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Item
19. |
Exhibits. |
82 |
• |
references to “Camtek,” the “Company,”
“us,” “we”, “our”
and the “Registrant” refer to Camtek Ltd., an Israeli company, and its consolidated
subsidiaries (unless otherwise indicated); |
• |
references to “ordinary shares,” “our shares”
and similar expressions refer to the Registrant’s ordinary shares, NIS 0.01 nominal (par) value per share; |
• |
references to “dollars,” “U.S. Dollars”,
“USD” and “$” are to United States
Dollars; |
• |
references to “shekels” and “NIS”
are to New Israeli Shekels, the Israeli currency; |
• |
references to the “Companies Law” are to Israel’s Companies Law, 5759-1999;
|
• |
references to the “Israeli Securities Law” are to Israel’s Securities Law,
5728-1968; |
• |
references to the “SEC” are to the United States Securities and Exchange Commission;
and |
• |
references to the “Nasdaq Rules” are to rules of the Nasdaq Global Market.
|
Item 1. |
Identity of Directors, Senior Management and Advisers. |
Item 2. |
Offer Statistics and Expected Timetable. |
Item 3. |
Key Information. |
• |
Disruption to our business by negative effects on the semiconductor industry, including as a result of economic, political, legal,
regulatory and other changes, in the global or local markets in which we operate; |
• |
The impact of changes in global trade policies beyond our control; |
• |
The concentration of substantial majority of our sales in the Asia Pacific region, with China being our largest territory;
|
• |
The effects of global economic trends such as recession, rising inflation, rising interest rates and economic slowdown; |
• |
The impact of the latest Israel-Hamas war and continued hostilities along Israel’s borders; |
• |
The adverse effects on the terms on which we sell our products due to the high competitiveness of the markets we serve, that have
dominant market participants, some with greater resources than us; |
• |
The expansion of our business within and/or beyond our current served markets, through acquisition activity, including the recent
acquisition of FormFactor, Inc.’s FRT Metrology (“FRT”); |
• |
We may be exposed to fluctuations in currency exchange rates; |
• |
The effects of the continuing sharp increase in demand for electronic components, while production capacity remains limited;
|
• |
Risks associated with the levels of cash we maintain, which are higher than in the past; |
• |
The impact of cybersecurity risks and events, and compliance with the related regulatory framework; and |
• |
The effects of climate change or related legal or regulatory measures, and compliance with additional environmental, social, governance,
health, export controls, and other laws, regulations, and disclosure rules. |
• |
The risks associated with volatility of our share price, trading volumes, and price
depressions; |
• |
The effects of the controlling interest of our principal shareholders, Priortech and Chroma, that may exercise their control in ways
that may be adverse to the interests of our other shareholders; and |
• |
The impact of our ordinary shares being traded on more than one market. |
• |
Conditions in the Middle East and Israel may adversely affect our operations; |
• |
The effects of Israeli governmental programs and tax benefits, as well as of governmental grants; and |
• |
Shareholders rights and responsibilities and the general corporate law framework in Israel, applicable to our shares and shareholders.
|
Item 4. |
Information on the Company. |
• |
an electro-optical assembly unit which captures the image of the inspected product and which consists of a video camera, precision
optics and illumination sources; |
• |
a precise, movable table, that holds the inspected product; and |
• |
an electronic hardware unit, which operates the entire system and includes embedded components that process and analyze the captured
image by using our proprietary algorithms. |
Product
|
Function |
Eagle-i |
The Eagle-i system family is designed
for high volume 2D inspection, delivering superior 2D inspection and 2D metrology capabilities. The system utilizes the most advanced
algorithms enabling detection of down to sub-micron defects and measuring two-micron line and space redistribution layer (“RDL”).
The Eagle-i system family includes the EagleT-I and EagleT-I
Plus models, which were designed for better accuracy and optical resolutions and higher throughput.
|
Eagle-AP |
The Eagle-AP system family addresses the
fast-growing advanced packaging market using state of the art technologies, both software and hardware, that deliver superior 2D and 3D
inspection and metrology capabilities on the same platform. The Eagle-AP metrology capabilities support the wide spectrum of bump sizes
and all bump types, including copper pillars, micro-bumps, solder and gold bumps, meeting the advanced packaging market requirements,
including measurement of bumps down to 2µm (microns) and providing high throughput. The Eagle-AP system family includes the EagleT-AP
and EagleT-AP Plus
models, equipped with higher throughput and improved metrology capabilities. |
Golden
Eagle |
Designed mainly for Fanout Panel-Level-Package
(FO-PLP) applications, Camtek’s Golden Eagle is used for the inspection and metrology of standard panel sizes, up to 650mm x 650mm.
The Golden Eagle addresses the challenges of Fanout Wafer Level Packaging (FOWLP), while providing a robust system that addresses high-volume
manufacturing requirements. |
Product
|
Function |
MicroProf® AP |
The FRT MicroProf® AP is a fully
automated wafer metrology tool for a wide range of applications at different 3D packaging process steps, e.g. for the measurement of photoresist
(PR) coatings and structuring, through silicon vias (TSVs) or trenches after etching, μ-bumps and Cu pillars, as well as for the
measurement in thinning, bonding and stacking processes. With its modular multi-sensor concept, the flexible MicroProf AP measuring tool
is designed to perform a variety of measuring tasks in advanced packaging. |
MicroProf® DI |
The FRT MicroProf DI optical inspection
tool enables inspection of structured and unstructured wafers during the entire manufacturing process. By combining 2D inspection and
metrology, the MicroProf DI provides measurement solutions for a variety of applications, including defect inspection and wafer-level
metrology for micro-bumps, RDL, overlay and through silicon via (TSV) in a single measuring tool. |
MicroProf®
FE |
The FRT MicroProf® FE is Camtek’s
standard, fully automated 2D/3D wafer metrology tool. It combines the capabilities of the established MicroProf 300 with a wafer-handling
system within an Equipment Front End Module (EFEM). With fully SEMI-compliant metrology solutions and almost maintenance-free hardware
components, providing high throughput inspection, the MicroProf FE is a metrology solution intended to serve front end HVM fab.
|
MicroProf®
FS |
FRT MicroProf® FS is a fully automated
wafer metrology tool, configurable for a wide range of applications in the wafer foundry, using both standard and customized solutions.
|
MicroProf®
PT |
The FRT MicroProf® PT is a fully
automated tool for hybrid metrology applications for all common panel sizes. Its panel handling system with 2 panel loaders and multi-sensor
setup (including topography point sensors, FoV sensors and film thickness sensors) suits metrology and inspection applications, both for
development and production (from lab to fab). |
MicroProf®
MHU |
The FRT MicroProf® MHU metrology
tool with Material Handling Unit (fully automated handling, manual cassette placement), is specially designed for the semiconductor, MEMS,
sapphire, and LED industries. Typical applications are measurements of bare and coated, as well as structured wafers at various lithographic
process steps. Due to a robotic arm with two vacuum end effectors, the tool has high throughput rates of up to 220 wafers per hour. It
is capable of processing wafer sizes from 2 to 8 inches. Up to 4 open cassettes can be processed and, additionally, there is the option
to integrate a pre-aligner and an OCR reader. |
MicroProf®
TL |
The FRT MicroProf® TL is an optical
surface measurement tool for fully automatic 3D surface measurements. Unique from other family members of the FRT MicroProf series, the
TL features a Thermo Unit – a fully integrated heating and cooling stage – as well as a DLS deformation sensor by Chemnitzer
Werkstoffmechanik. With these features, MicroProf TL can be used to characterize lateral and vertical deformation of samples under thermal
load. This can be used to determine the behavior of components under working condition or to simulate various process steps. For the measurement
process temperature cycles can be set as required by an easy recipe creation. |
MicroProf®
100 |
The FRT MicroProf® 100 is the universal
surface metrology tool for quick and easy determination of topography, film thickness and sample thickness. As a compact table-top unit,
and thus the smallest member of the MicroProf multi-sensor family, the MicroProf 100 offers the full flexibility of its bigger brothers.
It is based on our proven SurfaceSens technology, in which different optical measurement methods – which otherwise can only be found
in individual solutions– are merged into a universal and space-saving device. |
MicroProf®
200 |
The FRT MicroProf® 200 is a high-performance
measuring device for contactless and non-destructive characterization of almost all surfaces and films. This surface measuring tool is
based on our established SurfaceSens technology and can perform numerous measuring tasks within just one system. A high-resolution CWL
sensor allows for easy and reliable measuring of many parameters, e.g. topography, roughness, and contour. With a wide range of additional
sensors, it is also possible to adapt the MicroProf 200 individually to your measuring task. Using the TTV module for inspection from
both sides or using the module for automatic sample handling (MHU), the MicroProf 200 can also be retrofitted to new measurement requirements.
With these capabilities, the tool can meet high automation requirements. |
MicroProf®
300 |
The FRT MicroProf® 300 is part of
the high-performance and versatile MicroProf generation and features our established SurfaceSens technology. The tool is particularly
useful in quality assurance, development and manufacturing, where the smallest deviations from the ideal surface shape must be determined
contact-free without destroying the sample, with surface precision down to the sub-μm range. Besides roughness of the sample surface,
the shape is one of the most important parameters. Narrow tolerances must be precisely determined. The FRT MicroProf 300 is perfect for
these requirements and can also be integrated into fully automated production. An extensive range of sensors and the option of conducting
double-sided sample inspections (TTV) make it possible to individual adapt the MicroProf 300 to suit your measuring task at any time.
Furthermore, the simple automation of measurements boosts productivity and process reliability. |
Year Ended December 31,
|
||||||||||||
2023 |
2022 |
2021 |
||||||||||
U.S. Dollars (In thousands) |
||||||||||||
China |
149,510 |
141,959 |
147,651 |
|||||||||
Asia Pacific |
67,773 |
63,455 |
45,571 |
|||||||||
Korea |
47,425 |
43,256 |
31,709 |
|||||||||
United States |
41,118 |
54,741 |
28,641 |
|||||||||
Europe |
9,549 |
17,498 |
16,087 |
|||||||||
Total |
315,375 |
320,909 |
269,659 |
• |
ongoing research, development and commercial implementation of new image acquisition, processing and analysis technologies;
|
• |
product architecture based on proprietary core technologies and commercially available hardware. Such architecture supports shorter
time-to-market, flexible cost structure, longer service life and higher margins; |
• |
fast response to evolving customer needs; |
• |
ability to maintain competitive pricing; |
• |
product compatibility with customer automation environment; and |
• |
strong pre- and post-sale support (applications, service and training) deployed in immediate proximity to customer sites. |
December 31, |
||||||||||||
2023 |
2022 |
2021 |
||||||||||
(U.S. Dollars in thousands) |
||||||||||||
Machinery and equipment*
|
8,155 |
6,162 |
3,390 |
|||||||||
Right of use (ROU) assets
|
2,573 |
2,079 |
2,546 |
|||||||||
Computer equipment and
software |
1,061 |
1,438 |
990 |
|||||||||
Building and leasehold improvements
|
2,974 |
3,600 |
1,777 |
|||||||||
Vehicles
|
34 |
3 |
216 |
|||||||||
Office furniture and
equipment |
111 |
117 |
76 |
|||||||||
Total
|
14,908 |
13,399 |
$ |
8,995 |
Name of Subsidiary |
Jurisdiction of Incorporation |
Camtek H.K. Ltd. |
Hong Kong |
Camtek USA Inc. |
New Jersey, USA |
Camtek (Europe) NV |
Belgium |
Camtek Germany GmbH |
Germany |
Camtek Inspection Technology (Suzhou) Ltd. |
China |
Camtek Japan Ltd. |
Japan |
Camtek Inspection Technology Limited |
Taiwan |
Camtek South East Asia Pte Ltd. |
Singapore |
Camtek Korea Ltd. |
South Korea |
Camtek Germany Holding GmbH |
Germany |
FRT GmbH |
Germany |
D. |
Property, Plants and Equipment |
Item 5. |
Operating and Financial Review and Prospects. |
A. |
Operating Results |
Year Ended December 31, |
||||||||||||
2023 |
2022 |
2021 |
||||||||||
Total Revenues |
100.00 |
% |
100.00 |
% |
100.00 |
% | ||||||
Total cost of revenues |
53.19 |
% |
50.19 |
% |
49.07 |
% | ||||||
Gross profit |
46.81 |
% |
49.81 |
% |
50.93 |
% | ||||||
Operating expenses: |
||||||||||||
Research and development expenses |
9.98 |
% |
8.99 |
% |
8.70 |
% | ||||||
Selling, general and administrative expenses |
16.09 |
% |
15.42 |
% |
15.94 |
% | ||||||
Total operating expenses |
26.07 |
% |
24.42 |
% |
24.64 |
% | ||||||
Operating profit |
20.74 |
% |
25.40 |
% |
26.29 |
% | ||||||
Financial income , net |
7.04 |
% |
2.08 |
% |
0.38 |
% | ||||||
Income tax expenses |
(2.85 |
)% |
(2.57 |
)% |
(4.32 |
)% | ||||||
Net income |
24.93 |
% |
24.91 |
% |
22.35 |
% |
• |
improving our defect detection capabilities while reducing the number of false alarms, simplifying operation and reducing the level
of user expertise required to realize the benefits of our systems; |
• |
increasing the throughput of our Inspection and Metrology systems; |
• |
providing unique technological solutions to our customers; and |
• |
adding capabilities to expand our market segments. |
Item 6. |
Directors, Senior Management and Employees |
Name
|
Age |
Title |
Rafi Amit |
75 |
Director and Chief Executive Officer |
Moty Ben-Arie
|
69 |
Director, Chairman of the Board of Directors* |
Orit Stav |
53 |
Director |
Yotam Stern |
71 |
Director |
Leo Huang |
70 |
Director |
I-Shih Tseng |
62 |
Director |
Yael Andorn |
53 |
Director** |
Yosi Shacham-Diamand
|
70 |
Director** |
Moshe Eisenberg
|
57 |
Chief Financial Officer |
Ramy Langer |
70 |
Chief Operating Officer |
Orit Geva Dvash
|
52 |
Vice President - Human Resources |
Name and Principal Position (1) |
Salary Cost (USD) (2) |
Bonus (USD) (3) |
Equity-Based Compensation (USD) (4) |
Other (USD) (5) |
Total (USD) |
|||||||||||||||
Rafi Amit – Chief Executive Officer |
313,134 |
298,602 |
940,815 |
150,687 |
1,703,238 |
|||||||||||||||
Ramy Langer - Chief Operating Officer |
312,491 |
146,004 |
516,247 |
0 |
974,742 |
|||||||||||||||
Moshe Eisenberg - Chief Financial Officer |
273,939 |
121,670 |
402,211 |
0 |
797,820 |
|||||||||||||||
Orit Geva-Dvash - Vice President, Human Resources |
194,051 |
51,360 |
243,382 |
0 |
488,794 |
|||||||||||||||
Yael Andorn – Director, Chairwoman of the Audit Committee
|
- |
50,000 |
52,654 |
102,654 |
||||||||||||||||
Total |
1,093,615 |
617,637 |
2,152,655 |
203,341 |
4,067,248 |
(1) |
All Covered Office Holders are employed on a full-time (100%) basis, except for Mr. Amit who dedicates 90% of his time to his role
as our Chief Executive Officer and except for Ms. Yael Andorn who serves as an external director in the Company’s Board of Directors.
