SPRQ Spartan Acquisition Corp II

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934 (Amendment No. )

Check the appropriate box:

(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):

Company’s address specified above solely for the purpose of adjourning the meeting to reconvene at a date, time and physical or virtual location announced by the meeting chair. Under either of the foregoing circumstances, we will post information regarding the announcement on the Investors page of the Company’s website at https://sunlightfinancial.com.

YOUR VOTE IS IMPORTANT. Voting can be completed in one of four ways:

Whether or not you plan to attend the Annual Meeting, we urge you to submit your proxy now via the internet, telephone or by mail. Submitting a proxy will not deprive you of the right to attend the Annual Meeting or to vote your shares at the Annual Meeting. You can revoke a proxy at any time before it is exercised by voting at the Annual Meeting, by delivering a subsequent proxy or by notifying the inspector of elections in writing of such revocation prior to the Annual Meeting. YOUR SHARES CANNOT BE VOTED UNLESS YOU EITHER (I) VOTE BY USING THE INTERNET, (II) VOTE BY PHONE, (III) USE THE PROXY CARD INCLUDED WITH THIS PROXY STATEMENT TO CAST YOUR VOTE BY COMPLETING, SIGNING AND RETURNING THE PROXY CARD BY MAIL OR (IV) ATTEND THE ANNUAL MEETING AND VOTE. When you submit a proxy, you are authorizing Matthew Potere, our Chief Executive Officer, and Rodney Yoder, our Chief Financial Officer, to vote your shares at the Annual Meeting and at any postponements or adjournments of the Annual Meeting in accordance with your instructions.

We appreciate your continued support of Sunlight Financial Holdings Inc. and look forward to receiving your proxy.

 

Charlotte, North Carolina

July   , 2023

 

Stockholder of Record: Shares Registered in Your Name: If on the Record Date you had Sunlight shares registered in your name with Sunlight’s transfer agent, Continental Stock Transfer & Trust Company, then you are a stockholder of record, and you may vote your shares by proxy or at the Annual Meeting. Specifically, you may vote:

We are holding the Annual Meeting online and providing internet voting to provide expanded access and to allow you to vote your shares online, with procedures designed to ensure the authenticity and correctness of your voting instructions. However, please be aware that you must bear any costs associated with your internet access, such as usage charges from internet access providers and telephone companies.

Whether or not you plan to attend the Annual Meeting, we urge you to submit your proxy now via the internet, telephone or by mail to ensure your vote is counted. You may still attend and vote at the Annual Meeting even if you have already voted by proxy.

Beneficial Owner: Shares Registered in the Name of a Broker, Bank or Other Nominee: If on our Record Date (July 3, 2023) your shares were held, not in your name, but rather in an account at a broker, bank or other nominee, then you are the beneficial owner of shares held in “street name” and this proxy statement is being forwarded to you by that organization. The organization holding your account is considered to be the stockholder of record for purposes of voting at the Annual Meeting. As a beneficial owner, you have the right to direct your bank, broker or other nominee regarding how to vote the shares in your account. Follow the instructions from your broker, bank or other nominee included with these proxy materials or contact your bank, broker or other nominee to request a proxy form. You are also invited to virtually attend the Annual Meeting.

There are three matters scheduled for a vote:

The Board knows of no other matters that will be presented for consideration at the Annual Meeting. However, if any other matters are properly brought before the meeting, your shares will be voted in accordance with the discretion of the person or persons appointed as proxies.

On each matter to be voted upon, you have one vote for each share of Class A or Class C common stock you own as of July 3, 2023. On this Record Date, there were     shares of Class A common stock and     shares of Class C common stock outstanding.

Stockholder of Record: Shares Registered in Your Name: If you are a stockholder of record as of the Record Date and do not vote by completing your proxy card, by telephone, through the internet or online at the Annual Meeting, your shares will not be voted.

Beneficial Owner: Shares Registered in the Name of Bank, Broker or Other Nominee: If you are a beneficial owner of shares registered in the name of your bank, broker or other nominee as of the Record Date, and you do not provide the bank, broker or other nominee that holds your shares with voting instructions, then the bank, broker or other nominee will determine if it has the discretionary authority to vote on the particular matter. See below under “How are votes counted?” for more information.

If you return a signed and dated proxy card or otherwise submit a proxy without marking voting selections, then your shares will be voted, as applicable, “For” the election of each of the three Class II director nominees, “For” the ratification of our selection of RSM US LLP as the independent registered public accounting firm of the Company for its fiscal year ending December 31, 2023 and “For” the approval of the amendment to our Certificate of Incorporation to effect a reverse stock split. If any other matter is properly presented at the meeting, then your proxyholder (one of the individuals named on your proxy card) will vote your shares using his or her best judgment.

This proxy solicitation is being made on behalf of our Board. We will pay for the entire cost of soliciting proxies. In addition to these proxy materials, our directors and employees may also solicit proxies online, by telephone, or by other means of communication, however, directors and employees will not be paid any additional compensation for soliciting proxies. We may also reimburse brokerage firms, banks, dealers or other similar organizations for the cost of forwarding proxy materials to beneficial owners.

If you receive more than one copy of these proxy materials, then your shares may be registered in more than one name or in different accounts. Please follow the voting instructions in this proxy statement or, if you are the beneficial owner of shares held in “street name,” the instructions provided to you by your bank, broker or other nominee to ensure that all of your shares are voted.

Yes. You may revoke your proxy at any time before the final vote at the Annual Meeting.

Stockholder of Record: Shares Registered in Your Name: If you are the record holder of your shares as of the Record Date, then you may revoke your proxy in any one of the following ways:

Your most current proxy card or telephone or internet proxy is the one that is counted.

Beneficial Owner: Shares Registered in the Name of Bank, Broker or Other Nominee: If your shares are held by your broker or bank as a nominee or agent as of the Record Date, then you should follow the instructions provided by your bank, broker or other nominee.

To be considered for inclusion in next year’s proxy materials, your proposal must be submitted in writing by March 9, 2024 to Sunlight’s Corporate Secretary at 101 North Tryon Street, Suite 1000, Charlotte, NC 28246 and comply with the requirements in the Company’s Amended and Restated Bylaws (the “Bylaws”) and all applicable requirements of Rule 14a-8 promulgated under the Securities Exchange Act of 1934, as amended. If you wish to submit a proposal that is not to be included in next year’s proxy materials or nominate a director, you must do so no later than May 13, 2024 and not earlier than April 13, 2024; provided, however, that if our 2024 annual meeting of stockholders is held before July 12, 2024 or after September 10, 2024, then your proposal must be received no earlier than the close of business on the 120th day prior to such meeting and not later than the close of business on the later of the 90th day prior to such meeting or the 10th day following the day on which notice or public announcement of the date of such meeting is first made. You are also advised to review our Bylaws, which contain additional requirements about advance notice of stockholder proposals and director nominations. In addition to satisfying the foregoing requirements under our Bylaws, to comply with the universal proxy rules, stockholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than June 12, 2024.

Votes will be counted by the inspector of election appointed for the meeting, who will separately count, for the proposal to elect directors, votes “For,” “Withhold” and broker non-votes; and, with respect to other proposals, votes “For,” “Against,” abstentions and, if applicable, broker non-votes.

Broker non-votes occur when shares are held indirectly through a bank, brokerage firm or other nominee or intermediary on behalf of a beneficial owner (referred to as held in “street name”) and the broker submits a proxy, but does not cast a vote on a matter because the broker has not received voting instructions from the beneficial owner, and (i) the broker does not have discretionary voting authority on the matter or (ii) the broker chooses not to vote on a matter for which it has discretionary voting authority. Pursuant to the New York Stock Exchange (“NYSE”), which governs brokers’ use of discretionary authority, brokers are permitted to exercise discretionary voting authority only on “routine” matters when voting instructions have not been timely received from a beneficial owner.

Abstentions and broker non-votes will be treated as shares present for the purpose of determining the presence of a quorum for the transaction of business at the Annual Meeting. Broker non-votes will not be counted for purposes of determining the number of shares present at the meeting or represented by proxy and entitled to vote with respect to a particular proposal.

As discussed above, when a beneficial owner of shares held in “street name” does not give instructions to the broker or nominee holding the shares as to how to vote on matters deemed to be “non-routine,” the broker or nominee cannot vote the shares with respect to such matters. These unvoted shares are considered “broker non-votes” with respect to such matters.

A quorum of stockholders is necessary to hold a valid meeting. A quorum will be present if stockholders holding at least a majority of the issued and outstanding shares of our Class A and Class C common stock entitled to vote are present online at the meeting or represented by proxy.

