UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
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 [ ]
Check
the Appropriate Box:
[ ]
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Preliminary
Proxy Statement
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[ ]
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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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[ ]
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Definitive
Additional Materials
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[ ]
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Soliciting
Material Under Rule 14a-12
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Sunworks,
Inc.
(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):
[X]
No fee required
[ ]
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1)
Title of each class of securities to which transaction applies:
(2)
Aggregate number of securities to which transaction applies:
(3)
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):
(4)
Proposed maximum aggregate value of transaction:
(5)
Total fee paid:
[ ]
Fee paid previously with preliminary materials:
[ ]
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.
(1)
Amount Previously paid:
(2)
Form, Schedule or Registration Statement No.:
(3)
Filing Party:
(4)
Date Filed
Sunworks,
Inc.
1030
Winding Creek Road, Suite 100
Roseville,
CA 95678
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
To
Be Held On May 18, 2017
Dear
Stockholder:
You
are cordially invited to attend the annual meeting of stockholders of Sunworks, Inc. The meeting will be held on May 18, 2017
at 8:30 a.m. (local time) at Sunworks, Inc., 1030 Winding Creek Road, Suite 100, Roseville, California 95678, for the following
purposes:
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1.
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To
elect eight (8) directors to serve until the 2017 annual meeting of Stockholders and until their successors are duly elected
and qualified.
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2.
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To
ratify the selection of Liggett & Webb, P.A. as the independent registered public accounting firm of the Company for the
year ending December 31, 2017.
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3.
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To
transact such other business as may properly come before the meeting or any adjournment thereof.
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The
record date for the annual meeting is April 3, 2017. Only stockholders of record at the close of business on that date may vote
at the meeting or any adjournment thereof.
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By Order
of the Board of Directors
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Chairman
of the Board
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You
are cordially invited to attend the meeting in person. Whether or not you expect to attend the meeting, please complete, date,
sign and return the enclosed proxy as promptly as possible in order to ensure your representation at the meeting. Your vote is
important, no matter how many shares you owned on the record date. A return envelope is enclosed for your convenience and needs
no postage if mailed in the United States. If you wish, you may vote via the Internet or telephone. Instructions for doing so
are attached to this Proxy Statement. Even if you have voted by proxy or via the Internet, you may still vote in person if you
attend the meeting. Please note, however, that if your shares are held of record by a broker, bank or other nominee and you wish
to vote at the meeting, you must obtain a proxy issued in your name from that record holder.
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING TO BE HELD ON MAY 18, 2017.
Our
proxy statement and Annual Report on Form 10-K, which are enclosed with this mailing, are also available at http://www.cstproxy.com/sunworksusa/2017.
Sunworks,
Inc.
1030
Winding Creek Road, Suite 100
Roseville,
CA 95678
PROXY
STATEMENT
FOR
2017 ANNUAL MEETING OF STOCKHOLDERS
This
proxy statement is furnished to stockholders in connection with the solicitation of proxies by the Board of Directors of Sunworks,
Inc. (“Sunworks”, the “Company”, “we”, “our”, or “us”) in connection
with the annual meeting of stockholders of the Company to be held on May 18, 2017 at 8:30 a.m. (local time) at Sunworks, Inc.,
1030 Winding Creek Road, Suite 100, Roseville, California 95678 (the “Annual Meeting”).
Additional
copies of this proxy statement and the Annual Report on Form 10-K, notice of meeting, form of proxy, and directions to be able
to attend the meeting and vote in person, may be obtained from the Company’s Secretary, 1030 Winding Creek Road, Suite 100,
Roseville, CA 95678.
Important
Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be Held on May 18, 2017.
This
proxy statement, form of proxy, and the accompanying Annual Report on Form 10-K are available at http://www.cstproxy.com/sunworksusa/2017.
SOLICITATION
AND REVOCABILITY OF PROXIES
The
enclosed proxy for the Annual Meeting is being solicited by the Board of Directors of the Company. Stockholders of record may
vote by mail, telephone, or via the Internet. The toll-free telephone number and Internet web site are listed on the enclosed
proxy. If you vote by telephone or via the Internet you do not need to return your proxy card. If you choose to vote by mail,
please mark, date and sign the proxy card, and then return it in the enclosed envelope (no postage is necessary if mailed within
the United States). Any person giving a proxy may revoke it at any time prior to the exercise thereof by filing with the Secretary
of the Company a written revocation or duly executed proxy bearing a later date. The proxy may also be revoked by a stockholder
attending the Annual Meeting, withdrawing the proxy and voting in person.
The
expense of preparing, printing and mailing the form of proxy and the material used in the solicitation thereof will be borne by
the Company. In addition to solicitation by mail, proxies may be solicited by the directors, officers and regular employees of
the Company (who will receive no additional compensation therefor) by means of personal interview, telephone or facsimile. It
is anticipated that banks, brokerage houses and other institutions, custodians, nominees, fiduciaries or other record holders
will be requested to forward the soliciting material to persons for whom they hold shares and to seek authority for the execution
of proxies; in such cases, the Company will reimburse such holders for their charges and expenses.
VOTING
SECURITIES
The
close of business on April 3, 2017 has been fixed as the record date for determination of the stockholders entitled to notice
of, and to vote at, the Annual Meeting. On that date there were outstanding and entitled to vote (i) 22,440,664 shares of common
stock, each of which is entitled to one vote on each matter at the Annual Meeting and (ii) 1,506,024 shares of Series B Preferred
Stock, each of which is entitled to one vote on each matter at the Annual Meeting.
Pursuant
to the Company’s bylaws the vote of: (i) a plurality of the shares of common stock present in person or by proxy and entitled
to vote will be required to elect directors and (ii) a majority of shares of common stock either present in person or represented
by proxy and entitled to vote will be required to ratify the appointment of the independent auditors for 2017.
The
presence, in person or by properly executed proxy, of the holders of shares of common stock entitled to cast a majority of all
the votes entitled to be cast at the Annual Meeting is necessary to constitute a quorum. Holders of shares of common stock represented
by a properly signed, dated and returned proxy will be treated as present at the Annual Meeting for purposes of determining a
quorum. Proxies relating to “street name” shares that are voted by brokers will be counted as shares present for purposes
of determining the presence of a quorum, but will not be treated as votes cast at the Annual Meeting as to any proposal as to
which the brokers do not have voting instructions and discretion. These missing votes are known as “broker non-votes.”
QUESTIONS
AND ANSWERS ABOUT THIS PROXY MATERIAL AND VOTING
Why
am I receiving these materials?
We
are sending you this proxy statement and the enclosed proxy card because the Board of Directors of Sunworks, Inc. is soliciting
your proxy to vote at the 2017 Annual Meeting of stockholders. We invite you to attend the Annual Meeting and request that you
vote on the proposals described in this proxy statement. The meeting will be held on Thursday May 18, 2017 at 8:30 a.m. (local
time) at Sunworks, Inc., 1030 Winding Creek Road, Suite 100, Roseville, California 95678. However, you do not need to attend the
meeting to vote your shares. Instead, you may simply complete, date, sign and return the enclosed proxy card.
We
are mailing this proxy statement, the accompanying proxy card, and our Annual Report on Form 10-K for the year ended December
31, 2016 on or about April 12, 2017 to all stockholders of record entitled to vote at the Annual Meeting.
Who
can vote at the Annual Meeting?
Only
stockholders of record at the close of business on April 3, 2017, the record date for the Annual Meeting, will be entitled to
vote at the Annual Meeting. On April 3, 2017, there were 22,440,664 shares of common stock (each entitled to one vote) outstanding
and 1,506,024 shares of Series B Preferred Stock (each entitled to one vote) outstanding.
Stockholder
of Record: Shares Registered in Your Name
If
on April 3, 2017, your shares of Sunworks, Inc. common stock were registered directly in your name with our transfer agent, Continental
Stock Transfer & Trust, then you are a stockholder of record. As a stockholder of record, you may vote in person at the Annual
Meeting or vote by proxy. Whether or not you plan to attend the meeting, we urge you to fill out and return the enclosed proxy
card to ensure your vote is counted.
Beneficial
Owner: Shares Registered in the Name of a Broker or Bank
If
on April 3, 2017, your shares of Sunworks, Inc. common stock were held in an account at a brokerage firm, bank, dealer or other
similar organization, then you are the beneficial owner of shares held in “street name” and these proxy materials
are being forwarded to you by that organization. The organization holding your account is considered the stockholder of record
for purposes of voting at the Annual Meeting. As a beneficial owner, you have the right to direct your broker or other agent on
how to vote the shares in your account. You are also invited to attend the Annual Meeting. However, since you are not the stockholder
of record, you may not vote your shares in person at the Annual Meeting unless you request and obtain a signed letter or other
valid proxy from your broker or other agent.
What
am I voting on?
There
are two matters scheduled for a vote at the Annual Meeting: (1) to elect eight (8) directors to serve until the 2018 Annual Meeting
of stockholders and until their successors are duly elected and qualified and (2) to ratify the selection of Liggett & Webb,
P.A. as the independent registered public accounting firm of the Company for the year ending December 31, 2017.
Our
Board of Directors does not intend to bring any other matters before the meeting and is not aware of anyone else who will submit
any other matters to be voted on. However, if any other matters properly come before the meeting, the people named on the proxy
card, or their substitutes, will be authorized to vote on those matters in their own judgment.
How
many votes do I have?