|
(2) |
Salary cost includes the Covered Office Holder’s gross salary plus payment of social benefits made by the Company on behalf
of such Covered Office Holder. Such benefits may include, to the extent applicable to the Covered Office Holder, payment, contributions
and/or allocations for saving funds (e.g. Managers’ Life Insurance Policy), education funds (referred to in Hebrew as “Keren
Hishtalmut”), pension, severance, risk insurances (e.g. life, or work disability insurance), payments for social security
and tax gross-up payments, vacation, car, medical insurance and benefits, phone, convalescence or recreation pay, and other benefits and
perquisites consistent with the Company’s policies. |
(3) |
Represents annual bonuses paid in accordance with the Covered Office Holder’s performance of targets as set forth in his or
her bonus plan and approved by the Company’s Audit Committee and Board of Directors and/ or any special one-time bonuses as approved
by the Company’s Audit Committee and Board of Directors in accordance with the Company’s Compensation Policy. |
(4) |
Represents the equity-based compensation expenses recorded in the Company’s consolidated financial statements for the year
ended December 31, 2023, for each Covered Office Holder, based on the options’ fair value on the grant date, calculated in accordance
with accounting guidance for equity-based compensation. |
(5) |
Includes relocation expenses which may consist of, to the extent applicable to the Covered Office Holder: housing, schooling, car,
medical insurance and travel expenses for the Covered Office Holder and family members residing with him abroad. |
• |
a majority of the shares voted at the meeting, which are not held by controlling shareholders or shareholders with personal interest
in approving the appointment (excluding personal interest not resulting from contacts with the controlling shareholder), not taking into
account any abstentions, vote in favor of the election; or |
• |
a vote in which the total number of shares voting against the election of the external director, does not exceed two percent
of the aggregate voting rights in the company. |
1. |
a shareholder holding one percent or more of a company’s voting rights proposed the re-election of the nominee; |
2. |
the board of directors proposed the re-election of the nominee and the election was approved by the shareholders by the majority
required to appoint external directors for their initial term; or |
3. |
the external director who is up for renewal has proposed himself or herself for re-election. |
• |
transactions with Office Holders and third parties - where an Office Holder has a personal interest in the transaction; |
• |
employment terms of Office Holders; and |
• |
extraordinary transactions with controlling parties or with a third party where a controlling party has a personal interest in the
transaction; or any transaction with the controlling shareholder or his relative regarding terms of service (provided directly or indirectly,
including through a company controlled by the controlling shareholder) and terms of employment (for a controlling shareholder who is not
an Office Holder). A “relative” is defined in the Companies Law as spouse, sibling, parent, grandparent, descendant, spouse’s
descendant, sibling or parent and the spouse of any of the foregoing. |
• |
the majority of the shares of shareholders who have no personal interest in the transaction and who are present and voting, vote
in favor; or |
• |
shareholders who have no personal interest in the transaction who vote against the transaction do not represent more than two percent
of the aggregate voting rights in the company. |
• |
a breach of his or her duty of care to us or to another person; |
• |
a breach of his or her duty of loyalty to us, provided that the Office Holder acted in good faith and had reasonable cause to assume
that his or her act would not prejudice our interests; and |
• |
a financial liability imposed upon him or her in favor of another person. |
• |
a financial liability imposed on him or her in favor of another person by any judgment, including a settlement or an arbitration
award approved by a court; |
• |
reasonable litigation expenses, including attorney’s fees, incurred by the Office Holder as a result of an investigation or
proceeding instituted against him by a competent authority which concluded without the filing of an indictment against him and without
the imposition of any financial liability in lieu of criminal proceedings, or which concluded without the filing of an indictment against
him but with the imposition of a financial liability in lieu of criminal proceedings concerning a criminal offense that does not require
proof of criminal intent or in connection with a financial sanction (the phrases “proceeding concluded without the filing of an
indictment” and “financial liability in lieu of criminal proceeding” shall have the meaning ascribed to such phrases
in section 260(a)(1a) of the Companies Law); |
• |
reasonable litigation expenses, including attorneys’ fees, expended by an Office Holder or charged to the Office Holder by
a court, in a proceeding instituted against the Office Holder by the Company or on its behalf or by another person, or in a criminal charge
from which the Office Holder was acquitted, or in a criminal proceeding in which the Office Holder was convicted of an offense that does
not require proof of criminal intent; and |
• |
expenses, including reasonable litigation expenses and legal fees, incurred by an Office Holder in relation to an administrative
proceeding instituted against such Office Holder, or payment required to be made to an injured party, pursuant to certain provisions of
the Israeli Securities Law. |
• |
a breach by the Office Holder of his or her duty of loyalty, except that the company may enter into an insurance contract or indemnify
an Office Holder if the Office Holder acted in good faith and had a reasonable basis to believe that the act would not prejudice the company;
|
• |
a breach by the Office Holder of his or her duty of care if such breach was intentional or reckless, but unless such breach was solely
negligent; |
• |
any act or omission done with the intent to derive an illegal personal benefit; or
|
• |
any fine, civil fine, financial sanction or monetary settlement in lieu of criminal proceedings imposed on such Office Holder.
|
D. |
Employees |
As of December 31,
|
||||||||||||
2023 |
2022 |
2021 |
||||||||||
Executive management
|
4 |
4 |
4 |
|||||||||
Research and development
|
151 |
119 |
104 |
|||||||||
Sales support
|
156 |
121 |
113 |
|||||||||
Sales and marketing
|
91 |
54 |
46 |
|||||||||
Administration
|
57 |
50 |
45 |
|||||||||
Operations
|
106 |
98 |
92 |
|||||||||
Total
|
565 |
446 |
404 |
As of December 31,
|
||||||||||||
2023 |
2022 |
2021 |
||||||||||
Israel
|
287 |
280 |
255 |
|||||||||
Abroad
|
278 |
166 |
149 |
|||||||||
Total
|
565 |
446 |
404 |
Name |
Total Beneficial Ownership |
Percentage |
||||||
Rafi Amit(1)
|
29,689 |
* |
||||||
Moty Ben- Arie(2)
|
4,258 |
* |
||||||
Orit Stav(2)
|
4,258 |
* |
||||||
Yotam Stern(3)
|
- |
* |
||||||
Leo Huang (4)
|
- |
* |
||||||
I-Shih Tseng |
- |
* |
||||||
Yael Andorn(5)
|
4,258 |
* |
||||||
Yosi Shacham-Diamand(5)
|
9,599 |
* |
||||||
Moshe Eisenberg(6)
|
15,278 |
* |
||||||
Ramy Langer(7)
|
19,929 |
* |
||||||
Orit Geva Dvash(8)
|
12,332 |
* |
||||||
*Beneficially owns less than 1% |
(1)
|
Includes (i) 15,509 ordinary shares; and (ii) 14,180 RSUs that will become vested
within 60 days of the date of the table. Does not include 47,061 RSUs that do not vest within 60 days of the date of the table. In addition,
as a result of a voting agreement relating to a majority of Priortech’s voting equity, Mr. Amit may be deemed to control Priortech.
As a result, Mr. Amit may be deemed to beneficially own the 9,617,757 shares of the Company held by Priortech. Mr. Amit disclaims beneficial
ownership of such shares. See Item 7. Major Shareholders and Related Party Transactions. A. Major Shareholders – Beneficial Ownership”
below.
|
(2)
|
Includes (i) 1,082 ordinary shares; and (ii) fully vested options to purchase 3,176
ordinary shares, at an exercise price of $22.63 per share, which expire in November 2029. Does not include (i) options to purchase 3,176
ordinary shares which fully vest at the 2023 AGM, at an exercise price of $22.63 per share, which expire in December 2029 and (ii) 1,082
RSUs that do not vest within 60 days of the date of the table.
|
(3)
|
Mr. Stern does not directly own any of our ordinary shares. As a result of a voting
agreement relating to a majority of Priortech’s voting equity, Mr. Stern may be deemed to control Priortech. As a result, Mr. Stern
may be deemed to beneficially own the 9,617,757 shares of the Company held by Priortech. Mr. Stern disclaims beneficial ownership of such
shares. See Item 7. Major Shareholders and Related Party Transactions. A. Major Shareholders – Beneficial Ownership” below.
|
(4)
|
Mr. Huang does not directly own any of our ordinary shares. Based on information we
received from Chroma, Mr. Huang is considered a controlling person with regard to Chroma, accordingly Mr. Huang may be deemed to beneficially
own the 7,817,440 shares of the Company held by Chroma. Mr. Huang disclaims beneficial ownership of such shares. See Item 7. Major Shareholders
and Related Party Transactions. A. Major Shareholders – Beneficial Ownership” below.
|
(5)
|
Includes (i) 4,997 ordinary shares; and (ii) fully vested options to purchase 4,602
ordinary shares, at an exercise price of $36.45 per share, which expire on August 18, 2028. Does not include (i) options to purchase 3,176
ordinary shares which fully vest at the 2023 AGM, at an exercise price of $22.63 per share, which expire in December, 2029; and (ii) 394
RSUs that do not vest within 60 days of the date of the table.
|
(6)
|
Includes (i) 6,924 ordinary shares; (ii) 8,354 RSUs that will
become vested within 60 days of the date of the table. Does not include 21,653 RSUs that do not vest within 60 days of the date of the
table.
|
(7)
|
Includes (i) 8,682 ordinary shares; and (ii) 11,247 RSUs that will become vested within
60 days of the date of the table. Does not include 27,887 RSUs that do not vest within 60 days of the date of the table.
|
(8)
|
Includes (i) 7,689 ordinary shares; and (ii) 4,643 RSUs that will become vested within
60 days of the date of the table. Does not include 11,643 RSUs that do not vest within 60 days of the date of the table. |
Number of Ordinary Shares*
|
Percentage |
|||||||
Priortech Ltd. (1)
|
9,617,757 |
21.31 |
% | |||||
Chroma ATE Inc.
(2) |
7,817,440 |
17.32 |
% | |||||
Migdal Insurance & Financial Holdings Ltd (3)
|
3,455,423 |
7.75 |
% |
(1)
|
28.57% of the voting equity in Priortech Ltd. is subject to a voting agreement. As
a result of this agreement, and due to the fact that there are no other shareholders holding more than 50% of the voting equity in Priortech
Ltd., Messrs. Rafi Amit, Yotam Stern, David Kishon, and Hanoch Feldstien and the estates of Itzhak Krell (deceased), Zehava Wineberg (deceased)
and Haim Langmas (deceased), may be deemed to control Priortech Ltd. The voting agreement does not provide for different voting rights
for Priortech than the voting rights of other holders of our ordinary shares. Priortech’s principal executive offices are located
at South Industrial Zone, Migdal Ha’Emek 23150, Israel.
|
(2)
|
Based on the Schedule 13G filed by Chroma ATE Inc. on August 5, 2019, which presented
ownership as of June 19, 2019. The 7,817,440 Ordinary Shares reported under such Schedule 13G by Chroma are beneficially owned by Chroma. Chroma’s
principal address is No. 66, Hwa Ya 1 Rd., Guishan District, Taoyuan City 333, Taiwan.
|
(3)
|
Based on the Schedule 13G filed by Migdal Insurance & Financial Holdings Ltd.