Your shares will be counted towards the quorum only if you submit a valid proxy (or one is submitted on your behalf by your broker, bank or other nominee) or if you vote online at the Annual Meeting. Abstentions and broker non-votes will be counted towards the quorum requirement. If there is no quorum, then the meeting’s chairperson or holders of a majority of shares represented at the meeting may adjourn the meeting to another date and time.

Preliminary voting results will be announced at the Annual Meeting. In addition, final voting results will be published in a Current Report on Form 8-K that we expect to file within four business days after the Annual Meeting. If final voting results are not available to us in time to file a Current Report on Form 8-K within four business days after the meeting, then we intend to file a Current Report on Form 8-K to publish preliminary results and, within four business days after the final results are known to us, file an additional Current Report on Form 8-K to publish the final results.

As to the proposals to be voted on at the Annual Meeting, our board of directors unanimously recommends that you vote:

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” EACH OF THE

CLASS II DIRECTOR NOMINEES.

In addition to the director nominees, Sunlight has six other directors who will continue in office after the Annual Meeting with terms expiring in 2024 and 2025. The following includes a brief biography of each director composing the remainder of the Board with terms expiring as shown, with each biography including information regarding the experiences, qualifications, attributes or skills that caused the Nominating, Governance & ESG Committee and the Board to determine that the applicable director should serve as a member of our Board.

Our Board does not have a formal policy regarding the combination of the roles of Chairperson of the Board and Chief Executive Officer because the Board believes that it is in the best interests of the Company to have the flexibility to determine, from time to time, whether the positions should be held by the same person or by separate persons. Currently, the roles are separated, with Matthew Potere serving as Chief Executive Officer and Emil W. Henry, Jr. serving as the Chairperson of the Board. We believe this permits the Chief Executive Officer to concentrate on the considerable responsibilities involved in managing the day-to-day functioning and long-term strategies of running the Company, thus ensuring that sufficient attention is paid to both executive and corporate governance concerns, which enhances our risk management procedures. We also have a lead independent director, Kenneth Shea, which helps ensure that the independent and non-management members of the Board have a voice. Our lead independent director is appointed by the majority of the independent directors of the Board, presides over all executive sessions of the Board, is responsible for calling separate meetings of the independent directors, determining the agenda and serving as chairperson of such meetings, reporting to the Company’s Chief Executive Officer and Chairperson of the Board regarding feedback from such meetings, serving as spokesperson for the Company as requested, and performing such other responsibilities as may be designated by a majority of the independent directors from time to time.

While we believe our current Board structure is best-suited to our Company and stockholders, the Board may reconsider this leadership structure from time to time based on the leadership needs of our Board and the Company at any particular time. The Nominating, Governance & ESG Committee evaluates on an ongoing basis whether the Board’s leadership structure is appropriate to effectively address the evolving needs of the Company’s business and the long-term interests of our stockholders. The Nominating, Governance & ESG Committee then makes recommendations to the Board concerning the Board’s leadership structure, including whether the roles of Chairman and Chief Executive Officer should be separated or combined.

 

As required under the NYSE listing standards, a majority of the members of a listed company’s Board of Directors must qualify as “independent,” as affirmatively determined by the Board of Directors in accordance with NYSE rules. The Board consults with the Company’s counsel to ensure that the Board’s determinations are consistent with relevant securities and other laws and regulations regarding the definition of “independent,” including those set forth in pertinent listing standards of the NYSE, as in effect from time to time.

Consistent with these considerations, after review of all relevant identified transactions or relationships between each director, or any of his or her family members or entities controlled by such directors, and the Company, its senior management and its independent auditors, we have concluded that each member of the Board, other than those continuing from the Sunlight LLC

Board (Matthew Potere, Emil W. Henry, Jr. and Brad Bernstein) qualify as independent, as defined under the listing rules of the NYSE and applicable SEC rules. In addition, Sunlight is subject to the rules of the SEC and NYSE relating to the membership, qualifications and operations of the Audit Committee, Compensation Committee and Nominating, Governance & ESG Committee as discussed below. The Board appointed Mr. Shea to serve as lead independent director. In making this determination, the Board found that none of these directors or nominees for director had a material or other disqualifying relationship with the Company.

There are no familial relationships between or among the Sunlight directors and executive officers.

The Board has established the Audit Committee, the Compensation Committee and the Nominating, Governance & ESG Committee. The Board may establish other committees to facilitate the management of Sunlight’s business. The Board and its committees will set schedules for meetings throughout the year and can also hold special meetings and act by written consent from time to time, as appropriate. The Board has delegated various responsibilities and authority to its committees as generally described below. The committees will regularly report on their activities and actions to the full board of directors. Each member of each committee of the Board qualifies as an independent director in accordance with the listing standards of the NYSE. Each committee of the Sunlight Board has a written charter approved by the Board. Copies of each charter are posted on Sunlight’s website at https://ir.sunlightfinancial.com/leadership-governance/board-of-directors under “Governance Documents”. Members serve on these committees until their resignation or until otherwise determined by the Board.

One of the key functions of the Board is informed oversight of Sunlight’s risk management process. The Board does not have a risk management committee, but rather anticipates administering this oversight function directly through the Board as a whole, as well as through various standing committees of the Board that address risks inherent in their respective areas of oversight and in consultation with management. The Audit Committee is responsible for overseeing the management of risks associated with Sunlight’s financial reporting, accounting and auditing matters, legal and tax matters, as well as internal and external audit controls. The Compensation Committee is responsible for overseeing the management of risks associated with Sunlight’s compensation policies and programs, retention-related risk, as well as other human capital management-related risk. The Nominating, Governance and ESG Committee is responsible for executive succession-related risk, as well as risk relating to environmental, social and governance matters, conflicts of interest (other than those reviewed by the Audit Committee), and oversight of corporate governance policies and practices as a risk-management related measure. In addition, our management is responsible for overseeing day-to-day risks, and assisting the Board in identifying strategic and operating risks that could impede the achievement of our business goals, assessing the likelihood and potential impact of those risks, and proposing means to mitigate or eliminate those risks. Our management also maintains a disclosure committee as part of our disclosure controls and procedures that meets at least quarterly in connection with the review of our quarterly and annual reports to discuss, among other things, ongoing and potential new risks faced by the Company which are then communicated to the Board where material.

During the fiscal year ended December 31, 2022, our Board held nine meetings, our Audit Committee held six meetings, our Compensation Committee held five meetings, and our Nominating, Governance and ESG Committee held four meetings. Each of the directors attended at least 75% of the meetings of the board of directors and the committees of the Board on which he or she served during the fiscal year ended December 31, 2022, (in each case, which were held during the period for which he or she was a director and/or a member of the applicable committee), except for Toan Huynh, who attended six out of the nine Board meetings held. The Company’s Corporate Governance Guidelines strongly encourages the Company’s directors to attend the annual meeting of stockholders.

The following table provides membership and meeting information for 2022 for each of these committees of our Board with directors marked with an asterisk (*) identified as committee chair:

The members of the Audit Committee are Toan Huynh, Philip Ryan and Joshua Siegel, each of whom can read and understand fundamental financial statements. Each of the members of the Audit Committee is independent under the rules and regulations of the SEC and the listing standards of the NYSE applicable to audit committee members. Philip Ryan is the chair of the Audit Committee. Philip Ryan qualifies as an audit committee financial expert within the meaning of SEC regulations and meets the financial sophistication requirements of the NYSE. The Audit Committee assists the Sunlight Board with its oversight of, among other things, the following: (i) the integrity of Sunlight’s financial statements; (ii) Sunlight’s compliance with legal and regulatory requirements; (iii) the qualifications, independence and performance of the independent registered public accounting firm; and (iv) the design and implementation of Sunlight’s internal audit function and risk assessment and risk management. Among other things, the Audit Committee is responsible for reviewing and discussing with Sunlight’s management the adequacy and effectiveness of Sunlight’s disclosure controls and procedures. The Audit Committee will also discuss with Sunlight’s management and independent registered public accounting firm the annual audit plan and scope of audit activities, scope and timing of the annual audit of Sunlight’s financial statements, and the results of the audit, quarterly reviews of Sunlight’s financial statements and, as appropriate, will initiate inquiries into certain aspects of Sunlight’s financial affairs. The Audit Committee is responsible for establishing and overseeing procedures for the receipt, retention and treatment of any complaints regarding accounting, internal accounting controls or auditing matters, as well as for the confidential and anonymous submissions by Sunlight’s employees of concerns regarding questionable accounting or auditing matters. In addition, the Audit Committee has direct responsibility for the appointment, compensation, retention and oversight of the work of Sunlight’s independent registered public accounting firm. The Audit Committee has sole authority to approve the hiring and discharging of Sunlight’s independent registered public accounting firm, all audit engagement terms and fees, all permissible non-audit engagements with the independent auditor and pre-approvals of any of the foregoing. The Audit Committee reviews and oversees all related person transactions in accordance with Sunlight’s policies and procedures.

