UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant ☒ Filed
by a Party other than the Registrant ☐
Check the appropriate box:
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Preliminary Proxy Statement |
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Confidential, for Use of the
Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional
Materials |
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Soliciting Material Pursuant to
§240.14a-12 |
Rubicon Technology, Inc.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the
Registrant)
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Statement No.: |
RUBICON TECHNOLOGY, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 16, 2020
As a stockholder of Rubicon Technology, Inc., a Delaware
corporation (the “Company,” “we,” “us” or “our”), you are cordially
invited to attend the Annual Meeting of Stockholders of the Company
(the “Annual Meeting”) to be held at 900 East Green Street,
Bensenville, Illinois 60106, at 8:30 a.m. local time on July 16,
2020, for the following purposes:
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To approve an amendment to our
Eighth Amended and Restated Certificate of Incorporation (as
amended, our “Certificate of Incorporation”), to declassify the
Board of Directors and provide for the annual election of
directors; |
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2. |
To ratify the Company’s
Section
382 Rights Agreement and approve a three year extension
thereof; |
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3. |
To elect one director to serve an
one-year term (or if the amendment of our Certificate of
Incorporation to declassify our Board of Directors set forth in
Proposal 1 is not approved, to elect a Class I director to serve
for a three year term); |
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4. |
To ratify the selection of Marcum
LLP as our independent registered public accounting firm for the
fiscal year ending December 31, 2020; |
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5. |
To approve, on a non-binding
advisory basis, the compensation of our named executive officers
(Say-on-Pay); and |
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6. |
To transact such other business as
may properly come before the Annual Meeting or any continuation or
adjournment thereof. |
Our Board of Directors has fixed the close of business on June 8,
2020, as the record date for determining the stockholders entitled
to notice of, and to vote at, the Annual Meeting and at any
postponement or adjournment thereof.
We hope that you can attend the Annual Meeting. Whether you attend
the Annual Meeting or not, your vote is important, and we encourage
you to vote your shares promptly. We are pleased to offer multiple
options for voting your shares. You may vote your shares by proxy
via the Internet or by telephone, mail or written ballot at the
Annual Meeting.
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BY ORDER OF THE BOARD OF DIRECTORS, |
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/s/ TIMOTHY E.
BROG |
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TIMOTHY E. BROG |
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ACTING SECRETARY |
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Bensenville, Illinois |
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June 18, 2020 |
This Notice of Annual Meeting and Proxy Statement are being
distributed or
made available, as the case may be, on or about June 18,
2020.
Important Notice Regarding the Availability of Proxy
Materials
for the Annual Meeting of Stockholders to Be Held on July 16,
2020.
This Proxy Statement and the 2019 Annual Report are available
with your 16-digit control number at:
www.proxyvote.com
TABLE OF CONTENTS
RUBICON TECHNOLOGY, INC.
900 EAST GREEN STREET
BENSENVILLE, ILLINOIS 60106
Corporate Internet Site: www.rubicontechnology.com
PROXY STATEMENT
FOR THE
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 16, 2020
QUESTIONS AND ANSWERS
ABOUT THE PROXY MATERIALS, ANNUAL MEETING AND VOTING
1. Why am I receiving these materials?
We are providing this meeting notice, proxy statement and proxy
card (the “Proxy Materials”) in connection with the solicitation by
the Board of Directors of Rubicon Technology, Inc., a Delaware
corporation (“Rubicon,” the “Company,” “we,” “us,” or “our”), of
proxies to be voted at our 2020 Annual Meeting of Stockholders (the
“Annual Meeting”). The proxies also may be voted at any
continuations, adjournments or postponements of the Annual Meeting.
This proxy statement contains information you may use when deciding
how to vote in connection with the Annual Meeting. We are first
sending the Proxy Materials to stockholders on or about June 18,
2020.
2. When and where is the Annual Meeting, and who may
attend?
The Annual Meeting will be held on July 16, 2020, at 8:30 a.m.
local time, at 900 East Green Street, Bensenville, Illinois 60106.
Stockholders who are entitled to vote and our invited guests may
attend the Annual Meeting.
3. What do I need to attend the Annual Meeting?
Stockholders of Record. If you are a “stockholder of record”
and plan to attend the Annual Meeting, please bring photo
identification.
Beneficial Owners. If you are a “beneficial owner” and you
plan to attend the Annual Meeting, you must present proof of your
ownership of shares of our common stock as of June 8, 2020, such as
a bank or brokerage account statement or a letter from the bank,
broker or other nominee indicating that you are the beneficial
owner of the shares, as well as photo identification. If you wish
to vote at the Annual Meeting, you must also obtain a signed proxy
from your bank, broker, trustee or other nominee who holds the
shares on your behalf in order to cast your vote.
The answer to Question 11 set forth below describes the difference
between stockholders of record and beneficial owners.
4. What proposals are being presented for stockholder vote at
the Annual Meeting?
There are five proposals from Rubicon to be considered and voted on
at the Annual Meeting:
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Proposal 1: To approve an amendment
to our Eighth Amended and Restated Certificate of Incorporation (as
amended, our “Certificate of Incorporation”), to declassify the
Board of Directors and provide for the annual election of
directors |
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2. |
Proposal 2: To ratify
the Company’s Section 382 Rights
Agreement and approve a three year extension thereof, which
is designed to protect the tax benefits of the Company’s net
operating loss carry-forwards |
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3. |
Proposal 3: To elect one director
to serve an one-year term (or to elect a Class I Director to serve
for a three-year term if Proposal 1 to amend our Certificate of
Incorporation to declassify our Board of Directors is not
approved) |
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4. |
Proposal 4: To ratify the selection
of Marcum LLP as our independent registered public accounting firm
for the fiscal year ending December 31, 2020 |
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5. |
Proposal 5: To approve, on a non-binding advisory basis, the
compensation of our named executive officers (Say-on-Pay)
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5. How does the Board of Directors recommend that I
vote?
Our Board recommends that you vote your shares:
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FOR the approval of the
Eighth Amended and Restated Certificate of Incorporation (as
amended, our “Certificate of Incorporation”), to declassify the
Board of Directors and provide for the annual election of
directors; |
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FOR
the ratification of the Company’s Section 382 Rights
Agreement and approve a three year extension thereof; which
is designed to protect the tax benefits of the Company’s net
operating loss carry-forwards;
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FOR the election of the
Board’s nominee, Susan M. Westphal, as director for an one-year
term (or as a Class I Director for a three-year term if Proposal 1
to amend our Certificate of Incorporation to declassify our Board
of Directors is not approved); |
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FOR the ratification of the
selection of Marcum LLP as our independent registered public
accounting firm for the fiscal year ending December 31, 2020;
and |
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FOR the resolution approving
the compensation of our named executive officers (Say-on-Pay). |
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6. Are there any other matters to be acted upon at the Annual
Meeting?
We do not expect any matters to be presented for action at the
Annual Meeting other than the matters described in this proxy
statement. If any matters not set forth in the meeting notice
included in the Proxy Materials are properly brought before the
Annual Meeting, the persons named in the enclosed proxy card will
have the discretion to vote on those matters for you.
7. Who is entitled to vote at the Annual Meeting?
You are entitled to vote at the Annual Meeting if you owned shares
of our common stock as of the close of business on the record date,
June 8, 2020. Each share of common stock is entitled to one vote on
each matter properly brought before the Annual Meeting and there is
no cumulative voting. As of June 8, 2020, we had 2,475,946 shares
of common stock outstanding. Both Delaware law and our Second
Amended and Restated Bylaws (our “bylaws”) require our Board to
establish a record date in order to determine who is entitled to
receive notice of the Annual Meeting, and to vote at the Annual
Meeting and any continuations, adjournments or postponements
thereof.
8. How many stockholders must be present to hold the Annual
Meeting?
Under Delaware law and our bylaws, holders of a majority of our
outstanding shares of common stock as of the close of business on
June 8, 2020, must be present in person or represented by proxy at
the Annual Meeting. This is referred to as a quorum. The inspector
of election will determine whether a quorum is present at the
Annual Meeting. As of June 8, 2020, we had 2,475,946 shares of
common stock outstanding. Accordingly, the presence of the holders
of common stock representing at least [1,237,974] shares will be
required to establish a quorum. Your shares are counted as present
if you attend the Annual Meeting and vote in person or if you
properly return a proxy over the Internet, by telephone or by mail.
Abstentions and broker non-votes, if any, will be counted for
purposes of establishing a quorum.
9. What happens if I do not submit voting instructions for a
proposal? What is discretionary voting? What is a broker
non-vote?
If you properly complete, sign, date and return a proxy card or
voting instruction form, your shares of our common stock will be
voted as you specify. If you are a stockholder of record and you
sign and return a proxy card, but make no specifications on such
proxy card, your shares of our common stock will be voted in
accordance with the recommendations of our Board, as provided
above. If you are a beneficial owner and you do not provide voting
instructions to your bank, broker, trustee or other nominee holding
shares of our common stock for you, your shares of our common stock
will not be voted with respect to any proposal for which the
stockholder of record does not have discretionary authority to
vote. Rules of the New York Stock Exchange (“NYSE”) determine
whether proposals presented at stockholder meetings are
“discretionary” or “non-discretionary.” If a proposal is determined
to be discretionary, your bank, broker, trustee or other nominee is
permitted under NYSE rules to vote on the proposal without
receiving voting instructions from you. If a proposal is determined
to be non-discretionary, your bank, broker, trustee or other
nominee is not permitted under NYSE rules to vote on the proposal
without receiving voting instructions from you. A “broker non-vote”
occurs when a bank, broker, trustee or other nominee holding shares
for a beneficial owner returns a valid proxy, but does not vote on
a particular proposal because it does not have discretionary
authority to vote on the matter and has not received voting
instructions from the stockholder for whom it is holding
shares.
10. How many votes are needed to approve the proposals? What
is the effect of abstentions and broker non-votes on the outcome of
the proposals?
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Proposal |
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Voting Options |
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Vote Required
to Adopt the
Proposal |
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Effect of
Abstentions |
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Effect of
Broker
Non-Votes |
| 1: Declassification of the Board of Directors |
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For, against, or abstain |
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Affirmative vote of at least 75% of the shares of common stock
outstanding and entitled to vote
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Treated as votes against |
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Treated as votes against |
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| 2: Ratification of the Company’s Section 382 Rights
Agreement and approval of a three year extension
thereof |
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For, against, or abstain |
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Affirmative vote of a majority of the shares of common stock
present in person or by proxy and entitled to vote |
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Treated as votes
against |
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No effect |
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| 3: Election of one director |
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For or withhold |
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Affirmative vote of a plurality of the shares of common stock
present in person or by proxy and entitled to vote |
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No effect |
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No effect |
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| 4: Ratification of the selection of our independent registered
public accounting firm |
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For, against or abstain |
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Affirmative vote of a
majority of
the shares of common stock present in person or by proxy and
entitled to vote |
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Treated as votes
against |
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No effect |
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| 5: Approval, on a non-binding advisory basis, of executive
compensation (Say-on-Pay) |
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For, against or abstain |
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Affirmative vote of a majority of the shares of common stock
present in person or by proxy and entitled to vote |
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Treated as votes against |
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No effect |
Our directors are elected by a plurality of the shares of our
common stock present in person or by proxy and entitled to vote. At
the Annual Meeting, one director seat is up for election. That
means the director candidate receiving the highest number of “FOR”
votes will be elected. Under our bylaws, all other matters require
the affirmative vote of the holders of a majority of the shares of
our common stock present in person or by proxy and entitled to
vote, except as otherwise provided by statute, our Certificate of
Incorporation or our bylaws. A properly executed card marked
“WITHHOLD” with respect to the election of a director nominee will
be counted for purposes of determining whether there is a quorum at
the Annual Meeting, but will not be considered to have been voted
on the director election.
11. What is the difference between holding shares as a
stockholder of record and as a beneficial owner?
If your shares are registered in your name on the books and records
of our transfer agent, you are a “stockholder of record.” Rubicon
sent the proxy materials directly to you.
If your shares are held for you in the name of your bank, broker,
trustee or other nominee, your shares are held in “street name” and
you are considered the “beneficial owner.” The proxy materials have
been forwarded to you by your bank, broker, trustee or other
nominee, who is considered, with respect to those shares, the
stockholder of record. As the beneficial owner, you have the right
to direct your bank, broker, trustee or other nominee on how to
vote your shares by using the voting instruction form provided by
your nominee. The answer to Questions 9 and 10 describes brokers’
discretionary voting authority and when your bank, broker, trustee
or other nominee is permitted to vote your shares without
instructions from you. The answer to Question 3 describes how
beneficial owners may attend the Annual Meeting.
12. What can I do if I change my mind after I vote my
shares?
If you are a stockholder of record, you can revoke your proxy
before it is counted by (1) sending written notice of
revocation, that is dated later than the date of your proxy, to
Timothy E. Brog, our Acting Secretary, at 900 East Green Street,
Bensenville, Illinois 60106, (2) timely delivering a valid,
later-dated proxy that we receive no later than the conclusion of
voting at the Annual Meeting, or (3) if you are present at the
Annual Meeting, either voting in person or notifying the Acting
Secretary in writing at the Annual Meeting of your wish to revoke
your proxy. Your attendance alone at the Annual Meeting will not be
enough to revoke your proxy.
If you are a beneficial owner of shares of our common stock, you
may submit new voting instructions by contacting your bank, broker,
trustee or other nominee. You may also vote in person at the Annual
Meeting if you obtain a legal proxy.
13. What if I do not specify a choice for a matter when
returning a proxy?
Proxies that are signed and returned but do not contain voting
instructions will be voted (1) “FOR” the approval of the Amendment
to the Certificate of Incorporation to declassify the Board of
Directors; (2) “FOR” the ratification of the Company’s Section 382 Rights
Agreement and approval of a three year extension
thereof; (3) “FOR” the election of Susan Westphal as
director; (4) “FOR” the ratification of Marcum LLP as our
independent registered accounting firm for the fiscal year ending
December 31, 2020; and (5) “FOR” on a non-binding
advisory basis, the compensation of our named executive officers
(Say-on-Pay). If you are a beneficial owner see Question 14
below.
If necessary, and unless the shares represented by the proxy are
voted in a manner contrary to the manner described in the preceding
paragraph, the persons named in the proxy may also vote in favor of
a proposal to recess the Annual Meeting and to reconvene it on a
subsequent date or dates, without further notice, in order to
solicit and obtain sufficient votes to approve or disapprove any
matters being considered at the Annual Meeting.
14. Will my shares be voted if I do not provide my proxy or
instruction form?
If you are a Stockholder of Record and do not provide a proxy, you
must attend the Annual Meeting in order to vote. If you are a
Beneficial Owner and hold shares through an account with a bank or
broker, your shares may be voted on certain matters if you do not
provide voting instructions. Brokerage firms have the authority
under the New York Stock Exchange rules to vote shares for which
their customers do not provide voting instructions on routine
matters. The approval of an amendment to our Certificate of
Incorporation to declassify the Board of Directors and to provide
for annual election of directors, ratification of the Section 382
Rights Agreement and the approval of a three year extension
thereof, election of directors, and the advisory vote on executive
compensation are not considered routine matters. When a proposal is
not routine and the brokerage firm has not received voting
instructions from the beneficial owner, the brokerage firm cannot
vote the shares on that proposal. This is called a broker non-vote.
We urge you to give voting instructions to your broker on all five
of our Proposals.
15. What does it mean if I receive more than one proxy
card?
If you received multiple proxy cards, it means that you hold your
shares in different ways (e.g., trust, custodial accounts, joint
tenancy) or in multiple accounts. You should complete, sign, date
and return your proxy card(s), as described in each proxy card you
received.
16. Who will pay for the cost of this proxy solicitation and
how will the Company solicit votes?
We pay all expenses incurred in connection with this solicitation
of proxies to vote at the Annual Meeting. In addition to
solicitation by mail, some of our directors, officers and employees
may solicit proxies in person or by telephone at no additional
compensation. We will also request banks, brokers, trustees and
other nominees holding shares of our common stock beneficially
owned by others to forward these proxy materials to the beneficial
owners and upon request we will reimburse such nominees for the
customary costs of forwarding the proxy materials.
PROPOSAL 1:
APPROVAL OF AN AMENDMENT TO OUR EIGHTH AMENDED
AND RESTATED CERTIFICATE OF INCORPORATION, TO DECLASSIFY
THE
BOARDOF DIRECTORS AND PROVIDE FOR THE ANNUAL ELECTION OF
DIRECTORS
Overview
Article 7 of the Certificate of Incorporation currently provides
that our Board is divided into three classes, as nearly equal in
number as possible, with each class of directors serving a
staggered term, so that the term of only one class expires at each
annual meeting of stockholders and each class is elected to a
three-year term.
Our Board has unanimously approved and recommended to our
stockholders for approval an amendment to our Certificate of
Incorporation to declassify the Board and provide for the annual
election of directors. If Proposal 1 is approved by our
stockholders, at the Annual Meeting our Certificate of
Incorporation will be amended and our stockholders will be asked to
elect one Class I director for a term of one year. If our
stockholders do not approve this proposal, our Board of Directors
will remain classified and our stockholders will instead be asked
to elect one Class I director for a term of three years. (See
Proposal 3, Election of Director on page 12)
The proposed amendment would eliminate the classification of our
Board effective as of our 2021 annual meeting of stockholders (the
“2021 Annual Meeting”). The proposed amendment would not shorten
the terms of our incumbent Class II directors, which expire in
2021. Our Class III director, whose term expires at our 2022 annual
meeting of stockholders, has indicated his support for the
declassification of our Board by agreeing to resign from his term
effective as of the date of the 2021 Annual Meeting if stockholders
approve Proposal 1. As a result, if Proposal 1 is approved by our
stockholders, all of our directors will be up for election for a
one-year term at the 2021 Annual Meeting and each year thereafter.
Upon effectiveness of the proposed amendment, any person appointed
to fill any vacancy in the Board (including a vacancy by reason of
an increase in the size of the Board, or the death, resignation,
retirement, disqualification or removal of a director) will hold
office until the next succeeding annual meeting of stockholders and
until such director’s successor has been duly elected and qualified
or until such person’s earlier death, resignation, retirement,
disqualification or removal.
The Certificate of Incorporation currently provides for a
classified Board of Directors and permits the removal of directors
only for cause and only by the affirmative vote of the holders of
at least 75% of shares entitled to vote at an election of
directors. Consistent with Delaware law for unclassified boards,
the amendment to the Certificate of Incorporation will permit
stockholders holding a majority of shares entitled to vote at an
election of directors to remove directors either with or without
cause from and after the 2021 Annual Meeting.
The proposed amendment to Article 7 of the Certificate of
Incorporation is in substantially the form set forth in Appendix
A to this proxy statement. If approved, the Company expects to
promptly file a certificate of amendment to our Certificate of
Incorporation with the Secretary of State of the State of Delaware
and the proposed amendment will become effective upon the filing of
the certificate of amendment or at a later time determined at the
discretion of our Board. If our stockholders do not approve this
Proposal 1, our Board will remain classified.
The Board has considered carefully the advantages and disadvantages
of maintaining a classified board structure. The Board has decided
that it is an appropriate time to propose an amendment to the
Certificate of Incorporation eliminating the classified Board. This
amendment will bring the Company’s governance structure into line
with the stockholder-favorable market practice of all directors
being elected annually, thereby enhancing the rights of
stockholders and improving the Company’s corporate governance to
maximize accountability to stockholders. If approved, the proposal
will give stockholders the opportunity each year to register their
views on the performance of the entire Board.
Vote Required
Approval of this proposal requires the affirmative vote of at least
75% of the shares of our common stock outstanding and entitled to
vote. For more information on the voting requirements, see
“Questions and Answers about the Proxy Materials, Annual Meeting
and Voting.”
Recommendation of the Board of Directors
OUR BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE
“FOR” THE APPROVAL OF THE AMENDMENT TO OUR EIGTH AMENDED
AND RESTATED CERTIFICATE OF INCORPORATION TO DECLASSIFY
THE
BOARD OF DIRECTORS AND PROVIDE FOR THE ANNUAL ELECTION OF
DIRECTORS
PROPOSAL 2:
RATIFICATION OF THE
COMPANY’S Section 382 Rights
Agreement and approval
OF A three year extension
Our Board of Directors is asking stockholders to ratify the Section
382 Rights Agreement, dated as of December 18, 2017 (the “Section
382 Rights Agreement”), by and between us and American Stock
Transfer & Trust Company, LLC, as rights agent and approve of a
three year extension thereof. The Section 382 Rights Agreement was
entered into in an effort to preserve stockholder value by
protecting against a possible limitation on our ability to use our
net operating loss carry-forwards (“NOLs”), which for U.S. federal
income tax purposes were estimated at approximately $188.1 million
as of December 31, 2019.
If our stockholders do not ratify the Section 382 Rights Agreement
and the approval of a three year extension thereof at the Annual
Meeting, by its terms the Section 382 Rights Agreement will expire
on December 18, 2020 and will not be renewed.
Background and Reasons for the Proposal
We have generated significant NOLs. Except as limited by U.S.
federal income tax laws, we generally can use NOLs to offset future
taxable income (thereby reducing our future U.S. federal income tax
obligations), provided that we will forfeit any NOLs arising in
taxable years ending before January 1, 2018, to the extent they
expire unused. Assuming a federal corporate tax rate of 21%, we
estimate that these NOLs, if fully utilized, could result in
potential tax savings of up to approximately $39.5 million,
provided that the present value of such savings, even if the NOLs
are fully utilized, depends on a number of assumptions, including
the amount and timing of our future taxable income, future tax
rates, limitations on the use of NOLs, and an appropriate discount
rate, none of which can be accurately predicted.
Although we are unable to quantify an exact value, we believe that
the NOLs are a valuable asset and our Board of Directors believes
it is in our best interest to attempt to prevent the imposition of
limitations on their use.
For U.S. federal income tax purposes, the benefits of our NOLs
could be reduced, and our use of the NOLs could be substantially
delayed (possibly to the point of expiring unused in the case of
NOLs arising in taxable years ending before January 1, 2018), if we
experience an “ownership change,” as determined under Section 382
of the Internal Revenue Code of 1986, as amended (“Section 382”).
In general, an “ownership change” occurs whenever, immediately
after the close of any testing date, the percentage of the
corporation’s stock owned by one or more “5-percent stockholders”
is more than 50 percentage points higher than the lowest percentage
of the corporation’s stock that such stockholders owned at any time
during the three-year period preceding the testing date. The
concept of a 5-percent stockholder is highly complex, particularly
when entities directly or indirectly own the corporation’s stock.
If an ownership change occurs, Section 382 would impose an annual
limit on the amount of our NOLs that we can use to offset taxable
income, generally equal to the product of the total value of our
outstanding equity immediately prior to the ownership change
(adjusted by certain items specified in Section 382) and the
“long-term tax-exempt rate” (i.e., the highest of the federal
long-term rates in effect for the month of the ownership change or
for the two preceding months). A number of complex rules apply to
calculating this annual limit. If an ownership change were to
occur, the limitations imposed by Section 382 could significantly
delay the use of a material amount of our NOLs (possibly to the
point of expiring unused in the case NOLs arising in taxable years
ending before January 1, 2018) and, therefore, significantly impair
the value of our NOLs.
The Section 382 Rights Agreement is intended to preserve the
benefits of our NOLs by acting as a deterrent to any person (an
“Acquiring Person”) acquiring (together with all affiliates and
associates of such person) beneficial ownership of 4.9% or more of
our outstanding common stock within the meaning of Section 382,
without the approval of our Board of Directors. Our stockholders
who beneficially owned 4.9% or more of our outstanding common stock
as of July 24, 2017 (the “Rights Dividend Declaration Date”) are
not be deemed to be an Acquiring Person, but such person will be
deemed an Acquiring Person if such person (together with all
affiliates and associates of such person) becomes the beneficial
owner of securities representing a percentage of our common stock
that exceeds by .5% or more the lowest percentage of beneficial
ownership of our common stock that such person had at any time
since the Rights Dividend Declaration Date.
Section 382 Ownership Change Determinations
The rules of Section 382 are very complex and are beyond the scope
of this summary discussion. Some of the factors that must be
considered in determining whether a Section 382 ownership change
has occurred include the following:
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Each stockholder who
owns less than 5% of our common stock is generally (but not always)
aggregated with other such stockholders and treated as a single
“5-percent stockholder” for purposes of Section 382. Transactions
in the public markets among such stockholders are generally (but
not always) excluded from the Section 382 calculation. |
| ● |
There are several
rules regarding the aggregation and segregation of stockholders who
otherwise do not qualify as Section 382 “5-percent stockholders.”
Ownership of stock is generally attributed to its ultimate
beneficial owner without regard to ownership by nominees, trusts,
corporations, partnerships or other entities. |
| ● |
Acquisitions by a
person that cause the person to become a Section 382 “5-percent
stockholder” generally result in a 5% (or more) change in
ownership, regardless of the size of the final purchase(s) that
caused the threshold to be exceeded. |
| ● |
Certain constructive
ownership rules, which generally attribute ownership of stock owned
by estates, trusts, corporations, partnerships or other entities to
the ultimate indirect individual owner thereof, or to related
individuals, are applied in determining the level of stock
ownership of a particular stockholder. Special rules can result in
the treatment of options (including warrants) or other similar
interests as having been exercised if such treatment would result
in an ownership change. |
Our redemption or buyback of our common stock will increase the
ownership of any Section 382 “5-percent stockholders” (including
groups of stockholders who are not individually 5-percent
stockholders) and can contribute to an ownership change. In
addition, it is possible that a redemption or buyback of shares
could cause a holder of less than 5% to become a Section 382
“5-percent stockholder,” resulting in a 5% (or more) change in
ownership.
Certain Factors Stockholders Should Consider
Our Board of Directors believes that attempting to protect our NOLs
is in our stockholders’ best interests. However, you should
consider the factors below when making your decision with respect
to the ratification of the Section 382 Rights Agreement and the
approval of a three year extension thereof.
Continued Risk of Ownership Change. Although
the Section 382 Rights Agreement is intended to reduce the
likelihood of an “ownership change,” we cannot assure you that it
will be effective. The amount by which an ownership interest may
change in the future could be affected by many factors, including
purchases and sales of shares by stockholders holding 5% or more of
our outstanding common stock, over which we have no control.