On
each matter to be voted upon, you have one vote for each share of common stock you owned as of April 3, 2017. Each holder of our
outstanding Series B Preferred Stock is also entitled to vote with holders of our outstanding common stock and is entitled to
one vote for each share of Series B Preferred Stock held.
What
is the quorum requirement?
A
quorum of stockholders is necessary to hold a valid meeting. A quorum will be present if a majority of the outstanding shares
of common stock entitled to vote are present at the meeting.
Your
shares will be counted towards the quorum only if you submit a valid proxy, have voted via the Internet, have voted via telephone
or vote in person at the Annual Meeting. Abstentions and broker non-votes will be counted towards the quorum requirement. If there
is no quorum, a majority of the votes present at the Annual Meeting may adjourn the meeting to another date.
How
do I vote?
The
procedures for voting are set forth below:
Stockholder
of Record: Shares Registered in Your Name
If
you are a stockholder of record, you may vote in person at the Annual Meeting, vote by proxy using the enclosed proxy card, vote
via the Internet or by telephone. Whether or not you plan to attend the Annual Meeting, we urge you to vote by proxy, via the
Internet or by telephone to ensure your vote is counted. You may still attend the Annual Meeting and vote in person if you have
already voted by proxy, via the Internet or by telephone. You may vote as follows:
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To
vote in person, come to the Annual Meeting and we will give you a ballot when you arrive.
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To
vote using the proxy card, simply complete, date and sign the enclosed proxy card and return it promptly in the envelope provided.
If you return your signed proxy card to us before the Annual Meeting, we will vote your shares as you direct.
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To
vote via the Internet or by telephone, follow the instructions on the enclosed proxy card.
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Beneficial
Owner: Shares Registered in the Name of Broker or Bank
If
you hold your shares in “street name” and thus are a beneficial owner of shares registered in the name of your broker,
bank or other agent, you must vote your shares in the manner prescribed by your broker or other nominee. Your broker or other
nominee has enclosed or otherwise provided a voting instruction card for you to use in directing the broker or nominee how to
vote your shares. Check the voting form used by that organization to see if it offers internet or telephone voting. To vote in
person at the Annual Meeting, you must obtain a valid proxy from your broker, bank or other agent. Follow the instructions from
your broker or bank included with these proxy materials, or contact your broker or bank to request a proxy form.
How
are votes counted?
You
may either vote “FOR” or “WITHHOLD” authority to vote for each nominee for the Board of Directors. You
may vote “FOR”, “AGAINST” or “ABSTAIN” to ratify the appointment of the independent auditors
for 2017.
If
you submit your proxy, vote via the Internet or by telephone but abstain from voting or withhold authority to vote on one or more
matters, your shares will be counted as present at the meeting for the purpose of determining a quorum. Your shares also will
be counted as present at the meeting for the purpose of calculating the vote on the particular matter with respect to which you
abstained from voting or withheld authority to vote.
If
you abstain from voting on a proposal, your abstention has the same effect as a vote against that proposal, except, however, an
abstention has no effect on the election of directors.
See “How many votes are needed to approve each Proposal?”
If
you hold your shares in street name and do not provide voting instructions to your brokerage firm, it may still be able to vote
your shares with respect to certain “discretionary” (or routine) items, but it will not be allowed to vote your shares
with respect to certain “non-discretionary” items. In the case of non-discretionary items, for which no instructions
are received, the shares will be treated as “broker non-votes”. Shares that constitute broker non-votes will be counted
as present at the meeting for the purpose of determining a quorum, but will not be considered entitled to vote on the proposal
in question. Your broker does not have discretionary authority to vote shares for the election of directors but will have discretionary
authority to vote on the proposal relating to the ratification of the selection of the accounting firm. As a result, if you do
not vote your street name shares, your broker has the authority to vote on your behalf with respect to Proposal 2 (the ratification
of the selection of the accounting firm).
How
many votes are needed to approve each Proposal?
Proposal
1 Election of directors
Directors
are elected by a plurality of the votes represented by the shares of common stock present at the meeting in person or by proxy.
This means that the eight (8) director nominees with the most affirmative votes will be elected. Withheld votes, abstentions and
broker non-votes will have no effect.
Proposal
2 Ratification of the selection of Liggett & Webb, P.A. as the independent registered public accounting firm of the Company
for the year ending December 31, 2017.
To
be approved, the ratification of the selection of Liggett & Webb, P.A. as our independent auditors for our 2017 fiscal year,
must receive “For” votes from the holders of a majority of shares common stock present in person or by proxy and entitled
to vote. If you “Abstain” from voting, it will have the same effect as an “Against” vote. Broker non-votes
will have no effect.
Can I change my vote after submitting my proxy, voting via the Internet or by telephone?
Yes.
You can revoke your proxy at any time before the final vote at the Annual Meeting. If you are a stockholder of record, you may
revoke your proxy in any one of four ways:
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You
may submit another properly completed proxy card with a later date.
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You
may send a written notice that you are revoking your proxy to Corporate Secretary, Sunworks, Inc., 1030 Winding Creek Road,
Suite 100, Roseville, CA 95678.
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You
may attend the Annual Meeting and vote in person. Simply attending the Annual Meeting will not, by itself, revoke your proxy.
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If
you hold your shares in street name, contact your broker or other nominee regarding how to revoke your proxy and change your
vote.
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How
can I find out the results of the voting at the Annual Meeting?
Preliminary
voting results will be announced at the Annual Meeting. Final voting results will be published in our Current Report on Form 8-K
within four (4) business days after the Annual Meeting.
What
does it mean if I receive more than one proxy card?
If
you receive more than one proxy card, your shares are registered in more than one name or are registered in different accounts.
Please complete, date, sign and return each proxy card, vote your shares via the Internet or by telephone for each proxy card
you received to ensure that all of your shares are voted.
Who
is paying for this proxy solicitation?
In
addition to mailed proxy materials, our directors, officers and employees may also solicit proxies in person, by telephone, or
by other means of communication. We will not pay our directors, officers and employees any additional compensation for soliciting
proxies. We may reimburse brokerage firms, banks and other agents for the cost of forwarding proxy materials to beneficial owners.
When
are stockholder proposals due for next year’s annual meeting?
At
our annual meeting each year, our Board of Directors submits to stockholders its nominees for election as directors. In addition,
the Board of Directors may submit other matters to the stockholders for action at the annual meeting.
Our
stockholders also may submit proposals for inclusion in the proxy material. These proposals must meet the stockholder eligibility
and other requirements of the Securities and Exchange Commission (the “SEC”). To be considered for inclusion in next
year’s proxy materials, you must submit your proposal in writing by January 18, 2018 to our Corporate Secretary, Sunworks,
Inc., 1030 Winding Creek Road, Suite 100, Roseville, CA 95678.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table shows the amount of our common stock beneficially owned as of April 3, 2017 by (i) each person or group as those
terms are used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), believed
by us to beneficially own more than 5% of our common stock, (ii) each of our directors, (iii) each of our executive officers,
and (iv) all of our directors and executive officers as a group. Except as otherwise noted, each person named in the table has
sole voting and investment power with respect to all shares shown as beneficially owned by them, subject to applicable community
property laws.
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Common Stock
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Preferred Stock
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All Stock
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Number of
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Number of
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Percentage
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Percentage
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Name of Beneficial Owner (1)
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Shares
Owned (2)
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Percentage
Owned (2)(3)
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Shares
Owned (2)(4)
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Owned (2)(3)(4)
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Number of
Votes (2)(4)
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Owned (2)(3)(4)
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James Nelson (5)
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1,220,929
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5.2
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%
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-
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-
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%
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1,220,929
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5.2
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%
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Paul McDonnel (6)
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8,982
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*
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*
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8,982
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*
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Emil Beitpolous (7)
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808,565
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3.6
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%
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-
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*
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808,565
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3.6
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%
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Abe Emard (8)
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847,517
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3.8
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%
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-
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*
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847,517
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3.8
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%
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Frank Hunt (9)
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39,387
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.2
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%
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-
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*
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34,047
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.2
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Brigham Tomco (10)
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34,595
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.2
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%
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34,595
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.2
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%
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Mikhail Podnebesnyy (11)
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816,470
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3.6
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%
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816,470
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3.6
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%
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Shane Mace (12)
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29,901
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.1
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%
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29,901
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.1
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%
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Charles Cargile (13)
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18,818
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.1
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%
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18,818
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.1
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%
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Rhone Resch (14)
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14,582
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.1
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%
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14,582
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.1
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%
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Kirk Short (15)
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15,125
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.1
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%
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1,506,024
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100
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%
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1,521,149
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6.35
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%
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John Van Slooten (16)
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36,867
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.1
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%
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-
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*
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31,527
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.2
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%
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All officers and directors as a group (9 persons)
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3,891,738
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17.4
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%
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1,506,024
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100
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%%
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3,891,738
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17.4
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%
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(1)
The address for our officers and directors is c/o of the Company, 1030 Winding Creek Road, Suite 100, Roseville, California 95678.
(2)
Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes
voting or investment power with respect to securities. Shares of common stock subject to options or warrants currently exercisable
or convertible, or exercisable or convertible within 60 days of April 3, 2017 are deemed outstanding for computing the percentage
of the person holding such option or warrant but are not deemed outstanding for computing the percentage of any other person.
(3)
Percentage based on 22,440,664 shares of Common Stock issued and outstanding at April 3, 2017.