The members of the Compensation Committee are Jeanette Gorgas, Jennifer D. Nordquist and Kenneth Shea. Jeanette Gorgas is the chair of the Compensation Committee. Each member of the Compensation Committee is considered independent under the rules and regulations of the SEC and the listing standards of the NYSE applicable to compensation committee members. The Compensation Committee assists the Sunlight Board in discharging certain of Sunlight’s responsibilities with respect to compensating Sunlight’s executive officers, the administration and review of Sunlight’s equity compensation and other incentive plans for employees and other service providers, and certain other matters related to Sunlight’s compensation programs.

The members of Nominating, Governance & ESG Committee of the Sunlight Board are Toan Huynh, Jennifer D. Nordquist and Joshua Siegel. Toan Huynh is the chair of the Nominating, Governance & ESG Committee. Each member of the Nominating, Governance and ESG Committee is considered independent under the rules and regulations of the SEC and the listing standards of the NYSE applicable to nominating and governance committees. The Nominating, Governance & ESG

Committee assists the Sunlight Board with its oversight of and identification of individuals qualified to become members of the Sunlight Board, consistent with criteria approved by the Sunlight Board and the Investor Rights Agreement (as defined below), and selects, or recommends that the Sunlight Board select, director nominees, develops, evaluates and recommends to the Sunlight Board any changes to the Company’s corporate governance guidelines, and oversees the evaluation of the Sunlight Board, committees and management.

The Nominating, Governance & ESG Committee is responsible for determining the qualifications, qualities, skills and other expertise required to be a director, which shall include consideration of factors such as business experience and diversity in professional background, education, skill and other individual qualities and attributes that contribute to the total mix of viewpoints and experience represented on the Board, and to develop, and recommend to the Board for its approval, criteria to be considered in selecting nominees for director. Candidates for director nominees are reviewed in the context of the current composition, organization and governance of the Board and its committees.

The Nominating, Governance & ESG Committee evaluates the performance of individual members of the Board eligible for re-election and evaluates the independence of directors and director nominees against the independence requirements of the NYSE listing standards, the applicable rules and regulations promulgated by the SEC, and other applicable laws, and makes recommendations related to the determination thereof to the Board.

The Nominating, Governance & ESG Committee will consider director candidates recommended by stockholders. The policy adopted in the Nominating, Governance & ESG Committee’s charter provides that candidates recommended by stockholders are given appropriate consideration in accordance with applicable laws, rules and regulations and the provisions of our Second Amended and Restated Certificate of Incorporation (“Second A&R Charter”) and Bylaws.

The Nominating, Governance & ESG Committee will consider director candidates recommended by stockholders. The Nominating, Governance & ESG Committee does not alter the manner in which it evaluates candidates, including the minimum criteria set forth above, based on whether or not the candidate was recommended by a stockholder. However, the Nominating, Governance & ESG Committee has the power and authority to establish procedures for submission of director nominees to the Board, including stockholder nominees, as approved by the Board in the Company’s policies and procedures for director candidates and to review and evaluate any stockholder nominees for director submitted in accordance with our Bylaws and any candidates, for the Board recommended by stockholders in accordance with the Company’s policies and procedures for director candidates.

Subject to advance notice provisions contained in our Bylaws, a stockholder may propose the nomination of someone for election as a director at our annual meeting of stockholders by timely written notice to our Secretary. Stockholders who wish to recommend individuals for consideration by the Nominating, Governance & ESG Committee to become nominees for election to the Board may do so by delivering a written notice to Sunlight’s Corporate Secretary at 101 N. Tyron Street, Suite 1000, Charlotte, NC, 28246 not later than the close of business on the 90th day nor earlier than the close of business on the 120th day prior to the first anniversary of the preceding year’s annual meeting. As discussed in our Bylaws, the notice must set forth: (A) certain information as to each nominee such stockholder proposes to nominate at the meeting as set forth in our Bylaws, including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected, and (B) certain information as to, and certain representations and certifications from, the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination is being made, as set forth in our Bylaws. In addition to satisfying the foregoing requirements under our Bylaws, to comply with the universal proxy rules, stockholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than June 12, 2024.

The Nominating Governance & ESG Committee oversees the Company’s process for stockholder communications with the Board. As outlined in the Company’s Corporate Governance Guidelines, available on the Company’s website at https://ir.sunlightfinancial.com/leadership-governance/board-of-directors under “Governance Documents”, stockholders and any interested party may communicate with the Board, any committee of the Board, the Chairperson of the Board, the lead independent director, or any other director by sending written communications containing the information specified in the Corporate Governance Guidelines to the attention of the Company’s Corporate Secretary at Sunlight Financial Holdings Inc., 101 N. Tryon Street, Suite 1000, Charlotte, NC 28246. The Corporate Secretary will, in consultation with appropriate directors as reasonably necessary, review and forward proper communications to the Board, a Board committee, the Chairperson of the

Board, the lead independent director or an individual director for further response. The Corporate Secretary generally will not forward communications that are primarily solicitations for products or services, matters of a personal nature that are not relevant for stockholders, matters that are of a type that render them improper or irrelevant to the functioning of the Board.

The Board has adopted a Code of Business Conduct & Ethics (the “Code of Conduct”), effective as of July 9, 2021. The Code of Conduct applies to all of Sunlight’s employees, officers and directors, as well as all of Sunlight’s independent contractors, consultants, vendors and service providers in connection with their work for Sunlight. The Code of Conduct clarifies (i) the types of permitted conduct under such code, including business activities and opportunities, and (ii) procedures for the reporting, oversight and investigation of alleged violations of the Code of Conduct. The full text of Sunlight’s Code of Conduct is posted on Sunlight’s website at https://ir.sunlightfinancial.com/leadership-governance/board-of-directors under “Governance Documents”. Sunlight intends to disclose future amendments to, or waivers of, Sunlight’s Code of Conduct, as and to the extent required by SEC regulations, at the same location on Sunlight’s website identified above or in public filings with the SEC from time to time.

The Board of Directors documented the governance practices followed by the Company by adopting Corporate Governance Guidelines, as amended, to assure that the Board will have the necessary authority and practices in place to review and evaluate the Company’s business operations as needed and to make decisions that are independent of the Company’s management. The guidelines are also intended to align the interests of directors and management with those of the Company’s stockholders. The Corporate Governance Guidelines set forth the practices the Board intends to follow with respect to the role of the Board and management, principal responsibilities and duties of the Board, Board structure and composition, Board procedures, and Board communication with Company stockholders. The Corporate Governance Guidelines, as well as the charters for each committee of the Board, may be viewed on the Company’s website at https://ir.sunlightfinancial.com/leadership-governance/governance-documents under “Governance Documents.”

In addition to the rights of Spartan Acquisition Sponsor II LLC (“Sponsor”), FTV V, L.P. (“FTV Blocker”) and its affiliates and Tiger Infrastructure Partners Sunlight Feeder LP (“Tiger IPSF”), Tiger Infrastructure Partners Co-Invest B LP (together with Tiger IPSF, “Tiger Blocker”) and their affiliates to nominate directors to serve on the Sunlight Board, each such party also has the right to appoint one non-voting board observer (each, a “Board Observer”) for so long as each such party, respectively, is entitled to designate a nominee to serve on the Board pursuant to the Investor Rights Agreement (as defined below). Each Board Observer has the right to attend all meetings of the Sunlight Board in a non-voting, observer capacity and, subject to certain exceptions, receive copies of all notices, minutes, consents and other materials that Sunlight provides to the Sunlight Board in the same manner as such materials are provided to the Sunlight Board. Sponsor, FTV Blocker and its affiliates and Tiger Blocker and their respective affiliates are not permitted to transfer the right to appoint a Board Observer. A Board Observer is not entitled to vote on any matter submitted to the Sunlight Board nor to offer any motions or resolutions to the Sunlight Board. Each Board Observer is subject to the same obligations as the members of the Sunlight Board with respect to confidentiality and conflicts of interest.

Our Board of Directors has adopted an Insider Trading Policy, which applies to all of our directors, officers and employees, as well as their respective immediate family members who reside with them or anyone else who lives in their household and family members who live elsewhere but whose transactions in Company securities are directed by them or subject to their influence and control. Under the Insider Trading Policy, such individuals are prohibited from (i) securities trading while in the possession of material nonpublic information and during certain specified periods during each fiscal year, (ii) transacting short sales in Sunlight securities, (iii) transacting in puts, calls or other derivative securities involving Sunlight securities and (iv) entering into hedging transactions involving Sunlight securities.

All fees described above were pre-approved by the Audit Committee.