Absent a
court determination, we cannot assure you that the Section 382
Rights Agreement restrictions on acquisition of our common stock
will be enforceable against all our stockholders, and they may be
subject to challenge on equitable grounds.
Potential Anti-Takeover Effect. While the
Section 382 Rights Agreement is not intended to prevent a takeover,
it does have a potential anti-takeover effect because an Acquiring
Person may be diluted upon the occurrence of a triggering event.
Accordingly, the overall effects of the Section 382 Rights
Agreement may be to render more difficult, or discourage a merger,
tender offer, or assumption of control by a substantial holder of
our securities. However, as is the case with traditional
stockholder rights plans or “poison pills,” the Section 382 Rights
Agreement should not interfere with any merger or other business
combination approved by our Board of Directors.
Potential Impact on Value. The Section 382
Rights Agreement could negatively impact the value of our common
stock by deterring persons or groups of persons from acquiring our
common stock, including in acquisitions for which some stockholders
might receive a premium above market value.
Potential Effects on Liquidity. The Section
382 Rights Agreement is intended to deter persons or groups of
persons from acquiring beneficial ownership of our common stock in
excess of the specified limitations. A stockholder’s ability to
dispose of our common stock may be limited if the Section 382
Rights Agreement reduces the number of persons willing to acquire
our common stock or the amount they are willing to acquire. A
stockholder may become an Acquiring Person upon actions taken by
persons related to, or affiliated with, them. Stockholders are
advised to carefully monitor their ownership of our common stock
and consult their own legal advisors and, or us to determine
whether their ownership of the shares approaches the proscribed
level.
Internal Revenue Service. The Internal Revenue
Service (“IRS”) could challenge the amount of our NOLs or claim we
experienced an ownership change, which could reduce the amount of
our NOLs that we can use or eliminate our ability to use them
altogether. The IRS has not audited or otherwise validated the
amount of our NOLs. The IRS could challenge the amount of our NOLs,
which could limit our ability to use our NOLs to reduce our future
taxable income. In addition, the complexity of Section 382’s
provisions and the limited knowledge any public company has about
the ownership of its publicly traded stock make it difficult to
determine whether an ownership change has occurred. Therefore, we
cannot assure you that the IRS will not claim that we experienced
an ownership change and attempt to reduce or eliminate the benefit
of our NOLs even if the Section 382 Rights Agreement is in
place.
Description of the Section 382 Rights Agreement
The following description of the Section 382 Rights Agreement is
qualified in its entirety by reference to the text of the Section
382 Rights Agreement, which is attached to this Proxy Statement as
Appendix B and incorporated herein by reference. We urge you to
read carefully the Section 382 Rights Agreement in its entirety, as
the discussion below is only a summary.
The Rights. The Board authorized the issuance of one
right (a “Right”) for each outstanding share of common stock, par
value $0.001 per share, of the Company (the “Common Stock”) payable
to stockholders of record as of the close of business on January 2,
2018 (the “Record Date”). One Right will also be issued together
with each share of our Common Stock issued after January 2, 2018,
but before the Distribution Date (as defined below) and, in certain
circumstances, after the Distribution Date. Subject to the terms,
provisions and conditions of the Rights Agreement, if the Rights
become exercisable, each Right would initially represent the right
to purchase from the Company one one-thousandth of a share of
Series A Junior Participating Preferred Stock, par value $0.001 per
share, of the Company (the “Series A Preferred Stock”) for a
purchase price of $40.00 (the “Purchase Price”). If issued, each
one-thousandth of a share of Series A Preferred Stock would give
the stockholder approximately the same dividend, voting and
liquidation rights as does one share of Common Stock. However,
prior to exercise, a Right does not give its holder any rights as a
stockholder of the Company, including, without limitation, any
dividend, voting or liquidation rights.
Initial Exercisability. The Rights will not be
exercisable until the earlier of (i) ten business days after a
public announcement that a person has become an “Acquiring Person”
by acquiring beneficial ownership of 4.9% or more of outstanding
Common Stock (or, in the case of a person that had beneficial
ownership of 4.9% or more of the outstanding Common Stock as of the
close of business on December 18, 2017, by obtaining beneficial
ownership of any additional shares of Common Stock representing
0.5% or more of the shares of Common Stock then outstanding (other
than pursuant to a dividend or distribution paid or made by the
Company on the outstanding shares of the Common Stock or pursuant
to a split or subdivision of the outstanding shares of Common
Stock) at a time such person still beneficially owns 4.9% or more
of the outstanding Common Stock), and (ii) ten business days (or
such later date as may be specified by the Board prior to such time
as any person becomes an Acquiring Person) after the commencement
of a tender or exchange offer by or on behalf of a person that, if
completed, would result in such person becoming an Acquiring Person
(the “Distribution Date”).
Until the Distribution Date, Common Stock certificates or the
ownership statements issued with respect to uncertificated shares
of Common Stock will evidence the Rights. Any transfer of shares of
Common Stock prior to the Distribution Date will also constitute a
transfer of the associated Rights. After the Distribution Date,
separate rights certificates will be issued and the Rights may be
transferred other than in connection with the transfer of the
underlying shares of Common Stock unless and until the Board has
determined to effect an exchange pursuant to the Rights Agreement
(as described below).
Flip-In Event. In the event that a person becomes an
Acquiring Person, each holder of a Right, other than Rights that
are or, under certain circumstances, were beneficially owned by the
Acquiring Person (which will thereupon become void), will
thereafter have the right to receive upon exercise of a Right and
payment of the Purchase Price, a number of shares of our Common
Stock (or, in certain circumstances, cash, property or other
securities of the Company) having a market value equal to two times
the Purchase Price. However, Rights are subject to redemption and
exchange at the option of the Company (as described below).
Flip-Out Event. In the event that, at any time
following a person becoming an Acquiring Person, (i) the Company
engages in a merger or other business combination transaction in
which the Company is not the surviving corporation; (ii) the
Company engages in a merger or other business combination
transaction in which the Company is the surviving corporation and
the Common Stock is changed or exchanged; or (iii) 50% or more of
the Company’s assets, cash flow or earning power is sold or
transferred, each holder of a Right (except Rights which have
previously been voided as set forth above) shall thereafter have
the right to receive, upon exercise of the Right, common stock of
the acquiring company having a value equal to two times the
Purchase Price.
Redemption. At any time until the earlier of December
18, 2020 and ten calendar days following the first date of public
announcement that a person has become an Acquiring Person or that
discloses information which reveals the existence of an Acquiring
Person or such earlier date as a majority of the Board becomes
aware of the existence of an Acquiring Person, the Board may redeem
the Rights in whole, but not in part, at a price of $0.001 per
Right (the “Redemption Price”). The redemption of the Rights may be
made effective at such time, on such basis and with such conditions
as the Board in its sole discretion may establish. Immediately upon
any redemption of the Rights, the right to exercise the Rights will
terminate and the only right of the holders of Rights will be to
receive the Redemption Price.
Exchange. At any time after a person becomes an
Acquiring Person, the Board may, at its option, exchange the Rights
(other than Rights that have become void), in whole or in part, at
an exchange ratio of one share of Common Stock, or a fractional
share of Series A Preferred Stock (or of a share of a similar class
or series of the Company’s preferred stock having similar rights,
preferences and privileges) of equivalent value, per Right (subject
to adjustment). Immediately upon an exchange of any Rights, the
right to exercise such Rights will terminate and the only right of
the holders of Rights will be to receive the number of shares of
Common Stock (or fractional share of Series A Preferred Stock or of
a share of a similar class or series of the Company’s preferred
stock having similar rights, preferences and privileges) equal to
the number of such Rights held by such holder multiplied by the
exchange ratio.
Preferred Stock Provisions. Each one one-thousandth
of a share of Series A Preferred Stock, if issued: (i) will be
nonredeemable and junior to any other series of preferred stock the
Company may issue (unless otherwise provided in the terms of such
other series), (ii) will entitle holders to preferential cumulative
quarterly dividends in an amount per share of Series A Preferred
Stock equal to the greater of (a) $1 or (b) 1,000 times the
aggregate the dividends, if any, declared on one share of Common
Stock, (iii) will entitle holders upon liquidation (voluntary or
otherwise) to receive $1,000 per share of Series A Preferred Stock
plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, (iv) will have the
same voting power as one share of Common Stock, and (v) will
entitle holders to a per share payment equal to the payment made on
one share of Common Stock, if shares of the Common Stock are
exchanged via merger, consolidation, or a similar transaction.
Because of the nature of the Series A Preferred Stock’s dividend,
liquidation and voting rights, the value of a Unit of Series A
Preferred Stock purchasable upon exercise of each Right should
approximate the value of one share of Common Stock.
Expiration. The Rights and the Rights Agreement will
expire on the earliest of (i) December 18, 2020, (ii) the time at
which the Rights are redeemed pursuant to the Rights Agreement,
(iii) the time at which the Rights are exchanged in full pursuant
to the Rights Agreement, (iv) the date that the Board determines
that the Rights Agreement is no longer necessary for the
preservation of material valuable Tax Benefits, (v) the beginning
of a taxable year of the Company to which the Board determines that
no Tax Benefits may be carried forward, and (vi) a determination by
the Board, prior to the time any Person becomes an Acquiring
Person, that the Rights Agreement and the Rights are no longer in
the best interests of the Company and its stockholders.
Anti-Dilution Provisions. The Board may adjust the
Purchase Price, the number of shares of Series A Preferred Stock or
other securities or assets issuable and the number of outstanding
Rights to prevent dilution that may occur as a result of certain
events, including among others, a stock dividend, a stock split or
a reclassification of the Series A Preferred Stock or Common Stock.
With certain exceptions, no adjustments to the Purchase Price will
be required until cumulative adjustments amount to at least 1% of
the Purchase Price.
Amendments. For so long as the Rights are redeemable,
the Board may supplement or amend any provision of the Rights
Agreement in any respect without the approval of the holders of the
Rights. From and after the time the Rights are no longer
redeemable, the Board may supplement or amend the Rights Agreement
only to cure an ambiguity, to alter time period provisions, to
correct inconsistent provisions, or to make any additional changes
to the Rights Agreement which the Company may deem necessary or
desirable, but only to the extent that those changes do not impair
or adversely affect any Rights holder (other than an Acquiring
Person or any Affiliate or Associate of an Acquiring Person or
certain of their transferees) and do not result in the Rights again
becoming redeemable or the Rights Agreement again becoming
amendable other than in accordance with this sentence.
Vote Required to Ratify the Company’s Section 382 Rights
Agreement and approve a three year extension thereof
The ratification of the Company’s Section 382 Rights Agreement and
approval of a three year extension thereof, will require the
affirmative vote of a majority of the shares present in person or
by proxy and entitled to vote. For more information on the voting
requirements, see “Questions and Answers about the Proxy Materials,
Annual Meeting and Voting.” Broker non-votes are not counted as
votes for or against this proposal and will therefore have no
effect on the outcome of the vote.
Recommendation of Our Board of Directors
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A
VOTE “FOR” THE RATIFICATION OF THE COMPANY’S SECTION 382
RIGHTS AGREEMENT AND APPROVAL OF A THREE YEAR EXTENSION
THEREOF
PROPOSAL 3:
ELECTION OF DIRECTOR
Our bylaws permit our Board of Directors to establish by resolution
the authorized number of directors. Our Board of Directors
currently consists of four directors, who are divided into three
classes with staggered three-year terms. The current term of our
Class I director, Susan Westphal, will expire at this Annual
Meeting. Following the recommendation of the Nominating and
Governance Committee, the Board of Directors recommends the
re-election of Ms. Westphal as director for a one-year term at the
Annual Meeting (or as a Class I Director for a three-year term if
Proposal 1 to amend our Certificate of Incorporation to declassify
our Board of Directors is not approved).
The individuals named as proxies on the enclosed proxy card intend
to vote your shares of common stock for the election of Ms.
Westphal, the nominee proposed by the Board, unless otherwise
directed. Ms. Westphal has consented to serving as a nominee and
being named as a nominee in this proxy statement, and to serving as
a director if elected at the Annual Meeting. However, if, contrary to
our present expectations, Ms. Westphal is unable to serve or for
good cause will not serve, your proxy will be voted for a
substitute nominee designated by our Board of Directors, unless
otherwise directed.
All of our directors bring to our Board of Directors a wealth of
executive leadership experience derived from their service as
corporate executives as well as service as directors on other
boards. When evaluating director candidates, the Nominating and
Governance Committee takes into account all factors it considers
appropriate, which include (i) ensuring that the Board of
Directors, as a whole, is diverse and consists of individuals with
various and relevant career experience, relevant technical skills,
industry knowledge and experience, and financial expertise
(including expertise that could qualify a director as a “financial
expert,” as that term is defined by the rules of the SEC), and
(ii) minimum individual qualifications, including strength of
character, mature judgment, familiarity with the Company’s business
and industry and independence of thought. The Nominating and
Governance Committee also considers geographical, cultural,
experiential and other forms of diversity when evaluating director
candidates. In addition, the Nominating and Governance Committee
also may consider the extent to which the candidate would fill a
present need on the Board of Directors. Information about Ms.
Westphal and the rest of our current directors, including their
business experience for the past five years, appears below.
NOMINEE FOR
ELECTION
Class I Director
Following is a continuing Class I director whose current term will
expire at our 2020 Annual Meeting.
Susan M. Westphal, 54,
is a continuing Class I director whose current term expires at our
2020 Annual Meeting. Ms. Westphal has served as a member of our
Board of Directors since March 17, 2017. She currently serves as a
member of the Audit, Compensation, and Nominating and Governance
Committees. Ms. Westphal, is Chief Counsel at Melissa & Doug,
LLC, a leading designer of educational toys and children’s’
products, since February 2016. Ms. Westphal is responsible for a
range of legal, strategic, and organizational matters. From January
2012 to January 2016, Ms. Westphal was an attorney with Brody and
Associates, LLC. Ms. Westphal was previously an attorney at law
firms including Epstein, Becker, & Green, p.c, where she
represented corporate clients in litigations and negotiations in
commercial, real estate, and employment matters. She holds a JD
from The George Washington University National Law Center and a BA
from Tufts University. Ms. Westphal’s qualifications to serve on
our Board of Directors include her extensive legal and negotiation
experience.
Vote Required to Elect Director
Under our bylaws, our directors are elected by a plurality of the
shares present in person or by proxy and entitled to vote. For more
information on the voting requirements, see “Questions and Answers
about the Proxy Materials, Annual Meeting and Voting.”
Recommendation of Our Board of Directors
OUR BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS
VOTE “FOR” THE ELECTION OF OUR DIRECTOR NOMINEE, MS.
WESTPHAL
DIRECTORS WHOSE TERMS
DO NOT EXPIRE THIS YEAR
Class II Directors
Timothy Brog, 56, is a continuing Class II director whose
current term expires at our 2021 Annual Meeting. Mr. Brog joined us
in May 2016 as a member of our Board of Directors and was appointed
as our President and Chief Executive Officer effective March 17,
2017. Mr. Brog served on our Audit Committee from July 1, 2016
until March 17, 2017 and on the Compensation Committee from
December 14, 2016 to March 17, 2017. From March 2015 until March
17, 2017, Mr. Brog served as the president of Locksmith Capital
Management LLC, an investment advisory firm. Previously, he served
as Chairman of the Board of Directors of Peerless Systems
Corporation from June 2008 to February 2015, Chief Executive
Officer from August 2010 to March 2015 and a director beginning in
July 2007. Mr. Brog served as a Managing Director and Portfolio
Manager to Locksmith Value Opportunity Fund LP from September 2007
to August 2010. He also served as Managing Director of E2
Investment Partners LLC, a special purpose vehicle to invest in
Peerless, from March 2007 to July 2008. Prior to his experience at
Locksmith Capital and E2 Investment Partners, Mr. Brog was
President of Pembridge Capital Management LLC and the Portfolio
Manager of Pembridge Value Opportunity Fund LP, a small cap value
hedge fund, from June 2004 to September 2007. He also worked as the
Managing Director of The Edward Andrews Group Inc., a boutique
investment bank, from 1996 to 2007. From 1989 to 1995, Mr. Brog was
a corporate finance and mergers and acquisitions associate of the
law firm Skadden, Arps, Slate, Meagher & Flom LLP. Mr. Brog has
previously served as a director of Eco-Bat Technologies Limited
from October 2007 to July 2019, Chairman of the Board and Chairman
of the Audit Committee of Deer Valley Corporation from October 2014
to April 2015, and as a member of the board of directors of the
Topps Company Inc., from July 2006 to October 2007. Mr. Brog
received a JD from Fordham University School of Law in 1989 and a
BA from Tufts University in 1986. Mr. Brog’s qualifications to
serve on our Board of Directors include his operational, legal,
investment banking, executive management and financial analysis
experience.
Michael Mikolajczyk, 68, is a continuing Class II director
whose current term expires at our 2021 Annual Meeting. Mr.
Mikolajczyk has served as a member of our Board of Directors from
June 2001 until May 2002 and rejoined our Board of Directors in
March 2004. Mr. Mikolajczyk was elected as the chairman of our
Board of Directors in December 2017. Mr. Mikolajczyk also serves as
a member of our Audit, Compensation, and Nominating and Governance
Committees. Since September 2003, Mr. Mikolajczyk has served as
managing director of Catalyst Capital Management, LLC, a private
equity firm. From 2001 through 2003, Mr. Mikolajczyk worked as an
independent consultant providing business and financial advisory
services to early stage and mid-cap companies. Mr. Mikolajczyk also
served as vice chairman of Diamond Management & Technology
Consultants, Inc., a management and technology consulting firm,
from 2000 to 2001, president from 1998 to 2000 and chief financial
officer from 1994 to 1998. Mr. Mikolajczyk served as chief
financial officer of Technology Solutions Company, a business
solutions provider, from 1993 to 1994. In addition, Mr. Mikolajczyk
served as a director of Diamond Management & Technology
Consultants, Inc. from 1994 to 2010 and served as director of
Kanbay International, Inc. from 2004 to 2007. Mr. Mikolajczyk is a
CPA in the State of Michigan and holds an MBA from Harvard Business
School and a BS in business from Wayne State University. Mr.
Mikolajczyk’s qualifications to serve on our Board of Directors
include his experience as an operating executive and his years of
experience providing business and financial advisory services. Mr.
Mikolajczyk is a financial expert with extensive experience in
corporate governance.
Class III Director
Jefferson Gramm, 44, is a continuing Class III director
whose current term will expire at our 2022 Annual Meeting. Mr.
Gramm, in connection with a Stock Purchase Agreement dated November
16, 2017, was appointed to the Board on November 16, 2017. He
currently serves as a member of our Audit, Compensation and
Nominating and Governance Committees. Mr. Gramm has served as
managing director, managing partner and portfolio manager of
Bandera Partners, LLC, a value-oriented investment partnership, and
Bandera Partners Management LLC, an affiliate general partner
entity, since August 2006. Previous to Bandera Partners, Mr. Gramm
was a managing director of Arklow Capital LLC, a hedge fund manager
focused on distressed and value investments, from October 2004 to
July 2006. Mr. Gramm serves as a director of Tandy Leather Company,
a distributor of leather and related products, since 2014 and as
chairman of the board since 2017. Mr. Gramm served as director of
Peerless Systems Corporation from June 2009 to November 2010, as
director of Morgan’s Foods Inc., a restaurant company, from April
2013 to May 2014, and as director of Ambassadors Group, Inc., an
educational travel company, from May 2014 to October 2015. He holds
an MBA from Columbia University and a BA from the University of
Chicago. Mr. Gramm’s qualifications to serve on our Board of
Directors include his extensive experience in finance, especially
in areas of reviewing acquisition targets and negotiating and the
consummation of potential acquisitions.
PROPOSAL 4:
RATIFICATION OF SELECTION OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee of the Board of Directors has selected Marcum
LLP (“Marcum”) to serve as the Company’s independent registered
public accounting firm for the fiscal year ending December 31,
2020, and is submitting this matter to the stockholders for
ratification at the Annual Meeting. Marcum has served as the
Company’s independent registered public accounting firm since 2017.
One or more representatives of Marcum will be present at the Annual
Meeting to make a statement if they desire to do so and to be
available to respond to appropriate questions that may be asked by
stockholders.
Neither our bylaws nor other governing documents or law require
stockholder ratification of the selection of Marcum as our
independent registered public accounting firm. However, the Board
is submitting the selection of Marcum to the stockholders for
ratification as a matter of good corporate practice. In the event
the proposal to ratify the selection of Marcum is defeated, the
adverse vote will be considered as a direction to the Board to
select another independent registered public accounting firm for
the next fiscal year ending December 31, 2021. However,
because of the expense and difficulty in changing independent
registered public accounting firms after the beginning of a year,
the Board intends to allow the appointment of Marcum for the fiscal
year ending December 31, 2020 to stand unless the Board finds
other reasons for making a change.
Audit Fees
The aggregate fees billed by Marcum for audit services of the
Company’s annual financial statements and review services of the
Company’s quarterly financial statements for the fiscal year 2019
were $146,481. The aggregate fees billed by Marcum for audit
services of the Company’s annual financial statements and
assistance with and review of SEC filings for the fiscal year 2018
were $150,000.
Audit-Related Fees
There were no audit-related fees billed by Marcum in the fiscal
years 2019 and 2018.
Tax Fees
There were no tax fees billed by Marcum in the fiscal years 2019
and 2018.
All Other Fees
There were no other fees billed by Marcum in the fiscal years 2019
and 2018 for any other services.
Pre-Approval Policy and Procedures
In accordance with the Sarbanes-Oxley Act of 2002, the Audit
Committee is required to pre-approve all auditing services and
permissible non-audit services, including related fees and terms,
to be performed for the Company by its independent registered
public accounting firm subject to the de minimis exceptions for
non-audit services described under the Exchange Act, which are
approved by the Audit Committee prior to the completion of the
audit. In the fiscal years 2019 and 2018, the Audit Committee
pre-approved all audit and non-audit services provided to the
Company by its independent registered public accounting firm.
Vote Required
Approval of this proposal requires the affirmative vote of a
majority of the shares of our common stock present in person or by
proxy and entitled to vote. For more information on the voting
requirements, see “Questions and Answers about the Proxy Materials,
Annual Meeting and Voting.”
Recommendation of the Board of Directors
OUR BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE
RATIFICATION OF THE SELECTION OF MARCUM LLP TO SERVE AS THE
COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE
FISCAL YEAR ENDING DECEMBER 31, 2020.
PROPOSAL 5:
ADVISORY VOTE ON EXECUTIVE COMPENSATION
Overview
The Company is providing its stockholders an advisory vote on
executive compensation as required by Section 14A of the
Exchange Act and Rule 14a-21 promulgated thereunder. The advisory
vote on executive compensation is a non-binding vote to approve the
compensation of the Company’s named executive officers, as
disclosed pursuant to SEC rules in this proxy statement, including
the compensation tables and the accompanying narrative disclosure.
The advisory vote on executive compensation is not a vote on the
Company’s general compensation policies or compensation of the
Board of Directors.
The Company’s executive compensation programs are designed to
attract, motivate and retain highly qualified executive officers
who are able to achieve corporate objectives and create stockholder
value. The Compensation Committee believes the Company’s executive
compensation programs reflect a strong pay-for-performance
philosophy and are well aligned with the stockholders’ long-term
interests. The Compensation Committee believes the Company’s
executive compensation programs have been effective at
incentivizing the achievement of improved financial performance and
returns to stockholders.
At our 2017 annual meeting of stockholders, the Company’s
stockholders approved a one-year frequency for the stockholder
advisory vote to approve executive compensation. While the
stockholder vote on the frequency of future advisory votes on
executive compensation is not binding, the Board will take it into
consideration when determining the frequency of future advisory
votes to approve executive compensation.
Stockholders are being asked to vote on the following
resolution:
RESOLVED, that the compensation paid to the Company’s named
executive officers, as disclosed pursuant to SEC rules in this
proxy statement, including the compensation tables and accompanying
narrative disclosure under “Executive Compensation,” is hereby
APPROVED.
While this advisory vote on executive compensation is not binding
on the Board of Directors, the Board of Directors will take into
account the result of the vote when determining future executive
compensation arrangements.
Vote Required
Approval of this proposal requires the affirmative vote of a
majority of the shares of our common stock present in person or by
proxy and entitled to vote. For more information on the voting
requirements, see “Questions and Answers about the P.roxy
Materials, Annual Meeting and Voting.”
Recommendation of the Board of Directors
OUR BOARD UNANIMOUSLY RECOMMENDS THAT YOU
VOTE “FOR” THE RESOLUTION APPROVING EXECUTIVE
COMPENSATION.
CORPORATE
GOVERNANCE
Director
Independence
Our Board of Directors undertook a review of the independence of
each director and considered whether any director has a material
relationship with us that could compromise his or her ability to
exercise independent judgment in carrying out his or her
responsibilities. As a result of this review, our Board of
Directors determined that Messrs. Mikolajczyk, Gramm and Ms.
Westphal are independent under the standards for director
independence adopted by the Board of Directors and are “independent
directors” as defined under the rules of the NASDAQ Stock Market.
Based on the foregoing, our Board of Directors has concluded that a
majority of our Board of Directors has been independent during the
periods covered by this proxy statement, as required by the rules
of the NASDAQ Stock Market. The standards for director independence
adopted by the Board of Directors are available for review on our
website www.rubicontechnology.com.
Board of Directors
Leadership Structure
Our Board of Directors is led by an independent Chairman, Mr.
Mikolajczyk. The Board has determined that having an independent
Chairman is in the best interest of the Company’s stockholders at
this time and adopted a formal policy to that effect on December
14, 2016. The Board believes that this leadership structure is
appropriate because it strikes an effective balance between
management and independent director participation in the Board
process. The independent Chairman role allows our Chief Executive
Officer to focus on his management responsibilities in leading the
business, setting the strategic direction of the Company and
optimizing the day-to-day performance and operations of the
Company. At the same time, the independent Chairman can focus on
Board leadership, providing guidance to the Chief Executive Officer
and the Company’s overall business strategy. The Board believes
that the separation of functions between the Chief Executive
Officer and Chairman of the Board provides independent leadership
of the Board in the exercise of its management oversight
responsibilities, increases the accountability of the Chief
Executive Officer and creates transparency into the relationship
among executive management, the Board of Directors and the
stockholders. The independent Chairman regularly presides at
executive sessions of the independent directors, without the
presence of management.