(4)
James Nelson was issued 4,400 shares of Series A Preferred Stock by the Company on January 9, 2015, which were automatically redeemed
and converted to 170 shares of common stock upon the listing of the Company’s common stock for trading on the Nasdaq Capital
Market which occurred on March 4, 2015.
(5)
Includes (a) 370,615 shares of common stock, (b) 807,044 shares underling options that are vested and currently exercisable and
options which may be exercisable in the next 60 days.
(6)
Includes (a) 0 shares of common stock, (b) 8,982 shares underling options that are vested and currently exercisable and options
which may be exercisable in the next 60 days.
(7)
Includes (a) 793,440 shares of common stock, (b) 15,125 shares underling options that are vested and currently exercisable and
options which may be exercisable in the next 60 days.
(8)
Includes (a) 817,267 shares of common stock, (b) 30,250 shares underling options that are vested and currently exercisable and
options which may be exercisable in the next 60 days.
(9)
Includes (a) 0 shares of common stock, (b) 39,387 shares underling options that are vested and currently exercisable and options
which may be exercisable in the next 60 days.
(10)
Includes (a) 0 shares of common stock, (b) 34,595 shares underling options that are vested and currently exercisable and options
which may be exercisable in the next 60 days.
(11)
Includes (a) 804,707 shares of common stock, (b) 11,763 shares underling options that are vested and currently exercisable and
options which may be exercisable in the next 60 days.
(12)
Includes (a) 0 shares of common stock, (b) 29,901 shares underling options that are vested and currently exercisable and options
which may be exercisable in the next 60 days.
(13)
Includes (a) 0 shares of common stock, (b) 18,818 shares underling options that are vested and currently exercisable and options
which may be exercisable in the next 60 days.
(14)
Includes (a) 0 shares of common stock, (b) 14,582 shares underling options that are vested and currently exercisable and options
which may be exercisable in the next 60 days.
(15)
Includes (a) 0 shares of common stock, (b) 1,506,024 shares of common stock underlying Series B Preferred Stock and (c)15,125
shares underling options that are vested and currently exercisable and options which may be exercisable in the next 60 days.
(16)
Includes (a) 0 shares of common stock, (b) 36,867 shares underling options that are vested and currently exercisable and options
which may be exercisable in the next 60 days.
PROPOSAL
1
ELECTION
OF DIRECTORS
At
this Annual Meeting, eight (8) persons, comprising the entire membership of the Board of Directors, are to be elected. Each elected
director will serve until the Company’s next annual meeting of stockholders and until a successor is elected and qualified.
All of the nominees currently serve on the Board of Directors.
All
nominees have consented to serve if elected. We expect that each of the nominees will be available for election, but if any of
them is not a candidate at the time the election occurs, such proxy will be voted for the election of another nominee to be designated
by the Board to fill any such vacancy.
The
term of office of each person elected as a director will continue until the next annual meeting or until his or her successor
has been elected and qualified, or until the director’s death, resignation or removal.
Biographical
and certain other information concerning the Company’s nominees for election to the Board of Directors is set forth below.
Except as indicated below, none of our directors is a director in any other reporting companies. We are not aware of any proceedings
to which any of our directors, or any associate of any such director is a party adverse to us or any of our subsidiaries or has
a material interest adverse to us or any of our subsidiaries.
Background
of Nominees
BOARD
NOMINEES
Name
|
|
Age
|
|
|
|
James Nelson
|
|
64
|
|
|
|
Abe Emard
|
|
39
|
|
|
|
Charles Cargile
|
|
52
|
|
|
|
Frank L. Hunt
|
|
66
|
|
|
|
John D. Van Slooten
|
|
56
|
|
|
|
Brigham Tomco
|
|
37
|
|
|
|
Shane Mace
|
|
51
|
|
|
|
Rhone Resch
|
|
50
|
James
B. Nelson
has been a director and Chief Executive Officer of Sunworks since October 2010. Mr. Nelson also served as Interim
Chief Financial Officer from August 2012 until February 2014. Mr. Nelson is also a director of Sunworks United, a position he
has held since February 1, 2014. Mr. Nelson began his executive career 30 years ago at Bain and Company, a business strategy consulting
firm, where he managed a team of consultants on four continents solving CEO-level programs for global companies. Prior to joining
Sunworks, he spent 20 years working in the private equity industry as both a capital partner and operating CEO to portfolio companies.
Mr. Nelson was a general partner at Peterson Partners (2007-2009) and at Millennial Capital Partners (1991-2010—previously
known as Invest West Capital). In addition to his responsibilities in acquisition and divestiture, Mr. Nelson worked as an executive
of several portfolio companies. He served as chief executive officer of Euro-Tek Store Fixture, LLC, chairman of the board of
American Retail Interiors, chairman of the board and chief executive officer of Panelview Inc. and chairman of the board of Critical
Power Exchange, as well as sitting on numerous boards both in and out of the private equity funds’ portfolios. Prior to
his years in private equity, Mr. Nelson served as Vice President of Marketing at Banana Republic/The Gap, where he managed company-wide
marketing, as well as the initial international expansion of Banana Republic. He was also general manager for Banana Republic’s
catalog division. He also served as Vice President of Marketing and Corporate Development at Saga Corporation, a multi-billion
dollar food service company. Mr. Nelson received his MBA from Brigham Young University, where he graduated summa cum laude and
was named the Outstanding Master of Business Administration Graduate.
The
Board believes that Mr. Nelson is qualified to serve as a director because of his extensive experience as an executive and as
a strategic consultant.
Abe
Emard
is
a co-founder and served as the CEO of Sunworks United Inc., a division of Sunworks, from the company’s inception in February
2011 until February 2016, when he was named Chief Operating Officer of Sunworks. He is actively engaged in the business development
and overall management of the company’s operations in solar energy solutions for commercial, agricultural and residential
customers. From 2000 until co-founding Sunworks United, he worked for Emard Electric, Inc. as its Project Manager, Vice President
and Business Development Officer. Mr. Emard is actively pursuing his construction management degree at U.C. Davis
Extension program and holds the Company’s electrical C-10 License.
The Company’s Board
of directors believes that Mr. Emard is qualified to serve as a Director because of his background with more than fifteen years’
electrical and solar construction management experience and his experience in growing and developing companies.
Charles
F. Cargile
has served as Chief Executive Officer since April 2017, and a Director of
the Company since September 2016.
From
July, 2016 until September 2016,
Mr. Cargile has served an Executive Advisor to MKS Industries which acquired Newport Corporation (“Newport”) in April
2016. Prior to that, since 2000, Mr. Cargile served as the Chief Financial Officer for Newport. Prior to joining Newport,
Mr. Cargile served in various capacities at York International Corporation (now a division of Johnson Controls, Inc.) since 1998
including Vice President, Finance and Corporate Development and Corporate Controller and Chief Accounting Officer. From 1992
to 1998 Mr. Cargile served at Flowerve Corporation, most recently as Corporate Controller and Chief Accounting Officer
from 1995 to 1998. Mr. Cargile currently serves on the board of directors of Netlist, Inc. He also serves on the board of directors
of Reeds, Inc., where he is Chairman of the audit committee and on the board of directors of Photon Control, where he is Chairman
of the compensation committee.
Mr.
Cargile qualifies to serve on the Company’s Board because of his experience serving on public company board of directors
and his extensive financial background including strategic development, capital structures, operational management and financial
processes and controls.
Frank
Hunt
has served as a director of the Company since December 2014. Mr. Hunt is the owner of Hunt Business Consulting, a company
that provides consultation to companies regarding current requirements under GAAP, where Mr. Hunt provides consulting service
since 2010. Mr. Hunt has over 30 years of experience as a CPA and served as a member (partner) of HJ & Associates, LLC, a
public accounting firm, from 1995 to 2010. Mr. Hunt has previously served on the board and advisory committee for both public
and private companies. Currently, Mr. Hunt is serving on the advisory board for Independent Stock Market and American Gunity companies.
Mr. Hunt served as the Audit Committee Chairman for Cereplast, Inc., a public company, from September 2010 until March 2014. Mr.
Hunt received a Bachelor of Science degree from Brigham Young University.
Mr.
Hunt’s thirty years of experience in public accounting bring to the Board a broad knowledge of public finance, audit processes,
and compliance expertise.
John
Van Slooten
has served as a director of the Company since December 2014. Mr. Van Slooten is the Managing Partner of Intrepid
Equity Partners since 2013. From 2007 until 2013 he served as the Managing Partner of Atlanta-based VVS Capital. Previously, Mr.
Van Slooten served as a Managing Director at SunTrust Robinson Humphrey Capital Markets. He has over 25 years’ experience
in private equity and the capital markets. He has executed private equity investments in a variety of industries. He has worked
for Standard Chartered Bank and First Interstate Bank Ltd. He holds a Bachelor of Science in Accounting and an MBA from Brigham
Young University.
Mr.
Van Slooten’s twenty-five years of experience in management, public finance and private equity bring to the Board a broad
knowledge of public company management, and investment community relationships among institutional investors, analysts, and investment
bankers.
