Item
1.01
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Entry
into a Material Definitive Agreement.
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On November 16, 2017 Bandera
Master Fund L.P., a Cayman Islands exempted limited partnership (“Bandera”), purchased an aggregate of 221,784 shares
of common stock, par value $.001 per share (the “Common Stock”), of Rubicon Technology, Inc. (the “Company”),
from (i) Cross Atlantic Technology Fund II, LP, a Delaware limited partnership and (ii) The Co-Investment 2000 Fund, L.P., a Delaware
limited partnership ((i) and (ii) are each affiliates of Donald Caldwell, and collectively, “Cross Atlantic”), in
a transaction (the “Transaction”) directly between such parties to which the Company was not a party. Based upon representations
made by Bandera, following the Transaction, Bandera owned approximately 9.5% of the Company’s outstanding shares of Common
Stock. In connection with the Transaction, effective November 16, 2017, Mr. Caldwell, Chairman and Chief Executive Officer of
Cross Atlantic, resigned as a Class III director of the Company.
The Company has entered
into a Stockholders Agreement, dated November 16, 2017 (the “Agreement”), with Bandera, Bandera Partners, LLC, Greg
Bylinsky and Jefferson Gramm (collectively, the “Bandera Parties” and together with and their affiliates and associates
(the “Bandera Group”)). Except as specified therein, the Agreement terminates on the earlier of (i) the third anniversary
of the date of the Agreement and (ii) five business days after Timothy Brog is no longer the Company’s Chief Executive Officer
(the effective date of such termination, the “Termination Date”).
Under
the Agreement, the Company agreed that its Board of Directors (the “Board”) would take all action necessary to appoint
Jefferson Gramm as a Class III director of the Company. Accordingly, on November 16, 2017, Mr. Gramm was appointed as a Class
III director of the Company to fill the vacancy created by Mr. Caldwell’s resignation. In the event that Mr. Gramm is unable
to serve as a director, resigns as a director or is removed as a director without cause prior to the 2019 annual meeting of stockholders
(the “2019 Annual Meeting”), the Bandera Group shall have the ability to recommend a substitute person for appointment
or election to the Board, subject to Board approval. Mr. Gramm shall be subject to the Company’s policies applicable to
directors of the Company, and shall meet the Company’s requirements to serve as an independent director and member of the
Board’s audit committee.
If
at any time prior to the 2019 Annual Meeting the Bandera Group’s beneficial ownership of Common Stock is reduced to less
than 5% of the Company’s outstanding shares of Common Stock, Bandera shall provide written notice to the Board and the Company
may, in its sole discretion, determine to request that Mr. Gramm resign from the Board and, following such request, Mr. Gramm
shall resign.
Until
the Termination Date, each member of the Bandera Group shall, or shall cause their representatives on their behalf to, (i) appear
at each stockholder meeting of the Company and (ii) on each proposal submitted to the Company’s stockholders, including
without limitation the election of directors, vote all shares of Common Stock beneficially owned by them and over which they have
voting power as recommended by the Board.
Until
the Termination Date, subject to certain exceptions, each member of the Bandera Group shall not, and shall cause their affiliates
and associates not to: (a) (i) nominate or recommend any person for election to the Board; (ii) participate in any solicitation
of proxies in respect of any contested director’s election; (iii) submit any stockholder proposal for consideration at,
or bring any other business before, any stockholder meeting; (iv) participate in any solicitation of proxies in respect of any
stockholder proposal for consideration at, or bring any other business before, any stockholder meeting; or (v) participate in
any “withhold” or similar campaign with respect to any stockholder meeting or any solicitation of written consents
of stockholders; (b) form or participate in any group (other than a group solely consisting of the members of the Bandera Group)
with respect to any Company voting securities in connection with any stockholder meeting; (c) deposit any Company voting securities
in any voting trust or any similar arrangement or agreement; (d) seek, alone or in concert with others, to amend any provision
of the Company’s certificate of incorporation or bylaws; (e) demand an inspection of the Company’s books and records;
(f) effect or participate in, or in any way assist a material transaction involving any of the voting securities or any of the
material assets or businesses of the Company or any of its subsidiaries; (g) enter into any discussions with any third party with
respect to the foregoing, or encourage any third party to take any action with respect to any of the foregoing, or otherwise take
or cause any action materially inconsistent with any of the foregoing; or (h) take any action challenging the validity or enforceability
of the Agreement, or publicly make or in any way advance publicly any request or proposal that the Company or Board amend, modify
or waive any provision of the Agreement.
Until
the Termination Date, neither the Company nor any member of the Bandera Group shall make any public statement concerning the subject
matter of the Agreement that is inconsistent with or contrary to the terms of the Agreement, except as required by law or applicable
stock exchange listing rules or with the prior written consent of the other.
Until
November 16, 2018, the Bandera Group shall not directly or indirectly acquire any additional voting securities of the Company;
provided, that any securities of the Company granted or awarded to Mr. Gramm in his capacity as a director of the Company shall
not be subject to such restriction.
The
foregoing summary of the Agreement does not purport to be complete. Such summary is qualified in its entirety by reference to
the Agreement, which is attached hereto as Exhibit 10.1 and is incorporated herein by reference.