice of a physician competent in the area to which such Disability relates.
“Disloyal
Act”
means: (a) improper or unauthorized disclosure of Trade Secrets or Confidential Information, or (b) Performing
Services (as such term is defined below), without the written consent or acquiescence of the Committee. As used in the preceding
sentence, “Performing Services” means that the Participant performs services for a Competitor that are substantially
the same as the services Participant performs or performed for the Company: (i) during the time the Participant is employed by,
or is engaged to perform services for, the Company, its Parent, or a Subsidiary, or (ii) during the one (1) year period which
commences on the Effective Date of Termination. The Committee shall not be deemed to have acquiesced in a Disloyal Act, even if
the Committee has actual knowledge of the Disloyal Act, unless: (A) the activities which constitute a Disloyal Act are listed
on an exhibit to any employment agreement between the Company and such Participant, (B) the Participant gave written notice of
the Participant’s intention to perform such Disloyal Act to the Board of Directors not less than thirty (30) Business Days
prior to the performance of such Disloyal Act and the Committee did not object, or (C) the Participant was directed in writing
by an officer or a managerial employee of the Company to perform such Disloyal Act
and
the Participant delivered
a copy of such written direction to the Committee within ten (10) days of the Committee’s request for such a copy.
“Disposition”
means any conveyance, sale, transfer, assignment, pledge, or hypothecation of Common Stock, whether outright or as security,
inter vivos or testamentary, with or without consideration, voluntary or involuntary.
“Effective
Date of Termination”
means the effective date of Termination of Employment as determined by the Committee. In making
its determination, the Committee shall consider the date stated in any notice of termination given by the Company, and if no notice
of termination is given by the Company, the date on which a Participant last performs the duties or services of the Participant’s
employment or other relationship with the Company as determined by the Committee. In the absence of manifest error, the Committee’s
determination is final, binding, and nonappealable.
“Exercise
Agreement”
means an agreement entered into by and between a Participant and the Company which sets forth the terms and
conditions with respect to the Participant’s exercise of an Option and the issuance of Shares thereupon.
“Exercise
Price”
means the consideration which must be paid by a Participant or a Transferee to purchase one share of Common Stock
upon exercise of an Option.
“Family
Group”
means, with respect to any Participant, such Participant’s spouse and descendants (whether natural or adopted),
and any trust solely for the benefit of such Participant and/or such Participant’s spouse and/or their respective ancestors
and/or descendants.
“Fair
Value”
means the value of one share of Common Stock determined as set forth below, as of the business day which immediately
precedes the date for which Fair Value is determined.
(a)
If the Common Stock is not: (i) listed on any securities exchange, (ii) quoted in the NASDAQ National Market System, or (iii)
quoted in the over-the-counter market as reported by the National Quotation Bureau, “Fair Value” means an amount determined
by the Committee in good faith. In making the determination of the Fair Value pursuant to this subparagraph (a), the Committee
shall assume: (A) that the value of the Company is equal to the amount which would be paid in cash for the Company, as a going
concern, by an unaffiliated third party buyer, and may take into account such additional factors as may be relevant to such valuation,
including, without limitation, the absence of a trading market for the Common Stock, the minority status of the shares of Common
Stock, and such other facts and circumstances as may be material, in the judgment of the Committee, and (B) that the Fair Value
of one share of Common Stock is equal to: (I) the value of the Company,
divided by
(II) the sum of the number of
outstanding shares of Common Stock,
plus
all Incentive Shares,
plus
all shares of Common Stock issuable
upon: (x) the exercise of all outstanding options not issued under the Plan, warrants, and rights to purchase Common Stock, and
(y) the conversion of all outstanding convertible securities. The Fair Value established by the Committee shall, in the absence
of manifest error, be final, binding, and conclusive upon the Company and all affected Participants.
(b)
If the Common Stock is: (x) listed on a securities exchange, (y) quoted in the NASDAQ National Market System, or (z) quoted in
the over-the-counter market as reported by the National Quotation Bureau, “Fair Value” means the average Daily Price
(as such term is defined below) over a twenty (20) Business Day period consisting of the day as of which Fair Value is being determined
and the nineteen (19) consecutive Business Days prior to such date. For the purposes of computing Fair Value, the “Daily
Price” for each of the twenty (20) consecutive Business Days shall be determined as follows:
(i)
If the Common Stock is listed on a securities exchange, the “Daily Price” is the closing price of the Common Stock
on the securities exchange having the greatest trading volume over the preceding thirty (30) calendar day period,
or
,
if there have been no sales on a particular Business Day, the average of the last reported bid and asked quotations on such exchange
at the close of business for such Business Day.
(ii)
If the Common Stock is quoted on the NASDAQ National Market System, the “Daily Price” is the average of the representative
bid and asked prices of the Common Stock quoted in the NASDAQ National Market System as of 4:00 p.m., Eastern Time.
(iii)
If the Common Stock is quoted on the over-the-counter market as reported by the National Quotation Bureau, the “Daily Price”
is the average of the highest bid and asked prices of the Common Stock on the over-the-counter market as reported by the National
Quotation Bureau.
“Holding
Period”
means a one (1) year period which commences on the Effective Date of Termination, except that, if the Company
is or becomes a party to an agreement with a third party which prohibits the Company from exercising the right of first refusal
in Section 7.2 hereof or the Company’s right to purchase Acquired Shares upon Termination of Employment in Section 7.3 hereof,
or, if the exercise of such rights would cause the Company to breach any financial or other covenant in any agreement to which
the Company is a party, Holding Period means the period which commences on the Effective Date of Termination and ends on the first
anniversary of the date that the Company is no longer subject to, or obtains a waiver of, such prohibition or covenant.
“Incentive
Shares”
means all shares of Common Stock subject to issuance upon exercise or payment of all outstanding Stock Incentives.
“Incentive
Stock Option” or “Qualified Stock Option”
means an incentive stock option, as defined in Code Section 422,
which is awarded under the Plan.
“ISO-FMV”
means the Fair Value of one (1) share of Common Stock, determined without consideration of factors such as the absence of
a trading market, the minority status of the shares of Common Stock, or any other factor, except a restriction which, by its terms,
will never lapse.
“Non-Employee
Director”
means a member of the Board of Directors who:
(a)
is not currently an officer or otherwise employed by the Company, its Parent, or any Subsidiary;
(b)
does not receive compensation directly or indirectly from the Company, its Parent, or any Subsidiary, for services rendered as
a consultant or in any capacity other than as a director, except for compensation in an amount for which disclosure would not
be required pursuant to Item 404(a) of Regulation S-K promulgated pursuant to the Securities Act of 1933;
(c)
does not possess an interest in any other transaction for which disclosure would be required pursuant to Item 404(a) of Regulation
S-K promulgated pursuant to the Securities Act of 1933; and
(d)
is not engaged in a business relationship for which disclosure would be required pursuant to Item 404(a) of Regulation S-K promulgated
pursuant to the Securities Act of 1933.
“Non-Qualified
Stock Option”
means a stock option awarded under the Plan which does not qualify as an Incentive Stock Option.
“Offer”
means a bona fide written offer made by a Proposed Purchaser to a Participant or Transferee to purchase Acquired Shares owned
by such Participant or Transferee in an arm’s length transaction.
“Option”
means a Non-Qualified Stock Option or an Incentive Stock Option.
“Over
10% Owner”
means an individual who, at the time an Incentive Stock Option is granted, owns Common Stock possessing more
than ten percent (10%) of the total combined voting power of the Company, or one of its Parents or Subsidiaries, determined by
applying the attribution rules of Code Section 424(d).