(“Migdal”) on January 31, 2024, which presented ownership as of December 31, 2023. Of the 1,901,521 Ordinary Shares reported
as beneficially owned by the Migdal (i) 1,901,521 Ordinary Shares are held for members of the public through, among others, provident
funds, mutual funds, pension funds and insurance policies, which are managed by direct and indirect subsidiaries of Reporting Person,
each of which subsidiaries operates under independent management and makes independent voting and investment decisions, and (ii)
329,924 Ordinary Shares are held by companies for the management of funds for joint investments in trusteeship, each of which operates
under independent management and makes independent voting and investment decisions, and (iii) - are beneficially held for their own account
(Nostro account). Migdal’s principal business address is 4 Efal Street; P.O. Box 3063; Petach Tikva 49512, Israel.
|
• |
an individual citizen or resident of the United States for U.S. federal income tax purposes; |
• |
a corporation (or another entity taxable as a corporation for U.S. federal income tax purposes) created or organized under the laws
of the United States, any political subdivision thereof, or the District of Columbia; |
• |
an estate, the income of which may be included in gross income for U.S. federal income tax purposes regardless of its source; or
|
• |
a trust (i) if, in general, a U.S. court is able to exercise primary supervision over its administration and one or more U.S.
persons have the authority to control all of its substantial decisions, or (ii) that has in effect a valid election under applicable
U.S. Treasury Regulations to be treated as a U.S. person. |
Tax Year |
Development “Zone A” |
Other Areas within Israel |
Regular Corporate Tax Rate |
2013 |
7% |
12.5% |
25% |
2014-2015 |
9% |
16% |
26.5% |
2016 |
9% |
16% |
25% |
2017 |
7.5% |
16% |
24% |
2018 |
7.5% |
16% |
23% |
2019 |
7.5% |
16% |
23% |
2020 |
7.5% |
16% |
23% |
2021 |
7.5% |
16% |
23% |
2022 |
7.5% |
16% |
23% |
2023 |
7.5% |
16% |
23% |
2024 |
7.5% |
16% |
23% |
Enterprise type |
Development “Zone A”
|
Other Areas within Israel |
Regular Corporate Tax Rate |
Preferred Enterprise |
7.5% |
16% |
23% |
Special Preferred Enterprise |
5% |
8% |
23% |
Preferred Technological Enterprise
|
7.5% |
12% |
23% |
Special Preferred Technological Enterprise
|
6% |
6% |
23% |
• |
amortization of the cost of purchased know-how and patents over an eight-year period for tax purposes, from the tax year it began
to use them; |
• |
amortization of expenses incurred in some cases in connection with a public issuance of publicly traded securities over a three-year
period; and |
• |
accelerated depreciation rates on equipment and buildings. |
(a) |
Disclosure Controls and Procedures. |
(b)
|
Management’s
Annual Report on Internal Control Over Financial Reporting. |
(c)
|
Attestation Report
of the Registered Public Accounting Firm. |
(d) |
Changes in Internal Control over Financial Reporting. |
Fee Category |
For 2023 Services Rendered
|
For 2022 Services Rendered
|
||||||
Audit Fees (1) |
365,300 |
302,300 |
||||||
Audit-Related Fees (2) |
134,000 |
0 |
||||||
Tax Fees (3) |
69,000 |
2,800 |
- |
We have opted out of the requirement that all securities listed on Nasdaq be eligible for a direct registration program operated
by a registered clearing agency as set forth in Rule 5255(a). Our procedures regarding the issuance of stock certificates comply with
Israeli law and practice. According to the Companies Law, a share certificate is defined as a certificate which states the name of
the owner registered in the company’s shareholders register, as well as the number of shares he or she owns. In the event that
what is registered in the company’s shareholders register conflicts with a share certificate, then the evidentiary value of the
shareholder register outweighs the evidentiary value of the share certificate. A shareholder registered in the company’s shareholders
register is entitled to receive from the company a certificate evidencing his ownership of the share. |
- |
As all members of our Audit Committee meet the independence requirements for compensation committee members set forth in Nasdaq Rule
5605(d)(2), as a foreign private issuer, we have elected, pursuant to Nasdaq Rule 5615(a)(3), to follow Israeli practice, in lieu of compliance
with the certain provisions of Nasdaq Rule 5605(d), requiring us to have a separate compensation committee. Accordingly, and consistent
with Israeli law allowing an audit committee that satisfies the requirements of the Companies Law regarding the composition of a
compensation committee, to carry out all duties and responsibilities of the compensation committee, our Audit Committee has been authorized
to assume the functions and responsibilities of a compensation committee. In this respect, we have also opted out the requirement to adopt
and file a compensation committee charter as set forth in Rule 5605(d)(1).We have opted out of the requirement for shareholder approval
of stock option plans and other equity-based compensation arrangements as set forth in Nasdaq Rule 5635 and Nasdaq Rule 5605(d), respectively.
Nevertheless, as required under the Companies Law, special shareholder voting procedures are followed for the approval of equity-based
compensation of certain Office Holders or employees who are controlling shareholders or any relative thereof, as well as of our Chief
Executive Officer and members of our Board of Directors. Equity-based compensation arrangements with Office Holders (chief executive officer
and directors excluded) or employees who are not controlling shareholders or any relative thereof, are approved by our Compensation Committee
and our Board of Directors, provided they are consistent with our Compensation Policy, and in special circumstances in deviation therefrom,
taking into account certain considerations as set forth in the Companies Law. |
- |
We have opted out of the requirement for conducting annual meetings as set forth in Nasdaq Rule 5620(a), which requires Camtek to
hold its annual meetings of shareholders within twelve months of the end of a company’s fiscal year end. Instead, Camtek is following
home country practice and law in this respect. The Companies Law requires that an annual meeting of shareholders be held every year, and
not later than 15 months following the last annual meeting (see in Item 10.B –
“Memorandum and Articles - Voting, Shareholders’ Meetings and Resolutions” above). Our 2023 AGM was held on December
21, 2023, therefore our 2024 AGM must be held by December 31, 2024. Further, we have opted out the requirement set under Rule 5620(c)
of the Nasdaq Rules which requires the presence of two or more shareholders holding at least 33 1/3%, and in lieu follow our home country
practice and Israeli law, according to which the quorum for any shareholders meeting will be the presence of two or more shareholders
holding at least 25% of the voting rights in the aggregate - within half an hour from the time set for opening the meeting. |
- |
We have chosen to follow our home country practice in lieu of the requirements of Nasdaq Rule 5250(d)(1), relating to an issuer’s
furnishing of its annual report to shareholders. Specifically, we file annual reports on Form 20-F, which contain financial statements
audited by an independent accounting firm, electronically with the SEC and post a copy on our website. |
• |
risk assessments designed to
help identify material cybersecurity risks to our critical systems, information, products, services, and our broader enterprise IT environment;
|
• |
a security team principally
responsible for managing (1) our cybersecurity risk assessment processes, (2) our security controls, and (3) our response to cybersecurity
incidents; |
• |
the use of external service
providers, where appropriate, to assess, test or otherwise assist with aspects of our security controls; and |
• |
a cybersecurity incident response
plan that includes procedures for responding to cybersecurity incidents |
Camtek Ltd.
and its subsidiaries
Consolidated Financial Statements
As of December 31, 2023
|
Page
|
|
Report of Independent Registered Public Accounting Firm (PCAOB ID No.
|
F-2 to F-5
|
F-6 to F-7
|
|
F-8 to F-9
|
|
F-10
|
|
F-11
|
|
F-12 to F-13
|
|
F-14 to F-53
|
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the inventory provision process, including controls related to the assumptions noted above. We assessed the changing product demands and probability of anticipated usage assumptions by performing an independent analysis of available market information that took into consideration industry-related market conditions and possible technological changes. We considered the effect of technological changes on the inventory provision estimate through inquiry of finance and operational personnel. We also compared historical inventory provisions to actual quantity sold in subsequent periods to evaluate management’s ability to accurately estimate the reserve.
We identified the evaluation of the fair value of the developed technology intangible asset acquired in the FRT acquisition as a critical audit matter. A high degree of subjective auditor judgment was required to assess certain assumptions used to estimate the fair value, specifically the forecasted revenue growth rates and discount rate. Changes in these assumptions could have had a significant impact on the fair value of the acquired developed technology intangible asset. In addition, the involvement of valuation professionals with specialized skills and knowledge was required to assess the discount rate.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s process to determine the acquisition-date fair value of the developed technology intangible asset, including controls related to the development of the forecasted revenue growth rates and discount rate. We performed sensitivity analyses over the Company’s forecasted revenue growth rates and discount rate used to determine the fair value of the developed technology intangible asset to assess the impact of changes in those assumptions on the Company’s determination of fair value. We assessed the reasonableness of the Company’s forecasted revenue growth rates by comparing them to current industry, market and economic trends, FRT’s historical results, and FRT’s actual results since the acquisition date. In addition, we involved valuation professionals with specialized skills and knowledge, who assisted in evaluating the discount rate by independently developing a discount rate using publicly available market data and comparing it to the Company’s discount rate.
Somekh Chaikin
December 31,
|
||||||||||||
2023
|
2022
|
|||||||||||
Note
|
U.S. Dollars (In thousands)
|
|||||||||||
Assets
|
||||||||||||
Current assets
|
||||||||||||
Cash and cash equivalents
|
4
|
|
|
|||||||||
Short-term deposits
|
2F
|
|
|
|
||||||||
Marketable securities
|
5,22
|
|
|
|||||||||
Trade accounts receivable, net
|
15
|
|
|
|||||||||
Inventories
|
6
|
|
|
|||||||||
Other current assets
|
7
|
|
|
|||||||||
Total current assets
|
|
|
||||||||||
Long-term deposits
|
8
|
|
|
|||||||||
Marketable securities
|
5,22
|
|
|
|||||||||
Long-term inventory
|
6
|
|
|
|||||||||
Deferred tax asset, net
|
20
|
|
|
|||||||||
Other assets, net
|
|
|
||||||||||
Property, plant and equipment, net
|
9, 2X
|
|
|
|
||||||||
Intangible assets, net
|
10
|
|
|
|||||||||
Goodwill
|
3, 2M
|
|
|
|
||||||||
Total non-current assets
|
|
|
||||||||||
Total assets
|
|
|
Year Ended December 31,
|
||||||||||||
2023
|
2022
|
|||||||||||
Note |
U.S. Dollars (In thousands)
|
|||||||||||
Liabilities and shareholder’s equity
|
||||||||||||
Current liabilities
|
||||||||||||
Trade accounts payable
|
|
|
||||||||||
Other current liabilities
|
11
|
|
|
|||||||||
Total current liabilities
|
|
|
||||||||||
Long-term liabilities
|
||||||||||||
Deferred tax liabilities, net
|
|
|
||||||||||
Other long-term liabilities
|
12 ,14
|
|
|
|||||||||
Convertible notes
|
13
|
|
|
|||||||||
|
|
|||||||||||
Total liabilities
|
|
|
||||||||||
Commitments and contingencies
|
14
|
|||||||||||
Shareholders’ equity
|
16
|
|||||||||||
Ordinary shares NIS
|
||||||||||||
|
||||||||||||
|
|
|
||||||||||
Additional paid-in capital
|
|
|
||||||||||
Accumulated other comprehensive income
|
|
|
||||||||||
Retained earnings
|
|
|
||||||||||
|
|
|||||||||||
Treasury stock, at cost (
|
(
|
)
|
(
|
)
|
||||||||
Total shareholders' equity
|
|
|
||||||||||
Total liabilities and shareholders' equity
|
|
|
_______________________ | ____________________ |
Chief Executive Officer |
Chief Financial Officer |
Year Ended December 31,
|
||||||||||||||||
2023 | 2022 |
2021
|
||||||||||||||
Note
|
U.S. Dollars (In thousands)
|
|||||||||||||||
Revenues
|
18, 19A
|
|
|
|
|
|||||||||||
Cost of revenues
|
|
|
|
|||||||||||||
Gross profit
|
|
|
|
|||||||||||||
Operating expenses:
|
||||||||||||||||
Research and development
|
|
|
|
|||||||||||||
Selling, general and administrative
|
19B
|
|
|
|
|
|||||||||||
Total operating expenses
|
|
|
|
|||||||||||||
Operating profit
|
|
|
|
|||||||||||||
Financial income, net
|
19C
|
|
|
|
|
|||||||||||
Income before incomes taxes
|
|
|
|
|||||||||||||
Income tax expense
|
20
|
(
|
)
|
(
|
)
|
(
|
)
|
|||||||||
Net income
|
|
|
|
Year Ended December 31,
|
||||||||||||
2023
|
2022
|
2021
|
||||||||||
U.S. Dollars
|
||||||||||||
Earnings per share information (see Note 17):
|
||||||||||||
Basic net earnings per share
|
|
|
|
|||||||||
Diluted net earnings per share
|
|
|
|
|||||||||
Weighted average number of
|
||||||||||||
ordinary shares outstanding (in thousands):
|
||||||||||||
Basic
|
|
|
|
|||||||||
Diluted
|
|
|
|
Year Ended December 31,
|
||||||||||||
2023
|
2022
|
2021
|
||||||||||
U.S. Dollars (in thousands)
|
||||||||||||
Net income
|
||||||||||||
Other comprehensive income, net of tax:
|
|
|
|
|||||||||
Change in net unrealized gains on available-for-sale marketable securities
|
|
|
|
|||||||||
