Material Agreement - Form 8-K

Item 1.01. Entry into a Definitive Material Agreement.

Sale of Software-as-a-Service Business

On May 7, 2024, Rubicon Technologies, Inc. (the "Company"), a company incorporated under the laws of the State of Delaware, entered into an Asset Purchase Agreement (the "Asset Purchase Agreement") by and among the Company, Rubicon Technologies Holdings, LLC, a Delaware limited liability company ("Holdings"), Wastech Corp. ("Wastech"), an affiliate of Rodina Capital ("Rodina"), and, solely for purposes of guaranteeing certain obligations of Wastech under the Asset Purchase Agreement, GAFAPA, S.A. de C.V., an affiliate of Rodina. Pursuant to the Asset Purchase Agreement, the Company agreed to sell to Wastech its software-as-a-service business, including the RUBICONSmartCity, RUBICONPro and RUBICONPremier product offerings (the "Technology Business"), for an approximate aggregate purchase price of $68,000,000. The Asset Purchase Agreement also provides a potential earn-out payment of $12,500,000 from Wastech to the Company if the Technology Business achieves a certain annual recurring revenue target on or prior to December 31, 2024.

The foregoing description of the Asset Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the same, which is attached to this Current Report on Form 8-K as Exhibit 10.1 and incorporated by reference herein.

Securities Purchase Agreement

On May 7, 2024, the Company entered into a Securities Purchase Agreement (the "Purchase Agreement"), by and between the Company and MBI Holdings, LP (the "Buyer"), an affiliate of Rodina. Pursuant to the Purchase Agreement, the Company agreed to issue and sell the Buyer 20,000 shares of the Company's Series A Convertible Perpetual Preferred Stock, par value $0.0001 per share (the "Preferred Stock"), having the designation, preferences, rights, privileges, powers and terms and conditions as specified in the Certificate of Designations, Preferences and Rights of Series A Convertible Perpetual Preferred Stock (the "Certificate of Designations"), for an aggregate purchase price of $20,000,000. The Buyer is affiliated with Rodina, a significant shareholder of the Company. The issuance and sale of the Preferred Stock by the Company to the Buyer closed on May 7, 2024. The Company will use the proceeds of sale for general corporate purposes.

Certificate of Designations

The Preferred Stock issued at the closing of the Purchase Agreement has the powers, designations, preferences and other rights set forth in the form of Certificate of Designations.

The Preferred Stock is entitled to receive, whether or not declared, dividends at the rate of 8.0% per annum of the stated value per share of Preferred Stock. On the second anniversary of the closing date and each anniversary thereafter, the dividend rate on the Preferred Stock will increase by 1.0% per annum, up to a maximum dividend rate not to exceed 11.0% per annum. In the event of certain non-compliance by the Company with the Certificate of Designations, the dividend rate will immediately increase by 5.0% per annum during the continuance of such event. The dividend rate on the Preferred Stock may not exceed 16.0% per annum. Accrued dividends will increase the stated value of the Preferred Stock and result in an increase in the liquidation preference of the Preferred Stock to the extent not paid in cash on any dividend payment date. The Preferred Stock is entitled to participate in any dividends declared and paid on the Company's Class A common stock on an as-converted basis.

Each holder of Preferred Stock has the right, at its option, to convert its Preferred Stock, in whole or in part, into fully paid and non-assessable shares of Class A common stock of the Company (the "Common Stock"), subject to certain conditions and certain customary adjustments in the event of certain events affecting the Common Stock. The conversion price is equivalent to $0.35 per share, which is the closing price of the Common Stock on the NYSE immediately prior to the execution of the Purchase Agreement. As of May 7, 2024, the Preferred Stock is convertible into 57,142,857 shares of Common Stock, representing approximately 51% of the Company's outstanding Common Stock and Class V common stock (assuming issuance of such shares of Common Stock upon conversion of the Preferred Stock).

Upon the earliest date on which the following would not result in an event of default or similar event under the debt agreements of the Company as in effect and as amended as of the closing date, the Buyer will have the right to require the Company to redeem the Preferred Stock at a redemption price equal to the greater of the accumulated liquidation preference and 2.0 times the initial liquidation preference (the "Redemption Value"). Upon a change of control as defined in the Certificate of Designations, the Company may redeem the Preferred Stock at a price equal to the Redemption Value. Redemption of the Preferred Stock shall be payable in cash.

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