“Parent”
means any corporation (other than the Company) in an unbroken chain of corporations ending with the Company if (with respect
to Incentive Stock Options, at the time of granting of the Option), each of the corporations other than the Company owns stock
possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations
in the chain.
“Participant”
means an individual who receives a Stock Incentive.
“Plan”
means the Logical Choice Technologies, Inc. 1999 Stock Incentive Plan.
“Prime
Rate”
means the prime rate as published in the “Money Rates” column of the Wall Street Journal, and if more
than one rate is published, the average of such rates, and if there is a range of such rates, the average of such rates.
“Proposed
Purchase Price”
means the price per Acquired Share offered in an Offer by a Proposed Purchaser.
“Proposed
Purchaser”
means an unrelated third party who is not a Competitor who makes a bona fide arm’s length written offer
to a Participant or a Transferee to purchase Acquired Shares owned by such Participant or Transferee.
“Public
Offering”
means the offering for sale by the Company of Common Stock pursuant to a registration statement filed in accordance
with the Securities Act of 1933, as amended, or any comparable law then in effect, which results in gross proceeds to the Company
in excess of five million dollars ($5,000,000.00). The effective date of any such Public Offering shall be the first day on which
the securities covered thereby may lawfully be offered and sold pursuant to such registration statement.
“Resignation
For Good Reason”
means any voluntary resignation of employment by a Participant, because of: (a) a material reduction
in the Participant’s total compensation package, (b) the Participant’s involuntary relocation by the Company to a
location which is outside the boundaries established by the Internal Revenue Service for determining whether expenses incurred
in commuting to and from a place of employment are tax deductible, or (c) a material change in the responsibilities of employment
which is not based upon substandard or ineffective job performance. In order to qualify as a Resignation for Good Reason, the
Participant must tender written notice of resignation within thirty (30) days of the first to occur of the events described in
clause (a), (b), or (c). Any resignation after such thirty (30) day period shall not, without the consent of the Committee, be
a Resignation For Good Reason. The Committee shall, in good faith, make the final determination as to whether a resignation is
a Resignation for Good Reason, and such determination, in the absence of manifest error, shall be final, binding, and nonappealable.
“Restricted
Stock Award”
means restricted stock awarded pursuant to the Plan.
“Restricted
Stock Award Agreement”
means an agreement between the Company and a Participant evidencing an award of a Restricted
Stock Award.
“Stock
Appreciation Right”
means a stock appreciation right awarded pursuant to the Plan.
“Stock
Appreciation Right Agreement”
means an agreement between the Company and a Participant evidencing an award of a Stock
Appreciation Right.
“Stock
Incentive”
means an Incentive Stock Option, a Non-Qualified Stock Option, a Restricted Stock Award, or a Stock Appreciation
Right
.
“Stock
Incentive Agreement”
means an agreement between the Company and a Participant evidencing an award of a Stock Incentive,
including a Stock Option Agreement, a Stock Appreciation Right Agreement, or a Restricted Stock Award Agreement.
“Stock
Option Agreement” or “Stock Option Certificate”
means an agreement between the Company and a Participant
evidencing the grant of an Option.
“Subsidiary”
means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if (with respect
to Incentive Stock Options, at the time of the granting of the Option) each of the corporations other than the last corporation
in the unbroken chain owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock
in one of the other corporations in the chain.
“Tax
Date”
means the date on which the amount of any tax required to be withheld is determined.
“Termination
of Employment”
means the termination of the employer-employee relationship between a Participant and the Company (and
its Parents and Subsidiaries), regardless of the fact that severance or similar payments are made to the Participant, for any
reason, including, without limitation, a termination by resignation, discharge, death, Disability, or retirement. The Committee
shall, in its absolute discretion, determine the effect of all matters and questions relating to Termination of Employment, including,
without limitation, the question of whether a leave of absence constitutes a Termination of Employment, or whether a Termination
of Employment is for Cause.
“Trade
Secret(s)”
means information, without regard to form, which derives economic value, actual or potential, from not being
generally known and not being readily ascertainable to other persons who can obtain economic value from its disclosure or use
and which is the subject of efforts that are reasonable under the circumstances to maintain its secrecy or confidentiality. Trade
Secrets may include either technical or non-technical data, including without limitation: (a) any useful process, machine, chemical
formula, composition of matter, or other device which: (i) is new or which the Participant has a reasonable basis to believe may
be new, (ii) is being used or studied by the Company and is not described in a patent or in any literature already published and
distributed externally by the Company, and (iii) is not readily ascertainable from inspection of a product of the Company; (b)
any engineering, technical, or product specifications including those of features used in any current product of the Company,
or to be used, or the use of which is contemplated, in a future product of the Company; (c) any application, operating system,
communication system, or other computer software (whether in source or object code) and all flow charts, algorithms, coding sheets,
routines, subroutines, compilers, assemblers, design concepts, test data, documentation, or manuals related thereto, whether or
not copyrighted, patented or patentable, related to or used in the business of the company; and (d) information concerning the
customers, suppliers, products, pricing strategies of the Company, personnel assignments, and policies of the Company, or matters
concerning the financial affairs and management of the Company or any parent, subsidiary, or affiliate of the Company.
“Transaction”
means any: (a) dissolution or liquidation of the Company; (b) merger, consolidation, combination, reorganization, or like
transaction in which the Company is not the survivor, or any share exchange in which the Company is not the parent; (c) sale or
transfer (other than as security for the Company’s obligations) of all or substantially all of the assets of the Company;
or (d) sale or transfer of ninety percent (90%) or more of the issued and outstanding shares of Common Stock by the holders thereof
in a single transaction or in a series of related transactions,
except
that a distribution of shares of Common Stock
by a holder that is (A) an entity to: (x) the employees, officers, and/or directors of such holder, (y) the shareholders, partners,
other equity security holders, or beneficiaries of such holder, or (z) to any Parent or Subsidiary, or (B) an individual to members
of such holder’s Family Group, for no consideration, shall not be deemed a “transfer” for purposes of this clause.
“Transfer
Notice”
means a written notice of an Offer which states the number of Acquired Shares subject to such Offer, the Proposed
Purchase Price, and terms of payment offered by a Proposed Purchaser in such Offer.
“Transferee”
means the estate, or the executor or administrator of the estate, of a deceased Participant, or the personal representative
of a Participant suffering a Disability, or any subsequent transferee of the Transferee.
“Withholding
Election”
means a Participant’s election: (a) with respect to Common Stock issued pursuant to any Stock Incentive,
to have the number of shares of Common Stock so issued reduced in accordance with Section 8.1 hereof by the smallest number of
whole shares of Common Stock which, when multiplied by the Fair Value of such shares of Common Stock, determined as of the Tax
Date, is sufficient to satisfy all federal, state, and local tax withholding obligations arising from the issuance of such shares
of Common Stock, or (b) with respect to the vesting of any Restricted Stock Award, to tender, in accordance with Section 8.1 hereof,
the smallest number of whole shares of Common Stock back to the Company which, when multiplied by the Fair Value determined as
of the Tax Date, is sufficient to satisfy all federal, state, and local, tax withholding obligations arising from the vesting
of such Restricted Stock Award.
Section
2. Stock Incentive Plan
Section
2.1. Plan Purpose.
The Plan is intended to provide an opportunity for directors, officers, key employees, and consultants
of the Company to acquire Common Stock, or to receive compensation which is based upon appreciation in the value of Common Stock.
