8.	Commitments and Contingencies:

Intellectual Property Indemnification Obligations

The Company has entered into agreements with customers that include limited intellectual property indemnification obligations that are customary in the industry. These guarantees generally require the Company to compensate the other party for certain damages and costs incurred as a result of third party intellectual property claims arising from these transactions. The nature of the intellectual property indemnification obligations prevents the Company from making a reasonable estimate of the maximum potential amount it could be required to pay to its customers. Historically, the Company has not made any indemnification payments under such agreements and no amount has been accrued in the accompanying consolidated financial statements with respect to these indemnification guarantees.

Warranty Reserves

The Company generally provides a warranty on its products for a period of twelve to fifteen months against defects in material and workmanship. The Company estimates the costs that may be incurred during the warranty period and records a liability in the amount of such costs at the time revenue is recognized. The Company’s estimate is based primarily on historical experience. The Company periodically assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary. Settlements of warranty reserves are generally associated with sales that occurred during the 12 to 15 months prior to the year-end and warranty accruals are related to sales during the year.

Changes in the Company’s warranty reserves are as follows:

	Year Ended December 31,
	2017			2016			2015
Balance, beginning of the year	$	1,788		$	1,894		$	1,574
Accruals		3,464			2,405			2,640
Usage		(2,825	)		(2,511	)		(2,320	)
Balance, end of the year	$	2,427		$	1,788		$	1,894

Legal Matters

From time to time, the Company is subject to legal proceedings and claims in the ordinary course of business. As of December 31, 2017, there are no legal proceedings pending or threatened against the Company that management believes are likely to have a material adverse effect on the Company’s consolidated financial position or otherwise.

With respect to the litigations that were ongoing during 2017, on July 28, 2017, Rudolph and Camtek, Ltd. (“Camtek”) entered into a Settlement Agreement (the “Agreement”) resolving each of the three litigations referenced below (the “Litigations”).

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August Technology Corporation and Rudolph Technologies, Inc. v. Camtek, Ltd., No. 11-CV-03707 (MJD/TNL): A lawsuit against Camtek, located in Migdal Haemek, Israel, was filed by the Company on June 1, 2011 alleging infringement of its U.S. Patent No. 7,729,528 related to its proprietary continuous scan wafer inspection technology. The relief sought in the lawsuit included the payment of damages and a permanent injunction against any products found to be infringing.

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Rudolph Technologies, Inc. v. Camtek, Ltd., No. 15-CV-1246 (ADM/BRT): On March 12, 2015, the Company filed and served on Camtek a complaint asserting infringement of Rudolph’s U.S. Patent No. 6,826,298 by Camtek’s Eagle product with the U.S. District Court in Minnesota. The ‘6,298 patent is also related to its proprietary continuous scan wafer inspection technology and was the subject of Rudolph’s prior litigation against the Camtek Falcon system (the “Falcon Litigation”) in which Rudolph prevailed with a final judgment of infringement and damages of $14.6 million assessed against Camtek. The relief sought in the lawsuit included the payment of damages and a permanent injunction against any products found to be infringing.

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Camtek, Ltd. v. Rudolph Technologies, Inc., No.: 1:17-CV-11127-PBS: On June 19, 2017, Camtek filed with the U.S. District Court in Massachusetts and served on Rudolph a complaint alleging infringement by Rudolph’s NSX product of Camtek’s U.S. Patent No. 6,192,289 related to kerf inspection. The relief sought in the lawsuit included the payment of damages and a permanent injunction against any products found to be infringing.

Pursuant to the Agreement, in exchange for a $13.0 million cash payment from Camtek to Rudolph, the parties each agreed to dismiss with prejudice, and to release the other party from, all claims, damages and expenses incurred or raised in the Litigations. The parties also mutually agreed not to pursue further legal actions on any of the claims reflected in the patents that were the subject of the Litigations. Further, subject to limited exceptions, Rudolph and Camtek have agreed not to bring suit against each other for a three year period from the date of the Agreement. Each party expressly denies any liability to the other party with respect to any of the Litigations. The payment was made in October of 2017 and these matters are now closed.

Lease Agreements

The Company rents space for its corporate headquarters, manufacturing and service operations and sales offices, which expire through 2027. Total rent expense for these facilities amounted to $3,292, $3,296 and $3,525 for the years ended December 31, 2017, 2016 and 2015, respectively.

The Company also leases certain equipment pursuant to operating leases, which expire through 2022. Rent expense related to these leases amounted to $111, $99 and $105 for the years ended December 31, 2017, 2016 and 2015, respectively.

Total future minimum lease payments under noncancelable operating leases as of December 31, 2017 amounted to $3,292 for 2018, $2,458 for 2019, $1,706 for 2020, $1,105 for 2021, $1,044 for 2022 and $2,477 for all periods thereafter.

Royalty Agreements

Under various licensing agreements, the Company is obligated to pay royalties based on net sales of products sold. There are no minimum annual royalty payments. Royalty expense amounted to $1,117, $586 and $813 for the years ended December 31, 2017, 2016 and 2015, respectively.

Open and Committed Purchase Orders

The Company has open and committed purchase orders of $60,107 as of December 31, 2017.

Line of Credit

The Company has a credit agreement with a bank that provides for a line of credit which is secured by the marketable securities the Company has with the bank. The Company is permitted to borrow up to 70% of the value of eligible securities held at the time the line of credit is accessed. The available line of credit as of December 31, 2017 was approximately $87,583 with an available interest rate of 3.0%. The credit agreement is available to the Company until such time that either party terminates the arrangement at their discretion. The Company has not utilized the line of credit to date.