2013 Annual Report

Technology LeadershipR

ubicon Technology, Inc. 2013 Annual Report

About Rubicon Technology, Inc.Rubicon Technology, Inc. is a world leader in the production of superior quality sapphire. The market

for sapphire has grown with the rise of the LED industry, because sapphire is the substrate used to make

more than 90% of the world’s LED chips. Now, because of sapphire’s increased availability and its

excellent physical properties such as hardness, strength and transparency, this fascinating material is

being adopted for use in protective components for consumer electronics—camera lens covers, biometric

interfaces, and even smartphone faceplates—as well as for very hard lenses and windows for industrial

applications from semiconductor capital equipment to medical instruments.

Rubicon is the industry’s most vertically integrated sapphire producer, having created an innovative

process to prepare raw aluminum oxide powder for use in its proprietary ES2 crystal growth furnaces and

growing sapphire crystals as large as 200 kilograms, from which Rubicon fabricates sapphire cores or

ingots. The smaller-diameter ingots are sold to supply chain partners for further processing. Larger cores,

at 100, 150 and 200 millimeter (4, 6 and 8 inch) diameters, are cut into wafers which Rubicon epi-polishes

to exacting customer specifications for LED chipmakers. Rubicon has now added plasma etching capability

to make large-diameter patterned sapphire substrates (PSS) for use in high-brightness LED chips for the

lighting industry. In addition, Rubicon fabricates sapphire into a range of different shapes for use as optical

components.

Vertical integration allows Rubicon to control quality at every stage of production, lower costs, and reduce

dependence on third parties in order to be the most reliable supplier in the sapphire industry. Through

continuous innovation, Rubicon makes sapphire in ever larger formats while maintaining crystal quality and

carving out the leading edge in sapphire wafer technology.

Rubicon Technology, Inc. 2013 Annual Report

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While 2013 was a challenging year, we began to see a recovery in the sapphire industry driven in part by the strengthening of the LED market—the principal market for sapphire.Driving the growth in the LED market in 2013 was the beginning of the long-awaited trend toward solid-state LED lighting for general

lighting applications. While backlighting remains the largest segment of the LED market, general lighting is now the fastest-growing

segment, with LED market penetration of approximately 5 percent of all light sockets globally and therefore much opportunity still ahead

of us. Also contributing to incremental demand for sapphire in 2013 was the adoption of sapphire in new applications, including

exterior components for smartphones, such as camera lens covers and home buttons. The growing demand for sapphire has absorbed

much of the excess global capacity, and we saw pricing for 50 and 100-mm sapphire cores increase steadily throughout 2013. While

pricing remains low relative to historical pricing, we expect continued strong demand in 2014 with continuing price increases as a result.

Dear Fellow Shareholders:

Our strategy in the sapphire market is to continuously develop

leading-edge technology and high value-added products that

are capable of earning a strong margin, while at the same time

maintaining a low cost structure for the more commoditized

parts of our product line, such as 50-mm cores. We also pursue

a high degree of vertical integration in order to control cost

and quality and to be the most reliable supplier by reducing

our dependence on third parties. We made great strides in

enhancing our technology platform and extending our vertical

integration during 2013, and I am proud to say that we remain

a technology leader in both sapphire crystal growth and

sapphire wafer finishing.

Chief among our 2013 accomplishments is the launch of our

patterned sapphire substrate (“PSS”) product line, which is

discussed in more detail elsewhere in our annual report. Pat tern-

ing is a process that has historically been done in-house by

our high-brightness LED customers. We are the first to market

with large-diameter PSS wafers, and we are very pleased with

the amount of interest we are receiving from leading LED

manufacturers. Our emphasis in PSS, as in polished wafers, is

the large-diameter, 150 and 200-mm, wafer market. For PSS,

however, we are offering 100-mm patterned wafers as well

to provide a product with broader immediate appeal while at

the same time facilitating our customers’ future transition to

larger diameters.

A significant challenge for us in 2013, in addition to the difficult

pricing environment, was a reduction in demand for 150-mm

polished wafers. This was due to a number of factors including

high wafer inventory levels at our customers, increased competi-

tion in the 150-mm LED market and a technology shift to an

alternative substrate for certain SoS products. While the shift to

the use of larger diameter 150-mm wafers has been limited to

date, 100-mm wafers are now more prevalent than 50-mm

wafers in the LED market, and we continue to believe that it is

only a matter of time before we see greater adoption of 150-mm

wafers. In the near term, however, we will be putting more

emphasis on addressing the established 100-mm wafer market

by offering both polished and PSS 100-mm wafers in 2014 in

order to increase utilization of our wafer fab in Malaysia.

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Other accomplishments in 2013 include the introduction of

innovations in our wafer polishing operations which have signifi-

cantly reduced our wafer costs; completing the rollout of our

new raw material process which reduces our crystal cost and

provides a greater degree of self-reliance; and the continued

progress in our LANCE development. Our LANCE project

involves the development of a new crystal growth technology

to produce very large (36" x 18" x 2") sapphire windows that

no one else in the world can provide. Our current research

and development projects also include work on cost-effective

solutions for potential new markets for sapphire, including

components for the exterior of smartphones.

Our financial position remains strong, with no debt, and with

more than $35 million in cash and short-term investments

at year-end 2013, augmented by an additional $30 million

raised through an equity offering in January 2014. We believe

there are significant opportunities to increase margins in the

near term as we increase utilization of our wafer fab operations

which will reduce the significant idle plant costs we have been

absorbing and result in the sale of our crystal in a more value-

added form. For example, when we sell patterned sapphire

wafers we generate six to eight times as much revenue as when

we sell the same amount of sapphire in core form. In addition,

our current level of operating expenses will support a significant

increase in revenue.

In closing, I believe our strategy of technology leadership and

vertical integration has positioned us well to benefit from the

growth of the LED market and the emerging applications for

sapphire. We remain committed to creating value for our cus-

tomers and shareholders. Thank you for your support.

Sincerely,

Raja M. Parvez

President, Chief Executive Officer and Director

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Our strategy of technology leadership and vertical integration has positioned us well to benefit from the growth of the LED market and the emerging applications for sapphire.

Rubicon Technology, Inc. 2013 Annual Report

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Technology LeadershipFrom raw powdered aluminum oxide, Rubicon Technology makes sapphire, one of the hardest materials in nature, and fabricates it into specialized products for technology markets.

Rubicon’s legacy of innovation has led to unique technology and highly advanced,

pRopRietaRy pRocesses:

• We have developed advanced technology to grow sapphire crystals, in ever larger sizes and with

unsurpassed crystal quality.

• We are the most experienced company in the world at making high-purity, large-diameter sapphire

wafers. Our fabrication process represents a significant advancement in sapphire manufacturing.

• Our patterned sapphire substrates are breaking new ground in bringing greater efficiency to the

manufacture of high-brightness LED chips.

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pRoducts and MaRkets:

Our sapphire is fashioned into ingots, optical windows, and polished and patterned wafers. Those products

are used in LED chips for lighting a room or a TV screen, in smartphone camera lenses and home buttons,

and as very hard and durable lenses and components in optical and industrial applications from aerospace

windows to surgical scalpels.

technology:

Rubicon is at the cutting edge of this exciting new technology, supplying high-quality materials to some of

the most advanced applications in the worlds of optics, semiconductor manufacturing and lighting. From

our proprietary sapphire furnace design to our patented in-situ crystal orientation technology, Rubicon is the

technology leader.

ManufactuRing:

Our business model is central to our success. Rubicon Technology is completely vertically integrated, from

basic raw material to highly advanced finishing processes. Our manufacturing facilities use proprietary pro-

cesses in wafer slicing, polishing and cleaning, and our work involves unprecedented precision. Our custom

patterning process can involve tolerances one tenth of a micron—or 1/250,000th of an inch. By compari-

son, a human hair measures 30 to 120 microns.

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Rubicon Technology, Inc. 2013 Annual Report

A key step in the transformation of powdered aluminum oxide into finished products is the production of sapphire crystals. Our

proprietary crystal growth technology, ES2, results in a low-stress environment that produces superior quality sapphire.

A key element in our process: our furnaces. Attaining temperatures as high as 3,800 degrees (F), we have designed and built our

furnaces to produce an extremely low thermal gradient along the crystal, resulting in sapphire boules of exceptional quality.

Our sapphires are ultrapure and are simply the best in the industry. They have the industry’s lowest dislocation density, the best

crystalline quality, refractive index and uniformity—even as size increases. Speaking of size, we are able to grow crystalline boules

weighing up to 200 kilograms, or 440 pounds, giving us the capability of providing 12-inch LED substrates when the market

evolves to that stage.

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Crystal Growth

With our advanced furnace technology, Rubicon is able to grow sapphire of exceptional quality and purity.

Core fabrication includes cutting a cylindrical core from the boule, then shaping the ends and finishing the outside diameter. Our

cores, or ingots, may be further processed by other slicing and polishing companies for use as LED substrates or as tough, nearly

scratch-proof lens covers and biometric home buttons in consumer electronics products such as smartphones.

Using a diamond wire saw, we cut our large-diameter cores into wafers. Then we epi-polish them into ultra-flat, super clean, stress-free

large diameter substrates. For our LED customers, we manufacture our wafers to precise thicknesses, flatness and custom molecular

orientations. Rubicon is able to control these processes with patented in situ X-ray technology that allows us to provide extremely

precise, customized crystal orientation.

For optical markets, our sapphire windows and blanks are sent to other manufacturers for use in sensors and detectors, instrumentation

and analytical processing, and medical and laser applications.

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Fabrication

Every day Rubicon Technology meets the challenges of shaping and adapting industrial sapphire to fulfill the demanding needs of a wide range of industrial applications. We offer the unparalleled capability to manufacture sapphire in a variety of formats.

Rubicon Technology, Inc. 2013 Annual Report

With the introduction of LED lights designed for a wide variety of home and commercial applications, manufacturers are under

intense pressure to achieve challenging targets for product performance, yield, and total cost—production standards necessary to

broadly penetrate these markets. Rubicon’s PSS capability offers LED lighting manufacturers a high-quality, lower-cost option that

eliminates the chipmaker’s need to add in-house infrastructure and maintenance for this process step.

Our reputation for excellence is driving a high level of interest in this product; our experience in large-format manufacturing is a

significant competitive advantage. We not only offer a complete line of patterned sapphire substrates in 100-mm wafers but also

in 150 and 200-mm. That capability has resulted in requests from no fewer than 16 customers for samples in a variety of

etched patterns.

Our wafers are available in fully customizable sub-micron patterning, with dimensional etching tolerances within one-tenth of a

micron, or 1/250,000th of an inch, and edge exclusion zones as small as one millimeter. The result: longer-lasting lights, with

better lumen performance, at a lower cost.

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Patterned Sapphire Substrates

Our proprietary crystal growth process produces better crystals. Better crystals produce more uniform polished wafers—and that level of excellence has laid the foundation for Rubicon’s entry, in late 2013, into the production of patterned sapphire substrates (PSS), a process that improves both light generation and light extraction in the chips used in LED lighting.

2013 Financial Information

Form 10-K2013 Financial Information

Form 10-K2013 Financial Information

Form 10-K

UNITED STATESSECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-K

(Mark one)Í Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act of

1934 for the fiscal year ended December 31, 2013or

‘ Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of1934 for the transition period from to

Commission file number 001-33834

RUBICON TECHNOLOGY, INC.(Exact Name of Registrant as Specified in Its Charter)

Delaware 36-4419301(State or Other Jurisdiction ofIncorporation or Organization) (I.R.S. Employer Identification No.)

900 East Green StreetBensenville, Illinois 60106

(Address of Principal Executive Offices) (Zip Code)

Registrant’s Telephone Number, Including Area Code: (847) 295-7000

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Name of each exchange on which registeredCommon Stock, Par Value $0.001 per share The NASDAQ Global Market

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ‘ No Í

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ‘ No Í

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities ExchangeAct of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has beensubject to such filing requirements for the past 90 days. Yes Í No ‘

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive DataFile required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (orfor such shorter period that the registrant was required to submit and post such files). Yes Í No ‘

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not becontained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form10-K or any amendment to this Form 10-K. ‘

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reportingcompany. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ‘ Accelerated filer Í Non-accelerated filer ‘ Smaller reporting company ‘

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ‘ No Í

As of June 30, 2013, there were 17,701,022 shares of common stock outstanding held by nonaffiliates of the registrant, with an aggregatemarket value of the common stock (based upon the closing price of these shares on the NASDAQ Global Market) of approximately $141,077,145.

The number of shares of the registrant’s common stock outstanding as of the close of business on March 7, 2014 was 25,765,795.

Documents incorporated by reference:

Portions of the Registrant’s Proxy Statement for its Annual Meeting of Stockholders are incorporated by reference into Part III of thisAnnual Report on Form 10-K provided, that if such Proxy Statement is not filed with the Commission within 120 days after the end of the fiscalyear covered by this Form 10-K, an amendment to this Form 10-K shall be filed no later than the end of such 120-day period.

TABLE OF CONTENTS

Item of Form 10-K Page

Part I1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

1A. Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111B. Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 223. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 224. Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Part II5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer

Purchases of Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 236. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 267. Management’s Discussion and Analysis of Financial Condition and Results of

Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 277A. Quantitative and Qualitative Disclosure About Market Risk . . . . . . . . . . . . . . . . . . . . . . . . 37

8. Consolidated Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . 429. Changes in and Disagreements with Accountants on Accounting and Financial

Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 429A. Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 429B. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

Part III10. Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . 4411. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4412. Security Ownership of Certain Beneficial Owners and Management and Related

Stockholder Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4413. Certain Relationships and Related Transactions, and Director Independence . . . . . . . . . . . 4514. Principal Accountant Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

Part IV15. Exhibits and Consolidated Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . 46

Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47Exhibit Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

PART I

All statements, other than statements of historical facts, included in this Annual Report on Form 10-Kregarding our estimates, expectations, beliefs, intentions, projections or strategies for the future, results ofoperations, financial position, net sales, projected costs, prospects and plans and objectives of management forfuture operations may be “forward-looking statements” as defined in the Private Securities Litigation Reform Actof 1995. We have based these forward-looking statements on our current expectations and projections aboutfuture events and financial trends that we believe may affect our financial condition, results of operations,business strategy, short-term and long-term business operations and objectives and financial needs. Theseforward-looking statements can be identified by the use of terms and phrases such as “believe,” “plan,” “intend,”“anticipate,” “target,” “estimate,” “expect,” and the like, and/or future-tense or conditional constructions such as“will,” “may,” “could,” “should,” etc. (or the negative thereof). Items contemplating or making assumptionsabout actual or potential future sales, market size and trends or operating results also constitute forward-lookingstatements.

Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from timeto time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors onour business or the extent to which any factor, or combination of factors, may cause actual results to differmaterially from those contained in any forward-looking statements we may make. Before investing in ourcommon stock, investors should be aware that the occurrence of the risks, uncertainties and events described inthe section entitled “Risk Factors” and elsewhere in this Annual Report could have a material adverse effect onour business, results of operations and financial condition.

Although we believe that the expectations reflected in the forward-looking statements are reasonable,forward-looking statements are inherently subject to known and unknown risks and business, economic and otherrisks and uncertainties that may cause actual results to be materially different from those discussed in theseforward-looking statements. Readers are urged not to place undue reliance on these forward-looking statements,which speak only as of the date of this Annual Report. We assume no obligation to update any forward-lookingstatements in order to reflect any event or circumstance that may arise after the date of this Annual Report, otherthan as may be required by applicable law or regulation. If one or more of these risks or uncertainties materialize,or if the underlying assumptions prove incorrect, our actual results may vary materially from those expected orprojected.

This Annual Report also contains statistical data and estimates, including those relating to market size andgrowth rates of the markets in which we participate, that we obtained from industry publications and reportsgenerated by market research firms. These publications typically indicate that they have obtained theirinformation from sources they believe to be reliable, but do not guarantee the accuracy and completeness of theirinformation. Although we have assessed the information in such publications and found it to be reasonable andbelieve the publications and reports are reliable, we have not independently verified their data.

You should read this Annual Report and the documents that we reference in this Annual Report and havefiled with the Securities and Exchange Commission (the “SEC”) as exhibits with the understanding that ouractual future results, levels of activity, performance and events and circumstances may be materially differentfrom what we expect.

Unless otherwise indicated, the terms “Rubicon,” the “Company,” “we,” “us,” and “our” refer to RubiconTechnology, Inc.

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ITEM 1. BUSINESS

OVERVIEW

We are a vertically integrated, advanced electronic materials provider specializing in monocrystallinesapphire for applications in light-emitting diodes (“LEDs”), optical systems and specialty electronic devices. Theemergence of sapphire in commercial volumes at competitive prices has enabled the development of newtechnologies such as high brightness (“HB”) white, blue and green LEDs and highly-integrated radio frequencyintegrated circuits (“RFICs”). Recently, sapphire has been adopted for use in several new applications in mobiledevices, specifically camera lens covers, dual flashes and home buttons on certain newer model smartphones.The reason sapphire was adopted for use on the home button on certain smartphones is because of the scratchresistance and increased touch capacitance it offers, which are important characteristics to ensure theeffectiveness of the fingerprint recognition security built into the device. We believe that the use of fingerprintrecognition security and other biometrics could become more prevalent in the future, which could become astrong growth driver for sapphire. We apply our proprietary crystal growth technology to produce high-qualitysapphire products efficiently to supply our end-markets, and we work closely with our customers to meet theirquality and delivery needs.

We are a vertically-integrated manufacturer of high-quality sapphire substrates and optical windows that areused in a variety of high-growth, high-volume end-market applications. Our largest product lines are:

• sapphire cores, two to six inches in diameter, which our customers further process into wafers for usein LED applications and into components such as lens covers for mobile devices;

• six-inch sapphire wafers that are used as substrates for the manufacture of LED chips and to a lesserextent for other semiconductor applications such as Silicon-on-Sapphire (“SoS”) RFICs; and

• Optical sapphire components in various shapes and sizes, including round and rectangular windowsand blanks, domes, tubes and rods. These optical sapphire products are used in equipment for a widevariety of end markets, including defense and aerospace, medical devices, oil and gas drilling,semiconductor manufacturing and other markets.

For the LED market, we sell two to four-inch material primarily in core form and six and eight-inch materialprimarily in polished wafer form. Eight-inch wafers are sold primarily for customers’ research and developmentefforts at this time. We have the ability to produce cores and wafers of up to twelve inches in diameter to supportproduction of chips for next-generation LED and other electronic applications. Larger sapphire also has currentapplications in the optical markets. In other semiconductor markets, we sell primarily six-inch wafers; our majorcustomer in that market, however, is modifying its technology to produce its higher volume RFIC products on asubstrate other than sapphire, a development which will likely significantly reduce the amount of sapphiredemand from that market beginning in early 2014. Other non-LED semiconductor customers are using sapphirein research and development at this time.

We recently introduced a new product offering, patterned sapphire substrates or “PSS”. HB LED chipmanufacturers etch a pattern onto the surface of the sapphire wafer in the early stages of their production processin order to improve light output. We have leveraged our capability in producing larger diameter sapphire wafersto offer pre-patterned, larger diameter (four-inch and six-inch) wafers to the LED market.

We believe that LED production is following a similar path to that of production of integrated circuits onsilicon substrates, which gradually migrated to production on increasingly larger substrates in order to reducemanufacturing costs. We feel that this migration to larger substrates and the related efficiency gains will helpreduce the prices of LED devices and thereby facilitate greater adoption of LED technology in the backlightingand general lighting markets.

Our vertically-integrated manufacturing capabilities enable us to maintain our high quality standards whilecontrolling costs. We design, assemble and maintain our own proprietary crystal growth furnaces to grow high-

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purity, low-stress, ultra-low-defect-density sapphire crystals. In addition, we possess state-of-the-art capabilitiesin high-precision core drilling, wafer slicing, surface lapping, edge bevel grinding, polishing, patterning andwafer cleaning processes. We foster a strong sense of innovation and agility in our product development teams inan attempt to develop new products more effectively and to rapidly capture market growth.

We plan to leverage our technological advantage in efficiently producing high-quality, large-diametersapphire products to maintain our leadership position and capitalize on future growth opportunities. To attain thisgoal, we are investing in research and development activities, continuing to enhance our operational capabilities,increasing our brand recognition and diversifying into new market segments.

We are a Delaware corporation incorporated on February 7, 2001. Our common stock is listed on theNASDAQ Global Market under the symbol “RBCN.”

INDUSTRY OVERVIEW

Integrated circuits and other semiconductor devices have traditionally been fabricated on silicon substrates.However, for certain advanced applications, new electronic materials have emerged as the substrates of choicedue to evolving integration and performance considerations. For example, sapphire is the preferred substratematerial for HB white, blue and green LED applications due to its crystal lattice compatibility with the aluminumgallium nitride (“AlGaN”) epitaxial layers, thermal expansion properties, commercial availability and costefficiency.

LED applications

Advancements in solid state lighting utilizing HB white, blue and green LEDs over the past decaderepresent a disruptive technology in the lighting industry, providing significant performance, environmental andeconomic improvements compared to traditional incandescent or fluorescent lighting. For example, traditionalincandescent lamps are inefficient and costly, emitting over 90% of consumed power as heat and lasting only1,500 to 2,000 hours. Fluorescent lamps produce light by passing electricity through toxic mercury vapor, whichcreates an environmental disposal problem. LEDs do not contain mercury or lead and are 4.0 to 6.6 times asefficient as traditional incandescent lamps, while providing 35,000 to 50,000 hours of light. These factors, alongwith their durability, small form factor, excellent color performance and decreasing costs, have led to growingdemand for LEDs in applications such as small displays for mobile devices, flashes for digital cameras,backlighting units (“BLUs”) for displays used in notebook computers, desktop monitors, LCD televisions, publicdisplay signs, automotive lights, street lights, traffic signals and general and specialty lighting. Applicationsusing LEDs have unit volumes in the billions and are expected to grow significantly over the next several years.The majority of HB LEDs are produced on sapphire substrates. Therefore, as the HB LED market grows, webelieve the sapphire substrate market will grow as well.

Mobile devices. LEDs are used in color displays for mobile phones and other portable electronics such asGPS systems, MP3 players and digital camera flashes. LEDs are well suited for mobile devices due to their lowcurrent drain which extends battery life and durability while generating less heat. For these reasons, the vastmajority of mobile devices utilize LED lighting.

LED backlighting units for large displays. LED BLUs now frequently replace conventional fluorescentBLUs in LCD flat panel televisions, notebook computers and desktop monitors. Benefits of LED BLUs in theseapplications are reduced power consumption/extended battery life, thinner displays, quicker response time andbetter color rendition. Displays made with LED BLUs also have no toxic materials, which helps electronicsmanufacturers to comply with environmental regulations.

Automotive lighting. Automobile manufacturers are increasingly using LEDs in car and truck headlights,turning and tail light functions as well as interior lighting. Benefits include near-instant response time, reduced

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power usage and more stylish and effective designs. Increased LED usage in other transportation vehicles such asmotorcycles and commercial jets offers additional growth potential.

Commercial signage/displays. LEDs are widely used as light sources on large signs, LED displays andoutdoor displays, such as jumbo screens used in sporting arenas and electronic billboard displays.

General illumination. LEDs are increasingly being used for outdoor and indoor commercial and publiclighting, architectural lighting, street lights, traffic signals, retail displays, residential lighting, replacement lampsand off-grid lighting for developing countries. General illumination is expected to be one of the fastest growingapplications for HB LEDs.

Optical applications

Sapphire is utilized for windows and optics for aerospace, sensor, medical and laser applications due to itswide-band transmission, superior strength, scratch resistance and high strength-to-weight ratio. Sapphire’sphysical properties make it very well suited for jet fighter targeting pod windows, forward-looking infraredwindows for commercial and business jets as well as unmanned air vehicles or drones, rocket domes andtransparent armor for military vehicles.

Recently, sapphire has been adopted for use in several new applications in mobile devices, specificallycamera lens covers, dual flashes and home buttons on certain newer model smartphones. The switch to sapphirefor these mobile device applications is because sapphire is highly scratch resistant and offers improved touchcapacitance which are important characteristics to ensure the effectiveness of the fingerprint recognition securityrecently built into the home button functionality of one of the major brands of smartphones. Biometrics, such asfingerprint recognition, provides greater security than a password. Data security is becoming an increasingconcern in society and we believe that the use of biometrics could increase in coming years, which could increasedemand for sapphire.

Other semiconductor applications

SoS integrated circuits consist of a thin layer of silicon grown on a sapphire substrate and are primarily usedin advanced wireless and military applications, such as RFICs. In particular, SoS RFICs are currently used inmobile phones, broadband television set-top boxes, satellites and radiation-hardened applications for the defenseindustry.

Sapphire is also currently being experimented with as a substrate to produce certain power devices. If ourcustomers are successful with their development efforts, this market could evolve into a growth opportunity forsapphire suppliers.

Sapphire substrate industry supply chain

The production process for sapphire substrates is substantially similar to that of silicon wafers. A typicalprocess flow consists of crystal growth, fabrication, slicing, lapping and polishing steps. Output quality ismeasured in flatness, desired crystal planar orientation, etch pitch density and crystalline structure uniformity. Agreat emphasis is placed on continuously improving yields and increasing production efficiency to drive costslower to take advantage of emerging high-volume opportunities. Device manufacturers are seeking largerdiameter sapphire wafers to allow them to gain efficiency in their production processes through higherthroughput and reduced edge loss. Historical methods of sapphire crystal growth, which rely on lower-volumebatch processes, are less able to meet the needs of leading end-market customers for high-quality crystals,demanding dimensional tolerances, high production volumes, cost efficiency and on-time delivery. Sapphire isthe material on which the entire value chain is built.

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TECHNOLOGY

Rubicon, as a vertically integrated manufacturer, has developed proprietary advanced technology at everystage of production from raw material processing through crystal growth, fabrication, wafer finishing, patterningand cleaning.

Our proprietary ES2 crystal growth technique produces high-quality sapphire crystals for use in our sapphireproducts. ES2 is derived from the standard Kyropoulos method of crystal growth. We developed this techniquewith the goal of establishing greater control over the crystal growth process while maintaining minimaltemperature variations. Unlike other techniques, during the ES2 technique, the growing sapphire crystal exists inan unconstrained, low stress environment inside a closed growth chamber. The closed system allows forenhanced control of the melt, resulting in higher quality crystals. The temperature gradient between the melt andthe crystal in the ES2 technique is significantly lower than in other crystal growth techniques. These aspects ofthe ES2 technique enable us to grow crystals that have a significantly lower dislocation density, higher crystalpurity and greater uniformity than sapphire crystals grown using other techniques. The ES2 technique providesan inherent annealing process once the crystal is fully grown. This thermal annealing is an integral means ofrelieving stress in the crystal during the ES2 process. We believe we can readily scale our ES2 technology in aproduction environment while maintaining high crystal quality even as crystal boule size is increased. As a resultof our proprietary ES2 technology, we believe that we currently offer the most efficient method formanufacturing large form factor, high-quality sapphire in the market today.

We have automated the crystal growth process of our proprietary ES2 technique. Our furnace environmentsare controlled by closed-loop control systems and the overall crystal growth process is run with minimal operatorintervention, which reduces the potential for human error. In addition, a single operator can supervise the controlof multiple ES2 furnaces simultaneously, which reduces costs.

We believe our proprietary ES2 process provides significant advantages over other crystal growth methodssuch as CZ and EFG. Unlike the ES2 technique, the CZ and EFG methods grow crystals with much higher levelsof stress. This stress can decrease the overall quality of the sapphire crystal and requires increased processingtime to relieve this stress, which increases production costs and decreases throughput, especially in largerdiameter crystals. During the EFG process, the crystal is grown in a sheet form by pulling it through a diedirectly from the melt; while in the CZ process, the crystal must be rotated and pulled as the aluminum oxidemelt is consumed. These constrained growth environments with higher thermal gradients increase stress anddecrease crystal quality.

Our research and development (“R&D”) activity plays a vital role in supporting our technology, product andrevenue roadmaps. In 2013, 2012 and 2011, our R&D expenses totaled $2.3 million, $2.3 million and$1.8 million, respectively. Our R&D is focused on three key areas:

• large area sapphire growth and fabrication;

• higher precision sapphire processing; and

• cost-effective optical components for mobile devices.

Our technical staff possesses deep and broad expertise in materials science and engineering. We alsodevelop and utilize sophisticated metrology equipment to perform material and process characterization.

PRODUCTS

We offer a wide variety of sapphire products designed to meet the stringent specifications of our customers.Using our proprietary ES2 technology, we grow high-quality sapphire boules. We fabricate our products from theboules and sell them in four general categories: core, as-cut, as-ground and polished. We currently offer two,three, four, six and eight-inch diameter wafers, in C, R, A, and M planar orientations. A sapphire crystal hasmultiple orientation planes resulting from its crystalline structure symmetry.

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Each orientation of the crystal structure is represented by a letter and differs in lattice structure. Thesevariations result in different chemical, electrical and physical properties depending on the particular orientationplane. As a result, customers require different orientation planes depending on the intended application. Forexample, LED manufacturers typically request C plane crystals while SoS manufacturers typically requestR plane crystals.

While we continue to offer all of the following products, our sales efforts are now focused on selling twothrough four-inch cores to our polishing customers and four, six and eight-inch polished wafers to oursemiconductor device manufacturing customers.

Product Size Orientation Applications

Core 2,” 3,” 4” C, R, A, M • LED• Optical windows• Blue laser diode

As-Cut 2,” 3,” 4,” 6”, 8” C, R, A, M • Wafers for LED• Wafers for blue laser diodes• Wafers for SOS RFICs

As-Ground 2,” 3,” 4,” 6”, 8” C, R, A, M • Wafers for LED• Wafers for SOS RFICs• Blanks for optical windows• Wafer carriers

Polished 4”, 6”, 8” C, R, A • Epi-polished wafers for SOS RFICs• Polished optical windows• Double-side polished wafer carriers

Patterned SapphireSubstrate 4”, 6” C • Epi-polished patterned wafers for RFICs

Core

Our core product line consists of our sapphire cores drilled from sapphire boules with high-precision. In2013, 2012 and 2011, sales of core accounted for 56%, 15% and 46% of our revenue, respectively. Revenue fromsapphire cores increased through the first half of 2011, then declined due to excess inventory at polishers andLED manufacturers. Major suppliers of sapphire, including us, added capacity in 2010 and 2011, resulting inexcess supply during 2012 which caused lower product prices. We chose to sell fewer sapphire cores in 2012awaiting price improvement. Compared with historical pricing, core prices continued to be low in 2013, butprices steadily increased through most of 2013. We expect that pricing will continue to recover as LEDproduction volumes increase.

As-cut

Our as-cut product line consists of sapphire cores sliced using a wire saw machine. We believe we are ableto offer our customers one of the highest-precision cut sapphire wafers in the market. This is especially importantto customers who require precise orientation planes for applications such as LEDs, SoS, RFICs and blue laserdiodes. In each year ended December 31, 2013, 2012 and 2011, sales of as-cut wafers accounted for less than10% of our revenue.

As-ground

Our as-ground product line consists of cut sapphire wafers that undergo a double-sided lapping and edgegrinding process. The lapping process ensures that the surface of the wafer is flat and smooth and has a high

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degree of parallelism. The grinding process bevels the edges of the wafers, making them more durable and lesssusceptible to chipping and cracking. In each year ended December 31, 2013, 2012 and 2011, sales of as-groundwafers accounted for less than 10% of our revenue.

Polished

Our polished product line primarily consists of finely polished, ultra-clean, six and eight-inch sapphirewafers. Our polished wafers undergo two polishing phases including both a mechanical and a chemicalmechanical planarization phase. We believe we are currently one of a small number of fully vertically integratedfirms offering six and eight-inch, high-quality C-plane and R-plane polished wafers. In 2013, 2012 and 2011sales of polished wafers accounted for 29%, 75% and 49% of our revenue, respectively. Sales of six-inchpolished sapphire wafers increased in 2011 and 2012 with certain LED chip manufacturers migrating to a six-inch production platform and with the growth of the SoS RFIC market, which has subsequently decreased in size.The percentage of revenue coming from six-inch wafer sales in 2012 was particularly high due to reduced salesof sapphire core in that period. The proportion of revenue from polished wafers in the future will depend on anumber of factors, including customer adoption of large-diameter sapphire wafers in the LED market, customerdecisions to purchase patterned versus polished wafers and pricing for our various products, including cores.

Patterned sapphire substrates

Our patterned sapphire substrates (“PSS”) product line was introduced in 2013 and consists of finelypolished, ultra-clean, four and six-inch patterned sapphire wafers. LED chip manufacturers etch a pattern ontothe surface of the sapphire wafer in the early stages of their production process in order to improve light output.We are leveraging our capability in producing larger diameter sapphire wafers to offer pre-patterned, largerdiameter (four-inch and six-inch) wafers to the LED market. We offer fully customizable, sub-micron patterningcapability with dimensional tolerances within one tenth of a micron. We also offer the industry’s smallest edgeexclusion zone maximizing the usable wafer surface area yielding more chips per wafer. We believe we are thefirst vertically integrated sapphire producer to offer high volume four and six-inch patterned substrates. During2013, we shipped samples of four and six-inch wafers with a wide variety of pattern types, densities and heights.We believe this product line will generate increasing revenue in 2014. In 2013, sales of PSS wafers accounted forless than 10% of our revenue.

Other

We also offer optically-polished windows and ground window blanks of sapphire. We provide sapphire andother crystal products in many sizes, shapes and product formats for specialty applications.

MANUFACTURING

The process of growing the crystal begins by heating the raw material, aluminum oxide, until it reaches anideal temperature above its melting point. This ideal temperature is essential for our process because it allows usto produce high-purity crystals with very low defect rates. Following the heating, a seed rod is inserted in themelted material as the material is being cooled to crystallize into a boule. Following the growth process, eachboule is rigorously inspected by using polarized lighting and magnification to find imperfections, such asbubbles, dislocations and granular deposits within the crystal.

We then drill the resulting boules into cylindrical cores using our custom high-precision crystal orientationequipment and proprietary processes. We use wire saws to slice each core into wafers of precise size and shape.These wafers are then pre-polished using precision lapping and edge-grinding equipment and then are ready to bepolished into epitaxial wafers. All of these processes are performed in clean environments to reduce the chanceof crystal contamination. Epi-polishing and wafer cleaning are performed in Class 10,000 and Class 100 clean-room environments, respectively.

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We are dedicated to quality assurance throughout our entire operation. We employ detailed materialtraceability from raw material to finished product. Our quality system is certified as ISO9001:2000, and we havein-house expertise at the Six Sigma Black Belt level.

All of our long-lived assets are located in the U.S. and Malaysia.

SALES AND MARKETING

We market and sell our products through our direct sales force to customers in Asia, Australia, NorthAmerica and Europe. Our direct sales force includes experienced and technically sophisticated salesprofessionals and engineers who are knowledgeable in the development, manufacturing and use of sapphiresubstrates, windows and other optical materials. Our sales staff works with customers during all stages of thesubstrate manufacturing process, from developing the precise composition of the substrate throughmanufacturing and processing the substrate to the customer’s specifications.