The Plan provides for the grant of Incentive Stock Options, Non-Qualified Stock Options, Restricted Stock Awards, and Stock Appreciation
Rights to aid the Company in retaining and obtaining key personnel of outstanding ability. The Company expects the grant of Stock
Incentives to benefit the Company by motivating such key personnel to help the Company succeed.
Section
2.2 Stock Subject to the Plan.
Subject to adjustment in accordance with Section 8.2 hereof, Two Million Six Hundred Ninety
Thousand Four Hundred Thirty-Eight (2,690,438) shares of Common Stock (the “Total Reserved Shares”) are hereby reserved
exclusively for issuance pursuant to Stock Incentives granted under the Plan. At no time shall the Company have outstanding Incentive
Shares and Acquired Shares in excess of the Total Reserved Shares,
minus
the number of Acquired Shares redeemed
by the Company pursuant to Sections 7.2 and 7.3 hereof. Acquired Shares redeemed by the Company may be either (a) authorized and
unissued Common Stock or (b) Common Stock held in the treasury of the Company, as shall be determined by the Committee. If an
Option or Stock Appreciation Right expires or terminates for any reason without being exercised in full, or if Acquired Shares
issued under a Restricted Stock Award are transferred back to the Company pursuant to the restrictions thereon, other than pursuant
to the Company’s call right pursuant to Section 7.3 or the Company’s right of first refusal pursuant to Section 7.2,
such Shares shall again be available for purposes of the Plan. Acquired Shares purchased by the Company pursuant to Section 7.2
hereof and Section 7.3 hereof shall not be available for the purposes of the Plan.
Section
2.3 Plan Administration.
The Plan shall be administered by the Committee. The Committee shall have full and plenary power
and authority in its discretion to determine the directors, officers, key employees, and consultants of the Company to whom Stock
Incentives shall be granted and the terms and provisions of all Stock Incentives, subject to the provisions of the Plan. Subject
to the provisions of the Plan, the Committee shall have full and plenary power and authority to interpret the Plan, to prescribe,
amend, and rescind rules and regulations relating to the Plan, to determine the terms and provisions of the Stock Incentive Agreements,
and to make all other determinations necessary or advisable for the proper administration of the Plan. The Committee’s determinations
under the Plan need not be uniform and may be made by it selectively among persons who receive, or are eligible to receive, awards
under the Plan (whether or not such persons are similarly situated). The Committee’s decisions, in the absence of manifest
error, shall be final and binding on all Participants. No member of the Committee shall be liable for damages for any action taken
as a member of the Committee.
Section
2.4 Composition of Committee after Initial Public Offering.
Following the first registration of an equity security under Section
12 of the Securities Exchange Act of 1934, as amended, the Committee shall consist of at a minimum two (2) or more Non-Employee
Directors.
Section
2.5 Eligibility and Limits.
Stock Incentives may be granted only to directors, officers, key employees, and consultants of
the Company or a Parent or Subsidiary the Company;
provided, however
, that an Incentive Stock Option may only be
granted to an employee of any such entity. In the case of Incentive Stock Options, the aggregate Fair Value (determined as of
the time an Incentive Stock Option is granted) of Incentive Shares with respect to which Incentive Stock Options become exercisable
for the first time by a Participant during any calendar year under all plans of the Company, its Parents, and its Subsidiaries
shall not exceed one hundred thousand dollars ($100,000).
Section
3. Terms and Conditions of All Stock Incentives
Every
Stock Incentive granted under the Plan shall conform to the following provisions of the Plan and may contain such other terms
and conditions which are not inconsistent with the Plan as the Committee determines are advisable and in the interest of the Company:
Section
3.1. Number of Shares.
The number of Incentive Shares subject to a Stock Incentive shall be determined by the Committee in
its sole discretion, subject to the provisions of Section 2.2 of the Plan. The number of Incentive Shares shall be set forth in
the Stock Incentive Agreement, and shall be subject to adjustment as provided in Section 8.2 hereof.
Section
3.2. Stock Incentive Agreement.
Each Stock Incentive shall be evidenced by a Stock Incentive Agreement executed by the Company
and the Participant, which shall be in such form and contain such terms and conditions as the Committee in its discretion may,
subject to the provisions of the Plan, from time to time determine.
Section
3.3. Date of Grant.
The date a Stock Incentive is granted shall be the date on which the Committee has approved the terms
and conditions of the Stock Incentive Agreement, has determined the recipient of the Stock Incentive, the number of Incentive
Shares subject to the Stock Incentive, and has taken all such other action necessary to complete the grant of the Stock Incentive.
Such date shall be set forth in the Stock Incentive Agreement.
Section
3.4. Accelerated Vesting upon Consummation of a Transaction.
Unless otherwise set forth in a Stock Incentive Agreement: (a)
each unexpired Option which is vested or would vest within twelve (12) months after the date of consummation of a Transaction
shall become exercisable upon the consummation of a Transaction with respect to all of the Incentive Shares subject to such Option,
without regard to the date of grant of the Option, and notwithstanding that such Option would be unvested or otherwise unexercisable
with respect to some or all of such Incentive Shares, (b) each unexpired Stock Appreciation Right which is vested or would vest
within twelve (12) months after the date of consummation of a Transaction shall become payable upon the consummation of a Transaction
as to all of the Incentive Shares subject to the Stock Appreciation Right, without regard to the date of award of the Stock Appreciation
Right, and (c) each unexpired Restricted Stock Award which has not been previously forfeited which is vested or would vest within
twelve (12) months after the date of consummation of a Transaction shall be vested as to all of the Acquired Shares subject to
such Restricted Stock Award upon the consummation of a Transaction, without regard to the date of award of the Restricted Stock
Award. The preceding sentence notwithstanding, at any time prior to the consummation of a Transaction, the Committee may impose
conditions on the exercise, redemption, or substitution of any outstanding Stock Incentive, including, without limitation, a condition
of the continued employment of the affected Participant with the Company, or any successor to the Company, after the closing of
a Transaction, in order to receive payment of any consideration payable in a Transaction in respect of Incentive Shares, which,
in the absence of an acceleration pursuant to this Section 3.4, would be unvested Incentive Shares,
provided
,
however
,
that if the Committee imposes an employment condition after the closing of a Transaction, such condition
shall be deemed satisfied if a Termination of Employment results from (x) the death or Disability of a Participant or (y) a Resignation
for Good Reason.
Section
3.5. Redemption of Stock Incentives.
Notwithstanding anything to the contrary contained herein or in any Stock Incentive Agreement,
the Company shall have the absolute right to redeem any or all outstanding Stock Incentives from any or all Participants in connection
with a Transaction for an amount which, with respect to each Participant, represents the Committee’s best estimate of the
amount and type of consideration a holder of the number of shares of Common Stock equal to the number of vested Incentive Shares
held by such Participant would receive in the Transaction after deduction of the Exercise Price and all legal, accounting, and
other expenses incurred in the Transaction, and satisfaction of excluded liabilities and indebtedness not assumed in the Transaction
(the “Redemption Price”), and subject to such other terms and conditions set by the Committee. If the Company calls
any or all of the outstanding Stock Incentives for redemption, the affected Participants shall be under a mandatory obligation
to sell their Stock Incentives to the Company at the Redemption Price and upon such other terms as may be established by the Committee.
