Item
2.01. Completion of Acquisition or Disposition of Assets
On
April 8, 2021, Sunworks, Inc., a Delaware corporation (the “Company”), through its operating subsidiary Sunworks United
Inc., a California corporation (“Buyer”), acquired all of the issued and outstanding membership interests (the “Acquisition”)
of Solcius LLC, a California limited liability company (“Solcius”), from Solcius Holdings, LLC (“Seller”).
Located in Provo, Utah, Solcius is a full-service, residential solar systems provider.
The
Acquisition was consummated on April 8, 2021 pursuant to a Membership Interest Purchase Agreement, dated as of April 8, 2021 (the
“Purchase Agreement”), by and between Buyer and Seller. The purchase price for Solcius consisted of $51,750,000 in
cash, subject to post-closing adjustments related to working capital, cash, indebtedness and transaction expenses. The board of
directors of the Company has approved the Purchase Agreement and the transactions contemplated thereby. The Purchase Agreement
contains customary representations and warranties as well as indemnification obligations by Seller, on the one hand, and by Buyer,
on the other hand, to each other. In addition, the Purchase Agreement contains, among other customary restrictive covenants, (i)
a three year covenant not to compete by Seller, directly or indirectly, against Solcius, and (ii) a three year covenant not to
solicit by Seller, directly or indirectly, any person employed by Solcius, without the written consent of Buyer.
The
foregoing description of the Purchase Agreement is a summary of, and does not purport to be a complete statement of, the Purchase
Agreement or the rights and obligations of the parties thereunder, and is qualified in its entirety by reference to the full text
of the Purchase Agreement, which is filed herewith as Exhibit 2.1 and incorporated herein by this reference.
In
addition to equity grants that may be approved by the Sunworks Board of Directors under the Sunworks stock incentive plan, Sunworks
will issue an aggregate of 77,500 shares of common stock to certain employees of Solcius in connection with the commencement of
their employment with Sunworks.
Cautionary
Note Regarding the Purchase Agreement
The
Purchase Agreement has been attached as an exhibit hereto to provide investors with information regarding its terms. It is not
intended to provide any other factual information about Solcius, Seller, Buyer or the Company. The Purchase Agreement contains
representations and warranties made by Seller and Buyer. Such representations and warranties were made only for the purposes of
the Purchase Agreement, are solely for the benefit of the parties to the Purchase Agreement, and are not intended to be and should
not be relied upon by any other person. In addition, these representations and warranties should not be treated as establishing
matters of fact, but rather as a way of allocating risk between the parties. Moreover, certain of the representations and warranties
may be subject to limitations agreed upon by the parties to the Purchase Agreement and are qualified by information in confidential
disclosure schedules provided by Seller to Buyer. These representations and warranties may apply standards of materiality in a
way that is different from what may be material to investors, and were made only as of the date of the Purchase Agreement or such
other date or dates as may be specified in the Purchase Agreement and are subject to more recent developments. Accordingly, investors
are not third party beneficiaries under the Purchase Agreement and should not rely on the representations and warranties in the
Purchase Agreement as characterizations of the actual state of facts about Solcius, Seller, Buyer or the Company, or of any of
their respective businesses, assets, or contracts, or otherwise.