UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): January 27, 2023
SUNWORKS, INC.
(Exact Name of the Registrant as Specified in Charter)
| Delaware | 001-36868 | 01-0592299 | ||
| (State
or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS
Employer Identification No.) |
1555 Freedom Boulevard Provo, UT |
84604 | |
| (Address of Principal Executive Offices) | (Zip Code) |
(385) 497-6955
Registrant’s telephone number, including area code
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||
| Common Stock, par value $0.001 | SUNW | Nasdaq Capital Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Chief Executive Officer and Chief Financial Officer Compensation
On January 27, 2023, the Board of Directors (the “Board”) of Sunworks, Inc. (the “Company”) amended the Employment Agreements and approved the following adjustments to the compensation of Gaylon Morris, the Company’s Chief Executive Officer and Jason Bonfigt, the Company’s Chief Financial Officer.
Mr. Gaylon Morris
Mr. Morris’s annual base salary was increased from four hundred thousand dollars ($400,000) to five hundred thousand dollars ($500,000) for the calendar year 2023. Mr. Morris will also be entitled to a discretionary bonus equal to up to one hundred percent (100%) of his base salary, provided that certain performance criteria, as established by the Compensation Committee of the Company’s Board of Directors, are met. Mr. Morris was also granted a restricted stock unit grant equal to 265,957 shares of the Company’s common stock, which shall vest over a three-year period in equal installments on each anniversary of December 20, 2022 through December 20, 2025, provided that Mr. Morris continues to perform services for the Company through the applicable vesting date. Further, should the consolidated earnings of the Company and its subsidiaries before interest, taxes, depreciation and amortization, as calculated using the audited financial statements of the Company for the combined period from January 1 through December 31 of the calendar year exceed $0 for two consecutive fiscal quarters: i) Mr. Morris’ annual base salary shall be increased to six hundred fifty thousand dollars ($650,000), retroactive to the first day of the first quarter of such two consecutive quarters; and ii) Mr. Morris will be entitled to a one-time restricted stock grant representing the right to receive such number of shares of common stock of the Company equal to two million dollars ($2,000,000) divided by the closing price of the Company’s common stock on the first day of the first consecutive profitable quarter, which shall vest beginning on the first day following the two consecutive quarters of positive EBITDA and vest over a two year period in three equal installments; provided that Mr. Morris continues to perform services for the Company through the applicable vesting date. The other terms and conditions of Mr. Morris’s employment agreement with the Company remain unchanged.
Mr. Jason Bonfigt
Mr. Bonfigt’s annual base salary was increased from three hundred twenty thousand dollars ($320,000) to three hundred seventy thousand dollars ($370,000) for the calendar year 2023. Mr. Bonfigt will be entitled to a discretionary bonus equal to fifty percent (50%) of his base salary, provided that certain performance criteria, as established by the Compensation Committee of the Company’s Board of Directors, are met. Mr. Bonfigt will also be granted, each year (including 2023) a restricted stock unit grant representing the right to receive such number of shares of common stock of the Company equal to $200,000, one third of which shall vest on the one-year anniversary of the grant and the balance shall vest in twenty-four equal monthly installments thereafter; provided Mr. Bonfigt continues to perform services for the Company through the applicable vesting date. Further, should the consolidated earnings of the Company and its subsidiaries before interest, taxes, depreciation and amortization, as calculated using the audited financial statements of the Company for the combined period from January 1 through December 31 of the calendar year exceed $0, Mr. Bonfigt will be entitled to a one-time restricted stock grant representing the right to receive such number of shares of common stock of the Company equal to $250,000.00 divided by the closing price of the Company’s common stock on the date of grant, which shall vest in full on the date the Administrator, as defined in the Sunworks, Inc. 2016 Equity Incentive Plan (the “Plan”), certifies receipt by the Company of an audit report from its auditors in which the Company’s EBITDA for the combined period from January 1 through December 31 of the calendar year exceeds $0. In addition, in the event that the Company’s EBITDA exceeds $0 for two consecutive quarters, as certified by the Administrator (as defined in the Plan), then the Company shall grant under the Plan to Mr. Bonfigt a one-time restricted stock unit grant for such number of shares of common stock of the Company equal to $500,000 divided by the closing price of the Company’s common stock on the first day of the first consecutive quarter with EBITDA greater than $0, which shall vest in three equal installments, with the first equal installment vesting on the day of a successful audit of the Company for the year the second consecutive quarter of positive EBITDA occurs and the two additional equal installments vesting on the second and third anniversary of such successful audit. Should Mr. Bonfigt’s employment be terminated by the Company without cause or if the Company enters into a change of control transaction, then the Company has agreed to pay Mr. Bonfigt an amount equal to Mr. Bonfigt’s then current monthly salary multiplied by twelve (12). The other terms and conditions of Mr. Bonfigt’s employment agreement with the Company remain unchanged.