In the event a Participant fails to deliver a Stock Incentive for redemption to the Company in accordance with this Section 3.5,
the Company may terminate and cancel any Stock Incentive upon delivery of the Redemption Price to such Participant, whereupon
all rights of such Participant under the Stock Incentive shall be extinguished.
Section
3.6. Certain Termination Events.
Unless otherwise set forth in a Stock Incentive Agreement, an outstanding Stock Incentive
shall terminate upon the first to occur of any of the following events:
(a)
5:00 p.m. Eastern Time on the date on which the Participant holding a Stock Incentive commits a Disloyal Act;
(b)
5:00 p.m. Eastern Time on the fifth (5
th
) anniversary of the Award Date set forth in the Stock Incentive Agreement;
(c)
5:00 p.m. Eastern Time on the date of closing of a Transaction;
(d)
If the Stock Incentive is not an Incentive Stock Option, 5:00 p.m. Eastern Time on the Effective Date of Termination of the Participant
holding the Stock Incentive,
provided however
, if Termination of Employment results from death or Disability of
such Participant, the Stock Incentive shall not terminate until 5:00 p.m. Eastern Time ninety (90) days after the Effective Date
of Termination, or in the case of a Stock Appreciation Right only upon the consummation of a Transaction in accordance with Section
5.5;
(e)
If the Stock Incentive is an Incentive Stock Option, 5:00 p.m. Eastern Time on the ninetieth (90th) day after a Termination of
Employment of the Participant holding the Stock Incentive.
(f)
5:00 p.m. Eastern Time on the date the Stock Incentive is redeemed pursuant to Section 3.5 of the Plan; or
(g)
5:00 p.m. Eastern Time on the date a substituted stock option is issued pursuant to Section 4.7 of the Plan in replacement of
any Option issued under the Plan.
Section
4. Terms and Conditions of Options
Every
Option granted under the Plan shall be evidenced by a
Stock Option Agreement
which conforms to the following provisions
of the Plan, and which may contain such other terms and conditions which are not inconsistent with the Plan as the Committee determines
are advisable and in the interest of the Company under the circumstances.
Section
4.1. Type of Option.
At the time any Option is granted, the Committee shall determine whether the Option is to be an Incentive
Stock Option or a Non-Qualified Stock Option, and the Option shall be clearly identified as either an Incentive Stock Option or
a Non-Qualified Stock Option. At the time any Incentive Stock Option is exercised, the Company shall be entitled to place a legend
on the certificates representing the Acquired Shares purchased pursuant to the Option to clearly identify them as Acquired Shares
purchased upon exercise of an Incentive Stock Option. An Incentive Stock Option may only be granted within ten (10) years from
the earlier of the date the Plan is adopted or approved by the Company’s shareholders.
Section
4.2. Exercise Price.
The Exercise Price of each Option granted under the Plan shall be set forth in the Stock Option Agreement
evidencing such Option. The Exercise Price shall be subject to adjustment in accordance with Section 8.2 hereof; provided however,
that the Exercise Price of any Incentive Stock Option that is granted to a Participant who is not an Over 10% Owner shall not
be less than the ISO-FMV on the date the Incentive Stock Option is granted; and provided further, that the Exercise Price of any
Incentive Stock Option that is awarded to a Participant who is an Over 10% Owner shall not be less than one hundred ten percent
(110%) of the ISO-FMV on the date the Incentive Stock Option is granted.
Section
4.3. Term of Option.
The term of any Option shall be as set forth in the applicable Stock Option Agreement; provided, however,
that the term of any Incentive Stock Option granted to a Participant who is not an Over 10% Owner shall not exceed ten (10) years
after the date the Option is granted, and provided further, that the term of any Incentive Stock Option granted to an Over 10%
Owner shall not exceed five (5) years after the date the Option is granted.
Section
4.4. Payment of Exercise Price.
The Exercise Price of any Option shall be paid in cash, or, after a Public Offering, or other
exercise with the consent of the Committee, by a cashless exercise through a brokerage transaction or such other means as the
Committee determines. The Committee, prior to a Public Offering, may, but shall not be obligated to, accept payment of the Exercise
Price by a promissory note of the Participant which is secured by the Acquired Shares issued upon exercise of the Option. No Acquired
Shares shall be issued or delivered upon exercise of an Option until full payment of the Exercise Price has been made by the Participant.
The holder of an Option, as such, shall have none of the rights of a shareholder until Acquired Shares are issued upon exercise
of the Option.
Section
4.5. Vesting.
Each Option granted under the Plan shall be exercisable at such time or times, or upon the occurrence of such
event or events, and in such amounts, as the Committee shall specify in the Stock Option Agreement; provided, however, that subsequent
to the grant of an Option, the Committee, at any time before complete termination of such Option, may accelerate the time or times
at which such Option may be exercised in whole or in part.
Section
4.6. Nontransferability of Options.
Except as provided in Section 4.7 below, an Option shall not be transferable, or assignable,
except by will or by the laws of descent and distribution, and shall be exercisable during the Participant’s lifetime only
by the Participant, or in the event of the Disability of the Participant, by the Participant’s Transferee.
Section
4.7. Substitution of Previously Issued Options.
(a)
Notwithstanding anything to the contrary in the Plan, any Option granted in substitution for an option previously issued by another
entity, which substitution occurs in connection with a transaction to which Code Section 424(a) is applicable, may provide for
an Exercise Price computed in accordance with such Code Section and the regulations thereunder, and may contain such other terms
and conditions as the Committee may prescribe to cause such substitute Option to contain as nearly as possible the same terms
and conditions (including the applicable vesting and termination provisions) as those contained in the previously issued option
being replaced thereby.
(b)
The Company shall have the absolute right in connection with any Transaction in which the Company will not be the surviving entity
(including a sale of assets) to negotiate for the substitution of all or part of the outstanding Options for options issued by
the surviving entity, or its parent or a subsidiary of such surviving entity,
provided
the number of shares subject
to such substituted option, the number of shares “vested” or otherwise immediately exercisable thereunder, the exercise
price of such substituted option, and all other terms and conditions of such substituted option are such that the Participant
is in substantially the same economic position after receiving the substitute option as such Participant was in immediately prior
to such substitution (after taking into account the effect of Section 3.4 of the Plan). The Company shall use best efforts to
cause any such substituted option to be issued at the closing of the Transaction.
Section
5. Terms and Conditions of Stock Appreciation Rights
Every
Stock Appreciation Right awarded under the Plan shall be evidenced by a Stock Appreciation Right Agreement that conforms to the
following provisions of the Plan and which may contain such other terms and conditions which are not inconsistent with the Plan
as the Committee determines are advisable and in the interest of the Company:
Section
5.1. Award.
A Stock Appreciation Right may be awarded in connection with all or any portion of a previously or contemporaneously
granted Option or not in connection with an Option. A Stock Appreciation Right shall entitle the Participant to receive upon exercise
or payment the excess of: (a) the Fair Value of a specified number of Incentive Shares at the time of exercise,
minus
(b) a specified price which shall be not less than the Option’s Exercise Price for that number of Incentive Shares, in the
case of a Stock Appreciation Right granted in connection with a previously or contemporaneously granted Option, or, in the case
of any other Stock Appreciation Right, not less than one hundred percent (100%) of the Fair Value of the specified number of Incentive
Shares at the time the Stock Appreciation Right was awarded. A Stock Appreciation Right granted in connection with the grant of
an Option may only be exercised to the extent that the related Option
has not been
exercised. The exercise of a
Stock Appreciation Right shall result in a pro rata surrender of any related Option to the extent the Stock Appreciation Right
has been exercised.