Brigham
Tomco
has served as a director of the Company since April 2015. Since 2010, Mr. Tomco has served as the Chairman and Founder
of Zylun Global, a private equity backed investment holding company, and is the Founder of its operating entities Zylun Staffing,
Zylun Insights, and Emmersion Learning. Zylun Staffing is an offshore technical outsourcing firm with offices in Utah and the
Philippines. Zylun Insights is a market and opinion research firm with offices in Utah and Idaho. Emmersion Learning is a language
education company focused on live one-on-one teaching. In addition, Mr. Tomco sits on multiple boards including the Presidents
Advancement Council at BYU-Idaho, Foundation Investment Committee at Utah Valley University, Q-Sciences, and Oxzen Media. From
2011 until 2012, he was an Adjunct Professor at Brigham Young University-Marriott School teaching Financing New Ventures. Prior
to Zylun, Brigham worked at Ocean Road Advisors and Meyer Ventures, an $800+ million portfolio investing in public and private
equities, hedge funds, real estate, venture capital, high-yield debt, and fixed income. He earned his JD/MBA and Accounting degrees
at Brigham Young University and an AA in Management from Ricks College.
Mr. Tomco’s experience as an entrepreneur, CEO and educational background brings to the Board a broad
knowledge of public finance, audit processes, and compliance expertise.
Shane
Mace
has served as a director of the Company since October 2015. Since 2004, Mr. Mace has been a member owner of Buffalo Hump,
LLC, based in Meridian, Idaho, which is engaged in real estate development and property management. In 2013, Mr. Mace became a
member owner of Long Rod Equipment, LLC, also based in Meridian, Idaho, which is engaged in aircraft and construction equipment
leasing. Immediately prior to his current positions, from 2002-2012, Mr. Mace was the Founder, President, and Chief Executive
Officer of Track Utilities, LLC (“Track”) in Meridian, Idaho. Track provides mission-critical electric and telecommunications
infrastructure services in the Northwest and Intermountain West through its skilled labor force. Mr. Mace holds a BS degree in
finance from the College of Idaho and is well versed in financial statements and analysis with more than twenty-six (26) years
of experience performing accounting and financial tasks.
Mr.
Mace qualifies to serve on the Company’s Board of Directors because of his extensive experience as a member/owner of other
businesses and his accounting and financial background.
Rhone
Resch
has served as a director of the Company since November 2016. Mr. Resch served as
the President and Chief Executive Officer of Solar Energy Industries Association from 2004 until 2016 and now manages his own
solar energy advisory firm. From 1998 until 2004, he served as the Senior Vice President of Natural Gas Supply Association,
and from 1994 until 1998 he served as the Program Manager of the United State Environmental Protection Agency – Office of
Air and Radiation. From 1992 until 1994 Mr. Resch served as a Senior Analyst at Project Performance Corporation. Mr. Resch received
a Bachelor of Arts, English/Natural Resources from the University of Michigan, a Master of Environmental Science from State University
of New York and a Master of Public Administration, Management from Syracuse University.
Mr.
Resch is qualified to serve as a Director because of his industry expertise and corporate leadership experience.
Family
Relationships
There
are no family relationships among our executive officers and directors with the exception that Mr. Nelson is the first cousin
of Mr. Hunt’s wife.
Involvement
in Certain Legal Proceedings
During
the past ten years, none of our directors, executive officers, promoters, control persons, or nominees has been:
|
●
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the
subject of any bankruptcy petition filed by or against any business of which such person was a general partner or executive
officer either at the time of the bankruptcy or within two years prior to that time;
|
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●
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convicted
in a criminal proceeding or is subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
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|
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●
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subject
to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction
or any Federal or State authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement
in any type of business, securities or banking activities;
|
|
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●
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found
by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have
violated a federal or state securities or commodities law.
|
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●
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the
subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently
reversed, suspended or vacated, relating to an alleged violation of (a) any Federal or State securities or commodities law
or regulation; (b) any law or regulation respecting financial institutions or insurance companies including, but not limited
to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent
cease-and-desist order, or removal or prohibition order; or (c) any law or regulation prohibiting mail or wire fraud or fraud
in connection with any business entity; or
|
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●
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the
subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory
organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined
in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or
organization that has disciplinary authority over its members or persons associated with a member.
|
Director
Meeting and Attendance
During 2016, our Board
held 8 meetings, and also took certain actions by unanimous written consent. No Board member attended fewer than 75% of
the total Board meetings or of meetings held by all committees on which he served during 2016.
Board
Independence
Our
Board of Directors presently consists of eight members. Our Board of Directors has determined that each of Messrs Hunt, Van Slooten,
Tomco, Mace and Resch are “independent,” as defined by SEC rules adopted pursuant to the requirements of the Sarbanes-Oxley
Act of 2002 and as determined in accordance with Rule 4200(a)(15) of the Marketplace Rules of the Nasdaq Stock Market, Inc.
Board
Committees
We
have an audit committee, corporate governance/nominating committee and a compensation committee.
Audit
Committee.
The Board has a standing Audit
Committee, consisting of Messrs. Frank Hunt (Chairman), Brigham Tomco and Shane Mace. The Audit Committee acts under a written
charter, which more specifically sets forth its responsibilities and duties, as well as requirements for the Audit Committee’s
composition and meetings. The audit committee charter is available on the Company’s website (
www.sunworksusa.com
).
The Audit Committee held 4 meetings during the fiscal year ended December 31, 2016.
The
Audit Committee’s responsibilities include (1) the integrity of the Company’s financial statements and disclosures;
(2) the independent auditor’s qualifications and independence; (3) the performance of the Company’s internal audit
function and independent registered public accounting firm; (4) the adequacy and effectiveness of the Company’s internal
controls; (5) the Company’s compliance with legal and regulatory requirements; and (6) the processes utilized by management
for identifying, evaluating, and mitigating strategic, financial, operational, regulatory, and external risks inherent in the
Company’s business. The Audit Committee also prepares the Audit Committee report that is required pursuant to the rules
of the SEC.
The
Board has determined that each member of the audit committee is “independent,” as that term is defined by applicable
SEC rules. In addition, the Board has determined that each member of the audit committee is “independent,” as that
term is defined by the rules of the Nasdaq Stock Market.
The
Board has determined that Mr. Hunt is an “audit committee financial expert” serving on its Audit Committee, and is
independent, as the SEC has defined that term in Item 407 of Regulation S-K.
Corporate
Governance/Nominating Committee
. The Board has a standing Corporate Governance/ Nominating Committee. The Nominating and Governance
Committee consists of Messrs. John Van Slooten (Chairman), Shane Mace, and Rhone Resch. The Nominating and Governance Committee
acts under a written charter, which more specifically sets forth its responsibilities and duties, as well as requirements for
its composition and meetings. The corporate governance/nominating committee charter is available on the Company’s website
(
www.sunworksusa.com).
The Corporate Governance/Nominating Committee held 3 meetings during the fiscal year ended December
31, 2016.
The
Corporate Governance/Nominating Committee has been established by the Board in order, among other things to: (1) develop and recommend
to the Board the Corporate Governance Guidelines of the Company and oversee compliance therewith; (2) assist the Board in effecting
Board organization, membership and function including identifying qualified Board nominees; (3) assist the Board in effecting
the organization, membership and function of Board committees including the composition of Board committees and recommending qualified
candidates therefor; (4) evaluate and provide successor planning for the Chief Executive Officer and other executive officers;
and (5) to develop criteria for Board membership, such as independence, term limits, age limits and ability of former employees
to serve on the Board and the evaluation of candidates’ qualifications for nominations to the Board its committees as well
as removal therefrom, respectively.
The
Corporate Governance/Nominating Committee does not have a formal policy that requires it to consider any director candidates that
might be recommended by stockholders, but adheres to the Company’s By-Laws provisions and SEC rules relating to proposals
by stockholders. The Corporate Governance/Nominating Committee of the Board of Directors is responsible for identifying and selecting
qualified candidates for election to the Board of Directors prior to each annual meeting of the Company’s stockholders.
In identifying and evaluating nominees for director, the Corporate Governance/Nominating Committee considers each candidate’s
qualities, experience, background and skills, as well as other factors, such as the individual’s ethics, integrity and values
which the candidate may bring to the Board of Directors.
The
Board has determined that all the members of the Corporate Governance/Nominating Committee are “independent” under
the current listing standards of NASDAQ.
Compensation
Committee.
The Board has a standing Compensation Committee. The Compensation Committee of the Board is composed entirely of
directors who are not our current or former employees, each of whom meets the applicable definition of “independent”
as defined by the rules of the Nasdaq Stock Market. None of the members of the Compensation Committee during fiscal 2016 (i) had
any relationships requiring disclosure by the Company under the SEC’s rules requiring disclosure of related party transactions
or (ii) was an executive officer of a company of which an executive officer of the Company is a director. The current members
of the Compensation Committee are Messrs. Brigham Tomco (Chairman), John Van Slooten and Rhone Resch. The Compensation Committee
has no interlocks with other companies. The compensation committee charter is available on the Company’s website (
www.sunworksusa.com
).
The Compensation Committee held 2 meetings during the fiscal year ended December 31, 2016.
The
purpose of the Compensation Committee is to discharge the Board’s responsibilities relating to compensation of the Company’s
directors and executive officers. The Committee has overall responsibility for evaluating the Company’s compensation and
benefit plans, policies and programs and insuring overall alignment to the corporate compensation philosophy. The Compensation
Committee also is responsible for preparing any report on executive compensation required by the rules and regulations of the
SEC.
The
Board has determined that all the members of the Compensation Committee are “independent” under the current listing
standards of NASDAQ.