Pursuant to its charter, the Audit Committee may pre-approve audit and permissible non-audit and tax services provided to the Company by the independent auditors, except where pre-approval is not required because such non-audit services are de minimis under the rules of the SEC, in which case subsequent approval may be obtained. The Audit Committee may delegate to one or more designated members of the Audit Committee the authority to pre-approve audit and permissible non-audit services, provided such pre-approval decision is presented to the full Audit Committee at its scheduled meetings.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE RATIFICATION OF

THE APPOINTMENT OF RSM US LLP

Reverse stock splits generally cause the stock price per share to rise because there are fewer outstanding shares of common stock that represent the entire equity of the Company. Our board of directors believes that the Reverse Split is an effective means of increasing the per share market price of our common stock in order to achieve regain compliance with Rule 802.01C. An increased stock price may also encourage investor interest and improve the marketability and liquidity of our Common Stock. Because of the trading volatility often associated with low-priced stocks, many brokerage firms and institutional investors have internal policies and practices that either prohibit them from investing in low-priced stocks or tend to discourage individual brokers from recommending low-priced stocks to their customers. Some of those policies and practices may function to make the processing of trades in low-priced stocks economically unattractive to brokers. Our board of directors believes that the anticipated higher market price resulting from the Reverse Split may reduce, to some extent, the negative effects on the liquidity and marketability of our Common Stock inherent in some of the policies and practices of these institutional investors and brokerage firms described above. Additionally, because brokers’ commissions on low-priced stocks generally represent a higher percentage of the stock price than commissions on higher-priced stocks, the current average price per share of our Common Stock can result in individual stockholders paying transaction costs representing a higher percentage of their total share value than would be the case if the share price were substantially higher.

Our board of directors would effect the Reverse Split only upon our board of directors’ determination that the Reverse Split would be in our and our stockholders’ best interests following stockholder approval. If our board of directors were to effect the Reverse Split, our board of directors would determine the exact exchange ratio for the Reverse Split (which will be with an exchange ratio between one-for-10 and one-for-25), set the timing for the Reverse Split and file the Certificate of Amendment. No further action on the part of stockholders is required to either implement or abandon the Reverse Split. If our board of directors determines to implement the Reverse Split, we will publicly announce, prior to the effective date of the Reverse Split, additional details regarding the Reverse Split. If our board of directors does not implement the Reverse Split prior to December 31, 2023, the authority granted in this proposal to implement the Reverse Split will terminate. The board of directors reserves its right to elect not to proceed, and to abandon, the Reverse Split if it determines, in its sole discretion, that this proposal is no longer in our best interests.

We cannot assure you that the Reverse Split will have any of the desired effects described above. More specifically, we cannot assure you that after the Reverse Split the market price of our common stock will increase proportionately to reflect the ratio for the Reverse Split, that the market price of our common stock will not decrease to its pre-split level, or that our market capitalization will be equal to the market capitalization before the Reverse Split.

If the Reverse Split is effected and the market price of our common stock declines, the percentage decline may be greater than would occur in the absence of a Reverse Split. The market price of our common stock will, however, also be based on performance and other factors, which are unrelated to the number of shares outstanding.

Although the principal purpose of the Reverse Split would be to help increase the per-share market price of our common stock, there can be no assurance that the Reverse Split will result in any particular price for our common stock. As a result, the trading liquidity of our common stock may not necessarily improve. Additionally, there can be no assurance that the market price per share of our common stock after the Reverse Split will increase in proportion to the reduction in the number of shares of our common stock outstanding before the Reverse Split. For example, based on the closing price of $0.35 per share of our common stock on June 21, 2023, if the Reverse Split were implemented at a ratio of one-for-25, there can be no assurance that the post-split market price of our common stock would be $8.75 or greater. Accordingly, the total market capitalization of our common stock after the Reverse Split may be lower than the total market capitalization before the Reverse Split. Moreover, in the future, the market price of our common stock following the Reverse Split may not exceed or remain higher than the market price prior to the Reverse Split.

Additionally, while we expect that the effect of the Reverse Split will be sufficient to maintain our listing on NYSE, it is possible that, even if the Reverse Split results in a price for our Common Stock that exceeds $1.00 per share of our Class A Common Stock, we may not be able to continue to satisfy NYSE’s additional requirements and standards for continued listing of our Common Stock on NYSE.

The number of shares held by each individual holder of common stock would be reduced if the Reverse Split is implemented. This may increase the number of stockholders who hold less than a “round lot,” or 100 shares. Odd lot shares may be more difficult to sell, and brokerage commissions and other costs of transactions in odd lots are generally somewhat higher than the costs of transactions in “round lots” of even multiples of 100 shares. Consequently, the Reverse Split could increase the transaction costs to existing holders of common stock in the event they wish to sell all or a portion of their position.

Additionally, the liquidity of our Common Stock could be affected adversely by the reduced number of shares outstanding after the Reverse Split. Although our board of directors believes that a higher stock price may help generate investor interest, there can be no assurance that the Reverse Split will result in a per share price that will attract institutional investors or investment funds or that such share price will satisfy the investing guidelines of institutional investors or investment funds. As a result, the decreased liquidity that may result from having fewer shares outstanding may not be offset by increased investor interest in our Common Stock. The market price of our Common Stock will also be based on our performance and other factors that are unrelated to the number of shares outstanding.

The Board intends to effect the Reverse Split only if it believes that a decrease in the number of shares is likely to improve the trading price of our common stock and if the implementation of the Reverse Split is determined by the Board to be in the best interests of the Company and its stockholders. If neither of these conditions is present, then the Board will not proceed with the Reverse Split.

Upon receipt of stockholder approval for the Proposed Amendment, if our Board concludes that it is in the best interests of our Company and our stockholders to effect the Reverse Split, the Certificate of Amendment will be filed with the Secretary of State of Delaware before December 31, 2023. The actual timing of the filing of the Certificate of Amendment with the Secretary of State of Delaware to effect the Reverse Split, so long as it is prior to December 31, 2023, will be determined by our Board. In addition, if for any reason our Board deems it advisable to do so, the Reverse Split may be abandoned at any time prior to the filing of the Certificate of Amendment, without further action by our stockholders. The Proposed Amendment will be effective as of the date of filing with the Secretary of State of the State of Delaware or at such other date and time as is specified in the Certificate of Amendment (the “Split Effective Time”). If the Board does not implement the Reverse Split prior to December 31, 2023, the authority granted in this proposal to implement the Proposed Amendments will terminate.

Except as explained below with respect to fractional shares (see “— Principal Effects of the Reverse Split — Treatment of Fractional Shares”), at the Split Effective Time, all shares of our common stock issued and outstanding immediately prior to the Split Effective Time will be combined, automatically and without any action on the part of stockholders, into a lesser number of shares of our common stock calculated in accordance with the reverse stock split ratio determined by the Board. After the Split Effective Time, each class of our common stock will have a new committee on uniform securities identification procedures (“CUSIP”) number, which is a number used to identify the Company’s equity securities, and stock certificates with the older CUSIP number will need to be exchanged for stock certificates with the new CUSIP number by following the procedures described below.

Common Stock

After the Split Effective Time, each stockholder will own fewer shares of our Common Stock. However, the Reverse Split will affect all of our stockholders uniformly and will not affect any stockholder’s percentage ownership interests in us, except to the extent that the Reverse Split results in any of our stockholders owning a fractional share as described below. Proportionate voting rights and other rights and preferences of the holders of our Common Stock will not be affected by the Reverse Split. Because both the Class A Common Stock and Class C Common Stock will be involved in the Reverse Split, the relative ownership of the Company between the two classes of stock will not be affected. Further, in order to preserve the ability of the holders of the membership units of Sunlight Financial LLC to exchange such units for shares of Class A Common Stock on a one-for-one basis, we expect to effect a reverse split of those units at the same ratio as the reverse split of our Common Stock. Finally, the number of stockholders of record will not be affected by the Reverse Split.

The Reverse Split is likely to result in some stockholders owning “odd-lots” of fewer than 100 shares of Common Stock. Brokerage commissions and other costs of transactions in odd lots are generally somewhat higher than the costs of transactions on “round-lots” of even multiples of 100 shares.

Although the Reverse Split will not have any dilutive effect on our stockholders, the Reverse Split will reduce the proportion of shares owned by our stockholders relative to the number of shares authorized for issuance, resulting in an effective increase in the relative number of authorized shares of Class A common stock and Class C common stock available for issuance in the discretion of the board of directors. The board of directors from time to time may deem it to be in our best interests to enter into transactions and other ventures that may include the issuance of shares of our Class A or Class C common stock. If the board of directors authorizes the issuance of additional shares of Class A or Class C common stock subsequent to the Reverse Split, the dilution to the ownership interest and/or voting power of our existing stockholders may be greater than would occur had the Reverse Split not been effected.