A key component of our marketing strategy is developing and maintaining strong relationships with ourcustomers, especially at the senior management level. We achieve this by working closely with our customers tooptimize our products for their production processes. In addition, we are able to develop long-term relationshipswith key customers by offering product specification assistance, providing direct access to enable them toevaluate and audit our operations, delivering high-quality products and providing superior customer service. Webelieve that maintaining close relationships with senior management and providing technical support improvescustomer satisfaction and provides us with a competitive advantage when selling our products.

In order to increase brand recognition of our products and of Rubicon in general, we publish technicalarticles, advertise in trade journals, distribute promotional materials and participate in industry trade shows andconferences.

CUSTOMERS

Our principal customers are semiconductor device manufacturers and wafer polishing companies. Asubstantial portion of our sales have been to a small number of customers. In 2013 and 2012, our top twocustomers accounted for approximately 44% and 67% of our revenue, respectively. In 2011, our top threecustomers accounted for approximately 69%. Although we are attempting to diversify and expand our customerbase, we expect our sales to continue to be concentrated among a small number of customers. However, we alsoexpect that our significant customers may change from time to time. In 2013, sales to Peregrine SemiconductorCorporation and Nanjing J-crystal Photoelectric Technology Co. represented approximately 27% and 17% of ourrevenues, respectively. In 2012, sales to Peregrine Semiconductor Corporation and LG Innotek representedapproximately 38% and 29% of our revenues, respectively. In 2011, sales to LG Innotek, Tera Xtal TechnologyCorp. and Crystalwise Technology represented approximately 38%, 19% and 12% of our revenues, respectively.No other customer accounted for 10% or more of our revenues during 2013, 2012, or 2011.

In 2013, 60% of our sales were made to customers in Asia, 25% of our sales were made to customers inAustralia, 11% of our sales were made to customers in North America and 4% of our sales were made tocustomers in Europe. In 2012, 48% of our sales were made to customers in Asia, 19% of our sales were made tocustomers in Australia, 17% of our sales were made to customers in North America and 16% of our sales weremade to customers in Europe. In 2011, 87% of our sales were made to customers in Asia, 9% of our sales weremade to customers in North America and 4% of our sales were made to customers in Europe. Our customersupply agreements tend to be for short periods of time, typically 90 days. Therefore, fluctuations in demandcould cause our quarterly revenue to vary significantly. Our standard arrangement with most customers includespayment terms.

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INTELLECTUAL PROPERTY

Our ability to compete successfully depends upon our ability to protect our proprietary technologies andother confidential information. We rely primarily upon a combination of trade secret laws and non-disclosureagreements with employees, customers and potential customers to protect our intellectual property. We have fivepatents and twelve pending patent applications with the U.S. Patent and Trademark Office, mostly coveringaspects of our core production, wafer grinding and lapping technologies. However, we believe that factors suchas the technological and innovative abilities of our personnel, the success of our ongoing product developmentefforts and our efforts to maintain trade secret protection are more important than patents in maintaining ourcompetitive position. We pursue the registration of certain of our trademarks in the U.S. and currently have threeregistered trademarks.

COMPETITION

The markets for high-quality sapphire products are very competitive and have been characterized by rapidtechnological change. The products we produce must meet certain demanding requirements to succeed in themarketplace. Although we account for a significant percentage of the total market volume today, we facesignificant competition from other established providers of similar products as well as from new and potentialentrants into our markets.

We have several competitors that compete directly with us. In recent years, certain companies that formerlycompeted with us only in sapphire cores have entered into wafer polishing and are trying to establish positions inthe large-diameter wafer market. These companies tend to focus on providing core and as-cut products ratherthan offering polished products. There are a limited number of companies that are substantially larger than we arethat compete with us in a relatively small segment of their overall business. These larger companies tend to focuson providing polished products to customers rather than providing core, as-cut and as-ground products.

We believe that the key competitive factors in our markets are:

• consistently producing high-quality products in the desired size, orientation and finish;

• driving innovation through focused research and development efforts;

• possessing sufficient supply capacity to meet end-market customer demands;

• offering solutions through collaborative efforts with customers;

• pricing; and

• providing a low total cost-of-ownership for customers.

Although we face significant competition, we believe that our proprietary ES2 crystal growth technology,our fabrication and polishing capabilities and our business practices allow us to compete effectively on all of theabove factors.

ENVIRONMENTAL REGULATION

In our manufacturing process, we use water, oils, slurries, acids, adhesives and other industrial chemicals.We are subject to a variety of federal, state and local laws regulating the discharge of these materials into theenvironment or otherwise relating to the protection of the environment. These include statutory and regulatoryprovisions under which we are responsible for the management of hazardous materials we use and the dispositionof hazardous wastes resulting from our manufacturing processes. Failure to comply with such provisions,whether intentional or inadvertent, could result in fines and other liabilities to the government or third parties,injunctions requiring us to suspend or curtail operations or other remedies, which could have a material adverseeffect on our business.

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EMPLOYEES

As of December 31, 2013, we had 292 full-time employees, of which 264 work in technology andoperations. None of our employees are represented by a labor union. We consider our employee relations to begood.

OTHER INFORMATION

You may access, free of charge, our reports filed with the SEC (for example, our Annual Report onForm 10-K, our Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K and any amendments tothose forms) indirectly through our Internet website (www.rubicontechnology.com). Reports filed with orfurnished to the SEC will be available as soon as reasonably practicable after they are filed with or furnished tothe SEC. Alternatively, if you would like a paper copy of any such SEC report (without exhibits) or document,write to Investor Relations, Rubicon Technology, Inc., 900 East Green Street, Bensenville, Illinois 60106, and acopy of such requested document will be provided to you, free of charge. The information found on our websiteis not part of this or any other report filed with or furnished to the SEC.

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ITEM 1A. RISK FACTORS

You should carefully read the risk factors set forth below, together with the financial statements, relatednotes and other information contained in this Annual Report on Form 10-K. Our business is subject to a numberof important risks and uncertainties, some of which are described below. The risks described below, however,are not the only risks that we face. Additional risks and uncertainties not currently known to us or that wecurrently deem to be immaterial may also impair our business operations. Any of these risks may have a materialadverse effect on our business, financial condition, results of operations and cash flows. Please refer to thediscussion of “forward-looking” statements on page one of this Annual Report on Form 10-K in connection withyour consideration of the risk factors and other important factors that may affect future results described below.

Our results of operations, financial condition and business will be harmed if we are unable to effectivelymatch our capacity with customer demand.

The markets we serve are emerging markets. As a result, there can be significant fluctuations in demand forour products, which may result in our manufacturing facilities being underutilized from time to time, which cannegatively impact our gross margins and overall business. Currently, there is limited demand for six-inchsapphire wafers. As a result, we currently are not fully utilizing our manufacturing facilities. We expect thisunderutilization of some of our manufacturing facilities to continue into the first half of 2014. There can be noassurance that such sudden market changes will not occur again in the future adversely affecting our profitability.

We plan to continue to expand our production capacity as demand for our products strengthens. Ourcapacity expansion involves significant risks, including the availability of capital equipment and the timing of itsinstallation, availability and timing of required electric power, management of expansion costs, timing ofproduction ramp-up, qualification of our new equipment and demands on management’s time. If our businessdoes not grow fast enough to utilize this new capacity effectively, our business and financial results could beadversely affected. Conversely, delays in expanding our manufacturing capacity could impact our ability to meetfuture demand for our products. As a result, we might not be able to fulfill customer orders in a timely manner,which could adversely affect our customer relationships and operating results. Moreover, our efforts to increaseour production capacity may not succeed in enabling us to manufacture the required quantities of our products ina timely manner or at the gross margins that we achieved in the past. There can be no assurance that we will beable to successfully reach our production, timing and cost goals for our expansion.

We have incurred significant losses in prior periods and may incur losses in the future.

We have incurred significant losses in prior periods. As of December 31, 2013, we had an accumulateddeficit of $127.6 million. While we had net income of $38.1 million in 2011 and $29.1 million in 2010, weincurred net losses of $30.4 million, $5.5 million, $9.6 million and $2.9 million in 2013, 2012, 2009 and 2007,respectively. There can be no assurance that we will have sufficient revenue growth to offset expenses or toachieve profitability in future periods.

The average selling prices of products in the LED supply chain have historically been volatile.

Historically, our industry has experienced volatility in product demand and pricing. Changes in averageselling prices of our products as a result of competitive pricing pressures, increased sales discounts and newproduct introductions by our competitors could have a significant impact on our profitability. Although weattempt to optimize our product mix, introduce new products, reduce manufacturing costs and pass along certainincreases in costs to our customers in order to lessen the effect of decreases in selling prices, we may not be ableto successfully do so in a timely manner and our results of operations and business may be harmed. In addition,rapid changes in market conditions have, at times, caused financial hardship for our customers, resulting is somewrite-offs of our accounts receivable. While we monitor the financial health of our customers, rapid changes inmarket conditions may result in additional accounts receivable write-offs in the future which could affect ourresults of operations.

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If LED lighting does not achieve greater market acceptance, or if alternative technologies are developedand gain market traction, prospects for our growth and profitability would be limited.

Our future success largely depends on increased market acceptance of LED lighting. Approximately 59%and 49% of our revenue during 2013 and 2012, respectively, was from sales of our products for use in themanufacture of LED products. Potential customers for LED lighting systems may be reluctant to adopt LEDlighting as an alternative to traditional lighting technology because of its higher initial cost and relatively lowlight output per unit in comparison with the most powerful traditional lighting devices. In addition, our potentialcustomers may have substantial investments and know-how related to their existing lighting technologies, andmay perceive risks relating to the novelty, complexity, reliability, quality, usefulness and cost-effectiveness ofLED products compared to other lighting sources available in the market. If acceptance of LED lighting does notincrease significantly, then opportunities to increase our revenues and operate profitably would be limited.

Moreover, if effective new sources of light other than LED devices are developed, our current products andtechnologies could become less competitive or obsolete. Any of these factors could have a material and adverseimpact on our growth and profitability.

If the acceptance of newly developed products does not meet our expectations, or our efforts to enhanceexisting products are not successful, our future operating results may be harmed.

The development of new products may require substantial investment in development efforts andequipment. If our newly developed products, such as our PSS product line, do not achieve market acceptance, wemay be unable to generate anticipated revenue and our operating results could be harmed.

Our continuing efforts to enhance our current products and to develop new products involve several risks,including:

• our ability to anticipate and respond in a timely manner to changes in customer requirements;

• the significant research and development and equipment investment that we may be required to makebefore market acceptance of a particular new or enhanced product;

• the possibility that the industry may not accept our new or enhanced products after we have invested asignificant amount of resources in development; and

• competition from new technologies, processes and products introduced by our current and/or futurecompetitors.

The technology used in the LED industry continues to change rapidly, and if we are unable to modify ourproducts to adapt to future changes in the LED industry, we will be unable to attract or retain customers.

We do not design or manufacture LEDs. Our ability to expand into new applications in the LED marketdepends on continued advancement in the design and manufacture of LEDs by others. The LED industry hasbeen characterized by a rapid rate of development of new technologies and manufacturing processes, rapidchanges in customer requirements, frequent product introductions and ongoing demands for greater functionality.Our future success will depend on our ability to develop new products for use in LED applications and to adjustour product specifications, such as our previous development of larger diameter wafers, in response to thesedevelopments in a timely manner. If our development efforts are not successful or are delayed, or if our newlydeveloped products, such as PSS, do not achieve market acceptance, we may be unable to attract or retaincustomers and our operating results could be harmed. In addition, although sapphire is currently the preferredsubstrate material for HB white, blue and green LED applications, we cannot assure you that the LED marketwill continue to demand the performance attributes of sapphire. Silicon carbide is another substrate materialcurrently used for certain LED applications, including some that also use sapphire substrates. Other substratesbeing investigated and used in research and development for certain LED applications are silicon, aluminumnitride, zinc oxide and bulk gallium nitride. If sapphire is displaced as the substrate of choice for certain LEDapplications, our financial condition and results of operations would be materially and adversely affected unlesswe were able to successfully offer the competing substrate material.

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If the development and acceptance of our products for the SoS RFIC market do not meet our expectations,our future operating results may be harmed.

The level of market acceptance of our SoS RFIC products may impact our future operating results. Oursuccess in the SoS RFIC market depends on a number of factors, including the success of our customers’products in current applications and the acceptance of SoS RFIC products for newly targeted applications.

In addition, it is possible that other solutions, such as silicon-on-insulator, may become preferred over SoS.We cannot assure you that the RFIC market will continue to require the performance attributes of SoS solutions.If our products are not accepted more broadly in the RFIC market, our results of operations and business may beharmed.

We depend on a few customers for a major portion of our sales and our results of operations would beadversely impacted if they reduced their order volumes.

Historically, we have earned, and believe that in the future we will continue to earn, a substantial portion ofour revenue from a small number of customers. In 2013 and 2012, our top two customers accounted forapproximately 44% and 67% of our revenue, respectively. If we were to lose one of our major customers or havea major customer significantly reduce its volume of business with us, our revenues and profitability would bematerially reduced unless we are able to replace such demand with other orders promptly. We expect to continueto be dependent on our significant customers, the number and identity of which may change from period toperiod.

In addition, we generally sell our products on the basis of purchase orders. Delays in product orders couldcause our quarterly revenue to vary significantly. A number of factors could cause our customers to cancel ordefer orders, including interruptions to their operations due to a downturn in their industries, natural disasters,delays in manufacturing their own product offerings into which our products are incorporated, securing othersources for the products that we manufacture or developing such products internally.

We are subject to risks from international sales that may harm our operating results.

In 2013 and 2012, revenue from international sales was approximately 89% and 83%, respectively, of ourtotal revenue. We expect that revenue from international sales will continue to constitute a significant portion ofour total revenue for the foreseeable future. Our international sales are subject to a variety of risks, includingrisks arising from:

• trading restrictions, tariffs, trade barriers and taxes;

• differing intellectual property laws;

• economic and political risks, wars, acts of terrorism, political unrest, pandemics, such as a recurrenceof the SARS outbreak or avian flu, boycotts, curtailments of trade and other business restrictions;

• the difficulty of enforcing contracts and collecting receivables through some foreign legal systems;

• unexpected changes in regulatory requirements and other governmental approvals, permits andlicenses;

• import and export restrictions;

• sales variability as a result of transacting our foreign sales in U.S. dollars as prices for our productsbecome less competitive in countries with currencies that are low or are declining in value against theU.S. dollar and more competitive in countries with currencies that are high or increasing in valueagainst the U.S. dollar; and

• periodic foreign economic downturns.

Our future success will depend on our ability to anticipate and effectively manage these and other risksassociated with our international sales. Our failure to manage any of these risks could harm our operating results.

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Our manufacturing processes may be interrupted or our production may be delayed if we cannot maintainsufficient electrical supply, which could adversely affect our business, financial condition and operatingresults.

Our manufacturing process requires a stable source of electricity. From time to time, we have experiencedlimited disruptions in our supply of electricity. Such disruptions, depending upon their duration, could result in asignificant drop in throughput and yield of in-process crystal boules and create delays in our production.Although we use generators and other back-up sources of electricity, these replacement sources of electricity areonly capable of providing effective back-up for limited periods of time. We cannot assure you that we will besuccessful in avoiding future disruptions in power or in mitigating the effects of such disruptions. Any materialdisruption in electrical supply could delay our production and could adversely affect our business, financialcondition and operating results.

Our gross margins and profitability may be adversely affected by energy costs.

Most of our power consumption takes place in our crystal growth facilities in the U.S. Electricity pricescould increase due to overall changes to the price of energy due to conditions in the Middle East, natural gasshortages in the U.S. and other economic conditions and uncertainties regarding the outcome and implications ofsuch events. Once our current agreements expire, if electricity prices increase significantly, we may not be ableto pass these price increases through to our customers on a timely basis, if at all, which could adversely affect ourgross margins and results of operations.

Our contracts for electricity require us to purchase certain minimum amounts in order to retain the pricingunder the contract. If the amount we use is less than the required minimum, the difference is resold at the thenprevailing market price and, if the resale price is lower than our contract price, we will experience a loss on thatresale, which could adversely affect our gross margins and operating results.

Our future operating results may fluctuate significantly, which makes our future results difficult to predictand could cause our operating results for particular periods to fall below expectations.

Our revenues and operating results have fluctuated in the past and are likely to fluctuate in the future. Thesefluctuations are due to a number of factors, many of which are beyond our control. These factors include, amongothers:

• timing of orders from and shipments to major customers;

• the gain or loss of significant customers;

• fluctuations in gross margins as a result of changes in capacity utilization, product mix or other factors;

• market acceptance of our products and our customers’ products;

• our ability to develop, introduce and market new products and technologies on a timely basis;

• the need to pay higher labor costs as we grow;

• announcements of technological innovations, new products or upgrades to existing products by us orour competitors;

• competitive market conditions, including pricing actions by our competitors and our customers’competitors;

• developments in trade secrets, patent or other proprietary rights by us or our competitors;

• announcements by us or our competitors of significant acquisitions, strategic partnerships ordivestitures;

• interruption of operations at our manufacturing facilities or the facilities of our suppliers;

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• the level and timing of capital spending of our customers;

• additions or departures of key personnel;

• potential seasonal fluctuations in our customers’ business activities; and

• natural disasters, such as floods, hurricanes and earthquakes, as well as interruptions in power supplyresulting from such events or due to other causes.

The foregoing factors are difficult to forecast, and these, as well as other factors, could materially adverselyaffect our quarterly or annual operating results. If our revenues or operating results fall below the expectations ofinvestors or any securities analysts that may publish research on our company, the price of our common stockwould likely decline.

Our gross margins could decline as a result of changes in our product mix and other factors, which mayadversely impact our operating results.

We anticipate that our gross margins will fluctuate from period to period as a result of the mix of productsthat we sell in any given period. If our sales mix shifts to lower margin products in future periods, our overallgross margin levels and operating results would be adversely impacted. Increased competition and the adoptionof alternatives to our products, more complex engineering requirements, lower demand and other factors maylead to a further downward shift in our product margins, leading to price erosion and lower revenues for us in thefuture.

Our proprietary intellectual property rights may not adequately protect our products and technologies,and the failure to protect such rights could harm our competitive position and adversely affect ouroperating results.

To protect our technology, we have chosen to rely primarily on trade secrets rather than seeking protectionthrough publicly filed patents. Trade secrets are inherently difficult to protect. While we believe we usereasonable efforts to protect our trade secrets, our directors, employees, consultants or contractors mayunintentionally or willfully disclose our information to competitors, whether during or after the termination oftheir services to our company. If we were to seek to enforce a claim that a third party had illegally obtained andwas using our trade secrets, it would be expensive and time consuming, and the outcome would be unpredictable.

In addition, courts outside the U.S. are sometimes less willing to protect trade secrets than U.S. courts.Moreover, if our competitors independently develop equivalent knowledge, methods and know-how, it will bemore difficult for us to protect our intellectual property and our business could be harmed.

We have five issued patents covering our products and technologies and twelve patent applications pending.There can be no assurance that our pending patents will be issued or that any patents issued will be of significantvalue to our business. Our commercial success will depend on obtaining and maintaining trade secret, patent andother intellectual property protection of our products and technologies. We will only be able to protect productsand technologies from unauthorized use by third parties to the extent that valid, protectable and enforceable tradesecrets, patents or other intellectual property rights cover them.

If we are not able to defend the trade secret or patent protection positions of our products and technologies,then we may not be able to successfully compete with competitors developing or marketing competing productsand we may not generate enough revenue from product sales to justify the cost of development of our productsand to achieve or maintain profitability.

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The protection of our intellectual property rights and the defense of claims of infringement against us bythird parties may subject us to costly litigation.

Other companies might allege that we are infringing certain of their patents or other rights. If we are unableto resolve these matters satisfactorily, or to obtain licenses on acceptable terms, we may face litigation. Anylitigation to enforce patents issued to us, to protect trade secrets or know-how possessed by us or to defend us orindemnify others against claimed infringement of the rights of others could have a material adverse effect on ourfinancial condition and operating results. Regardless of the validity or successful outcome of any suchintellectual property claims, we may need to expend significant time and expense to protect our intellectualproperty rights or to defend against claims of infringement by third parties, which could have a material adverseeffect on us. If we lose any such litigation where we are alleged to infringe the rights of others, we may berequired to:

• pay substantial damages;

• seek licenses from others; or

• change, or stop manufacturing or selling, some or all of our products.

Any of these outcomes could have an adverse effect on our business, results of operations or financialcondition.

The markets in which we operate are very competitive, and many of our competitors and potentialcompetitors are larger, more established and better capitalized than we are.

The markets for selling high-quality sapphire products are very competitive and have been characterized byrapid technological change. This competition could result in increased pricing pressure, reduced profit margins,increased sales and marketing expenses, and failure to increase, or the loss of, market share or expected marketshare, any of which would likely seriously harm our business, operating results and financial condition.

Some of our competitors and potential competitors are substantially larger and have greater financial,technical, marketing and other resources than we do. Given their capital resources, the large companies withwhich we compete, or may compete in the future, are in a better position to substantially increase theirmanufacturing capacity and research and development efforts or to withstand any significant reduction in ordersby customers in our markets. Such larger companies typically have broader product lines and market focus andthus are not as susceptible to downturns in a particular market. In addition, some of our competitors have been inoperation much longer than we have and therefore may have more long-standing and established relationshipswith our current and potential domestic and foreign customers.

We would be at a competitive disadvantage if our competitors bring their products to market earlier, if theirproducts are more technologically capable than ours, or if any of our competitors’ products or technologiesbecomes preferred in the industry. Moreover, we cannot assure you that existing or potential customers will notdevelop their own products, or acquire companies with products that are competitive with our products. Any ofthese competitive threats could have a material adverse effect on our business, operating results or financialcondition.

We are dependent on the continued services and performance of our senior management, the loss of any ofwhom could adversely affect our business, operating results and financial condition.

Our future success is dependent on the continued services and continuing contributions of our seniormanagement who must work together effectively in order to design our products, expand our business, increaseour revenues and improve our operating results. The loss of services of senior management, particularly Raja M.Parvez, our president and chief executive officer, and William F. Weissman, our chief financial officer, couldsignificantly delay or prevent the achievement of our development and strategic objectives. In addition, key

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personnel may be distracted by activities unrelated to our business. The loss of the services, or distraction, of oursenior management for any reason could adversely affect our business, operating results and financial condition.

If we are unable to attract or retain qualified personnel, our business and product development effortscould be harmed.

Our success depends on our continued ability to identify, attract, hire, train, retain and motivate highlyskilled technical, managerial, manufacturing, administrative and sales and marketing personnel. Competition forthese individuals is intense, and we may not be able to successfully recruit, assimilate or retain sufficientlyqualified personnel. In particular, we may encounter difficulties in recruiting and retaining a sufficient number ofqualified technical personnel. The inability to attract and retain necessary technical, managerial, manufacturing,administrative and sales and marketing personnel could harm our ability to obtain new customers and developnew products and could adversely affect our business and operating results.

We rely on a limited number of suppliers for raw materials and key components.

We depend on a small number of suppliers for certain raw materials, components, services and equipmentused in manufacturing our products, including key materials such as aluminum oxide and certain furnacecomponents. We generally purchase these items with purchase orders, and we have no guaranteed supplyarrangements with such suppliers. We are subject to variations in the cost of raw materials and consumables fromperiod to period. We do not control the time and resources that these suppliers devote to our business, and wecannot be sure that these suppliers will perform their obligations to us or do so on a timely basis. In addition,some of these suppliers are located in regions of the world that may experience periods of political or economicinstability, which could inhibit their ability to supply necessary materials to us.

Any significant delay in product delivery or other interruption or variation in supply from our key supplierscould prevent us from meeting demand for our products and from obtaining future business. If we were to losekey suppliers or our key suppliers were unable to support our demand, our manufacturing operations could beinterrupted and we could be required to attempt to establish supply arrangements with other suppliers. Inaddition, the inability of our suppliers to support our demand could be indicative of a marketwide scarcity of thematerials, which could result in even longer interruptions. Any such delay or interruption would impair ourability to meet our customers’ needs and, therefore, could damage our customer relationships and have a materialadverse effect on our business and operating results.

Our products must meet exacting specifications and undetected defects may cause customers to return orstop buying our products.

Our customers establish demanding specifications for quality, performance and reliability that our productsmust meet. While we inspect our products before shipment, they still may contain undetected defects. If defectsoccur in our products, we could experience lost revenue, increased costs, delays in, or cancellations orrescheduling of orders or shipments, product returns or discounts, or damage to our reputation, any of whichwould harm our operating results and our business.

We are subject to numerous environmental laws and regulations, which could expose us to environmentalliabilities, increase our manufacturing and related compliance costs or otherwise adversely affect ourbusiness and operating results.

In our manufacturing process, we use water, oils, slurries, acids, adhesives and other industrial chemicals.We are subject to a variety of foreign, federal, state and local laws and regulations governing the protection ofthe environment. These environmental laws and regulations include those relating to the use, storage, handling,discharge, emission, disposal and reporting of toxic, volatile or otherwise hazardous materials used in ourmanufacturing processes. These materials may have been or could be released into the environment at properties

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currently or previously operated by us, at other locations during the transport of the materials, or at properties towhich we send substances for treatment or disposal. If we were to violate or become liable under environmentallaws and regulations or become non-compliant with permits required at some of our facilities, we could be heldfinancially responsible and incur substantial costs, including investigation and cleanup costs, fines and civil orcriminal sanctions, third-party property damages or personal injury claims. In addition, new laws and regulationsor stricter enforcement of existing laws and regulations could give rise to additional compliance costs andliabilities.

Our operations are concentrated in a small number of nearby facilities, and the unavailability of one ormore of these facilities could harm our business.

Our manufacturing, research and development, sales and marketing, and administrative activities areconcentrated in three facilities in the Chicago metropolitan area and one facility in Penang, Malaysia. Should anatural disaster, such as a tornado or flood, act of terrorism, war or outbreak of disease severely affect theChicago area, our operations could be significantly impacted. We may not be able to replicate the manufacturingcapacity and other operations of our Chicago facilities in our Malaysian facility or elsewhere, or such replicationcould take significant time and resources to accomplish. The disruption from such an event could adverselyaffect or interrupt entirely our ability to conduct our business. Similarly, should a disruption from such an eventoccur at our Malaysia facility, the disruption could adversely affect or interrupt our ability to conduct ourbusiness.

We may acquire other businesses, products or technologies; if we do, we may be unable to integrate themwith our business effectively or at all, which may adversely affect our business, financial condition andoperating results.

If we find appropriate opportunities, we may acquire complementary businesses, product lines ortechnologies. However, if we acquire a business, product line or technology, the process of integration mayproduce unforeseen operating difficulties and expenditures and may absorb significant attention of ourmanagement that would otherwise be available for the ongoing development of our business. Further, theacquisition of a business may result in the assumption of unknown liabilities or create risks with respect to ourexisting relationships with suppliers and customers. If we make acquisitions, we may issue shares of stock thatdilute other stockholders, expend cash, incur debt, assume contingent liabilities or create additional expensesrelated to amortizing intangible assets, any of which may adversely affect our business, financial condition oroperating results.

Our ability to comply with the required payments and financial covenant in our loan agreement dependsprimarily on our ability to generate sufficient operating cash flow.

Our ability to comply with the financial covenant under our loan agreement with Silicon Valley Bank willdepend primarily on our success in generating sufficient operating cash flow and receivables. Under the loanagreement, we are required to maintain a specified ratio of (i) unrestricted cash plus net billed accountsreceivable to (ii) obligations under the loan agreement plus current liabilities, which ratio is tested on a quarterlybasis. Industry conditions and financial, business and other factors, including those we identify as risk factors inthis and our other reports, will affect our ability to generate the cash flows and receivables we need to meet thoserequirements. Our failure to meet the requirements could result in a default and acceleration of repayment of theindebtedness under the credit facility. In such event, the bank would be entitled to stop extending credit to us,which will hinder our ability to operate, and would proceed against the collateral securing the indebtedness,which includes substantially all of our personal property (other than intellectual property assets).

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We may require additional capital to fund additional product research and development efforts and theintroduction of new products. If we are unable to raise additional capital when needed, we may be forcedto delay, reduce or eliminate our product research and development programs or delay the introduction ofnew products.

Developing advanced electronic materials and related products and introducing new products to the marketcan be expensive. We expect our research and development expenses to increase in connection with our ongoingproduct research and development plans. If we are required to conduct additional studies beyond those that wecurrently expect, our expenses could increase beyond what we currently anticipate and the timing of the releaseof any new products may be delayed. In addition, introducing newly developed products to the market oftenrequires investment before revenue is generated from those products. We currently have no commitments orarrangements for any additional financing to fund our product research and development programs other thanthrough our loan facility. We believe our existing cash, cash equivalents and short-term investments and interestthereon, will be sufficient to fund our projected operating requirements for at least the next twelve months.However, we may need to raise substantial additional capital in the future to complete the development andcommercialization of our new products.

We may finance future cash needs for new product research and development or product introductionsthrough public or private equity offerings, debt financings or corporate collaborations and licensingarrangements. Additional funds may not be available when we need them on terms that are acceptable to us, or atall. If adequate funds are not available, we may be required to delay, reduce the scope of or eliminate one ormore of our product research and development programs. To the extent that we raise additional funds by issuingequity securities, our stockholders may experience additional dilution, and debt financing, if available, mayinvolve restrictive covenants. To the extent that we raise additional funds through corporate collaborations andlicensing arrangements, it may be necessary to relinquish some rights to our technologies or our new products orgrant licenses on terms that may not be favorable to us. We may seek to access the public or private capitalmarkets whenever conditions are favorable, even if we do not have an immediate need for additional capital atthat time.

Our forecast of the period of time through which our financial resources will be adequate to support ouroperations is a forward-looking statement and involves risks and uncertainties, and actual results could vary as aresult of a number of factors, including the factors discussed elsewhere in this “Risk Factors” section, and undersimilar headings in this document. We have based this estimate on assumptions that may prove to be wrong, andwe could utilize our available capital resources sooner than we currently expect.

Our future funding requirements, both near and long-term, will depend on many factors, including, but notlimited to:

• the initiation, progress, timing, costs and results of studies and trials required for our new products;

• the number and characteristics of new products that we pursue;

• the terms and timing of any future collaboration, licensing or other arrangements that we may establish;

• the cost of filing, prosecuting, defending and enforcing any patent claims and other intellectualproperty rights;

• the effect of competing technological and market developments;

• the cost of establishing sales, marketing and distribution capabilities for any new products; and

• the extent to which we acquire or invest in businesses, products or technologies.

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Our U.S. net operating loss carryforwards could be substantially limited if we experience an ownershipchange as defined in the Internal Revenue Code.

We have significant U.S. net operating loss carryforwards (the “Tax Attributes”). Under federal tax laws, wecan carry forward and use our Tax Attributes to reduce our future U.S. taxable income and tax liabilities untilsuch Tax Attributes expire in accordance with the Internal Revenue Code of 1986, as amended (the “IRC”).Section 382 and Section 383 of the IRC provide an annual limitation on our ability to utilize our Tax Attributes,as well as certain built-in-losses, against future U.S. taxable income in the event of a change in ownership, asdefined under the IRC. We may experience a change in ownership in the future as a result of changes in our stockownership that are beyond our control, and any such subsequent changes in ownership for purposes of the IRCcould further limit our ability to use our Tax Attributes. Accordingly, any such occurrences could adverselyaffect our financial condition, operating results and cash flows.

RISKS RELATED TO OWNERSHIP OF OUR COMMON STOCK

The price of our common stock has fluctuated substantially and may continue to do so.

From our initial public offering through March 7, 2014, the trading price of our common stock has rangedfrom a low of $2.50 to a high of $35.90.

Factors related to our company and our business, as well as broad market and industry factors, mayadversely affect the market price of our common stock, regardless of our actual operating performance. Factorsthat could cause fluctuations in our stock price include, among other things:

• changes in market valuations of other companies in our industry;

• changes in financial guidance or estimates by us, by investors or by any financial analysts who mightcover our stock or our industry;

• our ability to meet the performance expectations of financial analysts or investors;

• announcements by us or our competitors of significant products, contracts, acquisitions or strategicpartnerships;

• general market and economic conditions; and

• the size of the public float of our stock.

Fluctuations caused by factors such as these may negatively affect the market price of our common stock. Inaddition, the other risks described elsewhere in this document could adversely affect our stock price.

Our Board of Directors does not intend to declare or pay any dividends to our stockholders in theforeseeable future.

The declaration, payment and amount of any future dividends will be made at the discretion of our Board ofDirectors and will depend upon, among other things, the results of our operations, cash flows and financialcondition, operating and capital requirements, and other factors the Board of Directors considers relevant. Thereis no plan to pay dividends in the foreseeable future, and if dividends are paid, there can be no assurance withrespect to the amount of any such dividend.

The concentration of our capital stock ownership with the affiliates of one of our directors will limit yourability to influence corporate matters.

One of our directors, together with affiliates he controls, owns in the aggregate approximately 21% of ouroutstanding capital stock and voting power. For the foreseeable future, they will have significant influence overour management and affairs and over all matters requiring stockholder approval, including the election of

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directors and significant corporate transactions, such as a merger or other sale of our company or our assets.Their ownership may limit your ability to influence corporate matters and, as a result, the market price of ourcommon stock could be adversely affected.

We could be the subject of securities class action litigation due to future stock price volatility.

The stock market in general, and market prices for the securities of companies like ours, has experiencedextreme volatility that often has been unrelated to the operating performance of the underlying companies. Thesebroad market and industry fluctuations may adversely affect the market price of our common stock, regardless ofour operating performance. When the market price of a stock declines significantly, holders of that stock havesometimes instituted securities class action litigation against the company that issued the stock. If any of ourstockholders brought a lawsuit against us, our defense of the lawsuit could be costly and divert the time andattention of our management.

Our certificate of incorporation, bylaws and Delaware law may discourage takeovers and businesscombinations that our stockholders might consider in their best interests.

A number of provisions in our certificate of incorporation and bylaws, as well as anti-takeover provisions ofDelaware law, may have the effect of delaying, deterring, preventing or rendering more difficult a change incontrol of Rubicon that our stockholders might consider in their best interests. These provisions include:

• establishment of a classified board of directors;

• granting to the board of directors sole power to set the number of directors and to fill any vacancy onthe board of directors, whether such vacancy occurs as a result of an increase in the number of directorsor otherwise;

• limitations on the ability of stockholders to remove directors;

• the ability of our board of directors to designate and issue one or more series of preferred stock withoutstockholder approval, the terms of which may be determined at the sole discretion of the board ofdirectors;

• prohibition on stockholders from calling special meetings of stockholders;

• prohibition on stockholders from acting by written consent; and

• establishment of advance notice requirements for stockholder proposals and nominations for election tothe Board of Directors at stockholder meetings.

