Item 1.01. Entry into a Material Definitive Agreement.
Stock
Purchase and Sale Agreement
On
July 1, 2022, Rubicon Technology, Inc., a Delaware corporation (the “Company”) and Janel Corporation, a Nevada corporation
(the “Purchaser”) entered into a Stock Purchase and Sale Agreement (the “Purchase Agreement”) under
which the Purchaser will commence a cash tender offer (the “Offer”) to purchase up to 45.0% of the issued and outstanding
shares of the Company’s common stock, par value $0.001, on a fully-diluted basis (collectively, the “Shares”),
at a price per Share of $20.00, subject to the terms and conditions set forth in the Purchase Agreement. The transaction has been approved
by the board of directors of both the Purchaser and the Board of Directors of the Company (the “Board”). The Purchase
Agreement calls for the Offer to commence within ten business days after the date of the Purchase Agreement and have an initial expiration
date of 20 business days following the commencement date of the Offer, which expiration date may be extended by the Purchaser without
the consent of the Company under certain circumstances.
Under
the terms of the Purchase Agreement, the Purchaser’s obligation to accept for payment and pay for any Shares tendered in the Offer
and not validly withdrawn is subject to certain conditions set forth in the Purchase Agreement, including (i) there being validly tendered
and not withdrawn prior to the expiration date that number of Shares which represents at least 35.0% of the Shares issued and outstanding
on a fully diluted basis (the “Minimum Condition”), (ii) the absence of a Purchaser Material Adverse Effect (as defined
the Purchase Agreement), (iii) the purchase of the Shares pursuant to the Offer would not result, and not be reasonably likely to result,
in a reduction or impairment of the net operating losses of the Company under the provisions of Section 382 of the Internal Revenue Code
of 1986, as amended, and the rules and regulations promulgated thereunder, and (iv) other conditions set forth in the Purchase Agreement.
The
Purchase Agreement contains customary representations and warranties from both the Purchaser and the Company, and the Company agreed
to customary covenants, including, among others, covenants relating to the conduct of its business during the interim period between
the execution of the Purchase Agreement and the closing of the Offer. The Company is subject to certain restrictions on its ability to
solicit third-party proposals relating to alternative transactions or provide information or enter into discussions in connection with
alternative transactions, subject to certain exceptions to permit the Board to comply with its fiduciary duties. Prior to the closing
of the Offer, under specified circumstances, the Board may change its recommendation to the Company’s stockholders regarding its
recommendation to the stockholders that they tender their Shares or its declaration of the advisability of the Offer in connection with
an unsolicited, bona fide written alternative acquisition proposal that the Board determines in good faith (after receiving the advice
of its outside counsel) constitutes a Superior Proposal (as defined in the Purchase Agreement).
The
parties have also agreed to cooperate with each other and to prepare and file, as promptly as possible, all applications, notices, petitions
and filings to obtain all consents and approvals that are necessary or advisable to consummate the transactions contemplated by the Purchase
Agreement.
If
the Offer is consummated, the Purchase Agreement provides that the Purchaser will be entitled to designate two individuals to serve on
the four-member Board, alongside two previously serving directors of the Company. Additionally, the Purchase Agreement provides that,
immediately after the consummation of the Offer, the Company will set the record date for, authorize and approve a cash distribution
to be paid to all stockholders of the Company, which will then include the Purchaser, in the aggregate amount of $11.00 per share.
The
Purchase Agreement contains certain termination rights for the Purchaser and the Company. Upon termination of the Purchase Agreement
under specified circumstances, the Company may be required to pay to the Purchaser a termination fee of either:
(A)
$500,000, which includes a reimbursement of expenses of up to $200,000, if the Company is in breach of the Purchase Agreement and that
breach results in certain closing conditions not being satisfied; or
(B)
$750,000, which includes a reimbursement of expenses of up to $500,000, if the Company terminates the Purchase Agreement and immediately
after such termination enters into an alternative acquisition agreement.
If
the Purchase Agreement is terminated by the Company due to the Purchaser’s breach of the Purchase Agreement, then the Purchaser
may be required to pay the Company an expense reimbursement amount of up to $500,000.
The
Purchase Agreement may also be terminated by, among other things, (i) mutual consent of the parties, (ii) either party if the Offer is
not consummated prior to August 31, 2022, or the Offer is terminated or withdrawn pursuant to its terms without any Shares being purchased
thereunder, (iii) either party if a judgment or other legal restraint preventing the consummation of the Offer, (iv) either party if
the other party has materially breached the Purchase Agreement, or (v) by the Company if the Board has received and approved a Superior
Proposal (as such is defined in the Purchase Agreement) and the Company enters into a new definitive agreement for such Superior Proposal
immediately after the termination of the Purchase Agreement.
The
representations, warranties and covenants of each party set forth in the Purchase Agreement have been made only for purposes of, and
were and are solely for the benefit of the parties to, the Purchase Agreement, may be subject to limitations agreed upon by the contracting
parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties
to the Purchase Agreement instead of establishing these matters as facts, and may be subject to standards of materiality applicable to
the contracting parties that differ from those applicable to investors. Accordingly, the representations and warranties may not describe
the actual state of affairs at the date they were made or at any other time, and investors should not rely on them as statements of fact.
In addition, such representations and warranties (1) will not survive consummation of the Purchase Agreement and (2) were made only as
of the date of the Purchase Agreement or such other date as is specified in the Purchase Agreement. Moreover, information concerning
the subject matter of the representations, warranties and covenants may change after the date of the Purchase Agreement, which subsequent
information may not be fully reflected in the parties’ public disclosures. Accordingly, the Purchase Agreement is included with
this filing only to provide investors with information regarding the terms of the Purchase Agreement, and not to provide investors with
any other factual information regarding the Purchaser or the Company, their respective affiliates or their respective businesses.