Deferred tax expense
|
(
|
) | ||||||||||
Total other comprehensive income
|
|
|
|
|||||||||
Total comprehensive income
|
|
|
|
Ordinary Shares |
Treasury Stock |
|
|
|
|
|||||||||||||||||||||||||||
NIS 0.01 par value |
NIS 0.01 par value |
Other |
Total |
|||||||||||||||||||||||||||||
Number of
|
U.S. Dollars
(In
|
Number of
Shares
|
U.S. Dollars
(In
|
Additional paid-in |
Comprehensive
Income
|
Retained
earnings
|
shareholders'
equity
|
|||||||||||||||||||||||||
Shares
|
thousands)
|
thousands)
|
capital |
U.S. Dollars (In thousands)
|
||||||||||||||||||||||||||||
Balances at December 31, 2020
|
|
|
(
|
)
|
(
|
)
|
|
|
|
|
||||||||||||||||||||||
|
|
-
|
|
|
|
|
||||||||||||||||||||||||||
Share-based compensation expense
|
-
|
|
-
|
|
|
|
|
|
||||||||||||||||||||||||
Net income
|
-
|
|
-
|
|
|
|
|
|
||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Balances at December 31, 2021
|
|
|
(
|
)
|
(
|
)
|
|
|
|
|
||||||||||||||||||||||
Exercise of share options and RSUs
|
|
|
-
|
|
|
|
|
|
||||||||||||||||||||||||
Shared-based compensation expense
|
-
|
|
-
|
|
|
|
|
|
||||||||||||||||||||||||
Net income
|
-
|
|
-
|
|
|
|
|
|
||||||||||||||||||||||||
Balances at December 31, 2022
|
|
|
(
|
)
|
(
|
)
|
|
|
|
|
||||||||||||||||||||||
Exercise of share options and RSUs
|
|
|
-
|
|
|
|
|
|
||||||||||||||||||||||||
Share-based compensation expense
|
-
|
|
-
|
|
|
|
|
|
||||||||||||||||||||||||
Share-based compensation adjustment
|
-
|
|
-
|
|
|
|
|
|
||||||||||||||||||||||||
Unrealised gain on investments
|
|
|
||||||||||||||||||||||||||||||
Deferred tax expense
|
(
|
)
|
(
|
)
|
||||||||||||||||||||||||||||
Net income
|
-
|
|
-
|
|
|
|
|
|
||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Balances at December 31, 2023
|
|
|
(
|
)
|
(
|
)
|
|
|
|
|
Consolidated Statements of Cash Flows
Year Ended December 31,
|
||||||||||||
2023
|
2022
|
2021
|
||||||||||
U.S. Dollars (In thousands)
|
||||||||||||
Cash flows from operating activities:
|
||||||||||||
Net income
|
|
|
|
|||||||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||||||
Depreciation and amortization
|
|
|
|
|||||||||
Deferred tax (benefit) expense
|
(
|
)
|
(
|
)
|
|
|||||||
Amortization of debt issuance costs
|
|
|
|
|||||||||
Share based compensation expense
|
|
|
|
|||||||||
Change in provision for doubtful debts
|
|
(
|
)
|
(
|
)
|
|||||||
Loss on disposal of fixed assets
|
|
|
|
|||||||||
Changes in operating assets and liabilities:
|
||||||||||||
Trade accounts receivable, gross
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Inventories
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Due from related parties
|
(
|
)
|
|
(
|
)
|
|||||||
Other assets
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Trade accounts payable
|
|
(
|
)
|
|
||||||||
Other current liabilities
|
(
|
)
|
|
|
||||||||
Net cash provided by operating activities
|
|
|
|
|||||||||
Cash flows from investing activities:
|
||||||||||||
Acquisition of subsidiary consolidated for the first time (a)
|
(
|
)
|
|
|
||||||||
Proceeds from (investment in) short-term deposits
|
|
(
|
)
|
(
|
)
|
|||||||
Proceeds from (investment in) long-term deposits
|
|
(
|
)
|
(
|
)
|
|||||||
Purchase of fixed assets
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Purchase of intangible assets
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Purchase of marketable securities
|
(
|
)
|
|
|
||||||||
Redemption of marketable securities
|
|
-
|
-
|
|||||||||
Net cash used in investing activities
|
(
|
)
|
(
|
)
|
(
|
)
|
Year Ended December 31,
|
||||||||||||
2023
|
2022
|
2021
|
||||||||||
U.S. Dollars (In thousands)
|
||||||||||||
Cash flows from financing activities:
|
||||||||||||
Proceeds from exercise of share options
|
|
|
|
|||||||||
Issuance of convertible notes, net
|
|
|
|
|||||||||
Net cash provided by financing activities
|
|
|
|
|||||||||
Effect of exchange rate changes on cash
|
(
|
)
|
(
|
)
|
|
|||||||
Net increase (decrease) in cash and cash equivalents
|
(
|
)
|
(
|
)
|
|
|||||||
Cash and cash equivalents at beginning of the year
|
|
|
|
|||||||||
Cash and cash equivalents at end of the year
|
|
|
|
Year Ended
December 31,
|
||||
2023
|
||||
(a) Acquisition of subsidiary, consolidated for the first time:
|
U.S. Dollars
(in thousands)
|
|||
Working capital (excluding cash and cash equivalents)
|
(
|
)
|
||
Fixed assets, net
|
(
|
)
|
||
Intangible assets
|
(
|
)
|
||
Goodwill
|
(
|
)
|
||
Deferred taxes liabilities, net
|
|
|||
Working capital adjustments
|
(
|
)
|
||
( |
) | |||
Increase in goodwill against share-based comensation |
||||
(
|
)
|
Year Ended December 31,
|
||||||||||||
2023
|
2022
|
2021
|
||||||||||
U.S. Dollars (In thousands)
|
||||||||||||
Supplementary cash flows information:
|
||||||||||||
A. Cash paid and received during the year for:
|
||||||||||||
Income taxes paid
|
|
|
|
|||||||||
Interest received
|
|
|
|
|||||||||
Lease payments
|
|
|
|
|||||||||
B. Non-cash transactions:
|
||||||||||||
Fixed assets purchased with supplier credit
|
|
|
|
A. |
Camtek Ltd. (“Camtek” or “Company”), an Israeli corporation, is jointly controlled by (
|
B. |
In October 2023, the Company completed the acquisition of
|
C. |
In November 2021, the Company closed an offering of $
|
A. |
Basis of preparation of the financial statements |
B. |
Principles of consolidation
|
C. |
Use of estimates
|
D. |
Foreign currency transactions
|
E. |
Cash and cash equivalents
|
F. |
Short-term deposits
|
H. |
Trade accounts receivable and allowance for doubtful accounts
|
Note 2 - Significant Accounting Policies (cont’d)
I. |
Inventories
|
J. |
Property, plant and equipment
|
Land
|
|
%
|
||
Building
|
|
%
|
||
Machinery and equipment
|
|
%
|
||
Computer equipment and software
|
|
%
|
||
Office furniture and equipment
|
|
%
|
||
Automobiles
|
|
%
|
Note 2 - Significant Accounting Policies (cont’d)
K. |
Business Combinations
|
L. |
Intangible assets
|
Note 2 - Significant Accounting Policies (cont’d)
M. |
Goodwill
|
N. |
Impairment of long-lived assets
|
O. |
Fair values of financial instruments
|
Note 2 - Significant Accounting Policies (cont’d)
P. |
Revenue recognition
|
The Company’s contracts with its customers include performance obligations to provide its products or to service the installed products. A product sale contract may include an extended warranty (that is, for longer than the twelve-month standard warranty) as well as installation, both of which are considered separate performance obligations. For such arrangements, the Company allocates revenue to each performance obligation based on its relative standalone selling price. The Company generally determines standalone selling prices based on the prices charged to customers.
Year Ended December 31,
|
||||||||
2023
|
2022
|
|||||||
U.S. Dollars (in thousands)
|
||||||||
Beginning of year
|
|
|
||||||
Deferral of revenue
|
|
|
||||||
Recognition of deferred revenue
|
(
|
)
|
(
|
)
|
||||
Balance at end of year
|
|
|
Note 2 - Significant Accounting Policies (cont’d)
Q. |
Warranty |
R. |
Income taxes |
The Company accounts for income taxes in accordance with the asset and liability method whereby deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts and the tax bases of assets and liabilities and are measured using the enacted tax rates and laws expected to apply to taxable income in the years in which the deferred tax asset or liability is expected to be recovered or settled. The Company includes the foreign currency transaction gains or losses that result from re-measuring deferred taxes in income tax expense. If necessary, the Company reduces deferred tax assets with a valuation allowance to the amount that is more likely than not to be realized.
The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50 percent likely of being realized. Changes in recognition or measurement are reflected in the period in which the change occurs. The Company recognizes interest and penalties related to unrecognized tax benefits as a component of income tax expenses.
The Company may incur additional tax liability in the event of intercompany dividend distributions by some of its subsidiaries. Such additional tax liability in respect of these non-Israeli subsidiaries has not been provided for in these consolidated financial statement as it is the Company’s policy permanently to reinvest the subsidiaries’ earnings and to consider distributing dividends only when this can be facilitated in connection with a specific tax or other opportunity that may arise.
Tax liabilities which would apply in the event of disposal of investments in non-Israeli subsidiaries have not been taken into account in computing the deferred taxes, as it is the Company’s intention to hold, and not to realize, these investments.
S. |
Research and development |
T. |
Earnings per ordinary share |
Note 2 - Significant Accounting Policies (cont’d)
U. |
Share-based compensation |
V. |
Fair value measurements
|
W. |
Contingent liabilities
|
Note 2 - Significant Accounting Policies (cont’d)
X. |
Leases
|
Operating lease ROU assets consist mainly of vehicles and real estate and are presented as property, plant and equipment on the consolidated balance sheet. The current portion of operating lease liabilities is included in other current liabilities and the long-term portion is presented within long-term liabilities on the consolidated balance sheet.
For operating leases, the ROU asset is subsequently measured throughout the lease term at the carrying amount of the lease liability, plus initial direct costs, plus (minus) any prepaid (accrued) lease payments, less the unamortized balance of lease incentives received. Lease expense for lease payments is recognized on a straight-line basis over the lease term.
ROU assets for operating leases are periodically reduced by impairment losses. The Company uses the long-lived assets impairment guidance in ASC Subtopic 360-10, Property, Plant, and Equipment – Overall, to determine whether an ROU asset is impaired, and if so, the amount of the impairment loss to recognize. See Note 2N.
Y. |
Convertible Notes |
Z. |
New Accounting Pronouncements |
In December 2023, the FASB issued Accounting Standards Update No. 2023-09, Income Taxes (Topic 740) Improvements to Income Tax Disclosure. The standard requires to disclose additional information in tax rate reconciliation table about federal, state and foreign income taxes and to provide more details about the reconciling items in some categories. The standard will become effective for fiscal years beginning after December 15, 2024. The Company is currently assessing the impact of the adoption of this standard on its consolidated financial statements.
The acquisition was accounted for using the acquisition method of accounting, with the Company treated as the acquirer. The acquired assets and liabilities of FRT were recorded at their respective fair values including an amount for goodwill representing the difference between the acquisition consideration and the fair value of the identifiable net assets.
During the year ended December 31, 2023, the Company incurred approximately $
Our Consolidated Statements of income include the financial results of FRT subsequent to the acquisition date of October 31, 2023.
Under the preliminary purchase price allocation, the Company allocated the purchase price to tangible and identified intangible assets acquired and liabilities assumed based on the preliminary estimates of their fair values, which were determined using generally accepted valuation techniques based on estimates and assumptions made by management at the time of the acquisition. Such estimates are subject to change during the measurement period which is not expected to exceed one year. The fair values assigned to assets acquired and liabilities assumed were based on management’s assumptions as of the reporting date.
As part of the acquisition, the Company granted share-based compensation to FRT employees to replace awards previously granted by the seller.
October 31,
2023
|
||||
U.S. Dollars
(in
thousands)
|
||||
Cash and cash equivalents
|
|
|||
Working capital (excluding cash and cash equivalents)
|
|
|||
Fixed assets, net
|
|
|||
Intangible assets
|
|
|||
Goodwill
|
|
|||
Deferred taxes liabilities, net
|
(
|
)
|
||
Cash consideration |
||||
Capitalized share-based compensation |
||||
|
October 31,
|
|
|||||||
2023
U.S. Dollars
|
Weighted
average
|
|||||||
(in
thousands)
|
useful life
(in years)
|
|||||||
Technology
|
|
|
||||||
Trade name
|
|
|
||||||
Customer relationship
|
|
|
||||||
|
|
Goodwill
The goodwill arising from the acquisition represents, inter alia, the synergies between the technology acquired and the Company’s existing operational, R&D and sales and marketing infrastructure. Amortization of the goodwill is not a recognized expense for tax purposes.
Pro Forma on acquisitions
The following unaudited pro forma financial information summarizes the combined results of operations for the Company, FRT, as if the acquisitions had been completed on January 1, 2022. The unaudited pro forma financial information was as follows:
December 31,
|
||||||||
2023 |
2022
|
|||||||
U.S. Dollars (in thousands)
|
||||||||
Revenue
|
|
|
||||||
Net income
|
|
|
The pro forma financial information for all periods presented above has been calculated after adjusting the results of FRT to reflect the business combination accounting effects resulting from this acquisition, including the amortization expense from acquired intangible assets, goodwill, and tangible assets and add-back of interest income of Camtek's cash, cash equivalents, deposits and marketable securities used as a cash consideration in the acquisition. The historical consolidated financial statements have been adjusted in the pro forma combined financial statements to give effect to pro forma events that are directly attributable to the business combination and factually supportable. The pro forma financial information is for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of 2022.