Code
of Conduct and Ethics
We
have adopted a code of conduct that applies to all of our directors, officers and employees. The text of the code of conduct has
been posted on our internet website and can be viewed at
www.sunworksusa.com
. Any waiver of the provisions of the code
of conduct for executive officers and directors may be made only by the audit committee and, in the case of a waiver for members
of the audit committee, by the Board of Directors. Any such waivers will be promptly disclosed to our stockholders.
Corporate
Governance and Related Matters
Board
of Directors Leadership Structure and Role in Risk Oversight.
Our
Board is responsible for the selection of the Chairman of the Board and the Chief Executive Officer. The Board does not have a
policy on whether or not the roles of Chief Executive Officer and Chairman should be separate and, if they are to be separate,
whether the Chairman should be selected from the non-employee directors or be an employee.
While
management is responsible for managing the day-to-day issues faced by the Company, our Board has an active role, directly and
through its committees, in the oversight of the Company’s risk management efforts. The Board carries out this oversight
role through several levels of review. The Board regularly reviews and discusses with members of management information regarding
the management of risks inherent in the operation of the Company’s business and the implementation of the Company’s
strategic plan, including the Company’s risk mitigation efforts.
Each
of the Board’s committees also oversees the management of the Company’s risks that are under each committee’s
areas of responsibility. For example, the Audit Committee oversees management of accounting, auditing, external reporting, internal
controls, and cash investment risks. The Nominating and Governance Committee oversees the Company’s compliance policies,
Code of Conduct and Ethics, conflicts of interests, director independence and corporate governance policies. The Compensation
Committee oversees risks arising from compensation practices and policies. While each committee has specific responsibilities
for oversight of risk, the Board is regularly informed by each committee about such risks. In this manner, the Board can coordinate
its risk oversight.
Communications
with the Board of Directors
Stockholders
and other parties may communicate directly with the Board of Directors or the relevant board member by addressing communications
to:
Sunworks,
Inc.
c/o
Corporate Secretary
1030
Winding Creek Road, Suite 100
Roseville,
CA 95678
All
stockholder correspondence will be compiled by our corporate secretary and forwarded as appropriate.
Director
Attendance at Annual Meetings
We
do not have a formal policy regarding attendance of Board members at annual meetings. We do not expect that all of our directors
will attend the Annual Meeting.
Compliance
with Section 16(a) of Exchange Act
Section
16(a) of the Exchange Act requires our officers and directors, and persons who own more than 10% of a registered class of our
equity securities, to file reports of ownership and changes in ownership with the SEC. These persons are required by regulation
to furnish us with copies of all Section 16(a) reports that they file. Based on our review of the copies of these reports received
by us, or written representations from the reporting persons that no other reports were required, we believe that, during fiscal
2016, all filing requirements applicable to our current officers, directors and greater than 10% beneficial owners were complied
with, except for Tracy Welch, our former Chief Financial Officer, who filed one Form 4 late and James Nelson who filed his Form
5 late.
Transactions
with Related Persons
The
following is a description of transactions since January 1, 2015, to which we have been a party in which the amount involved exceeded
or will exceed $120,000 and in which any of our directors, executive officers, beneficial holders of 5% or more of our capital
stock, or entities affiliated with them, had or will have a direct or indirect material interest:
In
October 2015, the Company entered into a consulting agreement with John Van Slooten, a Board member. The consulting services included,
but were not be limited to, consulting on and assisting with sourcing, assessing, modeling, due diligence and documentation with
respect to potential acquisition candidates for the Company. The agreement was subject to the provisions for termination with
the term of the agreement. The agreement commenced on October 1, 2015, terminating on September 30, 2018. The Company agreed to
pay Mr. Van Slooten, $33,000 upon signing and $9,300 per month plus out-of-pocket expenses. The Company terminated this agreement
in December of 2016.
Required
Vote
Directors
are elected by a plurality of the votes represented by the shares of common stock present at the meeting in person or by proxy.
This means that the eight (8) director nominees with the most affirmative votes will be elected.
RECOMMENDATION
OF THE BOARD FOR PROPOSAL NO. 1:
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF ALL THE NOMINEES NAMED ABOVE.
PROPOSAL
2
RATIFICATION
OF THE APPOINTMENT OF LIGGETT & WEBB, P.A.
AS
THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
FOR
THE FISCAL YEAR ENDING DECEMBER 31, 2017
The
Company’s stockholders are being asked to ratify the Board of Directors’ appointment of Liggett & Webb, P.A. as
the Company’s independent registered public accounting firm for fiscal 2017.
In
the event that the ratification of this selection is not approved by an affirmative majority of the votes cast on the proposal
at the Annual Meeting, management will review its future selection of the Company’s independent registered public accounting
firm.
A
representative of Liggett & Webb, P.A. is not expected to be present in person but will attend telephonically at the 2017
Annual Meeting and will have an opportunity to make a statement if he or she desires to do so. It is also expected that such representative
will be available to respond to appropriate questions.
On
January 15, 2015, HJ Associates & Consultants, L.L.P. (“HJ”) resigned as the independent registered public accounting
firm for the Company.
During
the fiscal years ended December 31, 2013 and December 31, 2012, HJ’s reports on the Company’s financial statements
did not contain an adverse opinion or disclaimer of opinion, and was not qualified or modified as to uncertainty, audit scope
or accounting principles, except that the report was modified as to the Company’s ability to continue as a going concern
.
During
the fiscal years ended December 31, 2013 and December 31, 2012 and the subsequent interim period through January 15, 2015, (i)
there were no disagreements between the Company and HJ on any matter of accounting principles or practices, financial statement
disclosure or auditing scope or procedure which, if not resolved to the satisfaction of HJ, would have caused HJ to make reference
to the subject matter of the disagreement in connection with its report on the Company’s financial statements; and (ii)
there were no reportable events as described in paragraph (a)(1)(v) of Item 304 of Regulation S-K.
The
Company provided HJ with a copy of the disclosures made in the Company’s Current Report on Form 8-K filed on January 20,
2015, and requested that HJ furnish it with a letter addressed to the SEC stating whether it agrees with the disclosure. A copy
of the letter was filed as Exhibit 16.1 to such Current Report.
On
January 16, 2015, the Company’s Board of Directors approved the engagement of Liggett & Webb P.A. (“LW”)
as its independent registered public accounting firm for the Company’s fiscal year ending December 31, 2014.
During
the years ended December 31, 2013 and December 31, 2012 and the subsequent interim period through January 16, 2015, the date of
engagement of LW, the Company did not consult with LW regarding either (i) the application of accounting principles to a specified
transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s financial
statements; or (ii) any matter that was either the subject of a disagreement (as defined in paragraph (a)(1)(iv) of Item 304 of
Regulation S-K and the related instructions thereto) or a reportable event (as described in paragraph (a)(1)(v) of Item 304 of
Regulation S-K).
Audit
Fees
The
aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for
the audit of the Company’s annual financial statements and review of financial statements included in the Company’s
Form 10-K or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements
for the fiscal years ending December 31, 2016 and 2015 were: $153,600 and $108,000, respectively. The fees were billed by LW,
our independent auditors for the years ended December 31, 2016 and 2015 audits were $142,600 and $108,000, respectively.
Audit-Related
Fees
The
aggregate fees billed in either of the last two fiscal years for assurance and related services by the principal accountant that
are reasonably related to the performance of the audit or review of the registrant’s financial statements and are not reported
under item (1) for the fiscal years ending December 31, 2016 and 2015 were $3,500, and $65,000, respectively. Audit related fees
primarily include fees due to the acquisition audits for Plan B Enterprises, Inc. and MD Energy, LLC.
Tax
Fees
The
aggregate fees were billed for professional services rendered by the principal accountant for tax compliance, tax advice, and
tax planning for the fiscal years ending December 31, 2016 and 2015 was $7,500 and $7,500, respectively.
All
Other Fees
There
were no other
fees billed for professional services provided
by the principal accountant, other than the services reported above, for the fiscal years ending December 31, 2016 and 2015.
Pre-Approval
Policies and Procedures of Audit and Non-Audit Services of Independent Registered Public Accounting Firm
The
Audit Committee’s policy is to pre-approve, typically at the beginning of our fiscal year, all audit and non-audit services,
other than de minimis non-audit services, to be provided by an independent registered public accounting firm. These services may
include, among others, audit services, audit-related services, tax services and other services and such services are generally
subject to a specific budget. The independent registered public accounting firm and management are required to periodically report
to the full Board of Directors regarding the extent of services provided by the independent registered public accounting firm
in accordance with this pre-approval, and the fees for the services performed to date. As part of the Board’s review, the
Board will evaluate other known potential engagements of the independent auditor, including the scope of work proposed to be performed
and the proposed fees, and approve or reject each service, taking into account whether the services are permissible under applicable
law and the possible impact of each non-audit service on the independent auditor’s independence from management. At Audit
Committee meetings throughout the year, the auditor and management may present subsequent services for approval. Typically, these
would be services such as due diligence for an acquisition, that would not have been known at the beginning of the year.
The
Audit Committee has considered the provision of non-audit services provided by our independent registered public accounting firm
to be compatible with maintaining their independence. The audit committee will continue to approve all audit and permissible non-audit
services provided by our independent registered public accounting firm.