Section
5.2. Payment under Stock Appreciation Right.
Upon exercise or payment of a Stock Appreciation Right, the Company shall pay
to the Participant the appreciation in cash, or by issuance of Acquired Shares (at the aggregate Fair Value on the date of payment
or exercise), as provided in the Stock Incentive Agreement or, in the absence of such provision, as the Committee may determine.
Section
5.3. Exercise.
Each Stock Appreciation Right shall be payable at such time or times, or upon the occurrence of such event
or events, and in such amounts, as the Committee shall specify in the Stock Appreciation Right Agreement; provided, however, that
subsequent to the award of a Stock Appreciation Right, the Committee, at any time before complete termination of such Stock Appreciation
Right, may accelerate the time or times at which such Stock Appreciation Right may be exercised in whole or in part.
Section
5.4. Nontransferability of Stock Appreciation Rights.
A Stock Appreciation Right shall not be transferable or assignable,
except by will or by the laws of descent and distribution, and shall be payable during the Participant’s lifetime only to
the Participant, or in the event of the Disability of the Participant, to the legal representative of the Participant.
Section
5.5. Effect of Termination of Employment.
Stock Appreciation Rights, and all rights thereunder, terminate upon Termination
of Employment, except that, if Termination of Employment is the result of death or Disability, no additional Incentive Shares
shall become vested, however, the Stock Appreciation Right shall not terminate and shall remain in full force and effect, and
shall be exercisable by the Transferee upon the consummation of a Transaction upon compliance with the terms of this Plan and
the terms of the Stock Appreciation Right Certificate.
Section
6. Terms and Conditions of Restricted Stock Awards
Every
Restricted Stock Award awarded under the Plan shall be evidenced by a Restricted Stock Award Agreement that conforms to the following
provisions of the Plan and which may contain such other terms and conditions which are not inconsistent with the Plan as the Committee
determines are advisable and in the interest of the Company.
Section
6.1. Award.
Shares awarded pursuant to Restricted Stock Awards shall be subject to such restrictions for such periods of time
as determined by the Committee. The Committee shall have the power to permit, in its discretion, an acceleration of the expiration
of the applicable restriction periods with respect to any part or all of the Acquired Shares subject to a Restricted Stock Award.
Section
6.2. Payment under Restricted Stock Award.
As a condition precedent to the award of a Restricted Stock Award, the Committee
may require a cash payment from the Participant in an amount no greater than the aggregate Fair Value of the Acquired Shares awarded
pursuant to the Restricted Stock Award, determined as of the date of award of the Restricted Stock Award. The Committee may accept
payment by the Participant of any amount required to be paid pursuant to this Section 6.2 by a promissory note of the Participant
(the “Participant Note”). The Participant Note shall bear interest at the applicable federal rate in effect on the
effective date of the Restricted Stock Award, such interest shall be payable or accrue on the terms established by the Committee
in its sole discretion. The term of any Participant Note shall not exceed ten (10) years, and shall be as determined by the Committee,
in its sole discretion; provided, however, that such Participant Note shall become immediately due and payable upon consummation
of a Transaction. The principal balance and interest accrued under any such Participant Note shall be payable as determined by
the Committee, in its sole discretion. The Participant Note shall be secured by all Acquired Shares held by Participant pursuant
to the Restricted Stock Award, and any and all earnings thereon, and shall, in addition, have a general right of recourse against
the Participant for payment under Participant Note as to no less than fifty percent (50%) of the principal balance of any such
Participant Note, and any accrued but unpaid interest thereon.
Section
7. Restrictions on Acquired Shares
Section
7.1. Restrictions on Transfer of Acquired Shares.
All Acquired Shares shall be subject to the following restrictions:
(a)
Except for transfers made in compliance with Section 7.1(b) hereof, or as otherwise required or permitted hereunder, no Acquired
Shares and no interest in Acquired Shares may be conveyed, pledged, assigned, transferred, hypothecated, encumbered, or otherwise
disposed of by a Participant or Transferee.
(b)
Except as provided for in connection with any pledge pursuant to Section 7.7 hereof, a Participant may transfer the Acquired Shares:
(i)
to a Transferee upon Participant’s death or Disability; provided, that all such Acquired Shares, after transfer to a Transferee,
shall remain subject to all the restrictions set forth in this Section 7 and to all applicable rights in favor of the Company
set forth elsewhere in the Plan. Execution of a counterpart of these restrictions by such Transferee shall be a condition precedent
to the issuance of any certificate evidencing the Acquired Shares registered in the name of any such Transferee;
(ii)
during the Holding Period, only: (A) in a Transaction, (B) in a Public Offering (subject to any limitations imposed by the managing
underwriters in an underwritten Public Offering), or (C) in connection with the exercise of the Company’s right to repurchase
Acquired Shares after a Termination of Employment; or (D) if approved by the President of the Company, to any member of the Participant’s
Family Group, provided that all such Acquired Shares, after transfer to such member of the Participant’s Family Group and
any subsequent transferee of such member of the Participant’s Family Group, shall remain subject to the restrictions set
forth in this Section 7 and subject to all applicable rights in favor of the Company set forth elsewhere in the Plan, and the
execution of a counterpart of these restrictions by such member of the Participant’s Family Group shall be a condition precedent
to the issuance of any certificate evidencing the Acquired Shares registered in the name of any such member of the Participant’s
Family; and
(iii)
after the expiration of the Holding Period, only: (A) in a Transaction, (B) in a Public Offering (subject to any limitations imposed
by the managing underwriters in an underwritten Public Offering), (C) to any member of the Participant’s Family Group, provided
that all such Acquired Shares, after transfer to any member of the Participant’s Family Group, and of any subsequent transferee
of such member of the Participant’s Family Group, shall remain subject to the restrictions set forth in this Section 7 and
to all applicable rights in favor of the Company set forth elsewhere in the Plan. Approval of the transfer by the President of
the Company and execution of a counterpart of these restrictions by such member of the Participant’s Family Group, shall
be conditions precedent to the issuance of any certificate evidencing the Acquired Shares registered in the name of any such member
of the Participant’s Family Group, or (D) if the Participant or Transferee, as the case may be, shall have complied with
the right of first refusal described in Section 7.2 hereof.