Each restricted stock unit referenced above represents the right to receive one share of common stock of the Company and pursuant to the terms of the Plan.
Item 9.01. Financial Statement and Exhibits.
(d) Exhibits
| Number | Description | |
| 10.1 | Second Amendment to January 11, 2021 Employment Agreement between Sunworks, Inc. and Gaylon Morris | |
| 10.2 | Amendment to October 5, 2021 Employment Agreement between Sunworks, Inc. and Jason Bonfigt | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| SUNWORKS, INC. | ||
| Date: January 30, 2023 | By: | /s/ Gaylon Morris |
| Gaylon
Morris Chief Executive Officer | ||
Exhibit 10.1
AMENDMENT TO EMPLOYMENT AGREEMENT
This Second Amendment to Employment Agreement (this “Amendment”), dated as of January 27, 2023 and effective as of January 1, 2023 (the “Amendment Effective Date”), is entered into by and between Gaylon Morris, an individual (the “Executive”), and Sunworks, Inc., a Delaware corporation (the “Company”).
RECITALS
A. Executive and the Company are parties to an Employment Agreement (the “Employment Agreement”) dated January 11, 2021, as amended by the Amendment to Employment Agreement dated as of December 20, 2021 (the “First Amendment Effective Date”). Terms used and not defined in this Amendment shall have the meanings defined in the Employment Agreement.
B. Pursuant to the Employment Agreement, the Employment Agreement may be amended in an instrument executed by the Executive and the Company.
C. The Company and Executive desire to amend the Employment Agreement to revise certain aspects of Executive’s compensation.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual promises hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1. Compensation Amendments. The Executive’s compensation provisions set forth in Sections 8.1, 8.2 and 8.3 of the Employment Agreement shall be deleted and replaced with the following, which shall be effective as of the Amendment Effective Date:
8.1. Annual Compensation. Executive shall be paid a base salary of five hundred thousand dollars ($500,000.00) payable bi-weekly in 26-equal amounts. Executive’s position is a regular, fulltime position classified as “exempt” and thus Executive is not eligible for overtime compensation. In addition to the foregoing, in the event that the Company’s EBITDA (as defined below) exceeds $0 for two consecutive fiscal quarters, Executive’s salary shall be increased to six hundred fifty thousand dollars ($650,000.00), retroactive to the first day of the first quarter of such two consecutive quarters. “EBITDA” means the consolidated earnings of the Company and its subsidiaries before interest, taxes, depreciation and amortization, as calculated using the audited financial statements of the Company.
8.2. Bonus. For each fiscal year of Executive’s employment hereunder, Executive shall be eligible to receive an annual bonus (the “Annual Bonus”). However, the decision to provide any Annual Bonus and the amount and terms of any Annual Bonus shall be in the sole and absolute discretion of the Compensation Committee of the Company’s Board of Directors and shall be subject to the terms of the Company annual bonus plan under which it is granted. In addition, in order to be eligible to receive an Annual Bonus, Executive must be employed by the Company on the last day of the applicable fiscal year that Annual Bonuses are paid. Notwithstanding anything to the contrary herein, for the fiscal year ending December 31, 2023 and all subsequent years in which the Executive is employed by the Company, Executive, shall be paid an Annual Bonus equal to up to 100% of base salary, which shall be determined and paid based upon the achievement by the Company of performance criteria established by the Compensation Committee of the Company’s Board of Directors.
