Item 1.01.
Entry into a Material Definitive Agreement.
Convertible
Debentures
On
December 16, 2022, Rubicon Technologies, Inc. (the “Company”) entered into a securities purchase agreement
(the “Securities Purchase Agreement”) with each of the investors listed on Schedule I thereto (the “Buyers”).
Pursuant to the Securities Purchase Agreement, the Company agreed to issue and sell to the Buyers convertible debentures (the “Convertible
Debentures”) in the principal amount of up to $17 million, net of an original issuance discount of $2,000,000.00, which
are convertible into shares of the Company’s Class A common stock, par value $0.0001 (as converted, the “Conversion
Shares”), which Convertible Debentures may be purchased by the Buyers over the course of a first closing (the “First
Closing”) or second closing (the “Second Closing”). The Securities Purchase Agreement contains
customary representations, warranties, and covenants for the sale and purchase of the Convertible Debentures (the “Transaction”).
At
the First Closing, which closed on December 16, 2022, the Buyers, which comprised of members of the Company’s management team and
board of directors, and certain other existing investors of the Company, purchased Convertible Debentures in an aggregate amount of $10,530,000.00
in United States dollars, net of an original issuance discount of $1,404,000.00, for a total principal amount of $11,934,000.00 in Convertible
Debentures. At the Second Closing, the Company will issue Convertible Debentures with an aggregate value of no less than $4,000,000.00
and no greater than $5,000,000.00, to certain third-party investors, as designated thereby at the Second Closing, which closing shall
occur within 5 days after such Buyers provide written notice to the Company of their election to purchase the remaining Convertible Debentures
as further described in the Securities Purchase Agreement.
The
Convertible Debentures mature on June 16, 2024, 18 months after issuance. The Convertible Debentures are convertible into shares of the
Company’s Class A common stock at an initial conversion price equal to the lower of 110% of: (i) the average closing price of the
Company’s common stock for the five (5) trading days immediately preceding the date of the respective closing or (ii) the closing
price of the Company’s common stock immediately preceding the date of the respective closing, subject to adjustments as further
specified in the Convertible Debentures. The Convertible Debentures will be fully repayable in cash upon maturity.
In
connection with the Transaction, the Company also entered into (1) a registration rights agreement (the “Registration Rights
Agreement”) with the Buyers, pursuant to which the Company agreed to file a registration statement (a “Registration
Statement”) with the Securities and Exchange Commission registering the resale of the Conversion Shares within 45 days
of the First Closing, and to cause any such Registration Statement to become effective within 120 days after filing, and (ii) a lockup
agreement (the “Lockup Agreement”) with the Buyers, pursuant to which the Buyers agreed to not offer, sell,
contract to sell, hypothecate, pledge or otherwise dispose of, directly or indirectly, any Conversion Shares. Each Lockup Agreement provides
that the resale of the Conversion Shares is subject to a lock-up period that shall be the earlier of (i) 18 months and (ii) such date
as YA II PN, Ltd. notifies the Company it has completely sold all shares of the Company’s Class A common stock under its self-liquidating
convertible debenture issued pursuant to the Securities Purchase Agreement, dated as of November 30, 2022, by and between the Company
and YA II PN, Ltd.
The
offer and sale of the Convertible Debentures and Conversion Shares have not been registered under the Securities Act of 1933, as amended
(the “Securities Act”), or applicable state securities laws, and accordingly may not be offered or sold in
the United States except pursuant to an effective registration statement or an applicable exemption from the registration requirements
of the Securities Act and such applicable state securities laws.
The
above descriptions of the terms and conditions, of the Securities Purchase Agreement, the Convertible Debenture, the Registration Rights
Agreement, and Lockup Agreement do not purport to be complete and are qualified in their entirety by reference to the full text of such
agreements and instruments, forms of which are attached to this Current Report on Form 8-K as Exhibit 10.1, Exhibit 10.2, Exhibit 10.3,
and Exhibit 10.4 respectively and incorporated by reference herein.