Our Common Stock is currently registered under Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and we are subject to the periodic reporting requirements of the Exchange Act. The Reverse Split would not affect the registration of our Common Stock under the Exchange Act in any material way, and following the Reverse Split, our Class A Common Stock will continue to be listed on the NYSE under the symbol “SUNL.”

Options and Warrants

In addition, all outstanding options and warrants to purchase shares of our Common Stock would be adjusted as a result of the Reverse Split, as required by the terms of those securities. In particular, the number of shares issuable upon the exercise of each instrument would be reduced, and the exercise price per share, if applicable, would be increased, in accordance with the terms of each instrument and based on the exchange ratio of the Reverse Split. The number of shares reserved for issuance under our existing stock option and equity incentive plans would be reduced proportionally based on the exchange ratio of the Reverse Split.

Treatment of Fractional Shares

We will not issue fractional shares of common stock in connection with the Reverse Split. In lieu of any fractional shares, we will issue to stockholders of record who would otherwise hold a fractional share because the number of shares of common stock they hold of record before the Reverse Split is not evenly divisible by the Reverse Split ratio that number of shares of common stock as rounded up to the nearest whole share. No stockholders will receive cash in lieu of fractional shares.

Non-registered stockholders holding our Common Stock through a bank, broker or other nominee should note that such banks, brokers or other nominees may have different procedures for processing the consolidation than those that would be put in place by us for registered stockholders. If you hold your shares with such a bank, broker or other nominee and if you have questions in this regard, you are encouraged to contact your nominee.

The combination of our outstanding shares of Common Stock as a result of the Reverse Split will occur automatically at the Split Effective Time without any action on the part of our stockholders. Our registered stockholders may hold some or all of their shares electronically in book-entry form. These stockholders will not have stock certificates evidencing their ownership of common stock. They are, however, provided with a statement reflecting the number of shares of our Common Stock registered in their accounts.

Stockholders who hold registered shares of our Common Stock in book-entry form do not need to take any action to receive post-Reverse Split shares of our Common Stock in registered book-entry form. These stockholders will have their pre-Reverse Split shares exchanged automatically and a statement will be mailed to them upon exchange indicating the number of shares owned by such stockholders following the Reverse Split.

If our board of directors decides to effect the Reverse Split, we will file the Certificate of Amendment with the Secretary of State of the State of Delaware. The Reverse Split will become effective at the time specified in the Certificate of Amendment.

As soon as practicable after the Split Effective Time, transmittal forms will be mailed to each holder of record of certificates for shares of our Common Stock to be used in forwarding such certificates for surrender in exchange for, if so elected by the holder, new certificates representing the number of shares of our Common Stock held by such stockholder following the Reverse Split. Our transfer agent will act as exchange agent for purposes of exchanging stock certificates. The transmittal forms will be accompanied by instructions specifying other details of the exchange. Upon receipt of the transmittal form, each stockholder should surrender the certificates representing shares of our Common Stock prior to the Reverse Split in accordance with the applicable instructions. No new certificates will be issued to a stockholder until the stockholder has surrendered his or her outstanding stock certificate(s) together with the properly completed and executed transmittal form to the exchange agent.

Stockholders should not destroy any stock certificate(s) and should not submit any stock certificate(s) until requested to do so.

The par value per share of our Common Stock would remain unchanged at $0.0001 per share after the Reverse Split. As a result, at the Split Effective Time, the stated capital on our balance sheet attributable to our Common Stock would be reduced proportionally, based on the actual exchange ratio of the Reverse Split, from its present amount, and the additional paid-in capital account would be credited with the amount by which the stated capital is reduced. The loss per share and net book value per share would be increased because there would be fewer shares of our Common Stock outstanding.

Certain of our officers and directors have an interest in Proposal 3 as a result of their ownership of shares of our Common Stock, as set forth above in the section titled “Security Ownership of Certain Beneficial Owners and Management.” However, we do not believe that our officers or directors have interests in Proposal 3 that are different from or greater than those of any other of our stockholders.

The following summary describes certain material U.S. federal income tax consequences of the Reverse Split to holders of our common stock. This summary addresses the tax consequences only to a beneficial owner of our common stock that is a citizen or individual resident of the United States, a corporation organized in or under the laws of the United States or any state thereof or the District of Columbia or otherwise subject to U.S. federal income taxation on a net income basis in respect of our common stock or Preferred Stock (a “U.S. holder”). This summary does not address all of the tax consequences that may be relevant to any particular stockholder, including any state, local or foreign tax consequences or other tax considerations that arise from rules of general application that may be applicable to all taxpayers or to certain classes of taxpayers or any tax considerations that are generally assumed to be known by investors. This summary also does not address the tax consequences to persons who may be subject to special treatment under U.S. federal income tax law or persons that do not hold our common stock as “capital assets” (generally, property held for investment). This summary is based on the provisions of the Internal Revenue Code of 1986, as amended, the U.S. Treasury regulations promulgated thereunder, and related administrative rulings and judicial authority, all as in effect as of the date hereof. Subsequent developments in U.S. federal income tax law, including changes in law or differing interpretations, which may be applied retroactively, could have a material effect on the U.S. federal income tax consequences of the Reverse Split.

If a partnership (or other entity classified as a partnership for U.S. federal income tax purposes) is the beneficial owner of our common stock, the U.S. federal income tax treatment of a partner in the partnership will generally depend on the status of the partner and the activities of the partnership, for federal income tax purposes. Partnerships that hold our common stock, and partners in such partnerships, should consult their own tax advisors regarding the U.S. federal income tax consequences of the Reverse Split.

The Reverse Split should be treated as a “recapitalization” for U.S. federal income tax purposes. Therefore, no gain or loss should be recognized by a U.S. holder upon the Reverse Split. Accordingly, the aggregate tax basis in the common stock received pursuant to the Reverse Split should equal the aggregate tax basis in the common stock surrendered and the holding period for the common stock received should include the holding period for the common stock surrendered. The U.S. Treasury regulations provide detailed rules for allocating the tax basis and holding period of the shares of our common stock surrendered for the shares of our common stock received pursuant to the Reverse Split. U.S. holders of shares of our common stock acquired on different dates and at different prices should consult their tax advisors regarding the allocation of the tax basis and holding period of such dates.

Each stockholder should consult his, her or its own tax advisor regarding the U.S. federal, state, local and foreign income and other tax consequences of the Reverse Split.

Text of Proposed Certificate of Amendment; Effectiveness

The text of the proposed Certificate of Amendment is set forth in substantially final form in Annex A to this proxy statement. If or when effected by our Board, the Certificate of Amendment will become effective at the time specified in the Certificate of Amendment.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE AMENDMENT TO OUR CERTIFICATE OF INCORPORATION TO EFFECT A REVERSE STOCK SPLIT.

The compensation provided to the NEOs consists of base salary, annual incentive compensation in the form of a discretionary cash bonus, and equity compensation. In making executive compensation decisions, the Compensation Committee considers such factors as they deem appropriate in the exercise of their discretion and business judgment, including a subjective assessment of the NEO’s performance, the amount of vested and unvested equity held by the NEO, amounts paid to the Company’s other executive officers, and competitive market conditions.

The employment agreements with each NEO described below establish base salaries and target bonus opportunities. Base salary and target bonus are to be reviewed annually and adjusted when the Compensation Committee determines it appropriate pursuant to the terms of each NEO’s employment agreement. For calendar year 2022, Mr. Potere’s base salary was $392,000, Mr. Parsons’ base salary was $312,000 and Mr. Mulloy’s base salary was $300,000.

Each NEO has a target annual bonus opportunity based on both the Company’s achievement of certain financial performance objectives and the NEO’s achievement of certain individual performance objectives. Target annual bonus opportunity for each NEO is stated as a percentage of base salary and requires the NEO’s continued employment through December 31st of the calendar year during which the annual bonus is earned. The target annual bonus percentages are 60% for Mr. Potere and 50% for Mr. Parsons and 55% for Mr. Mulloy, however, such targets are intended as a guideline only, and the Compensation Committee has the full discretion to deviate upward or downward irrespective of actual performance. All annual bonus amounts are reflected in the “Bonus” column of the “Fiscal Year 2022 Summary Compensation Table” above. The NEOs, in consultation with the Compensation Committee, determined to forego a bonus for the fiscal years ended December 31, 2022 (for Messrs. Potere, Parsons and Mulloy) and December 31, 2021 (for Mr. Potere) due to the impact of market conditions on the Company’s earnings forecast.