8.3. Equity Awards.
8.3.1. In consideration of Executive’s continued employment, on the First Amendment Effective Date, the Company granted to Executive a restricted stock unit grant representing the right to receive up to 284,900 shares of common stock of the Company under the Sunworks, Inc. 2016 Equity Incentive Plan (the “Plan”), which vests in full on the date that the Administrator (as defined in the Plan) certifies receipt by the Company of an audit report from its independent auditors in which the Company’s EBITDA for the combined period from January 1 through December 31 of the calendar year exceeds $0; provided that Executive continues to perform services for the Company through the applicable vesting date. All other terms and conditions of such award shall be governed by the terms and conditions of the Plan and the applicable award agreement.
8.3.2. Executive shall be granted a restricted stock unit grant representing the right to receive up to 265,957 shares of common stock of the Company under the Plan, which shall vest annually over a three year period in equal installments on each anniversary of December 20, 2022 through December 20, 2025, provided that Executive continues to perform services for the Company through the applicable vesting date. The restricted stock unit grant shall provide for settlement in cash or common stock pursuant to the terms of the award agreement.
8.3.3. In the event that the Company’s EBITDA exceeds $0 for two consecutive quarters, as certified by the Administrator, then the Company shall grant under the Plan to Executive a restricted stock unit grant representing the right to receive such number of shares of common stock of the Company equal to $2,000,000 divided by the closing price of the Company’s common stock on the first day of the first consecutive quarter with EBITDA greater than $0, which shall vest in three equal installments, with the first equal installment vesting on the day of a successful audit of the Company for the year the second consecutive quarter of positive EBITDA occurs and the two additional equal installments vesting on the second and third anniversary of such successful audit; provided that Executive continues to perform services for the Company through the applicable vesting date.
2. Effect of Amendment. The provisions of the Employment Agreement, except as specifically amended by this Amendment, shall remain in full force and effect following the effectiveness of this Amendment.
3. Governing Law. The validity, interpretation, construction and performance of this Amendment shall be governed by the laws of the State of California, without regard to its conflict of laws principles.
4. Counterparts. This Amendment may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.
[Signature Pages Follow]
The parties have duly executed this Amendment to Employment Agreement as of the date first above written.
| EXECUTIVE: | ||
| By: | ||
| Gaylon Morris | ||
| COMPANY: | ||
| SUNWORKS, INC., a Delaware corporation | ||
| By: | ||
| Name: | Jason Bonfigt | |
| Title: | Chief Financial Officer | |
Exhibit 10.2
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment to Employment Agreement (this “Amendment”), dated as of January 27, 2023 and effective as of January 1, 2023 (the “Amendment Effective Date”), is entered into by and between Jason Bonfigt, an individual (the “Executive”), and Sunworks, Inc., a Delaware corporation (the “Company”).
RECITALS
A. Executive and the Company are parties to an Employment Agreement (the “Employment Agreement) dated October 5, 2021 (the “Initial Effective Date”). Terms used and not defined in this Amendment shall have the meanings defined in the Employment Agreement.
B. Pursuant to the Employment Agreement, the Employment Agreement may be amended in an instrument executed by the Executive and the Company.
C. The Company and Executive desire to amend the Employment Agreement to revise certain aspects of Executive’s compensation.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual promises hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1. Compensation. The Executive’s compensation provisions set forth in Sections 8.1, 8.2 and 8.3 of the Employment Agreement shall be deleted and replaced with the following, which shall be effective as of the Amendment Effective Date:
8.1. Annual Compensation. Executive shall be paid a base salary of three hundred seventy thousand dollars ($370,000.00) payable bi-weekly in 26-equal amounts. Executive’s position is a regular, fulltime position classified as “exempt” and thus Executive is not eligible for overtime compensation.
8.2. Bonus. For each fiscal year of Executive’s employment hereunder, Executive shall be eligible to receive an annual bonus (the “Annual Bonus”). However, the decision to provide any Annual Bonus and the amount and terms of any Annual Bonus shall be in the sole and absolute discretion of the Compensation Committee of the Company’s Board of Directors and shall be subject to the terms of the Company annual bonus plan under which it is granted. In addition in order to be eligible to receive an Annual Bonus, Executive must be employed by the Company on the last day of the applicable fiscal year that Annual Bonuses are earned. The Annual Bonus target shall be equal to 50% (fifty percent) of base salary, provided that certain financial performance metrics objectives are met, as set and determined by the Compensation Committee of the Company’s Board of Directors.