December 31,
|
||||||||
2023
|
2022
|
|||||||
U.S. Dollars (in thousands)
|
||||||||
US Dollars
|
|
|
||||||
New Israeli Shekels
|
|
|
||||||
Other currencies
|
|
|
||||||
|
|
Marketable Securities
|
Amortized Cost
|
Unrealized Gains
|
Unrealized Losses
|
Fair Value
|
||||||||||||
Matures within one year:
|
||||||||||||||||
Corporate bonds
|
|
|
(
|
)
|
|
|||||||||||
Government bonds
|
|
|
|
|
||||||||||||
|
|
(
|
)
|
|
||||||||||||
Matures after one year:
|
||||||||||||||||
Corporate bonds
|
|
|
(
|
)
|
|
|||||||||||
Government bonds
|
|
|
|
|
||||||||||||
|
|
(
|
)
|
|
||||||||||||
|
|
(
|
)
|
|
December 31, 2023
|
||||||||
Amortized
Cost
|
Fair
Value
|
|||||||
U.S. Dollars (in thousands)
|
||||||||
Due within one year
|
|
|
||||||
Due after one through five years
|
|
|
||||||
Due after five through ten years
|
|
|
||||||
Total marketable securities
|
|
|
In Unrealized Loss Position For Less Than 12 Months
|
In Unrealized Loss Position For Greater Than 12 Months
|
|||||||||||||||
December 31, 2023
|
Fair Value
|
Gross Unrealized Loss
|
Fair Value
|
Gross Unrealized Loss
|
||||||||||||
Corporate bonds
|
|
(
|
)
|
|
(
|
)
|
||||||||||
Government bonds
|
|
|
|
|
||||||||||||
|
(
|
)
|
|
(
|
)
|
December 31,
|
||||||||
2023
|
2022
|
|||||||
U.S. Dollars (in thousands)
|
||||||||
Components
|
|
|
||||||
Work in process
|
|
|
||||||
Finished products *
|
|
|
||||||
|
|
December 31,
|
||||||||
2023
|
2022
|
|||||||
U.S. Dollars (in thousands)
|
||||||||
Current assets
|
|
|
||||||
Non-current assets (A)
|
|
|
||||||
|
|
(A) | Long-term Inventory: |
(B) | Inventory provision |
December 31,
|
||||||||
2023
|
2022
|
|||||||
U.S. Dollars (in thousands)
|
||||||||
Interest receivable
|
|
|
||||||
Prepaid expenses and vendor downpayments
|
|
|
||||||
Due from Government institutions and income tax receivables
|
|
|
||||||
Other
|
|
|
||||||
|
|
Note 9 - Property, Plant and Equipment, Net
December 31,
|
||||||||
2023
|
2022
|
|||||||
U.S. Dollars (in thousands)
|
||||||||
Cost:
|
||||||||
Land
|
|
|
||||||
Building
|
|
|
||||||
Machinery and equipment
|
|
|
||||||
Office furniture and equipment
|
|
|
||||||
Computer equipment and software
|
|
|
||||||
Automobiles
|
|
|
||||||
Leasehold improvements
|
|
|
||||||
Right of use assets
|
|
|
||||||
|
|
|||||||
Less accumulated depreciation
|
|
|
||||||
|
|
|
December 31,
|
|||||||
|
2022
|
2023
|
||||||
|
U.S. Dollars (in thousands)
|
|||||||
Cost:
|
||||||||
Patent registration costs
|
|
|
||||||
Acquired technology
|
|
|
||||||
Acquired trade names
|
|
|
||||||
Acquired customer relationship
|
|
|
||||||
|
|
|||||||
Less accumulated amortization
|
|
|
||||||
Total intangible assets, net
|
|
|
Year ended December 31,
|
U.S. Dollars
(in thousands)
|
|||
2024
|
|
|||
2025
|
|
|||
2026
|
|
|||
2027
|
|
|||
2028
|
|
December 31,
|
||||||||
2023
|
2022
|
|||||||
U.S. Dollars (in thousands)
|
||||||||
Advances from customers and deferred revenues
|
|
|
||||||
Commissions
|
|
|
||||||
Accrued employee compensation and other related benefits
|
|
|
||||||
Government institutions and income tax payable
|
|
|
||||||
Accrued warranty costs (1)
|
|
|
||||||
Accrued expenses
|
|
|
||||||
(See Note 2(V))
|
|
|
||||||
|
|
(1) |
Changes in the accrued warranty costs are as follows:
|
Year Ended December 31, |
||||||||||||
2023
|
2022
|
2021
|
||||||||||
U.S. Dollars (in thousands)
|
||||||||||||
Beginning of year
|
|
|
|
|||||||||
Accruals
|
|
|
|
|||||||||
Usage
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Balance at end of year
|
|
|
|
December 31,
|
||||||||
2023
|
2022
|
|||||||
U.S. Dollars (in thousands)
|
||||||||
Liability for severance pay (A)
|
|
|
||||||
Deferred revenues related to non-standard warranty (B)
|
|
|
||||||
Operating lease obligations
|
|
|
||||||
|
|
1. |
The liability in respect of most of its employees in Israel is discharged by participating in a defined contribution pension plan and making regular deposits with a pension fund or by individual insurance policies. The liability deposited with the pension fund is based on salary components as prescribed in the existing labor agreement. The custody and management of the amounts so deposited are independent of the companies and accordingly such amounts funded (included in expenses on an accrual basis) and related liabilities are not reflected in the balance sheet.
|
2. |
The liability for severance pay which is not covered by the contribution plan amounted to $
|
3. |
Severance pay expenses were $
|
December 31,
|
||||||||
2023
|
2022
|
|||||||
U.S. Dollars (in thousands)
|
||||||||
Liability:
|
||||||||
Principle:
|
|
|
||||||
Unamortized issuance costs
|
(
|
)
|
(
|
)
|
||||
Net carrying amount
|
|
|
A. |
Operating leases
|
December 31,
|
||||||||
2023
|
2022
|
|||||||
U.S. Dollars (in thousands)
|
||||||||
Cost:
|
||||||||
ROU assets – opening balance
|
|
|
||||||
ROU assets – additions
|
|
|
||||||
ROU assets – disposals
|
(
|
)
|
(
|
)
|
||||
|
|
|||||||
Less accumulated depreciation
|
|
|
||||||
|
|
December 31,
|
||||||||
2023
|
2022
|
|||||||
U.S. Dollars (in thousands)
|
||||||||
Other current liabilities
|
|
|
||||||
Other long-term liabilities
|
|
|
||||||
Total lease liabilities
|
|
|
A. |
Operating leases (cont.)
|
Year ended December 31,
|
U.S. Dollars (in thousands)
|
|||
2023
|
|
|||
2024
|
|
|||
2025
|
|
|||
2026
|
|
|||
2027
|
|
|||
|
||||
Less imputed interest
|
|
|||
Total lease liabilities
|
|
Marketable securities
The Company's marketable securities are maintained with high-grade securities and limits the amount of credit exposure to any one issuer.
Balance at
|
Balance at
|
|||||||||||||||||||
beginning
|
Reversal of
|
Write-off of
|
end of
|
|||||||||||||||||
of year
|
Provision
|
provision
|
provision
|
year
|
||||||||||||||||
U.S. Dollars (in thousands)
|
||||||||||||||||||||
2021
|
|
|
|
(
|
)
|
|
||||||||||||||
2022
|
|
|
(
|
)
|
|
|
||||||||||||||
2023
|
|
|
|
|
|
2023 Grant
|
|
Valuation assumptions:
|
|
Dividend yield
|
|
Expected volatility
|
|
Risk-free interest rate
|
|
Expected life (years) *
|
|
Vesting period (years)
|
|
*Expected life for the periods presented was determined according to the simplified method since the Company does not have enough history to make an estimate.
B.
|
Stock Option Plan (cont’d)
|
Year Ended December 31,
|
||||||||||||||||||||||||
2023
|
2022
|
2021
|
||||||||||||||||||||||
Weighted
|
Weighted
|
Weighted
|
||||||||||||||||||||||
Number
|
average
|
Number
|
average
|
Number
|
average
|
|||||||||||||||||||
of
|
exercise
|
of
|
exercise
|
of
|
exercise
|
|||||||||||||||||||
options
|
price US$
|
options
|
price US$
|
options
|
price US$
|
|||||||||||||||||||
Outstanding at January 1
|
|
|
|
|
|
|
||||||||||||||||||
Granted
|
|
|
|
|
|
|
||||||||||||||||||
Forfeited and cancelled
|
|
|
|
|
(
|
)
|
|
|||||||||||||||||
Exercised
|
(
|
)
|
|
(
|
)
|
|
(
|
)
|
|
|||||||||||||||
Outstanding at year end
|
|
|
|
|
|
|
||||||||||||||||||
Exercisable at year end
|
|
|
|
|
|
|
The income tax benefit associated with stock options exercised each year was immaterial.
B.
|
Stock Option Plan (cont’d)
|
Weighted
|
Aggregate
|
|||||||||||
Number
|
Weighted
|
Average
|
intrinsic
|
|||||||||
of
|
average
|
Remaining
|
Value (in
|
|||||||||
options
|
exercise
|
Contractual
|
US$
|
|||||||||
outstanding
|
price US$
|
term (years)
|
thousands)
|
|||||||||
Outstanding and exercisable as of December 31, 2023
|
|
|
|
|
Weighted
|
||||||||
average
|
||||||||
grant- date
|
||||||||
Options
|
fair value
|
|||||||
Balance at January 1, 2023
|
|
|
||||||
Granted
|
|
|
||||||
Vested
|
(
|
)
|
|
|||||
Forfeited
|
|
|
||||||
Balance at December 31, 2023
|
|
|
Note 16 - Shareholders’ Equity (cont’d)
C. |
Restricted Share Unit Plan
|
RSUs
|
Weighted average grant date value
|
|||||||
Balance at January 1, 2023
|
|
$
|
|
|||||
Granted
|
|
$
|
|
|||||
Vested
|
(
|
)
|
$
|
|
||||
Forfeited
|
(
|
)
|
$
|
|
||||
Balance at December 31, 2023
|
|
$
|
|
The income tax benefit associated with all compensation cost for share-based payment awards is immaterial.
Year Ended December 31,
|
||||||||||||
2023
|
2022
|
2021
|
||||||||||
Basic EPS:
|
||||||||||||
Net income attributable to Shares (US$ in thousands)
|
|
|
|
|||||||||
Weighted average number of Shares outstanding used in basic earnings per Share calculation
|
|
|
|
|||||||||
Diluted EPS:
|
||||||||||||
Net income attributable to Shares (US$ in thousands)
|
|
|
|
|||||||||
Add amortization of notes issuance costs
|
|
|
|
|||||||||
Net income used in diluted earnings per Share calculation
|
|
|
|
|||||||||
Weighted average number of Shares outstanding used in basic earnings per Share calculation
|
|
|
|
|||||||||
Add assumed exercise of outstanding dilutive
|
||||||||||||
Effect of stock-based awards
|
|
|
|
|||||||||
Effect of conversion of Notes
|
|
|
|
|||||||||
Weighted average number of Shares Outstanding used in diluted earnings per Share calculation
|
|
|
|
|||||||||
Basic net income per Share ($)
|
|
|
|
|||||||||
Diluted net income per Share ($)
|
|
|
|
|||||||||
Number of options excluded from the diluted earnings per share calculation due to their anti-dilutive effect
|
|
|
|
Year Ended December 31,
|
||||||||||||
2023
|
2022
|
2021
|
||||||||||
U.S. Dollars (in thousands)
|
||||||||||||
China
|
|
|
|
|||||||||
Asia Pacific
|
|
|
|
|||||||||
Korea
|
|
|
|
|||||||||
United States
|
|
|
|
|||||||||
Europe
|
|
|
|
|||||||||
|
|
|
December 31,
|
||||||||
2023
|
2022
|
|||||||
%
|
||||||||
Israel
|
|
|
||||||
Germany
|
|
|
||||||
Other
|
|
|
||||||
Total long-lived assets (*)
|
|
|
A. |
Revenues |
Year Ended December 31, |
||||||||||||
2023
|
2022 |
2021
|
||||||||||
U.S. Dollars (in thousands) |
||||||||||||
Sales of productss
|
|
|
|
|||||||||
Service fees
|
|
|
|
|||||||||
|
|
|
B. |
Selling, general and administrative expenses |
Year Ended December 31, |
||||||||||||
2023
|
2022
|
2021 | ||||||||||
U.S. Dollars (in thousands) |
||||||||||||
Selling (*)
|
|
|
|
|||||||||
General and administrative
|
|
|
|
|||||||||
|
|
|
||||||||||
(*) Including shipping and handling costs
|
|
|
|
C. |
Financial income, net |
Year Ended December 31, |
||||||||||||
2023
|
2022 |
2021
|
||||||||||
U.S. Dollars (in thousands) |
||||||||||||
Interest income
|
|
|
|
|||||||||
Convertible notes amortization
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Other, net (*)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
|
|
(*) |
Other, net includes foreign currency income (expense) resulting from transactions not denominated in U.S. Dollars amounting to $(
|
A. |
Tax under various laws
|
B. |
Details regarding the tax environment of the Israeli companies
|
(1) |
Corporate tax rate
The standard tax rate in Israel for the years 2021-2023 is
Current taxes for the reported periods are calculated according to the enacted tax rates presented above, subject to the reduced tax rate under the Law for the Encouragement of Capital Investment discussed below.
|
(2) |
Benefits under the Law for the Encouragement of Capital Investments (hereinafter - “the Encouragement Law”)
|
(a) |
Amendment to the Law for the Encouragement of Capital Investments – 1959
The Company filed a notice to the Israeli Tax Authorities regarding the implementation of the preferred enterprise to its preferred income. As the Company is located in Development Area A, the applied corporate tax rate is
|
B. |
Details regarding the tax environment of the Israeli companies (cont’d)
|
|
(b) |
In November 2021, an amendment to the Law of Encouragement of Capital Investment was enacted (the "2021 Amendment"). According to the 2021 Amendment, any future dividend distributed by an entity with tax exempt retained earnings will be deemed to be distributed proportionately from such tax exempt retained earnings. As part of the 2021 Amendment, the Israeli Tax Authorities enacted a temporary rule which reduces the tax rate applicable to the distribution of such tax exempt retained earnings.