Board of Directors
Oversight of Risk
Our executive management team is responsible for our day-to-day
risk management activities. The Board of Directors oversees these
risk management activities, delegating its authority in this regard
to the standing committees of the Board of Directors. The Audit
Committee is responsible for discussing with executive management
policies with respect to financial risk and enterprise risk
management. The Audit Committee also oversees the Company’s
corporate compliance programs. The Compensation Committee considers
risk in connection with its design of compensation programs for our
executives. The Nominating and Governance Committee reviews the
Company’s corporate governance principles and their implementation.
Each committee regularly reports to the Board of Directors. In
addition to each committee’s risk management oversight, the Board
of Directors regularly engages in discussions of the most
significant risks that the Company is facing and how these risks
are being managed.
The Board of Directors believes that each committee’s risk
oversight function, together with the efforts of the full Board of
Directors and the Chief Executive Officer in this regard, enables
the Board of Directors to effectively oversee the Company’s risk
management activities.
Committees of the Board
of Directors and Meetings
Our Board of Directors has established three standing committees:
an Audit Committee, a Compensation Committee and a Nominating and
Governance Committee. Described below are the membership and
principal responsibilities of each of the standing committees of
the Board of Directors, as well as the number of meetings held
during 2019. Each of these committees is composed entirely of
non-employee directors who have been determined by our Board of
Directors to be independent under the current requirements of the
NASDAQ Stock Market and the rules and regulations of the SEC. Each
committee operates under a charter approved by the Board of
Directors setting out the purposes and responsibilities of the
committee. All committee charters are available for review on our
website, www.rubicontechnology.com. The information contained on
our website is not a part of this proxy statement and shall not be
deemed incorporated by reference into this proxy statement or any
other public filing made by us with the SEC.
The Board of Directors held five meetings during 2019. Each of our
directors attended at least 75% of the aggregate of the total
number of meetings of the Board of Directors and the committees on
which he or she served during 2019. Our non-employee directors meet
regularly without our Chief Executive Officer present.
Audit Committee
From January 1, 2019 to December 31, 2019, our Audit Committee was
comprised of Michael E. Mikolajczyk, Susan M. Westphal and
Jefferson Gramm.
Mr. Mikolajczyk is the chairman of our Audit Committee. Our Board
of Directors has determined that each member of our Audit
Committee, during the period served on the committee, met or meets
the requirements for financial sophistication and independence for
Audit Committee membership under the current requirements of the
NASDAQ Stock Market and SEC rules and regulations. Our Board of
Directors has also determined that Mr. Mikolajczyk is an “audit
committee financial expert” as defined in the SEC rules. The Audit
Committee’s responsibilities include, but are not limited to:
| |
● |
selecting and hiring our
independent registered public accounting firm, and approving the
audit and permitted non-audit services to be performed by our
independent registered public accounting firm; |
| |
● |
evaluating the qualifications,
experience, performance and independence of our independent
registered public accounting firm; |
| |
● |
monitoring the integrity of our
financial statements and our compliance with legal and regulatory
requirements as they relate to financial statements or accounting
matters; |
| |
● |
reviewing the adequacy,
effectiveness and integrity of our internal control policies and
procedures; |
| |
● |
discussing the scope and results of
the audit with the independent registered public accounting firm
and reviewing with management and the independent registered public
accounting firm our interim and year-end operating results; |
| |
● |
preparing the Audit Committee
report required by the SEC in our annual proxy statement; and |
| |
● |
overseeing management with respect
to enterprise and financial risk management. |
Our Audit Committee held six meetings during 2019.
Compensation Committee
From January 1, 2019 to December 31, 2019, our Compensation
Committee was comprised of Jefferson Gramm, Michael E. Mikolajczyk
and Susan M. Westphal.
Mr. Gramm is the chairman of our Compensation Committee. The
Compensation Committee’s responsibilities include, but are not
limited to:
| |
● |
reviewing and approving our Chief
Executive Officer’s and other executive officers’ annual base
salaries and annual bonuses; |
| |
● |
evaluating and recommending to the
Board of Directors incentive compensation plans; |
| |
● |
overseeing an evaluation of the
performance of our executive officers; |
| |
● |
administering, reviewing and making
recommendations with respect to our equity compensation plans;
and |
| |
● |
reviewing and making
recommendations to the Board of Directors with respect to director
compensation. |
The Compensation Committee may, in its sole discretion, retain or
obtain the advice of one or more compensation consultants or other
advisors to assist it with these duties.
Our Compensation Committee held two meetings during 2019.
Nominating and Governance Committee
From January 1, 2019 to December 31, 2019, our Nominating and
Governance Committee was comprised of Susan M. Westphal, Jefferson
Gramm and Michael E. Mikolajczyk.
Ms. Westphal is the chairman of our Nominating and Governance
Committee. The Nominating and Governance Committee’s
responsibilities include, but are not limited to:
| |
● |
developing and recommending to the
Board of Directors criteria for Board of Directors and committee
membership; |
| |
● |
assisting our Board of Directors in
identifying prospective director nominees and recommending to the
Board of Directors nominees for each annual meeting of
stockholders; |
| |
● |
recommending members for each
committee to our Board of Directors; |
| |
● |
reviewing developments in corporate
governance practices and developing and recommending governance
principles applicable to our Board of Directors; and |
| |
● |
overseeing the evaluation of the
Board of Directors. |
Our Nominating and Governance Committee held one meeting during
2019.
Code of
Conduct
We have adopted a Business Code of Conduct that applies to all of
our employees, officers and directors. A copy of the Business Code
of Conduct is available on our website at
www.rubicontechnology.com, and any waiver from or amendment to the
Business Code of Conduct granted to our principal executive
officer, principal financial officer, principal accounting officer
or controller, or persons performing similar functions, will be
timely disclosed on the Company’s website as set forth above rather
than by filing a Form 8-K. The information found on our website is
not part of this proxy statement or any report filed with or
furnished to the SEC.
Policies and Procedures
Governing Director Nominations
The Nominating and Governance Committee considers candidates for
nomination to the Board of Directors from a number of sources,
including recommendations by current members of the Board of
Directors and members of management. Current members of the Board
of Directors are considered for re-election unless they have
notified us that they do not wish to stand for re-election. The
Nominating and Governance Committee will also consider director
candidates recommended by our stockholders, although a formal
policy has not been adopted with respect to consideration of such
candidates because stockholders may nominate director candidates
pursuant to our bylaws. Stockholders desiring to submit
recommendations for director candidates must follow the following
procedures:
| |
● |
The Nominating and Governance
Committee will accept recommendations of director candidates
throughout the year; however, in order for a recommended candidate
to be considered for nomination for election at an upcoming annual
meeting of stockholders, the recommendation must be received by the
Acting Secretary of the Company not later than the close of
business on the 60th day nor earlier than the close of business on
the 90th day prior to the anniversary date of our most recent
annual meeting of stockholders, unless the date of the annual
meeting is more than 30 days before or more than 60 days after the
first anniversary of the preceding year’s annual meeting, in which
case notice must be delivered not earlier than the 90th day prior
to such annual meeting and not later than the close of business on
the later of the 60th day prior to such annual meeting or the 10th
day following the day on which we first publicly announce the date
of such annual meeting. If the number of directors to be elected to
the Board is increased and the Company does not make public
announcement naming all of the nominees for director or specifying
the size of the increased Board at least 70 days prior to the first
anniversary of the preceding year’s annual meeting, a stockholder’s
nomination notice will also be considered timely with respect to
nominees for any newly created positions if such notice is
delivered to the Acting Secretary not later than the close of
business on the 10th day following the day on which such public
announcement is first made by the Company. |
| .. |
● |
A stockholder making the
recommendation must be a stockholder of record at the time of
giving of notice, be entitled to vote at the meeting and comply
with the notice procedures set forth in the bylaws. Furthermore,
this recommendation must be in writing and must include the
following initial information: (i) as to each person whom the
stockholder proposes to nominate for election as a director, all
information relating to such person that would be required to be
disclosed in proxy solicitations for election of directors in an
election contest, or would otherwise be required, in each case
pursuant to Regulation 14A under the Securities and Exchange Act of
1934, as amended (the “Exchange Act”) and Rule 14a-11 promulgated
under the Exchange Act, 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 (ii) as to the stockholder giving the
notice and the beneficial owner, if any, on whose behalf the
nomination is made, the name and address of such stockholder and
beneficial owner, and the class and number of shares of the Company
that are owned beneficially and of record by such stockholder and
beneficial owner. The Nominating and Governance Committee may
subsequently request additional information regarding the
candidate. |
| |
● |
Recommendations must be sent by
U.S. Mail, courier or expedited delivery service to Timothy E.
Brog, Acting Secretary, Rubicon Technology, Inc., 900 East Green
Street, Bensenville, Illinois 60106. |
In evaluating nominees for director, the Nominating and Governance
Committee is guided by, among other things, the objective that the
Board of Directors be composed of qualified, dedicated and highly
regarded individuals who have experience relevant to our operations
and who understand the complexities of our business environment.
See “Proposal 1: Election of Director” on page 6 for a discussion
of the evaluation of director candidates. The Nominating and
Governance Committee may also consider other factors such as
whether the candidate is independent under the standards adopted by
the Board of Directors and within the meaning of the listing
standards of the NASDAQ Stock Market, and whether the candidate
meets any additional requirements for service on the Audit
Committee. The Nominating and Governance Committee does not intend
to evaluate candidates recommended by stockholders any differently
than other candidates.
Stockholder
Communications with the Board of Directors
Interested parties, including stockholders, may communicate by mail
with all or selected members of the Board of Directors.
Correspondence should be addressed to the Board of Directors or any
individual director(s) or group or committee of directors either by
name or title (for example, “Chairman of the Nominating and
Governance Committee” or “All Non-Management Directors”). All
correspondence should be sent c/o Timothy E. Brog, Acting
Secretary, Rubicon Technology, Inc., 900 East Green Street,
Bensenville, Illinois 60106. The Acting Secretary will, in
consultation with the appropriate members of the Board, as
necessary, generally screen out communications from stockholders to
identify communications that are (i) commercial, charitable or
other solicitations for products, services and funds,
(ii) matters of a personal nature not relevant for
stockholders, or (iii) matters that are of a type that render
them improper or irrelevant to the functioning of the Board and the
Company.
Attendance at Annual
Meeting
Directors are encouraged, but not required, to attend our annual
stockholders’ meeting. All directors attended the 2019 Annual
Meeting of Stockholders.
REPORT OF THE AUDIT
COMMITTEE
The primary purpose of the Audit Committee is to assist the Board
of Directors in its general oversight of Rubicon’s financial
reporting process.
Rubicon’s management is responsible for the preparation,
consistency, integrity and fair presentation of the financial
statements, accounting and financial reporting principles, and
systems of internal control and procedures designed to ensure
compliance with accounting standards, applicable laws, and
regulations. Rubicon’s independent registered public accounting
firm, Marcum LLP, is responsible for performing an independent
audit of the financial statements and issuing its report
thereon.
The Audit Committee conducted its oversight activities in
accordance with the duties and responsibilities outlined in the
Audit Committee charter. These activities included, but were not
limited to, the following during the fiscal year ended
December 31, 2019:
| |
● |
Reviewed and discussed with
management and the independent registered public accounting firm
the audited financial statements, the quarterly financial
statements, and press releases for the year ended December 31,
2019. Management has the primary responsibility for such financial
statements and press releases. |
| |
● |
Reviewed with management and the
independent registered public accounting firm management’s annual
report on internal controls over financial reporting. |
| |
● |
Received the written disclosures
and the letter from the independent registered public accounting
firm required by the applicable requirements of the Public Company
Accounting Oversight Board regarding the independent registered
public accounting firm’s communications with the Audit Committee
concerning independence, and discussed with the independent
registered public accounting firm its independence. |
In reliance on the committee’s review and discussions of the
matters referred to above, the Audit Committee recommended to the
Board of Directors that the audited financial statements and
management’s annual report on internal controls over financial
reporting be included in Rubicon’s Annual Report on Form 10-K for
the fiscal year ended December 31, 2019.
Michael E. Mikolajczyk, Chairman
Susan M. Westphal
Jefferson Gramm
The foregoing Audit Committee Report is not soliciting material,
is not deemed filed with the SEC and is not to be incorporated by
reference in any filing of the Company under the Securities Act of
1933, as amended, or the Securities Exchange Act of 1934, as
amended, whether made before or after the date hereof and
irrespective of any general incorporation language in any such
filing.
DIRECTOR
COMPENSATION
In 2019, all non-employee directors received an annual fee of
$20,000 cash, payable quarterly and at every Annual Meeting,
non-employee directors receive $10,000 in restricted stock units
(“RSUs”) which vest on the day immediately preceding the next
following Annual Meeting of Stockholders. The Chairman of the Board
and Chairman of the Audit Committee each receive an additional
annual cash retainer of $5,000, payable quarterly.
We also have a policy of reimbursing directors for travel, lodging
and other reasonable expenses incurred in connection with their
attendance at Board or committee meetings or conducting Company
business.
The following table sets forth information regarding the aggregate
compensation we paid to the non-employee members of our Board of
Directors for 2019.
|
Name |
|
Fees
earned or
paid in cash
($) |
|
|
Stock
awards(1)
($) |
|
|
Total
($) |
|
| Michael E.
Mikolajczyk |
|
|
30,000 |
|
|
|
10,000 |
(2) |
|
|
40,000 |
|
| Susan M. Westphal |
|
|
20,000 |
|
|
|
10,000 |
(3) |
|
|
30,000 |
|
| Jefferson Gramm |
|
|
20,000 |
|
|
|
10,000 |
(4) |
|
|
30,000 |
|
| (1) |
Amounts reflect the aggregate grant
date fair value of the restricted stock units granted in 2019 in
accordance with FASB ASC Topic 718. |
| (2) |
On May 30, 2019, we granted Mr.
Mikolajczyk 1,391 shares of restricted stock. |
| (3) |
On May 30, 2019, we granted Ms.
Westphal 1,391 shares of restricted stock. |
| (4) |
On May 30, 2019, we granted Mr.
Gramm 1,391 shares of restricted stock. |
EXECUTIVE
COMPENSATION
Current Executive
Officers
Timothy E. Brog, age 56, was appointed as our President and
Chief Executive Officer effective March 17, 2017. Mr. Brog has also
been a member of our Board of Directors since May 2016. His
biographical information is provided under “Proposal 1: Election of
Directors” on page 6 above.
Mathew J. Rich, age 47, was appointed as our Chief Financial
Officer effective November 18, 2019. From August 15, 2019 to
November 15, 2019, Mr. Rich was a financial consultant to the
Company. Prior to August 2019, Mr. Rich was a regional strategy
lead for Cargill’s food ingredients business. From 2007 to 2016,
Mr. Rich held roles of increasing responsibility across Unilever’s
North American foods businesses. Prior to that, Mr. Rich served in
various capacities for Abbott Laboratories and The Procter &
Gamble Company. Mr. Rich holds an MBA from the University of
Chicago Booth School of Business and is registered as a Certified
Public Accountant.
Summary Compensation
Table
The table below sets forth, the compensation earned by Timothy E.
Brog, the President and Chief Executive Officer, William F.
Weissman, our former President and Chief Executive Officer, Mathew
J. Rich, the Chief Financial Officer, and Inga A. Slavutsky and
Mardel A. Graffy, our former Chief Financial Officers, during
fiscal 2018 and fiscal 2019. Such persons are referred to in this
proxy statement as our “named executive officers.” Mr. Weissman’s
employment with us ended on March 16, 2017. Ms. Slavutsky was the
Company’s Chief Financial Officer from June 1, 2018 to April 24,
2019 and prior to that she was our comptroller. Ms. Graffy’s
employment with us ended on June 1, 2018. Per terms of Mr.
Weissman’s employment agreement severance payments continued
through part of 2018.
|
Name and Principal Position |
|
Year |
|
Salary
($) |
|
|
Bonus
($) |
|
|
Stock
Awards
($) |
|
|
All Other
Compensation
($) |
|
|
Total
($) |
|
| Timothy E. Brog |
|
2019 |
|
|
350,000 |
|
|
|
— |
|
|
|
445,410 |
(1) |
|
|
— |
|
|
|
795,410 |
|
| President &
Chief Executive Officer |
|
2018 |
|
|
350,000 |
|
|
|
— |
|
|
|
209,169 |
(2) |
|
|
— |
|
|
|
559,169 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Mathew J. Rich |
|
2019 |
|
|
19,238 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
19,238 |
|
| Chief Financial
Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| William
F. Weissman(3) |
|
2018 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
68,120 |
(4) |
|
|
68,120 |
|
| Former
President & Chief Executive Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Inga A. Slavutsky(5) |
|
2019 |
|
|
41,500 |
|
|
|
13,750 |
(6) |
|
|
— |
|
|
|
— |
|
|
|
55,250 |
|
| Former Chief
Financial Officer |
|
2018 |
|
|
112,050 |
|
|
|
3,700 |
(7) |
|
|
3,250 |
(8) |
|
|
— |
|
|
|
119,000 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Mardel A. Graffy(9) |
|
2018 |
|
|
91,775 |
|
|
|
3,750 |
(10) |
|
|
3,086 |
(11) |
|
|
— |
|
|
|
98,611 |
|
| Former Chief
Financial Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1) |
Pursuant to Mr. Brog’s employment
agreement, he was eligible for a bonus based upon certain
objectives set forth by the Compensation Committee and agreed to by
him. For work performed in 2018 and paid in 2019, Mr. Brog was
eligible to earn up to 49,000 shares (the “Objective Bonus Shares”)
of the Company’s common stock if certain goals were
achieved. The Board of Directors determined that Mr.
Brog’s objectives were met and such shares were issued to Mr. Brog
in 2019. |
| (2) |
On January 1, 2018, we granted Mr.
Brog 30,902 RSUs. The equity grant is subject to price-based
vesting and was not an outright stock grant. Amount represents
the full aggregate grant date fair value of this grant, calculated
in accordance with FASB ASC Topic 718. For a discussion of the
assumptions and methodologies used in calculating the grant date
fair value of the RSU awards in 2018, please see Note 8 to the
Company’s consolidated financial statements in our Annual Report on
Form 10-K for the year ended December 31, 2018. |
| (3) |
Mr. Weissman served as our
President and Chief Executive Officer from December 2014 to March
16, 2017. The table includes his compensation for the year ended
December 31, 2018. |
| (4) |
Reflects severance and continuation
of benefits paid in 2018 in accordance with Mr. Weissman’s
employment agreement for termination without cause on March 16,
2017. |
| (5) |
Ms. Slavutsky was our Chief
Financial Officer from June 2018 to April 2019. The table includes
her compensation for the years ended December 31, 2018 and December
31, 2019. In addition, after her resignation, Ms. Slavutsky
performed services for the Company on a fee basis and was paid an
additional $950 for such services. Such payment was excluded from
the table above. |
| (6) |
Amount represents a $13,750 cash
bonus paid to Ms. Slavutsky in 2019. |
| (7) |
Amount represents a $3,700 cash
bonus paid to Ms. Slavutsky in 2018. |
| (8) |
In 2018, we granted Ms. Slavutsky
438 shares of Rubicon common stock. |
| (9) |
Ms. Graffy was our Chief Financial
Officer from December 2014 to June 2018. The table includes her
compensation for the year ended December 31, 2018. |
| (10) |
Amount represents a $3,750 cash
bonus paid to Ms. Graffy. |
| (11) |
In 2018, we granted Ms. Graffy 444
shares of Rubicon common stock. |
| (12) |
Prior to his appointment as CFO in
November 2019, Mr. Rich served as a consultant to the Company from
August 2019 to the date of such appointment and was paid $46,250
for his services during that period. Amount represents
a $3,750 cash bonus paid to Ms. Graffy. |
Discussion of Summary Compensation Table
Our executive compensation policies and practices for fiscal 2019
and 2018, pursuant to which the compensation set forth in the
“Summary Compensation Table” table was paid or awarded, are
described below.
Base salary
Pursuant to the terms of their employment agreements, the annual
base salaries for 2019 for Mr. Brog, Mr. Rich and Ms. Slavutsky
were $350,000, $165,000 and $130,000, respectively. For 2018, the
annual base salaries for Mr. Brog, Ms. Slavutsky and Ms. Graffy
were $350,000, $130,000 and $200,000, respectively. We formally
evaluate executive performance on an annual basis, and these
evaluations are one of the factors considered in making adjustments
to base salaries.
Incentive bonuses
The primary objectives of our incentive bonus plan are to provide
an incentive for superior work, to motivate our executives toward
even higher achievement and business results, to tie our
executives’ goals and interests to ours and our stockholders’ and
to enable us to attract and retain highly qualified individuals.
These targets are typically set in the first three months of the
year. The targets under our objective incentive bonus plan are
mutually agreed upon by the independent directors and each of the
executives.
Discretionary Incentive bonuses
In 2019, the Compensation Committee approved a bonus plan for some
of our employees in key areas of operations. Accordingly, in 2019
Ms. Slavutsky received a cash bonus of $13,750. Mr. Brog did not
receive a discretionary bonus in 2019.
In 2018, Ms. Graffy received a discretionary cash bonus of $3,750
and Ms. Slavutsky received a discretionary cash bonus of
$3,700.
Objective incentive compensation
In 2008, our Board of Directors adopted a policy generally to grant
equity awards to executives once per year to the extent equity
awards are to be granted during such year (except in the case of
newly hired executives, as described below). With respect to newly
hired executives, our practice is typically to make equity grants
at the first meeting of the Board of Directors following such
executive’s hire date. We do not have any program, plan or practice
to time equity awards in coordination with the release of material
non-public information.
Pursuant to Mr. Brog’s employment agreement, he was eligible for a
bonus based upon certain objectives set forth by the Compensation
Committee and agreed to by him.
In 2019, Mr. Brog was eligible to earn up to 40,500 shares (the
“2019 Objective Bonus Shares”) of the Company’s common stock if
certain goals were achieved. While Mr. Brog’s 2018 goal for earning
his bonus was based solely on preserving and building capital
through liquidation of assets, management of short-term
investments, and reductions of liabilities, his 2019 goals included
several specific, and more qualitative, targets that the Board
believes are critical to the long term success of the Company.
There is no set formula to weight the importance of each target --
the Board will consider Mr. Brog’s performance in relation to all
three targets when determining the amount of his bonus.
Goal 1: Progress towards an acquisition
The Board wishes to incentivize Mr. Brog to further develop the
Company’s acquisition pipeline, with the ultimate goal of finding
suitable acquisition targets and eventually closing a transaction.
To achieve Goal 1, the Board wants to see material progress from
Mr. Brog in improving deal-flow and allocating more time to the
search for acquisitions. A signed purchase agreement or the actual
consummation of an acquisition would also satisfy Goal 1.
Goal 2: Signed purchase agreements for the Malaysia
properties
The Board believes the Company’s assets in Malaysia continue to be
an unwanted distraction from Rubicon’s domestic operations. Mr.
Brog would achieve Goal 2 by negotiating and signing a purchase
agreement for one or both of the Malaysia properties with Board
approval. Material progress in finding a buyer for the properties
will also be considered by the Board for achieving Goal 2.
Goal 3: 2019 Year-End Cash
Similar to in 2018, the Board wishes to incentivize Mr. Brog in his
efforts to preserve capital.
As of December 31, 2018, Rubicon’s net short-term investments, cash
and cash equivalents and restricted cash were as follows:
| Cash and cash
equivalents: |
|
$ |
11,241,000 |
|
| Restricted Cash: |
|
$ |
169,000 |
|
| Short-term
investments: |
|
$ |
14,356,000 |
|
| Total: |
|
$ |
25,766,000 |
|
The term “Total Cash” is defined as cash and cash equivalents,
restricted cash and short-term investments. The total current
liabilities as of December 31, 2018 were $1,194,000 (“TCL”). The
difference between the Total Cash ($25,766,000) and the TCL
($1,194,000) as of December 31, 2018 was $24,572,000.
If the difference between the Total Cash and the TCL as of December
31, 2019 (“2019 YE Cash”) is equal to or greater than $25,000,000
then Mr. Brog would satisfy Goal 3.
The 2019 YE Cash would be adjusted for any unusual items that occur
in 2019. For instance, if Rubicon merges or acquires another
entity, then the cash used in such transactions and the related
costs thereto should be added back into the 2019 YE Cash. If cash
is raised pursuant to the sale of Rubicon’s Common Stock then the
net cash raised shall be subtracted from the 2019 YE Cash. If
Rubicon uses cash to repurchase shares of its Common Stock, that
cash shall be subtracted from 2019 YE Cash. The above examples are
for illustrative purposes only and are not a complete list of the
types of unusual items that may occur in 2019.
Prior to December 31, 2019, Mr. Brog had no rights, interest or
title in the 2019 Objective Bonus Shares and such shares were not
deemed issued or granted in 2019. If setting the bonus objectives
described above violates any provision of the 2016 Rubicon Stock
Incentive Plan, then the payment of this bonus shall be null and
void and Mr. Brog and the Compensation Committee shall negotiate in
good faith a new bonus that will be approximately equal to the
value of the bonus described above.
Notwithstanding that Mr. Brog reached certain of the objectives set
forth by the Compensation Committee, due to the Covid-19 crisis,
the fact that no other employee earned a bonus for 2019 and a
relatively poor performance of certain investments made by the
Company, Mr. Brog requested that the Board not consider him for the
payment of a bonus, at least not until the sale of the Company’s
real estate located in Malaysia is consummated. The Board accepted
Mr. Brog’s request and no 2019 Objective Bonus Shares have been
granted.
For work performed in 2018 and paid in 2019, Mr. Brog was eligible
to earn up to 49,000 shares (the “2018 Objective Bonus Shares”) of
the Company’s common stock if certain goals were achieved. The
Board of Directors determined that Mr. Brog’s objectives were met
and such shares were issued to Mr. Brog in 2019.