These provisions may prevent our stockholders from receiving the benefit from any premium to the marketprice of our common stock offered by a bidder in a takeover context. Even in the absence of a takeover attempt,the existence of these provisions may adversely affect the prevailing market price of our common stock if theyare viewed as discouraging takeover attempts in the future.

The foregoing provisions of our certificate of incorporation and bylaws may also make it difficult forstockholders to replace or remove our management. These provisions may facilitate management entrenchmentthat may delay, deter, render more difficult or prevent a change in our control, which may not be in the bestinterests of our stockholders.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

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ITEM 2. PROPERTIES

Our executive, research and development and manufacturing functions are located on properties that welease or own. We lease properties in Franklin Park, Illinois and Bensenville, Illinois. These facilities totalapproximately 102,600 square feet in seven buildings, which includes 30,000 square feet in our Bensenville,Illinois facility. The leases for these facilities terminate from July 2014 through July 2015. We own a134,400 square foot facility in Batavia, Illinois. We also own a 65,000 square foot facility in Penang, Malaysia,which processes sapphire grown by us in our Illinois facilities into finished cores and wafers.

ITEM 3. LEGAL PROCEEDINGS

From time to time we may be named in claims arising in the ordinary course of business. Currently, thereare no legal proceedings or claims pending against us or involving us that, in the opinion of our management,could reasonably be expected to have a material adverse effect on our business or financial condition.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDERMATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our common stock began trading on the NASDAQ Global Market under the symbol “RBCN” onNovember 16, 2007. The following table sets forth the high and low sales prices for our common stock asreported on the NASDAQ Global Market for the periods indicated:

High Low

Fiscal year ended December 31, 2013First Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6.97 $4.83Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9.05 $5.91Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $13.78 $7.73Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $11.82 $8.38

High Low

Fiscal year ended December 31, 2012First Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $13.59 $8.20Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $10.92 $8.46Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $11.57 $8.28Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9.96 $5.82

Holders

As of March 7, 2014, our common stock was held by approximately 27 stockholders of record and therewere 25,765,795 shares of our common stock outstanding.

Dividend Policy

We have never declared or paid cash dividends on our common stock. We currently intend to retain futureearnings to finance the growth and development of our business, and we do not anticipate declaring or payingany cash dividends in the foreseeable future. The declaration, payment and amount of any future dividends willbe made at the discretion of our Board of Directors.

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Performance Graph

The graph below matches Rubicon Technology, Inc.’s cumulative 5-Year total shareholder return oncommon stock with the cumulative total returns of the NASDAQ Composite Index and the RDG TechnologyComposite Index. The graph tracks the performance of a $100 investment in our common stock and in each index(with the reinvestment of all dividends) from December 31, 2008 to December 31, 2013.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*Among Rubicon Technology, Inc., the National Association of Securities Dealers Automated

Quotations (NASDAQ) Composite Index,and the Research Data Group (RDG) Technology Composite Index

$0

$100

$200

$300

$400

$500

$600

$700

$800

12/08 12/09 12/10 12/11 12/12 12/13

Rubicon Technology, Inc. NASDAQ Composite RDG Technology Composite

This performance graph shall not be deemed “filed” for purposes of Section 18of the Securities Exchange Act of 1934, as amended (the Exchange Act), orincorporated by reference into any filing of the Company under the SecuritiesAct of 1933, as amended, or the Exchange Act, except as shall be expressly setforth by specific reference in such filing.

12/31/08 12/31/09 12/31/10 12/31/11 12/31/12 12/31/13

Rubicon Technology, Inc . . . . . . . . . . . . . . . . . . . . . . . . 100.00 476.76 494.84 220.42 143.43 233.57NASDAQ Composite . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.00 144.88 170.58 202.69 199.99 283.39RDG Technology Composite . . . . . . . . . . . . . . . . . . . . . 100.00 160.94 181.64 220.06 208.18 274.77

The stock price performance reflected in this graph is not necessarily indicative of future stock priceperformance.

Recent Sales of Unregistered Securities

None.

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Issuer Purchases of Equity Securities

In August 2011, we announced a repurchase plan approved by our Board of Directors authorizing thepurchase of up to $25.0 million of our outstanding common stock over a period of two years. The stockrepurchase program authorized us to purchase shares of our common stock in the open market at times and pricesconsidered appropriate by us depending upon prevailing market conditions and other corporate considerations.There were no purchases made during the year ended December 31, 2013. The plan expired in 2013.

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ITEM 6. SELECTED FINANCIAL DATA

The following selected consolidated financial data should be read in conjunction with “Management’sDiscussion and Analysis of Financial Condition and Results of Operations” and our consolidated financialstatements and the related notes included elsewhere herein. The consolidated balance sheet data as ofDecember 31, 2013 and 2012 and the consolidated statements of operations data for the years endedDecember 31, 2013, 2012 and 2011 are derived from our audited consolidated financial statements includedelsewhere in this Form 10-K, which have been prepared in accordance with generally accepted accountingprinciples in the U.S. The consolidated balance sheet data as of December 31, 2011, 2010 and 2009 and theconsolidated statements of operations data for the years ended December 31, 2010 and 2009 have been derivedfrom our audited consolidated financial statements, which are not included in this Form 10-K.

SELECTED CONSOLIDATED FINANCIAL DATA

Year ended December 31,

2013 2012 2011 2010 2009

(In thousands, other than share and per share data)

Consolidated statements ofoperations data:

Revenue . . . . . . . . . . . . . . . . . . . . . . . . $ 41,513 $ 67,243 $ 134,000 $ 77,362 $ 19,808Cost of goods sold . . . . . . . . . . . . . . . . 63,434 67,283 64,365 36,205 23,427

Gross (loss) profit . . . . . . . . . . . . . . . . (21,921) (40) 69,635 41,157 (3,619)Operating expenses:

General and administrative . . . . . 8,629 9,018 11,336 9,883 4,811Sales and marketing . . . . . . . . . . 1,521 1,685 1,658 1,267 1,137Research and development . . . . . 2,263 2,274 1,806 1,079 801Loss on disposal of assets . . . . . . 550 19 84 234 —

Total operating expenses . . . . . . . 12,963 12,996 14,884 12,463 6,749

Income (loss) from operations . . . . . . (34,884) (13,036) 54,751 28,694 (10,368)Other (expense) income, net . . . . (627) 450 (118) 346 738

Income (loss) before income taxes . . . (35,511) (12,586) 54,633 29,040 (9,630)Income tax benefit (expense) . . . . . . . 5,160 7,048 (16,574) 71 —

Net (loss) income . . . . . . . . . . . . . . . . $ (30,351) $ (5,538) $ 38,059 $ 29,111 $ (9,630)

Net (loss) income per common shareBasic . . . . . . . . . . . . . . . . . . . . . . $ (1.35) $ (0.25) $ 1.67 $ 1.34 $ (0.48)Diluted . . . . . . . . . . . . . . . . . . . . . $ (1.35) $ (0.25) $ 1.61 $ 1.28 $ (0.48)

Weighted average common sharesoutstanding used in computing netincome (loss) per common share

Basic . . . . . . . . . . . . . . . . . . . . . . 22,572,212 22,523,951 22,852,205 21,726,090 20,117,543Diluted . . . . . . . . . . . . . . . . . . . . . 22,572,212 22,523,951 23,596,162 22,790,896 20,117,543

As of December 31,

2013 2012 2011 2010 2009

(In thousands)

Consolidated balance sheet data:Cash and cash equivalents . . . . . . . . . . $ 21,071 $ 19,573 $ 4,290 $ 16,073 $ 3,860Working capital . . . . . . . . . . . . . . . . . . 79,768 114,337 119,056 106,524 55,121Total assets . . . . . . . . . . . . . . . . . . . . . 202,695 248,096 259,952 206,742 101,186Total stockholders’ equity . . . . . . . . . . 195,791 225,386 228,231 192,094 97,440

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION ANDRESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be readtogether with our financial statements and related notes appearing elsewhere in this Annual Report on Form 10-K.This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions.You should review the “Risk Factors” section of this annual report for a discussion of important factors that couldcause actual results to differ materially from the results described in or implied by the forward-looking statementsdescribed in the following discussion and analysis.

OVERVIEW

We are a vertically integrated, advanced electronic materials provider specializing in monocrystallinesapphire for applications in light-emitting diodes (“LEDs”), optical systems and specialty electronic devices. Theemergence of sapphire in commercial volumes at competitive prices has enabled the development of newtechnologies such as high brightness (“HB”) white, blue and green LEDs and highly-integrated radio frequencyintegrated circuits (“RFICs”). Recently, sapphire has been adopted for use in several new applications in mobiledevices specifically camera lens covers, dual flashes and home buttons on certain newer model smartphones. Thereason sapphire was adopted for use on the home button on certain smartphones is because of the scratchresistance and increased touch capacitance offered by sapphire, which are important characteristics to ensure theeffectiveness of the fingerprint recognition security built into the device. We believe that the use of fingerprintrecognition security and other biometrics could become more prevalent in the future, which could become astrong growth driver for sapphire. We apply our proprietary crystal growth technology to produce high-qualitysapphire products efficiently to supply our end-markets, and we work closely with our customers to meet theirquality and delivery needs.

We are a vertically-integrated manufacturer of high-quality sapphire substrates and optical windows that areused in a variety of high-growth, high-volume end-market applications. Our largest product lines are:

• sapphire cores, two to six inches in diameter, which our customers further process into wafers for usein LED applications and into components such as lens covers for mobile devices;

• six-inch sapphire wafers that are used as substrates for the manufacture of LED chips and to a lesserextent for other semiconductor applications such as Silicon-on-Sapphire (“SoS”) RFICs; and

• Optical sapphire components in various shapes and sizes, including round and rectangular windowsand blanks, domes, tubes and rods. These optical sapphire products are used in equipment for a widevariety of end markets, including defense and aerospace, medical devices, oil and gas drilling,semiconductor manufacturing and other markets.

For the LED market, we sell two to four-inch material primarily in core form and six and eight-inch materialprimarily in polished wafer form. Eight-inch wafers are sold primarily for customers’ research and developmentefforts at this time. We have the ability to produce cores and wafers of up to twelve inches in diameter to supportproduction of chips for next-generation LED and other electronic applications. Larger sapphire also has currentapplications in the optical markets. In other semiconductor markets, we sell primarily six-inch wafers; our majorcustomer in that market, however, is modifying its technology to produce its higher volume RFIC products on asubstrate other than sapphire, a development which will likely significantly reduce the amount of sapphiredemand from that market beginning in early 2014. Other non-LED semiconductor customers are using sapphirein research and development at this time.

We recently introduced a new product offering, patterned sapphire substrates or “PSS”. HB LED chipmanufacturers etch a pattern onto the surface of the sapphire wafer in the early stages of their production processin order to improve light output. We have leveraged our capability in producing larger diameter sapphire wafersto offer pre-patterned, larger diameter (four-inch and six-inch) wafers to the LED market.

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We sell our products on a global basis. The Asian, Australian, North American and European marketsaccounted for 60%, 25%, 11% and 4%, respectively, of our revenue for the year ended December 31, 2013 and48%, 19%, 17% and 16%, respectively, of our revenue for the year ended December 31, 2012. The Asian, NorthAmerican and European markets accounted for and 87%, 9% and 4%, respectively, of our revenue for the yearended December 31, 2011. Demand from the LED market was strong though mid-year 2011, particularly in Asiawhere there is a high concentration of LED customers. Demand for our products from the LED market slowed inthe second half of 2011 due to a slowdown in LED chip sales that resulted in a build-up of inventory in the LEDsupply chain, which continued throughout 2012. We experienced increased demand for our core productsthroughout 2013 with stronger demand from the LED general lighting market and the adoption of sapphire innewer applications like the lens cover, dual flash and home button on certain smartphones, however,improvements in pricing has been gradual. Demand for our six-inch polished wafers sold into the SoS marketincreased significantly in 2012, partially offsetting the decrease in sales of polished wafers sold into the LEDmarket. However, the manufacturer of the majority of SoS chips will be introducing new products that will beproduced on a substrate other than sapphire which reduced demand in the second half of 2013 and will likelysignificantly reduce the amount of sapphire demand from that market beginning in early 2014. We expect pricingfor sapphire cores to continue to increase gradually as excess sapphire capacity in the market is absorbed bygrowing demand from the LED and other markets. However, we believe six-inch polished wafer prices maydecline further in the near-term. We experienced limited demand for LED polished wafers in 2013, but expectincreased adoption of six-inch wafers in the LED market. While we expect demand for LED chips to continue tostrengthen throughout 2014 with increased adoption of LED lighting, it is difficult to predict how quickly theexcess capacity will be absorbed and when the pricing environment will improve.

We currently depend on a small number of suppliers for certain raw materials, components, services andequipment, including key materials such as aluminum oxide and certain furnace components. If the supply ofthese components were to be disrupted or terminated, or if these suppliers were unable to supply the quantities ofraw materials required, we may have difficulty in finding, or may be unable to find, alternative sources for theseitems. As a result, we may be unable to meet the demand for our products, which could have a material adverseimpact on our business.

We manage direct sales primarily from our Bensenville, Illinois offices. Substantially all of our revenue isgenerated by our direct sales force and we expect this to continue in the future.

We manufacture and ship our products from our facilities in the Chicago metropolitan area and from ourfacility in Penang, Malaysia. We have approximately 237,000 square feet of manufacturing and office space inBatavia, Franklin Park and Bensenville, Illinois and a 65,000 square foot facility in Penang, Malaysia, whichprocesses sapphire grown by us in our Illinois facilities into finished cores and wafers. Our Malaysia facilitycurrently finishes the majority of our core production and can produce production volumes of polished wafers. InMarch 2012, we acquired additional land in Batavia, Illinois to expand our crystal growth capacity. We have notyet determined when we will begin construction on this facility.

Financial operations

Revenue. Our revenue consists of sales of sapphire materials sold in core, as-cut, as-ground and polishedforms in two, three, four, six and eight-inch diameters as well as optical materials sold as blanks or polishedwindows. Products are made to varying specifications, such as crystal planar orientations and thicknesses. Werecognize research and development revenue in the period during which the related costs are incurred.

We have focused on increasing sales of larger diameter substrates, which we define as three inch or greaterin diameter, as they generally yield higher gross margins. For the year ended December 31, 2011, we experienceda significant increase in revenue in large diameter polished product lines as one of our key customers was thefirst LED chip maker to move to a larger diameter (6”) platform in high-volume production. In addition,increased pricing for our core products resulted in higher revenue from these products for the year ended

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December 31, 2011. However, in the fourth quarter of 2011, the LED market began softening considerably withthe maturing of the LED backlighting markets, and the demand and pricing experienced a significant decreaseacross most product lines. The weak market conditions continued throughout 2012 and for the year endedDecember 31, 2012, we experienced a significant decrease in revenue from our core products on decreasingpricing as well as decreased demand for our large diameter polished product lines for the LED market. Thedecrease in our large diameter product lines for the LED market was partially offset by a strong SoS market.Throughout 2013, we experienced limited demand for our large diameter substrates and gradually improvedpricing for our smaller diameter core products. While we expect demand for the LED chips to continue tostrengthen throughout 2014 with increased adoption of LED lighting, it is difficult to predict how quickly theexcess capacity will be absorbed and when the pricing environment will improve.

Historically, a substantial portion of our revenue has been derived from sales to a small number ofcustomers. For the year ended December 31, 2013, our top two customers accounted for approximately 44% ofour revenue. For the year ended December 31, 2012 our top two customers accounted for approximately 67% ofour revenue and for the year ended December 31, 2011, our top three customers accounted for approximately69% of our revenue. Other than as discussed above, none of our customers accounted for more than 10% of ourrevenue for such periods. Although we are attempting to diversify and expand our customer base, we expect ourrevenue to continue to be concentrated among a small number of customers. We expect that our significantcustomers may change from period to period.

We recognize revenue based upon shipping terms with our customers and from our government contract ascosts and fees are incurred. Delays in product orders or changes to the timing of shipments could cause ourquarterly revenue to vary significantly. We derive a significant portion of our revenue from customers outside ofthe U.S. In most periods, the majority of our sales are to the Asian market and we expect that region to continueto be a major source of revenue for us. All of our revenue and corresponding accounts receivable aredenominated in U.S. dollars.

Cost of goods sold. Our cost of goods sold consists primarily of manufacturing materials, labor,manufacturing-related overhead such as utilities, depreciation and rent, provisions for excess and obsoleteinventory reserves, idle plant, freight and warranties. We manufacture our products at our Illinois and Malaysiamanufacturing facilities based on customer orders. We purchase materials and supplies to support such currentand future demand. We are subject to variations in the cost of raw materials and consumables from period toperiod because we do not have long-term fixed-price agreements with most of our suppliers. We mitigate thepotential impact of fluctuations in energy costs by entering into long-term purchase agreements. Once our currentagreements expire, if electricity prices increase significantly, we may not be able to pass these price increasesthrough to our customers on a timely basis, if at all, which could adversely affect our gross margins and results ofoperations. We determine our normal operating capacity and, if necessary, record as idle plant expense costsattributable to lower utilization of equipment and staff.

Gross profit. Our gross profit has been and will continue to be affected by a variety of factors, includingaverage sales prices of our products, product mix, our ability to reduce manufacturing costs, idle plant chargesand fluctuations in the cost of electricity, raw materials and other supplies.

General and administrative expenses. General and administrative expenses (“G&A”) consist primarily ofsalaries and associated costs for employees in finance, human resources, information technology andadministrative activities, as well as charges for outside accounting, legal and insurance fees and stock-basedcompensation.

Sales and marketing expenses. Sales and marketing expenses consist primarily of salaries and associatedcosts for employees engaged in sales activities, product samples, charges for participation in trade shows andtravel.

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Research and development expenses. Research and development (“R&D”) expenses include costs related toengineering personnel, materials and other product development related costs. R&D is expensed as incurred. Webelieve our R&D expenses will generally increase as we continue to develop new products.

Other income (expense). Other income (expense) consists of interest income and expense and gains andlosses on investments and currency translation.

Provision for income tax. We account for income taxes under the asset and liability method whereby theexpected future tax consequences of temporary differences between the book value and the tax basis of assets andliabilities are recognized as deferred tax assets and liabilities, using enacted tax rates in effect for the year inwhich the differences are expected to be recognized. Our most recent analysis of ownership changes that limit theutilization of the NOLs shows no ownership change. We believe that an updated analysis will not likely indicatean ownership change that would limit the utilization of our net operating losses and tax credits as ofDecember 31, 2013. We will be updating our analysis in 2014 and the results of that analysis may, because of theprimary stock offering in January 2014 indicate an ownership change. If an ownership change is determined, theutilization of the net operating losses and the tax credits may be limited.

A full valuation allowance is provided and no tax benefit is recorded until we can conclude that it is “morelikely than not” that our deferred tax assets will be realized. Due to the losses in the fourth quarter of 2013, weare in a cumulative loss position for the past three years, which is considered significant negative evidence by theaccounting standards that is difficult to overcome on a “more likely than not” standard through objectivelyverifiable data. As of December 31, 2013, a valuation allowance of $9.5 million has been recorded against the netU.S. deferred tax assets in order to measure only the portion of the deferred tax assets that are more likely thannot to be realized based on the weight of all the available evidence. Until an appropriate level of profitability isattained, we expect to maintain a valuation allowance on net deferred tax assets related to future U.S. tax benefitsand will no longer accrue tax benefits or tax expense. During the twelve months ended December 31, 2011, weconcluded at that time that based on the then current level of sustainable profitability that generates taxableincome, it was more likely than not that our deferred tax assets will be realizable. We recognized a tax benefit of$3.3 million to record current and long-term deferred tax assets during the twelve months ended December 31,2011.

The Illinois State Legislature has suspended the full use of net operating loss carryforwards for taxable yearsended after December 31, 2010 and before December 31, 2011, and has limited the net operation loss deductionto $100,000 for the years ended December 31, 2012 through December 31, 2013. Our effective tax rate couldfluctuate significantly on a quarterly basis and could be adversely affected to the extent earnings are lower thananticipated.

Stock-based compensation. The majority of our stock-based compensation relates primarily toadministrative personnel and is accounted for as a G&A expense. For the years ended December 31, 2013, 2012and 2011, our stock-based compensation expense was $1.6 million, $2.0 million and $2.5 million, respectively.

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RESULTS OF OPERATIONS

The following table sets forth our statements of operations for the periods indicated:

Year endedDecember 31,

2013 2012 2011

(in millions)

Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 41.5 $ 67.2 $134.0Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63.4 67.3 64.4

Gross (loss) profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (21.9) (0.1) 69.6

Operating expenses:General and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.6 9.0 11.3Sales and marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5 1.7 1.7Research and development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3 2.3 1.8Loss on disposal of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.6 — 0.1

Total operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.0 13.0 14.9

Income (loss) from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (34.9) (13.1) 54.7Other (expense) income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.6) 0.5 (0.1)

Income (loss) before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (35.5) (12.6) 54.6Income tax benefit (expense) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1 7.1 (16.5)

Net (loss) income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(30.4) $ (5.5) $ 38.1

The following table sets forth our statements of operations as a percentage of revenue for the periodsindicated:

Year endedDecember 31,

2013 2012 2011

(percentage of total)

Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100% 100% 100%Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153 100 48

Gross (loss) profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (53) — 52

Operating expenses:General and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 13 8Sales and marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 3 1Research and development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 3 2Loss on disposal of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 — —

Total operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 19 11

Income (loss) from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (84) (19) 41Other (expense) income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1) — —

Income (loss) before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (85) (19) 41Income tax benefit (expense) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 11 (13)

Net (loss) income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (73%) (8%) 28%

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Comparison of years ended December 31, 2013 and 2012

Revenue. Revenue was $41.5 million for the year ended December 31, 2013 and $67.2 million for the yearended December 31, 2012, a decrease of $25.7 million. In 2013, we experienced higher revenue from the sale ofsapphire cores, which are sold into the LED market, of $13.5 million, of which $16.3 million was attributed tohigher volume partially offset by a decrease of $2.8 million that was attributed to lower pricing. We experienceda decrease in revenue from our wafer products sold to the LED and SoS markets. Revenue from sales of ourpolished wafers decreased by $38.3 million, which was the result of $21.7 million lower sales of polished wafersto the LED market as well as a $16.6 million decrease in polished wafers sold to the SoS market. Of the$38.3 million reduction in revenue from polished wafers, $1.0 million was attributable to lower prices and$37.2 million was attributable to lower volume. We also experienced lower optical revenue of $1.2 million due tothe decrease in sales for sensor and instrumentation applications. We experienced an increase in research anddevelopment revenue of $234,000 on our contract with the Air Force Research Laboratory. Revenue with respectto this contract was recorded as costs were incurred as well as a portion of the fixed fee for the year endedDecember 31, 2013 and 2012. The contract will continue for a duration of three years and the total value of thecontract is $4.7 million.

Demand for our core products increased throughout 2013 with stronger demand from the LED generallighting market and the adoption of sapphire in newer applications like the lens cover, dual flash and homebutton on certain smartphones. As a result, pricing gradually increased for our core products in the second half of2013. We expect pricing for sapphire cores to remain steady in the first quarter of 2014 and then begin to slowlyincrease as excess sapphire capacity in the market continues to be absorbed by growing demand from the LEDand other markets. We continued to experience limited demand for LED polished wafers during 2013 but expectincreased adoption of six-inch wafers in the LED market. We have also recently begun offering four-inchpolished wafers and four and six-inch patterned wafers which we expect to generate additional wafer revenue in2014. The manufacturer of the majority of SoS chips will be introducing new products that will be produced on asubstrate other than sapphire starting early 2014, therefore the amount of wafers sold into that market will besignificantly reduced beginning in 2014. We operate in an extremely volatile market, so the amount of price orvolume change is difficult to predict.

Gross loss. Gross loss was $21.9 million and $40,000 for the years ended December 31, 2013 and 2012,respectively, an increased loss of $21.9 million. The increase in gross loss is primarily due to a reduction inrevenue, which in turn is attributable to decreased demand of our higher margin wafer sales as well as lowerutilization of our production facilities. For the years ended December 31, 2013 and 2012, we determined we werenot operating at capacity and recorded costs associated with the lower utilization of equipment and staff of$13.2 million and $1.9 million, respectively.

General and administrative expenses. G&A expenses were $8.6 million for the year ended December 31,2013 and $9.0 million for the year ended December 31, 2012, a decrease of $389,000. In 2013, we experiencedlower consulting fees of $430,000 and lower travel expenses of $93,000, partially offset by an increase in legalexpenses of $103,000.

Sales and marketing expenses. Sales and marketing expenses were $1.5 million and $1.7 million for theyears ended December 31, 2013 and 2012, a decrease of $164,000. The decrease is attributable to a decrease inemployee compensation.

Research and development expenses. R&D expenses were $2.3 million for the years ended December 31,2013 and 2012, a decrease of $11,000. We experienced a decrease in employee compensation costs offset by anincrease in spending on certain R&D projects.

Other income (expense). Other expense was $627,000 for the year ended December 31, 2013 and otherincome was $450,000 for the year ended December 31, 2012, an increase in other expense of $1.1 million. Theincrease was primarily due to an increase of $932,000 from realized losses on foreign currency translation and anincrease in interest expense of $95,000.

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Income tax benefit. Income tax benefit was $5.1 million and $7.1 million for the year ended December 31,2013 and 2012, respectively. In accordance with ASC740 “Accounting for Income Taxes” (“ASC740”), weevaluate our deferred income tax assets quarterly to determine if valuation allowances are required or should beadjusted. ASC740 requires that companies assess whether valuation allowances should be established againsttheir deferred tax assets based on consideration of all available evidence, both positive and negative, using a“more likely than not” standard. Due to the losses in the fourth quarter of 2013, we are in a cumulative lossposition for the past three years which is considered significant negative evidence by the accounting standardsthat is difficult to overcome on a “more likely than not” standard through objectively verifiable data. While ourfinancial outlook remains positive, the accounting standards attribute greater weight to objective negativeevidence than to subjective positive evidence, such as our projections for future growth. Based on this evaluation,as of December 31, 2013, a valuation allowance of $9.5 million has been recorded against the net U.S. deferredtax assets in order to measure only the portion of the deferred tax assets that are more likely than not to berealized based on the weight of all the available evidence. Until an appropriate level of profitability is attained,we expect to maintain a valuation allowance on net deferred tax assets related to future U.S. tax benefits and willno longer accrue tax benefits or tax expense on our Consolidated Statement of Operations. In the event that wechange our determination as to the amount of deferred tax assets that can be realized, we will adjust our valuationallowance with a corresponding impact to the provision for income taxes in the period in which suchdetermination is made.

We are evaluating the impact of the recent regulations concerning amounts paid to acquire, produce, orimprove tangible property and recovery of basis upon disposition. Given that Revenue Procedures were issued inlate January 2014, we are determining whether or not any changes in an accounting method are required.Presently, we do not anticipate a material impact to our financial statements.

Comparison of years ended December 31, 2012 and 2011

Revenue. Revenue was $67.2 million for the year ended December 31, 2012 and $134.0 million for the yearended December 31, 2011, a decrease of $66.8 million. In 2012, we experienced a decrease in revenue from ourproducts sold to the LED market. Revenue from the sale of sapphire cores, which are sold into the LED market,for the year ended December 31, 2012 decreased by $52.6 million, of which $42.3 million was attributed tolower pricing and $10.3 million was attributed to lower volume. We also experienced lower revenue from salesof our polished wafers by $14.4 million, which was the result of $36.9 million lower sales of polished wafers tothe LED market offset in part by a $22.5 million increase in polished wafers sold to the SoS market. Of the$14.4 million reduction in revenue from polished wafers, $16.9 million was attributable to lower prices offset inpart by an increase in volume of $2.5 million. We experienced an increase in R&D revenue of $1.2 million as wewere awarded a contract with the Air Force Research Laboratory in July 2012 to produce large area sapphireslabs. Revenue with respect to this contract was recorded as costs were incurred as well as a portion of the fixedfee for the year ended December 31, 2012. The contract will continue for a duration of three years and the totalvalue of the contract is $4.7 million. We also experienced in 2012, lower optical revenue of $1.0 million due tothe decrease in sales for sensor and instrumentation applications.

Gross (loss) profit. Gross loss was $40,000 for the year ended December 31, 2012 as compared to a grossprofit of $69.6 million for the year ended December 31, 2011, a decrease of $69.6 million. The decrease in grossprofit is primarily due to the reduction in revenue, which in turn is attributable to decreased pricing for ourproducts as well as lower utilization of our production facilities attributable to the reduced demand from the LEDmarket due to the buildup of excess inventory in the supply chain. Due to changes in customers’ productspecifications an excess and obsolete inventory reserve adjustment of $719,000 was recorded for the year endedDecember 31, 2012, which reduced inventory and increased cost of goods sold as various items in stock were nolonger in demand. In addition, pricing for our small diameter core products declined throughout 2012 and in thefourth quarter of 2012 market prices fell below our carrying cost in inventory. As a result, we recorded a lower ofcost or market adjustment which reduced inventory and increased cost of goods sold by a net of $1.5 million forthe year ended December 31, 2012. In addition, given the relative strength of the six-inch market, we wanted tomake sure our boule inventory was capable of producing high-yield six-inch material. Consequently, we decided

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to recycle some boules from inventory that might have produced lower than normal six-inch yield. This addedapproximately $927,000 to cost of goods sold for the year ended December 31, 2012.

General and administrative expenses. G&A expenses were $9.0 million for the year ended December 31,2012 and $11.3 million for the year ended December 31, 2011, a decrease of $2.3 million. Our bad debt expensedecreased by $1.9 million as we made accommodations for the year ended December 31, 2011 to certain keycustomers of our small diameter cores by agreeing to write off a portion of their accounts receivable balances thatdid not re-occur in 2012. We also experienced a decrease of employee compensation costs of $385,000, resultingfrom a lower performance based bonus expense. In 2012, we also experienced higher legal expenses of $488,000,offset partially by lower consulting expenses of $268,000 and lower recruiting expenses of $102,000.

Sales and marketing expenses. Sales and marketing expenses were $1.7 million for the years endedDecember 31, 2012 and 2011. A slight increase of $27,000 in sales and marketing expenses is attributable toadditional employee compensation costs, primarily due to annual salary increases and employee stock optionsexpense.

Research and development expenses. R&D expenses were $2.3 million for the year ended December 31,2012 and $1.8 million for the year ended December 31, 2011, an increase of $468,000. The increase isattributable to higher employee compensation costs of $204,000 related to increased headcount and salaryincreases, an increase in spending on research projects of $186,000 and an increase in travel of $77,000.

Other income (expense). Other income was $450,000 for the year ended December 31, 2012 and otherexpense was $118,000 for the year ended December 31, 2011, an increase in other income of $568,000. Theincrease was primarily due to an increase of $719,000 from realized gains on foreign currency translationpartially offset by a $159,000 decrease in interest income on lower investment balances.

Income tax benefit (expense). Income tax benefit was $7.1 million for the year ended December 31, 2012 ascompared to an income tax expense of $16.5 million for the year ended December 31, 2011. Our projectedeffective tax rate, while in a profit operating mode, is 30% to 35%; however, the rate of tax benefit accrued whilein a loss mode will typically be higher and will vary based on the distribution of activity between our U.S. andMalaysia operations.

LIQUIDITY AND CAPITAL RESOURCES

We have historically funded our operations using a combination of issuances of common stock and cashgenerated from our operations. On January 2, 2013, we entered into a three-year term agreement with a bank toprovide us with a senior secured credit facility of $25.0 million. The agreement provides for us to borrow up to80% of eligible accounts receivable and up to 35% for domestically held raw material and finished goodsinventory. Advances against inventory are limited to 40% of the aggregate outstanding on the revolving line ofcredit and $10.0 million in aggregate. We have the option to borrow at an interest rate of LIBOR plus 2.75% orthe Wall Street Journal prime rate prime rate plus 0.50%. If we maintain liquidity of $20.0 million or greater withthe lending institution, then the borrowing interest rate options are LIBOR plus 2.25% or the Wall Street Journalprime rate. Unused revolving line facility fee is 0.375% per annum. The facility is secured by a first priorityinterest in substantially all of our personal property, excluding intellectual property. We are required to maintainan adjusted quick ratio of 1.40 to 1.00, maintain operating and other deposit accounts with the bank or bank’saffiliates of 25% of our total worldwide cash, securities and investments, and we can only pay dividends orrepurchase capital stock with the bank’s consent during the three year term. As of December 31, 2013 we havenot yet borrowed against our debt facility.

As of December 31, 2013, we had cash and short term investments totaling $34.6 million, including cash of$5.5 million held in deposits at major banks, $15.5 million invested in money market funds and $13.6 million ofshort term investments including commercial paper, corporate notes and bonds, U.S. treasury securities, FDICguaranteed certificates of deposit and common stock.

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Cash flows from operating activities

Year ended December 31,

2013 2012 2011

(in millions)

Net (loss) income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(30.4) $ (5.5) $ 38.1Non-cash items:

Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.7 12.0 9.7Stock based compensation and other, net . . . . . . . . . . . . . . . . . . . . . 2.1 2.0 2.5Deferred taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5.2) (6.3) 13.5Excess tax benefits from stock based compensation . . . . . . . . . . . . . 0.1 (0.2) (1.4)

Total non-cash items: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.7 7.5 24.3

Working capital:Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.1 20.0 (14.0)Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4.4) (4.0) 3.7Other accruals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1.1) (0.4) (1.6)Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.0 (24.2) (12.0)Prepaid expenses and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.5 3.9 (13.9)

Total working capital items: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.1 (4.7) (37.8)

Net cash provided by (used in) operating activities . . . . . . . . . . . . . . . $ 0.4 $ (2.7) $ 24.6

Cash provided by operating activities was $412,000 for the year ended December 31, 2013. During suchperiod, we generated a net loss of $30.4 million, which included non-cash charges of $9.7 million, and anincrease in net working capital of $21.1 million. The net working capital change was comprised of a decrease inaccounts receivable of $9.1 million due to an overall decreased accounts receivables balance on lower revenues,a decrease in inventory of $13.0 million as we used a significant portion of our sapphire boules stock and adecrease in accounts payable of $4.4 million due to timing of payments. We also experienced a decrease in otherprepaid assets of $4.5 million, primarily related to a decrease in the purchase of furnace construction andreplacement parts and items used in the polishing of wafers.

Cash used in operating activities was $2.7 million for the year ended December 31, 2012. During suchperiod, we generated a net loss of $5.5 million, which included non-cash charges of $7.5 million, and a decreasein net working capital of $4.7 million. The net working capital change was comprised of a decrease in accountsreceivable of $20.0 million due to significant collections from several key customers and an overall decreasedaccounts receivables balance on lower revenues, an increase in inventory of $24.2 million primarily due to anincrease in our stock of raw materials and sapphire boules and a decrease in accounts payable of $4.0 million dueto timing of payments. We also experienced a decrease in other prepaid assets of $3.9 million, primarily relatedto a decrease in the purchase of furnace construction and replacement parts and items used in the polishing ofwafers.