Section
7.2. Right of First Refusal.
If, after the expiration of the Holding Period, a Participant or Transferee, as the case may
be, shall receive an Offer from a Proposed Purchaser, which Offer such Participant or Transferee intends to accept, such Participant
or Transferee, as the case may be, as a condition precedent to any sale of Acquired Shares to such Proposed Purchaser, shall provide
a Transfer Notice with respect to such Offer to the Company. A copy of the Offer shall be attached to the Transfer Notice. The
Transfer Notice shall constitute an irrevocable offer by the Participant or Transferee, as the case may be, to sell the Acquired
Shares which are subject to such Offer to the Company at the Proposed Purchase Price and upon the terms of payment and conditions
set forth in the Transfer Notice, which irrevocable offer shall be open for thirty (30) days from the date the Transfer Notice
is delivered to the Company. The Company shall have thirty (30) days after receipt of the Transfer Notice to notify such Participant
or Transferee, as the case may be, in writing, of its election to purchase all of the Acquired Shares which are subject to the
Offer at the Proposed Purchase Price and upon the same terms of payment and conditions as are contained in the Offer. Failure
by the Company to give such written notice within such thirty (30) day period shall constitute a rejection of the irrevocable
offer by the Company. If the Company rejects the irrevocable offer, or fails to accept the irrevocable offer timely, or, if after
timely accepting the irrevocable offer, the Company fails to consummate the purchase of the Acquired Shares which are subject
to the Offer timely, then such Participant or Transferee, as the case may be, shall be free to sell such Acquired Shares to the
Proposed Purchaser at the Proposed Purchase Price and upon the same terms and conditions as are set forth in the Offer; provided,
however, if such Participant or Transferee, as the case may be, does not consummate such sale to the Proposed Purchaser within
thirty (30) days after rejection by the Company of the irrevocable offer, such Acquired Shares shall once again become subject
to the provisions of this Section 7.2, and any subsequent disposition of such Acquired Shares shall be made only after compliance
with the terms of this Section 7.2. If the Company accepts the irrevocable offer set forth in the Transfer Notice, the Company’s
consummation of the purchase of the Acquired Shares shall be held at the Company’s offices no later than thirty (30) days
following the date on which the Company gives written notice of its acceptance of the irrevocable offer set forth in the Transfer
Notice. Notwithstanding anything contained herein to the contrary, no Participant may accept an offer from any Competitor, and
any attempted transfer of Acquired Shares to such Competitor shall be void and of no force or effect. Compliance with this Section
7.2 shall not be required for any transfer of Acquired Shares in: (i) a Public Offering, (ii) effected after a Public Offering
under Rule 144 promulgated under the Securities Act, (iii) to the Company upon exercise of its rights to redeem or repurchase
Acquired Shares after a Termination of Employment, or (iv) in a Transaction.
Section
7.3. Right to Purchase Upon Termination of Employment.
(a)
During the Holding Period, the Company shall have the right, but not the obligation, to purchase from a Participant or Transferee,
as the case may be, all or any portion of any Acquired Shares owned by such Participant or Transferee. The purchase price of any
Acquired Shares purchased by the Company in accordance with this Section 7.3 shall be the Call Price. If the Company elects to
exercise its right to repurchase any Acquired Shares pursuant to this Section, it shall do so by giving written notice thereof
to such Participant or Transferee, as the case may be, which notice shall specify the number of Acquired Shares held by such Participant
or Transferee as to which the Company is exercising its repurchase right. The Company’s repurchase, and the sale by Participant
or Transferee, as the case may be, of such Acquired Shares shall be consummated at a closing to be held at the Company’s
offices no later than thirty (30) days following the date on which the Company gives written notice of its exercise of such repurchase
right. At the closing, the Participant or Transferee, as the case may be, shall deliver all certificates representing the Acquired
Shares to be purchased, properly endorsed for transfer, and the Company shall pay the Participant or Transferee, as the case may
be, the aggregate purchase price for the Acquired Shares as follows: (i) ten percent (10%) of the total purchase price in cash,
and (ii) ninety percent (90%) of the total purchase price by delivery of a promissory note of the Company, payable to the order
of the Participant or Transferee, as the case may be, and bearing interest at the Prime Rate in effect on the Business Day ended
immediately prior to date of the closing, with accrued and unpaid interest being due on each principal installment payment date.
The principal amount of such note shall be payable in: (A) eight (8) equal quarterly installments if the original principal amount
of the note is equal to, or less than, twenty five thousand dollars ($25,000), or (B) if the original principal amount of the
note is greater than twenty five thousand dollars ($25,000), the original principal amount of such note shall be payable in equal
quarterly installments, over a term equal to two (2) years plus one (1) year for each additional twenty five thousand dollars
($25,000), or part thereof, that the original principal amount of the note exceeds twenty five thousand dollars ($25,000), provided,
however, the entire unpaid principal amount of such note, together with all accrued but unpaid interest thereon, shall become
due and payable in cash immediately upon the closing of a Transaction or a Public Offering. Payment of quarterly installments
shall commence on the first three (3) month anniversary of the closing date. The promissory note shall be secured by a pledge
of the Acquired Shares purchased from the Participant, and such Acquired Shares shall be released from the pledge quarterly upon
the payment of each principal payment due under the note, such that the number of Acquired Shares pledged shall never be more
than the quotient of the then outstanding principal amount of the note
divided by
the purchase price per Acquired
Share paid to the Participant.
(b)
All Acquired Shares not purchased by the Company prior to the expiration of the Holding Period shall, upon request of the Committee,
be deposited into a voting trust which shall be in such form and contain such terms and conditions as the Committee may determine
in its sole discretion, provided that the term of the voting trust shall terminate upon the closing of a Public Offering. The
voting trustee shall vote the Acquired Shares held by the voting trust as directed by the Board of Directors on all matters submitted
to a vote of shareholders.
Section
7.4. Determination of Call Price.
(a)
The Call Price for Acquired Shares issued upon exercise of Stock Options shall be determined as follows:
(i)
If the Termination of Employment of a Participant is: (A) for Cause, or (B) the resignation of such Participant (excluding a Resignation
for Good Reason), the Call Price shall be the lesser of (x) Fair Value or (y) the Exercise Price paid by such Participant
multiplied
by
the number of Acquired Shares being purchased by the Company;
(ii)
If the Termination of Employment of a Participant is (A) a Resignation For Good Reason or (B) not for Cause, the Call Price shall
be Fair Value.
(b)
The Call Price for Acquired Shares issued pursuant to a Restricted Stock Award or a Stock Appreciation Right shall be determined
as set forth in the Restricted Stock Award Agreement or Stock Appreciation Right Agreement.
Section
7.5 Mandatory Sale.
If the Board of Directors and/or the holders of a majority of the outstanding shares of Common Stock approve
a Transaction with a third party, each Participant shall, upon request of the Board of Directors, consent to, raise no objection
to, and support the Transaction. If the Transaction is structured as a sale of Common Stock by the holders thereof, each Participant
holding Acquired Shares shall sell all such Acquired Shares to such buyer on the terms and conditions approved by the Board of
Directors or the holders or a majority of the outstanding shares of Common Stock. The right of first refusal provided in Section
7.2 hereof shall be inapplicable to a sale effected under this Section 7.5.
Section
7.6 Disloyal Acts.
The Company shall have the following rights with respect to any Participant who commits a Disloyal Act:
(a)
If a Disloyal Act is committed by a Participant that is a holder of Acquired Shares, all Acquired Shares held by such Participant
shall be canceled upon the books and records of the Company, and the Company shall deliver to the Participant an unsecured sixty
(60) month promissory note bearing interest at the Prime Rate in effect on the Business Day which immediately precedes the date
such note is issued, in a principal amount equal to the product of the lesser of Fair Value or the Exercise Price paid by such
Participant
multiplied by
the number of Acquired Shares being canceled. The cancellation of such Acquired Shares
shall be effective as of the date on which the Company delivers the promissory note to the Participant in accordance with this
Subsection (a).
(b)
If a Disloyal Act is committed by a Participant that is a holder of a note issued by the Company pursuant to Section 7.3 hereof,
the outstanding balance of such note shall be reduced to an amount equal to the product of the lesser of Fair Value or the Exercise
Price,
multiplied by
the number of Acquired Shares purchased from such Participant pursuant to Section 7.3 hereof,
minus
the amount of cash paid at the closing of the sale pursuant to Section 7.3 hereof, and
minus
the amount all principal payments made under the such note between the date of such note and the date on which this adjustment
to the principal balance of the note is made, but in no event shall the note be reduced below zero.
