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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 | ||