Mr. Brog’s 2018 objective incentive compensation goals, in order to
earn the 2018 Objective Bonus Shares, was based upon the (a)
liquidation of certain of Rubicon’s assets, (b) generation and
preservation of Rubicon’s net short-term investments, cash and cash
equivalents and restricted cash and (c) reduction of current
liabilities, each of which were on the Company’s Balance Sheet as
of December 31, 2018. As of December 31, 2017, Rubicon’s net
short-term investments, cash and cash equivalents and restricted
cash were as follows:
| Cash and cash
equivalents: |
|
$ |
11,544,190 |
|
| Restricted Cash: |
|
$ |
180,655 |
|
| Short-term
investments: |
|
$ |
6,450,833 |
|
| Total: |
|
$ |
18,175,678 |
|
The term “2017 Total Cash” was defined as cash and cash
equivalents, restricted cash and short-term investments. The total
current liabilities as of December 31, 2017 were $1,715,000 (“2017
TCL”). The difference between the 2017 Total Cash ($18,175,678) and
the 2017 TCL ($1,714,851) as of December 31, 2017 was $16,460,827.
The closing price of the Common Stock the day prior to the
agreement of these bonus objectives was $7.16 per share.
If the difference between the 2018 Total Cash and the 2018 TCL as
of December 31, 2018 (“2018 YE Cash”) is equal to or greater than
$26,000,000 then Mr. Brog shall earn all of the 2018 Objective
Bonus Shares. If the 2018 YE Cash is equal to or less than
$23,000,000 then Brog shall earn none of the 2018 Objective Bonus
Shares. If the 2018 YE Cash is less than $26,000,000 and greater
than $23,000,000 then Brog shall earn a pro rata percentage of the
2018 Objective Bonus Shares.
The 2018 YE Cash would be adjusted for any unusual items that occur
in 2018. In 2018, the purchase by the Company of its building
located at 900 East Green Street, Bensenville, Illinois and the
amount of cash used in the Company’s Stock Repurchase Plan were
deemed to be unusual items.
The Board determined that in 2018, Mr. Brog achieved all of the
goals set forth by the Compensation Committee and therefore all of
the 2018 Objective Bonus Shares were earned and subsequently
issued.
Severance and change in control arrangements
Payments upon termination are described below under “Termination of
Employment or Change in Control”.
OUTSTANDING EQUITY
AWARDS AT 2019 FISCAL YEAR-END
The following table sets forth the outstanding equity awards for
our named executive officers as of December 31, 2019.
| |
|
Option Awards |
|
|
Stock Awards |
|
|
Name |
|
Number of securities underlying unexercised options (#)
exercisable |
|
|
Number of securities underlying unexercised options (#)
unexercis-able |
|
|
Option exercise price ($) |
|
|
Option
expiration date |
|
|
Number
of shares or units of stock that have not vested
(#)
|
|
|
Market value of shares or units of stock that have not
vested ($)(2) |
|
|
Equity
incentive
plan
awards:
number
of
unearned
shares, units or other rights that
have not
vested
(#)
|
|
|
Equity
incentive
plan
awards:
market
or payout
value of
unearned
shares, units or other rights that have not
vested
($) |
|
| Timothy Brog |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
14,098 |
(1) |
|
|
117,295 |
|
|
|
|
|
|
|
|
|
| |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
30,902 |
(3) |
|
|
257,105 |
|
|
|
|
|
|
|
|
|
| (1) |
The award of 14,098 RSUs vests in
the amounts set forth below on the first date the 15-trading day
average closing price of the Company’s common stock equals or
exceeds the corresponding target price of $11.00 for the common
stock before March 15, 2021, provided that Mr. Brog remains
employed with us through the applicable vesting dates. This
award did not vest in 2019. |
| (2) |
The market value of unvested stock
awards is calculated by multiplying the number of unvested RSUs by
$8.32, the closing price of the Company’s common stock on The
NASDAQ Stock Market on December 31, 2019. |
| |
|
| (3) |
The award of 30,902 RSUs vest in
the amounts set forth below on the first date the 15-trading day
average closing price of the Company’s common stock equals or
exceeds the corresponding target price for the common stock before
March 15, 2021: 902 - $11.00, 15,000 - $12.50 and 15,000 - $14.00,
provided that Mr. Brog remains employed with us through the
applicable vesting dates. No tranches vested in 2019. |
TERMINATION OF
EMPLOYMENT OR CHANGE IN CONTROL
Mr. Brog’s Severance Terms. Pursuant to the
terms of his employment agreement, if Mr. Brog’s employment is
terminated by us without “cause” or if he resigns for “good
reason,” he will receive a continuation of his annual base salary
for twelve months thereafter and all of his outstanding RSU awards
will become vested, provided that Mr. Brog delivers a release of
claims to the Company. In addition, he is entitled to receive any
unused vacation pay, any bonus earned prior to the termination date
that remained unpaid, and continuation of his medical and
welfare benefits for a period of twelve months thereafter. If
within two years after a “change in control,” as defined in the
2016 Plan and summarized below, we terminate Mr. Brog without cause
or he resigns for good reason, he will be entitled to a lump sum
payment equal to 100% of his annual base salary in lieu of the
salary continuation described above.
For purposes of Mr. Brog’s agreement (i) “cause” generally is
defined as willful misconduct materially and adversely affecting
us; theft, fraud, embezzlement or similar behavior; indictment or
conviction of a felony; or willfully failing to substantially
perform the material duties of his position, other than failure
resulting from incapacity due to physical or mental illness,
following a demand for performance delivered by the Board of
Directors and a specified cure period of not less than 10 days; and
(ii) “good reason” generally is defined as a material
reduction in base salary or benefits; substantial diminution in Mr.
Brog’s duties, responsibilities or title, if uncured by us within
30 days of receipt of notice from Mr. Brog; or Mr. Brog is required
by the Board to work in the Company’s office located in any place
other than in the New York metropolitan area for more than 12 days
in any one month in order to maintain employment with the
Company.
Restrictive Covenants. Each executive’s employment
agreement contained or contains customary non-competition and
non-solicitation covenants. These restrictions survive for a period
of 12 months after the executive’s resignation or termination, and
in the event of a breach of his or her employment agreement, the
period is automatically extended by the period of the breach.
Equity Compensation Awards. The equity
compensation awards granted under the 2016 Plan or 2007 Plan may
become vested upon a change in control. The 2016 and 2007 Plans
provide that in the event of “change in control,” as defined in the
2016 and 2007 Plans, each outstanding award will be treated as the
Compensation Committee determines, including that the successor
corporation or its parent or subsidiary may be required to assume
or substitute an equivalent award for each outstanding award. The
Compensation Committee is not required to treat all awards
similarly. If there is no assumption or substitution of outstanding
awards, the award recipient will fully vest in and have the right
to exercise all of his or her outstanding options and stock
appreciation rights, all restrictions on restricted stock and RSUs
will lapse and all performance goals or other vesting requirements
for performance awards will be deemed achieved at 100% of target
levels and all other terms and conditions will be deemed met. If an
option or stock appreciation right is not assumed or substituted,
the Compensation Committee will provide notice to the award
recipient that the option or stock appreciation right will be fully
vested and exercisable for a period of time determined by the
Compensation Committee in its discretion, and the option or stock
appreciation right will terminate upon the expiration of such
period. Notwithstanding the Compensation Committee’s general
discretionary authority described above, the individual award
agreements may provide for the vesting of such awards upon the
occurrence of a change in control. Under the 2016 and 2007 Plans, a
“change in control” is deemed to occur when (i) a person
becomes the beneficial owner (directly or indirectly) of at least
50% of the voting power represented by the Company’s outstanding
voting securities, (ii) the Company sells or disposes of all
or substantially all of its assets, (iii) the composition of
the Board of Directors changes within a two-year period resulting
in fewer than a majority of the directors being “incumbent
directors” (as defined in the 2016 and 2007 Plans), or (iv) a
merger or consolidation of the Company is consummated with any
other corporation resulting in the voting securities of the Company
outstanding immediately prior thereto representing (either by
remaining outstanding or by being converted into voting securities
of the surviving entity or its parent) less than 50% of the total
voting power represented by the voting securities of the Company or
such surviving entity or its parent outstanding immediately after
such merger or consolidation.
LIMITATION ON LIABILITY
AND INDEMNITY
Our Certificate of Incorporation contains provisions that limit or
eliminate the liability of our directors for monetary damages to
the fullest extent permitted by Delaware law. Consequently, our
directors will not be personally liable to us or our stockholders
for monetary damages for any breach of fiduciary duties as a
director, except liability for:
| |
● |
any breach of the director’s duty
of loyalty to us or our stockholders; |
| |
● |
any act or omission not in good
faith or that involves intentional misconduct or a knowing
violation of law; |
| |
● |
unlawful payments of dividends or
unlawful stock repurchases, redemptions or other distributions as
provided in Section 174 of the Delaware General Corporation
Law; or |
| |
● |
any transaction from which the
director derived an improper personal benefit. |
Our bylaws provide that we are required to indemnify our directors
and officers, in each case to the fullest extent permitted by
Delaware law. Our bylaws also provide that we are obligated to
advance expenses incurred by a director or officer in advance of
the final disposition of any action or proceeding and permit us to
secure insurance on behalf of any officer, director, employee or
other agent for any liability arising out of his or her actions in
that capacity regardless of whether we would otherwise be permitted
to indemnify him or her under the provisions of Delaware law. We
have entered into agreements and intend to continue to enter into
agreements to indemnify our executive officers and directors. With
certain exceptions, these agreements provide for indemnification
for related expenses including, among other things, attorneys’
fees, judgments, fines and settlement amounts incurred by any of
these individuals in any action or proceeding for which
indemnification is available. We believe these bylaw provisions and
indemnification agreements are necessary to attract and retain
qualified persons as directors and officers. We also maintain
directors’ and officers’ insurance.
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Unless otherwise noted, the following table sets forth, as of June
8, 2020, the beneficial ownership of our common stock by:
| |
● |
each person that was a beneficial
owner of 5% of more of our outstanding shares of common stock; |
| |
● |
each of our named executive
officers; |
| |
● |
each of our directors, including
the director nominees; and |
| |
● |
all of our named executive officers
and directors as a group. |
Beneficial ownership is determined in accordance with the rules of
the SEC. Except as described below, in computing the number of
shares beneficially owned by a person and the percentage ownership
of that person, shares of common stock subject to RSUs, options or
warrants held by that person that are currently exercisable or
exercisable within 60 days of indicated in the footnotes below, the
address for each beneficial owner is c/o Rubicon Technology, Inc.,
900 East Green Street, Bensenville, Illinois 60106.
| |
|
Shares beneficially owned |
|
| Name of
beneficial owner |
|
Number |
|
|
Percent |
|
| 5%
stockholders: |
|
|
|
|
|
|
| Bandera Master Fund L.P.(1)
(7) |
|
|
258,256 |
|
|
|
10.4 |
% |
| Aldebaran Capital,
LLC(2) |
|
|
160,373 |
|
|
|
6.5 |
% |
| Sententia Capital Management
LLC(3) |
|
|
143,120 |
|
|
|
5.8 |
% |
| |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| Named
Executive Officers and Directors: |
|
|
|
|
|
|
|
|
| Timothy Brog(4) |
|
|
75,000 |
|
|
|
3.0 |
% |
| Mathew J. Rich |
|
|
— |
|
|
|
* |
|
| Jefferson Gramm(5) |
|
|
261,450 |
|
|
|
10.6 |
% |
| Michael E.
Mikolajczyk(6) |
|
|
61,047 |
|
|
|
2.5 |
% |
| Susan M. Westphal(7) |
|
|
6,628 |
|
|
|
* |
|
| |
|
|
|
|
|
|
|
|
| All executive
officers and directors as a group (5
persons)(8) |
|
|
404,125 |
|
|
|
16.3 |
% |
| * |
Represents less than 1% of the
outstanding shares of common stock. |
| (1) |
The ownership information set forth
in the table is based on information contained in a statement on
Schedule 13D (the “Bandera 13D”), filed on November 11, 2017,
with the SEC by Bandera Master Fund L.P. (“Bandera”), together with
Bandera Partners LLC, Gregory Bylinsky and Jefferson Gramm,
Managing Partners, Managing Directors and Portfolio Managers of
Bandera Partners (“Reporting Persons”) with respect to ownership of
shares of our common stock. The Bandera 13D reflects that each of
Bandera Master Fund L.P. and Bandera Partners has sole dispositive
and voting power with respect to 258,256 of the reported shares.
Bandera reports on the Bandera 13D that each of Messrs. Bylinsky
and Gramm as Managing Partners, Managing Directors and Portfolio
Managers of Bandera Partners may be deemed to have shared power to
vote or dispose of the shares owned by Bandera. Bandera reports on
the Bandera 13D that no person other than the Reporting Persons
have the right to receive or the power to direct the receipts of
dividends from, or the proceeds from the sale of, our common stock.
Mr. Gramm is a director of the Company. The principal
business address of Bandera is 50 Broad Street, Suite 1820, New
York, New York 10004. |
| (2) |
The ownership information set forth
in the table is based on information contained in a statement on
Schedule 13D (the “Aldebaran 13D”), filed on June 30 2017,
with the SEC by Aldebaran Capital LLC (“Aldebaran”), together with
Kenneth R. Skarbeck (“Reporting Persons”) with respect to ownership
of shares of our common stock. The Aldebaran 13D reports that
included in the 160,373 shares held by Aldebaran are 3,770 shares
beneficially held in family accounts related to Kenneth R.
Skarbeck. The Aldebaran 13D reflects that the Reporting Persons
have shared dispositive and voting power with respect to 160,373 of
the reported shares. Aldebaran reports on the Aldebaran 13D that no
person other than the Reporting Persons have the right to receive
or the power to direct the receipts of dividends from, or the
proceeds from the sale of, our common stock and that none of
Aldebaran’s clients have an economic interest in more than 5% of
the Company’s outstanding shares. The principal business address of
Aldebaran is 10293 N. Meridian Street, Suite 100, Indianapolis,
Indiana 46290. |
| (3) |
The ownership information set forth
in the table is based on information contained in a statement on
Schedule 13D (the “Sententia 13D”), filed on December 5, 2017,
with the SEC by Sententia Capital Management LLC
(“Sententia”), together with Sententia Group, LP, Sententia CI-I,
LP and Michael R. Zapata (“Reporting Persons”) with respect to
ownership of shares of our common stock. The Senentia 13D reflects
that each of the Reporting Persons have dispositive and voting
power with respect to 143,120 of the reported shares. Sententia
reports on the Sententia 13D that no person other than the
Reporting Persons have the right to receive or the power to direct
the receipts of dividends from, or the proceeds from the sale of,
our common stock but that none of Sententia’s clients have an
economic interest of more than 5% of the Company’s outstanding
shares. The principal business address of Sententia is 745 Fifth
Avenue, 14th Floor, New York, New York 10151. |
| (4) |
Excludes 45,000 restricted stock
units granted to Mr. Brog. One third of such RSUs will vest if
prior to May 12, 2021, the 15-trading day average closing price of
the Company’s common stock is greater than or equal to the target
prices of $11.00, $12.50 and $14.00, respectively. |
| (5) |
Includes 1,995 shares of common
stock, owned by Mr. Gramm, and 258,256 shares of common stock
beneficially owned by Bandera Master Fund LLP. See footnote
(1) above for a description of the relationship between Mr.
Gramm and Bandera Master Fund LLP. Mr. Gramm disclaims beneficial
ownership of the shares beneficially owned by Bandera Master Fund
LLP. Also includes 1,199 RSUs that will vest on the date of the
2020 stockholder meeting of July 16, 2020. |
| (6) |
Includes 1,199 RSUs that will vest
on the date of the 2020 stockholder meeting of July 16, 2020. |
| (7) |
Includes 1,199 RSUs that will vest
on the date of the 2020 stockholder meeting of July 16, 2020. |
| (8) |
Includes 421,528 shares of common
stock and 3,597 RSUs beneficially owned by our executive officers
and directors. |
SECTION 16(A)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our directors,
executive officers and persons who own more than 10% of our common
stock to file with the SEC initial reports of ownership and reports
of changes in ownership of our common stock and to provide us
copies of these reports. Based solely on a review of the copies of
these reports furnished to us and written representations that no
other reports were required to be filed, we believe that all such
filings applicable to our officers, directors and beneficial owners
of greater than 10% of our common stock were made timely during the
fiscal year ended December 31, 2019.
CERTAIN RELATIONSHIPS
AND RELATED PARTY TRANSACTIONS
Policy and Procedures for Review, Approval or
Ratification
We recognize that transactions between the Company and related
persons present a potential for actual or perceived conflicts of
interest. Our general policies with respect to such transactions
are included in our Code of Conduct which is administered by our
Audit Committee. All employees and members of our Board of
Directors agree to be bound by the Code of Conduct. As a supplement
to the Code of Conduct, the Audit Committee adopted a written
policy setting out the procedures and standards to be followed for
the identification and evaluation of “related party transactions.”
For purposes of the policy, a related party transaction is any
transaction or series of related transactions in excess of $120,000
in which we are a party and in which a “related person” has a
material interest. Related persons include our directors, director
nominees, executive officers, beneficial owners of 5% or more of
any class of our voting securities and members of their immediate
families. The Audit Committee has determined that certain
transactions are deemed to be pre-approved under this policy. These
include (i) transactions with another company in which the
related person’s only interest is as a director or beneficial owner
of less than 10% of the equity interests in that other company and
(ii) certain compensation arrangements that have either been
disclosed in our public filings with the SEC or approved by our
Compensation Committee.
We collect information about potential related party transactions
in our annual questionnaires completed by directors, executive
officers and certain beneficial owners of 5% or more of any class
of our voting securities. Potential related party transactions are
first reviewed and assessed by our Acting Secretary to consider the
materiality of the transactions and then reported to the Audit
Committee. If a related party transaction is identified during the
year, it is reported promptly to the Audit Committee. The Audit
Committee reviews and considers all relevant information available
to it about each related party transaction. A related party
transaction is approved or ratified only if the Audit Committee
determines that it is in, or is not inconsistent with, our best
interests and those of our stockholders and is in compliance with
the Code of Conduct.
On June 10, 2019, the Company acquired 12,818 shares of Common
Stock at a price of $8.12 per share from Michael Mikolajczyk, the
Company’s Chairman of the Audit Committee and the Board of
Directors. This purchase was unanimously approved by all of the
disinterested directors of the Company.
2021 STOCKHOLDER
PROPOSALS FOR INCLUSION IN THE PROXY STATEMENT
Any proposal that a stockholder intends to present for action at
the 2021 Annual Meeting must have been received by the Company no
later than February 17, 2021, in order for the proposal to be
included in the proxy statement and form of proxy for the 2021
Annual Meeting. Any such proposal must meet the applicable
requirements of the Exchange Act and the rules and regulations
thereunder. Such proposals should be sent to Timothy E. Brog,
Acting Secretary, Rubicon Technology, Inc., 900 East Green Street,
Bensenville, Illinois 60106.
OTHER STOCKHOLDER
PROPOSALS AND NOMINATIONS
Our bylaws prescribe the procedures that a stockholder must follow
to nominate persons for election to the Board of Directors at an
annual meeting or to bring other business before an annual meeting
(other than matters that have been included in our proxy statement
for such meeting). Any nomination or proposed business that is not
made in accordance with these procedures will be disregarded. The
following summary of these procedures is qualified by reference to
our bylaws, a copy of which may be obtained, without charge, from
Timothy E. Brog, Acting Secretary, Rubicon Technology, Inc., 900
East Green Street, Bensenville, Illinois 60106.
A stockholder who intends to nominate a director for election or
bring other business before the 2021 Annual Meeting must deliver
timely written notice thereof to Timothy E. Brog, our Acting
Secretary, at the address shown above and must be a stockholder of
record at the time notice is delivered and entitled to vote at the
2021 Annual Meeting. To be timely, the notice must be delivered to
the Acting Secretary not later than the close of business on May
15, 2021 and not earlier than the close of business on April 17,
2021 unless the date of the 2021 Annual Meeting is more than 30
days before or more than 60 days after July 16, 2020, in which case
notice must be so delivered not earlier than the close of business
on the 90th day prior to such annual meeting date and
not later than the close of business on the later of the
60th day prior to such annual meeting or the
10th day following the day on which we first publicly
announce the date of such annual meeting.
Any such notice must contain the information specified in the
bylaws regarding the stockholder giving the notice and, as
applicable, each person whom the stockholder wishes to nominate for
election as a director and the other business proposed to be
brought before the 2021 Annual Meeting.
With respect to stockholder proposals not included in the Company’s
proxy statement for the 2021 Annual Meeting, the persons named in
the Board of Directors’ proxy for such meeting will be entitled to
exercise the discretionary voting power conferred by such proxy
under the circumstances specified in Rule 14a-4(c) under the
Exchange Act, including with respect to proposals not received by
the Company within a reasonable time before the mailing of the
proxy statement for the 2021 Annual Meeting.
“HOUSEHOLDING” OF PROXY
MATERIALS
We have delivered only one full copy of the proxy materials, to
multiple stockholders who share an address, unless we received
contrary instructions from the affected stockholders prior to the
mailing date. We agree to deliver promptly, upon written or oral
request, a separate copy of the notice or, if applicable, the proxy
materials, as requested, to any stockholder at the shared address
to which a single copy of these documents was delivered. Beneficial
owners should contact their bank, broker, trustee or other nominee
and stockholders of record should submit their requests to: Timothy
E. Brog, Acting Secretary, Rubicon Technology, Inc., 900 East Green
Street, Bensenville, Illinois 60106, Telephone:
(847) 295-7000. If you are a stockholder residing at a shared
address and would like to request an additional copy of the notice
or, if applicable, the proxy materials, with respect to future
mailings, or to request to receive only one copy of the notice or
proxy materials if you are currently receiving multiple copies,
please send your request to the Acting Secretary at the address
provided above.
COPIES OF THE COMPANY’S ANNUAL REPORT ON FORM 10-K FOR THE
FISCAL YEAR ENDED DECEMBER 31, 2019, AS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION, CAN BE OBTAINED WITHOUT CHARGE
UPON WRITTEN REQUEST TO TIMOTHY E. BROG, ACTING SECRETARY, RUBICON
TECHNOLOGY, INC., 900 EAST GREEN STREET, BENSENVILLE, ILLINOIS
60106.
| |
BY ORDER OF THE BOARD OF DIRECTORS, |
| |
|
| |
/s/ TIMOTHY E.
BROG |
| |
TIMOTHY E. BROG |
| |
ACTING SECRETARY |
| |
|
| |
Bensenville, Illinois |
| |
June 18, 2020 |
Appendix A
Form of Amendment to Certificate of Incorporation –
Declassification of Board
FORM OF AMENDMENT TO EIGHTH AMENDED
AND RESTATED CERTIFICATE OF INCORPORATION
(Adopted in Accordance with the Provisions of Section 242
of the General Corporation Law of the State of Delaware (the
“DGCL”))
Rubicon Technology, Inc., a corporation organized and existing
under and by virtue of the laws of the State of Delaware (the
“Corporation”), does hereby certify as follows:
1. The name of the Corporation is Rubicon Technology, Inc.
2. At a meeting of the Board of Directors of the Corporation (the
“Board”), resolutions were duly adopted setting forth a proposed
amendment (the “Amendment”) of the Eighth Amended and Restated
Certificate of Incorporation of the Corporation (the “Certificate
of Incorporation”), declaring said amendment to be advisable and
calling a meeting of the stockholders of the Corporation for
consideration thereof. The Amendment is set forth in paragraph 3
below.
3. The Certificate of Incorporation be, and hereby is, amended by
deleting Article 7, Election of Directors, in its entirety, and
substituting in lieu thereof, a new Article 7 as follows:
“ARTICLE
7
ELECTION OF
DIRECTORS
(a) Election of Directors need not be by written ballot except to
the extent provided in the bylaws of the Corporation.
(b) The number of Directors of the Corporation shall be fixed from
time to time in the manner set forth in the Bylaws.
(c) Directors shall be elected by the affirmative vote of the
plurality of shares present in person or by proxy at the meeting
and entitled to vote.
(d) The Directors of the Corporation shall until the election of
Directors at the Corporation’s 2021 annual meeting of stockholders
be divided into three classes: Class I, Class II
and Class III. Commencing at the Corporation’s 2020
annual meeting of stockholders and for each subsequent annual
meeting of stockholders, each Director elected at such annual
meeting shall be elected to hold office for a term expiring at the
next succeeding annual meeting of stockholders and until such
person’s successor shall be elected and qualified, or until such
person’s earlier death, resignation, retirement, disqualification
or removal from office. Commencing with the Corporation’s
2021 annual meeting of stockholders, the classification of the
Board shall cease.
(e) Subject to the rights, if any, of the holders of any series of
Preferred Stock to elect Directors and to fill vacancies in the
Board, any and all vacancies in the Board, however occurring,
including, without limitation, by reason of an increase in the size
of the Board, or the death, resignation, retirement,
disqualification or removal of a Director, shall be filled by a
majority of the Directors then in office, even if less than a
quorum, or by the sole remaining Director, at any meeting of the
Board and not by the stockholders. Any Director appointed in
accordance with the preceding sentence shall hold office until the
next succeeding annual meeting of stockholders and until such
Director’s successor shall have been duly elected and qualified or
until such person’s earlier death, resignation, retirement,
disqualification or removal.
(f) Subject to the rights, if any, of any series of Preferred Stock
to elect Directors and to remove any Director whom the holders of
any such stock have the right to elect, prior to the 2021 annual
meeting of stockholders, any Director (including persons elected by
Directors to fill vacancies in the Board) may be removed from
office (i) only with cause and (ii) only by the affirmative vote of
the holders of 75% or more of the shares then entitled to vote at
an election of Directors. Subject to the rights, if any, of any
series of Preferred Stock to elect Directors and to remove any
Director whom the holders of any such stock have the right to
elect, and except as otherwise provided by the DGCL, effective as
of and after the 2021 annual meeting of stockholders, any Director
may be removed with or without cause by the holders of a majority
of shares then entitled to vote at an election of Directors. At
least forty-five (45) days prior to any meeting of stockholders at
which it is proposed that any Director be removed from office,
written notice of such proposed removal and the alleged grounds
thereof shall be sent to the Director whose removal will be
considered at the meeting.”