Section
7.7 Pledging of Shares.
The Company may, as a condition precedent to the issuance of any Acquired Shares pursuant to any Stock
Incentive, require a Participant to pledge any such Acquired Shares for the benefit of certain Company lenders if all other Company
shareholders have pledged their shares of Common Stock, or will pledge their shares of Common Stock, on the same terms and conditions
as the other Company shareholders.
Section
7.8 Delivery of Certificate.
At any closing of a purchase by the Company of Acquired Shares pursuant to Section 7.2 or 7.3
hereof, a certificate representing the Acquired Shares purchased by the Company, duly endorsed for transfer to the Company, shall
be delivered by the Participant to the Company, and upon receipt of the certificate, the Company shall pay the consideration for
the Acquired Shares; provided that, if the certificate representing the Acquired Shares purchased by the Company is not delivered,
duly endorsed, to the Company at the closing, the Company may, in addition to all other remedies it may have, tender to the Participant,
at the address set forth in the stock transfer records of the Company, the purchase price for such Acquired Shares as is herein
specified, and cancel such Acquired Shares on its books and records, whereupon all of the Participant’s right, title, and
interest in and to such Acquired Shares shall terminate. The Company shall have the right to set off against, and to deduct from,
any sums payable by it in connection with the purchase of Acquired Shares, the principal amount of, and all accrued but unpaid
interest on, any indebtedness of the Participant owing to the Company on the date of the closing.
Section
7.9 Lockup Agreement in Public Offering.
Each holder of Acquired Shares shall execute any form of “lockup agreement”
required by any managing underwriter(s) in connection with any Public Offering, provided that no holder of Acquired Shares shall
be required to sign such a lockup agreement unless all holders of Acquired Shares are also required to execute such agreements.
Section
7.10 Termination of Restrictions.
The restrictions on transfer of Acquired Shares contained in this Section 7 shall continue
in effect until the twentieth (20th) anniversary of the date of this Plan. Any certificate issued by the Company which represents
any Acquired Shares shall contain the following legend:
transfer
is restricted
the
securities evidenced by this certificate are subject to a right of first refusal and other restrictions on transfer set forth
in THE Logical Choice Technologies, Inc. 1999 Stock Incentive Plan, a copy of which is available from the company.
The
securities evidenced by this certificate have not been registered under the securities act of 1933, as amended, and may not be
sold, transferred, assigned, or hypothecated unless (1) there is an effective registration under such act covering such securities,
(2) the transfer is made in compliance with rule 144 promulgated under such act, or (3) the COMPANY receives an opinion of counsel,
reasonably satisfactory to the company, stating that such sale, transfer, assignment or hypothecation is exempt from the registration
requirements of such act.
Section
7.11 Removal of Legends.
Any legend endorsed on a certificate pursuant to Section 7.10, and any stop transfer instructions
with respect to the Acquired Shares, shall be removed and the Company shall issue a certificate without such legend to the holder
thereof, if such Acquired Shares are (a) registered under the Securities Act and a prospectus meeting the requirements of Section
10 of the Securities Act is available or (b) the holder of Acquired Shares delivers an opinion of counsel acceptable to the Company
to the effect that such legend is no longer required under the Securities Act.
Section
8. General Provisions
Section
8.1. Withholding.
Whenever the Company issues Acquired Shares under the Plan, or upon the vesting (partial or complete) of
any Restricted Stock Award, the Participant shall remit to the Company an amount sufficient to satisfy all federal, state, and
local withholding tax requirements, if any, prior to the delivery of any certificate or certificates for Acquired Shares or the
vesting of such Restricted Stock Award. A Participant may pay such withholding taxes in cash, or the Participant may make a Withholding
Election, provided the Committee consents to such Withholding Election. In the event the Committee does not consent to such a
Withholding Election, the Participant shall pay such withholding taxes in cash. A Participant may make a Withholding Election
only if both of the following conditions are met:
(a)
The Withholding Election must be made on or prior to the Tax Date by executing and delivering to the Company a properly completed
notice of Withholding Election as prescribed by the Committee; and
(b)
Any Withholding Election made will be irrevocable; however, the Committee may in its sole discretion disapprove and give no effect
to the Withholding Election.
Section
8.2. Changes in Capitalization; Merger; Liquidation.
(a)
The Total Reserved Shares under the Plan, and the number of Incentive Shares and the Exercise Price of each outstanding Stock
Incentive shall be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock resulting
from a subdivision or combination of shares including without limitations a split-up, a stock split or a reverse stock split of
Common Stock or the payment of a stock dividend in shares of Common Stock to holders of outstanding securities.
(b)
If the Company shall be the surviving corporation in any merger or consolidation, recapitalization, or reclassification of shares
of Common Stock, or similar reorganization, an appropriate adjustment shall be made to each outstanding Stock Incentive such that
the Participant shall be entitled to purchase or receive, as the case may be, the number and class of securities which a holder
of the number of shares of Common Stock equal to the number of Incentive Shares subject to such Stock Incentive at the time of
such transaction would have been entitled to receive as a result of such transaction, and, if necessary, a corresponding adjustment
shall be made in the Exercise Price of each outstanding Stock Incentive, provided however, that if the Company’s Common
Stock outstanding immediately prior to the Transaction is not exchanged for a new security, no adjustments shall be made to outstanding
Stock Incentives pursuant to this Section 8.2 as a result of the merger or reorganization.
(c)
In the event of any other changes in capitalization of the Company, the Committee shall make such additional adjustments in the
number and class of Incentive Shares subject to outstanding Stock Incentives, and with respect to which future Stock Incentives
may be granted as the Committee, in its sole discretion, shall deem equitable or appropriate. Any adjustment pursuant to this
Section may provide, in the Committee’s discretion, for the elimination of any fractional Incentive Shares that might otherwise
become subject to any Stock Incentive without payment therefor.
(d)
Except for the adjustments in Sections (a) and (b) of this Section 8.2, the holder of a Stock Incentive shall have no rights by
reason of any: subdivision or combination of shares of stock of any class, payment of any stock or cash dividend, or any other
increase or decrease in the number of shares of Common Stock, or by reason of any Transaction or distribution to the Company’s
shareholders of assets or stock of another corporation. The existence of the Plan and any Stock Incentives granted pursuant to
the Plan shall not affect in any way the right or power of the Company to make or authorize any adjustment, reclassification,
reorganization, or other change in its capital or business structure, any merger or consolidation of the Company, any issue of
debt or equity securities having preferences or priorities as to the Common Stock or the rights thereof, the dissolution or liquidation
of the Company, any sale or transfer of all or any part of its business or assets, or any other corporate act or proceeding.
Section
8.3. Investment Representations.
As a condition precedent to the issuance of any Acquired Shares pursuant to any Stock Incentive,
the Participant receiving such Acquired Shares shall represent and agree as follows:
(a)
The Acquired Shares are being acquired by Participant for Participant’s own account, without the participation of any other
person, with the intent of holding the Acquired Shares for investment, and without the intent of participating, directly or indirectly,
in a distribution of the Acquired Shares, or for resale in connection with, any distribution of the Common Stock of the Company.
(b)
Participant is not acquiring the Acquired Shares based upon any representation, oral or written, by any person with respect to
the future value of, or income from, the Acquired Shares, but rather upon an independent examination and judgment as to the prospects
of the Company.
(c)
Participant understands and agrees that the Acquired Shares will be issued and sold to Participant without registration under
the Securities Act and any state law relating to the registration of securities for sale, and will be issued and sold in reliance
on the exemptions from registration under the Securities Act of 1933, provided by Sections 3(b) and/or 4(2) thereof and the rules
and regulations promulgated thereunder.