During the fourth quarter of 2021, the Company entered into a tax assessment with the Israeli Tax Authorities for the years 2017-2020. During the tax assessment, the Company reevaluated certain tax positions, due to the 2021 Amendment and the interactions with the tax authorities. As of December 31, 2021, the Company measured the possible negotiation settlement outcomes regarding its tax positions and concluded that it is the largest amount of tax benefit that is greater than 50 percent likely of being realized that it will incur tax expenses. The Company recognized a provision for these tax expenses at the expected rate which corresponds with the reduced tax rate of the temporary rule mentioned above.
The Company’s Statement of Income for the year ended December 31, 2021 included income tax on earnings of previous years of $
|
C. |
Details regarding the tax environment of the Non-Israeli companies
|
D. |
Composition of income before income taxes and income tax expense
|
Year Ended December 31,
|
||||||||||||
2023
|
2022
|
2021
|
||||||||||
U.S. Dollars (in thousands)
|
||||||||||||
Income before income taxes:
|
||||||||||||
Israel
|
|
|
|
|||||||||
Non-Israeli
|
|
|
|
|||||||||
|
|
|
||||||||||
Income tax expense:
|
||||||||||||
Current:
|
||||||||||||
Israel
|
|
|
(*)
|
|
||||||||
Non-Israeli
|
|
|
|
|||||||||
|
|
|
||||||||||
Deferred tax (benefit) expense:
|
||||||||||||
Israel
|
|
(
|
)
|
|
||||||||
Non-Israeli
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
(
|
)
|
(
|
)
|
|
||||||||
|
|
|
E. |
Reconciliation of income tax expense at the statutory rate to actual income tax expense |
Year Ended December 31,
|
||||||||||||
2023
|
2022
|
2021
|
||||||||||
U.S. Dollars (in thousands)
|
||||||||||||
Income before income taxes
|
|
|
|
|||||||||
Statutory tax rate
|
|
%
|
|
%
|
|
%
|
||||||
Theoretical income tax expense
|
|
|
|
|||||||||
Increase (decrease) in income tax expense resulting from:
|
||||||||||||
Income tax on earnings of previous years- see Note 20B(b)
|
|
|
|
|||||||||
Non-deductible expenses (*)
|
|
|
|
|||||||||
Income tax rate differential
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Other
|
|
|
|
|||||||||
Actual income tax expense
|
|
|
|
F.
|
Deferred tax assets and liabilities
|
December 31,
|
||||||||
2023
|
2022
|
|||||||
U.S. Dollars (in thousands)
|
||||||||
Deferred tax assets:
|
||||||||
Deferred revenue
|
|
|
||||||
Accrued expenses
|
|
|
||||||
Net operating loss and tax credit carryforwards
|
|
|
||||||
Operating lease obligations
|
|
|
||||||
Other temporary differences
|
|
|
||||||
Total deferred tax assets
|
|
|
||||||
Deferred tax liabilities:
|
||||||||
Property, plant and equipment
|
(
|
)
|
(
|
)
|
||||
Inventories (*)
|
(
|
)
|
|
|||||
Intangible assets (*)
|
(
|
)
|
|
|||||
Right of use assets
|
(
|
)
|
(
|
)
|
||||
Undistributed earnings
|
(
|
)
|
(
|
)
|
||||
Total deferred tax liabilities
|
(
|
)
|
(
|
)
|
||||
Net deferred tax assets (liabilities)
|
(
|
)
|
|
Note 20 - Income Taxes (cont’d)
F.
|
Deferred tax assets and liabilities (cont’d)
|
|
December 31,
|
||||||||
2023
|
2022
|
|||||||
U.S. Dollars (in thousands)
|
||||||||
Deferred tax asset, net
|
|
|
||||||
Deferred tax liabilities, net
|
(
|
)
|
|
|||||
Net deferred tax assets (liabilities)
|
(
|
)
|
|
Deferred tax assets are recognized for the anticipated tax benefits associated with operating loss carryforwards, tax credit carryforwards and deductible temporary differences. If it is more likely than not that some or all of the deferred tax assets will not be realized, the deferred tax credits are reduced by a valuation allowance.
G.
|
Accounting for uncertainty in income taxes |
As of December 31, 2023, the entire amount of the unrecognized tax benefits could affect the Company’s income tax provision and the effective tax rate.
The Company accounts for interest and penalties related to income taxes as a component of income tax expense. For the years ended December 31, 2023, 2022 and 2021, no interest and penalties related to income taxes have been accrued.
H.
|
Tax assessments |
A. |
Balances with related parties: |
December 31,
|
December 31,
|
|||||||
2023
|
2022
|
|||||||
U.S. Dollars (in thousands)
|
||||||||
Due from related parties
|
|
|
B. |
Registration Rights Agreement with Priortech |
December 31,
2023
|
Quoted Prices in
Active Markets
for Identical Assets
(Level 1)
|
Significant Other
Observable Inputs
(Level 2)
|
Significant
Unobservable
Inputs (Level 3)
|
|||||||||||||
Description
|
||||||||||||||||
U.S. Dollars
|
||||||||||||||||
Assets
|
||||||||||||||||
Marketable securities (current assets)
|
|
|
|
|
||||||||||||
Marketable securities (non-current assets
|
|
|
|
|
||||||||||||
Total Assets
|
|
|
|
|
Exhibit No. | Exhibit |
101 | Inline XBRL Instance Document |
101.SCH | Inline XBRL Taxonomy Extension Schema Document |
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB | Inline XBRL Taxonomy Extension Labels Linkbase Document |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
‡ | English translations from Hebrew original. |
* | Filed herewith. |
CAMTEK LTD. | |||
By: | /s/ Rafi Amit | ||
Name: | Rafi Amit | ||
Title: | Chief Executive Officer |
Page
|
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6 |
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6 |
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6 |
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7 |
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7 |
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8 |
||
8 |
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9 |
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10 |
||
10 |
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11 |
||
11 |
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12 |
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14 |
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15 |
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15 |
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19 |
||
19 |
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20 |
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22 |
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24 |
||
25 |
||
25 |
||
26 |
||
26 |
||
27 |
||
27 |
27 |
27 |
||
28 |
Exhibit A | List of Key Employees | |
Exhibit B |
Consulting Agreement | |
Exhibit C |
Form of Public Deed | |
Exhibit D |
Seller’s Designated Account | |
Exhibit E |
Form of Post-Closing Statement | |
Exhibit F |
Disclosure Schedule | |
Exhibit G |
Representation and Warranty Policy | |
Exhibit H |
Additional Employees | |
Exhibit I |
Carve-Out Employees | |
Annex A |
Definitions
|
Schedule 4.2
|
Restrictions on Conduct of Business of the Company
|
|
Schedule 4.18(a)
|
Restructuring Activities
|
|
Schedule 4.18(b)
|
Purchase Orders
|
|
Schedule 5.1(h)(ii)
|
Retained Employees
|
|
Schedule 6.4
|
Illustration of Representation and Warranty Policy Payments
|
|
Schedule A-1
|
Seller’s Knowledge
|
|
Schedule A-2
|
(a) |
Closing Timing; Date. The closing of the Share Sale (the “Closing”) shall take
|
(b) |
Closing Deliverables.
|
At the Closing, Parent and Seller shall:
|
(i) |
deliver to Purchaser a letter by the managing director of the Company, and
countersigned by the Company, resigning from such office and a shareholders’ resolution confirming the managing director’s removal with effect as of the Closing; and
|
(ii) |
deliver to Purchaser three (3) USB sticks evidencing the documents
and other materials that were Made Available to Purchaser, and indicating, for each such document or other material, the date it was uploaded to the Data Room.
|
At the Closing, Parent, Seller and Purchaser (as applicable) shall:
|
(iii) |
execute a public deed before a German notary public substantially in
the form of Exhibit C (the “German Transfer Deed”) delivering title to all of the Shares to Purchaser subject to the condition precedent of the payment of the Estimated Purchase Price;
|
(iv) |
execute and deliver to the respective other party the Transaction
Documents;
|
(v) |
deliver to the respective other party all shareholders’ and board
approvals required by it to consummate the transactions contemplated by this Agreement; and
|
(vi) |
deliver to the respective other party such other documents and
declarations proving the fulfillment of the conditions to Closing set out in Section 5.1 and Section 5.2.
(each, a “Closing Deliverable”, and collectively, “Closing Deliverables”).
|
(a) |
Seven (7) Business Days prior to the Closing Date, Parent and Seller shall prepare and deliver to Purchaser a statement (the “Estimated Closing Statement”) setting forth in Dollars,
estimated balance sheet as of the Closing Date prepared in good faith, and in accordance with US GAAP in a manner consistent with the policies and principles used by the Company in connection with the preparation of the Financial Statements,
consistently applied, as well as its good faith estimates of (i) the amount of the Closing Indebtedness (the “Estimated Closing Indebtedness”), (ii) the amount of the Closing Cash (the “Estimated Closing Cash”), (iii) the
Closing Net Working Capital (the “Estimated Closing Net Working Capital”), (iv) Estimated Closing Net Working Capital Adjustment and (v) the Closing Transaction Expenses (the “Estimated Transaction Expenses”), quantifying in
reasonable detail the estimates of the items constituting such Closing Cash, Closing Indebtedness, Closing Net Working Capital, Closing Net Working Capital Adjustment and Closing Transaction Expenses, with such statement to conclude with a
good faith estimate of the Purchase Price (“Estimated Purchase Price”), in each case calculated in accordance with the terms of this Agreement. The Estimated Closing Statement shall be prepared in a manner consistent with the policies
and principles used by the Company in connection with the preparation of the Financial Statements, consistently applied.
|
(b) |
For purposes of the Estimated Closing Statement and all calculations (including payments) in this Article I, the rate of exchange as between any two currencies, shall be determined
based upon the amounts for such currencies consistent with the rates currently utilized by the Company in its financial statements.
|
(c) |
During the period after the delivery of the Estimated Closing Statement and prior to the Closing Date, the parties’ respective CFOs shall have an opportunity to discuss the Estimated
Closing Statement and cooperate in good faith to mutually agree upon the Estimated Closing Statement in the event Purchaser disputes any item proposed to be set forth on such statement; provided, that, if the parties’ respective CFOs
are not able to reach mutual agreement prior to the Closing Date, the Estimated Closing Statement provided by Parent and Seller to Purchaser shall be binding for purposes of this Section, but not, for the avoidance of doubt, for purposes of Section
1.7.
|
(a) |
Within thirty (30) Business Days after the Closing Date, Purchaser shall prepare and deliver to Seller a statement (the “Post-Closing
Statement”) substantially in the form attached hereto as Exhibit E setting forth (i) an unaudited balance sheet as of the Closing Date of the Company, prepared in accordance with US GAAP and in a manner consistent with the
policies and principles used by the Company in connection with the preparation of the Financial Statements, consistently applied, (ii) Purchaser’s calculation, in reasonable detail, of Closing Cash, Closing Indebtedness, Closing Net
Working Capital Adjustment and Closing Transaction Expenses, and (iii) Purchaser’s calculation, in reasonable detail, of any necessary adjustment to the Estimated Purchase Price, in each case calculated in accordance with the terms of
this Agreement.
|
(b) |
During the twenty (20) Business Day period following delivery of the PostClosing Statement to Seller, Purchaser shall provide Seller and its
Representatives with other information and supporting materials used in preparing the Post-Closing Statement reasonably requested by Seller and its Representatives. The Post-Closing Statement and its calculation of the Purchase
Price shall become final and binding on the twentieth (20th) Business Day following delivery thereof, unless prior to the end of such period, Seller delivers to Purchaser written notice of its disagreement (a “Notice of
Disagreement”) specifying the nature and amount of any disputed item. Seller shall be deemed to have agreed with all items and amounts in the Post-Closing Statement not specifically referenced in the Notice of Disagreement,
and such items and amounts shall not be subject to review under subsection (c) below.
|
(c) |
During the ten (10) Business Day period following delivery of a Notice of Disagreement by Seller to Purchaser, the parties shall seek in good
faith to resolve in writing any differences they may have with respect to the matters specified therein. During such ten (10) Business Day period, each party shall provide the other party and their respective Representatives with
reasonable access during normal business hours upon reasonable advance notice to the working papers of the other party and such party’s respective Representatives relating to such Notice of Disagreement, and each party shall and
shall cause its respective Representatives to cooperate with the other party and such other party’s respective Representatives to provide them with other information used in preparation of the Post-Closing Statement and/or such
Notice of Disagreement, as applicable, as reasonably requested by each party or such party’s Representatives including, upon reasonable advance notice, access during normal business hours to relevant personnel and records. Any
disputed items resolved in writing between Seller and Purchaser within such ten (10) Business Day period shall be final and binding with respect to such items, and if Seller and Purchaser agree in writing on the resolution of each
disputed item specified in the Notice of Disagreement, the amount so determined shall be final and binding on the parties for all purposes hereunder.