Cash provided by operating activities was $24.6 million for the year ended December 31, 2011. During suchperiod, we generated net income of $38.1 million, which included non-cash charges of $24.3 million, and a decreasein net working capital of $37.8 million. The decrease in net working capital was comprised of an increase inaccounts receivable of $14.0 million due to timing of collections, a decrease in other accruals of $1.6 millionconsisting primarily of a decrease in deposits of $1.1 million from customer prepayments, an increase in prepaidexpenses and other current assets of $13.9 million due to an increase in purchases of furnace construction andreplacement parts for both the Illinois and Malaysia facilities, an increase in inventory of $12.0 million, which wasattributed to an increase in raw materials inventory as we continued to grow our safety stock, as well as an increasein work-in-progress and finished goods inventory due to lower demand of the two and four-inch core products in thefourth quarter. This was offset by an increase in accounts payable of $3.7 million due to timing of payments.

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Cash flows provided by (used in) investing activities

The following table represents the major components of our cash flows from investing activities for theyears ended December 31, 2013, 2012 and 2011:

Year ended December 31,

2013 2012 2011

(in millions)

Purchases of property and equipment:Machinery and equipment for crystal growth . . . . . . . . . . . . . . . . . . . (0.9) (5.1) (28.0)Land and building improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (2.4) (5.9)Increase capacity in other areas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7.8) (3.5) (14.3)Proceeds from disposal of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.1 — —

Total purchases of property and equipment, net of proceeds fromdisposal of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8.6) (11.0) (48.2)

Proceeds from sale of investments, net of purchases . . . . . . . . . . . . . . . . . . 9.4 29.0 15.5

Net cash provided by (used in) investing activities . . . . . . . . . $ 0.8 $ 18.0 $(32.7)

Net cash provided by investing activities was $770,000 and $18.0 million for the years ended December 31,2013 and 2012, respectively, and net cash used in investing activities was $32.7 million for the year endedDecember 31, 2011. In 2013, we used approximately $7.8 million for machinery and equipment that allows us toproduce patterned polished substrates at our Malaysia facility, as well as to enhance our current polishingplatform in Malaysia. This was offset by proceeds from the sale of investments of $9.4 million. In 2012, we usedapproximately $7.5 million to continue to complete and equip our crystal growth facility in Batavia, Illinois andapproximately $3.5 million to increase capacity in other areas. This was offset by sales of investments (net ofpurchases of investments of $5.3 million) of $29.0 million. In 2011, we used approximately $33.9 million onexpansion activities for building and equipment for our crystal growth facility in Batavia, Illinois. We usedapproximately $14.3 million to increase capacity for post crystal growth operations, of which $10.0 million wasused for continued equipment installation in our facility in Penang, Malaysia. This was partially offset by sales ofinvestments of $25.0 million used to fund operations, capital spending and to repurchase some of our capitalstock. We purchased additional investments of $9.5 million using investment earnings proceeds.

We anticipate capital expenditures in 2014 to be between $10.0 million and $15.0 million and to primarilybe focused on investment in equipment to produce patterned sapphire substrates and enhance our polishingplatform.

Cash flows provided by (used in) financing activities

Net cash provided by financing activities was $32,000 and $250,000 for the years ended December 31,2013, and 2012 respectively and net cash used in financing activities was $4.0 million for the year endedDecember 31, 2011. Net cash provided by financing activities in 2013 was primarily the result of proceeds fromthe exercise of stock options of $140,000 offset by a change in the tax benefits related to stock basedcompensation of $114,000. Net cash provided by financing activities in 2012 was primarily the result of excesstax benefits related to stock based compensation of $160,000 and proceeds from the exercise of stock options of$72,000. Net cash used in financing activities for 2011 reflects stock repurchases of $6.5 million, partially offsetby excess tax benefits related to stock based compensation of $1.4 million and proceeds from the exercise ofoptions of $742,000.

Future liquidity requirements

We believe that our existing cash, cash equivalents, investments, anticipated cash flows from operatingactivities and secured credit facility will be sufficient to meet our anticipated cash needs for at least the next

36

twelve months. In addition, on January 13, 2014, we completed a public offering of common stock in which atotal of 3,047,500 shares were sold, including 397,500 shares pursuant to the full exercise of the underwriter’sover-allotment option, at a price of $10.65 per share, which resulted in our raising a total of $32.5 million ingross proceeds from the offering. Our cash needs include cash required to fund our operations, and the capitalneeded to fund our planned expansions in the U.S. and Asia and investments in new product development. If theassumptions underlying our business plan regarding future revenues and expenses change, or if unexpectedopportunities or needs arise, we may seek to raise additional cash by selling equity or convertible debt securities.If we raise additional funds through the issuance of equity or convertible debt securities, the percentageownership of our stockholders could be significantly diluted, and these newly-issued securities may have rights,preferences or privileges senior to those of existing stockholders. If we obtain additional debt financing or drawon our credit facility, a substantial portion of our operating cash flow may be dedicated to the payment ofprincipal and interest on such indebtedness, and the terms of the debt securities issued could impose significantrestrictions on our operations. If we are unable to obtain financing on terms favorable to us, we may be unable tosuccessfully execute our business plan.

Contractual obligations

The contractual obligations presented in the table below represent our estimates of future payments underfixed contractual obligations and commitments at December 31, 2013. Changes in our business needs as well asactions by third parties and other factors may cause these estimates to change. Because these estimates arecomplex and necessarily subjective, our actual payments in future periods are likely to vary from those presentedin the table. The following table sets forth information relating to our contractual obligations at December 31,2013:

Payments due in

TotalLess than

1 year1-3

years3-5

yearsMore than

5 years

(in millions)

Operating lease obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1.5 $1.1 $0.4 $— $—Purchase obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.4 0.6 — —

Total contractual obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $5.5 $4.5 $1.0 $— $—

OFF-BALANCE SHEET ARRANGEMENTS

None.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Market risk is the risk of loss related to changes in market prices, including interest rates, of financialinstruments that may adversely impact our financial position, results of operations or cash flows.

Foreign currency exchange risk. As a result of our global operations, we are exposed to changes in foreigncurrency exchange rates which may adversely affect our results and financial position. Primary exposures arerelated to the U.S. Dollar versus the Malaysian Ringgit. While we continue to monitor this exchange risk, we arenot currently entered into any foreign currency hedging transactions.

Interest rate risk. We do not have any long-term borrowings. Our investments consist of cash, cashequivalents, investment grade commercial paper, FDIC guaranteed certificates of deposits, common stock,corporate notes and government securities. The primary objective of our investment activities is to preserveprincipal while maximizing income without significantly increasing risk. We do not enter into investments forspeculative purposes. Our investments are exposed to market risk due to a fluctuation in interest rates, which may

37

affect our interest income and the fair market value of our investments. Due to the short-term nature of ourinvestment portfolio, we do not believe an immediate 10% increase or decrease in interest rates would have amaterial effect on the fair market value of our portfolio, and therefore, we do not expect our operating results orcash flows to be materially affected by a sudden change in market interest rates.

Inflation. Our operations have not been, and we do not expect them to be, materially affected by inflation.However, historically, the prices we charge our customers are market driven, and therefore, we may not be ableto increase our prices to offset any increase in our material or labor costs. Our inability or failure to do so couldharm our business, financial condition and results of operations.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of financial statements in accordance with accounting principles generally accepted in theU.S. requires us to make estimates, assumptions and judgments that affect the amounts reported in our financialstatements and the accompanying notes. We base our estimates on historical experience and various otherassumptions that we believe to be reasonable. Although these estimates are based on our present best knowledgeof the future impact on the company of current events and actions, actual results may differ from these estimates,assumptions and judgments.

We consider to be critical those accounting policies that require our most subjective or complex judgments,which often result from a need to make estimates about the effect of matters that are inherently uncertain, andthat are among the most important of our accounting policies in the portrayal of our financial condition andresults of operations. We believe the following to be our critical accounting policies, including the moresignificant estimates and assumptions used in preparation of our financial statements.

Foreign currency translation and transactions. Rubicon Worldwide LLC’s assets and liabilities aretranslated into U.S. dollars at exchange rates existing at the respective balance sheet dates and capital accounts athistorical exchange rates. The results of operations are translated into U.S. dollars at the average exchange ratesduring the respective period. Translation adjustments resulting from fluctuations in exchange rates for RubiconWorldwide LLC are recorded as a separate component of accumulated other comprehensive income (loss) withinstockholders’ equity.

We have determined that the functional currency of Rubicon Sapphire Technology (Malaysia) SDN BHD isthe U.S. dollar. Rubicon Sapphire Technology (Malaysia) SDN BHD’s assets and liabilities are translated intoU.S. dollars using the remeasurement method. Non-monetary assets are translated at historical exchange ratesand monetary assets are translated at exchange rates existing at the respective balance sheet dates. Translationadjustments for Rubicon Sapphire Technology (Malaysia) SDN BHD are included in determining net income(loss) for the period. The results of operations are translated into U.S. dollars at the average exchange ratesduring the respective period. We record these gains and losses in other income (expense).

Foreign currency transaction gains and losses are generated from the effects of exchange rate changes ontransactions denominated in a currency other than our functional currency, which is the U.S. dollar. Gains andlosses on foreign currency transactions are generally required to be recognized in the determination of net income(loss) for the period. We record these gains and losses in other income (expense).

Revenue recognition. We recognize revenue from sales of products and billings for costs and fees fromgovernment contracts. We recognize revenue from sales of products when:

• Persuasive evidence of an arrangement exists. We require evidence of a purchase order with thecustomer specifying the terms and specifications of the product to be delivered, typically in the form ofa signed quotation or purchase order from the customer;

• Title has passed and the product has been delivered. Title passage and product delivery generally occurwhen the product is delivered to a common carrier;

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• The price is fixed or determinable. All terms are fixed in the signed quotation or purchase orderreceived from the customer. The purchase orders do not contain rights of cancellation, return,exchanges or refunds; and

• Collection of the resulting receivable is reasonably assured. Our standard arrangement with customersincludes payment terms. Customers are subject to a credit review process that evaluates eachcustomer’s financial position and its ability to pay. We determine collectability by considering thelength of time the customer has been in business and our history of collections with that customer. Ifwe determine that collection is not probable, no product is shipped and no revenue is recognized unlesscash is received in advance.

In July 2012, we signed a contract with the Air Force Research Laboratory to produce large-area sapphirewindows on a cost plus fixed fee basis. We recognize revenue from this contract in the period during which therelated costs are incurred over the contractually defined period. Our current contract will be over a period ofthree years.

All of our revenue is denominated in U.S. dollars.

Inventory. We value our inventory at the lower of cost or market. Market is determined based on netrealizable value. Costs for raw materials are based on actual costs on a first-in, first-out basis and costs for workin process and finished goods are based on a weighted average cost basis. We establish inventory reserves whenconditions exist that suggest inventory may be in excess of anticipated demand or is obsolete based on customerrequired specifications. We evaluate the ability to realize the value of our inventory based on a combination offactors, including forecasted sales, estimated current and future market value and changes in customers’ productspecifications. For the years ended December 31, 2013 and 2012, we determined we had inventory that wasexcess or obsolete and recorded an adjustment which reduced inventory and increased costs of goods sold by$604,000 and $719,000, respectively. We also sold our smaller diameter core material at prices lower than ourcost. Based on those sales prices, we recorded at December 31, 2013 and 2012 a lower of cost or marketadjustment which reduced inventory and increased cost of goods sold by $421,000 and $1.5 million, respectively.As of December 31, 2013, prices for our small diameter core products were higher than cost. Our method ofestimating excess and obsolete inventory has remained consistent for all periods presented. However, if ourrecognition of excess or obsolete inventory is, or if our estimates of our inventory’s potential utility become, lessfavorable than currently expected, additional inventory reserves may be required.

There is a high degree of volatility in the markets we serve with demand for our products constantlychanging. During the year ended December 31, 2012, due to the current demand of products, we decided torecycle some boules from inventory. Historically, boules put through a second growth cycle typically result in avery high-grade crystal which may result in higher yield of large diameter wafers. The recycling of boulesreduced inventory and increased cost of goods sold for the year ended December 31, 2012 by $927,000.

We determine our normal operating capacity and record as expenses costs attributable to lower utilization ofequipment and staff. For the years ended December 31, 2013 and 2012, we determined we were not operating atcapacity and recorded costs associated with the lower utilization of equipment and staff of $13.2 million and$1.9 million, respectively. Our crystal growth operation is now operating at full capacity. The utilization of ourpolishing operation will also improve as we ramp up production on PSS and as we gain market share in four andsix-inch polished wafers. However, until the ramp up occurs, we will incur additional adjustments for lowerutilization of our polishing equipment and staff in the first half of 2014.

We value our other inventory supplies at cost, based on the purchase prices on a first- in, first out-basis.Other inventory supplies include consumable items used in the manufacturing process as well as repair andmaintenance items for our machinery and equipment.

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Investments. We invest available cash primarily in investment grade commercial paper, FDIC guaranteedcertificates of deposits, common stock, corporate notes and government securities. Investments classified asavailable-for-sale securities are carried at fair market value with unrealized gains and losses recorded inaccumulated other comprehensive income (loss). Investments in trading securities are reported at fair value, withboth realized and unrealized gains and losses recorded in other income (expense), in the Consolidated Statementsof Operations. Investments in which we have the ability and intent, if necessary, to liquidate in order to supportour current operations are classified as short-term.

We review our available-for-sale securities investments at the end of each quarter for other-than-temporarydeclines in fair value based on the specific identification method. We consider various factors in determiningwhether an impairment is other-than-temporary, including the severity and duration of the impairment, changesin underlying credit ratings, forecasted recovery, our ability and intent to hold the investment for a period of timesufficient to allow for any anticipated recovery in market value and the probability that the scheduled cashpayments will continue to be made. When we conclude that an other-than-temporary impairment has resulted, thedifference between the fair value and carrying value is written off and recorded as a charge on the ConsolidatedStatement of Operations. As of December 31, 2013, no impairment was recorded.

Allowance for doubtful accounts. We estimate the allowance for doubtful accounts based on an assessmentof the collectability of specific customer accounts. The determination of risk for collection is assessed on acustomer-by-customer basis considering our historical experience and future orders with the customer, changesin payment patterns and recent information we have about the current status of our accounts receivable balances.If we determine that a specific customer is a risk for collection, we provide a specific allowance for credit lossesto reduce the net recognized receivable to the amount we reasonably believe will be collected. If a receivable isdeemed uncollectible, and the account balance differs from the allowance provided, the specific amount iswritten off to bad debt expense. We believe that based on the customers to whom we sell and the nature of ouragreements with them, our estimates are reasonable. Our method of estimating collectability has remainedconsistent for all periods presented and with past collections experience.

Stock-based compensation. We grant stock-based compensation in the form of stock options, restricted stockunits (“RSUs”) and restricted stock. We expense stock-based compensation based upon the fair market value onthe date of grant. We use the Black-Scholes option pricing model to determine the fair value of stock options.The determination of the fair value of stock-based payment awards on the date of grant using an option-pricingmodel will be affected by assumptions regarding a number of complex and subjective variables. These variablesinclude our expected stock volatility over the term of the awards, actual and projected employee stock optionexercise behaviors, risk-free interest rates, forfeitures and expected dividends.

The expected term represents the weighted-average period that our stock options are expected to beoutstanding and is based upon the vesting term of our options, a review of a peer group of companies, andexpected exercise behavior. Until November 2007, we were operating as a private company, and as a result, wewere unable to use our actual price volatility data. Therefore, we estimated the volatility of our common stockbased on volatility of similar entities over the expected term of our stock options for the years endedDecember 31, 2012 and 2011. In 2013, we determined we had enough historical data to use our own stock priceas the basis for calculating the volatility rate. As such, we used a three year historical stock price to calculate thevolatility rate used for stock options granted in the year ended December 31, 2013. We base the risk-free interestrate that we use in the option pricing model on U.S. Treasury zero-coupon issues with remaining terms similar tothe expected term on the options. We do not anticipate paying any cash dividends in the foreseeable future and,therefore, use an expected dividend yield of zero in the option pricing model. We are required to estimateforfeitures at the time of grant and revise those estimates in subsequent periods if actual forfeitures differ fromthose estimates. The current forfeiture rate of 19.18% was based on our past history of forfeitures.

All option grants made during 2013 and 2012 were granted at an exercise price per share equal to theclosing market price of our common stock on the day before the date of the grant. Therefore, there is no intrinsic

40

value because the exercise price per share of each option was equal to the fair value of the common stock on thedate of grant. Based on the fair market value of the common stock at December 31, 2013 and 2012, there was noaggregate intrinsic value for options outstanding and exercisable.

During 2013, we granted RSUs to certain key employees. The fair value of each RSU is the market price onthe date of grant and is being recorded as compensation expense ratably over the vesting terms. Each RSUgranted will vest 25% at each anniversary of grant date and settle in common stock (on a one-for-one basis). TheRSUs are forfeited by a participant upon termination for any reason and there is no proportionate or partialvesting in the periods between the vesting dates.

We allocate stock based compensation costs using a straight-line method which amortizes the fair value ofeach option on a straight-line basis over the service period. Based on the variables affecting the valuation of ourcommon stock and the method used for allocating compensation costs, we recognized $1.6 million in stock-basedcompensation expense during the year ended December 31, 2013. For more information on stock-basedcompensation, see Note 7 – Stock Incentive Plans to our Consolidated Financial Statements included in thisAnnual Report on Form 10-K.

Income tax valuation allowance. Evaluating the need for and amount of a valuation allowance for deferredtax assets often requires significant judgment and extensive analysis of all the positive and negative evidenceavailable to determine whether all or some portion of the deferred tax assets will not be realized. A valuationallowance must be established for deferred tax assets when it is more likely than not (a probability level of morethan 50 percent) that they will not be realized. In general, “realization” refers to the incremental benefit achievedthrough the reduction in future taxes payable or an increase in future taxes refundable from the deferred taxassets, assuming that the underlying deductible differences and carryforwards are the last items to enter into thedetermination of future taxable income. In determining our valuation allowance, we consider the source oftaxable income including taxable income in prior carryback years, future reversals of existing temporarydifferences, the required use of tax planning strategies, and future taxable income exclusive of reversingtemporary differences and carryforwards. Due to the losses in the fourth quarter of 2013, we are in a cumulativeloss position for the past three years which is considered significant negative evidence by the accountingstandards that is difficult to overcome on a “more likely than not” standard through objectively verifiable data.While we believe our financial outlook remains positive, under the accounting standards objective verifiableevidence will have greater weight than subjective evidence such as our projections for future growth. Based onan evaluation in accordance with the accounting standards, as of December 31, 2013, a valuation allowance of$9.5 million has been recorded against the net U.S. deferred tax assets in order to measure only the portion of thedeferred tax assets that are more likely than not to be realized based on the weight of all the available evidence.Until an appropriate level of profitability is attained, we expect to maintain a full valuation allowance on our U.S.net deferred tax assets. During the year ended December 31, 2011, management concluded at that time that basedon the current level of sustainable profitability that generates taxable income, that it is more likely than not thatour deferred tax assets will be realizable. With the release of the valuation allowance, federal and certain stateand non-U.S. income taxes attributable to the fiscal year’s pre-tax income were provided for in the period. Thereversal of the valuation allowance favorably impacted our effective tax rate.

Accounting for uncertainty in income taxes. We recognize the tax benefit from an uncertain tax positiononly if it is more likely than not the tax position will be sustained on examination by the taxing authorities, basedon the technical merits of the position. The tax benefits recognized in the financial statements from suchpositions are then measured based on the largest benefit that has a greater than 50% likelihood of being realizedupon settlement. For the years ended December 31, 2012 and 2011, we recorded a liability of $1.0 million and$363,000, respectively for uncertain tax positions. We recognize interest and/or penalties related to income taxmatters in income tax expense.

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RECENT ACCOUNTING PRONOUNCEMENT

In July 2013, the FASB issued Accounting Standards Update No. 2013-11 (“ASU 2013-11”), Income Taxes(Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a SimilarTax Loss, or a Tax Credit Carryforward Exists. ASU No. 2013-11 clarifies that an unrecognized tax benefit, or aportion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to adeferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except asfollows. To the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is notavailable at the reporting date under the tax law of the applicable jurisdiction to settle any additional incometaxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction doesnot require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, theunrecognized tax benefit should be presented in the financial statements as a liability and should not be combinedwith deferred tax assets. The assessment of whether a deferred tax asset is available is based on the unrecognizedtax benefit and deferred tax asset that exist at the reporting date and should be made presuming disallowance ofthe tax position at the reporting date. This ASU is effective for fiscal years, and interim periods within thoseyears, beginning after December 15, 2013. The adoption of ASU 2013-11 is not expected to have a materialimpact on our consolidated financial statements.

ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Our Consolidated Financial Statements, together with the related notes and the report of independentregistered public accounting firm, are set forth on the pages indicated in Item 15 of this Annual Report onForm 10-K.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING ANDFINANCIAL DISCLOSURES.

None.

ITEM 9A. CONTROLS AND PROCEDURES

Management’s Evaluation of Disclosure Controls and Procedures.

An evaluation was performed under the supervision and with the participation of our management, includingour chief executive officer and chief financial officer (together, our “certifying officers”), of the effectiveness ofthe design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the year coveredby this report. Disclosure controls and procedures are controls and other procedures designed to ensure thatinformation required to be disclosed by us in our periodic reports filed with the SEC is recorded, processed,summarized and reported within the time periods specified by the SEC’s rules and instructions for Form 10-K,and that the information is accumulated and communicated to our management, including the chief executiveofficer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure. Basedon their evaluation, our certifying officers concluded that these disclosure controls and procedures were effectiveas of December 31, 2013.

Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financialreporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Our internal control systemwas designed to provide reasonable assurance regarding the reliability of financial reporting and the preparationof the consolidated financial statements for external purposes in accordance with generally accepted accountingprinciples. Based on its evaluation, management concluded that our internal controls over financial reportingwere effective as of December 31, 2013. As required under this Item 9A, the management’s report titled

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“Management’s Assessment of Control Over Financial Reporting” is set forth in “Item 8 – ConsolidatedFinancial Statements and Supplementary Data” and is incorporated herein by reference.

Attestation Report of the Registered Public Accounting Firm

As required under this Item 9A, the auditor’s attestation report titled “Report of Independent RegisteredPublic Accounting Firm on Internal Control Over Financial Reporting” is set forth in “Item 8 – ConsolidatedFinancial Statements and Supplementary Data” and is incorporated herein by reference.

Changes in Internal Controls over Financial Reporting

There have been no changes in our internal controls over financial reporting that occurred during the quarterended December 31, 2013 that our certifying officers concluded materially affected, or are reasonably likely tomaterially affect, our internal controls over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

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PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The Information required by Items 401, 405, 407(d)(4) and 407(d)(5) of Regulation S-K will be includedunder the captions “Election of Directors,” “Executive Officers,” “Section 16(a) Beneficial Ownership ReportingCompliance” and “Audit Committee” in our proxy statement for our 2014 annual meeting of stockholders and isincorporated by reference herein. If such proxy statement is not filed with the SEC within 120 days after the endof the fiscal year covered by this Form 10-K, an amendment to this Form 10-K shall be filed not later than theend of such 120-day period.

We have adopted a Code of Ethics that applies to all of our employees, officers and directors. A copy of theCode of Ethics is available on our website at www.rubicontechnology.com, and any waiver from the Code ofEthics will be timely disclosed on the Company’s website as will any amendments to the Code of Ethics.

ITEM 11. EXECUTIVE COMPENSATION

The information required by Item 402 of Regulation S-K will be included under the captions “ExecutiveCompensation” and “Director Compensation” in our proxy statement for our 2014 annual meeting ofstockholders and is incorporated by reference herein. The information required by Item 407(e)(4) and 407(e)(5)of Regulation S-K will be included under the captions “Compensation Committee Interlocks and InsiderParticipation” and “Compensation Committee Report” in our proxy statement for our 2014 annual meeting ofstockholders and is incorporated by reference herein. If such proxy statement is not filed with the SEC within120 days after the end of the fiscal year covered by this Form 10-K, an amendment to this Form 10-K shall befiled not later than the end of such 120-day period.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENTAND RELATED STOCKHOLDER MATTERS

Securities Authorized for Issuance under Equity Compensation Plans

The following table represents securities authorized for issuance under our 2001 Equity Plan and our 2007Stock Incentive Plan as of December 31, 2013.

Equity Compensation Plan Information

Plan Category

Number of Securitiesto be Issued

Upon Exercise ofOutstanding Options,Warrants and Rights

Weighted-AverageExercise Price of

Outstanding Options,Warrants and Rights

Number of SecuritiesRemaining Availablefor Future Issuances

Under the EquityCompensation Plans(Excluding Securities

Reflected in Column(a))

(a) (b) (c)

Equity compensation plans approved bysecurity holders(1) . . . . . . . . . . . . . . . . . . . . . 1,972,011 $12.38 2,240,103

(1) Approved before our initial public offering.

The information required by Item 403 of Regulation S-K will be included under the caption “SecurityOwnership of Certain Beneficial Owners and Management and Related Shareholder Matters” in our proxystatement for our 2014 annual meeting of stockholders and is incorporated by reference herein. If such proxystatement is not filed with the SEC within 120 days after the end of the fiscal year covered by this Form 10-K, anamendment to this Form 10-K shall be filed not later than the end of such 120-day period.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTORINDEPENDENCE

The information required by Item 404 of Regulation S-K will be included under the caption “CertainRelationships and Related Person Transactions” in our proxy statement for our 2014 annual meeting ofstockholders and is incorporated by reference herein. The information required by Item 407(a) of Regulation S-Kwill be included under the caption “Director Independence” in our proxy statement for our 2014 annual meetingof stockholders and is incorporated by reference herein. If such proxy statement is not filed with the SEC within120 days after the end of the fiscal year covered by this Form 10-K, an amendment to this Form 10-K shall befiled not later than the end of such 120-day period.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this Item will be included under the caption “Ratification of Selection ofIndependent Registered Public Accounting Firm” in our proxy statement for our 2014 annual meeting ofstockholders and is incorporated by reference herein. If such proxy statement is not filed with the SEC within120 days after the end of the fiscal year covered by this Form 10-K, an amendment to this Form 10-K shall befiled not later than the end of such 120-day period.

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PART IV

ITEM 15. EXHIBITS AND CONSOLIDATED FINANCIAL STATEMENT SCHEDULES

(a) Financial statements. The following consolidated financial statements are filed as part of this AnnualReport on Form 10-K.

Page

Management’s Report on Internal Control over Financial Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-2Report of Independent Registered Public Accounting Firm on Internal Control over Financial

Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-3Report of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-4Consolidated Balance Sheets as of December 31, 2013 and 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-5Consolidated Statements of Operations for each of the three years in the period ended December 31,

2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-6Consolidated Statements of Comprehensive Income for each of the three years in the period ended

December 31, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-7Consolidated Statements Stockholders’ Equity for each of the three years in the period ended

December 31, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-8Consolidated Statements of Cash Flows for each of the three years in the period ended December 31,

2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-9Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-10

(b) Exhibits. The exhibits filed or incorporated by reference as a part of this report are listed in the Index toExhibits which appears following the signature page to this Annual Report on Form 10-K and are incorporatedby reference.

(c) Financial statement schedules not listed above have been omitted because they are inapplicable, are notrequired under applicable provisions of Regulation S-X, or the information that would otherwise be included insuch schedules is contained in the registrant’s financial statements or accompanying notes.

46

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registranthas duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on March 13,2014.

Rubicon Technology, Inc.

By /s/ Raja M. Parvez

Raja M. ParvezPresident and Chief Executive Officer

KNOWN BY ALL MEN BY THESE PRESENTS, that each person whose signature appears belowconstitutes and appoints Raja M. Parvez and William F. Weissman, jointly and severally, his or her attorney-in-fact, with the power of substitution, for him or her in any and all capacities, to sign any amendments to thisAnnual Report on Form 10-K and to file the same, with exhibits thereto and other documents in connectiontherewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of saidattorneys-in-fact, or his or her substitute or substitutes, may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below bythe following persons on behalf of the registrant and in the capacities indicated on March 13, 2014.

Signature Title

/s/ Raja M. Parvez

Raja M. Parvez

Director, President and Chief Executive Officer(Principal Executive Officer)

/s/ William F. Weissman

William F. Weissman

Chief Financial Officer(Principal Financial and Accounting Officer)

/s/ Don N. Aquilano

Don N. Aquilano

Chairman of the Board of Directors

/s/ Donald R. Caldwell

Donald R. Caldwell

Director

/s/ Michael E. Mikolajczyk

Michael E. Mikolajczyk

Director

/s/ Raymond J. Spencer

Raymond J. Spencer

Director

47

EXHIBIT INDEX

The Exhibits listed below are filed or incorporated by reference as part of this Annual Report on Form 10-K.

Exhibit No. Description Incorporation by Reference

3.1 Eighth Amended and Restated Certificate ofIncorporation of Rubicon Technology, Inc.

Filed as Exhibit 3.1 to Amendment No. 2,filed on November 1, 2007, to the registrant’sRegistration Statement on Form S-1 (File No.333-145880)

3.2 Amendment No. 1 to Eighth Amended andRestated Certificate of Incorporation ofRubicon Technology, Inc.

Filed as Appendix A to the registrant’sDefinitive Proxy Statement on Schedule 14A,filed on April 29, 2011 (File No. 1-33834)

3.3 Amended and Restated Bylaws of RubiconTechnology, Inc.

Filed as Exhibit 3.2 to Amendment No. 2,filed on November 1, 2007, to the registrant’sRegistration Statement on Form S-1 (FileNo. 333-145880)

4.1 Specimen Common Stock Certificate Filed as Exhibit 4.1 to Amendment No. 3,filed on November 13, 2007, to theregistrant’s Registration Statement onForm S-1 (File No. 333-145880)

4.2 Warrant to Purchase Shares of Series Bpreferred stock between Rubicon Technology,Inc. and GATX Ventures, Inc., dated July 10,2002 (1)

Filed as Exhibit 4.8 to the registrant’sRegistration Statement on Form S-1, filed onOctober 11, 2007 (File No. 333-145880)

4.3 Warrant to Purchase Shares of Series Bpreferred stock between Rubicon Technology,Inc. and GATX Ventures, Inc., dated July 10,2002 (2)

Filed as Exhibit 4.9 to the registrant’sRegistration Statement on Form S-1, filed onOctober 11, 2007 (File No. 333-145880)

4.4 Form of Investor Warrant to Purchase Shares ofSeries E preferred stock

Filed as Exhibit 4.14 to the registrant’sRegistration Statement on Form S-1, filed onOctober 11, 2007 (File No. 333-145880)

10.1* Rubicon Technology, Inc. 2001 Equity Plan,dated as of August 2, 2001

Filed as Exhibit 10.1 to the registrant’sRegistration Statement on Form S-1, filed onOctober 11, 2007 (File No. 333-145880)

10.1(a)* Amendment No. 1 to the Rubicon Technology,Inc. 2001 Equity Plan, dated as of November 6,2001

Filed as Exhibit 10.1(a) to the registrant’sRegistration Statement on Form S-1, filed onOctober 11, 2007 (File No. 333-145880)

10.1(b)* Amendment No. 2 to the Rubicon Technology,Inc. 2001 Equity Plan, dated as of May 21,2002

Filed as Exhibit 10.1(b) to the registrant’sRegistration Statement on Form S-1, filed onOctober 11, 2007 (File No. 333-145880)

10.1(c)* Amendment No. 3 to the Rubicon Technology,Inc. 2001 Equity Plan, dated as of May 28,2004

Filed as Exhibit 10.1(c) to the registrant’sRegistration Statement on Form S-1, filed onOctober 11, 2007 (File No. 333-145880)

10.1(d)* Amendment No. 4 to the Rubicon Technology,Inc. 2001 Equity Plan, dated as of December 6,2004

Filed as Exhibit 10.1(d) to the registrant’sRegistration Statement on Form S-1, filed onOctober 11, 2007 (File No. 333-145880)

48

Exhibit No. Description Incorporation by Reference

10.1(e)* Amendment No. 5 to the Rubicon Technology,Inc. 2001 Equity Plan, dated as of June 28,2005

Filed as Exhibit 10.1(e) to the registrant’sRegistration Statement on Form S-1, filed onOctober 11, 2007 (File No. 333-145880)

10.1(f)* Amendment No. 6 to the Rubicon Technology,Inc. 2001 Equity Plan, dated as ofNovember 30, 2005

Filed as Exhibit 10.1(f) to the registrant’sRegistration Statement on Form S-1, filed onOctober 11, 2007 (File No. 333-145880)

10.1(g)* Amendment No. 7 to the Rubicon Technology,Inc. 2001 Equity Plan, dated as of July 26, 2006

Filed as Exhibit 10.1(g) to the registrant’sRegistration Statement on Form S-1, filed onOctober 11, 2007 (File No. 333-145880)

10.1(h)* Rubicon Technology, Inc. 2001 Equity PlanForm of Notice of Stock Option Grant andStock Option Agreement

Filed as Exhibit 10.1(h) to the registrant’sRegistration Statement on Form S-1, filed onOctober 11, 2007 (File No. 333-145880)

10.2* Rubicon Technology, Inc. 2007 Stock IncentivePlan, as amended and restated on March 23,2011

10.3* Rubicon Technology, Inc. ManagementIncentive Bonus Plan, dated as of February 28,2007

Filed as Exhibit 10.4 to the registrant’sRegistration Statement on Form S-1, filed onOctober 11, 2007 (File No. 333-145880)

10.4* Amendment No. 1 to Rubicon Technology, Inc.Management Incentive Bonus Plan, dated as ofAugust 29, 2007

Filed as Exhibit 10.4(a) to the registrant’sRegistration Statement on Form S-1, filed onOctober 11, 2007 (File No. 333-145880)

10.5* Executive Employment Agreement, dated as ofdated January 29, 2009, by and betweenRubicon Technology, Inc. and Raja M. ParvezExecutive Employment Agreement

Filed as Exhibit 10.5(b) to the registrant’sCurrent Report on Form 8-K filed onDecember 3, 2009 (File No. 1-33834)

10.6* Executive Employment Agreement, dated as ofJuly 30, 2007, by and between RubiconTechnology, Inc. and William F. Weissman

Filed as Exhibit 10.8 to the registrant’sRegistration Statement on Form S-1, filed onOctober 11, 2007 (File No. 333-145880)

10.7* First Amendment to Executive EmploymentAgreement, dated as of January 29, 2009, byand between Rubicon Technology, Inc. andWilliam F. Weissman

Filed as Exhibit 10.8(a) to the registrant’sCurrent Report on Form 8-K filed onDecember 3, 2009 (File No. 1-33834)

10.8* Form of Post-IPO Change of Control SeveranceAgreement

Filed as Exhibit 10.10 to the registrant’sRegistration Statement on Form S-1, filed onOctober 11, 2007 (File No. 333-145880)

10.9* Form of Indemnification Agreement Filed as Exhibit 10.11 to the registrant’sRegistration Statement on Form S-1, filed onOctober 11, 2007 (File No. 333-145880)

10.10 Commercial Lease, dated as of December 23,2004, by and between Rubicon Technology,Inc. and Bartmanns, Perales & Dolter, LLC

Filed as Exhibit 10.12 to the registrant’sRegistration Statement on Form S-1, filed onOctober 11, 2007 (File No. 333-145880)

10.11 Amendment to Commercial Lease, dated as ofMay 6, 2005, by and between RubiconTechnology, Inc. and Bartmanns, Perales &Dolter, LLC

Filed as Exhibit 10.12(a) to the registrant’sRegistration Statement on Form S-1, filed onOctober 11, 2007 (File No. 333-145880)

49

Exhibit No. Description Incorporation by Reference

10.12 Industrial Building Lease, dated as of July 18,2007, by and between Rubicon Technology,Inc. and Phillip J. Latoria, Jr.