We sponsor the Sunlight Financial Holdings Inc. 2021 Equity Incentive Plan (the “Plan”), which is designed to provide additional incentives to employees, directors, and consultants. On July 9, 2021, and in connection with the Closing of the Business Combination, the NEOs received a one-time grant of time-based restricted stock units (“RSUs”) pursuant to the Plan, and the NEOs may receive future grants from time to time. Mr. Potere was granted 510,000 RSUs, Mr. Parsons was granted 63,600 RSUs and Mr. Mulloy was granted 65,700 RSUs. The RSUs will vest over a three (3)-year period with one-third (1/3rd) of the RSUs vesting on the second (2nd) anniversary of the grant date and two-thirds (2/3rds) of the RSUs vesting on the third (3rd) anniversary date of the grant date. The NEOs were also granted RSUs in connection with their service on June 30, 2022, September 30, 2022 and December 31, 2022. Mr. Potere was granted 151,079 RSUs on June 30, 2022, 196,261 RSUs on September 30, 2022 and 456,521 RSUs on December 31, 2022; Mr. Parsons was granted 30,455 RSUs on June 30, 2022, 39,563 RSUs on September 30, 2022 and 92,028 RSUs on December 31, 2022; and Mr. Mulloy was granted 31,494 RSUs on June 30, 2022, 40,913 RSUs on September 30, 2022 and 95,169 RSUs on December 31, 2022. These RSUs will vest over a four (4)-year period in equal installments annually, commencing on February 18, 2023. As soon as practicable following the date the RSUs become vested, the Company will convert the RSUs and deliver to each NEO the number of shares of Class A Common Stock subject to the RSUs.

Administration. The Plan is administered by the Board or by one or more committees to which the Board delegates such administration (as applicable, the “Plan Administrator”). Subject to the terms of the 2021 Plan, the 2021 Plan Administrator will have the complete discretion to determine the eligible individuals to whom awards may be granted under the 2021 Plan, the number of shares of Class A Common Stock or cash to be covered by each award granted under the 2021 Plan and the terms and conditions of awards granted under the 2021 Plan.

Eligibility. Employees (including officers), non-employee directors and consultants who render services to the Company or a parent, subsidiary or affiliate thereof are eligible to receive awards under the Plan. Incentive Stock Options (“ISOs”) may only be granted to employees of the Company or a parent or subsidiary thereof. As of December 31, 2022, approximately 231 persons (includes executives and non-employee directors) are eligible to participate in the Plan.

International Participation. The Plan Administrator has the authority to implement sub-plans (or otherwise modify applicable grant terms) for purposes of satisfying applicable foreign laws, conforming to applicable market practices or for qualifying for favorable tax treatment under applicable foreign laws, and the terms and conditions applicable to awards granted under any such sub-plan or modified award may differ from the terms of the Plan. Any shares issued in satisfaction of awards granted under a sub-plan will come from the Plan share reserve.

Share Reserve. As of December 31, 2022, the number of shares of Class A Common Stock that may be issued under the Plan is equal to 28,147,983 shares. On the first day of each fiscal year, the number of shares that may be issued under the Plan will increase by a number of shares equal to the lesser of (a) 2.0% of the total issued and outstanding common shares on the first day of such fiscal year, and (b) such lesser amount (including zero) as determined by the Board. If an award under the Plan is forfeited, cancelled or expires, the shares subject to such award will again be available for issuance under the Plan. Only the number of shares actually issued upon exercise or settlement of awards under the Plan will reduce the number of shares available under the Plan. Shares applied to pay any applicable exercise prices or to satisfy tax withholding obligations related to any award will again become available for issuance under the Plan. To the extent an award is settled in cash, the cash settlement will not reduce the number of shares available for issuance under the Plan.

Types of Awards. The Plan provides for the ability to grant stock options, which may be ISOs or nonstatutory stock options, stock appreciation rights, restricted shares, RSUs, performance share units (“PSUs”), performance shares and other stock-based awards (collectively, “awards”).

Stock Options. A stock option is the right to purchase a certain number of shares of stock at a fixed exercise price which, pursuant to the Plan, may not be less than 100% of the fair market value of the Company’s Class A Common Stock on the date of grant for ISOs, and for nonstatutory stock options must comply with (or be exempt from) Section 409A of the Code. Subject to limited exceptions, an option may have a term of up to ten (10) years and will generally expire sooner if the optionee’s service terminates. Options will vest at the rate determined by the Plan Administrator. If a participant ceases to be an employee or other service provider for any reason, then any unvested options will be forfeited upon such termination and except as otherwise set forth in an award agreement, any vested options will remain outstanding and eligible to vest for three months following a participant’s termination other than his or her death or disability and twelve (12) months following a participant’s termination due to his or her death or disability. An optionee may pay the exercise price of an option in cash, check, or, with the administrator’s consent, with shares of Class A Common Stock the optionee already owns, with proceeds from an immediate sale of the option shares through a broker approved by us, through a net exercise procedure or a reduction in the amount of any liability owed by the Company to the participant or by any other method permitted by applicable law or any combination of the foregoing.

Stock Appreciation Rights. A stock appreciation right (“SAR”) provides the recipient with the right to the appreciation in a specified number of shares of stock. The Plan Administrator determines the exercise price of SARs granted under the Plan, which may not be less than 100% of the fair market value of Class A Common Stock on the date of grant. Subject to limited exceptions, a SAR may have a term of up to ten (10) years and will generally expire sooner if the recipient’s service terminates. SARs will vest at the rate determined by the Plan Administrator. Upon exercise of a SAR, the recipient will receive an amount in cash, stock, or a combination of stock and cash determined by the Plan Administrator, equal to the excess of the fair market value of the shares being exercised over their exercise price.

Restricted Stock Awards and Performance Share Awards. Shares of restricted stock and performance shares may be issued under the Plan for such consideration as the Plan Administrator may determine, including cash, services rendered or to be rendered to the Company, promissory notes or such other forms of consideration permitted under applicable law. Restricted shares and performance shares may be subject to vesting, as determined by the Plan Administrator. The Plan Administrator may set performance goals which, depending on the extent to which they are met, will determine the number or value of the performance shares that will be paid out to the participant. Recipients of restricted shares and performance shares generally have all of the rights of a stockholder with respect to those shares, including voting rights, however any dividends and other distributions on restricted shares will generally be subject to the same restrictions and conditions as the underlying shares.

Restricted Stock Units and Performance Share Units. RSUs and PSUs are rights to receive shares, at no cost to the recipient, upon satisfaction of certain conditions, including vesting conditions, established by the Plan Administrator. The Plan Administrator may set performance goals which, depending on the extent to which they are met, will determine the number or value of the PSUs that will be paid out to the participant. RSUs and PSUs vest at the rate determined by the Plan Administrator and any unvested RSUs or PSUs will generally be forfeited upon termination of the recipient’s service. Settlement of RSUs and PSUs may be made in the form of cash, Class A Common Stock or a combination of cash and Class A Common Stock, as determined by the Plan Administrator. Recipients of RSUs and PSUs generally will have no voting or dividend rights prior to

the time the vesting conditions are satisfied, and the award is settled. At the Plan Administrator’s discretion and as set forth in the applicable RSU agreement, RSUs and PSUs may provide for the right to dividend equivalents which will generally be subject to the same conditions and restrictions as the RSUs or PSUs to which they pertain.

Other Awards. The Plan Administrator may grant other awards under the Plan either alone, in addition to or in tandem with, other awards under the Plan or cash awards granted outside of the Plan. The Plan Administrator will determine the terms and conditions of any such awards.

Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Plan Administrator may provide for the participant to have the right to exercise his or her award, to the extent applicable, until ten days prior to the transaction (including with respect to awards or portions thereof that are unvested and unexercisable as of such date). The Plan Administrator may also provide for the accelerated vesting of all unvested awards as of such transaction and may provide that any forfeiture or repurchase provisions applicable to any outstanding award may lapse.

Change in Control. The Plan Administrator may provide, in an individual award agreement or in any other written agreement with a participant, that the award will be subject to acceleration of vesting and exercisability in the event of a change in control. The Plan Administrator may also provide that an acquirer in a change in control may assume or continue any awards outstanding under the Plan or may provide for the cash out of any outstanding awards under the Plan upon a change in control. Pursuant to the Plan, if awards are assumed by an acquirer in a change in control, and a participant’s employment or service relationship is terminated without cause within twenty-four (24) months following the date of such change in control, then all awards held by such participant shall immediately become fully vested.

Amendment and Termination. The Board may amend or terminate the Plan at any time. Any such amendment or termination will not affect outstanding awards unless otherwise mutually agreed upon by the participant and the Plan Administrator. If not sooner terminated, the Plan will terminate automatically on the tenth (10th) anniversary of its adoption by the Board. Shareholder approval is not required for any amendment of the Plan, unless required by applicable law or exchange listing standards.