|
(d) |
If Seller and Purchaser have not resolved all such differences by the end of such ten (10) Business Day period, Seller or Purchaser shall
have the right to submit, in writing, to a public accounting firm of international reputation with capabilities in the United States and Germany and which is not conflicted with either Seller or Purchaser as shall be agreed in
writing by Seller and Purchaser (the “Accounting Firm”), their briefs detailing their views as to the correct nature and amount of each item remaining in dispute and the amounts of Closing Cash, Closing Indebtedness,
Closing Net Working Capital Adjustment and Closing Transaction Expenses, (in each case, if and to the extent disputed), and the Accounting Firm shall make a written determination as to each such disputed item and the Purchase
Price calculated thereupon, which determination shall be final and binding on the parties for all purposes hereunder. Purchaser, Parent and Seller shall provide to the Accounting Firm all working papers and back-up materials
relating to the items remaining in dispute to the extent available to Purchaser and Seller. Purchaser and Seller shall be afforded the opportunity to present to the Accounting Firm any material related and to discuss the issues
with the Accounting Firm. The Accounting Firm shall be authorized to resolve only those items remaining in dispute between the parties in accordance with the provisions of this Section within the range of the difference between
Purchaser’s position with respect thereto and Seller’s position with respect thereto. The determination of the Accounting Firm shall be accompanied by a certificate of the Accounting Firm that it reached such determination in
accordance with the provisions of this Section. Seller and Purchaser shall use their commercially reasonable efforts to cause the Accounting Firm to render a written decision resolving the matters submitted to it within twenty
(20) Business Days following the submission thereof. Notwithstanding anything to the contrary in this Agreement, the costs of any dispute resolution pursuant to this subsection, including the fees and expenses of the Accounting
Firm and of any enforcement of the determination thereof, shall be shared by Seller and Purchaser in inverse proportion to the relative amounts of the disputed amount determined to be for the account of Seller and Purchaser,
respectively. The fees and disbursements of the Representatives of each party incurred in connection with their preparation or review of the Post-Closing Statement and preparation or review of any Notice of Disagreement, as
applicable, shall be borne by such party.
|
(e) |
The Estimated Purchase Price, as adjusted pursuant to this Section 1.7 in light of the final and binding Post-Closing
Statement, shall be considered the Purchase Price. The amount by which the Purchase Price exceeds or is less than the Estimated Purchase Price shall be (such upward or downward amount, the “Adjustment Amount”). If
the Purchase Price is less than the Estimated Purchase Price, then Parent and Seller shall pay such Adjustment Amount to Purchaser no later than five (5) Business Days following the date of the determination of the
Adjustment Amount. If the Purchase Price is greater than the Estimated Purchase Price, then Purchaser shall pay such Adjustment Amount to Seller no later than five (5) Business Days following the date of the determination
of the Adjustment Amount. Parent, Seller, Purchaser, and the Company agree to treat any payment made pursuant to this Section 1.7(e) as an adjustment to the purchase price for all income tax purposes, except as
required by Applicable Law.
|
(f) |
Payments of the Adjustment Amount shall be made by wire transfer of Dollars in immediately available funds to Seller’s Designated Account or such account
as may be designated in writing by Purchaser (as applicable).
|
(a) |
Each of Parent, Seller and Company is a company duly established, duly organized, and validly existing under the Applicable Laws and has the
requisite corporate power and authority to own, lease and operate all of its properties and assets and to carry on its business as it is now being conducted and as currently proposed to be conducted. Each of Parent, Seller and Company
is duly qualified or licensed to do business, and is in good standing (to the extent such concept or a comparable status is recognized), in each jurisdiction where the character of the properties and assets occupied, owned, leased or
operated by it or the nature of its business makes such qualification or licensing necessary.
|
(b) |
Except to the extent set forth in Section 2.3(b) of the Disclosure Schedule, the Company did not have nor has any subsidiaries and does
not directly or indirectly own or has owned any equity, partnership, membership or similar interest in, or any interest convertible into, exercisable for the purchase of or exchangeable for any such equity, partnership, membership
or similar interest, or is under any current or prospective obligation to form or participate in, provide funds to, make any loan, capital contribution or other investment in or assume any Liability of, any Person.
|
(a) |
Except to the extent set forth in Section 2.4(a) the execution, delivery and performance by Parent, Seller and Company of this Agreement and each of the Transaction Documents to which Parent,
Seller or Company is or will be a party, and the consummation of the transactions contemplated hereby and thereby, do not and will not: (i) conflict with or violate any Applicable Law with respect to Parent, Seller and Company; or
(ii) result in any breach of, constitute a default (or an event that, with notice or lapse of time or both, would become a default or breach) under, require any consent of or notice to any Person pursuant to, or give to others any
right of termination, amendment, modification, acceleration or cancellation of, allow the imposition of any fees or penalties, require the offering or making of any payment or redemption, give rise to any increased, guaranteed,
accelerated or additional rights or entitlements of any Person or otherwise adversely affect any rights of Parent, Seller and/or the Company under, or result in the creation of any Encumbrance on any property, asset or right of
Parent, Seller, or Company pursuant to, any note, bond, mortgage, indenture, agreement, lease, license, permit, franchise, instrument, obligation or other Contract to which Parent, Seller or Company is a party or by which Parent,
Seller, or the Company or any of its respective properties, assets or rights are bound or affected.
|
(b) |
Except to the extent set forth in Section 2.4(b), the execution, delivery and performance by Parent, Seller, and Company of this Agreement and each of the Transaction Documents to which
Parent, Seller or Company is or will be a party and the consummation of the transactions contemplated hereby or thereby by Parent, Seller or the Company does not, and the performance of this Agreement by Parent, Seller and the
Company will not, require any consent, approval, authorization or permit of, or filing with or notification to, any Governmental Entity for such performance or in order to prevent the termination of any right, privilege,
license or qualification of Parent, Seller or the Company.
|
(a) |
The total share capital of the Company consists of 196,867 (one hundred ninety six thousand eight hundred sixty seven) ordinary shares as reflected in Section
2.1 of the Disclosure Schedule, with a total nominal value of EUR 196,867.00 which constitute all of the share capital of the Company.
|
(b) |
Section 2.8(b) of the Disclosure Schedule sets forth the owners of the Shares, which constitute all of the outstanding shares of the Company.
|
(c) |
The Company has not issued or agreed to issue, or is obligated to issue, any: (i) share of capital shares or other equity or ownership interest; (ii) option,
warrant or interest convertible into or exchangeable or exercisable for the purchase of capital shares or other equity or ownership interests; (iii) share appreciation right, phantom shares, interest in the ownership or
earnings of the Company or other equity equivalent or equity-based award or right; or (iv) bond, debenture or other Indebtedness having the right to vote or convertible or exchangeable for securities having the right to
vote. There are no outstanding obligations of the Company to repurchase, redeem or otherwise acquire, or that relate to the holding, voting or disposition of or that restrict the transfer of, the issued or unissued
capital shares or other equity or ownership interests of the Company.
|
(d) |
Each outstanding capital share or other equity or ownership interest of the Company is duly authorized, validly issued, fully paid and non-assessable
and free and clear of any Encumbrance. There are no declared or accrued but unpaid dividends or other distributions with respect to any Shares. Seller is not obliged to make any further contributions in relation
to the Shares (keine Nachschusspflicht).
|
(e) |
Section 2.8(e) of the Disclosure Schedule sets forth a complete and accurate list of all shareholder agreements, investors rights
agreements, voting agreements, voting trusts, right of first refusal and co-sale agreements, pre-emptive rights agreements, rights of first negotiation, rights to notice of an acquisition proposal from a third
party, management rights agreements and all other similar agreements or Contracts to which the Company is a party or by which it is bound relating to the transfer, voting or registration of any capital shares
or any other securities of the Company and no shareholder or other security holder of the Company is party to such an agreement.
|
(f) |
The Company has Made Available to Purchaser complete and correct copies of the applicable share transfer documentation pertaining to
any transfer or issuance of the Shares. Any such documentation accurately reflects all transactions in the capital shares and other equity or equity equivalent interests of the Company (including with
respect to the Shares).
|
(g) |
The Company and the transactions contemplated hereby are not, and by the passage of time will not be, subject to a right of
first negotiation, right of first offer or refusal, preemptive right, or any other similar right granted by the Company (or Parent, Seller or their Affiliates ) to and in favor of a third party
with respect to an Acquisition Proposal or a potential Acquisition Proposal or otherwise that could affect, threaten the compliance of any of the exclusivity obligations under Section 4.8,
or cause any delays in the consummation of the transactions contemplated by this Agreement.
|
(a) |
The Company has been in material compliance with Applicable Laws relevant for the business carried out by the Company from time to time since October 9, 2019.
The Company has not received, nor is, to the Seller’s Knowledge, there any basis for, any notice, order, complaint or other communication from any Governmental Entity or any other Person that the Company is not or has not been in
material compliance with Applicable Law relevant for the business carried out by the Company from time to time since October 9, 2019. No investigation or review by any Governmental Entity regarding a material violation of
Applicable Law relevant for the business carried out by the Company has occurred, is pending or threatened in writing, and, to the Seller’s Knowledge, there is no basis therefor.
|
(b) |
The Company is in possession of all Permits necessary for the Company to lawfully carry on its business as it is now being conducted and is proposed
under the Operating Plan to be conducted, including, without limitation, all Permits applicable to Company Products (the “Company Permits”). The Company is and has since October 9, 2019 been in material
compliance with all such Company Permits. No suspension, cancellation, modification, revocation or non-renewal of any Company Permit has occurred, is pending or threatened in writing, and, to the Seller’s Knowledge, there
is no basis therefor.
|
(c) |
Export Control Laws. Without diluting the generality or full effect of Section 2.9(a) and Section 2.9(b), the Company is
and has since October 9, 2019 been in material compliance with all applicable Export Control Laws. Without limiting the foregoing: (A) the Company has obtained all export licenses and other approvals required for
its exports of products, Software, services and technologies required by any applicable Export Control Law and all such approvals and licenses are in full force and effect; (B) the Company is in material compliance
with the terms of such applicable export licenses or other approvals; (C) there are no pending or threatened claims in writing against the Company with respect to such export licenses or other approvals; (D) there
are no actions, and conditions or circumstances pertaining to the Company’s export transactions that would reasonably be expected to give rise to any future Actions against the Company; and (E) the Company has
established internal controls and procedures intended to ensure compliance with all applicable Export Control Laws.
|
(d) |
Economic Sanctions Laws. Without limiting the generality or full effect of Section 2.9(a) and Section 2.9(b), the
Company is and has since October 9, 2019 been in compliance with all Economic Sanctions Laws. Neither the Company nor any of its directors, officers, or employees is a Prohibited Person, is a target of
Israeli Sanctions or is engaged in or has previously engaged in any transactions or dealings with Prohibited Persons or parties subject to Israeli Sanctions or other Economic Sanctions. The representations
and warranties in this Section 2.9(d) are made only to the extent that they do not violate or conflict with Section 7 of the German Foreign Trade and Payments Regulation (Außenwirtschaftsverordnung) or Article 5 of Council Regulation (EC) No 2271/96 of 22 November 1996.
|
(e) |
Company Products. Each Company Product is in compliance with industry standards, meets their Company-specified
specifications, and is fit for the purposes and application for which it is intended to be used and substantially conforms to any written undertakings, purchase order representations and similar
obligations.
|
(a) |
Complete and correct copies of (i) the audited annual financial statements of the Company as of December 31, 2020 and December 31, 2021 prepared in accordance with German GAAP (collectively referred to as the
“Financial Statements”) and (ii) the unaudited adjusted financial statements of the Company as of and for the year December 31, 2022 and as of and for the six months ended June 30, 2023 (the “Interim Financial Statements”)
prepared in accordance with US GAAP and including certain adjustments to exclude balances associated with purchase accounting, investment in subsidiary, and similar items, and include assets expected to be transferred to the buyers upon
closing, and otherwise fairly present the statements on a standalone basis, and the related statements of income, retained earnings, shareholders’ equity and changes in financial position of the Company, together with all related notes
thereto, are set forth in Section 2.10(a) of the Disclosure Schedule. Except as set forth in the Interim Financial Statements, the Company does not have any Liability or obligation of any nature (whether accrued, absolute, contingent
or otherwise) required to be disclosed by US GAAP, except for liabilities and obligations (i) incurred since June 30, 2023, in the ordinary course of business consistent with past practice, (ii) in the form of executory obligations under any
Contract to which the Company is a party or is bound and that are not in the nature of material breaches of such Contracts, and (iii) incurred in connection with the preparation and negotiation of this Agreement or pursuant to this Agreement
or in connection with the Transaction Documents.
|
(b) |
Each of the Financial Statements and the Interim Financial Statements (i) are complete and correct in all material respects and have been prepared in accordance with the books and records of the Company, (ii)
have been prepared in accordance with applicable GAAP applied on a consistent basis throughout the periods indicated (except as may be indicated in the notes thereto) and (iii) present a true and fair view of the financial position, results
of operations and cash flows of the Company as at the dates thereof and for the periods indicated therein, except as otherwise noted therein and subject, in the case of the Interim Financial Statements, to normal and recurring year-end
adjustments that will not, individually or in the aggregate, be material.
|
(c) |
The Company maintains systems of internal accounting controls sufficient to provide reasonable assurances that: (i) transactions are executed in accordance with management’s general or specific authorization;
(ii) transactions are recorded as necessary to permit the preparation of financial statements in conformity with US GAAP and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management’s
general or specific authorization; and (iv) the recorded accountability for assets is compared with the actual levels at reasonable intervals and appropriate action is taken with respect to any differences.
|
(d) |
The Company’s 2023 annual operating plan (the “Company Operating Plan”) was approved by Parent. There are no current circumstances which would prevent the Company from operating its business as
conducted under the Company Forecast and delivering its purchase orders or its business objectives as contemplated by the Company Forecast.
|
(a) |
No Action against the Company, any property or asset of the Company, against any of Seller or Seller’s Affiliates in connection to the Company or the business of the Company, any of the
managing directors, directors or officers or employees of the Company with regard to their actions as such, has occurred, is pending or threatened in writing, and, to the Seller’s Knowledge, there is no basis for any such Action. No Action
seeking to prevent, hinder, modify, delay or challenge the transactions contemplated by this Agreement or the Transaction Documents or that would reasonably be expected to be material to the business of Company as conducted and as proposed to
be conducted, has occurred, is pending or threatened in writing, and, to the Seller’s Knowledge, there is no basis for any such Action. There is no outstanding order, writ, judgment, injunction, decree, determination or award of, or pending
or threatened investigation by, any Governmental Entity relating to the Company, any of its properties or assets (including any Company Intellectual Property Right), any of its officers, directors or managing directors, or the transactions
contemplated by this Agreement or the Transaction Documents. There is no Action by the Company pending, or which the Company has commenced preparations to initiate, against any other Person and, to the Seller’s Knowledge, there is no basis
for any such Action.