Required
Vote
The
affirmative vote of the holders of a majority of the shares of common stock present in person or represented by proxy at the Annual
Meeting and entitled to vote on the matter is needed to ratify the appointment of Liggett & Webb, P.A. as our independent
registered public accounting firm for the year ending December 31, 2017.
RECOMMENDATION
OF THE BOARD FOR PROPOSAL NO. 2:
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF LIGGETT & WEBB, P.A. AS THE COMPANY’S
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2017.
AUDIT
COMMITTEE REPORT
The
following Audit Committee Report shall not be deemed to be “soliciting material,” “filed” with the SEC,
or subject to the liabilities of Section 18 of the Exchange Act. Notwithstanding anything to the contrary set forth in any of
the Company’s previous filings under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange
Act, that might incorporate by reference future filings, including this Proxy Statement, in whole or in part, the following Audit
Committee Report shall not be incorporated by reference into any such filings.
Membership
and Role of Audit Committee
The
Audit Committee of our Board is responsible for providing independent, objective oversight and review of our accounting functions,
internal controls and financial reporting process. Currently, the audit committee is comprised of Messrs. Frank Hunt (Chairman),
Shane Mace and Brigham Tomco. The Audit Committee operates pursuant to a written charter adopted by the Board of Directors which
may be found on our website
www.sunworksusa.com
. We believe that each of the members of the Audit Committee is independent
as defined by applicable laws and regulations.
Management
has the primary responsibility for the financial statements and the reporting process, including our system of internal controls,
and for the preparation of the consolidated financial statements in accordance with generally accepted accounting principles.
Our independent accountants are responsible for performing an independent audit of those financial statements in accordance with
generally accepted auditing standards and to issue a report thereon. The Audit Committee’s responsibility is to monitor
and oversee these processes on behalf of the Board.
Review
of our Audited Financial Statements
In
fulfilling its oversight responsibilities, the Audit Committee reviewed the audited financial statements in our Annual Report
on Form 10-K with management and discussed the quality and acceptability of our accounting principles, the reasonableness of significant
judgments, and the clarity of disclosures in our financial statements.
The
Audit Committee reviewed with the independent auditors, who are responsible for expressing an opinion on the conformity of those
audited financial statements with generally accepted accounting principles, their judgments as to the quality and acceptability
of our accounting principles and such other matters as are required to be discussed with the committee under generally accepted
auditing standards, including Auditing Standard No. 16 (Communications with Audit Committees). In addition, the Audit Committee
has discussed with the independent auditors the auditors’ independence from management and us, including the matters in
the written disclosures required by Independence Standards Board Standard No. 1 (Independent Discussions with Audit Committees),
which were submitted to us, and considered the compatibility of non-audit services with the auditors’ independence.
The
Audit Committee discussed with our independent auditors the overall scope and plans for their audit. The Audit Committee met with
the independent auditors, with and without management present, to discuss the results of their examination, their evaluation of
our internal controls, and the overall quality of our financial reporting.
In
reliance on these reviews and discussions, the Audit Committee recommended to our Board of Directors (and our Board has approved)
that our audited financial statements for the year ended December 31, 2016 be included in the Annual Report on Form 10-K for the
year ended December 31, 2016 for filing with the SEC.
The
Audit Committee selects the Company’s independent registered public accounting firm annually and has submitted such selection
for the year ending December 31, 2017 for ratification by stockholders at the Company’s Annual Meeting.
EXECUTIVE
OFFICERS
The
following persons are our executive officers and hold the offices set forth opposite their names.
Name
|
|
Age
|
|
Position
|
|
|
|
|
|
Charles Cargile
|
|
52
|
|
Chief Executive Officer
|
|
|
|
|
|
Paul McDonnel
|
|
60
|
|
Chief Financial Officer
|
|
|
|
|
|
Abe Emard
|
|
39
|
|
Chief Operating Officer
|
|
|
|
|
|
James Nelson
|
|
64
|
|
Chairman
|
The
biographies for each of Charles Cargile, James B. Nelson and Abe Emard are contained in the information disclosures relating to
the Company’s nominees for director.
Paul
C. McDonnel
joined the Company in September 2016 as its Chief Financial Officer. Prior to joining Sunworks, Mr.
McDonnel
has served as the President of Vulcan Prevision Linings since 2010. From 2009 until 2010 Mr. McDonnel served as the Chief Operating
Officer of Franklin Convey Products, LLC. From 2006 until 2009 he served as the Controller & Chief Financial Officer of Arrowhead
Research Corp. From 2003 until 2005 Mr. McDonnel served as the Chief Executive Officer of Quality Imaging Products, and from 1999
until 2003 he served as the Chief Financial Officer and Senior Manager-Operations of Recall Secure Destruction Services. From
1994 to 1998 Mr. McDonnel served as the VP of Operations and Chief Operating Officer of Reid Plastics, Inc. (“Reid”).
From 1990 until 1994 he served as Reid’s Chief Financial Officer. From 1987 to 1990 Mr. McDonnel served as the Vice President
of Finance of Trojan Enterprises. From 1982 until 1987 he served in the audit practice of the Small Business Division of the Los
Angeles office of Arthur Andersen & Co. Mr. McDonnel received both a Master of Arts - Management Accounting and Bachelor of
Science – Accounting from Brigham Young University. Mr. McDonnel is a Certified Public Accountant in the State of California.
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
The
following Compensation Discussion and Analysis describes the material elements of compensation for our executive officers identified
in the Summary Compensation Table (“Named Executive Officers”), and executive officers that we may hire in the future.
As more fully described above, the Compensation Committee is responsible for recommendations relating to compensation of the Company’s
directors and executive officers.
Compensation
Program Objectives and Rewards
Our
compensation philosophy is based on the premise of attracting, retaining, and motivating exceptional leaders, setting high goals,
working toward the common objectives of meeting the expectations of customers and stockholders and rewarding outstanding performance.
Following this philosophy, in determining executive compensation, we consider all relevant factors, such as the competition for
talent, our desire to link pay with performance in the future, the use of equity to align executive interests with those of our
stockholders, individual contributions, teamwork and performance, and each executive’s total compensation package. We strive
to accomplish these objectives by compensating all executives with total compensation packages consisting of a combination of
competitive base salary and incentive compensation.
The
primary purpose of the compensation and benefits described below is to attract, retain, and motivate highly talented individuals
when we do hire, who will engage in the behaviors necessary to enable us to succeed in our mission while upholding our values
in a highly competitive marketplace. Different elements are designed to engender different behaviors, and the actual incentive
amounts, which may be awarded to each Named Executive Officer are subject to the annual review of the Board of Directors. The
following is a brief description of the key elements of our planned executive compensation structure.
|
●
|
Base
salary and benefits are designed to attract and retain employees over time.
|
|
|
|
|
●
|
Incentive
compensation awards are designed to focus employees on the business objectives for a particular year.
|
|
|
|
|
●
|
Equity
incentive awards, such as restricted stock awards, stock options and non-vested stock, focus executives’ efforts on
the behaviors within the recipients’ control that they believe are designed to ensure our long-term success as reflected
in increases to our stock prices over a period of several years, growth in our profitability and other elements.
|
|
|
|
|
●
|
Severance
and change in control plans are designed to facilitate a company’s ability to attract and retain executives as we compete
for talented employees in a marketplace where such protections are commonly offered. We currently have not given separation
benefits to any of our Name Executive Officers.
|
Benchmarking
We
have not yet adopted benchmarking but may do so in the future. When making compensation decisions, our Board of Directors may
compare each element of compensation paid to our Named Executive Officers against a report showing comparable compensation metrics
from a group that includes both publicly-traded and privately-held companies. Our Board believes that while such peer group benchmarks
are a point of reference for measurement, they are not necessarily a determining factor in setting executive compensation as each
executive officer’s compensation relative to the benchmark varies based on scope of responsibility and time in the position.
We have not yet formally established our peer group for this purpose.
The
Elements of Sunworks’ Compensation Program
Base
Salary
Executive
officer base salaries are based on job responsibilities and individual contribution. The Board reviews the base salaries of our
executive officers, including our Named Executive Officers, considering factors such as corporate progress toward achieving objectives
(without reference to any specific performance-related targets) and individual performance experience and expertise. None of our
Named Executive Officers have employment agreements with us. Additional factors reviewed by the Board of Directors in determining
appropriate base salary levels and raises include subjective factors related to corporate and individual performance. For the
year ended December 31, 2016, the Board of Directors approved all executive officer base salary decisions.
Our
Board of Directors determines base salaries for the Named Executive Officers at the beginning of each fiscal year, and the Board
proposes new base salary amounts, if appropriate, based on its evaluation of individual performance and expected future contributions.
We adopted a 401(k) Plan in 2016 and base salary is the only element of compensation that is used in determining the amount of
contributions permitted under the 401(k) Plan.
Incentive
Compensation Awards
Some
Named Executives have been paid discretionary bonuses but our Compensation Committee has not yet established a formal compensation
policy for the determination of bonuses. If our revenue grows and bonuses become affordable and justifiable, we expect to use
the following parameters in justifying and quantifying bonuses for our Named Executive Officers and our other officers: (1) the
growth in our revenue, (2) the growth in our earnings, as adjusted (3) growth in our cash flow and (4) our stock price
performance. Other subjective measures may be considered at the discretion of the Compensation Committee and/or the Board of
Directors. Our compensation committee has not adopted specific performance goals and target bonus amounts for any of our fiscal
years, but may do so in the future.