Filed as Exhibit 10.14 to the registrant’sRegistration Statement on Form S-1, filed onOctober 11, 2007 (File No. 333-145880)

10.13+ Master Purchase Agreement dated as ofFebruary 3, 2012 by and between RubiconTechnology, Inc. and LG Innotek Co., Ltd.

Filed as Exhibit 10.1 to the registrant’sQuarterly Report on Form 10-Q/A, filed onAugust 23, 2012 (File No. 1-33834)

10.14 Loan and Security Agreement by and betweenRubicon Technology, Inc. and Silicon ValleyBank, dated as of January 2, 2013

Filed as Exhibit 10-K to the registrant’sCurrent Report on Form 8-K , filed onJanuary 3, 2013 (File No. 1-33834)

21.1 Subsidiaries of the Company

23.1 Consent of Independent Registered PublicAccounting Firm

24.1 Power of Attorney (incorporated by referenceto the signature page of this Annual Report onForm 10-K)

31.1 Certification of Chief Executive Officerpursuant to Exchange Act Rules 13a-14(a) and15d-14(a), as adopted pursuant to Section 302of the Sarbanes-Oxley Act of 2003

31.2 Certification of Chief Financial Officerpursuant to Exchange Act Rules 13a-14(a) and15d-14(a), as adopted pursuant to Section 302of the Sarbanes-Oxley Act of 2003

32.1 Certifications of Chief Executive Officer andChief Financial Officer pursuant to 18 U.S.C.Section 1350, as adopted pursuant to Section906 of the Sarbanes-Oxley Act of 2003

101.INS** XBRL Instance Document

101.SCH** XBRL Taxonomy Extension Schema Document

101.CAL** XBRL Taxonomy Extension CalculationLinkbase Document

101.LAB** XBRL Taxonomy Extension Label LinkbaseDocument

101.PRE** XBRL Taxonomy Extension PresentationDocument

101.DEF** XBRL Taxonomy Extension DefinitionLinkbase Document

* Management contract or compensatory plan or arrangement of the Company.** Submitted electronically with this Report on Form 10-K+ Confidential treatment has been requested and granted for certain provisions of this Exhibit pursuant to

Rule 24b-2 promulgated under the Exchange Act.

50

Rubicon Technology, Inc.

INDEX TO FINANCIAL STATEMENTS

Page

Management’s Report on Internal Control over Financial Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-2Report of Independent Registered Public Accounting Firm on Internal Control over Financial

Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-3Report of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-4Consolidated Balance Sheets as of December 31, 2013 and 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-5Consolidated Statements of Operations for each of the three years in the period ended

December 31, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-6Consolidated Statements of Comprehensive Income for each of the three years in the period ended

December 31, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-7Consolidated Statements of Stockholders’ Equity for each of the three years in the period ended

December 31, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-8Consolidated Statements of Cash Flows for each of the three years in the period ended

December 31, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-9Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-10

F-1

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

The financial statements were prepared by management, which is responsible for their integrity andobjectivity and for establishing and maintaining adequate internal controls over financial reporting.

The Company’s internal control over financial reporting is designed to provide reasonable assuranceregarding the reliability of financial reporting and the preparation of financial statements for external purposes inaccordance with generally accepted accounting principles. The Company’s internal control over financialreporting includes those policies and procedures that:

i. pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect thetransactions and disposition of the assets of the Company;

ii. provide reasonable assurance that transactions are recorded as necessary to permit preparation ofconsolidated financial statements in accordance with generally accepted accounting principles, and thatreceipts and expenditures of the Company are being made only in accordance with authorizations ofmanagement and directors of the Company; and

iii. provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, useor disposition of the Company’s assets that could have a material effect on the consolidated financialstatements.

There are inherent limitations in the effectiveness of any internal control, including the possibility of humanerror and the circumvention or overriding of controls. Accordingly, even effective internal controls can provideonly reasonable assurance with respect to the financial statement preparation. Further, because of changes inconditions, the effectiveness of internal controls may vary over time.

Management assessed the design and effectiveness of the Company’s internal control over financialreporting as of December 31, 2013. In making this assessment, management used the criteria set forth in InternalControl—Integrated Framework by the Committee of Sponsoring Organizations of the Treadway Commission(COSO).

Based on management’s assessment using those criteria, as of December 31, 2013, management concludedthat the Company’s internal controls over financial reporting were effective.

Grant Thornton LLP, independent registered public accounting firm, has audited the consolidated financialstatements of the Company for the fiscal years ended December 31, 2013, 2012 and 2011 and the Company’sinternal control over financial reporting as of December 31, 2013. Their reports are presented on the followingpages.

Rubicon Technology, Inc.March 13, 2014

F-2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and StockholdersRubicon Technology, Inc.

We have audited the internal control over financial reporting of Rubicon Technology, Inc. (a Delawarecorporation) and subsidiaries (the Company) as of December 31, 2013, based on criteria established in the 1992Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the TreadwayCommission (COSO). The Company’s management is responsible for maintaining effective internal control overfinancial reporting and for its assessment of the effectiveness of internal control over financial reporting,included in the accompanying Management’s Report on Internal Control over Financial Reporting. Ourresponsibility is to express an opinion on the Company’s internal control over financial reporting based on ouraudit.

We conducted our audit in accordance with the standards of the Public Company Accounting OversightBoard (United States). Those standards require that we plan and perform the audit to obtain reasonable assuranceabout whether effective internal control over financial reporting was maintained in all material respects. Ouraudit included obtaining an understanding of internal control over financial reporting, assessing the risk that amaterial weakness exists, testing and evaluating the design and operating effectiveness of internal control basedon the assessed risk, and performing such other procedures as we considered necessary in the circumstances. Webelieve that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assuranceregarding the reliability of financial reporting and the preparation of financial statements for external purposes inaccordance with generally accepted accounting principles. A company’s internal control over financial reportingincludes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financial statements in accordancewith generally accepted accounting principles, and that receipts and expenditures of the company are being madeonly in accordance with authorizations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of thecompany’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detectmisstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk thatcontrols may become inadequate because of changes in conditions, or that the degree of compliance with thepolicies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financialreporting as of December 31, 2013, based on criteria established in the 1992 Internal Control—IntegratedFramework issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board(United States), the consolidated financial statements of the Company as of and for the year ended December 31,2013, and our report dated March 13, 2014 expressed an unqualified opinion on those financial statements.

/s/ GRANT THORNTON LLP

Chicago, IllinoisMarch 13, 2014

F-3

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and StockholdersRubicon Technology, Inc.

We have audited the accompanying consolidated balance sheets of Rubicon Technology, Inc. (a Delawarecorporation) and subsidiaries (the Company) as of December 31, 2013 and 2012, and the related consolidatedstatements of operations, comprehensive income, changes in shareholders’ equity, and cash flows for each of thethree years in the period ended December 31, 2013. These financial statements are the responsibility of theCompany’s management. Our responsibility is to express an opinion on these financial statements based on ouraudits.

We conducted our audits in accordance with the standards of the Public Company Accounting OversightBoard (United States). Those standards require that we plan and perform the audit to obtain reasonable assuranceabout whether the financial statements are free of material misstatement. An audit includes examining, on a testbasis, evidence supporting the amounts and disclosures in the financial statements. An audit also includesassessing the accounting principles used and significant estimates made by management, as well as evaluatingthe overall financial statement presentation. We believe that our audits provide a reasonable basis for ouropinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects,the financial position of Rubicon Technology, Inc. and subsidiaries as of December 31, 2013 and 2012, and theresults of their operations and their cash flows for each of the three years in the period ended December 31, 2013in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board(United States), the Company’s internal control over financial reporting as of December 31, 2013, based oncriteria established in the 1992 Internal Control—Integrated Framework issued by the Committee of SponsoringOrganizations of the Treadway Commission (COSO), and our report dated March 13, 2014 expressed anunqualified opinion.

/s/ GRANT THORNTON LLP

Chicago, IllinoisMarch 13, 2014

F-4

Rubicon Technology, Inc.

Consolidated Balance SheetsAs of December 31,

2013 2012

(in thousands, otherthan share data)

AssetsCash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 21,071 $ 19,573Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165 171Short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,567 24,361Accounts receivable, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,571 10,992Accounts receivable—related parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 1,677Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,312 47,354Other inventory supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,533 15,813Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,186 2,353Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 4,427

Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86,405 126,721Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115,220 119,850Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,070 1,525

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 202,695 $248,096

Liabilities and stockholders’ equityAccounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,465 $ 8,954Accrued payroll . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 369 1,006Accrued and other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 867 1,139Corporate income and franchise taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 192 216Accrued real estate taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 336 297Advance payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 408 772

Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,637 12,384Deferred tax liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 267 10,326

Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,904 22,710Commitments and contingenciesStockholders’ equity

Preferred stock, $0.001 par value, 5,000,000 undesignated shares authorized, noshares issued or outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — —

Common stock, $0.001 par value, 45,000,000 shares authorized; 24,433,523 and24,327,140 shares issued; 22,658,679 and 22,552,296 shares outstanding . . . . . . . 25 25

Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 335,935 334,314Treasury stock, at cost, 1,774,844 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (12,148) (12,148)Accumulated other comprehensive (loss) income . . . . . . . . . . . . . . . . . . . . . . . . . . . . (418) 447Accumulated deficit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (127,603) (97,252)

Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195,791 225,386

Total liabilities and stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 202,695 $248,096

The accompanying notes are an integral part of these consolidated statements.

F-5

Rubicon Technology, Inc.

Consolidated Statements of Operations

Year ended December 31,

2013 2012 2011

(in thousands, other than shareand per share data)

Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 41,513 $ 67,243 $ 134,000Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63,434 67,283 64,365

Gross (loss) profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (21,921) (40) 69,635Operating expenses:

General and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,629 9,018 11,336Sales and marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,521 1,685 1,658Research and development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,263 2,274 1,806Loss on disposal of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 550 19 84

Income (loss) from operations . . . . . . . . . . . . . . . . . . . . . . (34,884) (13,036) 54,751

Other income (expense):Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 93 252Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (95) — —Realized (loss) gain on foreign currency translation . . . . . . . . . . (583) 349 (370)Realized gain on investments . . . . . . . . . . . . . . . . . . . . . . . . . . . — 8 —

Total other (expense) income . . . . . . . . . . . . . . . . . . . . . . . (627) 450 (118)

Income (loss) before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . (35,511) (12,586) 54,633Income tax benefit (expense) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,160 7,048 (16,574)

Net (loss) income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (30,351) $ (5,538) $ 38,059

Net (loss) income per common shareBasic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (1.35) $ (0.25) $ 1.67

Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (1.35) $ (0.25) $ 1.61

Weighted average common shares outstanding used incomputing net (loss) income per common share

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,572,212 22,523,951 22,852,205Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,572,212 22,523,951 23,596,162

The accompanying notes are an integral part of these consolidated statements.

F-6

Rubicon Technology, Inc.

Consolidated Statements of Comprehensive Income

Year ended December 31,

2013 2012 2011

(in thousands)

Net (loss) income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(30,351) $(5,538) $38,059Other comprehensive (loss) income:

Unrealized (loss) gain on investments, net of taxes . . . . . . . . . . . . . . . . . . . . (863) 505 (42)Unrealized (loss) gain on currency translation . . . . . . . . . . . . . . . . . . . . . . . . (2) (8) 2

Other comprehensive (loss) income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (865) 497 (40)

Comprehensive (loss) income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(31,216) $(5,041) $38,019

The accompanying notes are an integral part of these consolidated statements.

F-7

Rubicon Technology, Inc.

Consolidated Statements of Stockholders’ Equity

Stockholders’ equity

Common stock Treasury Stock Additionalpaid-incapital

AccumOtherCompInc.

Accumdeficit

Totalstockholders’

equityShares Amount Shares Amount

(in thousands other than share data)Balance at January 1, 2011 . . 24,210,644 $ 23 (1,249,975) $ (5,661) $327,515 $ (10) $(129,773) $192,094

Exercise of stockoptions . . . . . . . . . . . . 71,355 1 — — 741 — — 742

Stock-basedcompensation . . . . . . . — — — — 2,297 — — 2,297

Excess tax benefit ofstock basedcompensation . . . . . . . — — — — 1,404 — — 1,404

Stock issued to Board ofDirectors . . . . . . . . . . . 7,724 — — — 162 — — 162

Purchase of treasurystock, at cost . . . . . . . . — — (524,869) (6,487) — — — (6,487)

Foreign currencytranslationadjustments . . . . . . . . — — — — — 2 — 2

Unrealized loss oninvestments, net oftax . . . . . . . . . . . . . . . . — — — — — (42) — (42)

Net income . . . . . . . . . . . — — — — — — 38,059 38,059

Balance at December 31,2011 . . . . . . . . . . . . . . . . . . 24,289,723 24 (1,774,844) (12,148) 332,119 (50) (91,714) 228,231

Exercise of stockoptions . . . . . . . . . . . . 17,884 1 — — 72 — — 73

Net exercise of stockwarrants . . . . . . . . . . . 2,188 — — — — — — —

Stock-basedcompensation . . . . . . . — — — — 1,801 — — 1,801

Stock issued to Board ofDirectors . . . . . . . . . . . 17,345 — — — 162 — — 162

Excess tax benefit ofstock basedcompensation . . . . . . . — — — — 160 — — 160

Foreign currencytranslationadjustments . . . . . . . . — — — — — (8) — (8)

Unrealized gain oninvestments, net oftax . . . . . . . . . . . . . . . . — — — — — 505 — 505

Net loss . . . . . . . . . . . . . . — — — — — — (5,538) (5,538)

Balance at December 31,2012 . . . . . . . . . . . . . . . . . . 24,327,140 25 (1,774,844) (12,148) 334,314 447 (97,252) 225,386

Exercise of stockoptions . . . . . . . . . . . . 27,930 — — — 140 — — 140

Stock-basedcompensation . . . . . . . — — — — 1,246 — — 1,246

Restricted stockissued . . . . . . . . . . . . . 73,709 — — — 292 — — 292

Stock issued to Board ofDirectors . . . . . . . . . . . 4,744 — — — 57 — — 57

Excess tax benefit ofstock basedcompensation . . . . . . . — — — — (114) — — (114)

Foreign currencytranslationadjustments . . . . . . . . — — — — — (2) — (2)

Unrealized loss oninvestments, net oftax . . . . . . . . . . . . . . . . — — — — — (863) — (863)

Net loss . . . . . . . . . . . . . . — — — — — — (30,351) (30,351)

Balance at December 31,2013 . . . . . . . . . . . . . . . . . . 24,433,523 $ 25 (1,774,844) $(12,148) $335,935 $(418) $(127,603) $195,791

The accompanying notes are an integral part of these consolidated statements.

F-8

Rubicon Technology, Inc.

Consolidated Statements of Cash Flows

Year ended December 31,

2013 2012 2011

(in thousands)Cash flows from operating activities

Net (loss) income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(30,351) $ (5,538) $ 38,059Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities

Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,660 12,027 9,724Net loss on disposal of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 550 19 84Stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,375 1,801 2,297Stock issued to Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 220 162 162Realized gain on investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (8) —Deferred taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,166) (6,324) 13,447Excess tax benefits from stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114 (160) (1,404)Changes in operating assets and liabilities:

Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,098 19,975 (13,968)Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,979 (24,258) (11,948)Other inventory supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,976 1,948 (9,929)Prepaid expenses and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,571 1,981 (3,993)Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,472) (4,004) 3,683Accrued payroll . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (510) (581) (951)Corporate income and franchise taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (25) (391) 212Accrued real estate taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 22 49Advance payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (364) 763 (1,094)Accrued and other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (282) (172) 182

Net cash provided by (used in) operating activities . . . . . . . . . . . . . . . . . . . . . . . . . 412 (2,738) 24,612

Cash flows from investing activitiesPurchases of property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8,721) (10,975) (48,228)Proceeds from disposal of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141 10 —Purchase of investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,040) (5,281) (9,439)Proceeds from sale of investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,390 34,300 25,000

Net cash provided by (used in) investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . 770 18,054 (32,667)

Cash flows from financing activitiesProceeds from exercise of options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140 72 742Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 18 344Purchase of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — (6,487)Excess tax benefits from stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (114) 160 1,404

Net cash provided by (used in) financing activities . . . . . . . . . . . . . . . . . . . . . . . . . 32 250 (3,997)

Net effect of currency translation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 284 (283) 269Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,498 15,283 (11,783)Cash and cash equivalents, beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,573 4,290 16,073

Cash and cash equivalents, end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 21,071 $ 19,573 $ 4,290

Supplemental disclosure of cash flow informationCash paid for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ — $ — $ 6,050Cash paid for interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 87 $ — $ —

The accompanying notes are an integral part of these consolidated statements.

F-9

Rubicon Technology, Inc.

Notes to Consolidated Financial Statements

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of business

Rubicon Technology, Inc., a Delaware corporation (the “Company”), is an electronic materials provider thatdevelops, manufactures and sells monocrystalline sapphire and other innovative crystalline products for LEDs,RFICs, blue laser diodes, optoelectronics and other optical applications. The Company sells its products on aglobal basis to customers in Asia, Australia, North America and Europe. The Company maintains its operatingfacilities in the Chicago metropolitan area and in Penang, Malaysia.

Principles of consolidation

The consolidated financial statements include the accounts of the Company and its wholly ownedsubsidiaries, Rubicon Worldwide LLC and Rubicon Sapphire Technology (Malaysia) SDN BHD. Allintercompany transactions and balances have been eliminated in consolidation.

A summary of the Company’s significant accounting policies applied in the preparation of theaccompanying consolidated financial statements follows.

Cash and cash equivalents

The Company considers all unrestricted highly liquid investments immediately available to be cashequivalents. Cash equivalents primarily consist of time deposits with banks, unsettled trades and brokeragemoney market accounts.

Restricted cash

At December 31, 2013 and 2012, in connection with certain credit agreements, the Company is required tomaintain $5,000 of restricted certificates of deposit. At December 31, 2013 and 2012, the Company held $7,800and $2,600, respectively, of employee funds as part of a flexible spending program. At December 31, 2013 and2012, the Company held $152,300 and $163,500, respectively, as a fixed deposit pledged to a bank as a securityfor a bank guarantee facility granted to the Company.

Foreign currency translation and transactions

Rubicon Worldwide LLC’s assets and liabilities are translated into U.S. dollars at exchange rates existing atthe respective balance sheet dates and capital accounts at historical exchange rates. The results of operations aretranslated into U.S. dollars at the average exchange rates during the respective period. Translation adjustmentsresulting from fluctuations in exchange rates for Rubicon Worldwide LLC are recorded as a separate componentof accumulated other comprehensive income (loss) within stockholders’ equity.

The Company has determined that the functional currency of Rubicon Sapphire Technology (Malaysia)SDN BHD is the U.S. dollar. Rubicon Sapphire Technology (Malaysia) SDN BHD’s assets and liabilities aretranslated into U.S. dollars using the remeasurement method. Non-monetary assets are translated at historicalexchange rates and monetary assets are translated at exchange rates existing at the respective balance sheet dates.Translation adjustments for Rubicon Sapphire Technology (Malaysia) SDN BHD are included in determining netincome (loss) for the period. The results of operations are translated into U.S. dollars at the average exchangerates during the respective period. The Company records these gains and losses in other income (expense).

F-10

Rubicon Technology, Inc.

Notes to Consolidated Financial Statements—(Continued)

Foreign currency transaction gains and losses are generated from the effects of exchange rate changes ontransactions denominated in a currency other than the functional currency of the Company, which is the U.S.dollar. Gains and losses on foreign currency transactions are generally required to be recognized in thedetermination of net income (loss) for the period. The Company records these gains and losses in other income(expense).

Investments

The Company invests available cash primarily in investment grade commercial paper, FDIC guaranteedcertificates of deposit, common stock, corporate notes and government securities. Investments classified asavailable-for-sale securities are carried at fair market value with unrealized gains and losses recorded inaccumulated other comprehensive income (loss). Investments in trading securities are reported at fair value, withboth realized and unrealized gains and losses recorded in other income (expense), in the consolidated statementsof operations. Investments in which the Company has the ability and intent, if necessary, to liquidate in order tosupport its current operations, are classified as short-term.

The Company reviews its available-for-sale securities investments at the end of each quarter for other-than-temporary declines in fair value based on the specific identification method. The Company considers variousfactors in determining whether an impairment is other-than-temporary, including the severity and duration of theimpairment, changes in underlying credit ratings, forecasted recovery, its ability and intent to hold the investmentfor a period of time sufficient to allow for any anticipated recovery in market value and the probability that thescheduled cash payments will continue to be made. When the Company concludes that an other-than-temporaryimpairment has resulted, the difference between the fair value and carrying value is written off and recorded as acharge on the consolidated statements of operations. As of December 31, 2013 and 2012, no impairment wasrecorded.

Treasury Stock

The Company records treasury stock purchases under the cost method whereby the entire cost of theacquired stock is recorded as treasury stock.

Accounts receivable

The majority of the Company’s accounts receivable is due from manufacturers serving the LED and Silicon-on-Sapphire (SoS) industries. Credit is extended based on an evaluation of the customer’s financial condition.Accounts receivable are due based on contract terms and at stated amounts due from customers, net of anallowance for doubtful accounts.

Accounts outstanding longer than the contractual payment terms are considered past due. The Companydetermines its allowance by considering a number of factors, including the length of time past due, thecustomer’s current ability to pay and the condition of the general economy and industry as a whole. TheCompany writes off accounts receivable when they become uncollectible, and payments subsequently receivedon such receivables are recorded as a reduction to bad debt expense.

F-11

Rubicon Technology, Inc.

Notes to Consolidated Financial Statements—(Continued)

The following table shows the activity of the allowance for doubtful accounts:

Year ended December 31,

2013 2012

(in thousands)

Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 286 $378Charges to costs and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 (54)Accounts charged off, less recoveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (260) (38)

Ending balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 50 $286

Inventories

Inventories are valued at the lower of cost or market. Raw materials cost is determined using the first-in,first-out method, and work-in-process and finished goods costs are determined on a weighted-average cost basiswhich includes materials, labor and overhead. The Company reduces the carrying value of its inventories fordifferences between the cost and the estimated net realizable value, taking into account usage, expected demand,technological obsolescence and other information. Inventories are composed of the following:

As of December 31,

2013 2012

(in thousands)

Raw materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $18,651 $21,267Work in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,337 20,787Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,324 5,300

$34,312 $47,354

The Company establishes inventory reserves when conditions exist that suggest inventory may be in excessof anticipated demand or is obsolete based on customer required specifications. The Company evaluates theability to realize the value of our inventory based on a combination of factors, including forecasted sales,estimated current and future market value and changes in customers’ product specifications. For the years endedDecember 31, 2013 and 2012, the Company determined it had inventory that was excess or obsolete and recordedan adjustment which reduced inventory and increased costs of goods sold by $604,000 and $719,000,respectively. The Company had accepted sales orders for smaller diameter core products at prices lower than costduring 2013 and 2012. Based on these sales prices, the Company recorded at December 31, 2013 and 2012, alower of cost or market adjustment which reduced inventory and increased cost of goods sold by $421,000 and$1.5 million, respectively. During the year ended December 31, 2012, the Company recycled some boules frominventory. Historically, boules put through a second growth cycle typically result in a very high-grade crystalwhich may result in higher yield of large diameter wafers. The recycling of boules reduced inventory andincreased cost of goods sold for the year ended December 31, 2012 by $927,000. The Company’s method ofestimating excess and obsolete inventory has remained consistent for all periods presented.

F-12

Rubicon Technology, Inc.

Notes to Consolidated Financial Statements—(Continued)

Property and equipment

Property and equipment consisted of the following:As of December 31,

2013 2012

(in thousands)

Land and land improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,133 $ 4,133Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,269 30,364Machinery, equipment and tooling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121,313 103,477Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,696 7,696Furniture and fixtures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 949 941Information systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,077 1,070Construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,221 17,712

Total cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172,658 165,393Accumulated depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . (57,438) (45,543)

Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $115,220 $119,850

Property and equipment are carried at cost and depreciated over their estimated useful lives using thestraight-line method. The cost of maintenance and repairs is charged to expense as incurred. Significant renewalsand improvements are capitalized. Depreciation and amortization expense associated with property andequipment was $12.7 million, $12.0 million and $9.7 million for the years ended December 31, 2013, 2012 and2011, respectively.

Construction in progress includes costs associated with the construction of furnaces and deposits made onequipment purchases.

The estimated useful lives are as follows:

Asset description Life

Buildings 39 yearsMachinery, equipment and tooling 3-10 yearsLeasehold improvements Lesser of life of lease or economic lifeFurniture and fixtures 7 yearsInformation systems 3 years

Impairment of long-lived assets

When circumstances, such as adverse market conditions, indicate that the carrying value of a long-livedasset may be impaired, the Company performs an analysis to review the recoverability of the asset’s carryingvalue. The Company makes estimates of the undiscounted cash flows (excluding interest charges) from theexpected future operations of the asset. These estimates consider factors such as expected future operatingincome, operating trends and prospects, as well as the effects of demand, competition and other factors. If theanalysis indicates that the carrying value is not recoverable from future cash flows, an impairment loss isrecognized to the extent that the carrying value exceeds the estimated fair value. Any impairment losses arerecorded as operating expenses, which reduce net income. There were no impairment losses on long lived assetsfor the years ended December 31, 2013, 2012 and 2011.

F-13

Rubicon Technology, Inc.

Notes to Consolidated Financial Statements—(Continued)

Other assets

The Company’s other assets include overhaul costs that are accounted for using the deferral method. Theseoverhaul costs are recorded at cost on the balance sheet as other assets and are amortized over terms inaccordance with their respectful useful lives.

Warranty cost

The Company’s sales terms include a warranty that its products will meet certain specifications. TheCompany records a current liability for the expected cost of warranty-related claims at the time of sale. Thewarranty reserve is included in accrued and other current liabilities on the consolidated balance sheets.

The following table presents changes in the Company’s product warranty liability:

Year endedDecember 31,

2013 2012

(in thousands)

Balance, beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $101 $ 253Charged to cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102 (37)Actual product warranty expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (62) (115)

Balance, end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $141 $ 101

Fair value of financial instruments

The Company’s financial instruments consist primarily of cash and cash equivalents, short-terminvestments, accounts receivable, and accounts payable. The carrying values of these assets and liabilitiesapproximate their fair values due to the short-term nature of these instruments at December 31, 2013 and 2012.

Concentration of credit risks and other risks and uncertainties

Financial instruments that could potentially subject the Company to concentrations of credit risk consistprincipally of cash and cash equivalents and accounts receivable. At December 31, 2013 and 2012, the Companyhad $4.8 million and $6.9 million, respectively, on deposit at a financial institution in excess of amounts insuredby the Federal Deposit Insurance Corporation. The Company performs periodic evaluation of this institution forrelative credit standing. The Company has not experienced any losses in such accounts and management believesit is not exposed to any significant risk of loss on these balances.

The Company currently depends on a small number of suppliers for certain raw materials, components,services and equipment, including key materials such as aluminum oxide and certain furnace components. If thesupply of these components were to be disrupted or terminated, or if these suppliers were unable to supply thequantities of raw materials required, the Company may have difficulty in finding, or may be unable to find,alternative sources for these items. As a result, the Company may be unable to meet the demand for its products,which could have a material adverse impact on the Company.

Concentration of credit risk related to revenue and accounts receivable is discussed in Note 5.

F-14

Rubicon Technology, Inc.

Notes to Consolidated Financial Statements—(Continued)

Revenue recognition

Revenues recognized include product sales and billings for costs and fees for government contracts.

Product Sales

The Company recognizes revenue from product sales when earned. Revenue is recognized when, and if,evidence of an arrangement is obtained and the other criteria to support revenue recognition are met, including:

• Persuasive evidence of an arrangement exists. The Company requires evidence of a purchase orderwith the customer specifying the terms and specifications of the product to be delivered, typically inthe form of a signed quotation or purchase order from the customer;

• Title has passed and the product has been delivered. Title passage and product delivery generally occurwhen the product is delivered to a common carrier;

• The price is fixed or determinable. All terms are fixed in the signed quotation or purchase orderreceived from the customer. The purchase orders do not contain rights of cancellation, return, exchangeor refund; and

• Collection of the resulting receivable is reasonably assured. The Company’s standard arrangementwith customers includes payment terms. Customers are subject to a credit review process that evaluateseach customer’s financial position and its ability to pay. Collectability is determined by considering thelength of time the customer has been in business and history of collections. If it is determined thatcollection is not probable, no product is shipped and no revenue is recognized unless cash is received inadvance.

Government Contracts

The Company recognizes research and development revenue in the period during which the related costs areincurred over the contractually defined period. In July 2012, the Company signed a contract with the Air ForceResearch Laboratory to produce large-area sapphire windows on a cost plus fixed fee basis. The Company willrecord revenue on a gross basis as costs are incurred plus a portion of the fixed fee. For the years endedDecember 31, 2013 and 2012, $2.7 million and $1.2 million, respectively of revenue were recorded. The contractwill continue for duration of three years and the total value of the contract is $4.7 million.

The Company does not provide maintenance or other services and it does not have sales that involvemultiple elements or deliverables.

Shipping and handling costs

The Company records costs incurred in connection with shipping and handling of products as cost of goodssold. Amounts billed to customers in connection with these costs are included in revenue and are not material forany of the periods presented in the accompanying financial statements.

Sales tax

The Company collects and remits sales taxes on products sold to customers and reports such amounts underthe net method in its consolidated statements of operations and records a liability until remitted to the respectivetax authority.

F-15

Rubicon Technology, Inc.

Notes to Consolidated Financial Statements—(Continued)

Stock-based compensation

The Company requires all share-based payments to employees, including grants of employee stock optionsto be measured at fair value and expensed in the consolidated statements of operations over the service period(generally the vesting period) of the grant. Expense is recognized in the consolidated statements of operations forthese share-based payments.

Research and development

Research and development costs are expensed as incurred. Research and development expense was$2.3 million, $2.3 million and $1.8 million for the years ended December 31, 2013, 2012 and 2011, respectively.

Accounting for uncertainty in income taxes

The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not thetax position will be sustained on examination by the taxing authorities, based on the technical merits of theposition. The tax benefits recognized in the financial statements from such positions are then measured based onthe largest benefit that has a greater than 50% likelihood of being realized upon settlement. The Companyrecognizes interest and/or penalties related to income tax matters in income tax expense. For the year endedDecember 31, 2011, the Company accrued $11,000 for potential penalties related to income taxes. There were nointerest or penalties related to income taxes that have been accrued or recognized as of and for the years endedDecember 31, 2013 and 2012.

The Company is subject to taxation in the U.S., Japan and in a state jurisdiction. The Company is exemptfrom Malaysian income tax for a ten year period beginning in 2009. Due to the existence of net operating losscarryforwards, tax years ended December 31, 2002 thru 2006 and 2008 thru 2013 are open to examination by taxauthorities. All tax years in Malaysia are open to examination by tax authorities.

Income taxes

Deferred tax assets and liabilities are provided for temporary differences between financial reporting andincome tax bases of assets and liabilities, and are measured using the enacted tax rates and laws expected to be ineffect when the differences will reverse. Deferred income taxes also arise from the future benefits of netoperating loss carryforwards. Valuation allowances are established when necessary to reduce deferred tax assetsto the amounts expected to be realized. Full valuation allowances on net deferred tax assets are maintained untilan appropriate level of profitability that generates taxable income is deemed sustainable or until a tax strategy isdeveloped that would enable the Company to conclude that it is more likely than not that a portion of the deferredtax assets will be realizable. Based on an evaluation in accordance with the accounting standards, as ofDecember 31, 2013, a valuation allowance has been recorded against the net U.S. deferred tax assets in order tomeasure only the portion of the deferred tax assets that are more likely than not to be realized based on theweight of all the available evidence.

Use of estimates

The preparation of financial statements in conformity with accounting principles generally accepted in theUnited States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affectthe reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of thefinancial statements, and the reported amounts of revenues and expenses during the reporting period. Actualresults could differ from those estimates.

F-16

Rubicon Technology, Inc.

Notes to Consolidated Financial Statements—(Continued)

Other comprehensive income (loss)

Comprehensive income (loss) is defined as the change in equity of a business enterprise from transactionsand other events from non-owner sources. Comprehensive income (loss) includes net earnings (loss) and othernon-owner changes in equity that bypass the statement of operations and are reported in a separate component ofequity. For the years ended December 31, 2013 and 2012 other comprehensive income (loss) includes theunrealized gain (loss) on investments and foreign currency translation adjustments. A summary of thecomponents of comprehensive income (loss) for the years ended December 31, 2013 and 2012 follows:

Year Ended December 31,

2013 2012

(in thousands)

Unrealized (loss) gain on investments, net of tax . . . . . . . . . . . . . . . . . . . . . . $(406) $457Unrealized loss on currency translation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (12) (10)

Ending Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(418) $447

Net income (loss) per common share

Basic net income (loss) per share is computed by dividing net income (loss) by the weighted averagenumber of common shares outstanding during the period. Diluted net income (loss) per common share iscomputed by dividing net income (loss) by the weighted average number of diluted common shares outstandingduring the period. Diluted shares outstanding are calculated by adding to the weighted shares outstanding anycommon stock equivalents, outstanding stock options and warrants based on the treasury stock method.

Diluted net loss per common share is the same as basic net loss per common share for the years endedDecember 31, 2013 and 2012, because the effects of potentially dilutive securities are anti-dilutive.