4. Pursuant to a resolution of the Board, a meeting of the
stockholders of the Corporation was duly called and held upon
notice in accordance with Section 222 of the DGCL at which meeting
the necessary number of shares as required by statute were voted in
favor of the Amendment.
5. The Amendment was duly adopted in accordance with the provisions
of Section 242 of the DGCL.
6. In accordance with Section 103(d) of the DGCL, the
Amendment shall become effective on the date and at the time set
forth below:
Effective date:
Effective time:
IN WITNESS WHEREOF, Rubicon Technology, Inc. has caused this
Amendment to Eighth Amended and Restated Certificate of
Incorporation to be signed by its duly authorized officer as of
__________________, 2020.
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RUBICON TECHNOLOGY,
INC. |
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By: |
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Title: |
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Appendix B
Section 382 Rights Agreement
SECTION 382 RIGHTS
AGREEMENT
by and between
Rubicon Technology,
Inc.
and
AMERICAN STOCK TRANSFER
& TRUST COMPANY, LLC,
as Rights Agent
Dated as of December 18, 2017
TABLE OF CONTENTS
EXHIBITS
| Exhibit A: |
Form of Certificate of Designation, Preferences
and Rights of Series A Junior Participating Preferred
Stock |
| Exhibit B: |
Form
of Rights Certificate |
| Exhibit C: |
Summary of Rights |
SECTION 382 RIGHTS
AGREEMENT
SECTION 382 RIGHTS AGREEMENT, dated as of December 18, 2017 (the
“Agreement”), between Rubicon Technology, Inc., a Delaware
corporation (the “Company”), and American Stock Transfer
& Trust Company, LLC, as Rights Agent (the “Rights
Agent”).
W I T N E S S E T
H
WHEREAS, the Company and certain of its Subsidiaries (as
hereinafter defined) have generated net operating losses for United
States federal income tax purposes (“NOLs”);
WHEREAS, the NOLs may potentially provide valuable Tax Benefits (as
hereinafter defined) to the Company;
WHEREAS, the Company desires to preserve its ability to engage in
acquisitions or other transactions approved by the Board of
Directors of the Company (the “Board”) in which the Company
would desire to issue securities (whether debt or equity) directly
from the Company without adversely affecting the Tax Benefits
because of the potential of an “ownership change” within the
meaning of Section 382 of the Code (as hereinafter defined);
WHEREAS, the Company desires to avoid an “ownership change” within
the meaning of Section 382 of the Code (as hereinafter defined) and
thereby preserve the Company’s ability to utilize the NOLs and, in
furtherance of such objective, the Company wishes to enter into
this Agreement;
WHEREAS, on December 18, 2017 (the “Rights Dividend Declaration
Date”), the Board authorized and declared a dividend
distribution of one right (a “Right”) for each share of
common stock, par value $0.001 per share, of the Company (the
“Common Stock”) outstanding at the Close of Business (as
hereinafter defined) on January 2, 2018 (the “Record Date”),
each Right initially representing the right to purchase one
one-thousandth of a share of Preferred Stock (as hereinafter
defined) of the Company, upon the terms and subject to the
conditions hereinafter set forth, and further authorized and
directed the issuance of one Right (subject to adjustment as
provided herein) with respect to each share of Common Stock issued
or delivered by the Company after the Record Date but prior to the
earlier of the Distribution Date (as hereinafter defined) and the
Expiration Date (as hereinafter defined) or as provided in Section
21 hereof.
NOW, THEREFORE, in consideration of the mutual agreements herein
set forth, the parties hereby agree as follows:
Section 1. Certain
definitions. For purposes of this Agreement, the following
terms shall have the meanings indicated:
(a) “4.9% Stockholder” shall mean a Person (other than the
Company, any Related Person or any Exempt Person) who Beneficially
Owns (as hereinafter defined) 4.9% or more of the then-outstanding
Common Stock.
(b) “Acquiring Person” shall mean any Person who or which,
together with all Affiliates and Associates of such Person, is or
becomes a 4.9% Stockholder, regardless of whether or not such
Person continues to be a 4.9% Stockholder; provided,
however, that an “Acquiring Person” shall not include (i)
the Company, (ii) a Related Person, (iii) an Exempt Person, or (iv)
an Existing Holder. Notwithstanding the foregoing: (A) no Person
shall become an “Acquiring Person” solely as a result of (x) a
reduction in the number of shares of Common Stock outstanding due
to the repurchase of shares of Common Stock by the Company, (y) a
dividend or distribution paid or made by the Company on the
outstanding shares of Common Stock or pursuant to a split or
subdivision of the outstanding shares of Common Stock, and/or (z)
an Exempt Transaction; and (B) if the Board determines in good
faith that a Person who would otherwise be an “Acquiring Person”
has become such inadvertently, and such Person divests as promptly
as practicable a sufficient number of shares of Common Stock so
that such Person would no longer be an “Acquiring Person,” then
such Person shall not be deemed to be or have become an “Acquiring
Person” at any time for any purposes of this Agreement. The Board
shall not be required to make any determination with respect to a
potential Acquiring Person, including whether the potential
Acquiring Person is an Exempt Person or whether the change of
Beneficial Ownership of the potential Acquiring Person has resulted
from an Exempt Transaction, until five (5) Business Days after the
date on which all Board members first received actual notice of the
change of Beneficial Ownership at issue. Notwithstanding the
foregoing, the Board may, in its sole discretion, determine that
any Person shall not be deemed to be an “Acquiring Person” for any
purposes of this Agreement.
(c) “Affiliate” and “Associate” shall have the
respective meanings ascribed to such terms in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act as in effect
on the date of this Agreement, and to the extent not included
within the foregoing clause of this Section 1(c), shall also
include, with respect to any Person, any other Person (other than a
Related Person or an Exempt Person) whose shares of Common Stock
would be deemed constructively owned by such first Person, owned by
a single “entity” (as defined in Section 1.382-3(a)(1) of the
Treasury Regulations) or otherwise aggregated with shares owned by
such first Person pursuant to the provisions of Section 382 of the
Code, or any successor provision or replacement provision, and the
Treasury Regulations thereunder; provided, however, that a Person
shall not be deemed to be the Affiliate or Associate of another
Person solely because either or both Persons are or were directors
of the Company.
(d) “Agreement” shall have the meaning set forth in the
preamble of this Agreement.
(e) “Authorized Officer” shall mean the President and Chief
Executive Officer, or Chief Financial Officer of the Company.
(f) A Person shall be deemed the “Beneficial Owner” of,
shall be deemed to have “Beneficial Ownership” of and shall
be deemed to “Beneficially Own” any securities:
(i) which such Person or any of such Person’s Affiliates or
Associates, directly or indirectly owns or has the right to acquire
(whether such right is exercisable immediately or only after the
passage of time or upon the satisfaction of one or more conditions
(whether or not in the control of such Person), compliance with
regulatory requirements or otherwise) pursuant to any agreement,
arrangement or understanding (whether or not in writing) or upon
the exercise of conversion rights, exchange rights, rights (other
than these Rights), warrants or options, or otherwise, or the
obligation to acquire as a result of such Person’s ownership or
beneficial ownership of the Company’s outstanding equity units or
any purchase contract originally issued as part of an equity unit);
provided, however, that a Person shall not be deemed
the Beneficial Owner of, or to Beneficially Own, securities
tendered pursuant to a tender or exchange offer made by or on
behalf of such Person or any of such Person’s Affiliates or
Associates until such tendered securities are accepted for purchase
or exchange;
(ii) which such Person or any of such Person’s Affiliates or
Associates, directly or indirectly, has the right to vote or
dispose of or has “beneficial ownership” of (as determined pursuant
to Rule 13d-3 of the General Rules and Regulations under the
Exchange Act), including pursuant to any agreement, arrangement or
understanding, whether or not in writing; provided, however, that a
Person shall not be deemed the Beneficial Owner of, or to
Beneficially Own, any security under this subparagraph (ii) as a
result of an agreement, arrangement or understanding (whether or
not in writing) to vote such security if such agreement,
arrangement or understanding (A) arises solely from a revocable
proxy given in response to a public proxy or consent solicitation
made pursuant to, and in accordance with, the applicable provisions
of the General Rules and Regulations under the Exchange Act and (B)
is not reportable by such Person on Schedule 13D under the Exchange
Act (or any comparable or successor report);
(iii) which are Beneficially Owned, directly or indirectly,
by any other Person (or any Affiliate or Associate thereof) with
respect to which such Person (or any of such Person’s Affiliates or
Associates) has any agreement, arrangement or understanding
(whether or not in writing) for the purpose of acquiring, holding,
voting (except pursuant to a revocable proxy as described in the
proviso to subparagraph (ii) of this paragraph (f)) or disposing of
any voting securities of the Company; or
(iv) which such Person actually owns (directly or indirectly)
or would be deemed to actually or constructively own pursuant to
Section 382 of the Code, or any successor provision or replacement
provision, and the Treasury Regulations promulgated thereunder.
Notwithstanding the foregoing, nothing in this paragraph (f) shall
cause a Person engaged in business as an underwriter of securities
to be the Beneficial Owner of, or to Beneficially Own, any
securities acquired through such Person’s participation in good
faith in a firm commitment underwriting until the expiration of
forty (40) days after the date of such acquisition, and then only
if such securities continue to be owned by such Person at such
expiration of forty (40) days.
Notwithstanding anything in this definition of Beneficial Ownership
to the contrary, the phrase “then outstanding,” when used with
reference to a Person’s Beneficial Ownership of securities of the
Company, shall mean the number of such securities then issued and
outstanding together with the number of such securities not then
actually issued and outstanding which such Person would be deemed
to own beneficially hereunder.
(g) “Board” shall have the meaning set forth in the recitals
of this Agreement.
(h) “Business Day” shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in the State of New
York are authorized or obligated by law or executive order to
close.
(i) “Common Stock” shall have the meaning set forth in the
preamble of this Agreement.
(j) “Close of Business” on any given date shall mean 5:00
P.M., New York City time, on such date; provided, however, that if
such date is not a Business Day, it shall mean 5:00 P.M., New York
City time, on the next succeeding Business Day.
(k) “Code” shall mean the Internal Revenue Code of 1986, as
amended.
(l) “Company” shall have the meaning set forth in the
preamble of this Agreement.
(m) “Company’s Bylaws” shall mean the Amended and Restated
Bylaws of the Company, as the same may be amended from time to time
after the date hereof.
(n) “Company’s Charter” shall mean the Amended and Restated
Certificate of Incorporation of the Company, as the same may be
amended from time to time after the date hereof.
(o) “Current Per Share Market Price” shall have the meaning
set forth in Section 11(d)(i) or Section 11(d)(ii) hereof, as
applicable.
(p) “Current Value” shall have the meaning set forth in
Section 11(a)(iii) hereof.
(q) “Distribution Date” shall mean the earliest of (i) the
Close of Business on the 10th Business Day after the Stock
Acquisition Date and (ii) the Close of Business on the 10th
Business Day (or, such later date as may be specified by the Board
prior to such time as any Person becomes an Acquiring Person) after
the commencement of a tender or exchange offer by or on behalf of
any Person (other than the Company, any Related Person or any
Exempt Person), if upon the consummation thereof such Person would
become an Acquiring Person; provided, however, that if a tender or
exchange offer is terminated prior to the occurrence of a
Distribution Date, then no Distribution Date shall occur as a
result of such tender or exchange offer.
(r) “Equivalent Preferred Stock” shall have the meaning set
forth in Section 11(b) hereof.
(s) “Exchange Act” shall mean the Securities Exchange Act of
1934, as amended.
(t) “Exchange Ratio” shall have the meaning set forth in
Section 23(a) hereof.
(u) “Exempt Person” shall mean any Person (together with its
Affiliates and Associates) whose status as a 4.9% Stockholder, as
determined by the Board in its sole and absolute discretion, (i)
would not jeopardize or endanger in any material respect the
availability to the Company of its Tax Benefits, or (ii) is
otherwise in the best interests of the Company, provided, however,
that, such a Person shall cease to be an Exempt Person if the
Board, in its sole discretion, makes a contrary determination based
on the potential effect of such Person’s status as a 4.9%
Stockholder (together with all Affiliates and Associates of such
Person) regardless of the reason therefor.
(v) “Exempt Transaction” shall mean any transaction that the
Board determines, in its sole discretion, is exempt from this
Agreement, which determination shall be made in the sole and
absolute discretion of the Board, including, without limitation, if
the Board determines that (i) neither the Beneficial Ownership of
shares of Common Stock by such Person, directly or indirectly, as a
result of such transaction nor any other aspect of such transaction
would jeopardize or endanger the availability to the Company of the
Tax Benefits, or (ii) such transaction is otherwise in the best
interests of the Company.
(w) “Existing Holder” shall mean any Person that, as of the
date hereof, is the Beneficial Owner of 4.9% or more of the shares
of Common Stock outstanding unless and until such Existing Holder
acquires Beneficial Ownership of additional shares of Common Stock
(other than as a result of a dividend or distribution paid or made
by the Company on the outstanding shares of Common Stock or
pursuant to a split or subdivision of the outstanding shares of
Common Stock) representing 0.5% or more of the then outstanding
shares of Common Stock unless, upon becoming the Beneficial Owner
of such additional share(s), such Existing Holder is not then the
Beneficial Owner of 4.9% or more of the then outstanding shares of
Common Stock.
(x) “Expiration Date” shall mean the earliest of (i) the
Final Expiration Date, (ii) the time at which the Rights are
redeemed as provided in Section 22 hereof, (iii) the time at which
the Rights are exchanged in full as provided in Section 23 hereof,
(iv) the date that the Board determines that this Agreement is no
longer necessary for the preservation of material valuable Tax
Benefits, (v) the beginning of a taxable year of the Company to
which the Board determines that no Tax Benefits may be carried
forward, and (vi) a determination by the Board, prior to the time
any Person becomes an Acquiring Person, that this Agreement and the
Rights are no longer in the best interests of the Company and its
stockholders.
(y) “Final Expiration Date” shall be December 18, 2020.
(z) “NOLs” shall have the meaning set forth in the Recitals
to this Agreement.
(aa) “Ownership Statement” shall have the meaning set forth
in Section 3(a) hereof.
(bb) “Person” shall mean any individual, firm, corporation,
partnership, limited liability company, limited liability
partnership, trust or other legal entity, or any group of persons
making a “coordinated acquisition” of shares or otherwise treated
as an entity within the meaning of Section 1.382-3(a)(1) of the
Treasury Regulations or otherwise for purposes of Section 382 of
the Code, or any successor provision or replacement provision, and
includes any successor (by merger or otherwise) of such individual
or entity.
(cc) “Preferred Stock” shall mean the shares of Series A
Junior Participating Preferred Stock, par value $0.001 per share,
of the Company having the rights and preferences set forth in the
form of Certificate of Designation, Preferences and Rights of
Series A Junior Participating Preferred Stock attached hereto as
Exhibit A.
(dd) “Purchase Price” shall mean initially $40.00 per one
one-thousandth of a share of Preferred Stock, subject to adjustment
from time to time as provided in this Agreement.
(ee) “Record Date” shall have the meaning set forth in the
recitals to this Agreement.
(ff) “Redemption Price” shall mean $0.001 per Right, subject
to adjustment of the Company to reflect any stock split, stock
dividend or similar transaction occurring after the date
hereof.
(gg) “Related Person” shall mean (i) any Subsidiary of the
Company or (ii) any employee benefit or stock ownership plan of the
Company or of any Subsidiary of the Company or any entity
organized, appointed or established by the Company for or pursuant
to the terms of such plan.
(hh) “Rights” shall have the meaning set forth in the
recitals to this Agreement.
(ii) “Rights Agent” shall have the meaning set forth in the
preamble of this Agreement except as otherwise provided in Section
18 and Section 20 hereof.
(jj) “Rights Certificates” shall mean certificates
evidencing the Rights, in substantially the form attached hereto as
Exhibit B.
(kk) “Rights Dividend Declaration Date” shall have the
meaning set forth in the recitals to this Agreement.
(ll) “Section 11(a)(ii) Event” shall have the meaning set
forth in Section 11(a)(ii) hereof.
(mm) “Section 11(a)(ii) Trigger Date” shall have the meaning
set forth in Section 11(a)(iii) hereof.
(nn) “Section 11(o) Event” shall mean any event described in
clause (x), (y) or (z) of Section 11(o)(i) hereof.
(oo) “Securities Act” shall mean the Securities Act of 1933,
as amended.
(pp) “Spread” shall have the meaning set forth in Section
11(a)(iii) hereof.
(qq) “Stock Acquisition Date” shall mean the first date of
public announcement (which, for purposes of this definition, shall
include, without limitation, a report filed or amended pursuant to
Section 13(d) or Section 13(g) under the Exchange Act) by the
Company or an Acquiring Person that an Acquiring Person has become
such or that discloses information which reveals the existence of
an Acquiring Person, or such earlier date as a majority of the
Board becomes aware of the existence of an Acquiring Person.
(rr) “Subsidiary” shall mean, with reference to any Person,
any corporation or other entity of which an amount of securities or
other ownership interest having ordinary voting power sufficient to
elect at least a majority of the directors or other Persons having
similar functions of such corporation or other entity are at the
time, directly or indirectly, Beneficially Owned, or otherwise
controlled by such Person.
(ss) “Substitution Period” shall have the meaning set forth
in Section 11(a)(iii) hereof.
(tt) “Summary of Rights” shall mean a copy of a summary of
the terms of the Rights, in substantially the form attached hereto
as Exhibit C.
(uu) “Tax Benefits” shall mean the net operating loss
carry-overs, capital loss carry-overs, general business credit
carry-overs, alternative minimum tax credit carry-overs and foreign
tax credit carry-overs, as well as any loss or deduction
attributable to a “net unrealized built-in loss” within the meaning
of Section 382 of the Code, or any successor provision or
replacement provision, and the Treasury Regulations promulgated
thereunder, of the Company or any direct or indirect Subsidiary
thereof.
(vv) “Trading Day” shall mean a day on which the principal
national securities exchange on which the shares of Common Stock
are listed or admitted to trading is open for the transaction of
business or if the shares of Common Stock are not listed or
admitted to trading on any national securities exchange, a Business
Day.
(ww) “Treasury Regulations” shall mean final, temporary and
proposed regulations of the Department of the Treasury promulgated
under the Code and any successor regulation, including any
amendments thereto.
(xx) “Trust” shall have the meaning set forth in Section
23(a) hereof.
(yy) “Trust Agreement” shall have the meaning set
forth in Section 23(a) hereof.
Section 2. Appointment of the
Rights Agent. The Company hereby appoints the Rights Agent to
act as agent for the Company in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such
co-rights agents as it may deem necessary or desirable, upon ten
(10) days’ prior written notice to the Rights Agent. The Rights
Agent shall have no duty to supervise, and shall in no event be
liable for, the acts or omission of any such co-rights agent. Prior
to the appointment of a co-rights agent, the specific duties and
obligations of each such co-rights agents shall be set forth in
writing and delivered to the Rights Agent and the proposed
co-rights agent.
Section 3. Issuance of Rights
Certificates.
(a) Until the Distribution Date, (i) the Rights shall be evidenced
(subject to Section 3(b) and Section 3(c) hereof) by the
certificates representing the shares of Common Stock in the names
of the record holders thereof (which certificates representing such
shares of Common Stock shall also be deemed to be certificates for
Rights) or by the current ownership statements issued with respect
to uncertificated shares of Common Stock in lieu of such
certificates (“Ownership Statements”) (which Ownership Statements
shall be deemed also to be certificates for Rights) and (ii) the
Rights shall be transferable only in connection with the transfer
of the underlying shares of Common Stock.
(b) On or as promptly as practicable after the Record Date, the
Company shall send, in accordance with Section 25 hereof, to each
record holder of shares of Common Stock as of the Close of Business
on the Record Date, a copy of a Summary of Rights. With respect to
shares of Common Stock outstanding as of the Record Date, until the
Distribution Date, the Rights associated with such shares of Common
Stock will be evidenced by the certificate or Ownership Statement
for such shares of Common Stock registered in the names of the
holders thereof, in each case together with the Summary of Rights.
Until the Distribution Date, the surrender for transfer of any
certificate or Ownership Statement for shares of Common Stock
outstanding on the Record Date, with or without a copy of the
Summary of Rights, shall also constitute the transfer of the Rights
associated with the shares of Common Stock represented by such
certificate or Ownership Statement.
(c) Rights shall be issued by the Company in respect of all shares
of Common Stock (other than any shares of Common Stock that may be
issued upon the exercise or exchange of any Right) issued or
delivered by the Company after the Record Date but prior to the
earlier of the Distribution Date and the Expiration Date, and, to
the extent provided in Section 21 hereof, after the Distribution
Date. Certificates and Ownership Statements representing such
shares of Common Stock shall have stamped on, impressed on, printed
on, written on, or otherwise affixed to them a legend in
substantially the following form or such similar legend as the
Company may deem appropriate and is not inconsistent with the
provisions of this Agreement and as do not affect the rights,
duties or responsibilities of the Rights Agent, or as may be
required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation of
any stock exchange or transaction reporting system on which the
shares of Common Stock may from time to time be listed or
quoted:
“This [certificate/statement] also evidences and entitles the
holder hereof to certain Rights as set forth in the Section 382
Rights Agreement by and between Rubicon Technology, Inc. and
American Stock Transfer & Trust Company, LLC, dated as of
December 18, 2017 and as amended from time to time (the “Rights
Agreement”), the terms of which are hereby incorporated herein
by reference and a copy of which is on file at the principal
executive offices of Rubicon Technology, Inc. The Rights are not
exercisable prior to the occurrence of certain events specified in
the Rights Agreement. Under certain circumstances, as set forth in
the Rights Agreement, such Rights may be redeemed, may be
exchanged, may expire, may be amended, or may be evidenced by
separate certificates and no longer be evidenced by this
[certificate/statement]. Rubicon Technology, Inc. shall mail to the
holder of this [certificate/statement] a copy of the Rights
Agreement, as in effect on the date of mailing, without charge
promptly after receipt of a written request therefor. Under certain
circumstances as set forth in the Rights Agreement, Rights that are
or were beneficially owned by an Acquiring Person or any Affiliate
or Associate of an Acquiring Person (as such terms are defined in
the Rights Agreement) may become null and void.”
With respect to such certificates or Ownership Statements
containing the foregoing legend, until the Distribution Date, the
Rights associated with the shares of Common Stock represented by
such certificates or Ownership Statements shall be represented by
such certificates or Ownership Statements alone and the surrender
for transfer of any certificate or Ownership Statement for shares
of Common Stock shall also constitute the transfer of the Rights
associated with the shares of Common Stock represented by such
certificate or Ownership Statement.
(d) As promptly as practicable after the Distribution Date, the
Company shall prepare and execute, the Rights Agent shall
countersign and the Company shall send or cause to be sent (and the
Rights Agent will, if requested by the Company in writing, and if
provided with all necessary information, send), in accordance with
Section 25 hereof, to each record holder of shares of Common Stock,
as of the Close of Business on the Distribution Date (other than an
Acquiring Person or any Associate or Affiliate of an Acquiring
Person), a Rights Certificate representing one Right for each share
of Common Stock so held, subject to adjustment as provided herein.
In the event that an adjustment in the number of Rights per share
of Common Stock has been made pursuant to Section 11(i) or Section
11(p) hereof, at the time of distribution of the Rights
Certificates, the Company shall not be required to issue Rights
Certificates evidencing fractional Rights but may, in lieu thereof,
make the necessary and appropriate rounding adjustments (in
accordance with Section 13(a) hereof) so that Rights Certificates
evidencing only whole numbers of Rights are distributed and cash is
paid in lieu of any fractional Rights. As of and after the
Distribution Date, the Rights shall be represented solely by such
Rights Certificates. The Company shall promptly notify the Rights
Agent in writing upon the occurrence of the Distribution Date and,
if such notification is given orally, the Company shall confirm
same in writing on or prior to the next Business Day.
(e) In the event that the Company purchases or otherwise acquires
any shares of Common Stock after the Record Date but prior to the
Distribution Date, any Rights associated with such shares of Common
Stock shall be deemed cancelled and retired so that the Company
shall not be entitled to exercise any Rights associated with the
shares of Common Stock so purchased or acquired.
Section 4. Form of Rights
Certificates. The Rights Certificates (and the form of election
to purchase and the form of assignment and the certificates
contained therein to be printed on the reverse thereof) shall each
be substantially in the form attached hereto as Exhibit B with such
changes and marks of identification or designation, and such
legends, summaries or endorsements printed thereon as the Company
may deem appropriate and as are not inconsistent with the
provisions of this Agreement, or as may be required to comply with
any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange or
transaction reporting system on which the Rights may from time to
time be listed or quoted, or to conform to usage. Subject to the
provisions of Section 21 hereof, the Rights Certificates, whenever
distributed shall entitle the holders thereof to purchase such
number of one one-thousandths of a share of Preferred Stock as is
set forth therein at the Purchase Price; provided, however, that
the Purchase Price, the number and kind of securities issuable upon
exercise of each Right and the number of Rights outstanding shall
be subject to adjustment as provided in this Agreement.
Section 5. Countersignature and
Registration.
(a) The Rights Certificates shall be executed on behalf of the
Company by any Authorized Officer, either manually or by facsimile
signature, and shall have affixed thereto the Company’s seal or a
facsimile thereof, which shall be attested by any other Authorized
Officer, either manually or by facsimile signature. The Rights
Certificates shall be countersigned by the Rights Agent, either
manually or by facsimile signature, and shall not be valid for any
purpose unless so countersigned. In case any officer of the Company
who shall have signed any of the Rights Certificates shall cease to
be such officer of the Company before countersignature by the
Rights Agent and issuance and delivery by the Company, such Rights
Certificates, nevertheless, may be countersigned by the Rights
Agent and issued and delivered by the Company with the same force
and effect as though the person who signed such Rights Certificates
had not ceased to be such officer of the Company; and any Rights
Certificates may be signed on behalf of the Company by any person
who, at the actual date of the execution of such Rights
Certificate, shall be a proper officer of the Company to sign such
Rights Certificate, although at the date of the execution of this
Agreement any such person was not such an officer.