Equity
Incentive Awards
In
March 2016, the Company’s Board of Directors adopted the 2016 Plan and in June 2016, the stockholders adopted the same.
The maximum number of shares of common stock that may be issued under the 2016 Plan is 1,800,000. The 2016 Plan is currently administered
by the Company’s Compensation Committee. The 2016 Plan authorizes grants of stock options, stock appreciation rights and
restricted stock awards to officers, employees, directors of the Company as well as consultants who are selected by the Compensation
Committee to receive an award. No option shall be exercisable more than 10 years after the date of grant. No option granted under
the 2016 Plan is transferable by the individual or entity to whom it was granted otherwise than by will or laws of descent and
distribution, and, during the lifetime of such individual, is not exercisable by any other person, but only by him.
Benefits
and Prerequisites
At
this stage of our business we have limited benefits and no prerequisites for our employees other than health insurance, 401(k)
and vacation benefits that are generally comparable to those offered by other small private and public companies or as may be
required by applicable state employment laws. We may confer other fringe benefits for our executive officers in the future if
our business grows sufficiently to enable us to afford them.
Separation
and Change in Control Arrangements
At
the date of each acquisition of our subsidiaries, we established three-year employment agreements with the owners and have entered
into employment agreements with the three of the former owners of Sunworks United, Abe Emard, Emil Beitpolous and Mikhail Podnebesnyy;
and the former owner of Elite, Kirk Short. None of these employees are eligible for specific benefits or payments if their employment
or engagement terminates in a separation or if there is a change of control.
Executive
Officer Compensation
The
following table sets forth the total compensation paid in all forms to the executive officers of the Company and includes two
of the most highly compensated officers other than our principal executive officer, our principal operating officer and our principal
financial officer during the periods indicated:
Summary
Compensation Table
Name and Principal Position
|
|
Year
|
|
Salary
|
|
|
Bonus
|
|
|
Stock Awards(1)(3)
|
|
|
Option Awards(2)
|
|
|
Non-Equity Incentive Plan Compensation
|
|
|
Non-Qualified Deferred Compensation Earnings
|
|
|
All Other Compensation
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James B. Nelson, Chief Executive Officer
|
|
2016
|
|
$
|
310,000
|
|
|
$
|
300,000
|
|
|
|
55,800
|
|
|
|
43,800
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
709,600
|
|
and President (5)
|
|
2015
|
|
|
294,000
|
|
|
|
250,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
544,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Abe Emard, Chief Operating
|
|
2016
|
|
$
|
173,700
|
|
|
$
|
14,600
|
|
|
|
1,418,300
|
|
|
|
35,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
$
|
1,641,700
|
|
Officer
|
|
2015
|
|
|
129,000
|
|
|
|
136,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
265,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul McDonnel, Chief Financial
|
|
2016
|
|
$
|
67,400
|
|
|
$
|
0
|
|
|
|
0
|
|
|
|
3,800
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
$
|
71,200
|
|
Officer
|
|
2015
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Emil Beitpolous, President of
|
|
2016
|
|
$
|
139,200
|
|
|
$
|
73,100
|
|
|
|
1,418,300
|
|
|
|
17,500
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
$
|
1,648,100
|
|
Residential
|
|
2015
|
|
|
125,000
|
|
|
|
77,000
|
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
202,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mikhail Podnebesnyy, Director of
|
|
2016
|
|
$
|
139,200
|
|
|
$
|
73,100
|
|
|
|
1,418,300
|
|
|
|
13,600
|
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
1,644,200
|
|
Engineering
|
|
2015
|
|
|
125,000
|
|
|
|
77,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
202,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tracy Welch, Former Chief
|
|
2016
|
|
$
|
137,000
|
|
|
$
|
20,000
|
|
|
|
485,800
|
|
|
|
11,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
25,000
|
|
|
$
|
678,800
|
|
Financial Officer
|
|
2015
|
|
|
174,000
|
|
|
|
30,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
204,000
|
|
|
(1)
|
The
amount reflected in this column is the compensation cost recognized by the Company during fiscal years 2016 and 2015 under
Statement of Financial Accounting Standard No. 123R (
Share-Based Payment
) for grants made in 2016 and 2015. The fair
value of each restricted stock grant is estimated on the date of grant using the closing price of our common stock on the
date of the grant as reported on the OTCQB.
|
|
|
|
|
(2)
|
The
amount reflected in this column is the compensation cost recognized by the Company during fiscal years 2016 and 2015 under
Statement of Financial Accounting Standard No. 123R (
Share-Based Payment
) for grants made in 2016 and 2015. The fair
value of each grant is estimated on the date of grant using the Black-Scholes option-pricing model.
|
|
|
|
|
(3)
|
On
September 23, 2013, Mr. Nelson was granted 769,231 restricted shares of our common stock. These shares vest according to a
schedule of performance goals, which is described below under “Restricted Stock.” As of December 31, 2015, half
of the restricted stock in this award had vested and issued, based on the achievement of two performance milestones: the achievement
of $10 million in revenues in a 12-month period of time and the achievement of $10 million in market value. The vesting of
the second half of the shares is based on the achievement of $2,000,000 in GAAP Net Profit in a 12-month period.
|
|
|
|
|
(4)
|
On
September 2, 2016 Tracy Welch resigned as Chief Financial Officer. The terms of the separation
require a $50,000 severance payment in two installments of $25,000 each in 2016 and 2017.
|
|
|
|
|
(5)
|
Stepped
down as Chief Executive Officer effective April 3, 2017.
|
Employment
Agreements
We
have not entered into any employment agreements with our executive officers to date, except for at-will employment agreements
with the executive officers of our subsidiaries as follows:
In
2014, we entered into employment agreements with three executive officers of Sunworks United, the Company’s wholly owned
subsidiary. Each of these employment agreements provided for an initial base annual salary of $100,000 with the potential for
periodic bonuses and equity incentive awards at the discretion of the Company’s Board of Directors. In October 2014, the
Board of Directors approved increases in the annual base salaries to $120,000. In January 2016 the base salaries of two of the
three the officers was increased to $140,000. The base salary for the third officer, Abe Emard, who assumed the role of our Chief
Operating Officer, was increased from $120,000 to $175,000.
In
2015, the Company entered into an at-will employment agreement with the Chief Executive Officer of Elite Solar Acquisition Sub.,
Inc., another wholly owned subsidiary acquired on December 1, 2015. The employment agreement provides for a base annual salary
of $140,000 with the potential for periodic bonuses and equity incentive awards at the discretion of the Company’s Board
of Directors.
On
March 29, 2017, the Company entered into an employment agreement with Charles Cargile (“Cargile Employment Agreement”)
pursuant to which Mr. Cargile will serve as the Company’s Chief Executive Officer. Pursuant to the terms
of the Cargile Employment Agreement, Mr. Cargile will receive a base salary of $300,000 per year and a discretionary bonus;
provided,
however
, for the fiscal year ending December 31, 2017, Mr. Cargile shall be entitled to a minimum bonus equal to 3% of the
operating earnings of the Company but shall receive a bonus that is not less than the bonus paid to next highest executive of
the Company. In addition, Mr. Cargile was granted a restricted stock grant of 500,000 shares, one third of which shall vest on the
one year anniversary of the grant, and the balance of which shall vest in twenty-four equal monthly installments commencing on
the one year anniversary of the grant.
Outstanding
Equity Awards
The
following table sets forth information with respect to unexercised stock options, stock that has not vested, and equity incentive
plan awards held by our executive officers at December 31, 2016.
Outstanding Equity Awards at Fiscal Year-End
|
|
|
Option Awards
|
|
Stock
Awards
|
Name and Principal Position
|
|
|
Number of Securities Underlying Unexercised Options Exercisable
|
|
|
|
Number of Securities Underlying Unexercised Options Unexercisable
|
|
|
|
Option Exercise Price
|
|
|
Option Expiration Date
|
|
|
Number of Shares of Stock that Have not Vested
|
|
|
|
Market Value of Shares of Stock that Have not Vested
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James B. Nelson,
|
|
$
|
576,923
|
(1)
|
|
$
|
0
|
|
|
$
|
1.30
|
|
|
7/22/17
|
|
$
|
384,616
|
(3)
|
|
$
|
769,232
|
(6)
|
Chief Executive Officer and President
|
|
|
192,308
|
(2)
|
|
|
0
|
|
|
|
0.26
|
|
|
11/1/19
|
|
|
230,769
|
(4)
|
|
|
461,538
|
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul C. McDonnel,
Chief Financial Officer
|
|
|
2,037
|
(5)
|
|
|
47,963
|
|
|
|
2.39
|
|
|
11/17/21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Abe Emard,
Chief Operating Officer
|
|
|
17,750
|
(5)
|
|
|
42,250
|
|
|
|
2.68
|
|
|
4/13/21
|
|
|
|
|
|
|
|
|
|
(1)
|
On
July 22, 2010, Mr. Nelson was granted nonqualified stock options to purchase 576,923 shares of our common stock at an exercise
price of $1.30 per share exercisable until July 22, 2017 in consideration for his services to us. These stock options vest
1/36th per month, commencing on August 21, 2010, on a monthly basis for as long as Mr. Nelson is an employee or consultant
of Sunworks.