(d)
The Acquired Shares cannot be offered for sale, sold or transferred by Participant other than pursuant to: (A) an effective registration
under the Securities Act of 1933 or in a transaction otherwise in compliance with the Securities Act of 1933; (B) evidence satisfactory
to the Company of compliance with the applicable securities laws of other jurisdictions; and (C) compliance with all terms and
conditions of the Plan and the corresponding Stock Incentive. The Company shall be entitled to rely upon an opinion of counsel
satisfactory to it with respect to compliance with the above laws, the Plan, and any Stock Incentive.
(e)
The Company will be under no obligation to register the Acquired Shares, or to comply with any exemption available for sale of
the Acquired Shares, without registration or filing, and the information or conditions necessary to permit routine sales of securities
of the Company under Rule 144 of the Securities Act of 1933 are not now available, and no assurance has been given that it or
they will become available. The Company is under no obligation to act in any manner so as to make Rule 144 available with respect
to the Acquired Shares.
(f)
The agreements, representations, warranties, and covenants made by Participant herein extend to and apply to all Acquired Shares
issued to Participant pursuant to any Stock Incentive. Acceptance by Participant of a certificate representing Acquired Shares
shall constitute a confirmation by Participant that all such agreements, representations, warranties, and covenants made herein
shall be true and correct at that time.
Section
8.4. Compliance with Code.
All Incentive Stock Options to be granted hereunder are intended to comply with Code Section 422,
and all provisions of the Plan and all Incentive Stock Options granted hereunder shall be construed in such manner as to effectuate
that intent.
Section
8.5. Set-Off.
The Company shall have the right to set-off against any payment made by the Company to a Participant in connection
with any Stock Incentive, Acquired Shares, or Incentive Shares, the amount of any indebtedness, including accrued but unpaid interest,
then owed by such Participant to the Company, or reasonably believed to be owed by Participant to the Company.
Section
8.6. Right to Terminate Employment.
Nothing in the Plan or in any Stock Incentive shall confer upon any Participant the right
to continue as an employee of the Company, or any of its Parents or Subsidiaries, or affect the right of the Company, or any of
its Parents or Subsidiaries, to terminate the Participant’s employment at any time.
Section
8.7. Restrictions on Delivery and Sale of Shares.
Each Stock Incentive is subject to the condition that, if at any time the
Committee, in its discretion, shall determine that the listing, registration, or qualification of the shares covered by such Stock
Incentive upon any securities exchange or under any state or federal law is necessary or desirable as a condition of or in connection
with the granting of such Stock Incentive or the purchase of delivery of shares thereunder, the delivery of any or all Acquired
Shares pursuant to such Stock Incentive may be withheld unless and until such listing, registration or qualification shall have
been effected.
Section
8.8. Shareholders Agreement.
Holders of Acquired Shares may be required to execute a Joinder Agreement to the Logical Choice
of Georgia Inc., Employee Shareholders’ Agreement dated April 16, 1999.
Section
8.9. Plan Termination and Amendment.
The Plan may be terminated, modified, or amended by the Board of Directors of the Company;
provided, however, that no such termination, modification, or amendment without the consent of the holder of a Stock Incentive
shall adversely affect the rights of a Participant under such Stock Incentive.
Section
8.10. Effective Date of Plan.
The Plan shall become effective on the date the Plan is adopted by the Board of Directors and
is ratified by the holders of a majority of the issued and outstanding shares of voting capital stock of the Company entitled
to vote.
BY
ORDER OF THE BOARD OF DIRECTORS
, this Plan has
been executed by the duly authorized officers of the Company as of the Effective Date.
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Logical
Choice Corporation
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By:
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Name:
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James
Mark Elliott
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Title:
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Chief
Executive Officer
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Attest:
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Secretary
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[Corporate
Seal]
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Effective
Date Plan adopted by the Board:
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Effective
Date Plan adopted by the Shareholders:
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DETACH
AND RETURN THIS PORTION ONLY
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THIS
PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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For
All
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Withhold
All
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For
All
Except
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To
withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the
nominee(s) on the line below.
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The
Board of Directors recommends you vote FOR the following:
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☐
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☐
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☐
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1.
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Election
of Directors
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Nominees
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01
James Mark Elliott
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02
Michael Pope
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03
Tiffany Kuo
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04
Rudolph F. Crew
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05
Steve Hix
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06
Dale Strang
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07
Harold Bevis
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The
Board of Directors recommends you vote FOR proposals 2,3 and 5
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For
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Against
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Abstain
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2.
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To
ratify the appointment of GBH CPAs, PC, independent public accountants, as the auditor of the Company for the fiscal year
2018.
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☐
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☐
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☐
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3.
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To
conduct an advisory vote to approve the compensation paid to the Company’s named executive officers, as disclosed under
the caption Election of Directors - Executive Compensation.
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☐
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☐
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☐
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The
Board of Directors recommends you vote THREE YEARS on the following proposal:
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4
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To
conduct an advisory vote to approve the frequency of advisory votes on executive compensation —————
EVERY:
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☐
1 YEAR ☐ 2 YEARS ☐ 3 YEARS ☐ ABSTAIN
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5
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To
amend the Company’s 2014 Equity Incentive Plan to increase the number of shares of Common Stock authorized for issuance
under the plan by 300,000 shares.
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☐
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☐
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NOTE:
To transact any other business as may properly be presented at the Annual Meeting or any adjournment thereof.
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Please
sign exactly as your name appears below. When shares are held by joint tenants, each should sign. When signing as attorney,
executor, administrator, trustee, guardian, corporate officer, or partner, please give full title as such. Joint owners
should each sign personally.
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Investor
Address Line 1
Investor
Address Line 2
Investor
Address Line 3
Investor
Address Line 4
Investor
Address Line 5
John
Sample
1234
ANYWHERE STREET
ANY
CITY, ON A1A 1A1
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SHARES
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CUSIP
#
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Signature
[PLEASE SIGN WITHIN BOX]
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Date
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JOB
#
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Signature
(Joint Owners)
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Date
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SEQUENCE
#
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The
Annual Meeting of the Stockholders of Boxlight Corporation, a Nevada corporation
(“Company”),
will be held on September 7, 2018, at 10:00 a.m. (ET), at the Company’s
headquarters
located at
1045
Progress Circle, Lawrenceville, Georgia 30043.
Important
Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice & Proxy Statement, 10-K is/are
available at www.proxyvote.com
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS
PROXY
FOR THE ANNUAL MEETING OF STOCKHOLDERS
OF
BOXLIGHT CORPORATION
Boxlight
Corporation,
Annual
Meeting of Stockholders
September
7, 2018 at 10:00 AM ET
This
proxy is solicited by the Board Of Directors
The
stockholders hereby appoints James Mark Elliott and Michael Pope, and each of them, each with full power of substitution,
hereby are authorized to vote as specified on the reverse side or, with respect to any matter not set forth on the reverse
side, as a majority of those or their substitutes present and acting at the meeting shall determine, all of the shares
of Class A Common Stock of Boxlight Corporation that the undersigned would be entitled to vote, if personally present,
at the 2018 Annual Meeting of Stockholders and any adjournment thereof.
Unless
otherwise specified, this proxy will be voted FOR Proposals 1, 2, 3, 5 and for THREE YEARS for Proposal 4. The Board of
Directors recommends a vote FOR Proposals 1, 2, 3,5 and for THREE YEARS for Proposal 4.
Continued
and to be signed on reverse side
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