Tender
and Voting Agreements
Concurrently
with the execution of the Purchase Agreement, the Purchaser entered into a Tender and Voting Agreement (each, a “Tender and
Voting Agreement”), with each of Aldebaran Capital, LLC, Bandera Master Fund, L.P., Sententia Capital Management LLC and Poplar
Point Capital Management, LLC (each, a “Principal Stockholder,” and collectively, the “Principal Stockholders”),
and the Company. The Purchaser has not paid any consideration in connection with the execution and delivery of the Tender and Voting
Agreements. Each Tender and Voting Agreement was entered into as a condition and inducement to the willingness of the Purchaser to enter
into the Purchase Agreement and to increase the likelihood that the Minimum Condition will be satisfied. Pursuant to the Tender and Voting
Agreements, the Principal Stockholders agreed to validly tender to the Purchaser pursuant to and in accordance with the terms of the
Offer, an aggregate of 675,263 Shares beneficially owned by the Principal Stockholders on the date of each Tender and Voting Agreement
(the “Existing Shares”), subject to proration for tenders by other stockholders, and not to withdraw the Existing
Shares from the Offer. If any Principal Stockholder acquires beneficial ownership of any additional outstanding Shares of the Company’s
common stock after the date of such Tender and Voting Agreement to which it is a party and prior to the termination of the Tender and
Voting Agreement (together with the Existing Shares, the “TO Shares”), such Principal Stockholder agreed to validly
tender such TO Shares to the Purchaser in accordance with the Offer, and in any event prior to the expiration date of the Offer, subject
to proration for tenders by other stockholders. Each Principal Stockholder agreed not to withdraw any TO Shares so tendered unless the
Tender and Voting Agreement to which such Principal Stockholder is a party or the Offer is terminated or otherwise terminates in accordance
with its terms, except under certain limited circumstances.
In
addition, during the term of the Tender and Voting Agreements, each Principal Stockholder irrevocably agreed to vote the TO Shares at
any meeting of the holders of the Company’s common stock, or in connection with any written consent of the holders of the Company’s
common stock: (i) in favor of approving the transactions contemplated by the Purchase Agreement and the Tender and Voting Agreement to
which it is a party and any actions required in furtherance thereof (the “Transactions”); and (ii) against the following
actions, agreements or transactions (other than the Transactions): (A) any extraordinary corporate transaction, such as a merger, consolidation
or other business combination involving the Company or any of its subsidiaries, (B) a sale, lease or transfer of a material amount of
assets of the Company or any of its subsidiaries, or a reorganization, recapitalization, dissolution or liquidation of the Company or
any of its subsidiaries, (C) (1) any change in a majority of the persons who constitute the Board, (2) any change in the present capitalization
of the Company or any amendment of the organizational documents of the Company, (3) any other material change in the Company‘s
corporate structure or business or (4) any other action which, in the case of each of the matters referred to in clauses (C)(1), (2)
or (3), is intended or could reasonably be expected to impede, interfere with, delay, postpone, discourage, frustrate the purpose of
or adversely affect the Transactions contemplated by the Tender and Voting Agreement and the Purchase Agreement.
Amendment
to Section 382 Rights Agreement
In
connection with the execution of the Purchase Agreement, on June 27, 2022, the Board approved an Amendment (the “Amendment”)
to the Company’s Section 382 Rights Agreement, dated as of December 18, 2017, as amended (the “Rights Agreement”).
The Amendment, among other things, renders the Rights Agreement inapplicable to the Offer, the Purchase Agreement and the Transactions
(as such term is defined in the Purchase Agreement). In addition, the Amendment provides that neither the Purchaser, nor any of its affiliates
or associates will become an “Acquiring Person” or Beneficial Owner” (as such terms are defined in the Rights Agreement),
and a Distribution Date and Stock Acquisition Date (as such terms are defined in the Rights Agreement) will not be deemed to have occurred,
as a result of the announcement of the Offer, the execution of the Purchase Agreement, or the consummation of the Offer or of the other
transactions contemplated by the Purchase Agreement.
Amendment
to Executive Employment Agreement
In
connection with the execution of the Purchase Agreement, on June 27, 2022, the Board approved an Employment Agreement Amendment (the
“Employment Agreement Amendment”) to the Executive Employment Agreement, dated March 15, 2017 (the “Executive
Employment Agreement”) by and between the Company and Timothy E. Brog. The Employment Agreement Amendment, among other things,
eliminates Mr. Brog’s entitlement to severance payments in exchange for a Sale Bonus on closing of the Offer, reduced Mr. Brog’s
annual salary to Three Hundred Thousand Dollars ($300,000) as of the Amendment Effective Date (as such term is defined in the Employment
Agreement Amendment) and extended Mr. Brog’s employment with the Company to September 30, 2023, which such term shall be renewable
for successive one (1)-year terms.
***
The
description of the Purchase Agreement, the Tender and Voting Agreements, the Amendment and Employment Agreement Amendment is qualified
in its entirety by reference to the full text of the Purchase Agreement , the Amendment, Employment Agreement Amendment and the Tender
and Voting Agreements, copies of which are attached hereto as Exhibit 2.1, 10.1, 10.2, 99.1, 99.2, 99.3 and 99.4 and are incorporated
by reference herein.