(b) Following the Distribution Date, upon receipt by the Rights
Agent of written notice of the occurrence of the Distribution Date
pursuant to Section 3(d) hereof, the Rights Agent shall keep or
cause to be kept, at its office or offices designated for such
purposes and at such other offices as may be required to comply
with any applicable law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock
exchange or any transaction reporting system on which the rights
may from time to time be listed or quoted, books for registration
and transfer of the Rights Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders
of the Rights Certificates, the number of Rights evidenced on its
face by each of the Rights Certificates and the date of each of the
Rights Certificates.
Section 6. Transfer, Split-Up,
Combination and Exchange of Rights Certificates; Mutilated,
Destroyed, Lost or Stolen Rights Certificates.
(a) Subject to the provisions of Section 11(a)(ii) and Section 13
hereof, at any time after the Close of Business on the Distribution
Date, and prior to the Expiration Date, any Rights Certificate(s)
(other than Rights Certificates representing Rights that have been
redeemed or exchanged pursuant to Section 22 or Section 23 hereof)
representing exercisable Rights may be transferred, split-up,
combined or exchanged for another Rights Certificate(s), entitling
the registered holder to purchase a like number of one
one-thousandths of a share of Preferred Stock (or other securities,
cash or other assets, as the case may be) as the Rights
Certificate(s) surrendered then entitled such holder (or former
holder in the case of a transfer) to purchase. Any registered
holder desiring to transfer, split-up, combine or exchange any such
Rights Certificate(s) must make such request in writing delivered
to the Rights Agent, and must surrender the Rights Certificate(s)
to be transferred, split-up, combined or exchanged, with the forms
of assignment and certificate contained therein duly executed, at
the office or offices of the Rights Agent designated for such
purpose. The Rights Certificates are transferable only on the
registry books of the Rights Agent. Neither the Rights Agent nor
the Company shall be obligated to take any action whatsoever with
respect to the transfer of any such surrendered Rights Certificate
until the registered holder shall have (i) completed and signed the
certificate contained in the form of assignment on the reverse side
of such Rights Certificate, (ii) provided such additional evidence
of the identity of the Beneficial Owner (or former Beneficial
Owner) and the Affiliates and Associates of such Beneficial Owner
(or former Beneficial Owner) as the Company or the Rights Agent
shall reasonably request, and (iii) paid a sum sufficient to cover
any tax or charge that may be imposed in connection with any
transfer, split-up, combination or exchange of Rights Certificates
as required by Section 9(d) hereof. Thereupon the Rights Agent
shall, subject to Section 11(a)(ii), Section 13 and Section 23
hereof, countersign and deliver to the Person entitled thereto a
Rights Certificate or Rights Certificates, as the case may be, as
so requested registered in such name or names as may be designated
by the surrendering registered holder. The Rights Agent shall
promptly forward any such sum collected by it to the Company or to
such Person or Persons as the Company shall specify by written
notice. The Rights Agent shall have no duty or obligation unless
and until it is satisfied that all such taxes and/or charges have
been paid.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Rights Certificate, and, in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to
them, and reimbursement to the Company and the Rights Agent of all
reasonable expenses incidental thereto, and upon surrender to the
Rights Agent and cancellation of the Rights Certificate, if
mutilated, the Company shall execute and deliver a new Rights
Certificate of like tenor to the Rights Agent and the Rights Agent
will countersign and deliver such new Rights Certificate to the
registered holder in lieu of the Rights Certificate so lost,
stolen, destroyed or mutilated.
Section 7. Exercise of Rights;
Purchase Price; Expiration Date of Rights.
(a) Subject to Section 11(a)(ii) hereof, at any time after the
Distribution Date and prior to the Expiration Date, the registered
holder of any Rights Certificate may exercise the Rights evidenced
thereby (except as otherwise provided herein, including, without
limitation, the restrictions on exercisability as set forth in
Section 9(e), Section 11(a)(iii), Section 22(a) and Section 23(a)
hereof) in whole or in part upon surrender of the Rights
Certificate, with the form of election to purchase and the
certificate contained therein on the reverse side thereof duly
executed, to the Rights Agent at the office or agency of the Rights
Agent designated for such purpose, together with payment of the
Purchase Price (including any applicable tax or charge required to
be paid by the holder of such Rights Certificate in accordance with
the provisions of Section 9(d) hereof) for each one one-thousandth
of a share of Preferred Stock (or other securities, cash or other
assets, as the case may be) as to which the Rights are
exercised.
(b) Upon receipt of a Rights Certificate representing exercisable
Rights with the form of election to purchase and the certificate
contained therein properly completed and duly executed, accompanied
by payment of the Purchase Price for each one one-thousandth of a
share of Preferred Stock (or other securities, cash or other
assets, as the case may be) to be purchased and an amount equal to
any applicable tax or charge required to be paid under Section 9(d)
hereof by certified check, cashier’s check, bank draft or money
order payable to the order of the Company, the Rights Agent shall,
subject to Section 19(j) hereof, thereupon promptly (i) (A)
requisition from any transfer agent of the shares of Preferred
Stock (or make available, if the Rights Agent is the transfer agent
for such shares) certificates representing the total number of one
one-thousandths of a share of Preferred Stock to be purchased (and
the Company hereby irrevocably authorizes and directs its transfer
agent to comply with all such requests) or (B) if the Company shall
have at its discretion elected to deposit any shares of Preferred
Stock issuable upon exercise of the Rights hereunder with a
depositary agent, requisition from the depositary agent depositary
receipts representing such number of one one-thousandths of a share
of Preferred Stock as are to be purchased (and the Company hereby
irrevocably authorizes and directs such depositary agent to comply
with all such requests), (ii) after receipt of such certificates
(or depositary receipts, as the case may be) cause the same to be
delivered to or upon the order of the registered holder of such
Rights Certificate, registered in such name or names as may be
designated by such holder, (iii) when appropriate, requisition from
the Company or any transfer agent therefor of certificates
representing the number of equivalent shares to be issued in lieu
of the issuance of shares of Common Stock in accordance with the
provisions of Section 11(a)(iii) hereof, (iv) when appropriate,
after receipt of such certificates, cause the same to be delivered
to or upon the order of the registered holder of such Rights
Certificate, registered in such name or names as may be designated
by such holder, (v) when appropriate, requisition from the Company
of the amount of cash to be paid in lieu of the issuance of
fractional shares in accordance with the provisions of Section 13
hereof, and (vi) when appropriate, after receipt, deliver such cash
to the registered holder of such Rights Certificate.
(c) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, the Rights
Agent shall prepare, execute and deliver a new Rights Certificate
evidencing Rights equivalent to the Rights remaining unexercised to
the registered holder of such Rights Certificate or to such
holder’s duly authorized assigns, subject to the provisions of
Section 13 hereof.
(d) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to any purported transfer,
split-up, combination or exchange of any Rights Certificate
pursuant to Section 6 hereof or exercise or assignment of a Rights
Certificate as set forth in this Section 7 unless the registered
holder of such Rights Certificate shall have (i) duly and properly
completed and signed the certificate contained in the form of
assignment or the form of election to purchase, as applicable, set
forth on the reverse side of the Rights Certificate surrendered for
such transfer, split-up, combination, exchange, exercise or
assignment, and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner)
thereof and of the Rights evidenced thereby and Affiliates and
Associates thereof as the Company or the Rights Agent may
reasonably request.
Section 8. Cancellation and
Destruction of Rights Certificates. All Rights Certificates
surrendered for the purpose of exercise, transfer, split-up,
combination or exchange shall, if surrendered to the Company or any
of its agents, be delivered to the Rights Agent for cancellation or
in cancelled form, or, if surrendered to the Rights Agent, shall be
cancelled by it, and no Rights Certificates shall be issued in lieu
thereof except as expressly permitted by any of the provisions of
this Agreement. The Company shall deliver to the Rights Agent for
cancellation and retirement, and the Rights Agent shall so cancel
and retire, any other Rights Certificate purchased or acquired by
the Company otherwise than upon the exercise thereof. The Rights
Agent shall deliver all cancelled Rights Certificates to the
Company, or shall, at the written request of the Company, destroy
such cancelled Rights Certificates, and in such case shall deliver
a certificate of destruction thereof to the Company.
Section 9. Company Covenants
Concerning Securities and Rights.
(a) The Company covenants and agrees that it shall cause to be
reserved, authorized for issuance and kept available out of its
authorized and unissued shares of Preferred Stock, a number of
shares of Preferred Stock that shall be sufficient to permit the
exercise in full of all outstanding Rights in accordance with
Section 7 hereof.
(b) The Company covenants and agrees so long as the shares of
Preferred Stock (and, following the occurrence of a Section
11(a)(ii) Event, shares of Common Stock or other securities, as the
case may be) issuable upon the exercise of the Rights may be listed
on any national securities exchange, or quoted on a quotation
system, it shall endeavor to cause, from and after such time as the
Rights become exercisable, all securities reserved for issuance
upon the exercise of Rights to be listed on such exchange, or
quoted on such quotation system, upon official notice of issuance
upon such exercise.
(c) The Company covenants and agrees it will take all such actions
as may be necessary to ensure that all shares of Preferred Stock
(and, following the occurrence of a Section 11(a)(ii) Event, shares
of Common Stock or other securities, as the case may be) delivered
upon exercise of Rights, at the time of delivery of the
certificates for such securities, shall be (subject to payment of
the Purchase Price) duly authorized, validly issued, fully paid and
nonassessable securities.
(d) The Company covenants and agrees it will pay when due and
payable any and all federal and state taxes and charges that may be
payable in respect of the issuance or delivery of the Rights
Certificates and of any certificates representing securities issued
upon the exercise of Rights; provided, however, that the Company
shall not be required to pay any tax or charge which may be payable
in respect of any transfer or delivery of Rights Certificates to a
person other than, or the issuance or delivery of certificates or
depositary receipts representing securities issued upon the
exercise of Rights in a name other than, that of the registered
holder of the Rights Certificate evidencing Rights surrendered for
exercise, or to issue or deliver any certificates or depositary
receipts representing securities issued upon the exercise of any
Rights until any such tax or charge has been paid (any such tax or
charge being payable by the holder of such Rights Certificate at
the time of surrender) or until it has been established to the
Company’s reasonable satisfaction that no such tax or charge is
due.
(e) If the Company determines that registration under the
Securities Act is required, then the Company shall use commercially
reasonable efforts (i) to file, as soon as practicable after the
Distribution Date, on an appropriate form, a registration statement
under the Securities Act with respect to the securities issuable
upon exercise of the Rights, (ii) to cause such registration
statement to become effective as soon as practicable after such
filing and (iii) to cause such registration statement to remain
effective (with a prospectus at all times meeting the requirements
of the Securities Act) until the earlier of (A) the date as of
which the Rights are no longer exercisable for such securities and
(B) the Expiration Date. The Company shall also take such action as
may be appropriate under, or to ensure compliance with, the
securities or “blue sky” laws of the various states in connection
with the exercisability of the Rights. The Company may temporarily
suspend, for a period of time not to exceed 90 calendar days after
the date the Company determines that registration is required, the
exercisability of the Rights in order to prepare and file such
registration statement and to permit it to become effective or to
qualify the rights, the exercise thereof or the issuance of shares
of Preferred Stock, Common Stock, or other securities upon the
exercise thereof under state securities or “blue sky” laws. Upon
any such suspension, the Company shall issue a public announcement
stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the
suspension is no longer in effect. The Company shall notify the
Rights Agent in writing whenever it makes a public announcement
pursuant to this Section 9(e) and give the Rights Agent a copy of
such announcement. In addition, if the Company determines that a
registration statement or other document should be filed under the
Securities Act or any state securities laws following the
Distribution Date, the Company may temporarily suspend the
exercisability of the Rights, for a period of time not to exceed
ninety (90) calendar days after the date the Company makes such
determination, in each relevant jurisdiction, until such time as a
registration statement has been declared effective or any such
other document filed and, if required, approved, and, upon any such
suspension, the Company shall issue a public announcement stating
that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the
suspension is no longer in effect. Notwithstanding anything in this
Agreement to the contrary, the Rights shall not be exercisable in
any jurisdiction if the requisite registration or qualification in
such jurisdiction has not been effected or the exercise of the
Rights is not permitted under applicable law.
(f) Notwithstanding anything in this Agreement to the contrary,
after the later of the Stock Acquisition Date and the Distribution
Date, the Company shall not, except as permitted by Section 22 or
Section 26 hereof, take (or permit any Subsidiary to take) any
action if at the time such action is taken it is reasonably
foreseeable that such action shall eliminate or otherwise diminish
the benefits intended to be afforded by the Rights.
(g) In the event that the Company is obligated to issue other
securities of the Company, pay cash or distribute other assets
pursuant to Section 7, Section 11, Section 13, Section 22 or
Section 23 hereof, it shall make all arrangements necessary so that
such other securities, cash or other assets are available for
distribution by the Rights Agent, if and when necessary to comply
with this Agreement.
Section 10. Record Date. Each
Person in whose name any certificate for a number of one
one-thousandths of a share of Preferred Stock (or Common Stock or
other securities, as the case may be) is issued upon the exercise
of Rights shall for all purposes be deemed to have become the
holder of record of such shares of Preferred Stock (or Common Stock
or other securities, as the case may be) represented thereby on,
and such certificate shall be dated, the date upon which the Rights
Certificate representing such Rights was duly surrendered and
payment of the Purchase Price (and all applicable taxes and
charges) was made; provided, however, that if the date of such
surrender and payment is a date upon which the transfer books of
the Company for shares of Preferred Stock (or Common Stock or other
securities, as the case may be) are closed, such Person shall be
deemed to have become the record holder of such securities on, and
such certificate shall be dated, the next succeeding Business Day
on which the transfer books of the Company are open. Prior to the
exercise of the Rights evidenced thereby, the holder of a Rights
Certificate shall not be entitled to any rights of a holder of any
security of the Company with respect to shares for which the Rights
are or may be exercisable, including, without limitation, the right
to vote, to receive dividends or other distributions or to exercise
any preemptive rights, and shall not be entitled to receive any
notice of any proceedings of the Company, except as provided
herein.
Section 11. Adjustment of Purchase
Price, Number and Kind of Securities or Number of Rights. The
Purchase Price, the number of shares of Preferred Stock or other
securities or property purchasable upon exercise of each Right and
the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the Record
Date (A) declare a dividend on the shares of Preferred Stock
payable in shares of Preferred Stock, (B) subdivide the outstanding
shares of Preferred Stock, (C) combine the outstanding shares of
Preferred Stock into a smaller number of shares of Preferred Stock,
or (D) issue any shares of its capital stock in a reclassification
of the shares of Preferred Stock (including any such
reclassification in connection with a consolidation or merger in
which the Company is the continuing or surviving corporation),
except as otherwise provided in this Section 11(a), the Purchase
Price in effect at the time of the record date for such dividend or
of the effective date of such subdivision, combination or
reclassification, as the case may be, and the number and kind of
shares of capital stock issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised
after such time shall be entitled to receive, upon payment of the
Purchase Price then in effect, the aggregate number and kind of
shares of capital stock which, if such Right had been exercised
immediately prior to such date (whether or not such Right was then
exercisable) and at a time when the transfer books of the Company
for the shares of Preferred Stock (or other capital stock, as the
case may be) were open, the holder would have owned upon such
exercise and been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification; provided, however,
that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par value of the
shares of capital stock of the Company issuable upon exercise of
one Right.
(ii) Subject to Section 22 and Section 23 of this Agreement and
except as otherwise provided in this Section 11(a)(ii) and Section
11(a)(iii) hereof, in the event that any Person becomes an
Acquiring Person (a “Section 11(a)(ii) Event”), each holder
of a Right shall thereafter have the right to receive, upon
exercise thereof at a price equal to the then-current Purchase
Price, in accordance with the terms of this Agreement and in lieu
of shares of Preferred Stock, such number of shares of Common Stock
(or at the option of the Company, such number of one
one-thousandths of a share of Preferred Stock) as shall equal the
result obtained by (x) multiplying the then-current Purchase Price
by the number of one one-thousandths of a share of Preferred Stock
for which a Right was exercisable immediately prior to the first
occurrence of a Section 11(a)(ii) Event and (y) dividing that
product by 50% of the Current Per Share Market Price of the Common
Stock (determined pursuant to Section 11(d) hereof) on the date of
such first occurrence; provided, however, that the Purchase Price
(as so adjusted) and the number of shares of Common Stock so
receivable upon exercise of a Right shall thereafter be subject to
further adjustment as appropriate in accordance with Section 11(f)
hereof.
For example, a stockholder of the Company who Beneficially
Owns 5,000 shares of Common Stock will receive 5,000 Rights, each
Right entitling such stockholder to purchase one one-thousandth of
a share of Preferred Stock. Pursuant to this Section 11(a)(ii), for
each Right such stockholder owns, he/she will be entitled to
receive a total number of shares of Common Stock according to the
following equation:
|
No. of Shares of Common Stock
= |
Purchase Price × 1 |
| 50% ×
Current Per Share Market Price of the Common Stock |
For the purpose of the above example, the total number of shares of
Common Stock such stockholder will receive upon exercising all
5,000 Rights will be the product of multiplying the above “No. of
Shares of Common Stock” by 5,000.
Notwithstanding anything in this Agreement to the contrary,
however, from and after the first occurrence of a Section 11(a)(ii)
Event, any Rights that are Beneficially Owned by (A) any Acquiring
Person (or any Affiliate or Associate of any Acquiring Person), (B)
a transferee of any Acquiring Person (or any such Affiliate or
Associate) who becomes a transferee after the occurrence of such
Person becoming an Acquiring Person, or (C) a transferee of any
Acquiring Person (or any such Affiliate or Associate) who became a
transferee prior to or concurrently with such Person becoming an
Acquiring Person pursuant to either (1) a transfer from the
Acquiring Person (or any such Affiliate or Associate) to holders of
its equity securities or to any Person with whom the Acquiring
Person (or any such Affiliate or Associate) has any continuing
agreement, arrangement or understanding, written or otherwise,
regarding the transferred Rights or (2) a transfer that the Board
has determined is part of a plan, arrangement or understanding,
written or otherwise, which has the purpose or effect of avoiding
the provisions of this paragraph, shall be null and void without
any further action and any holder of such Rights shall thereafter
have no rights whatsoever with respect to such Rights, whether
under any provision of this Agreement or otherwise. The Company
will use commercially reasonable efforts to ensure that the
provisions of this Section 11(a)(ii) are complied with, but shall
have no liability to any holder of Rights Certificates or other
Person as a result of its failure to make any determinations with
respect to an Acquiring Person or its Affiliates, Associates or
transferees hereunder. From and after the occurrence of any Person
becoming an Acquiring Person, no Right Certificates shall be issued
pursuant to Section 3 or Section 6 hereof that represents Rights
that are or have become void pursuant to the provisions of this
paragraph, and any Right Certificates delivered to the Rights Agent
that represents Rights that are or have become void pursuant to the
provisions of this paragraph shall be cancelled.
(iii) The Company may at its option substitute for a share of
Common Stock issuable upon the exercise of Rights in accordance
with the foregoing Section 11(a)(ii) such number or fractions of
shares of Preferred Stock having an aggregate current market value
equal to the Current Per Share Market Price of a share of Common
Stock. In the event that there shall be an insufficient number of
shares of Common Stock authorized but unissued (and unreserved) to
permit the exercise in full of the Rights in accordance with the
foregoing Section 11(a)(ii), the Board shall, with respect to such
deficiency, to the extent not prohibited by applicable law or any
material agreements then in effect to which the Company is a party
(A) determine the excess of (1) the value of the shares of Common
Stock issuable upon the exercise of a Right in accordance with the
foregoing Section 11(a)(ii) (the “Current Value”) over (2)
the then-current Purchase Price (such excess, the “Spread”),
and (B) with respect to each Right (other than Rights which have
become void pursuant to Section 11(a)(ii)), make adequate provision
to substitute for the shares of Common Stock issuable in accordance
with Section 11(a)(ii) upon exercise of the Right and payment of
the applicable Purchase Price, (1) cash, (2) a reduction in the
Purchase Price, (3) shares of Preferred Stock or other equity
securities of the Company (including, without limitation, shares or
fractions of shares of preferred stock which, by virtue of having
dividend, voting and liquidation rights substantially comparable to
those of the shares of Common Stock, are deemed in good faith by
the Board to have substantially the same value as the shares of
Common Stock), (4) debt securities of the Company, (5) other
assets, or (6) any combination of the foregoing, having a value
which, when added to the value of the shares of Common Stock
actually issued upon exercise of such Right, shall have an
aggregate value equal to the Current Value, where such aggregate
value has been determined by the Board (upon the advice of a
nationally recognized investment banking firm selected by the Board
in good faith); provided, however, if the Company shall not make
adequate provision to deliver value pursuant to clause (B) above
within thirty (30) calendar days following the later of (x) the
first occurrence of a Section 11(a)(ii) Event and (y) the date on
which the Company’s right of redemption pursuant to Section 22(a)
expires (the later of (x) and (y) being referred to herein as the
“Section 11(a)(ii) Trigger Date”), then the Company shall be
obligated to deliver, to the extent not prohibited by applicable
law or any material agreements then in effect to which the Company
is a party, upon the surrender for exercise of a Right and without
requiring payment of the Purchase Price, shares of Common Stock (to
the extent available), and then, if necessary, such number or
fractions of shares of Preferred Stock (to the extent available)
and then, if necessary, cash, which shares and cash have an
aggregate value equal to the Spread. If within the 30-day period
referred to above the Board shall determine in good faith that it
is likely that sufficient additional shares of Common Stock could
be authorized for issuance upon exercise in full of the Rights,
then, if the Board so elects, such 30-day period may be extended to
the extent necessary, but not more than ninety (90) calendar days
after the Section 11(a)(ii) Trigger Date, in order that the Company
may seek stockholder approval for the authorization of such
additional shares (such 30-day period, as it may be extended, is
hereinafter called the “Substitution Period”). To the extent that
the Company determines that some action need be taken pursuant to
the second or third sentence of this Section 11(a)(iii), the
Company (I) shall provide, subject to Section 11(a)(ii), that such
action shall apply uniformly to all outstanding Rights, and (II)
may suspend the exercisability of the Rights until the expiration
of the Substitution Period in order to seek any authorization of
additional shares or to decide the appropriate form of distribution
to be made pursuant to such second sentence and to determine the
value thereof. In the event of any such suspension, the Company
shall issue a public announcement stating that the exercisability
of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in
effect.
(b) If the Company fixes a record date for the issuance of rights,
options or warrants to all holders of shares of Preferred Stock
entitling them (for a period expiring within forty-five (45)
calendar days after such record date) to subscribe for or purchase
shares of Preferred Stock (or securities having equivalent rights,
privileges and preferences as the shares of Preferred Stock (for
purposes of this Section 11(b), “Equivalent Preferred
Stock”)) or securities convertible into shares of Preferred
Stock or Equivalent Preferred Stock at a price per share of
Preferred Stock or Equivalent Preferred Stock (or having a
conversion price per share, if a security convertible into shares
of Preferred Stock or Equivalent Preferred Stock) less than the
Current Per Share Market Price of the shares of Preferred Stock
(determined pursuant to Section 11(d) hereof) on such record date,
the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which is
the number of shares of Preferred Stock outstanding on such record
date plus the number of shares of Preferred Stock which the
aggregate offering price of the total number of shares of Preferred
Stock and Equivalent Preferred Stock so to be offered (or the
aggregate initial conversion price of the convertible securities so
to be offered) would purchase at such Current Per Share Market
Price and the denominator of which is the number of shares of
Preferred Stock outstanding on such record date plus the number of
additional shares of Preferred Stock and Equivalent Preferred
Shares to be offered for subscription or purchase (or into which
the convertible securities so to be offered are initially
convertible); provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less
than the aggregate par value of the shares of capital stock
issuable upon exercise of one Right. In case such subscription
price may be paid in a consideration part or all of which is in a
form other than cash, the value of such consideration shall be as
determined in good faith by the Board, whose determination shall be
described in a written statement filed with the Rights Agent.
Shares of Preferred Stock owned by or held for the account of the
Company shall not be deemed outstanding for the purpose of any such
computation. Such adjustments shall be made successively whenever
such a record date is fixed, and in the event that such rights,
options or warrants are not so issued, the Purchase Price shall be
adjusted to be the Purchase Price which would then be in effect if
such record date had not been fixed.
(c) If the Company fixes a record date for the making of a
distribution to all holders of shares of Preferred Stock (including
any such distribution made in connection with a consolidation or
merger in which the Company is the continuing or surviving
corporation) of evidences of indebtedness, cash (other than a
regular periodic cash dividend), assets, stock (other than a
dividend payable in shares of Preferred Stock) or subscription
rights, options or warrants (excluding those referred to in Section
11(b) hereof), the Purchase Price to be in effect after such record
date shall be determined by multiplying the Purchase Price in
effect immediately prior to such record date by a fraction, the
numerator of which is the Current Per Share Market Price of the
shares of Preferred Stock (as determined pursuant to Section 11(d)
hereof) on such record date or, if earlier, the date on which
shares of Preferred Stock begin to trade on an ex-dividend or when
issued basis for such distribution, less the fair market value (as
determined in good faith by the Board, whose determination shall be
described in a written statement filed with the Rights Agent) of
the portion of the evidences of indebtedness, cash, assets or stock
so to be distributed or of such subscription rights, options or
warrants applicable to one share of Preferred Stock, and the
denominator of which is such Current Per Share Market Price of the
shares of Preferred Stock; provided, however, that in no event
shall the consideration to be paid upon the exercise of one Right
be less than the aggregate par value of the shares of capital stock
issuable upon exercise of one Right. Such adjustments shall be made
successively whenever such a record date is fixed; and in the event
that such distribution is not so made, the Purchase Price shall
again be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, the “Current
Per Share Market Price” of a share of Common Stock on any date
shall be deemed to be the average of the daily closing prices per
share of a share of Common Stock for the 30 consecutive Trading
Days immediately prior to, but not including, such date; provided,
however, that in the event that the Current Per Share Market Price
of Common Stock is determined during a period following the
announcement by the Company of (A) a dividend or distribution on
such shares of Common Stock payable in shares of Common Stock or
securities convertible into such shares (other than the Rights) or
(B) any subdivision, combination or reclassification of such shares
of Common Stock, and prior to the expiration of 30 Trading Days
after, but not including, the ex-dividend date for such dividend or
distribution, or the record date for such subdivision, combination
or reclassification, then, and in each such case, the Current Per
Share Market Price shall be appropriately adjusted to take into
account ex-dividend trading or to reflect the current per share
market price per share equivalent of such shares of Common Stock.