The number of anti-dilutive shares excluded from the calculation of diluted net loss per share is as followsas of December 31:

2013 2012

Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179,252 143,291Stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56,892 266,020

236,144 409,311

Recent accounting pronouncement

In July 2013, the FASB issued Accounting Standards Update No. 2013-11 (“ASU 2013-11”), Income Taxes(Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a SimilarTax Loss, or a Tax Credit Carryforward Exists. ASU No. 2013-11 clarifies that an unrecognized tax benefit, or aportion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to adeferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except asfollows. To the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is notavailable at the reporting date under the tax law of the applicable jurisdiction to settle any additional incometaxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction doesnot require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, theunrecognized tax benefit should be presented in the financial statements as a liability and should not be combinedwith deferred tax assets. The assessment of whether a deferred tax asset is available is based on the unrecognized

F-17

Rubicon Technology, Inc.

Notes to Consolidated Financial Statements—(Continued)

tax benefit and deferred tax asset that exist at the reporting date and should be made presuming disallowance ofthe tax position at the reporting date. This ASU is effective for fiscal years, and interim periods within thoseyears, beginning after December 15, 2013. The adoption of ASU 2013-11 is not expected to have a materialimpact on the Company’s consolidated financial statements.

Reclassifications

Certain prior period amounts on the balance sheet have been reclassified to conform to the current periodpresentation.

2. SEGMENT INFORMATION

The Company has determined that it operates in only one segment as it only reports profit and lossinformation on an aggregate basis to its chief operating decision maker.

Revenue is attributed by geographic region based on ship-to location of the Company’s customers. Thefollowing table summarizes revenue by geographic region:

Year Ended December 31,

2013 2012 2011

(in thousands)

China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $14,844 $ 3,893 $ 3,877Australia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,368 12,494 14Taiwan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,361 5,663 50,006United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,444 11,104 12,253Korea . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,214 19,862 51,461France . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122 8,482 359Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 309 2,999 11,362Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,851 2,746 4,668

Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $41,513 $67,243 $134,000

The following table summarizes sales by product type:

Year Ended December 31,

2013 2012 2011

(in thousands)

Core . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $23,294 $ 9,755 $ 61,734Polished . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,201 50,474 65,468Optical . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,523 5,723 6,752Research & Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,457 1,223 15Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 68 31

Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $41,513 $67,243 $134,000

F-18

Rubicon Technology, Inc.

Notes to Consolidated Financial Statements—(Continued)

The following table summarizes assets by geographic region:

As of December 31,

2013 2012

(in thousands)

United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $157,572 $210,781Malaysia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45,086 37,280Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 35

Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $202,695 $248,096

3. INVESTMENTS

The Company invests available cash primarily in investment grade commercial paper, FDIC guaranteedcertificates of deposits, common stock, corporate notes and government securities. The Company’s short-terminvestments balance of $13.6 million as of December 31, 2013 is comprised corporate notes and bonds of$3.0 million, commercial paper of $3.0 million, FDIC guaranteed certificates of deposit of $6.2 million andcommon stock of $1.4 million. The Company’s investments are classified as available-for-sale securities and arecarried at fair market value with unrealized gains and losses recorded in accumulated other comprehensiveincome (loss).

The following table presents the amortized cost, and gross unrealized gains and losses on all securities atDecember 31, 2013:

AmortizedCost

GrossUnrealized

Gains

GrossUnrealized

LossesFair

Value

(in thousands)

Short-term Investments:FDIC Guaranteed certificates of deposit . . . . . . . . . . . . . . . . . . . . . $ 6,160 $— $ 6 $ 6,154Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000 — 642 1,358Corporate Notes/Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,058 — 1 3,057Commercial Paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,998 — — 2,998

Total short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . $14,216 $— $649 $13,567

The following table presents the amortized cost, and gross unrealized gains and losses on all securities atDecember 31, 2012:

AmortizedCost

GrossUnrealized

Gains

GrossUnrealized

LossesFair

Value

(in thousands)

Short-term Investments:U.S. Treasury securities and agency . . . . . . . . . . . . . . . . . . . . . . . . $ 3,509 $— $— $ 3,509FDIC Guaranteed certificates of deposit . . . . . . . . . . . . . . . . . . . . . 6,453 — 6 6,447Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000 806 — 2,806Corporate Notes/Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,606 — 4 4,602Commercial Paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,999 — 2 6,997

Total short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . $23,567 $806 $ 12 $24,361

F-19

Rubicon Technology, Inc.

Notes to Consolidated Financial Statements—(Continued)

The Company values its investments at fair value, defined as the price that would be received to sell an assetor paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liabilityin an orderly transaction between market participants on the measurement date. Valuation techniques used tomeasure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Thestandard describes a fair value hierarchy based on three levels of inputs, of which the first two are consideredobservable and the last unobservable, that may be used to measure fair value which are the following:

• Level 1—Quoted prices in active markets for identical assets or liabilities.

• Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quotedprices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs thatare observable or can be corroborated by observable market data for substantially the full term of theassets or liabilities.

• Level 3—Unobservable inputs that are supported by little or no market activity and that are significantto the fair value of the assets or liabilities.

The Company’s fixed income available-for-sale securities consist of high-quality, investment gradecommercial paper, FDIC guaranteed certificates of deposits, common stock, corporate notes and governmentsecurities. The Company values these securities based on pricing from pricing vendors, who may use quotedprices in active markets for identical assets (Level 1 inputs) or inputs other than quoted prices that are observableeither directly or indirectly (Level 2 inputs) in determining fair value. The valuation techniques used to measurethe fair value of the Company’s financial instruments having Level 2 inputs were derived from non-bindingmarket consensus prices that are corroborated by observable market data, quoted market prices for similarinstruments, or pricing models, such as discounted cash flow techniques.

The following table summarizes the Company’s financial assets measured at fair value on a recurring basisas of December 31, 2013:

Level 1 Level 2 Level 3 Total

Cash Equivalents:Money market funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $15,541 $ — $— $15,541

Investments:Available-for-sales securities—current:

FDIC Guaranteed certificates of deposit . . . . . . . . . . . . . . . . . . — 6,154 — 6,154Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,358 — — 1,358Corporate notes/bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 3,057 — 3,057Commercial paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 2,998 — 2,998

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $16,899 $12,209 $— $29,108

F-20

Rubicon Technology, Inc.

Notes to Consolidated Financial Statements—(Continued)

The following table summarizes the Company’s financial assets measured at fair value on a recurring basisas of December 31, 2012:

Level 1 Level 2 Level 3 Total

Cash Equivalents:Money market funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $11,644 $ — $— $11,644

Investments:Available-for-sales securities—current:

U.S. Treasury securities and agency . . . . . . . . . . . . . . . . . . . . . — 3,509 — 3,509FDIC Guaranteed certificates of deposit . . . . . . . . . . . . . . . . . . — 6,447 — 6,447Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,806 — — 2,806Corporate notes/bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 4,602 — 4,602Commercial paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 6,997 — 6,997

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $14,450 $21,555 $— $36,005

There are no terms or conditions restricting the Company from redeeming any of its investments.

In addition to the debt securities noted above, the Company had approximately $5.5 million and $7.9 millionof time deposits included in cash and cash equivalents as of December 31, 2013 and 2012, respectively.

4. RELATED PARTY TRANSACTIONS

In November 2008, the Company purchased 1,345,444 shares of Peregrine Series D-1 Preferred shares for atotal of $2.0 million, which represented less than 1% of shares outstanding. The terms and stock price of thepurchase were the same as for the other investors who participated. Peregrine is a customer of the Company. OnAugust 8, 2012, Peregrine completed its initial public offering, which resulted in a conversion of the preferredshares to common stock at a ratio of 7.34:1, or 183,303 shares of common stock. There was a lock out perioduntil February, 2013 during which the Company could not sell these shares. For the years ended December 31,2013 and 2012, the Company recorded an unrealized loss on investments of $1.4 million and an unrealized gainon investments of $806,000, respectively. For years ended December 31, 2013, 2012 and 2011, revenue fromPeregrine was $11.0 million, $25.2 million and $5.2 million, respectively. As of December 31, 2013 there was noaccounts receivable from Peregrine and as of December 31, 2012, accounts receivable from Peregrine was$1.7 million. The pricing terms and conditions of the sales to Peregrine are similar to those available to theCompany’s other non-related customers.

5. SIGNIFICANT CUSTOMERS

For the year ended December 31, 2013, the Company had two customers that accounted for approximately27% and 17% of its revenue. For the year ended December 31, 2012, the Company had two customers thataccounted for approximately 38% and 29% of its revenue. For the year ended December 31, 2011, the Companyhad three customers that accounted for approximately 38%, 19% and 12% of its revenue.

Customers individually representing more than 10% of trade receivables accounted for approximately 47%and 93% of accounts receivable as of December 31, 2013 and 2012, respectively. The Company grants credit tocustomers based on an evaluation of their financial condition. Losses from credit sales are provided for in thefinancial statements.

F-21

Rubicon Technology, Inc.

Notes to Consolidated Financial Statements—(Continued)

6. STOCKHOLDERS’ EQUITY

Common Stock

As of December 31, 2013 the Company had reserved 1,972,011 shares of common stock for issuance uponthe exercise of outstanding common stock options and vesting of restricted stock units. Also, 2,240,103 shares ofthe Company’s common stock were reserved for future grants of stock options (or other similar equityinstruments) under the Company’s 2007 Stock Incentive Plan (the “2007 Plan”) as of December 31, 2013. Inaddition, 267,826 shares of the Company’s common stock were reserved for future exercise of outstandingwarrants as of December 31, 2013.

Warrants

At December 31, 2013 and 2012, the Company had outstanding 267,826 warrants to purchase shares ofcommon stock at an exercise price of $3.65 per share. The warrants were issued in conjunction with the issuanceof convertible promissory notes issued by the Company to investors from August 2005 through October 2005.The warrants are immediately exercisable and expire 10 years from the date of issuance.

At December 31, 2011 the Company had outstanding 13,735 warrants to purchase shares of common stockat an exercise price of $7.28 per share. The warrants were issued in 2002 in conjunction with the procurement ofloans. The warrants were immediately exercisable and expire 10 years from the date of issuance. During 2012,these warrants were exercised on a “net exercise” basis, resulting in the issuance of 2,188 shares of commonstock to the warrant holders.

Treasury Stock

On August 4, 2011, the Company authorized a stock repurchase program to purchase up to $25.0 million ofits common stock over a period of two years. The stock repurchase program authorizes the Company torepurchase its shares of common stock in the open market at times and prices considered appropriate by theCompany depending upon prevailing market conditions and other corporate considerations. The treasury sharesare accounted for using the cost method whereby the entire cost of the acquired stock is recorded as treasurystock. The Company did not repurchase any shares for the twelve months ended December 31, 2013 and 2012.The stock repurchase plan expired in 2013.

7. STOCK INCENTIVE PLANS

The Company sponsored a stock option plan, the 2001 Equity Plan (the “2001 Plan”), which allowed for thegranting of incentive and nonqualified stock options for the purchase of common stock. The maximum number ofshares which could be awarded or sold under the 2001 Plan was 1,449,667 shares. Each option entitles the holderto purchase one share of common stock at the specified option exercise price. The exercise price of eachincentive stock option granted must not be less than the fair market value on the grant date. At the discretion ofmanagement and with the approval of the Board of Directors, the Company granted options under the 2001 Plan.Management and the Board of Directors determined vesting periods and expiration dates at the time of the grant.On August 2, 2011, the plan expired.

In August 2007, the Company adopted the 2007 Plan, which allows for the grant of incentive stock options,non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units, performance awardsand bonus shares. On June 22, 2011, the stockholders of the Company approved an amendment to the 2007 Planto increase the maximum number of shares that may be awarded or sold under the 2007 Plan by 2,100,000 from

F-22

Rubicon Technology, Inc.

Notes to Consolidated Financial Statements—(Continued)

2,307,692 to 4,407,692 shares. The Board of Directors has appointed a committee to administer the plan. Theplan committee determines the type of award to be granted, the fair market value, the number of shares coveredby the award, and the time when the award vests and may be exercised.

The following table summarizes the activity of the stock incentive and equity plans:

Sharesavailablefor grant

Number ofoptions

outstanding

Weighted-averageoption

exercise price

Number ofrestricted

stock sharesissued

Number ofrestrictedstock unitsoutstanding

Outstanding at January 1, 2011 . . . . . . . . . . . . 643,850 1,830,397 $12.98 34,863 —Authorized . . . . . . . . . . . . . . . . . . . . . . . . 2,100,000 — — — —Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . (389,774) 382,050 16.02 7,724 —Exercised . . . . . . . . . . . . . . . . . . . . . . . . . — (73,428) 10.78 — —Expired . . . . . . . . . . . . . . . . . . . . . . . . . . . (139,988) — — — —Canceled/forfeited . . . . . . . . . . . . . . . . . . 45,911 (45,911) 20.15 — —

Outstanding at December 31, 2011 . . . . . . . . . 2,259,999 2,093,108 13.45 42,587 —Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . (106,395) 89,050 9.72 17,345 —Exercised . . . . . . . . . . . . . . . . . . . . . . . . . — (17,885) 4.01 — —Canceled/forfeited . . . . . . . . . . . . . . . . . . 47,000 (47,163) 15.13 — —

Outstanding at December 31, 2012 . . . . . . . . . 2,200,604 2,117,110 13.32 59,932 —Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . (216,913) 97,265 8.43 73,707 45,941Exercised . . . . . . . . . . . . . . . . . . . . . . . . . — (27,930) 5.02 — —Canceled/forfeited . . . . . . . . . . . . . . . . . . 256,412 (260,375) 18.31 — —

Outstanding at December 31, 2013 . . . . . . . . . 2,240,103 1,926,070 $12.46 133,639 45,941

The following table sets forth option grants made during 2013, 2012 and 2011 with intrinsic valuecalculated based on grant date fair value.

Date of Grant

Number ofoptionsgranted

Exerciseprice

Intrinsicvalue

per share

January 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,000 $18.80 - $21.64 —March - April 2011 . . . . . . . . . . . . . . . . . . . . . . . 73,500 $25.61 - $27.63 —May 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51,650 $ 22.92 —July 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,500 $ 16,86 —October 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75,400 $10.81 - $10.93 —December 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . 143,000 $ 10.19 —January 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,500 $ 9.39 —April-May 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . 36,750 $ 9.45 - $10.43 —July 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,000 $ 10.20 —September - October 2012 . . . . . . . . . . . . . . . . . . 36,800 $ 9.41 - $9.58January - July 2013 . . . . . . . . . . . . . . . . . . . . . . . 82,815 $ 6.60 - $7.97 —October 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,450 $ 12.11 —

F-23

Rubicon Technology, Inc.

Notes to Consolidated Financial Statements—(Continued)

At December 31, 2013, the exercise prices of outstanding options units were as follows:

Exercise Price

Number ofoptions

outstanding

Averageremaining

contractual life(years)

Number ofoptions

exercisable

$0.78 - $4.94 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 533,365 4.05 533,365$6.11 - $9.58 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 385,054 6.84 274,089$10.02 - $14.00 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 374,867 7.93 250,417$15.00 - $18.80 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66,979 5.71 61,854$19.21 - $22.92 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 375,150 6.76 353,625$24.95 - $32.67 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190,655 6.70 126,155

1,926,070 6.36 1,599,505

The weighted average fair value of the options that became vested in the years ended 2013, 2012 and 2011was $4.8 million, $8.0 million and $3.9 million, respectively.

The following table summarizes the activity of non-vested options and restricted stock units as follows:

Non-vestedoptions

Weighted-Average Option

Exerciseprice

Non-vested at January 1, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . 1,339,386 $14.12Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 382,050 16.02Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (366,484) 10.72Cancelled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (41,775) 20.39

Non-vested at December 31, 2011 . . . . . . . . . . . . . . . . . . . . . . 1,313,177 13.58Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89,050 9.72Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (540,050) 14.77Cancelled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (41,175) 15.38

Non-vested at December 31, 2012 . . . . . . . . . . . . . . . . . . . . . . 821,002 15.24Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143,206 8.49Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (380,413) 12.50Cancelled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (211,288) 18.55

Non-vested at December 31, 2013 . . . . . . . . . . . . . . . . . . . . . . 372,507 $13.57

The Company’s aggregate intrinsic value is calculated as the difference between the exercise price of theunderlying stock options and the fair value of the Company’s common stock. Based on the fair market value ofthe common stock at December 31, 2013 and 2012, there was no aggregate intrinsic value for options outstandingand exercisable. For the year ended December 31, 2013, the Company used historical stock prices over the pastthree years as the basis for its volatility assumptions. Prior to 2013, the Company used a review of peer groupcompanies to determine the volatility rate used for its stock option grants. The assumed risk-free rates were basedon U.S. Treasury rates in effect at the time of grant with a term consistent with the expected option lives. Theexpected term is based upon the vesting term of the Company’s options, a review of a peer group of companies,and expected exercise behavior. The forfeiture rate is based on past history of forfeited options. The expense isbeing allocated using the straight-line method. For the years ended December 31, 2013, 2012 and 2011, theCompany recorded $1.2 million, $1.8 million and $2.3 million, respectively of stock option compensation

F-24

Rubicon Technology, Inc.

Notes to Consolidated Financial Statements—(Continued)

expense. As of December 31, 2013, the Company has $3.1 million of total unrecognized compensation costrelated to non-vested options granted under the Company’s stock-based plans that it expects to recognize over aweighted-average period of 1.98 years.

For the years ended December 31, 2013, 2012 and 2011, the assumptions used for the estimated fair value atthe date of option grant using the Black-Scholes option-pricing model were as follows:

2013 2012 2011

Weighted average fair value pershare of option . . . . . . . . . . . . . . . . $8.49 $9.72 $16.02

Expected term . . . . . . . . . . . . . . . . . . 5.3 years 5.3 years 5.0 yearsRisk free interest rate . . . . . . . . . . . . 0.76% - 1.42% 0.62% - 1.04% 0.85% - 2.24%Volatility . . . . . . . . . . . . . . . . . . . . . . 77% 52% 51%Dividend yield . . . . . . . . . . . . . . . . . . None None NoneForfeiture rate . . . . . . . . . . . . . . . . . . 19.18% 16.59% 24.53%

The Company continues to account for options issued prior to January 1, 2006 under the intrinsic valuemethod.

In October 2013, the Company granted 45,941 restricted stock units (“RSUs”) to certain key employees at amarket price of $8.60. The fair value of each RSU is the market price on the date of grant and is being recordedas compensation expense ratably over the vesting terms. The intrinsic value at date of grant was $395,000.During 2013, the Company recorded $25,000 of RSU expense. Each RSU granted will vest 25% at eachanniversary of grant date and settle in common stock (on a one-for-one basis). The RSUs are forfeited by aparticipant upon termination for any reason and there is no proportionate or partial vesting in the periods betweenthe vesting dates. As of December 31, 2013, there was $370,000 of unrecognized compensation cost related tothe non-vested restricted stock units. This cost is expected to be recognized over a weighted-average period of3.75 years. At December 31, 2013 the intrinsic value of these RSUs was $556,000.

An analysis of restricted stock issued is as follows:

Non-vested restricted stock as of January 1, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . 1,931Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,345Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (14,940)

Non-vested restricted stock as of December 31, 2012 . . . . . . . . . . . . . . . . . . . . . . . 4,336Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73,707Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (24,329)

Non-vested restricted stock as of December 31, 2013 . . . . . . . . . . . . . . . . . . . . . . . 53,714

For the years ended December 31, 2013, 2012 and 2011, the Company recorded $292,000, $162,000 and$165,000, respectively, of stock compensation expense related to restricted stock.

In 2013, the Board of Directors awarded 47,050 shares of restricted stock and 70,365 stock options to keyexecutives at a price of $7.97, the closing price of the shares on the date of the grant. Vesting of the shares issubject to achievement of specified targets by December 31, 2013 and March 31, 2014. The Company isrecording stock compensation expense related to these shares based on the probability of achieving the targets.At December 31, 2013 two of these milestones were achieved and expense was recorded.

F-25

Rubicon Technology, Inc.

Notes to Consolidated Financial Statements—(Continued)

8. INCOME TAXES

Components of income before income taxes and the income tax provision are as follows:

Income (loss) before income taxes

Year ended December 31,

2013 2012 2011

(in thousands)

U.S. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(38,114) $(17,849) $51,618Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,603 5,263 3,015

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(35,511) $(12,586) $54,633

Income taxes

Year ended December 31,

2013 2012 2011

(in thousands)

CurrentU.S. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ — $ (204) $ 177State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (357) 2,777Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 (163) 173

Total current income tax expense (benefit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 (724) 3,127

DeferredU.S. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,863) (5,536) 13,223State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 691 (1,049) 224Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 261 —

Total deferred income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,166) (6,324) 13,447

Total income tax expense (benefit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(5,160) $(7,048) $16,574

The reconciliation of income tax computed at the federal statutory rate to income before taxes is as follows:

Year ended December 31,

2013 2012 2011

U.S. Federal statutory rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (34.0)% (34.0)% 35.0%State taxes net of federal benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5.5) (8.9) 5.2Permanent differences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — (0.6)Foreign rate differential and transactional tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.7) (3.8) (1.4)Impact of foreign tax holiday . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1.8) (10.4) —Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26.9 — (5.9)Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.6 1.1 (2.0)

(14.5)% (56.0)% 30.3%

Deferred income taxes reflect the net tax effects of the temporary differences between the carrying amountof assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

F-26

Rubicon Technology, Inc.

Notes to Consolidated Financial Statements—(Continued)

Significant components of the Company’s net deferred income taxes are as follows at December 31:

2013 2012

(in thousands)

Deferred tax assets:Allowance for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 20 $ 115Inventory reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,340 1,697Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 316Warrant interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 277 277Stock compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,850 2,503State net operating loss—net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,500 1,524Net operating loss carryforward . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,206 4,537Unrealized loss on securities held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 240 —Tax credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 514 297Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (9,547) —

Total deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,476 11,266Deferred tax liability:

Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (15,620) (16,685)Unrealized gain on securities held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (340)Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (123) (140)

Net deferred tax liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (267) $ (5,899)

The Company’s deferred income tax assets and liabilities were reported on the consolidated balance sheetsas follows.

2013 2012

(in thousands)

Current deferred income tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ — $ 4,427Long term deferred income tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . (267) (10,326)

Net deferred tax liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(267) $ (5,899)

In accordance with ASC740 “Accounting for Income Taxes” (“ASC740”), the Company evaluates itsdeferred income tax assets quarterly to determine if valuation allowances are required or should be adjusted.ASC740 requires that companies assess whether valuation allowances should be established against theirdeferred tax assets based on consideration of all available evidence, both positive and negative, using a “morelikely than not” standard. Due to the losses in the fourth quarter of 2013, the Company is in a cumulative lossposition for the past three years which is considered significant negative evidence that is difficult to overcome ona “more likely than not” standard through objectively verifiable data. While the Company believes its financialoutlook remains positive, under the accounting standards objective verifiable evidence will have greater weightthan subjective evidence such as the Company’s projections for future growth. Based on an evaluation inaccordance with the accounting standards, as of December 31, 2013, a valuation allowance of $9.5 million hasbeen recorded against the net U.S. deferred tax assets in order to measure only the portion of the deferred taxassets that are more likely than not to be realized based on the weight of all the available evidence. Until anappropriate level of profitability is attained, the Company expects to maintain a full valuation allowance on itsU.S. net deferred tax assets. Any U.S. tax benefits or tax expense recorded on the Company’s ConsolidatedStatement of Operations will be offset with a corresponding valuation allowance until such time that theCompany changes its determination related to the realization of deferred tax assets. In the event that the

F-27

Rubicon Technology, Inc.

Notes to Consolidated Financial Statements—(Continued)

Company changes its determination as to the amount of deferred tax assets that can be realized, the Companywill adjust its valuation allowance with a corresponding impact to the provision for income taxes in the period inwhich such determination is made.

At December 31, 2013, the Company had separate federal and Illinois net operating loss carryforwards of$72.5 million and $97.3 million, respectively, which begin to expire in 2026 and 2019, respectively. The IllinoisState Legislature has suspended the full use of net operating loss carryforwards for taxable years ending afterDecember 31, 2010 and before December 31, 2011, and has limited the net operation loss deduction to $100,000for the years ending December 31, 2012 through December 31, 2013. In addition, at December 31, 2013, theCompany had Illinois investment tax credits and research and development credits of $155,000 and $54,000,respectively which begin to expire in 2017. Tax credits are accounted for using the flow through method andtherefore are taken in the year earned.

The Company completed an analysis of the utilization of net operating losses subject to limits based uponcertain ownership changes as of December 31, 2012. The results of this analysis indicated no ownership changelimiting the utilization of net operating losses and tax credits. The Company believes that an updated analysiswill not likely indicate an ownership change that would limit the utilization of net operating losses and tax creditsat December 31, 2013. The Company will be updating its analysis in 2014 and the results of that analysis maybecause of the stock offering in January 2014 indicate an ownership change. If an ownership change isdetermined, the utilization of the net operating losses and the tax credits may be limited. Additionally, theCompany has not recorded a deferred tax asset NOL attributable to stock option exercises in the amount of$21.8 million for federal purposes and $26.2 million for state purposes because the Company cannot record theseexcess tax benefit stock option deductions until the benefit has been realized by actually reducing taxes payable.

The Company prescribes a recognition threshold and measurement attribute for the financial statementrecognition and measurement of a tax position taken, or expected to be taken, in a tax return. The following is areconciliation of the unrecognized tax benefits taken or expected to be taken in a tax return that have beenrecorded on the Company’s financial statements for the years ended December 31, 2013.

(in thousands)

Balance at January 1, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 363Decrease related to prior year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (363)Tax positions related to current year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,140

Balance at December 31, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,140Tax positions related to prior year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —Tax positions related to current year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —

Balance at December 31, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,140

The Company is evaluating the impact of the recent regulations concerning amounts paid to acquire,produce, or improve tangible property and recovery of basis upon disposition. Given that Revenue Procedureswere issued in late January 2014, the Company is determining whether or not any changes in an accountingmethod are required. Presently, the Company does not anticipate a material impact to its financial statements.

For the year ended December 31, 2011 the Company accrued $11,000 for potential penalties related toincome taxes. There were no interest or penalties related to income taxes that have been accrued or recognized asof and for the years ended December 31, 2013 and 2012. Included in the balance of total unrecognized taxbenefits at December 31, 2013, are potential benefits of $1.0 million that if recognized, would affect the effectivetax rate in the year recognized.

F-28

Rubicon Technology, Inc.

Notes to Consolidated Financial Statements—(Continued)

The Company files income tax returns in the United States federal jurisdiction and in a state jurisdiction.During 2009, the Company began foreign operations in Malaysia and Japan and is subject to local income taxesin both jurisdictions. The Company is exempt from Malaysian income tax for a ten-year period beginning in2009. The impact of this tax holiday decreased foreign taxes for the years ended December 31, 2013, 2012 and2011 by approximately $651,000, $1.3 million, and $535,000, respectively. The benefit of the tax holiday on netincome per share (diluted) for the years ended December 31, 2013, 2012 and 2011 was $0.03, $0.06 and $0.02,respectively. All tax years in Malaysia are open to examination by tax authorities.

The Company’s federal tax return for the periods ended December 31, 2010, 2008 and 2007 have beenaudited by the Internal Revenue Service (IRS) with no changes made to the Company’s taxable losses for thoseyears. The Company’s state tax returns for the periods ended December 31, 2010 and 2009 have been audited bythe Illinois Department of Revenue with no changes made to the Company’s taxable losses for those years. Dueto the existence of net operating loss carryforwards, tax years ended December 31, 2002 thru 2006 and 2008 thru2013 are open to examination by tax authorities.

U.S. income and foreign withholding taxes have not been provided on approximately $11.1 million ofcumulative undistributed earnings of foreign subsidiaries. We intend to reinvest these earnings for theforeseeable future. If these amounts were distributed to the U.S., in the form of a dividend, at December 31, 2013there would have been no impact to the provision of income taxes. Due to the U.S. NOL’s and the full valuationallowance recorded any additional income from the dividends would have been offset by the NOL’s and acorresponding adjustment to the valuation allowance. At December 31, 2013 dividends per the Malaysia statuteare not subject to withholding. Determination of the amount of unrecognized deferred income tax liabilities thatmay be due in the future on these earnings is not practicable because such liability, if any, is dependent oncircumstances existing, if and when remittance occurs.

9. CREDIT FACILITY

On January 2, 2013, the Company entered into a three-year term agreement with a bank to provide theCompany with a senior secured credit facility of $25.0 million. The agreement provides for the Company toborrow up to 80% of eligible accounts receivable and up to 35% of domestically held raw material and finishedgoods inventory. Advances against inventory are limited to 40% of the aggregate outstanding on the revolvingline of credit and $10.0 million in aggregate. The Company has the option to borrow at an interest rate of LIBORplus 2.75% or the Wall Street Journal prime rate plus 0.50%. If the Company maintains liquidity of $20.0 millionor greater with the lending institution, then the borrowing interest rate options are LIBOR plus 2.25% or the WallStreet Journal prime rate. There is an unused revolving line facility fee of 0.375% per annum. The facility issecured by a first priority interest in substantially all of the Company’s personal property, excluding intellectualproperty. The Company is required to maintain an adjusted quick ratio of 1.40 to 1.00, maintain operating andother deposit accounts with the bank or bank’s affiliates of 25% of the Company’s total worldwide cash,securities and investments, and the Company can pay dividends or repurchase capital stock only with the bank’sconsent during the three year term. For year ended December 31, 2013, the Company did not draw on this facilityand the Company recorded $95,000 of interest expense charged on the unused portion of the facility.

F-29

Rubicon Technology, Inc.

Notes to Consolidated Financial Statements—(Continued)

10. COMMITMENTS AND CONTINGENCIES

Operating Leases

The Company leases buildings used for manufacturing and offices. The leases provide for payment of theCompany’s proportionate share of operating expenses and real estate taxes.

Net rent expense under operating leases in 2013, 2012 and 2011 amounted to $1.1 million, $1.4 million and$1.1 million respectively.

Future minimum payments under all leases are as follows:

Year ending December 31,

Operatingleases (in

thousands)

2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,1042015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4022016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Balance at December 31, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,510

Purchase Commitments

The Company has entered into agreements for electricity and to purchase equipment and components toconstruct furnaces. These agreements will result in the Company purchasing electricity, equipment orcomponents for a total cost of approximately $4.0 million with deliveries occurring through December 2015.

Litigation

From time to time, the Company experiences routine litigation in the normal course of its business. Themanagement of the Company does not believe any pending litigation will have a material adverse effect on thefinancial condition or results of operations of the Company.

11. BENEFIT PLAN

The Company sponsors a 401(k) savings plan (the “Plan”). Employees are eligible to participate in the Planupon reaching 21 years of age. Employees make contributions to the Plan through payroll deferrals and employermatching contributions are discretionary. There were no employer matching contributions for the years endedDecember 31, 2013, 2012 and 2011.

12. SUBSEQUENT EVENT

On January 13, 2014, the Company completed a public offering of common stock in which a total of3,047,500 shares were sold including 397,500 shares pursuant to the full exercise of the underwriter’s over-allotment option, at a price of $10.65 per share. The Company raised a total of $32.5 million in gross proceedsfrom the offering, or approximately $30.3 million in net proceeds after deducting the underwriting discount andexpenses of $1.9 million and estimated other offering costs of approximately $425,000.

F-30

Rubicon Technology, Inc.

Notes to Consolidated Financial Statements—(Continued)

13. QUARTERLY FINANCIAL DATA (Unaudited)

Quarterly Financial Data (Unaudited)

Summary quarterly results for the two years ended December 31, 2013 are as follows (in thousands, otherthan share and per share data):

Three Months Ended

2013 March 31 June 30 September 30 December 31 Full Year

Revenue . . . . . . . . . . . . . . . . . . . . . . . . $ 8,307 $ 10,555 $ 11,115 $ 11,536 $ 41,513Gross loss . . . . . . . . . . . . . . . . . . . . . . $ (3,375) $ (6,417) $ (6,318) $ (5,811) $ (21,921)Loss from operations . . . . . . . . . . . . . . $ (6,296) $ (9,968) $ (9,595) $ (9,025) $ (34,884)Loss before income taxes . . . . . . . . . . $ (6,418) $ (10,173) $ (9,814) $ (9,106) $ (35,511)Net loss . . . . . . . . . . . . . . . . . . . . . . . . $ (3,376) $ (5,894) $ (5,840) $ (15,241) $ (30,351)Basic loss per common share . . . . . . . $ (0.15) $ (0.26) $ (0.26) $ (0.67) $ (1.35)Diluted loss per common share . . . . . . $ (0.15) $ (0.26) $ (0.26) $ (0.67) $ (1.35)Weighted average common shares

outstanding used in computing netloss per common share, basic anddiluted: . . . . . . . . . . . . . . . . . . . . . . . 22,550,378 22,560,603 22,578,608 22,599,258 22,572,212

Three Months Ended

2012 March 31 June 30 September 30 December 31 Full Year

Revenue . . . . . . . . . . . . . . . . . . . . . . . . $ 10,207 $ 17,003 $ 19,942 $ 20,091 $ 67,243Gross profit (loss) . . . . . . . . . . . . . . . . $ (3,408) $ 11 $ 2,445 $ 912 $ (40)Income (loss) from operations . . . . . . $ (6,646) $ (3,098) $ (1,141) $ (2,151) $ (13,036)Income (loss) before income taxes . . . $ (6,271) $ (3,386) $ (844) $ (2,085) $ (12,586)Net income (loss) . . . . . . . . . . . . . . . . $ (3,367) $ (1,312) $ 272 $ (1,131) $ (5,538)Basic income (loss) per common

share . . . . . . . . . . . . . . . . . . . . . . . . $ (0.15) $ (0.06) $ 0.01 $ (0.05) $ (0.25)Diluted income (loss) per common

share . . . . . . . . . . . . . . . . . . . . . . . . $ (0.15) $ (0.06) $ 0.01 $ (0.05) $ (0.25)Weighted average common shares

outstanding used in computing netincome (loss) per common share:

Basic . . . . . . . . . . . . . . . . . . . . . . 22,514,539 22,518,364 22,524,611 22,538,292 22,523,951Diluted . . . . . . . . . . . . . . . . . . . . . 22,514,539 22,518,364 23,050,618 22,538,292 22,523,951

F-31

Exhibit 10.2

RUBICON TECHNOLOGY, INC. 2007 STOCK INCENTIVE PLAN

(As Amended and Restated Effective March 23, 2011)

ARTICLE 1 Establishment and Purposes of the Plan.

The Company established the Plan and the Board duly adopted the Plan originally on August 29, 2007. The Plan was amended and restated on February 27, 2009. The Plan was further amended and restated on December 8, 2009. The Plan was subsequently amended on June 23, 2010 and further amended and restated on March 23, 2011, subject to the approval of the Company’s stockholders.

ARTICLE 2 Definitions

1.1 Purposes of the Plan. The purposes of this Plan are:

(a) to attract and retain the best available personnel for positions of substantial responsibility;

(b) to provide additional incentive to Employees, Directors and Consultants; and

(c) to promote the success of the Company’s business.