We also sponsor the Sunlight Financial Holdings Inc. Employee Stock Purchase Plan (the “ESPP”) in which the NEOs are eligible to participate. The ESPP is administered by the Compensation Committee (the “ESPP Administrator”) unless the Board determines to assume authority for administering the ESPP. All employees (including officers and employee directors) who are employed by the Company or a designated subsidiary or, solely in the case of an offering period that is not intended to qualify under Section 423 of the Code, a designated affiliate (whether currently existing or subsequently established) are eligible to participate in the ESPP. The ESPP permits eligible employees to purchase Class A Common Stock through payroll deductions, which may be between 1% and 10% of the employee’s eligible compensation (or such lower limit as may be determined by the ESPP Administrator for an offering period). Employees will be able to withdraw their accumulated payroll deductions prior to the end of the offering period in accordance with the terms of the offering period. Participation in the ESPP will end automatically upon termination of employment. In the event of withdrawal or termination of participation in the ESPP, a participant’s accumulated payroll contributions will be refunded without interest.

The Company currently provides health and welfare benefits to all employees, including the NEOs, including medical, dental and vision insurance. In addition, the Company maintains a 401(k) retirement plan for its employees. The 401(k) plan permits the Company to make discretionary employer contributions. In 2022, we made matching contributions under the 401(k) plan equal to 50% of each employee’s deferral contributions up to 6% of eligible compensation. In addition, we reimburse the NEOs for certain expenses associated with their K-1 filing status (for so long as they remain K-1 filers) and for their business expenses, in accordance with the Company's expense reimbursement policies and procedures.

Each NEO enters into an employment agreement by and between the NEO, Sunlight and Sunlight Financial LLC (the “Sunlight Employment Agreements”). The Sunlight Employment Agreements do not have a fixed term and may be terminated at any time in accordance with their terms. Upon any termination of employment, Messrs. Potere, Parsons and Mulloy will be subject to a non-competition covenant that covers a period of eighteen (18) months (for Mr. Potere) or twelve (12) months (for each of Messrs. Parsons and Mulloy) after the date of termination and a non-solicitation covenant that covers a period of eighteen (18) months (for Mr. Potere) or twelve (12) months (for each of Messrs. Parsons and Mulloy) after the date of termination.

Pursuant to the Sunlight Employment Agreements, upon termination of the NEOs employment for cause, or by the NEO without good reason, such NEO will receive: (i) any accrued and unpaid base salary through the date of termination; (ii) payment for any previously unreimbursed business expenses; (iii) vested amounts under the Sunlight Employment Agreement and any other agreement with the Company, (iv) except in the case of a termination for cause, an annual bonus for any completed fiscal year to the extent then unpaid, and (v) any previously unreimbursed incremental self-employment taxes due under the Sunlight Employment Agreements associated with their K-1 filing status (collectively, the “Accrued Rights”). The terms “cause” and “good reason” are defined in the Agreements.

Under the Sunlight Employment Agreements, each NEO is entitled to the following severance payments in the event of termination of his employment without cause or upon his resignation for good reason outside of the protection period (collectively, the “Involuntary Termination Severance Benefits”). The terms “cause,” “good reason,” “change in control,” and “protection period” are defined in the respective Agreements:

The cash-based portion of the Involuntary Termination Severance Benefits (other than the Accrued Rights) will be paid in equal monthly installments over a twenty-four (24)-month period (for Mr. Potere) or an eighteen (18)-month period (for each of Messrs. Parsons and Mulloy). As a condition to the receipt of the Involuntary Termination Severance Benefits, each of the NEOs must timely execute and not revoke a release of claims.

Under the Sunlight Employment Agreements, each NEO is entitled to the following severance payments in the event of his termination of employment without cause or upon his resignation for good reason during the protection period in connection with a change in control (collectively, the “Change in Control Severance Benefits”). The terms “cause,” “good reason,” “change in control,” and “protection period” are defined in the respective Agreements:

The cash-based portion of the Change in Control Severance Benefits (other than the Accrued Rights) will be paid in the form of a lump sum payment for each of Messrs. Potere, Parsons and Mulloy. As a condition to the receipt of the Change in Control Severance Benefits, each of the NEOs must timely execute and not revoke a release of claims.

Under the Sunlight Employment Agreements, the NEOs are entitled to the following severance payments upon a termination of employment due to death or Disability (as defined in the Agreements):

Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s directors and executive officers to file reports with the SEC relating to their ownership of, and transactions in, the Company’s Class A Common Stock. Based upon our review of reports filed with the SEC and written representations that no other reports were required, we believe that all of our directors, executive officers and beneficial owners of more than ten percent of our equity securities complied with the reporting requirements of Section 16(a) of the Exchange Act during the most recently completed fiscal year, with the exception of one late filing for Matthew Potere relating to one transaction in 2022, due to inadvertent administrative error.

In connection with the Closing of the Business Combination, the Sponsor, Tiger Blocker, FTV Blocker and certain other holders named therein (collectively, the “Holders”), entered into that certain Investor Rights Agreement (the “Investor Rights Agreement”), pursuant to which, among other things, (a) the IPO Registration Rights Agreement (as defined therein) was terminated, (b) certain resale registration rights were granted with respect to (i) the private placement warrants (including any shares of Common Stock issued or issuable upon the exercise of any such private placement warrants), (ii) any outstanding shares of Class A Common Stock held by a Holder at any time, whether held on the date thereof or acquired after the date thereof, (iii) any equity securities (including the shares of Common Stock issued or issuable upon the exercise of any such equity security) of Sunlight issuable upon conversion of any working capital loans in an amount up to $1,500,000 made to Sunlight by a Holder, (iv) any shares of Class A Common Stock issued or issuable upon exchange of Sunlight Class EX Units and the corresponding number of shares of Class C Common Stock issued to a Holder under the Business Combination Agreement and (v) any other equity security of Sunlight issued or issuable with respect to any such shares of Common Stock by way of a stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or reorganization, and (c) governance rights to certain Holders were granted.

Furthermore, pursuant to the Investor Rights Agreement, among other obligations, Sunlight filed with the SEC (at Sunlight’s sole cost and expense) a Registration Statement and prospectus on Form S-1 on July 30, 2021, which was subsequently amended on September 2, 2021 and declared effective by the SEC on September 7, 2021, registering the resale of certain securities held by or issuable to the Holders.

In certain circumstances, Tiger and FTV Blocker can demand up to three underwritten offerings in the aggregate and the Sponsor can demand up to one underwritten offering. Each Holder will be entitled to customary piggyback registration rights.

The Investor Rights Agreement also provides that when the Closing occurred, the Sunlight Board would consist of nine directors, divided into three classes serving staggered three-year terms. Pursuant to the Investor Rights Agreement, we have caused the following nominees to be elected to serve as director on the Sunlight Board:

In addition, for as long as each of the Sponsor, FTV Blocker or Tiger Blocker maintains its nomination rights described above, such person will also have the right to appoint an observer to attend meetings of the Sunlight Board, subject to customary limitations.

In connection with the entry into the Business Combination Agreement, but effective upon the Closing, Spartan, the Sponsor and each member of the board of directors of Spartan (the “Pre-Closing Spartan Board”) entered into that certain Letter Agreement Amendment, dated as of January 23, 2021 (the “Letter Agreement Amendment”), which amended that certain letter agreement, dated as of November 24, 2020, by and among Spartan, the Sponsor and each member of the Pre-Closing Spartan Board (the “Letter Agreement”), to modify the lock-up restrictions set forth in the Letter Agreement as follows:

In addition to the compensation arrangements, including employment, termination of employment, change in control and indemnification arrangements, discussed herein, the following is a description of each transaction since January 1, 2021, and each currently proposed transaction in which:

Sunlight was a party to that certain Management Agreement (the “FTV Management Agreement”), dated May 25, 2018, with FTV Management V, pursuant to which FTV Management V provided certain financial, managerial and operational advisory services to Sunlight. FTV Management V was an affiliate of FTV V, L.P., which was the sole owner of FTV Blocker, and an affiliate of FTV Blocker, which was a unit holder of Sunlight. Brad Bernstein is a member of the Sunlight Board and a Managing Partner of FTV Capital, an affiliate of each of FTV Management V, FTV V, L.P. and FTV Blocker. Michael Vostrizansky was a member of the board of directors of Sunlight LLC, is currently a Sunlight Board observer, and is a Principal of FTV Capital, an affiliate of each of FTV Management V, FTV V, L.P. and FTV Blocker. Pursuant to the terms of the FTV Management Agreement, Sunlight was obligated to pay to FTV Management V a quarterly fee equal to $50,000 on or before the start of each calendar quarter. Accordingly, Sunlight paid to FTV Management V approximately $100,000 for the fiscal year ended December 31, 2021. Sunlight’s and FTV Management V’s obligations under the FTV Management Agreement expired upon the Closing.