The closing price for each day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either
case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to
trading on the NASDAQ Stock Market or, if the Common Stock is not
listed or admitted to trading on the NASDAQ Stock Market, as
reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national
securities exchange on which the Common Stock is listed or admitted
to trading or, if the Common Stock is not listed or admitted to
trading on any national securities exchange, the last quoted price
or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported on a quotation
system then in use, or, if on any such date the Common Stock is not
quoted by any such organization, the average of the closing bid and
asked prices as furnished by a professional market maker making a
market in the Common Stock selected by the Board. If the Common
Stock is not publicly held or not so listed or traded, or is not
the subject of available bid and asked quotes, the Current Per
Share Market Price of such Common Stock shall mean the fair value
per share as determined in good faith by the Board, whose
determination shall be described in a statement filed with the
Rights Agent.
(ii) For the purpose of any computation hereunder, the “Current
Per Share Market Price” of a share of Preferred Stock shall be
determined in accordance with the method set forth above in Section
11(d)(i). If the Current Per Share Market Price of Preferred Stock
cannot be determined in the manner provided above, it shall be
conclusively deemed to be an amount equal to the current per share
market price of the shares of Common Stock multiplied by one
thousand (as such number may be appropriately adjusted to reflect
events such as stock splits, stock dividends, recapitalizations or
similar transactions relating to the shares of Common Stock
occurring after the date of this Agreement). If neither the Common
Stock nor the Preferred Stock are publicly held or so listed or
traded, or the subject of available bid and asked quotes, Current
Per Share Market Price of the Preferred Stock shall mean the fair
value per share as determined in good faith by the Board, whose
determination shall be described in a statement filed with the
Rights Agent. For all purposes of this Agreement, the current per
share market price of one one-thousandth of a Preferred Share will
be equal to the current per share market price of one Preferred
Share divided by one thousand.
(e) Except as set forth below, no adjustment in the Purchase Price
shall be required unless such adjustment would require an increase
or decrease of at least 1% in such Purchase Price; provided,
however, that any adjustments which by reason of this
Section 11(e) are not required to be made shall be carried forward
and taken into account in any subsequent adjustment. All
calculations under this Section 11 shall be made to the nearest
cent or to the nearest one one-millionth of a share of Preferred
Stock or one one-thousandth of a share of Common Stock or other
security, as the case may be. Notwithstanding the first sentence of
this Section 11(e), any adjustment required by this Section 11
shall be made no later than the earlier of (i) three years from the
date of the transaction which requires such adjustment and (ii) the
Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a)
hereof, the holder of any Right thereafter exercised becomes
entitled to receive any securities of the Company other than shares
of Preferred Stock, thereafter the number or kind of such other
securities so receivable upon exercise of any Right (or the
Purchase Price in respect thereof) shall be subject to adjustment
from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the shares of
Preferred Stock (and the Purchase Price in respect thereof)
contained in this Section 11, and the provisions of Section 7,
Section 9, Section 10 and Section 13 hereof with respect to the
shares of Preferred Stock (and the Purchase Price in respect
thereof) shall apply on like terms to any such other securities
(and the Purchase Price in respect thereof).
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the
right to purchase, at the adjusted Purchase Price, the number of
one one-thousandths of a share of Preferred Stock issuable from
time to time hereunder upon exercise of the Rights, all subject to
further adjustment as provided herein.
(h) Unless the Company has exercised its election as provided in
Section 11(i) hereof, upon each adjustment of the Purchase Price
pursuant to Section 11(b) or Section 11(c) hereof, each Right
outstanding immediately prior to the making of such adjustment
shall thereafter evidence the right to purchase, at the adjusted
Purchase Price, that number of one one-thousandths of a share of
Preferred Stock (calculated to the nearest one one-millionth of a
share of Preferred Stock) obtained by (i) multiplying (x) the
number of one one-thousandths of a share of Preferred Stock
issuable upon exercise of a Right immediately prior to such
adjustment of the Purchase Price by (y) the Purchase Price in
effect immediately prior to such adjustment of the Purchase Price
and (ii) dividing the product so obtained by the Purchase Price in
effect immediately after such adjustment of the Purchase Price.
(i) The Company may elect, on or after the date of any adjustment
of the Purchase Price, to adjust the number of Rights in
substitution for any adjustment in the number of one
one-thousandths of a share of Preferred Stock issuable upon the
exercise of a Right. Each of the Rights outstanding after such
adjustment of the number of Rights shall be exercisable for the
number of one one-thousandths of a share of Preferred Stock for
which a Right was exercisable immediately prior to such adjustment.
Each Right held of record prior to such adjustment of the number of
Rights shall become that number of Rights (calculated to the
nearest one hundred-thousandth) obtained by dividing the Purchase
Price in effect immediately prior to adjustment of the Purchase
Price by the Purchase Price in effect immediately after adjustment
of the Purchase Price. The Company shall make a public announcement
of its election to adjust the number of Rights, indicating the
record date for the adjustment, and, if known at the time, the
amount of the adjustment to be made. The Company shall also, as
promptly as practicable, notify the Rights Agent in writing of same
pursuant to Section 9(e) hereof and give the Rights Agent a copy of
such announcement. Such record date may be the date on which the
Purchase Price is adjusted or any day thereafter, but if the Rights
Certificates have been issued, such record date shall be at least
ten (10) calendar days later than the date of the public
announcement. If Rights Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(i),
the Company shall, as promptly as practicable, cause to be
distributed to holders of record of Rights Certificates on such
record date Rights Certificates evidencing, subject to the
provision of Section 13 hereof, the additional Rights to which such
holders are entitled as a result of such adjustment, or, at the
option of the Company, shall cause to be distributed to such
holders of record in substitution and replacement for the Rights
Certificates held by such holders prior to the date of adjustment,
and upon surrender thereof if required by the Company, new Rights
Certificates evidencing all the Rights to which such holders are
entitled after such adjustment. Rights Certificates so to be
distributed shall be issued, executed, and countersigned in the
manner provided for herein (and may bear, at the option of the
Company, the adjusted Purchase Price) and shall be registered in
the names of the holders of record of Rights Certificates on the
record date specified in the public announcement.
(j) Without respect to any adjustment or change in the Purchase
Price or the number or kind of securities issuable upon the
exercise of the Rights, the Rights Certificates theretofore and
thereafter issued may continue to express the Purchase Price and
the number and kind of securities which were expressed in the
initial Rights Certificate issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below one one-thousandth of the then
par value, if any, of the shares of Preferred Stock or below the
then par value, if any, of any other securities of the Company
issuable upon exercise of the Rights, the Company shall take any
corporate action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue
fully paid and nonassessable shares of Preferred Stock or such
other securities, as the case may be, at such adjusted Purchase
Price.
(l) In any case in which this Section 11 otherwise requires that an
adjustment in the Purchase Price be made effective as of a record
date for a specified event, the Company may elect to defer until
the occurrence of such event the issuance to the holder of any
Right exercised after such record date of the number of one
one-thousandths of a share of Preferred Stock or other securities
of the Company, if any, issuable upon such exercise over and above
the number of one one-thousandths of a share of Preferred Stock or
other securities of the Company, if any, issuable upon such
exercise on the basis of the Purchase Price in effect prior to such
adjustment; provided, however, that the Company delivers to such
holder a due bill or other appropriate instrument evidencing such
holder’s right to receive such additional shares of Preferred Stock
or other securities upon the occurrence of the event requiring such
adjustment.
(m) Notwithstanding anything in this Agreement to the contrary, the
Company shall be entitled to make such reductions in the Purchase
Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that in its good faith judgment
the Board determines to be necessary or advisable in order that any
(i) consolidation or subdivision of the shares of Preferred Stock,
(ii) issuance wholly for cash of shares of Preferred Stock at less
than the Current Per Share Market Price therefor, (iii) issuance
wholly for cash of shares of Preferred Stock or securities which by
their terms are convertible into or exchangeable for shares of
Preferred Stock, (iv) stock dividends or (v) issuance of rights,
options or warrants referred to in this Section 11, hereafter made
by the Company to holders of its shares of Preferred Stock is not
taxable to such stockholders.
(n) Notwithstanding anything in this Agreement to the contrary, in
the event that the Company at any time after the Record Date and
prior to the Distribution Date (i) pays a dividend on the
outstanding shares of Common Stock payable in shares of Common
Stock, (ii) subdivides the outstanding shares of Common Stock,
(iii) combines the outstanding shares of Common Stock into a
smaller number of shares, or (iv) issues any shares of its capital
stock in a reclassification of the outstanding shares of Common
Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or
surviving corporation), the number of Rights associated with each
share of Common Stock then outstanding, or issued or delivered
thereafter but prior to the Distribution Date (or issued or
delivered on or after the Distribution Date pursuant to Section 21
hereof), shall be proportionately adjusted so that the number of
Rights thereafter associated with each share of Common Stock
following any such event equals the result obtained by multiplying
the number of Rights associated with each share of Common Stock
immediately prior to such event by a fraction the numerator of
which is the total number of shares of Common Stock outstanding
immediately prior to the occurrence of the event and the
denominator of which is the total number of shares of Common Stock
outstanding immediately following the occurrence of such event. The
adjustments provided for in this Section 11(n) shall be made
successively whenever such a dividend is paid or such a
subdivision, combination or reclassification is effected.
(o) Consolidation, Merger or Sale or Transfer of Assets, Cash
Flow or Earning Power. (i) In the event that, following the
Stock Acquisition Date, directly or indirectly, (x) the Company
shall consolidate with, or merge with and into, any other Person,
and the Company shall not be the continuing or surviving
corporation of such consolidation or merger, (y) any Person shall
consolidate with, or merge with or into, the Company, and the
Company shall be the continuing or surviving corporation of such
consolidation or merger and, in connection with such consolidation
or merger, all or part of the outstanding shares of Common Stock
shall be changed into or exchanged for stock or other securities of
any other Person or cash or any other property, or (z) the Company
shall sell or otherwise transfer (or one or more of its
Subsidiaries shall sell or otherwise transfer), in one transaction
or a series of related transactions, assets, cash flow or earning
power aggregating more than 50% of the assets, cash flow or earning
power of the Company and its Subsidiaries (taken as a whole) to any
Person or Persons, then, and in each such case, proper provision
shall be made so that: (i) each holder of a Right shall thereafter
have the right to receive, upon the exercise thereof at the then
current Purchase Price in accordance with the terms of this
Agreement and in lieu of shares of Preferred Stock, such number of
validly authorized and issued, fully paid, non-assessable and
freely tradeable shares of Common Stock of the Principal Party (as
such term is hereinafter defined), not subject to any liens,
encumbrances, rights of first refusal or other adverse claims, as
shall be equal to the result obtained by (1) multiplying the then
current Purchase Price by the number of one one-thousandths of a
share of Preferred Stock for which a Right is exercisable
immediately prior to the first occurrence of a Section 11(o) Event
(or, if a Section 11(a)(ii) Event has occurred prior to the first
occurrence of a Section 11(o) Event, multiplying the number of such
one one-thousandths of a share for which a Right was exercisable
immediately prior to the first occurrence of a Section 11(a)(ii)
Event by the Purchase Price in effect immediately prior to such
first occurrence of a Section 11(a)(ii) Event), and (2) dividing
that product by 50% of the Current Per Share Market Price (as
determined pursuant to Section 11(d)(i) hereof) of the Common Stock
of such Principal Party on the date of consummation of such Section
11(o) Event; (ii) such Principal Party shall thereafter be liable
for, and shall assume, by virtue of such Section 11(o) Event, all
the obligations and duties of the Company pursuant to this
Agreement; (iii) the term “Company” shall thereafter be deemed to
refer to such Principal Party, it being specifically intended that
the provisions of Section 11 hereof shall apply only to such
Principal Party following the first occurrence of a Section 11(o)
Event; (iv) such Principal Party shall take such steps (including,
but not limited to, the reservation of a sufficient number of
shares of its Common Stock) in connection with the consummation of
any such transaction as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as
reasonably may be, in relation to its shares of Common Stock
thereafter deliverable upon the exercise of the Rights; and (v) the
provisions of Section 11(a)(ii) hereof shall be of no effect
following the first occurrence of any Section 11(o) Event.
(ii) “Principal Party” shall mean: (A) in the case of any
transaction described in clause (x) or (y) of the first sentence of
Section 11(o)(i), the Person that is the issuer of any securities
into which shares of Common Stock of the Company are converted in
such merger or consolidation, and if no securities are so issued,
the Person that is the other party to such merger or consolidation;
and (B) in the case of any transaction described in clause (z) of
the first sentence of Section 11(o)(i), the Person that is the
party receiving the greatest portion of the assets, cash flow or
earning power transferred pursuant to such transaction or
transactions; provided, however, that in any such case,
(1) if the Common Stock of such Person is not at such time and has
not been continuously over the preceding twelve-month period
registered under Section 12 of the Exchange Act, and such Person is
a direct or indirect Subsidiary of another Person the Common Stock
of which is and has been so registered, “Principal Party” shall
refer to such other Person; and (2) in case such Person is a
Subsidiary, directly or indirectly, of more than one Person, the
Common Stock of two or more of which are and have been so
registered, “Principal Party” shall refer to whichever of such
Persons is the issuer of the Common Stock having the greatest
aggregate market value.
(iii) The Company shall not consummate any such consolidation,
merger, sale or transfer unless the Principal Party shall have a
sufficient number of authorized shares of its Common Stock which
have not been issued or reserved for issuance to permit the
exercise in full of the Rights in accordance with this Section
11(o) and unless prior thereto the Company and such Principal Party
shall have executed and delivered to the Rights Agent a
supplemental agreement providing for the terms set forth in
paragraphs (i) and (ii) of this Section 11(o) and further providing
that, as soon as practicable after the date of any consolidation,
merger or sale of assets mentioned in paragraph (i) of this Section
11(o), the Principal Party will:
(A) prepare and file a registration statement under the Securities
Act, with respect to the Rights and the securities purchasable upon
exercise of the Rights on an appropriate form, and will use its
best efforts to cause such registration statement (x) to become
effective as soon as practicable after such filing and (y) to
remain effective (with a prospectus at all times meeting the
requirements of the Securities Act) until the Expiration Date;
and
(B) take all such other action as may be necessary to enable the
Principal Party to issue the securities purchasable upon exercise
of the Rights, including but not limited to the registration or
qualification of such securities under all requisite securities
laws of jurisdictions of the various states and the listing of such
securities on such exchanges and trading markets as may be
necessary or appropriate; and
(C) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which
comply in all respects with the requirements for registration on
Form 10 under the Exchange Act.
The provisions of this Section 11(o) shall similarly apply to
successive mergers or consolidations or sales or other transfers.
In the event that a Section 11(o) Event shall occur at any time
after the occurrence of a Section 11(a)(ii) Event, the Rights which
have not theretofore been exercised shall thereafter become
exercisable in the manner described in Section 11(o)(i).
Section 12. Certificate of Adjusted
Purchase Price or Number of Shares. Whenever an adjustment is
made or any event affecting the Rights or their exercisability
(including, without limitation, an event which causes Rights to
become null and void) occurs as provided in Section 11 thereof, the
Company shall promptly (a) prepare a certificate setting forth such
adjustment and a brief statement of the facts and calculations
accounting for such adjustment or describing such event, (b) file
with the Rights Agent, and with each transfer agent for the shares
of Preferred Stock and the shares of Common Stock (if the Rights
Agents is not also the transfer agent), a copy of such certificate,
and (c) if a Distribution Date has occurred, give a brief summary
thereof to each holder of a Rights Certificate in accordance with
Section 25 hereof. The Rights Agent shall be fully protected in
relying on any such certificate and on any adjustment therein
contained and shall not be deemed to have knowledge of any such
adjustment unless and until it shall have received such
certificate; provided, however, that the Rights Agent will not be
entitled to such protection in cases of bad faith or willful
misconduct.
Section 13. Fractional Rights and
Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights,
except prior to the Distribution Date as provided in Section 11(n)
hereof, or to distribute Rights Certificates which evidence
fractional Rights. In lieu of such fractional Rights, the Company
shall pay to the registered holders of the Rights Certificates with
regard to which such fractional Rights would otherwise be issuable,
an amount in cash equal to the same fraction of the current market
value of one Right. For purposes of this Section 13(a), the current
market value of one Right is the closing price of the Rights for
the Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The closing
price for any Trading Day shall be the last sale price, regular
way, or, in case no such sale takes place on such day, the average
of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on the
NASDAQ Stock Market or, if the Rights are not listed or admitted to
trading on the NASDAQ Stock Market, as reported in the principal
consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on
which the Rights are listed or admitted to trading or, if the
Rights are not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the
over-the-counter market, as reported on a quotation system then in
use or, if on any such date the Rights are not quoted, the average
of the closing bid and asked prices as furnished by a professional
market maker making a market in the Rights, such market maker to be
selected by the Board. If the Rights are not publicly held or are
not so listed or traded, or are not the subject of available bid
and asked quotes, the current market value of one Right shall mean
the fair value thereof as determined in good faith by the Board,
whose determination shall be described in a statement filed with
the Rights Agent.
(b) The Company shall not be required to issue fractions of shares
of Preferred Stock (other than fractions which are integral
multiples of one one-thousandth of a share of Preferred Stock) upon
exercise of the Rights or to distribute certificates which evidence
fractional shares of Preferred Stock (other than fractions which
are integral multiples of one one-thousandth of a share of
Preferred Stock). Fractions of Preferred Stock in integral
multiples of one one-thousandth of such Preferred Stock may, in the
sole discretion of the Company, be evidenced by depositary receipts
pursuant to an appropriate agreement between the Company and a
depositary selected by it, provided that such agreement provides
that the holders of such depositary receipts have all the rights,
privileges and preferences to which they are entitled as Beneficial
Owners of the Preferred Stock represented by such depositary
receipts. In lieu of fractional shares of Preferred Stock that are
not integral multiples of one one-thousandth of a share of
Preferred Stock, the Company may pay to the registered holders of
Rights Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the
current market value of one one-thousandth of a share of Preferred
Stock. For purposes of this Section 13(b), the current market value
of one one-thousandth of a share of Preferred Stock shall be one
one-thousandth of the closing price of a share of Preferred Stock
(as determined pursuant to Section 11(d)(ii) hereof) for the
Trading Day immediately prior to the date of such exercise;
provided, however, that if the closing price of the shares of the
Preferred Stock cannot be so determined, the closing price of the
shares of the Preferred Stock for such Trading Day shall be
conclusively deemed to be an amount equal to the closing price of
the shares of Common Stock for such Trading Day multiplied by one
thousand (as such number may be appropriately adjusted to reflect
events such as stock splits, stock dividends, recapitalizations or
similar transactions relating to the Common Stock shares occurring
after the date of this Agreement).
(c) Following the occurrence of a Section 11(a)(ii) Event, the
Company shall not be required to issue fractions of shares of
Common Stock upon exercise or exchange of the Rights or to
distribute certificates or Ownership Statements which evidence
fractional shares of Common Stock. In lieu of issuing any such
fractional shares of Common Stock, the Company may pay to any
Person to whom or which such fractional shares of Common Stock
would otherwise be issuable an amount in cash equal to the same
fraction of the current market value of one such share of Common
Stock. For purposes of this Section 13(c), the current market value
of one share of Common Stock shall be the closing price thereof (as
determined pursuant to Section 11(d)(i) hereof) on the Trading Day
immediately prior to the date of such exercise or exchange.
(d) The holder of a Right by the acceptance of the Rights expressly
waives such holder’s right to receive any fractional Rights or any
fractional shares upon exercise of a Right, except as permitted by
this Section 13.
Section 14. Rights of
Action.
(a) All rights of action in respect of this Agreement, excepting
the rights of action given to the Rights Agent hereunder, are
vested in the respective registered holders of the Rights
Certificates (or, prior to the Distribution Date, the registered
holders of shares of Common Stock); and any registered holder of
any Rights Certificate (or, prior to the Distribution Date, of the
shares of Common Stock), without the consent of the Rights Agent or
of the holder of any other Rights Certificate (or, prior to the
Distribution Date, of the shares of Common Stock), may, on such
first holder’s behalf and for such first holder’s own benefit,
enforce, and may institute and maintain any suit, action or
proceeding against the Company to enforce, or otherwise act in
respect of, such first holder’s right to exercise the Rights
evidenced by such Rights Certificate in the manner provided in such
Rights Certificate and in this Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have
an adequate remedy at law for any breach of this Agreement and
shall be entitled to specific performance of the obligations
hereunder and injunctive relief against actual or threatened
violations of the obligations hereunder of any Person subject to
this Agreement.
(b) Notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability
to any holder of a Right or other Person as a result of its
inability to perform any of its obligations under this Agreement by
reason of any preliminary or permanent injunction or other order,
judgment, decree or ruling (whether interlocutory or final) issued
by a court of competent jurisdiction or by a governmental
regulatory, self-regulatory or administrative agency or commission,
or any statute, rule, regulation, or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise
restraining performance of such obligation; provided, however, that
the Company shall use commercially reasonable efforts to have any
such injunction, order, judgment, decree or ruling lifted or
otherwise overturned as soon as possible.
Section 15. Agreement of
Rights Holders. Every holder of a Right, by accepting the same,
consents and agrees with the Company and the Rights Agent and with
every other holder of a Right that:
(a) prior to the Distribution Date, the Rights shall be
transferable only in connection with the transfer of shares of
Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if
surrendered at the principal office or offices of the Rights Agent
designated for such purposes, duly endorsed or accompanied by a
properly executed instrument of transfer with the appropriate forms
and certificates contained therein fully executed;
(c) subject to Section 6(a) and Section 7(d) hereof or unless
otherwise provided under this Agreement, the Company and the Rights
Agent may deem and treat the Person in whose name a Rights
Certificate (or, prior to the Distribution Date, the associated
Common Stock share certificate or Ownership Statement) is
registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or
writing on the Rights Certificates or the associated Common Stock
share certificate or Ownership Statement made by anyone other than
the Company or the Rights Agent) for all purposes whatsoever, and
neither the Company nor the Rights Agent shall be affected by any
notice to the contrary; and
(d) such holder expressly waives any right to receive any
fractional Rights and any fractional securities upon exercise or
exchange of a Right, except as otherwise provided in Section 13
hereof.
Section 16. Rights Certificate
Holder Not Deemed a Stockholder. No holder, of any Rights
Certificate, by means of such possession, shall be entitled to
vote, receive dividends or be deemed for any purpose the holder of
the number of one one-thousandths of a share of Preferred Stock or
any other securities of the Company which may at any time be
issuable on the exercise of the Rights represented thereby, nor
shall anything contained herein or in any Rights Certificate be
construed to confer upon the holder of any Rights Certificate, by
means of such possession, any of the rights of a stockholder of the
Company including any right to vote on any matter submitted to
stockholders at any meeting thereof, including the election of
directors, or to give or withhold consent to any corporate action,
or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 24 hereof), or to
receive dividends or subscription rights, or otherwise, until the
Right or Rights evidenced by such Rights Certificate have been
exercised in accordance with the provisions of this Agreement.
Section 17. Concerning the Rights
Agent.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder, and, from
time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the
preparation, administration and execution of this Agreement and the
exercise and performance of its duties hereunder. The Company also
agrees to indemnify the Rights Agent for, and to hold it harmless
against, any loss, liability, damage, judgment, fine, penalty,
claim, demand, cost or expense incurred without gross negligence,
bad faith or willful misconduct on the part of the Rights Agent,
for anything done or omitted by the Rights Agent in connection with
the acceptance and administration of this Agreement and the
performance of its duties and responsibilities and the exercise of
its rights hereunder, including the costs and expenses of defending
against any claim of liability arising therefrom, directly or
indirectly. The costs and expenses of enforcing this right of
indemnification will also be paid by the Company. The provisions of
this Section 17 shall survive the exercise, exchange, redemption or
expiration of the Rights, the resignation, replacement or removal
of the Rights Agent and the termination of this Agreement.
(b) The Rights Agent may conclusively rely on, and will be
protected and shall incur no liability for or in respect of any
action taken, suffered or omitted by it in connection with, its
acceptance or administration of this Agreement and the exercise and
performance of its duties and responsibilities and the exercise of
its rights hereunder, in reliance upon any Rights Certificate or
certificate evidencing shares of Preferred Stock, Common Stock or
other securities of the Company or an Ownership Statement, or any
instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it
to be genuine and to be signed, executed and, where necessary,
verified or acknowledged, by the proper Person or Persons, or
otherwise upon the advice of counsel as set forth in Section 19
hereof.
(c) Notwithstanding anything in this Agreement to the contrary, in
no event will the Rights Agent be liable for special, indirect or
consequential loss or damage of any kind whatsoever (including but
not limited to lost profits), even if the Rights Agent has been
advised of the likelihood of such loss or damage and regardless of
the form of action.
Section 18. Merger, Consolidation
or Change of Name of the Rights Agent.
(a) Any Person into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any
Person resulting from any merger or consolidation to which the
Rights Agent or any successor Rights Agent is a party, or any
Person succeeding to the corporate trust, stock transfer or other
shareholder services business of the Rights Agent or any successor
Rights Agent will be the successor to the Rights Agent under this
Agreement without the execution or filing of any paper or any
further act on the part of any of the parties hereto; provided that
such Person would be eligible for appointment as a successor Rights
Agent under the provisions of Section 20 hereof if at the time such
successor Rights Agent shall succeed to the agency created by this
Agreement any of the Rights Certificates shall have been
countersigned but not delivered, any such successor Rights Agent
may adopt the countersignature of a predecessor Rights Agent and
deliver such Rights Certificates so countersigned; and if at that
time any of the Rights Certificates shall not have been
countersigned, any successor Rights Agent may countersign such
Rights Certificates either in the name of the predecessor or in the
name of the successor Rights Agent; and in all such cases such
Rights Certificates shall have the full force provided in the
Rights Certificates and in this Agreement.