2.1 As used herein, the following terms shall have the meanings set forth below, unless otherwise clearly required by the context:

(a) “Adverse Conduct” means, for purposes of Article 14, any of the following:

(1) In the case of an Awardee who is an Employee, the Awardee’s rendering of services for any organization or engaging directly or indirectly in any business which is or becomes competitive with the Company, or which organization or business, or the rendering of services to such organization or business, is or becomes otherwise prejudicial to or in conflict with the interests of the Company in violation of any noncompetition or other similar agreement between the Company and the Employee;

(2) An Awardee’s unauthorized disclosure to anyone outside the Company, or the use in other than the Company’s business, of any confidential information or material relating to the business of the Company, acquired by the Awardee either during or after employment with the Company or either during or after having provided services to the Company as a Consultant;

(3) An Awardee’s failure or refusal to disclose promptly and to assign to the Company, all right, title and interest in any invention or idea, patentable or not, made or conceived by the Awardee during employment by the Company, relating in any manner to the actual or anticipated business, research or development work of the Company or the failure or refusal to do anything reasonably necessary to enable the Company to secure a patent where appropriate in the United States and in other countries where the Awardee has a legal obligation to so disclose, assign or take such actions;

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(4) Activity by the Awardee that results in termination of the Awardee’s employment or services for the Company for Cause;

(5) An Awardee’s violation of any written Company rules, policies, procedures or guidelines regarding business

conduct, where such rules, policies, procedures or guidelines have been distributed or made available to the Awardee; or

(6) Any attempt directly or indirectly to induce any employee of the Company to be employed or perform services elsewhere or any attempt directly or indirectly to solicit the trade or business of any current or prospective customer, supplier or partner of the Company in violation of any noncompetition or other similar agreement between the Company and the Employee.

(b) “Applicable Laws” means the requirements relating to the administration of stock incentive plans under U.S. state corporate laws, rules and regulations, U.S. federal and state securities laws, rules and regulations, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any foreign country or jurisdiction where Awards are, or will be, granted under the Plan.

(c) “Award” means an Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit, Performance Award or Bonus Shares granted under the Plan.

(d) “Award Agreement” means a written or electronic agreement between an Awardee and the Company evidencing the

terms and conditions of an Award granted pursuant to the Plan. An Award Agreement is subject to the terms and conditions of the Plan.

(e) “Awardee” means the Service Provider-recipient of an outstanding Award granted under the Plan.

(f) “Board” means the Board of Directors of the Company.

(g) “Bonus Shares” means Shares that are granted to a Service Provider pursuant to Article 11 of the Plan without cost and

without restrictions in recognition of past performance (whether determined by reference to another employee benefit plan of the Company or otherwise) or as an incentive to become a Service Provider of the Company or a Subsidiary.

(h) “Cause” means, unless otherwise defined for a particular Awardee in an Award Agreement or in an employment or

consulting agreement between the Company and such Awardee which addresses the effect of a termination for Cause (as therein defined) on benefits hereunder:

(1) an Awardee’s commission of a felony or other crime involving fraud, dishonesty or moral turpitude;

(2) an Awardee’s willful or reckless misconduct in the performance of the Awardee’s duties;

(3) an Awardee’s habitual neglect of duties; provided, however that the Awardee is given at least ten (10) days prior written notice of such habitual neglect and the opportunity to cure any curable neglect; or

Notwithstanding the foregoing, for purposes of clauses (2) and (3) above, Cause shall not include bad judgment or negligent acts not amounting to habitual neglect of duties. An Awardee who agrees to resign his affiliation with the Company or a Subsidiary in lieu of being terminated for Cause may be deemed to have been terminated for Cause for purposes of this Plan.

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(4) an Awardee’s breach or violation of any agreement between the Awardee and the Company, including but not limited to any noncompetition, nonsolicitation, or nondisclosure undertaking, or of any Company policy.

(i) “Change in Control” means the occurrence of any of the following events:

(1) Any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the total voting power represented by the Company’s then outstanding voting securities;

(2) The consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets;

(3) A change in the composition of the Board occurring within a two (2)-year period, as a result of which fewer than a majority of the directors are Incumbent Directors. “Incumbent Directors” means directors who either (A) are Directors as of the Effective Date, or (B) are elected, or nominated for election, to the Board with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but will not include an individual whose election or nomination is in connection with an actual or threatened proxy contest relating to the election of directors to the Company); or

(4) The consummation of a merger or consolidation of the Company with any other corporation, other than a mergeror consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least fifty percent (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.

(j) “Code” means the Internal Revenue Code of 1986, as amended, and any regulations and rulings thereunder.

(k) “Committee” means the Board or the committee of the Board designated by the Board to administer this Plan in accordance with Article 4 of the Plan.

(l) “Common Stock” means the common stock, $0.001 par value, of the Company.

(m) “Company” means Rubicon Technology, Inc., a Delaware corporation.

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(n) “Consultant” means a natural person, including an advisor, engaged by the Company or a Parent or Subsidiary to render services to such entity (other than an Employee or Director).

(o) “Date of Grant” means the date on which the Committee completes the corporate action granting an Award or such otherlater date following the completion of such corporate action as is established by the Committee and set forth in the Award Agreement. Notice of a grant shall be provided to each Awardee within a reasonable time after the date of such grant.

(p) “Director” means a member of the Board.

(q) “Disability” or “Disabled” means:

(1) as to an Incentive Stock Option, a total and permanent disability as defined in Code Section 22(e)(3);

(2) as to an Award (other than an Incentive Stock Option), that constitutes “deferred compensation” for purposes of Code Section 409A:

(A) The Awardee is unable to engage in any substantial gainful activity by reason of any medically

determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months;

(B) The Awardee is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Company;

(C) The Awardee is determined to be totally disabled by the Social Security Administration; or

(D) The Awardee is determined to be disabled under a disability insurance program applying the definition of

disability set forth in either Subsection (A) or (C) of this definition; and

(3) As to all other Awards, as determined by the Committee.

(r) “Effective Date” means August 30, 2007.

(s) “Employee” means any person, including Officers and Directors, employed by the Company or any Parent or Subsidiary

of the Company. Neither service as a Director nor payment of a director’s fee by the Company shall be sufficient to constitute “employment” by the Company.

(t) “Exchange Act” means the Securities Exchange Act of 1934, as amended, and any regulations and rulings thereunder.

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(u) “Fair Market Value” means, as of any date, the value of Common Stock determined as follows:

(1) If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the NASDAQ Global Market, The NASDAQ Global Select Market or The NASDAQ Capital Market of The NASDAQ Stock Market, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system for the last market trading day prior to the time of determination, as reported in The Wall Street Journal or such other source as the Committee deems reliable;

(2) If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of a Share of Common Stock shall be the mean between the high bid and low asked prices for the Common Stock on the last market trading day prior to the day of determination, as reported in The Wall Street Journal or such other source as the Committee deems reliable;

(3) The price per share at which Shares are initially offered for sale to the public by the Company’s underwriters in

the Initial Public Offering of the Common Stock pursuant to a registration statement filed with the SEC under the Securities Act if the Award is made on the effective date of such registration statement; or

(4) In the absence of an established market for the Common Stock, the Fair Market Value shall be determined in good faith by the Committee by the reasonable application of a reasonable valuation method.

(v) “Incentive Stock Option” means an Option intended to qualify as an incentive stock option within the meaning of Code Section 422.

(w) “Initial Public Offering” means the underwritten initial public offering of Common Stock that is registered under the Securities Act.

(x) “Modification” means any change in the terms of an Option or a Stock Appreciation Right (or change in the terms of the Plan or applicable Option or Stock Appreciation Right agreement) that may provide the holder of the Option or Stock Appreciation Right with a direct or indirect reduction in the exercise price of the Option or Stock Appreciation Right, or an additional deferral feature, or an extension or renewal of the Option or Stock Appreciation Right, regardless of whether the holder in fact benefits from the change in terms.

(1) An extension of an Option or Stock Appreciation Right refers to the granting to the holder of an additional period of time within which to exercise the Option or Stock Appreciation Right.

(2) A renewal of an Option or Stock Appreciation Right is the granting by the Company of the same rights or

privileges contained in the original Option or Stock Appreciation Right on the same terms and conditions.

6

(3) Notwithstanding the foregoing provisions of this Section 2.1(x), it is not a Modification of an Option or Stock Appreciation Right to provide an additional period of time within which to exercise the Option or Stock Appreciation Right if such additional period of time ends no later than (i) the original term of the Option or Stock Appreciation Right, or (ii) ten (10) years, and it is not a Modification to change the terms of an Option or Stock Appreciation Right in any of the ways or for any of the purposes specifically described in applicable Treasury Regulations under Code Section 409A as not resulting in a modification, extension or renewal of a stock right, or the granting of a new stock right, for purposes of that section.

(y) “Nonstatutory Stock Option” means an Option not intended to qualify as an Incentive Stock Option.

(z) “Notice of Grant” means a written or electronic notice evidencing certain terms and conditions of an individual Award grant. The Notice of Grant is part of the Award Agreement.

(aa) “Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act.

(bb) “Option” means a stock option granted under the Plan pursuant to Article 6 of the Plan.

(cc) “Option Agreement” means an Award Agreement between the Company and an Optionee evidencing the terms and

conditions of an individual Option granted to the Optionee pursuant to the Plan. The Option Agreement is subject to the terms and conditions of the Plan.

(dd) “Optioned Stock” means the Common Stock subject to an Option.

(ee) “Optionee” means the holder of an outstanding Option granted under the Plan.

(ff) “Parent” means a “parent corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code.

(gg) “Performance Award” means an Award granted under the Plan pursuant to Article 10 of the Plan.

(hh) “Performance Factors” means the performance of the Company or any Subsidiary, division, business unit or individual using one of the following measures, either on an operating or GAAP basis where applicable, and including measuring the performance of any of the following relative to a defined peer group of companies: revenue; net revenue; revenue growth; net revenue growth; earnings (including on a per share basis); earnings growth rate (including on a per share basis); earnings before interest, taxes, depreciation and amortization (“EBITDA”); total stockholder return; profitability; return on equity; return on capital; return on assets, cash flow, including free cash flow; cost savings; process improvement goals; achievement of balance sheet or income statement objective goals; product units shipped; and capital expenditures. When establishing Performance Factors for a Performance Period, the Committee may exclude any or all “extraordinary items” as determined under U.S. generally accepted accounting principles, including without limitation, the charges or costs associated with restructurings of the Company, discontinued operations, other unusual or nonrecurring items, and the cumulative effects of accounting changes.

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(ii) “Performance Period” means the period of 12 months or longer, but not exceeding five years, established by the Committee in connection with the grant of an Award for which the Committee has established performance objectives.

(jj) “Plan” means this Rubicon Technology, Inc. 2007 Stock Incentive Plan, as amended from time to time.

(kk) “Restricted Stock” means Shares granted under the Plan pursuant to Article 8 of the Plan.

(ll) “Restricted Stock Agreement” means an Award Agreement between the Company and an Awardee evidencing the terms

and conditions of a grant of Restricted Stock to the Awardee. The Restricted Stock Agreement is subject to the terms and conditions of the Plan.

(mm) “Restricted Stock Unit” means an Award granted under the Plan pursuant to Article 9 of the Plan.

(nn) “Rule 16b-3” means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3, as in effect when discretion is being exercised with respect to the Plan.

(oo) “SEC” means the United States Securities and Exchange Commission, or any successor thereto.

(pp) “Section 16(b)” means Section 16(b) of the Exchange Act.

(qq) “Securities Act” means the Securities Act of 1933, as amended, and any regulations and rulings thereunder.

(rr) “Service Provider” means an Employee, Director or Consultant.

(ss) “Stock Appreciation Right” means a right to receive Shares or cash from the Company pursuant to Article 7 of the Plan.

(tt) “Share” means a share of the Common Stock, as adjusted in accordance with Article 13 of the Plan.

(uu) “Subsidiary” means a “subsidiary corporation”, whether now or hereafter existing, as defined in Code Section 424(f).

(vv) “Termination” means the termination of an Awardee’s employment or service with the Company and all Subsidiaries. An Employee’s transfer between locations of the Company or between the Company, its Parent, any Subsidiary, or any successor does not constitute a Termination. A Service Provider for a Subsidiary shall, however, incur a Termination if the Subsidiary ceases to be a Subsidiary and the Service Provider does not immediately thereafter become a Service Provider of the Company or another Subsidiary.

(1) A Service Provider who is an Employee shall not incur a Termination in the case of any leave of absence approved by the Company, except, that:

ARTICLE 3 Type of Awards; Shares Subject to the Plan

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(2) For purposes of Incentive Stock Options, no leave of absence may exceed ninety (90) days, unless reemployment upon expiration of such leave is guaranteed by statute or contract. If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, on the one hundred eighty-first (181st) day of such leave, any Incentive Stock Option held by the Optionee shall cease to be treated as an Incentive Stock Option and shall be treated for tax purposes as a Nonstatutory Stock Option.

(3) For purposes of an Award (other than an Incentive Stock Option), that constitutes “deferred compensation” for purposes of Code Section 409A, if reemployment upon expiration of a leave of absence approved by the Company is not guaranteed by statute or contract, the Awardee shall be deemed to have incurred a Termination on the one hundred eighty-first (181st) day of such leave.

2.2 In addition, certain terms used herein that are capitalized and set forth in quotes shall have the definitions ascribed to them in the first place in which they are used.

2.3 In applying the Plan’s definitions, the masculine shall include the feminine and the singular shall include the plural, and vice versa.

3.1 Types of Awards. The following types of Awards may be granted under the Plan: Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Awards, and Bonus Shares. Options granted under the Plan may be Incentive Stock Options or Nonstatutory Stock Options, as determined by the Committee at the time of grant.

3.2 Shares Subject to the Plan. Subject to adjustment as provided in Article 13 of the Plan, the maximum number of Shares which may be awarded or sold under the Plan is 4,407,692 Shares. All of the Shares that may be issued under this Plan may be issued upon the exercise of Options that qualify as Incentive Stock Options. The Shares may be authorized, but unissued, or reacquired Common Stock.

(a) If an Award covered by one or more Shares is settled in cash or is forfeited without the delivery of Shares, such Shares shall again become available for future grant or sale under the Plan (unless the Plan has been terminated).

(b) If an Option or Stock Appreciation Right expires or becomes unexercisable without having been exercised in full, the unpurchased Share or Shares which were subject thereto shall become available for future grant or sale under the Plan (unless the Plan has terminated); provided, however, that Shares that have actually been issued under the Plan shall not be returned to the Plan and shall not become available for future distribution under the Plan;

(c) If an Optionee tenders previously-acquired Shares in payment of the exercise price of an Option or if Shares are

withheld in payment of the Option exercise price, the number of Shares represented thereby shall again be available for further Awards under the Plan;

ARTICLE 4 Administration of the Plan

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(d) If a Stock Appreciation Right is exercised and settled in Shares, the difference between the total Shares exercised and the net Shares delivered shall again be available for further awards under the Plan; and

(e) If an Awardee tenders previously-acquired Shares in satisfaction of applicable tax withholding obligations, or if any

Shares covered by an Award are not delivered to the Awardee because such Shares are withheld to satisfy applicable tax withholding obligations, such Shares shall again be available for further Awards under the Plan.

3.3 Individual Award Limits. The maximum number of Shares with respect to which Awards (including but not limited to Options and Stock Appreciation Rights) may be granted in a single calendar year to an individual Awardee (including Awards that are denominated in Shares but may be settled by payment of an equivalent amount in cash) may not exceed 300,000 Shares (except with respect to calendar year 2009, for which such maximum number of Shares for an individual Awardee shall be 600,000). The maximum amount of Awards denominated in cash (including Awards that are denominated in cash but may be settled by payment of an equivalent amount in Shares) that may be granted in a single calendar year to an individual Awardee may not exceed $2,400,000.

3.4 Substitute Awards. The Committee may grant Awards under the Plan in substitution for stock and stock based awards held by service providers of another corporation in connection with a merger or consolidation of the other corporation with the Company or a Subsidiary or the acquisition by the Company or a Subsidiary of property or stock of the other corporation. The Committee may direct that the substitute Awards be granted on such terms and conditions as the Committee considers appropriate in the circumstances. Such substitution of any outstanding stock option or stock appreciation right must satisfy the requirements of Treasury Regulation § 1.424-1 and Code Section 409A, as applicable. Any substitute Awards granted under the Plan shall not count against the share limitation set forth in Section 3.2 of the Plan.

4.1 Procedure.

(a) Multiple Administrative Bodies. The Board shall appoint a committee of the Board to administer the Plan. The committee so appointed may consist of the Board itself.

(1) The Board may appoint different committees to administer the Plan with respect to different groups of Service Providers, in which case, the Board shall specify the duties and authority of each such committee, and, to the extent such authority has been delegated by the Board, each such committee shall be the “Committee” for purposes of the Plan.

(2) The Board may delegate to the Company’s chief executive officer all or part of the Committee’s duties with respect to Awards, including the granting thereof, to individuals who are not subject to the reporting and other provisions of Section 16 of the Exchange Act or “covered employees” within the meaning of Code Section 162(m). To the extent such authority has been delegated by the Board, the Company’s chief executive officer shall be the “Committee” for purposes of the Plan.

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(3) The Board may revoke or amend the terms of a delegation at any time but such action shall not invalidate any prior actions of the Board’s delegate or delegates that were consistent with the terms of the Plan.

(4) Unless expressly delegated, the Board has reserved to itself the authority to amend, alter, suspend or terminate the Plan.

(b) Code Section 162(m). To the extent that the Committee determines it to be desirable to qualify Awards granted

hereunder as “performance-based compensation” within the meaning of Code Section 162(m), the Plan shall be administered by a Committee of two or more “outside directors” within the meaning of Code Section 162(m).

(c) Rule 16b-3. To the extent that the Committee determines it to be desirable to qualify transactions hereunder as exempt under Rule 16b-3, the Plan shall be administered by a Committee of two or more “non-employee directors” within the meaning of Rule 16-3 and the transactions contemplated hereunder shall be structured to satisfy the requirements for exemption under Rule 16b-3.

(d) Exchange Requirements. To the extent required, the Plan shall be administered by a Committee of “independent directors” within the meaning of any applicable stock exchange rule.

4.2 Powers of the Committee. Subject to the provisions of the Plan and subject to the specific duties delegated by the Board to such Committee, the Committee shall have the authority, in its sole discretion:

(a) to determine type of Awards (i.e., Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Awards and/or Bonus Shares) to be granted hereunder;

(b) to determine the Fair Market Value;

(c) to select the Service Providers to whom Awards may be granted;

(d) to determine the number of shares of Common Stock to be covered by each Award granted hereunder;

(e) to approve forms of agreements for use under the Plan;

(f) to determine the terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder. Such terms and conditions include, but are not limited to:

(1) in the case of an Option or Stock Appreciation Right, the time or times when Options may be exercised (which may be based on performance objectives);

(2) in the case of a grant of Restricted Stock, the amount (if any) of the consideration to be paid by a Service Provider for such Restricted Stock;

(3) any vesting acceleration or waiver of forfeiture restrictions with respect to Awards, and any restriction or

limitation regarding any Award or the shares of Common Stock relating thereto, based in each case on such factors as the Committee, in its sole discretion, shall determine;

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(g) to construe and interpret the terms of the Plan and Awards granted pursuant to the Plan;

(h) to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the purpose of qualifying for preferred tax treatment under foreign tax laws;

(i) to modify or amend each Award (subject to Article 16 of the Plan);

(j) to allow Optionees to satisfy withholding tax obligations by electing to have the Company withhold from the Shares to be issued upon exercise of an Award that number of Shares having a Fair Market Value equal to the amount required to be withheld. The Fair Market Value of the Shares to be withheld shall be determined on the date that the amount of tax to be withheld is to be determined. All elections by an Optionee to have Shares withheld for this purpose shall be made in such form and under such conditions as the Committee may deem necessary or advisable;

(k) to authorize any person to execute on behalf of the Company any instrument required to effect the grant of an Award previously granted by the Committee;

(l) to cancel any unexpired or unpaid Options if at any time the Committee determines the Optionee is not in compliance

with the terms and conditions (including, but not limited to any noncompete or nonsolicitation provisions) of the Option Agreement related to such Options; and

(m) to make all other determinations deemed necessary or advisable for administering the Plan.

4.3 Effect of Committee’s Decision. The Committee’s decisions, determinations and interpretations shall be final and binding on all Awardees and any other holders of Awards. No member of the Board or of any of the Committees administering the Plan shall be liable for any action or determination made with respect to the Plan or any grant thereunder.

4.4 Repricing.

(a) “Repricing” means, with respect to an Option or Stock Appreciation Right, any of the following: (i) the lowering of the exercise price after the Date of Grant; (ii) the taking of any other action that is treated as a repricing under generally accepted accounting principles; or (iii) the cancellation of the Option or Stock Appreciation Right at a time when its exercise price (or, with respect to the Stock Appreciation Right, the Fair Market Value of the Shares covered by the Stock Appreciation Right on the Date of Grant) exceeds the Fair Market Value of the underlying Shares in exchange for cash or any Award, unless the cancellation and exchange occurs in connection with a Change in Control.

(b) The Committee is prohibited from Repricing any Option or Stock Appreciation Right without the prior approval of the stockholders of the Company with respect to the proposed Repricing.

ARTICLE 5Eligibility

ARTICLE 6 Options

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5.1 The Committee may grant Nonstatutory Stock Options, Restricted Stock, Restricted Stock Awards, Performance Awards, and Bonus Shares to all Service Providers. Incentive Stock Options may be granted only to Employees. The provisions of Awards need not be the same with respect to each recipient. Each grant of an Award shall be confirmed by, and subject to the terms of an Award Agreement.

6.1 Generally. Subject to the limitations of the Plan, the Committee may make grants of Options to Service Providers.

6.2 Designation As Either An Incentive Stock Option or As A Nonstatutory Stock Option; $100,000 Limitation. Each Option shall be designated in the Option Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding such designation, to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options are exercisable for the first time by the Optionee during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds One Hundred Thousand Dollars ($100,000), such Options shall be treated as Nonstatutory Stock Options. For purposes of this Section 6.2, Incentive Stock Options shall be taken into account in the order in which they were granted. The Fair Market Value of the Shares shall be determined as of the time the Option with respect to such Shares is granted.

6.3 Option Term. The term of each Option shall be ten (10) years from the date of grant or such shorter term as may be provided in the Option Agreement. In the case of an Incentive Stock Option granted to an Optionee who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Incentive Stock Option shall be five (5) years from the date of grant or such shorter term as may be provided in the Option Agreement.

6.4 Exercise Price. The per share exercise price for the Shares to be issued pursuant to exercise of an Option shall be determined by the Committee, subject to the following:

(a) In the case of an Incentive Stock Option,

(1) granted to an Employee who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price shall be no less than one hundred ten percent (110%) of the Fair Market Value per Share on the Date of Grant.

(2) granted to any Employee other than an Employee described in paragraph (1) immediately above, the per Share

exercise price shall be no less than one hundred percent (100%) of the Fair Market Value per Share on the Date of Grant.

In the case of an Incentive Stock Option, the Committee shall determine the acceptable form of consideration at the time of grant.

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(b) In the case of a Nonstatutory Stock Option, the per Share exercise price shall be determined by the Committee;

provided, however, that the per Share exercise price shall not be less than one hundred percent (100%) of the Fair Market Value per Share on the Date of Grant.

6.5 Waiting Period and Exercise Dates. At the time an Option is granted, the Committee shall fix the period within which the Option may be exercised and shall determine any conditions which must be satisfied before the Option may be exercised.

6.6 Form of Consideration. The Committee shall determine the acceptable form of consideration for exercising an Option, including the method of payment. Such consideration may consist entirely of:

(a) cash;

(b) check;

(c) other Shares which (1) in the case of Shares acquired upon exercise of an Option, have been owned by the Optionee for

more than six (6) months on the date of surrender, and (2) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Option shall be exercised;

(d) consideration received by the Company under a cashless exercise program implemented by the Company in connection with the Plan to the extent permitted by Applicable Laws;

(e) a reduction in the amount of any Company liability to the Optionee;

(f) any combination of the foregoing methods of payment; or

(g) such other consideration and method of payment for the issuance of Shares to the extent permitted by Applicable Laws.

6.7 Procedure for Exercise; Rights as a Stockholder. Any Option granted hereunder shall be exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Committee and set forth in the Option Agreement. Unless the Committee provides otherwise, vesting of any Option granted hereunder shall be tolled during any unpaid leave of absence. An Option may not be exercised for a fraction of a Share.

(a) An Option shall be deemed exercised when the Company receives: (i) written or electronic notice of exercise (in accordance with the Option Agreement) from the person entitled to exercise the Option, (ii) full payment for the Shares with respect to which the Option is exercised, and (iii) any written representations, covenants, and undertakings that the Company may prescribe in the Option Agreement. Full payment may consist of any consideration and method of payment authorized by the Committee and permitted by the Option Agreement and the Plan. Shares issued upon exercise of an Option shall be issued in the name of the Optionee or, if requested by the Optionee, in the name of the Optionee and his or her spouse. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of

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the Company), no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the Optioned Stock, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such Shares promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Article 13 of the Plan.

(b) Exercising an Option in any manner shall decrease the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised.

(c) The Committee may suspend the right to exercise a Stock Option at any time when the Committee determines that

allowing the exercise and issuance of Stock would violate any federal or state securities or other laws. The Committee may provide that any time periods to exercise the Stock Option are extended during a period of suspension.

6.8 Notification under Code Section 83(b). If the Optionee, in connection with the exercise of any Option, makes the election permitted under Code Section 83(b) to include in such Optionee’s gross income in the year of transfer the amounts specified in Code Section 83(b), then such Optionee shall notify the Company of such election within ten (10) days of filing the notice of the election with the Internal Revenue Service, in addition to any filing and notification required pursuant to regulations issued under Code Section 83(b). The Committee may, in connection with the grant of an Option or at any time thereafter prior to such an election being made, prohibit an Optionee from making the election described above.

6.9 Buyout Provisions. Subject to Section 4.4, the Committee may at any time offer to buy out for a payment in cash or Shares an Option previously granted based on such terms and conditions as the Committee shall establish and communicate to the Optionee at the time that such offer is made.

6.10 Modifications Generally Prohibited. Once granted, no Modification shall be made in respect to any Option if such Modification would result in the Option constituting a deferral of compensation or having an additional deferral feature within the meaning of applicable Treasury Regulations under Code Section 409A.

6.11 Non-Transferability of Options. An Option that is an Incentive Stock Option may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Optionee, only by the Optionee. Unless determined otherwise by the Committee, a Nonstatutory Stock Option may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Optionee. If the Committee grants a Nonstatutory Stock Option that is transferable, the Option Agreement for such Nonstatutory Stock Option shall contain such additional terms and conditions governing the Option’s transferability as the Committee deems appropriate.

6.12 Termination of Service Provider For Cause. If a Service Provider is terminated for Cause, any unexercised Option shall terminate effective immediately upon such termination.

6.13 Disability of Optionee. If an Optionee ceases to be a Service Provider as a result of the Optionee’s Disability, the Optionee may exercise his or her Option within such period of time as is specified in the Option Agreement to the extent the Option is vested and exercisable on the date

ARTICLE 7 Stock Appreciation Rights

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of termination (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement); provided, however, that the time specified in the Option Agreement shall not be less than six (6) months. In the absence of a specified time in the Option Agreement, the Option shall remain exercisable for twelve (12) months following the Optionee’s termination. If, on the date of termination, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan. If, after termination, the Optionee does not exercise his or her Option within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

6.14 Death of Optionee. If an Optionee dies while a Service Provider, the Option may be exercised within such period of time as is specified in the Option Agreement (but in no event later than the expiration of the term of such Option as set forth in the Notice of Grant), by the Optionee’s estate or by a person who acquires the right to exercise the Option by bequest or inheritance, but only to the extent that the Option is vested and exercisable on the date of death; provided, however, that the time specified in the Option Agreement shall not be less than six (6) months. In the absence of a specified time in the Option Agreement, the Option shall remain exercisable for six (6) months following the Optionee’s death. If, at the time of death, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall immediately revert to the Plan. The Option may be exercised by the executor or administrator of the Optionee’s estate or, if none, by the person(s) entitled to exercise the Option under the Optionee’s will or the laws of descent or distribution. If the Option is not so exercised within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

6.15 For Any Other Reason. If an Optionee ceases to be a Service Provider, other than for Cause or upon the Optionee’s death or Disability, the Optionee may exercise his or her Option within such period of time as is specified in the Option Agreement to the extent that the Option is vested and exercisable on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement); provided, however, that the time specified in the Option Agreement shall not be less than thirty (30) days. In the absence of a specified time in the Option Agreement, the Option shall remain exercisable for three (3) months following the Optionee’s termination. If, on the date of termination, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan. If, after termination, the Optionee does not exercise his or her Option within the time specified by the Committee, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

7.1 Generally. Subject to the limitations of the Plan, the Committee may grant Stock Appreciation Rights to Service Providers. Stock Appreciation Rights may be granted in connection with, and on the same Date of Grant, as all or any part of an Option to a Service Provider or may be granted as a separate Award.

7.2 Stock Appreciation Rights Not Granted In Connection With Options. The following provisions apply to all Stock Appreciation Rights that are not granted in connection with Options:

(a) Described. A Stock Appreciation Right shall entitle the Awardee, upon exercise of all or any part of the Stock Appreciation Right, to receive in exchange from the Company an amount equal to the excess of (x) the Fair Market Value on the date of exercise of the Shares covered by the surrendered Stock Appreciation Right over (y) the Fair Market

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Value of the Shares on the Date of Grant of the Stock Appreciation Right. The Committee may not revise or amend a Stock Appreciation Right to reduce the Fair Market Value of the Stock Appreciation Right on the Date of Grant, except as provided in Article 13 of the Plan.

(b) Term. The term of each Stock Appreciation Right shall be ten (10) years from the Date of Grant or such shorter term as

may be provided in the Award Agreement. No Stock Appreciation Right may be exercised after the expiration of its term.

(c) Waiting Period and Exercise Dates. At the time a Stock Appreciation Right is granted, the Committee shall fix the period within which the Stock Appreciation Right may be exercised and shall determine any conditions which must be satisfied before the Stock Appreciation Right may be exercised. A Stock Appreciation Right may only be exercised at a time when the Fair Market Value of the Shares covered by the Stock Appreciation Right exceeds the Fair Market Value of the Shares on the Date of Grant of the Stock Appreciation Right.

(d) Exercise. Any Stock Appreciation Right granted hereunder shall be exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Committee and set forth in the Award Agreement. Unless the Committee provides otherwise, vesting of any Stock Appreciation Right granted hereunder shall be tolled during any unpaid leave of absence. A Stock Appreciation Right may not be exercised for a fraction of a Share.

(e) Effect of Exercise Upon Available Shares. Exercising a Stock Appreciation Right in any manner shall decrease the

number of Shares thereafter available, both for purposes of the Plan and for sale under the Stock Appreciation Right, by the number of Shares as to which the Stock Appreciation Right is exercised.

(f) Notification under Code Section 83(b). If the Awardee, in connection with the exercise of any Stock Appreciation Right, makes the election permitted under Code Section 83(b) to include in such Awardee’s gross income in the year of transfer the amounts specified in Code Section 83(b), then such Awardee shall notify the Company of such election within ten (10) days of filing the notice of the election with the Internal Revenue Service, in addition to any filing and notification required pursuant to regulations issued under Code Section 83(b). The Committee may, in connection with the grant of a Stock Appreciation Right or at any time thereafter prior to such an election being made, prohibit an Awardee from making the election described above.

(g) Buyout Provisions. Subject to Section 4.4, the Committee may at any time offer to buy out for a payment in cash or

Shares a Stock Appreciation Right previously granted based on such terms and conditions as the Committee shall establish and communicate to the Awardee at the time that such offer is made.

(h) Non-Transferability of Stock Appreciation Rights. Unless determined otherwise by the Committee, a Stock AppreciationRight may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Awardee, only by the Awardee. If the Committee grants a Stock Appreciation Right that is transferable, the Award Agreement for such Stock Appreciation Right shall contain such additional terms and conditions governing the Stock Appreciation Right’s transferability as the Committee deems appropriate.

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(i) Termination of Service Provider For Cause. If a Service Provider is terminated for Cause, any unexercised Stock Appreciation Right shall terminate effective immediately upon such termination.

(j) Disability of Awardee. If an Awardee ceases to be a Service Provider as a result of the Awardee’s Disability, the Awardee may exercise his or her Stock Appreciation Right within such period of time as is specified in the Award Agreement to the extent the Stock Appreciation Right is vested and exercisable on the date of termination (but in no event later than the expiration of the term of such Stock Appreciation Right as set forth in the Award Agreement); provided, however, that the time specified in the Award Agreement shall not be less than six (6) months. In the absence of a specified time in the Award Agreement, the Stock Appreciation Right shall remain exercisable for twelve (12) months following the Awardee’s termination. If, on the date of termination, the Awardee is not vested as to his or her entire Stock Appreciation Right, the Shares covered by the unvested portion of the Stock Appreciation Right shall revert to the Plan. If after termination, the Awardee does not exercise his or her Stock Appreciation Right within the time specified herein, the Stock Appreciation Right shall terminate, and the Shares covered by such Stock Appreciation Right shall revert to the Plan.

(k) Death of Awardee. If an Awardee dies while a Service Provider, the Stock Appreciation Right may be exercised within such period of time as is specified in the Award Agreement (but in no event later than the expiration of the term of such Stock Appreciation Right as set forth in the Notice of Grant), by the Awardee’s estate or by a person who acquires the right to exercise the Stock Appreciation Right by bequest or inheritance, but only to the extent that the Stock Appreciation Right is vested and exercisable on the date of death; provided, however, that the time specified in the Award Agreement shall not be less than six (6) months. In the absence of a specified time in the Award Agreement, the Stock Appreciation Right shall remain exercisable for six (6) months following the Awardee’s death. If, at the time of death, the Awardee is not vested as to his or her entire Stock Appreciation Right, the Shares covered by the unvested portion of the Stock Appreciation Right shall immediately revert to the Plan. The Stock Appreciation Right may be exercised by the executor or administrator of the Awardee’s estate or, if none, by the person(s) entitled to exercise the Stock Appreciation Right under the Awardee’s will or the laws of descent or distribution. If the Stock Appreciation Right is not so exercised within the time specified herein, the Stock Appreciation Right shall terminate, and the Shares covered by such Stock Appreciation Right shall revert to the Plan.

(l) For Any Other Reason. If an Awardee ceases to be a Service Provider, other than for Cause or upon the Awardee’s death or Disability, the Awardee may exercise his or her Stock Appreciation Right within such period of time as is specified in the Award Agreement to the extent that the Stock Appreciation Right is vested and exercisable on the date of termination (but in no event later than the expiration of the term of such Stock Appreciation Right as set forth in the Award Agreement); provided, however, that the time specified in the Award Agreement shall not be less than thirty (30) days. In the absence of a specified time in the Award Agreement, the Stock Appreciation Right shall remain exercisable for three months following the Awardee’s termination. If, on the date of termination, the Awardee is not vested as to his or her entire Stock Appreciation Right,

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the Shares covered by the unvested portion of the Stock Appreciation Right shall revert to the Plan. If, after termination, the Awardee does not exercise his or her Stock Appreciation Right within the time specified by the Committee, the Stock Appreciation Right shall terminate, and the Shares covered by such Stock Appreciation Right shall revert to the Plan.