Sunlight was a party to the Management Agreement (the “Tiger Management Agreement”) dated September 11, 2015 with Tiger Infrastructure Partners Sunlight Feeder LP (“Tiger Feeder”), pursuant to which affiliates of Tiger Feeder provided certain financial, managerial and operational advisory services to Sunlight. Emil W. Henry, Jr. is a member of the Sunlight Board and the Chief Executive Officer of Tiger Infrastructure Partners LP (“Tiger Infrastructure”), an affiliate of Tiger Feeder and Tiger Blocker Holder. Marc Blair was a member of the board of directors of Sunlight LLC, is currently a Sunlight Board observer, and is a Managing Director of Tiger Infrastructure. Pursuant to the terms of the Tiger Management Agreement, Sunlight was obligated to pay a quarterly fee equal to $50,000 on or before the start of each calendar quarter. Accordingly, Sunlight paid to Tiger Infrastructure approximately $104,000 for the fiscal year ended December 31, 2021, plus de minimis business expense reimbursements related to such advisory services. Sunlight’s and Tiger Feeder’s obligations under the Tiger Management Agreement expired upon the Closing.

On March 29, 2022, Barry Edinburg, the Company’s former Chief Financial Officer, announced his retirement from the Company, effective as of March 31, 2022. The Company and Barry Edinburg entered into an advisory services agreement, effective as of March 31, 2022, memorializing the terms of his transition (the “Advisory Services Agreement”). While employed with the Company as an advisor following his retirement, Mr. Edinburg performed certain advisory services and dedicated a certain amount of time to Sunlight as further described in the Advisory Services Agreement. The Advisory Services Agreement terminated in accordance with its terms after its six-month initial term and was not renewed by the parties.

In consideration for his services as an advisor to the Company, and in exchange for the execution of a full release of the Company of claims in connection with his departure executed at the end of the agreement term, Mr. Edinburg received continued monthly vesting and distribution through the term of the Advisory Services Agreement of Mr. Edinburg's share of the escrow established at the closing of the Company’s July 9, 2021 merger (the “Consideration”), for a total of 70,991 Class EX Units of Sunlight Financial LLC, 70,991 Class C Shares of the Company and $0.3 million.

The Company entered into a separation agreement with Nora Dahlman in connection with her resignation, effective July 31, 2022 (the “Separation Agreement”). Pursuant to the Separation Agreement, in consideration of Ms. Dahlman's release of claims in favor of the Company, the Company will provide Ms. Dahlman the following benefits: (i) $420,384.68 (equivalent to Ms. Dahlman's annual base salary as of the Delivery Date through December 31, 2023), less all applicable taxes and other withholdings, paid in substantially equal bi-weekly installments in accordance with the Company's standard payroll practices;

(ii) $306,147.95 (equivalent to Ms. Dahlman’s present target annual bonus prorated for fiscal year 2022 through July 31, 2022 plus Ms. Dahlman’s present target annual bonus for the full fiscal year 2023), less all applicable taxes and other withholdings, paid as a lump-sum payment on the six (6) month anniversary of Ms. Dahlman's termination; (iii) continued monthly vesting and distribution through May 31, 2023 of Ms. Dahlman’s share of the escrow established at the closing of the Company’s July 9, 2021 merger, totaling 71,791 Class EX Units of Sunlight Financial LLC, 71,791 Class C Shares of the Company and $0.3 million; and (iv) tax reimbursements to cover additional self-employment taxes incurred by Ms. Dahlman by reason of her membership interest in Sunlight Financial LLC through December 31, 2023. Additionally, the Company will pay the employer portion of Ms. Dahlman’s employee benefit program enrollment, other than Ms. Dahlman's applicable withholdings for premium amounts, until the earlier to occur of (i) December 31, 2023 or (ii) the date Ms. Dahlman becomes eligible to enroll in the health, dental and/or vision plans of another employer.

On April 2, 2023, Sunlight Financial LLC, Sunlight and Cross River Bank (the “Bank Partner”), entered the Commitment and Transaction Support Agreement (“Commitment & Transaction Support Agreement”) pursuant to which the parties have agreed to undertake the transactions (“Transactions”) described in the Commitment & Transaction Support Agreement, including, amendments to the loan agreements with the Bank Partner (the “Bank Partner Agreements”), entry into a new secured term loan facility with the Bank Partner, and issuance of equity warrants entitling the Bank Partner or its designees to purchase shares of Sunlight’s Class A common stock.

Effective April 25, 2023, Sunlight, Sunlight LLC, and other subsidiary entities, as applicable, closed the Transactions contemplated by the Commitment & Transaction Support Agreement and entered into a Secured Term Loan with the Bank Partner, amended and restated Bank Partner Agreements, a Warrant Purchase Agreement with CRB Group, Inc. (the “Purchaser”), an affiliate of the Bank Partner and issued the associated warrant to purchase shares of Sunlight’s Class A common stock (the “Warrant”) to the Purchaser. At that time, Cross River Bank became a related person of the Company as a result of the Warrant issued by the Company to the Purchaser to purchase approximately 12 million shares of Company Class A Common Stock as part of the Transactions.

In connection with the entry into the Business Combination Agreement, on January 23, 2021, Sunlight LLC, Spartan, SL Invest I Inc., SL Invest II LLC, SL Financial Investor I LLC, SL Financial Investor II LLC, SL Financial Holdings Inc., SL Financial LLC, FTV Blocker Holder, FTV Blocker and Tiger Blocker entered into an Indemnity Agreement, pursuant to which, from and after the Closing through the date that is thirty (30) days following the later of the (i) termination of the applicable statute of limitations period and (ii) the completion of any relevant tax proceedings, FTV Blocker Holder agreed to promptly indemnify, reimburse and defend in full and hold harmless Spartan, FTV Blocker and Tiger Blocker, their respective affiliates, successors and their respective officers, directors, employees and agents from and against any and all income taxes (net of any insurance proceeds recovered by such indemnified parties) imposed on or with respect to FTV Blocker (or its transferee) for any pre-Closing tax period by offsetting such obligations against any amounts otherwise due to FTV Blocker Holder (x) under the Tax Receivable Agreement (as defined below) or (y) any proceeds received from the transfer of the FTV Blocker Holders’ interest in the Tax Receivable Agreement.

Sunlight entered into a Tax Receivable Agreement with certain selling equity holders of Sunlight LLC that requires Sunlight to pay to such selling equity holders 85.0% of the tax savings that are realized primarily as a result of the increases in the tax basis in Sunlight LLC as a result of the sale and exchange of Sunlight LLC’s Class EX Units and Sunlight’s Class C shares for Sunlight’s Class A shares, as well as certain other tax benefits attributable to payments under the TRA. Sunlight retains the benefit of the remaining 15.0% of these tax savings.

In addition, Sunlight LLC has entered into indemnification agreements with certain of its officers and directors and purchased directors’ and officers’ liability insurance. These indemnification agreements and the Sunlight A&R LLC Agreement require Sunlight LLC to indemnify its directors and officers to the fullest extent permitted under Delaware law.

The Second A&R Charter contains provisions limiting the liability of directors, and our Bylaws provide that Sunlight will indemnify each of its directors to the fullest extent permitted under Delaware law. The Second A&R Charter and our Bylaws also provide the Sunlight Board with discretion to indemnify officers and employees when determined appropriate by the Sunlight Board.

Sunlight has also entered into indemnification agreements with each of its directors and executive officers and certain other key employees. The indemnification agreements provide that Sunlight will indemnify each of its directors, executive officers and such other key employees against any and all expenses incurred by that director, executive officer or other key employee because of his or her status as one of Sunlight’s directors, executive officers or other key employees, to the fullest extent permitted by Delaware law, the Second A&R Charter and our Bylaws. In addition, the indemnification agreements provide that, to the fullest extent permitted by Delaware law, Sunlight will advance all expenses incurred by its directors, executive officers and other key employees in connection with a legal proceeding involving his or her status as a director, executive officer or key employee.

The SEC has adopted rules that permit companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for Notices of Internet Availability of Proxy Materials or other Annual Meeting materials with respect to two or more stockholders sharing the same address by delivering a single Notice of Internet Availability of Proxy Materials or other Annual Meeting materials addressed to those stockholders. This process, which is commonly referred to as “householding,” potentially means extra convenience for stockholders and cost savings for companies.

This year, a number of brokers with account holders who are Sunlight Financial Holdings Inc. stockholders will be “householding” the Company’s proxy materials. A single Notice of Internet Availability of Proxy Materials will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker that they will be “householding” communications to your address, “householding” will continue until you are notified otherwise or until you revoke your consent. If you and another stockholder of record with whom you share an address participate in householding and you wish to receive an individual copy of our Proxy Materials now or discontinue your future participation in householding, please contact Broadridge Financial Solutions, Inc. toll-free at 1-866-540-7095 or by writing to Broadridge Financial Solutions, Inc., Attn: Householding Department, 51 Mercedes Way, Edgewood, NY 11717.