(b) If at any time the name of the Rights Agent changes and at such
time any of the Rights Certificates have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under
its prior name and deliver Rights Certificates so countersigned;
and if at that time any of the Rights Certificates have not been
countersigned, the Rights Agent may countersign such Rights
Certificates either in its prior name or in its changed name; and
in all such cases such Rights Certificates shall have the full
force provided in the Rights Certificates and in this
Agreement.
Section 19. Duties of the Rights
Agent. The Rights Agent undertakes to perform the duties and
obligations expressly imposed by this Agreement (and no implied
duties) upon the following terms and conditions, by all of which
the Company and the holders of Rights Certificates, by their
acceptance thereof, shall be bound:
(a) The Rights Agent may consult with competent legal counsel (who
may be legal counsel for the Company), and the advice or opinion of
such counsel shall be full and complete authorization and
protection to the Rights Agent and the Rights Agent shall incur no
liability for or in respect of any action taken, suffered or
omitted by it in good faith and in accordance with the content of
such advice or opinion.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact
or matter (including, without limitation, the identity of any
Acquiring Person and the determination of the Current Per Share
Market Price) be proved or established by the Company prior to
taking, suffering or omitting to take any action hereunder, such
fact or matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively proved
and established by a certificate signed by any Authorized Officer
and delivered to the Rights Agent; and such certificate, pursuant
to its terms, shall be full and complete authorization and
protection to the Rights Agent for any action taken or suffered in
good faith by it under the provisions of this Agreement in reliance
upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own
gross negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or
in the Rights Certificates (except its countersignature thereof)
and it shall not be required to verify the same, but all such
statements and recitals are and shall be deemed to have been made
by the Company only.
(e) The Rights Agent will have no liability in respect of the
validity of this Agreement or the execution and delivery hereof
(except the due execution and delivery hereof by the Rights Agent)
or in respect of the validity or execution of any Rights
Certificate (except its countersignature thereof); nor shall it be
responsible for any breach by the Company of any covenant contained
in this Agreement or in any Rights Certificate; nor shall it be
responsible for any adjustment required under the provisions of
Section 11, Section 22 or Section 23 hereof or responsible for the
manner, method or amount of any such adjustment or the ascertaining
of the existence of facts that would require any such adjustment
(except with respect to the exercise of Rights evidenced by Rights
Certificates after actual notice of any such adjustment); nor shall
it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any shares of
Common Stock or Preferred Stock to be issued pursuant to this
Agreement or any Rights Certificate or as to whether any shares of
Common Stock or Preferred Stock shall, when so issued, be validly
authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it shall perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and
assurances as may reasonably be required by the Rights Agent for
the carrying out or performing by the Rights Agent of the
provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties and the
exercise of the rights hereunder from any Authorized Officer, and
to apply to any such Authorized Officer for advice or instructions
in connection with its duties, and it shall not be liable for any
action taken or suffered by it in good faith in accordance with
instructions of any such Authorized Officer or for any delay in
acting while waiting for those instructions. Any application by the
Rights Agent for written instructions from the Company may, at the
option of the Rights Agent, set forth in writing any action
proposed to be taken or omitted by the Rights Agent under this
Agreement and the date on or after which such action shall be taken
or such omission shall be effective. The Rights Agent shall not be
liable for any action taken by, or omission of, the Rights Agent in
accordance with a proposal included in any such application on or
after the date specified in such application (which date shall not
be less than five (5) Business Days after the date any Authorized
Officer of the Company actually receives such application, unless
any such Authorized Officer shall have consented in writing to an
earlier date) unless, prior to taking any such action (or the
effective date in the case of an omission), the Rights Agent shall
have received written instructions in response to such application
specifying the action to be taken or omitted.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the
Rights or other securities of the Company or become pecuniarily
interested in any transaction in which the Company may be
interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not the Rights
Agent under this Agreement. Nothing herein shall preclude the
Rights Agent from acting in any other capacity for the Company or
for any other Person.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either
itself (through its directors, officers or employees) or by or
through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, omission, default, neglect
or misconduct of any such attorneys or agents or for any loss to
the Company or any other Person resulting from any such act,
default, neglect or misconduct, provided reasonable care was
exercised in the selection and continued employment thereof.
(j) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate contained in
the form of assignment or the form of election to purchase set
forth on the reverse thereof, as the case may be, has not been
completed or indicates an affirmative response to clause 1 or 2
thereof, the Rights Agent shall not take any further action with
respect to such requested exercise or transfer without first
consulting with the Company.
(k) No provision of this Agreement shall require the Rights Agent
to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or in
the exercise of its rights if there shall be reasonable grounds for
believing that repayment of such funds or adequate indemnification
against such risk or liability is not reasonably assured to it.
(l) The Rights Agent will not be required to take notice or be
deemed to have notice of any fact, event or determination
(including, without limitation, any dates or events defined in this
Agreement or the designation of any Person as an Acquiring Person,
Affiliate or Associate) under this Agreement unless and until the
Rights Agent is specifically notified in writing by the Company of
such fact, event or determination.
(m) The provisions of this Section 19 shall survive the exercise,
exchange, redemption or expiration of the Rights, the resignation,
replacement or removal of the Rights Agent and the termination of
this Agreement.
Section 20. Change of the Rights
Agent. The Rights Agent or any successor Rights Agent may
resign and be discharged from its duties under this Agreement upon
thirty (30) calendar days’ written notice given to the Company in
accordance with Section 25 hereof, and to each transfer agent, in
the event that the Rights Agent or one of its Affiliates is not
also the transfer agent for the Company, of the shares of Common
Stock and Preferred Stock known to the Rights Agent, respectively,
by registered or certified mail. In the event the transfer agency
relationship in effect between the Company and the Rights Agent
terminates, the Rights Agent will be deemed to have resigned
automatically and be discharged from its duties under this
Agreement as of the effective date of such termination, and the
Company shall be responsible for sending any required notice. The
Company may remove the Rights Agent or any successor Rights Agent
upon thirty (30) calendar days’ written notice, given to the Rights
Agent or successor Rights Agent, as the case may be, in accordance
with Section 25 hereof, and to each transfer agent of the shares of
Common Stock and the Preferred Stock, by registered or certified
mail, and, if such removal occurs after the Distribution Date, to
the holders of the Rights Certificates in accordance with Section
25 hereof if the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall, in its
sole discretion, appoint a successor to the Rights Agent. If the
Company shall fail to make such appointment within a period of
thirty (30) calendar days after giving notice of such removal or
after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the
holder of a Rights Certificate (who shall, with such notice, submit
such holder’s Rights Certificate for inspection by the Company),
then any registered holder of any Rights Certificate may apply to
any court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed by the
Company or by such a court, shall be (a) a legal business entity
organized and doing business under the laws of the United States or
of the State of New York or of any other state of the United
States, in good standing, which is authorized under such laws to
exercise corporate trust, stock transfer or shareholder services
powers and which has at the time of its appointment as Rights Agent
a combined capital and surplus of at least $50,000,000 or (b) an
affiliate of a legal business entity described in clause (a) of
this sentence. After appointment, the successor Rights Agent shall
be vested with the same powers, rights, duties and responsibilities
as if it had been originally named as Rights Agent without further
act or deed; but the predecessor Rights Agent shall deliver and
transfer to the successor Rights Agent any property at the time
held by it hereunder, and execute and deliver any further
assurance, conveyance, act or deed necessary for the purpose. Not
later than the effective date of any such appointment, the Company
shall file notice thereof in writing with the predecessor Rights
Agent and each transfer agent of the shares of Common Stock and the
Preferred Stock, and, if such appointment occurs after the
Distribution Date, give a notice thereof in writing to the
registered holders of the Rights Certificates in accordance with
Section 25 hereof. Failure to give any notice provided for in this
Section 20, however, or any defect therein, shall not affect the
legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case
may be.
Section 21. Issuance of New Rights
Certificates. Notwithstanding any of the provisions of this
Agreement or of the Rights to the contrary, the Company may, at its
option, issue new Rights Certificates evidencing Rights in such
form as may be approved by the Board to reflect any adjustment or
change in the Purchase Price and the number or kind or class of
shares or other securities or property purchasable under the Rights
Certificates made in accordance with the provisions of this
Agreement. In addition, in connection with the issuance or sale by
the Company of shares of Common Stock following the Distribution
Date and prior to the Expiration Date, the Company (a) shall, with
respect to shares of Common Stock so issued or sold pursuant to the
exercise of stock options or under any employee plan or
arrangement, granted or awarded as of the Distribution Date, or
upon the exercise, exchange or conversion of securities hereinafter
issued by the Company and (b) may, in any other case, if deemed
necessary or appropriate by the Board, issue Rights Certificates
representing the appropriate number of Rights in connection with
such issuance or sale; provided, however, that (i) no such Rights
Certificate shall be issued if, and to the extent that, in its good
faith judgment the Board determines that the issuance of such
Rights Certificate could have a material adverse tax consequence to
the Company or to the Person to whom or which such Rights
Certificate otherwise would be issued, and (ii) no such Rights
Certificate shall be issued if, and to the extent that, appropriate
adjustment shall otherwise have been made in lieu of the issuance
thereof.
Section 22. Redemption.
(a) The Board may, at its option, at any time prior to the earlier
of (1) the Close of Business on the tenth (10th)
calendar day following the Stock Acquisition Date, or (ii) the
Final Expiration Date, redeem all but not less than all of the then
outstanding Rights at the Redemption Price. The redemption of the
Rights may be made effective at such time, on such basis and with
such conditions as the Board in its sole discretion may establish.
The Company may, at its option, pay the Redemption Price in cash,
securities or any other form of consideration deemed appropriate by
the Board.
(b) Immediately upon the effectiveness of the action of the Board
ordering the redemption of the Rights, and without any further
action and without any notice, the right to exercise the Rights
shall terminate and the only right thereafter of the holders of
Rights shall be to receive the Redemption Price for each Right so
held without interest thereon. Promptly after the action of the
Board ordering the redemption of the Rights, the Company shall give
notice of such redemption to the Rights Agent and the holders of
the then outstanding Rights in accordance with Section 25 hereof;
provided, however, that the failure to give, or any defect in, any
such notice will not affect the validity of the redemption of the
Rights. Any notice given in accordance with Section 25 hereof shall
be deemed given, whether or not the holder receives the notice.
Each such notice of redemption shall state the method by which the
payment of the Redemption Price shall be made.
Section 23. Exchange.
(a) The Board may, at its option, at any time after a Section
11(a)(ii) Event, exchange all or part of the then-outstanding and
exercisable Rights (which shall not include Rights that have become
void pursuant to the provisions of Section 11(a)(ii) hereof) for
shares of Common Stock at an exchange ratio of one share of Common
Stock per Right, appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date
hereof (such amount per Right being hereinafter referred to as the
“Exchange Ratio”). The exchange of the Rights by the Board
may be made effective at such time, on such basis and with such
conditions as the Board in its sole discretion may establish.
(b) Immediately upon the effectiveness of the action of the Board
ordering the exchange of any Rights and without any further action
and without any notice, the right to exercise such Rights shall
terminate and the only right thereafter of a holder of such Rights
shall be to receive that number of shares of Common Stock equal to
the number of such Rights held by such holder multiplied by the
Exchange Ratio. The Company shall promptly give public notice of
any such exchange; provided, however, that the
failure to give, or any defect in, such notice shall not affect the
validity of such exchange. The Company shall promptly give a notice
of any such exchange to all of the holders of the Rights so
exchanged in accordance with Section 25 hereof. Any notice given in
accordance with Section 25 hereof shall be deemed given, whether or
not the holder receives the notice. Each such notice of exchange
will state the method by which the exchange of the shares of Common
Stock, for Rights shall be effected and, in the event of any
partial exchange, the number of Rights which will be exchanged. Any
partial exchange shall be effected pro rata based on the number of
Rights (other than Rights which have become void pursuant to the
provisions of Section 11(a)(ii) hereof) held by each holder of
Rights.
(c) The Company may at its option substitute and, in the event that
there shall not be sufficient shares of Common Stock issued but not
outstanding or authorized but unissued (and unreserved) to permit
an exchange of Rights as contemplated in accordance with this
Section 23, the Company shall substitute to the extent of such
insufficiency, for each share of Common Stock that would otherwise
be issuable upon exchange of a Right, a number of shares of
Preferred Stock or fraction thereof (or Equivalent Preferred Stock)
such that the Current Per Share Market Price of one share of
Preferred Stock (or Equivalent Preferred Stock) multiplied by such
number or fraction is equal to the Current Per Share Market Price
of the Common Stock that would otherwise be issuable as of the date
of such exchange.
(d) Prior to effecting an exchange pursuant to this Section 23, the
Board may direct the Company to enter into a trust agreement in
such form and with such terms as the Board shall then approve (the
“Trust Agreement”). If the Board so directs, the Company
shall enter into the Trust Agreement and shall issue to the trust
created by such agreement (the “Trust”) all of the shares of
Common Stock, Preferred Stock or other securities, if any, issuable
pursuant to the exchange, and all Persons entitled to receive such
shares or other securities (and any dividends or distributions made
thereon after the date on which such shares or other securities are
deposited in the Trust) shall be entitled to receive such only from
the Trust and solely upon compliance with the relevant terms and
provisions of the Trust Agreement.
Section 24. Notice of Certain
Events.
(a) If the Company, at any time after the Distribution Date,
proposes to (i) pay any dividend payable in stock of any class to
the holders of shares of Preferred Stock or to make any other
distribution to the holders of shares of Preferred Stock (other
than a regular periodic cash dividend), (ii) offer to the holders
of shares of Preferred Stock rights, options, warrants or any
similar instrument to subscribe for or to purchase any additional
shares of Preferred Stock or shares of stock of any class or any
other securities, rights or options, (iii) effect any
reclassification of its Preferred Stock (other than a
reclassification involving only the subdivision of outstanding
shares of Preferred Stock), (iv) effect any consolidation, merger
or statutory share exchange into or with any other Person, or (v)
to effect the liquidation, dissolution or winding up of the
Company, then, in each such case, the Company shall give to the
Rights Agent and, to the extent possible, to each holder of a
Rights Certificate, in accordance with Section 25 hereof, a notice
of such proposed action, which shall specify the record date for
the purposes of such stock dividend, distribution or offering of
rights, warrants, options or any similar instrument or the date on
which such reclassification, consolidation, merger, share exchange,
sale, transfer, liquidation, dissolution, or winding up is to take
place and the date of participation therein by the holders of the
shares of Preferred Stock, if any such date is to be fixed, and
such notice shall be so given in the case of any action covered by
clause (i) or (ii) above at least ten (10) calendar days prior to
the record date for determining holders of the shares of Common
Stock or Preferred Stock for purposes of such action, and in the
case of any such other action at least ten (10) calendar days prior
to the date of such proposed action or the date of participation
therein by the holders of the shares of Preferred Stock, whichever
is the earlier.
(b) If a Section 11(a)(ii) Event occurs, then the Company shall as
soon as practicable thereafter give to the Rights Agent and each
holder of a Rights Certificate, to the extent feasible and in
accordance with Section 25 hereof, a notice of the occurrence of
such event, which shall specify the event and the consequences of
the event to holders of Rights.
Section 25. Notices.
(a) Notices or demands authorized by this Agreement to be given or
made by the Rights Agent or by the holder of any Rights Certificate
to or on the Company shall be sufficiently given or made (a)
immediately, if made by personal delivery, (b) on the fifth
(5th) calendar day if sent by first-class mail, postage
prepaid, (c) the next Business Day if by nationally recognized
overnight courier, or (d) upon confirmation, if transmission by
facsimile is combined with a phone call to the Company notifying it
of such transmission, all addressed (until another address is filed
in writing by the Company with the Rights Agent) as follows:
Rubicon Technology,
Inc.
900 East Green
Street
Bensenville, IL
60106
Attention: Chief Executive
Officer
with a copy (which will not constitute notice) to:
Robinson & Cole LLP
1055 Washington Boulevard
Stamford, CT 06901
Attention: Eric M. Kogan, Esq.
Fax: (203) 462-7599
(b) Subject to the provisions of Section 20 hereof, any notice or
demand authorized by this Agreement to be given or made by the
Company or by the holder of any Rights Certificate to or on the
Rights Agent shall be sufficiently given or made (a) immediately,
if made by personal delivery, (b) on the fifth (5th)
calendar day if sent by first-class mail, postage prepaid, (c) the
next Business Day if by nationally recognized overnight courier or
(d) upon confirmation, if transmission by facsimile is combined
with a phone call to the Rights Agent notifying it of such
transmission, all addressed (until another address is filed in
writing by the Rights Agent with the Company) as follows:
American Stock Transfer & Trust Company, LLC
6201 15th Avenue
Brooklyn, NY 11219
Attention: Corporate Trust Department
with a copy (which will not constitute notice) to:
American Stock Transfer & Trust Company, LLC
48 Wall Street, 22nd Floor
New York, NY 10005
Attention: Legal Department
Email: legalteamAST@astfinancial.com
(c) Notices or demands authorized by this Agreement to be given or
made by the Company or the Rights Agent to the holder of any Rights
Certificate (or, if prior to the Distribution Date, to the holder
of certificates representing shares of Common Stock or an Ownership
Statement) shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the
address of such holder as shown on the registry books of the Rights
Agent (or, if prior to the Distribution Date, of the transfer agent
for the shares of Common Stock). Notwithstanding anything in this
Agreement to the contrary, prior to the Distribution Date, a filing
by the Company with the Securities and Exchange Commission shall
constitute sufficient notice to the holders of any Rights or of any
Common Shares for purposes of this Agreement.
Section 26. Supplements and
Amendments. Except as otherwise provided in this Section 26,
for so long as the Rights are redeemable pursuant to Section 22
hereof, the Company may in its sole and absolute discretion, and
the Rights Agent shall, if the Company so directs, supplement or
amend any provision of this Agreement in any respect without the
approval of any holders of Rights. From and after the time at which
the Rights cease to be redeemable pursuant to Section 22 hereof,
the Company may and the Rights Agent shall, if the Company so
directs, supplement or amend this Agreement without the approval of
any holders of Rights in order (i) to cure any ambiguity, (ii) to
correct or supplement any provision contained herein which may be
defective or inconsistent with any other provisions herein, (iii)
to shorten or lengthen any time period hereunder, or (iv) to amend
or supplement the provisions hereunder in any manner which the
Company may deem necessary or desirable; provided, however, that no
such supplement or amendment shall adversely affect the interests
of the holders of Rights (other than an Acquiring Person or any
Affiliate or Associate of an Acquiring Person or certain of their
transferees), and no such amendment may cause the Rights again to
become redeemable or cause this Agreement again to become amendable
other than in accordance with this sentence. Upon the delivery of a
certificate from an Authorized Officer of the Company which states
that the proposed supplement or amendment is in compliance with the
terms of this Section 26, the Rights Agent shall execute such
supplement or amendment. Notwithstanding anything herein to the
contrary, the Rights Agent shall not be obligated to enter into any
supplement or amendment that affects the Rights Agent’s own right,
duties, obligations or immunities under this Agreement.
Section 27. Successors. All the
covenants and provisions of this Agreement by or for the benefit of
the Company or the Rights Agent shall bind and inure to the benefit
of their respective successors and assigns hereunder.
Section 28. Determinations and
Actions by the Board.
(a) For all purposes of this Agreement, any calculation of the
number of shares of Common Stock or any other class of capital
stock outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding shares of
Common Stock of which any Person is the Beneficial Owner, shall be
made in accordance with, as the Board of Directors deems to be
applicable, the last sentence of Rule 13d-3(d)(1)(i) of the General
Rules and Regulations under the Exchange Act or the provisions of
Section 382 of the Code, or any successor provision or replacement
provision.
(b) The Board shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers
specifically granted to the Board or to the Company, or as may be
necessary or advisable in the administration of this Agreement,
including, without limitation, the right and power to (i) interpret
the provisions of this Agreement, and (ii) make all determinations
and calculations deemed necessary or advisable for the
administration of this Agreement (including, without limitation, a
determination to redeem or not redeem the Rights or amend this
Agreement).
(c) All such actions, calculations, interpretations and
determinations which are done or made by the Board in good faith
shall be final, conclusive and binding on the Company, the Rights
Agent, the holders of the Rights and all other parties. Unless
otherwise notified, the Rights Agent shall always be entitled to
assume that the Board acted in good faith and the Rights Agent
shall be fully protected and shall incur no liability in reliance
thereon.
Section 29. Benefits of this
Agreement. Nothing in this Agreement shall be construed to give
to any Person other than the Company, the Rights Agent and the
registered holders of the Rights Certificates (and, prior to the
Distribution Date, registered holders of shares of Common Stock)
any legal or equitable right, remedy or claim under this Agreement;
but this Agreement shall be for the sole and exclusive benefit of
the Company, the Rights Agent and the registered holders of the
Rights Certificates (and, prior to the Distribution Date,
registered holders of shares of Common Stock).
Section 30. Severability. If
any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction or other authority to be
invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall
remain in full force and effect and shall in no way be affected,
impaired or invalidated; provided, however, that notwithstanding
anything in this Agreement to the contrary, if any such term,
provision, covenant or restriction is held by such court or
authority to be invalid, void, or unenforceable and the Board
determines in its good faith judgment that severing the invalid
language from this Agreement would adversely affect the purpose or
effect of this Agreement, the right of redemption set forth in
Section 22 hereof shall be reinstated and shall not expire until
the Close of Business on the tenth (10th) Business Day
following the date of such determination by the Board.
Section 31. Governing Law. This
Agreement, each Right and each Rights Certificate issued hereunder
shall be deemed to be a contract made under the laws of the State
of Delaware and for all purposes shall be governed by and construed
in accordance with the laws of such State applicable to contracts
made and to be performed entirely within such State.
Section 32. Counterparts;
Facsimiles and PDFs. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all
purposes be deemed to be an original, and all such counterparts
shall together constitute but one and the same instrument. A
facsimile or pdf signature delivered electronically shall
constitute an original signature for all purposes.
Section 33. Descriptive
Headings. Descriptive headings of the several sections of this
Agreement are inserted for convenience only and shall not control
or affect the meaning or construction of any of the provisions
hereof.
Section 34. Force Majeure.
Notwithstanding anything to the contrary contained herein, the
Rights Agent shall not be liable for any delays or failures in
performance resulting from acts beyond its reasonable control
including, without limitation, acts of God, terrorist acts,
shortage of supply, breakdowns or malfunctions, interruptions or
malfunction of computer facilities, or loss of data due to power
failures or mechanical difficulties with information storage or
retrieval systems, labor difficulties, war, or civil unrest.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed, all as of the day and year first above
written.
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Rubicon Technology,
Inc. |
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By: |
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Name: |
Timothy E.
Brog |
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Title: |
Chief Executive
Officer |
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AMERICAN STOCK
TRANSFER & TRUST COMPANY, LLC |
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By: |
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Name: |
Michael A. Nespoli |
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Title: |
Executive Director |
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RUBICON TECHNOLOGY INC
900 EAST GREEN STREET
UNIT A
BENSENVILLE, IL 60106
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VOTE BY INTERNET - www.proxyvote.com
Use the Internet to transmit your voting instructions and for
electronic delivery of information. Vote by 11:59 P.M. ET on
07/15/2020. Have your proxy card in hand when you access the web
site and follow the instructions to obtain your records and to
create an electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs incurred by our company in
mailing proxy materials, you can consent to receiving all future
proxy statements, proxy cards and annual reports electronically via
e-mail or the Internet. To sign up for electronic delivery, please
follow the instructions above to vote using the Internet and, when
prompted, indicate that you agree to receive or access proxy
materials electronically in future years.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions.
Vote by 11:59 P.M. ET on 07/15/2020. Have your proxy card in hand
when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the
postage-paid envelope we have provided or return it to Vote
Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY
11717.
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| TO
VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: |
KEEP
THIS PORTION FOR YOUR RECORDS |
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THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
DETACH AND RETURN THIS PORTION ONLY
| The Board of Directors recommends you vote FOR
proposals 1 through 5. |
For |
Against |
Abstain |
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| 1. |
Approval of an amendment to our
Certificate of Incorporation to declassify the Board of Directors
and provide for the annual election of directors |
☐ |
☐ |
☐ |
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| 2. |
Ratification of the Company’s
Section
382 Rights Agreement and approval of a three year extension
thereof |
☐ |
☐ |
☐ |
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| 3. |
Election of
one director to serve a one-year term (or if Proposal 1 is not
approved, Election of one Class I director to serve a three-year
term) |
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Nominee is
Susan Westphal |
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☐ For
Nominee ☐
Withhold Vote |
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| 4. |
Ratification of the selection of
Marcum LLP as our independent registered public accounting firm for
the fiscal year ending December 31, 2020 |
☐ |
☐ |
☐ |
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| 5. |
A non-binding advisory vote to
approve the compensation of our named executive officers |
☐ |
☐ |
☐ |
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| NOTE: Such other business as may properly
come before the meeting or any adjournment thereof. |
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Please sign exactly as your name(s) appear(s) hereon. When signing
as attorney, executor, administrator, or other fiduciary, please
give full title as such. Joint owners should each sign personally.
All holders must sign. If a corporation or partnership, please sign
in full corporate or partnership name by authorized officer.
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| Signature [PLEASE SIGN WITHIN BOX] |
Date |
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Signature (Joint Owners) |
Date |
Important Notice Regarding the Availability of Proxy Materials
for the Annual Meeting: The Notice & Proxy Statement and
Form 10-K are available at www.proxyvote.com
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RUBICON TECHNOLOGY, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS
The undersigned, revoking all prior proxies, hereby appoints
Timothy E. Brog and Mathew Rich, as proxy, with full power of
substitution, to vote the undersigned’s shares of common stock of
Rubicon Technology, Inc. at the annual meeting of stockholders to
be held at 900 East Green Street Bensenville Illinois 60106, on
July 16, 2020, at 8:30 a.m. local time, and at any adjournment,
postponement or rescheduling thereof, on all matters coming before
the annual meeting.
The proxy will vote your shares: (1) as you specify on the back
of this proxy card, (2) as the Board of Directors recommends where
you do not specify your voting instructions on Proposals 1, 2, 3, 4
and 5.
Continued and to be signed on reverse side