7.3 Stock Appreciation Rights Granted In Connection With Options. The following provisions apply to all Stock Appreciation Rights that are granted in connection with Options:

(a) A Stock Appreciation Right granted in connection with an Option must be granted on the same Date of Grant as the Option to which it relates.

(b) A Stock Appreciation Right granted in connection with an Option shall entitle the Awardee, upon exercise of all or any part of the Stock Appreciation Right, to surrender to the Company unexercised that portion of the underlying Option relating to the same number of Shares as is covered by the Stock Appreciation Right (or the portion of the Stock Appreciation Right so exercised) and to receive in exchange from the Company an amount equal to the excess of (x) the Fair Market Value on the date of exercise of the Shares covered by the surrendered portion of the underlying Option over (y) the exercise price of the Shares covered by the surrendered portion of the underlying Option.

(c) Upon the exercise of a Stock Appreciation Right and surrender of the related portion of the underlying Option, the Option, to the extent surrendered, shall not thereafter be exercisable.

(d) Subject to any further conditions upon exercise imposed by the Committee, a Stock Appreciation Right shall be

exercisable only to the extent that the related Option is exercisable and a Stock Appreciation Right shall lapse or be forfeited no later than the date on which the related Option lapses or if forfeited.

(e) A Stock Appreciation Right shall terminate and shall no longer be exercisable upon the exercise of the related Option.

(f) The Stock Appreciation Right is only transferable when the related Options are otherwise transferable.

(g) A Stock Appreciation Right may only be exercised at a time when the Fair Market Value of the Shares covered by the Stock Appreciation Right exceeds the exercise price of the Shares covered by the underlying Option.

7.4 Form of Payment. The manner in which the Company’s obligation arising upon the exercise of a Stock Appreciation Right shall be paid shall be determined by the Committee and shall be set forth in the Award Agreement. The Award Agreement may provide for payment in (i) Shares, (ii) cash, or (iii) a fixed combination of Shares or cash, or the Committee may reserve the right to determine the manner of payment at the time the Stock Appreciation Right is exercised. Shares of Common Stock issued upon the exercise of a Stock Appreciation Right shall be valued at their Fair Market Value on the date of exercise. Any Shares issued upon exercise of a Stock Appreciation Right shall be issued in the name of the Awardee or, if requested by the Awardee, in the name of the Awardee and his or her spouse. Until Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), in payment of a Stock Appreciation Right, no right to vote or receive dividends or any

ARTICLE 8 Restricted Stock

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other rights as a stockholder shall exist with respect to the Stock Appreciation Right, notwithstanding the exercise of the Stock Appreciation Right. The Company shall issue (or cause to be issued) Shares that are to be issued in payment of a Stock Appreciation Right promptly after the Stock Appreciation Right is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Article 13 of the Plan.

7.5 Procedure for Exercise; Rights As a Stockholder. A Stock Appreciation Right shall be deemed exercised when the Company receives a written or electronic notice of exercise (in accordance with the Award Agreement) from the person entitled to exercise the Stock Appreciation Right. In addition, if the Stock Appreciation Right provides for the delivery of Shares in settlement of the Company’s obligation under the Stock Appreciation Right, prior to the delivery of Shares, the Company must also receive from the person entitled to exercise the Stock Appreciation Right any written representations, covenants, and undertakings that the Company may prescribe in the Award Agreement.

7.6 Modifications Generally Prohibited. Once granted, no Modification shall be made in respect to any Stock Appreciation Right if such Modification would result in the Stock Appreciation Right constituting a deferral of compensation or having an additional deferral feature within the meaning of applicable Treasury Regulations under Code Section 409A.

8.1 Generally. Subject to the limitations of the Plan, the Committee may make grants of Restricted Stock to Service Providers.

8.2 Administration. Shares of Restricted Stock may be granted either alone or in addition to other Awards granted under the Plan. The Committee shall determine the Service Providers to whom, and the time(s) at which grants of Restricted Stock will be made, the number of shares to be awarded to any Service Provider, the amount of the consideration (if any) that is to be paid, the time(s) within which, and the conditions under which such Restricted Stock may be subject to forfeiture, and any other terms and conditions of the Awards, in addition to those contained in this Article 8.

8.3 Awards and Certificates. As a condition to the grant of Restricted Stock under the Plan, each Awardee shall execute and deliverto the Company (i) an agreement in form and substance satisfactory to the Committee reflecting the conditions and restrictions imposed upon the Shares awarded, (ii) the consideration, if any, to be paid for the Shares, and (iii) any written representations, covenants, and undertakings that the Committee may prescribe in the Restricted Stock Agreement. Certificates for Shares delivered pursuant to such Awards may, if the Committee so determines, bear a legend referring to the restrictions and the instruments to which such Shares of Restricted Stock are subject.

8.4 Form of Consideration. The consideration for Restricted Stock (if any) shall consist entirely of cash.

8.5 Notification under Code Section 83(b). If, in connection with a grant of Restricted Stock, the Awardee makes the election permitted under Code Section 83(b) to include in such Awardee’s gross income in the year of transfer the amounts specified in Code Section 83(b), then such Awardee shall notify the Company of such election within ten (10) days of filing the notice of the

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election with the Internal Revenue Service, in addition to any filing and notification required pursuant to regulations issued under Code Section 83(b). The Committee may, in connection with the grant of Restricted Stock or at any time thereafter prior to such an election being made, prohibit an Awardee from making the election described above.

8.6 Buyout Provisions. The Committee may at any time offer to buy out for a payment in cash, Restricted Stock previously granted based on such terms and conditions as the Committee shall establish and communicate to the Awardee at the time that such offer is made.

8.7 Terms and Conditions. Subject to the provisions of the Plan and the applicable Restricted Stock Agreement, during a period set by the Committee, commencing with the date of such Award (the “Restriction Period”), the Awardee shall not be permitted to sell, assign, transfer, pledge or otherwise encumber shares of Restricted Stock. The Committee may provide for the lapse of such restrictions in installments or otherwise and may accelerate or waive such restrictions, in whole or in part, in each case based on period of service, performance of the Awardee or of the Company for which the Awardee is employed or such other factors or criteria as the Committee may determine. Restricted Stock for which forfeiture is conditioned solely on employment and the passage of time shall not fully vest less than three (3) years from the Date of Grant of the Restricted Stock. Restricted Stock for which forfeiture is conditioned on the achievement of Performance Factors or other performance conditions shall not be fully vested less than one (1) year from the Date of Grant. Notwithstanding the foregoing, the Committee may, in its discretion and without limitation, provide in the Restricted Stock Agreement that vesting of the Restricted Stock will be accelerated to any degree determined by the Committee as a result of the Disability, death, retirement or involuntary termination of the Awardee or the occurrence of a Change in Control.

8.8 Rights as a Stockholder. Except as otherwise provided in this Plan and the applicable Restricted Stock Agreement, the Awardee shall have, with respect to the Shares of Restricted Stock, all of the rights of a stockholder of the Company holding the class or series of stock that is the subject of the Restricted Stock, including, if applicable, the right to vote the Shares and the right to receive any cash dividends. Absent a provision regarding the disposition of dividends in the applicable Restricted Stock Agreement, any dividend payable with respect to Restricted Stock shall be paid to the Service Provider no later than the end of the calendar year in which the same dividends on Shares are paid to the stockholders of such Shares generally, or if later, the 15th day of the third month following the date on which the same dividends on Shares are paid to the Shares’ stockholders.

8.9 Termination for Cause. If a Service Provider is terminated for Cause, any Restricted Stock previously granted to the Service Provider that remains unvested as of the date of termination shall be forfeited effective immediately upon such termination.

8.10 Termination Other Than for Cause. Except as otherwise provided in the applicable Restricted Stock Agreement or as determined by the Committee, if a Service Provider ceases to be a Service Provider other than for Cause, any Restricted Stock previously granted to the Service Provider that remains unvested as of the date of cessation shall be forfeited immediately upon such cessation.

ARTICLE 9 Restricted Stock Units

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9.1 Generally. Subject to the limitations of the Plan, the Committee may make grants of Restricted Stock Units to Service Providers. A Restricted Stock Unit is the grant of a right to receive a Share of Common Stock or the Fair Market Value in cash of a Share of Common Stock, in the future, at such time and contingent upon such terms as the Committee shall establish.

9.2 Administration. Restricted Stock Units may be granted either alone or in addition to other Awards granted under the Plan. The Committee shall determine the Service Providers to whom, and the time(s) at which grants of Restricted Stock Units will be made, the number of Restricted Stock Units to be awarded to any Service Provider, the time(s) within which, and the conditions under which such Restricted Stock Unit may be subject to forfeiture, and any other terms and conditions of the Awards, in addition to those contained in this Article 9.

9.3 Terms and Conditions. The Committee shall establish as to each grant of Restricted Stock Units the terms and conditions upon which such Restricted Units shall become vested. The Committee may base the vesting of Restricted Stock Units upon (i) the continued employment or service of the Awardee, (ii) the achievement of performance objectives, or (iii) a combination thereof. The Committee may provide for the vesting of Restricted Stock Units in installments or otherwise and may accelerate or waive such restrictions, in whole or in part, in each case based on period of service, performance of the Awardee or of the Company for which the Awardee is employed or such other factors or criteria as the Committee may determine. Restricted Stock Units with vesting conditioned solely on employment and the passage of time shall not vest less than three (3) years from the Date of Grant of the Restricted Stock Units. Restricted Stock Units with vesting conditioned on the achievement of Performance Factors or other performance conditions shall not vest less than one (1) year from the Date of Grant. Notwithstanding the foregoing, the Committee may, in its discretion and without limitation, provide in the Restricted Stock Unit Agreement that vesting of the Restricted Stock Units will accelerate to any degree determined by the Committee as a result of the Disability, death, retirement or involuntary termination of the Awardee or the occurrence of a Change in Control.

9.4 Dividend Equivalents. If (and only if) expressly authorized in the applicable Award Agreement, in the event that the Company pays any cash or other dividend or makes any other distribution in respect of the Common Stock, a Service Provider will be credited with an additional number of Restricted Stock Units (including fractions thereof) determined by dividing (i) the amount of cash, or the value (as determined by the Committee) of any securities or other property, paid or distributed in respect of a Share by (ii) the Fair Market Value of a Share for the date of such payment or distribution, and multiplying the result of such division by (iii) the number of Restricted Stock Units that were credited to a Service Provider immediately prior to the date of the dividend or other distribution. Credits shall be made effective as of the date of the dividend or other distribution in respect of the Common Stock to the bookkeeping account to which the Service Provider’s Restricted Stock Units are credited. Dividends credited to a Service Provider shall be subject to the same restrictions and shall be distributed at the same time and in the same manner as the Restricted Stock Units to which they relate.

9.5 Non-Transferability. Restricted Stock Units may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner.

9.6 No Rights as a Stockholder. A Service Provider who is to receive settlement of his or her vested Restricted Stock Units by the delivery of Shares shall have no rights as a stockholder of the Company until the Shares are actually issued to the Service Provider pursuant to the terms of the applicable Award Agreement. The Shares may be issued without consideration.

ARTICLE 10 Performance Awards

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9.7 Termination for Cause. If a Service Provider is terminated for Cause, any Restricted Stock Units previously granted to the Service Provider that have not been settled by the delivery of cash or Shares shall be forfeited effective immediately upon such termination.

9.8 Termination Other Than for Cause. Except as otherwise provided in the applicable Award Agreement or as determined by the Committee, if a Service Provider ceases to be a Service Provider other than for Cause, any Restricted Stock Units previously granted to the Service Provider that remain unvested as of the date of cessation shall be forfeited immediately upon such cessation.

9.9 Form of Payment. The manner in which the Company shall settle its obligation (if any) arising out of a grant of Restricted Stock Units shall be determined by the Committee and shall be set forth in the Award Agreement. The Award Agreement may provide for payment in (i) Shares, (ii) cash, or (iii) a fixed combination of Shares or cash, or the Committee may reserve the right to determine the manner of payment at the time that the Restricted Stock Units are settled.

(a) Shares of Common Stock issued in settlement of Restricted Stock Units shall be valued at (i) their Fair Market Value on

the date of payment for purposes of determining the amount of compensation paid to the Awardee, and (ii) as provided in the Award Agreement for any other purpose.

(b) In addition, if the Award Agreement for a grant of Restricted Stock Units provides for the delivery of Shares in settlement of the Company’s obligation under the Award, prior to the delivery of any Shares, the Company must also receive from the Awardee any written representations, covenants, and undertakings that the Company may prescribe in the Award Agreement.

(c) Any Shares issued upon settlement of Restricted Stock Units shall be issued in the name of the Awardee or, if requested by the Awardee, in the name of the Awardee and his or her spouse. Until Shares are actually issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), in settlement of Restricted Stock Units, no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the Award. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Article 13 of the Plan.

10.1 Generally. Subject to the limitations of the Plan, the Committee may make grants of Performance Awards to Service Providers who are Employees. A Performance Award shall consist of the right to receive a payment that is contingent upon the attainment of one or more performance objectives during a Performance Period. Performance Awards may be denominated in cash (e.g., units valued at $100 at target level of performance) or Shares. Each grant of Performance Awards shall be evidenced by an Award Agreement, which shall set forth the terms and conditions of the Performance Award.

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10.2 Establishment of Performance Criteria. On or prior to the Date of Grant of a Performance Award, the Committee shall establish for such Performance Award:

(a) The Performance Period;

(b) One or more performance objectives;

(c) The formula for determining the amount or amounts that shall be earned under the Performance Award, if any, based upon the degree of attainment of the applicable performance objectives;

(d) The conditions under which an Awardee shall forfeit the Performance Award; and

(e) Such other terms and conditions that the Committee shall establish.

10.3 Performance Objectives. Performance objectives may include a threshold level of performance below which no payout or vesting will occur, target levels of performance at which a full payout of full vesting will occur, and/or a maximum level of performance at which a specified additional payout or vesting will occur. Unless otherwise provided in the Award Agreement, the Committee shall have the right to reduce or increase the amount payable to an Awardee with respect to an Award from the amount that would be payable by application of the Award’s formula.

10.4 Determination of Award Amount. At the expiration of the Performance Period, the Committee shall determine (i) the extent to which the predetermined performance objectives have been achieved during the Performance Period, (ii) the resulting value of the Performance Awards, and (iii) the payment, if any, owed to the Awardee.

10.5 Non-Transferability. Performance Awards may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner.

10.6 Form of Payment. The manner in which the Company shall settle its obligation (if any) arising out of the grant of a Performance Award shall be determined by the Committee and shall be set forth in the Award Agreement. The Award Agreement may provide for payment in (i) Shares, (ii) cash, or (iii) a fixed combination of Shares or cash, or the Committee may reserve the right to determine the manner of payment at the time the Performance Award is settled.

(a) Shares of Common Stock issued in settlement of a Performance Award shall be valued at (i) their Fair Market Value on the date of payment for purposes of determining the amount of compensation paid to the Awardee, and (ii) as provided in the Award Agreement for any other purpose (e.g., for purpose of converting a Performance Award denominated in cash into Shares for purposes of payment).

(b) In addition, if the Award Agreement for a Performance Award provides for the delivery of Shares in settlement of the Company’s obligation under the Award, prior to the delivery of any Shares, the Company must also receive from the Awardee any written representations, covenants, and undertakings that the Company may prescribe in the Award Agreement.

(c) Any Shares issued upon settlement of Performance Awards shall be issued in the name of the Awardee or, if requested

by the Awardee, in the name of the Awardee and his or her spouse. Until Shares are actually issued (as evidenced by the appropriate entry on the

ARTICLE 11 Bonus Shares

ARTICLE 12 Designation of Awards as Performance-Based Compensation

The Committee may designate an Award of Restricted Stock, Restricted Stock Units, or Performance Awards as intended to qualify as “performance based compensation” within the meaning of Code Section 162(m).

24

books of the Company or of a duly authorized transfer agent of the Company), in settlement of a Performance Award grant, no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the Award. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Article 13 of the Plan.

11.1 Generally. Subject to the limitations of the Plan, the Committee may grant Bonus Shares to any Service Provider, in such amount and upon such terms, at any time and from time to time as the Committee in its sole discretion shall determine.

11.2 Awards and Certificates. Prior to the delivery of any Shares to the Awardee in payment of a grant of Bonus Shares, the Company must receive from the Awardee any written representations, covenants, and undertakings that the Company may prescribe in the Award Agreement. Any Shares issued with respect to a grant of Bonus Shares shall be issued in the name of the Awardee or, if requested by the Awardee, in the name of the Awardee and his or her spouse. Until Shares are actually issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the Award. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Article 13 of the Plan.

11.3 Non-Transferability. Until actually delivered to the Awardee, Bonus Shares may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner.

12.1 Any Award of Restricted Stock, Restricted Stock Units, or any Performance Award that is intended to qualify as performance-based compensation shall be, to the extent required by Code Section 162(m), either (i) conditioned upon the attainment of one or more Performance Factors, or (ii) granted based upon the achievement of one or more Performance Factors.

12.2 Any Award of Restricted Stock, Restricted Stock Units, or any Performance Award that is intended to qualify as performance-based compensation shall also be subject to the following:

(a) No later than ninety (90) days following the commencement of each Performance Period (or such other time as may be required or permitted by Code Section 162(m)), the Committee shall, in writing, (1) grant a target number of Shares or units, (2) select the performance goal or goals applicable to the Performance Period, and (3) specify the relationship between performance goals and the number of Shares or units that may be earned by an Awardee for such Performance Period.

ARTICLE 13 Adjustments Upon Changes in Capitalization, Dissolution, Merger or Asset Sale

ARTICLE 14 Cancellation and Rescission of Awards

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(b) Following the completion of each Performance Period, the Committee shall certify in writing whether the applicable

performance objectives have been achieved and the number of units or Shares, if any, earned by an Awardee for such Performance Period.

(c) In determining the number of units or Shares earned by an Awardee for a given Performance Period, subject to any applicable Award Agreement, the Committee shall have the right to reduce (but not increase) the amount earned at a given level of performance to take into account additional factors that the Committee may deem relevant to the assessment of individual or corporate performance for the Performance Period.

13.1 Changes in Capitalization. Subject to any required action by the stockholders of the Company, the number of Shares covered by each outstanding Award, and the number of Shares which have been authorized for issuance under the Plan but as to which no Awards have yet been granted or which have been returned to the Plan as well as the price per Share covered by each outstanding Option and the base amount per Share of each Stock Appreciation Right, shall be proportionately adjusted for any increase or decrease in the number of issued Shares resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Share, or any other increase or decrease in the number of issued Shares effected without receipt of consideration by the Company; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been “effected without receipt of consideration”; provided, however, that with respect to Incentive Stock Options, no such adjustment shall be authorized to the extent that such adjustment would cause the Plan to violate Code Section 422(b)(1); provided further, that with respect to Options and Stock Appreciation Rights, no such adjustment shall be authorized to the extent such adjustment would cause the Options and Stock Appreciation Rights to become “deferred compensation” subject to Code Section 409A. Such adjustment shall be made by the Committee, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of Shares subject to an Award.

14.1 Cancellation of Awards. Unless the Award Agreement specifies otherwise, the Committee may cancel, rescind, suspend, withhold, or otherwise limit or restrict any unexercised (in the case of Options or Stock Appreciation Rights), unvested, or unpaid Award at any time if the Awardee is not in compliance with all applicable provisions of the Award Agreement and the Plan, or if the Awardee has engaged in any Adverse Conduct.

14.2 Certification of Compliance May Be Required. Upon exercise, payment or delivery pursuant to an Award, the Committee may require the Awardee to certify, in a manner acceptable to the Company, that the Awardee is in compliance with the terms and conditions of the Plan.

14.3 Rescission of Awards. Unless the Award Agreement specifies otherwise, for a period of two (2) years following the exercise, payment or delivery of an Award (the “Rescission Period”), the Committee may rescind any such exercise, payment, or delivery of the Award upon its

ARTICLE 15 Change in Control Provisions

26

determination that the Awardee has engaged in Adverse Conduct prior to the delivery of the Award or during the Rescission Period. In the event of any such rescission, the Awardee shall pay to the Company the amount of any gain realized or payment received as a result of the rescinded exercise, payment or delivery, in such manner and on such terms and conditions as may be required.

15.1 In the event of a merger or Change in Control, each outstanding Award will be treated as the Committee determines, including, without limitation, that each Award be assumed or an equivalent option or right substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. The Committee will not be required to treat all Awards similarly in the transaction.

15.2 In the event that the successor corporation does not assume or substitute for the Award, the Awardee will fully vest in and have the right to exercise all of his or her outstanding Options and Stock Appreciation Rights, including Shares as to which such Awards would not otherwise be vested or exercisable, all restrictions on Restricted Stock and Restricted Stock Units will lapse, and, with respect to Awards with performance-based vesting, all performance goals or other vesting criteria will be deemed achieved at one hundred percent (100%) of target levels and all other terms and conditions met. In addition, if an Option or Stock Appreciation Right is not assumed or substituted in the event of a Change in Control, the Committee will notify the Awardee in writing or electronically that the Option or Stock Appreciation Right will be fully vested and exercisable for a period of time determined by the Committee in its sole discretion, and the Option or Stock Appreciation Right will terminate upon the expiration of such period.

15.3 For the purposes of this Article 15, an Award will be considered assumed if, following the Change in Control, the Award confers the right to purchase or receive, for each Share subject to the Award immediately prior to the Change in Control, the consideration (whether stock, cash, or other securities or property) received in the Change in Control by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the Change in Control is not solely common stock of the successor corporation or its Parent, the Committee may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of an Option or Stock Appreciation Right or upon the payout of a Restricted Stock Unit, or Performance Award, for each Share subject to such Award (or in the case of an Award settled in cash, the number of implied shares determined by dividing the value of the Award by the per share consideration received by holders of Common Stock in the Change in Control), to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of Common Stock in the Change in Control.

15.4 Notwithstanding anything in this Article 15 to the contrary, an Award that vests, is earned or paid-out upon the satisfaction of one or more performance goals will not be considered assumed if the Company or its successor modifies any of such performance goals without the Awardee’s consent; provided, however, a modification to such performance goals only to reflect the successor corporation’s post-Change in Control corporate structure will not be deemed to invalidate an otherwise valid Award assumption.

ARTICLE 16 Amendment and Termination of the Plan

ARTICLE 17 Conditions Upon Issuance of Shares

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16.1 Amendment and Termination. The Board may at any time amend, alter, suspend or terminate the Plan.

16.2 Stockholder Approval. The Company shall obtain stockholder approval of any Plan amendment to the extent necessary and desirable to comply with Applicable Laws.

16.3 Effect of Amendment or Termination. No amendment, alteration, suspension or termination of the Plan shall impair the rights of any Awardee, unless mutually agreed otherwise between the Awardee and the Committee, which agreement must be in writing and signed by the Awardee and the Company. Termination of the Plan shall not affect the Committee’s ability to exercise the powers granted to it hereunder with respect to Awards granted under the Plan prior to the date of such termination.

17.1 Legal Compliance. Shares shall not be issued pursuant to the exercise of an Award unless the exercise of such Award and the issuance and delivery of such Shares shall comply with Applicable Laws and shall be further subject to the approval of counsel for the Company with respect to such compliance. Under no circumstances shall the Company be obligated to effect or maintain any registration under the Securities Act or other similar Applicable Laws.

17.2 Investment Representations. As a condition to the exercise of an Award, the Company may require the person exercising such Award to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required.

17.3 Restrictions on Share Transferability.

(a) Generally. The Committee may include in the Award Agreement such restrictions on any Shares acquired pursuant to

the exercise or vesting of an Award as it may deem advisable, including restrictions under applicable federal securities laws.

(b) Market Standoff. In the event of an underwritten public offering by the Company of its equity securities pursuant to an effective registration statement filed under the Securities Act, including the Company’s Initial Public Offering, no person may sell, make any short sale of, loan, hypothecate, pledge, grant any option for the purchase of, or otherwise dispose of or transfer for value or otherwise agree to engage in any of the foregoing transactions with respect to any Shares issued pursuant to an Award granted under the Plan without the prior written consent of the Company or its underwriters. Such limitations shall be in effect for such period of time as may be requested by the Company or such underwriters; provided, however, that in no event shall such period exceed two hundred fourteen (214) days following the effective date of the registration statement. The limitations of this Section 17.3 (b) shall in all events terminate two years after the effective date of the Company’s Initial Public Offering.

ARTICLE 18 Additional Provisions

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(1) In the event of any stock split, stock dividend, recapitalization, combination of Shares, exchange of Shares or other change affecting the Company’s outstanding Common Stock effected as a class without the Company’s receipt of consideration, any new, substituted or additional securities distributed with respect to the purchased Shares shall be immediately subject to the provisions of this Section 17.3(b), to the same extent the purchased Shares are at such time covered by such provisions.

(2) In order to enforce the limitations of this Section 17.3(b), the Company may impose stop-transfer instructions with respect to the purchased shares until the end of the applicable stand off period.

18.1 Term of Plan. Subject to Section 18.6 of the Plan, the Plan became effective upon its original adoption by the Board. It shall continue in effect for a term of ten (10) years from such original adoption by the Board unless terminated earlier under Article 16 of the Plan.

18.2 Unfunded Status of Plan. It is intended that the Plan shall constitute an “unfunded” plan for incentive and deferred compensation. The Committee may authorize the creation of trusts or other arrangements to meet the obligations created under the Plan to deliver stock or make payments; provided, however, that the existence of such trusts or other arrangements is consistent with the “unfunded” status of the Plan.

18.3 No Right to Continue As A Service Provider. Neither the Plan nor any Award shall confer upon an Awardee any right with respect to continuing the Awardee’s relationship as a Service Provider with the Company, nor shall they interfere in any way with the Awardee’s right or the Company’s right to terminate such relationship at any time, with or without Cause.

18.4 Inability to Obtain Authority. The inability or failure of the Company to obtain authority from any regulatory body having jurisdiction (including, without limitation, effectiveness of a registration statement under the Securities Act), which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.

18.5 Reservation of Shares. The Company, during the term of this Plan, will at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan.

18.6 Stockholder Approval. The Plan shall be subject to approval by the stockholders of the Company within twelve (12) months after the date the Plan is adopted. Such stockholder approval shall be obtained in the manner and to the degree required under Applicable Laws. If such stockholder approval is not obtained, all Awards granted under the Plan shall be cancelled.

18.7 No Right to Participation. No Employee, Director or Consultant shall have the right to be selected to receive an Award, or, having been so selected, to be selected to receive a future Award.

18.8 Successors. All obligations of the Company under the Plan with respect to Awards granted hereunder shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise of all or substantially all of the business or assets of the Company.

[END OF PLAN]

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18.9 Severability. If any part of the Plan is declared by any court or governmental authority to be unlawful or invalid, such unlawfulness or invalidity shall not invalidate any other part of the Plan. Any Section or part of a Section so declared to be unlawful or invalid shall, if possible, be construed in a manner which will give effect to the terms of such Section or part of a Section to the fullest extent possible while remaining lawful and valid.

18.10 Designation of Beneficiary. The Committee may establish procedures allowing an Awardee to designate a beneficiary or beneficiaries to exercise any Award or receive any payment under any Award payable on or after the Awardee’s death.

18.11 Governing Law. The Plan shall be construed in accordance with and governed by the laws of the State of Illinois.

18.12 Code Section 409A. To the extent that any Award shall constitute “deferred compensation” subject to Code Section 409A, such Award shall be administered in accordance with the requirements of Code section 409A(a)(2)(A)(i), which prohibits the distribution of compensation subject to Code section 409A to a “specified employee” of a publicly traded company any earlier than six months after the date of separation of service in the case of a distribution by reason of a separation of service.

Exhibit 21.1

Rubicon Technologies, Inc.Subsidiaries of the Company

Name of Subsidiary State (or other jurisdiction of incorporation)

Rubicon Worldwide LLC Illinois

Rubicon Sapphire Technology (Malaysia) SDN BHD Malaysia

EXHIBIT 23.1

Consent of Independent Registered Public Accounting Firm

We have issued our reports dated March 13, 2014, with respect to the consolidated financial statements, and internalcontrol over financial reporting included in the Annual Report of Rubicon Technology, Inc. on Form 10-K for theyear ended December 31, 2013. We hereby consent to the incorporation by reference of said reports in theRegistration Statements of Rubicon Technology, Inc. on Form S-3 (File No. 333-167272, effective June 4, 2010),on Form S-3/A (File No. 333-192536, effective December 13, 2013), on Form S-3MEF (File No. 333-167535,effective June 16, 2010), and on Forms S-8 (File No. 333-147552, effective November 20, 2007 and FileNo. 333-180211, effective March 19, 2012).

/s/ GRANT THORNTON LLP

Chicago, IllinoisMarch 13, 2014

EXHIBIT 31.1

Certifications

Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Raja M. Parvez, certify that:

1. I have reviewed this Annual Report on Form 10-K of Rubicon Technology, Inc. (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to statea material fact necessary to make the statements made, in light of the circumstances under which suchstatements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report,fairly present in all material respects the financial condition, results of operations and cash flows of theregistrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosurecontrols and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controlover financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant andhave:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures tobe designed under our supervision, to ensure that material information relating to the registrant,including its consolidated subsidiaries, is made known to us by others within those entities, particularlyduring the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financialreporting to be designed under our supervision, to provide reasonable assurance regarding thereliability of financial reporting and the preparation of financial statements for external purposes inaccordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in thisreport our conclusions about the effectiveness of the disclosure controls and procedures, as of the endof the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting thatoccurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in thecase of the annual report) that has materially affected, or is reasonably likely to materially affect, theregistrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internalcontrol over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board ofdirectors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control overfinancial reporting which are reasonably likely to adversely affect the registrant’s ability to record,process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have asignificant role in the registrant’s internal control over financial reporting.

Date: March 13, 2014 By: /s/ Raja M. Parvez

Raja M. ParvezPresident and Chief Executive Officer

EXHIBIT 31.2

Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, William F. Weissman, certify that:

1. I have reviewed this Annual Report on Form 10-K of Rubicon Technology, Inc. (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to statea material fact necessary to make the statements made, in light of the circumstances under which suchstatements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report,fairly present in all material respects the financial condition, results of operations and cash flows of theregistrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosurecontrols and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controlover financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant andhave:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures tobe designed under our supervision, to ensure that material information relating to the registrant,including its consolidated subsidiaries, is made known to us by others within those entities, particularlyduring the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financialreporting to be designed under our supervision, to provide reasonable assurance regarding thereliability of financial reporting and the preparation of financial statements for external purposes inaccordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in thisreport our conclusions about the effectiveness of the disclosure controls and procedures, as of the endof the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting thatoccurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in thecase of the annual report) that has materially affected, or is reasonably likely to materially affect, theregistrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internalcontrol over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board ofdirectors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control overfinancial reporting which are reasonably likely to adversely affect the registrant’s ability to record,process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have asignificant role in the registrant’s internal control over financial reporting.

Date: March 13, 2014 By: /s/ William F. Weissman

William F. WeissmanChief Financial Officer

EXHIBIT 32.1

Certification Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002,18 U.S.C. Section 1350

In connection with the Annual Report of Rubicon Technology, Inc. (the “Company”) on Form 10-K for theyear ended December 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the“Report”), I, Raja M. Parvez, President and Chief Executive Officer of the Company, and I, William F. Weissman,Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant toSection 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition andresults of operations of the Company.

Date: March 13, 2014 By: /s/ Raja M. Parvez

Raja M. ParvezPresident and Chief Executive Officer

Date: March 13, 2014 By: /s/ William F. Weissman

William F. WeissmanChief Financial Officer

A signed original of this written statement required by Section 906 has been provided to the registrant andwill be retained by the registrant and furnished to the Securities and Exchange Commission or its staff uponrequest.

Annual Report Design by Curran & Connors, Inc. / www.curran-connors.com

DirectorsDoN AquILANoChairman of the BoardRubicon Technology, Inc.General Partner, Allos Ventures, a venture capital fund, and Managing Director and President, Gazelle TechVentures, a venture capital fund

DoNALD R. CALDwELLChairman and Chief Executive officerCross Atlantic Capital Partners, Inc.,a venture capital fund manager

MIChAEL MIkoLAjCzykManaging DirectorCatalyst Capital Management, LLC,a private equity firm

RAyMoND j. SPENCERChairman, South Australia Economic Development Board and former Chairman, Financial Services Strategic Business unit of Capgemini SA, a provider of consulting, technology and outsourcing services

RAjA M. PARVEzPresident and Chief Executive officerRubicon Technology, Inc.

AuDit committeeMikolajczyk, Aquilano, Spencer

compensAtion committeeCaldwell, Mikolajczyk, Spencer

nominAting AnD governAnce committeeSpencer, Aquilano, Caldwell

executive officersRAjA M. PARVEzPresident and Chief Executive officer

wILLIAM F. wEISSMANChief Financial officer

trAnsfer AgentAmerican Stock Transfer & Trust Company, LLC6201 15th AvenueBrooklyn, Ny 112191-800-937-5449

inDepenDent registereD public Accounting firmGrant Thornton LLP175 w. jackson Blvd., 20th FloorChicago, IL 60604

to request An AnnuAl report or form 10-KAdditional copies of this Annual Report or the Company’s Form 10-k filed with the Securities and Exchange Commission are available, without charge, upon request by contacting Investor Relations at the address or phone number listed at right.

common stocK informAtionThe Company’s common stock is listed on the NASDAq Global Market. Trading of the Company’s common stock began on November 16, 2007 under the symbol RBCN. As of April 29, 2014, there were approximately 28 record holders of the Company’s common stock.

DiviDenDsThe Company has never declared or paid cash dividends on its common stock. The Company intends to retain future earnings to finance the growth and development of its business, and does not anticipate declaring or paying any cash dividends in the foreseeable future.

executive offices900 E. Green Street, unit ABensenville, IL 60106Phone: 847-295-7000Fax: 847-233-0177

AnnuAl meetingjune 25, 20148:00 A.M. CDTThe hyatt Regency o’hare9300 w. Bryn Mawr AvenueRosemont, IL 60018

legAl counselMcGuire woods LLP77 west wacker DriveSuite 4100Chicago, IL 60601

investor relAtionsRequests for information should be directed to:Dee johnsonVice President, Investor RelationsRubicon Technology, Inc.900 E. Green Street, unit ABensenville, IL 60106Phone 847-457-3426

for more informAtionFor additional information, please visit our website at www.rubicontechnology.com.

Corporate Information

Rubicon Technology, Inc. 2013 Annual R

eport