|
|
|
|
|
(2)
|
On
November 1, 2012, Mr. Nelson was granted nonqualified stock options to purchase 192,308 shares of our common at an exercise
price of $0.26 per share exercisable on a cash or cashless basis until November 1, 2019 for his services to the Company. These
stock options vest according to the following schedule: 53,419 on the date of grant, 5,342 on the first day of each month
thereafter commencing on December 1, 2012 until December 1, 2014, and then 5,342 on January 1, 2015; provided Mr. Nelson is
an employee or consultant of Sunworks. As of January 1, 2015, all of Mr. Nelson’s options are fully vested.
|
|
|
|
|
(3)
|
On
September 23, 2013, Mr. Nelson was granted 769,231 restricted shares of our common stock. These shares vest according to a
schedule of performance goals, which is described below under “Restricted Stock.” As of December 31, 2014, half
of the restricted stock in this award had vested and issued, based on the achievement of two performance milestones: the achievement
of $10 million in revenues in a 12-month period and the achievement of $10 million in market value. The vesting of the second
half of the shares is based on the achievement of $2,000,000 in GAAP Net Profit in a 12-month period.
|
|
|
|
|
(4)
|
In
August 2016, Sunworks granted Mr. Nelson a restricted stock grant of 250,000 shares of the Company’s common stock pursuant
to the terms of the Company’s 2016 Equity Incentive Plan (the “2016 Plan”). All shares issuable under the
restricted stock grant agreement are valued as of the grant date at $2.90 per share. The restricted stock grant to Mr. Nelson
will vest upon the earlier of (i) January 1, 2021, (ii) a Change of Control as defined in the 2016 Plan (iii) upon Mr. Nelson’s
retirement or (iv) upon Mr. Nelson’s death. “Change of Control” as defined in the 2016 Plan means (i) a
sale of all or substantially all of the Company’s assets or (ii) a merger with another entity or an acquisition of the
Company that results in the existing stockholders of the Company owning less than fifty percent (50%) of the outstanding shares
of capital stock of the surviving entity following such transaction.
|
|
|
|
|
(5)
|
Options
granted pursuant to the 2016 Equity Incentive Plan (the “2016 Plan”) and vest over 1/36th per month.
|
|
|
|
|
(6)
|
Based
on the last sale price of the Company’s common stock as quoted on the NASDAQ Market at the closing on December 31, 2016,
which was $2.00 per share.
|
|
|
|
|
(7)
|
Stepped
down as Chief Executive Officer effective April 3, 2017.
|
Restricted
Stock
During
fiscal year ended December 31, 2016, we granted to our Chief Executive Officer a restricted stock grant of 250,000 shares of the
Company’s common stock pursuant to the terms of the Company’s 2016 Equity Incentive Plan. The restricted stock grant
to Mr. Nelson will vest upon the earlier of (i) January 1, 2021, (ii) a Change of Control as defined in the 2016 Plan (iii) upon
Mr. Nelson’s retirement or (iv) upon Mr. Nelson’s death. “Change of Control” as defined in the 2016 Plan
means (i) a sale of all or substantially all of the Company’s assets or (ii) a merger with another entity or an acquisition
of the Company that results in the existing stockholders of the Company owning less than fifty percent (50%) of the outstanding
shares of capital stock of the surviving entity following such transaction.
The
grant was made in recognition of the efforts of Mr. Nelson leading the Company through the uplisting and financing transaction
consummated by the Company in 2015.
Option
Exercises and Stock Vested
During
the fiscal year ended December 31, 2015, Chang Won Son, our former Technology Director, exercised 53,649 stock options.
On
February 17, 2017, Mark Richardson, a former director, exercised an option to purchase up to 53,419 shares of the Company’s
common stock on a cashless basis resulting in the issuance of 41,773 shares.
Director
Compensation
The
following table sets forth certain information regarding the compensation paid to our directors during the fiscal year ended December
31, 2016:
Director
Compensation
Name
|
|
Fees earned or cash paid
|
|
|
Stock Awards
|
|
Option Awards
|
|
|
All other compensation
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark J. Richardson(1)
|
|
$
|
8,750
|
|
|
|
|
|
10,000
|
|
|
|
|
|
|
$
|
8,750
|
|
Frank Hunt
|
|
$
|
17,750
|
|
|
|
|
|
15,000
|
|
|
|
|
|
|
$
|
14,750
|
|
John Van Slooten
|
|
$
|
-
|
|
|
|
|
|
10,000
|
|
|
$
|
85,800
|
|
|
$
|
85,800
|
|
Brigham Tomco
|
|
$
|
17,750
|
|
|
|
|
|
50,000
|
|
|
|
|
|
|
$
|
14,750
|
|
Shane Mace
|
|
$
|
17,750
|
|
|
|
|
|
50,000
|
|
|
|
|
|
|
$
|
14,750
|
|
Charles F. Cargile(2)
|
|
$
|
8,500
|
|
|
|
|
|
50,000
|
|
|
|
|
|
|
$
|
5,500
|
|
Rhone Resch(3)
|
|
$
|
3,000
|
|
|
|
|
|
50,000
|
|
|
|
|
|
|
$
|
3,000
|
|
|
(1)
|
Resigned as a member
of the Board of Directors on September 1, 2016.
|
|
(2)
|
Appointed as a member
of the Board of Directors on September 2, 2016.
|
|
(3)
|
Appointed as a member
of the Board of Directors on October 25, 2016.
|
Commencing
in December 2014, non-employee Board members were paid $1,500 for attendance in-person or telephonically at each Board meeting.
Commencing on April 13, 2016, the amount paid to independent directors was increased to $3,750 per meeting, payable $1,250 per
month for a total of up to $15,000 per year, assuming four meetings, with a pro rata adjustment if there were more or less than
four meetings. In September 2016, the compensation paid to non-employee Board members was increased from $1,250 per month to $3,000
per month. Option awards granted to directors of the Company pursuant to the Company’s 2016 Equity Incentive Plan were modified
to provide for vesting in one-half increments over a two-year period instead of vesting in one-third increments over a 3 year
period. Directors may also be reimbursed their expenses for travelling, hotel and other expenses reasonably incurred in connection
with attending board or committee meetings or otherwise in connection with the Company’s business.
In
October 2015, the Company entered into a consulting agreement with John Van Slooten, a Board member. The consulting services included,
but were not be limited to, consulting on and assisting with sourcing, assessing, modeling, due diligence and documentation with
respect to potential acquisition candidates for the Company. The agreement was subject to the provisions for termination with
the term of the agreement. The agreement commenced on October 1, 2015, and could continue until September 30, 2018. The Company
agreed to pay Mr. Van Slooten, $33,000 upon signing and $9,300 per month plus out-of-pocket expenses. The Company terminated this
agreement in December of 2016.
As
of December 31, 2016 there are no other cash compensation arrangements in place for members of the Board of Directors acting as
such.
STOCKHOLDER
PROPOSALS
Proposals
Submitted for Inclusion in Our Proxy Materials
We
will include in our proxy materials for our next annual meeting of stockholders, stockholder proposals that comply with Rule 14a-8
under the Exchange Act. Among other things, Rule 14a-8 requires that we receive such proposals no later than 120 days prior to
the one-year anniversary of this proxy statement. Thus, for our next annual meeting of stockholders, we must receive stockholder
proposals submitted for inclusion in our proxy materials no later than January 18, 2018; unless the date of our next annual meeting
is more than 30 days before or after May 18, 2018, in which case the proposal must be received a reasonable time before we begin
to print and send our proxy materials. We will not include in our proxy materials stockholder proposals received that do not comply
with all of the requirements of Rule 14a-8. Stockholder proposals submitted for inclusion in our proxy materials should be mailed
to the following address: Sunworks, Inc., 1030 Winding Creek Road, Suite 100, Roseville, CA 95678 Attention: Secretary.
Proposals
Not Submitted for Inclusion in Our Proxy Materials
Stockholder
proposals that are not submitted for inclusion in our proxy materials for our next annual meeting pursuant to Rule 14a-8 under
the Exchange Act should be mailed to the following address: Sunworks, Inc., 1030 Winding Creek Road, Suite 100, Roseville, CA
95678 Attention: Secretary.
In
the event that our annual meeting of stockholders is more than 30 days before or after May 18, 2018, any stockholder wishing to
nominate a person for election to our Board of Directors or have any other proposal brought before our next annual meeting, but
not considered for inclusion in our proxy materials pursuant to Rule 14a-8 under the Exchange Act as described above, must submit
the proposal on or before (i) the 90
th
day prior to such annual annual meeting or (ii) the 10
th
day following
the date on which public announcement of the date of such meeting is first made, or such other time as may be disclosed in our
Quarterly Reports on Form 10-Q. The proxy holders will have discretionary authority granted by the proxies to vote on these proposals.
Recommendations
for director nomination must include appropriate biographical information, accompanied by the written consent of the proposed
nominee. The qualifications of recommended candidates will be reviewed by the Company’s Governance and Nominating Committee.
OTHER
MATTERS
The
Board of Directors knows of no other matters that will be presented for consideration at the Annual Meeting, but if other matters
properly come before the meeting, the persons named as proxies in the enclosed proxy will vote according to their best judgment.
Stockholders are requested to date and sign the enclosed proxy and to mail it promptly in the enclosed postage-paid envelope.
If you attend the Annual Meeting, you may revoke your proxy at that time and vote in person, if you wish. Otherwise your proxy
will be voted for you.
|
By Order
of the Board of Directors
|
|
|
|
|
|
Chairman of the Board
|
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