8.3. Equity Awards.
8.3.1. In consideration of Executive’s continued employment, on the Initial Effective Date, the Company granted to Executive a restricted stock grant of 104,529 shares of common stock of the Company under the Sunworks, Inc. 2016 Equity Incentive Plan (the “Plan”), one third of which vests on the one-year anniversary of the grant and the balance vests in twenty four equal monthly installments thereafter. All other terms and conditions of such award shall be governed by the terms and conditions of the Plan and the applicable award agreement.
8.3.2. For each fiscal year of Executive’s employment hereunder, Executive shall be eligible to receive an annual equity award bonus (the “Equity Bonus”). However, the decision to provide any Equity Bonus and the amount and terms of any Equity Bonus shall be in the sole and absolute discretion of the Compensation Committee of the Company’s Board of Directors and shall be subject to the terms of the Plan and the Company’s annual bonus plan under which it is granted. In addition, in order to be eligible to receive an Equity Bonus, Executive must be employed by the Company on the last day of the applicable fiscal year that Annual Bonuses are paid. The Equity Bonus target shall be equal to restricted stock units representing the right to receive such number of shares of common stock of the Company equal to $200,000.00 divided by the closing price of the Company’s common stock on the date of grant which such grant is made under the Plan, one third of which shall vest on the one-year anniversary of the grant and the balance shall vest in twenty four equal monthly installments thereafter. All other terms and conditions of such award shall be governed by the terms and conditions of the Plan and the applicable Equity Bonus award agreement.
8.3.3. In consideration of Executive’s continued employment, the Company grants to Executive a restricted stock unit grant representing the right to receive such number of shares of common stock of the Company equal to $250,000.00 divided by the closing price of the Company’s common stock on the date of grant which such grant is made under the Plan, which shall vest in full on the date that the Administrator (as defined in the Plan) certifies receipt by the Company of an audit report from its independent auditors in which the Company’s EBITDA (as defined below) for the combined period from January 1 through December 31 of the calendar year exceeds $0. All other terms and conditions of such award shall be governed by the terms and conditions of the Plan and the applicable award agreement. “EBITDA” means the consolidated earnings of the Company and its subsidiaries before interest, taxes, depreciation and amortization, as calculated using the audited financial statements of the Company.
8.3.4. In the event that the Company’s EBITDA exceeds $0 for two consecutive quarters, as certified by the Administrator, then the Company shall grant under the Plan to Executive a restricted stock unit grant for such number of shares of common stock of the Company equal to $500,000 divided by the closing price of the Company’s common stock on the first day of the first consecutive quarter with EBITDA greater than $0, which shall vest in three equal installments, with the first equal installment vesting on the day of a successful audit of the Company for the year the second consecutive quarter of positive EBITDA occurs and the two additional equal installments vesting on the second and third anniversary of such successful audit.
2. Termination without Cause or Change of Control. The first sentence of Section 8.5 in the Section entitled “Termination without Cause or Change of Control” of the Employment Agreement shall be deleted and replaced with the following, which shall be effective as of the Amendment Effective Date:
8.5. Termination without Cause or Change of Control. If the Company terminates Executive’s employment without Cause or consummates a Change of Control (as defined below) transaction, Executive shall receive a lump sum payment to be paid no more than 30 days following the termination date or Change of Control equal to an amount equal to Executive’s then current monthly base salary (the “Ending Monthly Salary”) multiplied by twelve (12).
3. Effect of Amendment. The provisions of the Employment Agreement, except as specifically amended by this Amendment, shall remain in full force and effect following the effectiveness of this Amendment.
4. Governing Law. The validity, interpretation, construction and performance of this Amendment shall be governed by the laws of the State of California, without regard to its conflict of laws principles.
5. Counterparts. This Amendment may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.
[Signature Pages Follow]
The parties have duly executed this Amendment to Employment Agreement as of the date first above written.
| EXECUTIVE: | ||
| By: | ||
| Jason Bonfigt | ||
| COMPANY: | ||
| SUNWORKS, INC., a Delaware corporation | ||
| By: | ||
| Name: | Gaylon Morris | |
| Title: | Chief Executive Officer | |