|
(b) |
There is no (i) pending or Action threatened in writing involving Parent, Seller or any Affiliate hereof, nor (ii) is there any judgment, injunction, order or decree by or before any
Governmental Entity imposed (or threatened in writing to be imposed) upon Parent or Seller, that, in the case of both (i) and (ii), challenges, or that may have the effect of preventing, materially delaying, making illegal or otherwise
materially interfering with transactions contemplated by this Agreement or the Transaction Documents.
|
(c) |
There is no judgment, injunction, order or decree binding upon Company which has or would reasonably expected to prohibit or impair any current or presently proposed business practice of
Company based on the conduct of the Company’s business as conducted.
|
(a) |
List of Employee Plans. Section 2.13(a) of the Disclosure Schedule sets
forth a complete and correct list of as of the date of execution of this Agreement:
|
(i) |
To the extent maintained by the Company, all individual or collective pension plans, pension schemes or death or disability benefits or other employee benefit plans, including benefit plans
relating to fringe benefit, supplemental unemployment benefit, bonus, incentive, profit-sharing, termination, change of control, retirement, share option, share purchase, restricted shares, deferred compensation, share appreciation, health,
welfare, medical, dental, disability, life insurance, retiree medical or life insurance, supplemental retirement, severance, and similar plans, programs, loans, guarantees, arrangements, policies or practices (collectively, the “Benefits”),
whether written or oral, funded or unfunded, insured or self-insured, registered or unregistered, and all employment, termination, severance or other contracts or agreements provided for under any Benefits on a bilateral contractual basis
under a Contract (A) to which the Company is a party, (B) with respect to which the Company has or could have any direct or indirect Liability or obligation (whether accrued, absolute, contingent or otherwise), or (C) which are maintained,
contributed to or sponsored by the Company, in each case, for the benefit of any current or former employee, officer, director, managing director or other service provider of the Company or any of their dependents or beneficiaries, except for
(X) statutory pension schemes, health and unemployment insurance and other statutory employee benefit schemes, (Y) vacation or sick pay, or (Z) accident insurance policies for the benefit of employees (including workers’ compensation or
accident insurance); and
|
(ii) |
any Contracts between the Company and any employee, managing director or other service provider of the Company or any of their dependents or beneficiaries relating in any way to a sale of
the Company as contemplated under this Agreement (collectively, all items specified in the foregoing clauses (i) and (ii), the “Employee Plans”).
|
(b) |
Employee Plans Made Available. Each Employee Plan is in writing. The Company has Made Available to Purchaser a complete and correct copy of each such Employee Plan.
|
(c) |
Compliance with Law. Each Employee Plan is now and has been since October 9, 2019, operated in all material respects in accordance with its
terms and the requirements of all Applicable Laws. The Company has performed all obligations required to be performed by it and is not in any respect in default under or in violation under any Employee Plan and no such default or
violation by any other party to any Employee Plan has occurred. In particular, all contributions, premiums or payments required to be made with respect to any Employee Plan have been made on or before their due dates.
|
(a) |
List of Employees, Consultants and Service Providers. Section 2.14(a) of the Disclosure Schedule contains, to the
maximum extent permitted under Applicable Law, a list of each managing director, Business Employee (including working students but excluding interns and trainees), consultant, or other service provider acting as a freelance for the
Company including the following information: the identity of the formal employer, each such Person’s position or function and period of continuous employment, the locations where employees are based and primarily perform their duties,
annual vacation, age, fixed term, special protection against termination (e.g. membership in works council, disability, pregnancy, parental leave), company car or car allowance, participation in equity or other Employee Plans maintained
by the Company, annual base salary or wages and any benefits, incentives or bonus arrangement with respect to such Person. Except as provided for in this Agreement, as of the date hereof, no such Person has terminated or has advised
the Company in writing of his or her intention to terminate such Person’s relationship or status as an employee or consultant of the Company for any reason, including because of the consummation of the transactions contemplated by this
Agreement, and the Company has no intention as of the date hereof to terminate any such employee or consultant. The Company does not engage any temporary agency workers (Leiharbeitnehmer).
|
(b) |
Company Employee Contracts. Complete and correct templates of all Contracts of employment and engagement, Contracts for
services, service agreements, consulting, termination, severance or other contracts or agreements and any offer letters or letters of appointment used by the Company for its employees, officers, directors, managing directors or
independent contractors (“Employee Contract Templates”, and any executed Contract based on such Employee Contract Templates, the “Company Employee Contracts”), have been Made Available to Purchaser. Each Company
Employee Contract has been made in writing and is governed by the Laws of Germany and does not materially deviate from the Employee Contract Templates. The Company has not made or agreed to (i) any agreements or undertakings under
which the Company may have acquired any commitment to maintain the jobs of its employees or (ii) make any payment or agreed to provide any benefit to any employee or former employee of the Company or to any dependent or beneficiary of
such employee or former employee, in connection with the actual or proposed termination or suspension of employment of such employee or former employee.
|
(c) |
Collective Agreements and Standard Practices. Section 2.14(c) of the Disclosure Schedule sets forth a complete
and correct list of all collective bargaining agreements (Tarifverträge) and other agreements with unions as well as agreements with works councils, general commitments (Gesamtzusagen) as well as standard business practices (betriebliche Übungen), regardless of whether such agreements are applicable to the Company
collectively or because they have been referenced in individual agreements. True and complete copies of such agreements or plans and descriptions of such general commitments have been Made Available to Purchaser prior to the date
hereof. The Company is in full compliance with any such agreements, plans and practices in all material respects.
|
(d) |
Classification. All
individuals who are or were performing consulting or other services for the Company are or were correctly classified under all Applicable Laws by the Company as either “independent contractors” (freie Mitarbeiter) or “employees” (Angestellte) as the case may be.
|
(e) |
Compliance with Laws.
The Company is and has since October 9, 2019, and, to Seller’s Knowledge, at all times been in compliance in all material respects with all applicable Labor and Employment Laws (including, without limitation, the
German Minimum Wage Act (Mindestlohngesetz)) and social security Laws, rules and regulations and with all applicable collective agreements, such as agreements with works councils or
applicable collective bargaining agreements. The Company does not have any Liability under any Labor and Employment Laws attributable to an event occurring or a state of facts existing prior to the date hereof, including but
not limited to Liability which has been incurred by the Company, but remains to be discharged, for breach of an employment Contract with an employee or breach of any statutory employment right under Labor and Employment Laws.
The Company has made all wage Tax and social security contributions on a timely basis in respect of or on behalf of all its current and former employees in accordance with Applicable Laws, and there is no Person with respect
to whom the Company could be declared principally or jointly and severally liable for the employment, wage Tax, social security or workplace risk prevention obligations applicable to such Person. No employee of the Company
has any right to receive additional compensation from the Company in relation to his/her past services or inventions. The Company has not implemented any plant or office closing, transfer or layoff of employees that (without
regard to any actions that might be taken by Purchaser after the Closing) is or could reasonably be expected to be in violation of any applicable provisions of the German Works Constitution Act with regard to plant closings
and mass layoffs or similar Laws applicable to the Company.
|
(f) |
Claims. Since October 9, 2019, no Action,
claim, dispute, grievance, or controversy between the Company and any of its present or former employees, works councils, unions or any other employee representative body has occurred, is pending or
threatened in writing, and, to the Seller’s Knowledge, there is no basis therefor. Since October 9, 2019, no action against the Company, including under any worker’s compensation policy or long-term disability
policy (or comparable policies in the case of non-U.S. Persons), has occurred, is pending or threatened in writing, and, to the Seller’s Knowledge, there is no basis for any such Action.
|
(g) |
Certain Loans. There are no
outstanding loans, guarantees, credit facilities or advances from the Company (or any Person on the Company’s behalf and account) to any current or former employees or
shareholders of the Company.
|
(h) |
Disputes. (i) Since October 9, 2019, no labor strike, industrial dispute, trade dispute or
other dispute, slow down or stoppage against the Company has occurred, is pending or threatened in writing, or, to the
Seller’s Knowledge, contemplated, (ii) the Company is not involved in any negotiation regarding a claim with any union or
other body representing employees or former employees of the Company, and (iii) since October 9, 2019, the Company has not
received any demand letters, civil rights charges, suits, drafts of suits, written complaints or other written
communications related to claims made by any of its current or former employees, directors or managing directors,
consultants, or other service providers, and, to the Seller’s Knowledge, there is no basis therefore.
|
(i) |
Benefits
for Past Service. There is no former employee, director,
managing director or other service provider of the Company
who is receiving or is scheduled to receive (or whose spouse or other
dependent is receiving or is scheduled to receive) any benefits
(whether from the Company or otherwise) relating to such former
employee’s employment or such former director’s, managing director’s
or service provider’s service relationship with the Company except as
is required under Applicable Law.
|
(j) |
Restrictions
on Employees. To the Seller’s Knowledge, no employee,
consultant, director, managing director, officer, or other service
provider of the Company is subject to any employment, invention
assignment, Patent disclosure, non-competition, non-solicitation,
confidentiality, or other restrictive Contract with a third-party that
interferes or is reasonably likely to interfere with (i) the
performance of such person’s duties to the Company or (ii) the
Company’s business as conducted.
|
(k) |
No
Transaction Bonuses. No employee of the Company is entitled
to a bonus or other incentive compensation to be paid on or
after the Closing Date by virtue or as a result of the execution of
the Transaction Documents and/or the completion of the transactions
other than those to be settled prior to the Closing Date or as
reflected as part of the Closing Indebtedness or Closing Transaction
Expenses.
|
(a) |
The Company does not own any real
property or equivalent rights (grundstücksgleiche Rechte).
|
(b) |
Section 2.15(b) of the Disclosure Schedule contains an accurate and complete
list of all leases of real property (collectively with all amendments and modifications thereto and guarantees
thereof, the “Real Property Leases”) to which the Company is or will be a party (as lessee, sublessee,
sublessor or lessor) and sets forth the role of the Company and the street address of such leased real property. Each
Real Property Lease is valid and binding and has not been terminated or repudiated. True and complete copies of such
Real Property Leases have been delivered or Made Available to Purchaser. All obligations to be performed by any party
under any such Real Property Lease have been fully performed in all material respects.
|
(c) |
The Company does not sublease
or sublicense any of the leased real property or any
portion thereof to any other Person.
|
(d) |
The
Company’s
facilities are
suitable and
sufficient for
operating the
Company’s
business as
conducted
under the
Company
Forecast,
including
developing and
production
capacity of
the Company
Products
according to
purchase
orders or
Company’s
business
objectives as
contemplated
by the Company
Forecast.
|
(a) |
The Company is and has, since October 9, 2019, been in compliance with all applicable Environmental Laws. The Company has not received any notice, letter, complaint or other written communication alleging that
the Company has any Liability under any Contract specifically with respect to or pursuant to Environmental Law or that the Company is not or has at any time not been in compliance with any applicable Environmental Law, and, to the Seller’s
Knowledge, there is no basis therefor. No investigation or review regarding a violation of any applicable Environmental Law by any Governmental Entity with respect to the Company has occurred, is pending or threatened writing, and, to the
Seller’s Knowledge, there is no basis therefor.
|
(b) |
The Company is and has, since October 9, 2019, and, to Seller’s Knowledge, at all times, been in possession of and compliance with all certificates, registrations, Permits, licenses and other authorizations
required under applicable Environmental Law (“Environmental Permits”). No suspension, cancellation, modification, revocation or nonrenewal of any Environmental Permit has occurred, is pending or threatened in writing, and, to the
Seller’s Knowledge, there is no basis therefor. (c)Since October 9, 2019, there has been no events, conditions, circumstances, activities, practices, incidents, actions, omissions or plans that constitute a violation by the Company of, or are
reasonably likely to prevent or interfere with the Company’s future compliance with, any applicable Environmental Laws. The Company is not conducting or funding, or is required to conduct or fund, any remediation or cleanup pursuant to any
Contract or Environmental Law.
|
(a) |
Generally.
|
(i) |
Section 2.17(a)(i) of the Disclosure Schedule sets forth, (A) a complete and correct list of all Patents and Trademarks, indicating for
each Patent or Trademark that is registered or the subject of an application for registration in the applicable jurisdiction, the registration number (or application number), owner and date issued (or date filed); (B) a complete and correct
list of all Copyrights that are (y) registered or the subject of an application for registration, indicating for each the applicable jurisdiction, registration number (or application number), owner and date issued (or date filed), or (z)
authored or created by the Company and licensed under an Open Source Technology license; (C) a complete and correct list of all Domain Names, indicating for each Domain Name the applicable registrar and registrant, in the case of each of
(A), (B) and (C) owned by or exclusively licensed, as applicable, to the Company, in whole or in part, including jointly with others (and such schedule specifies with reasonable detail if such Intellectual Property Rights are owned solely
by, owned jointly by, or exclusively licensed, as applicable, to the Company).
|
(ii) |
Each current or former Business Employee, consultant and contractor of the Company who develops or has developed Company Products or Technology
or Company Intellectual Property Rights, is either obligated by Applicable Law, or, to the extent not obligated by Applicable Law, has executed and delivered to the Company agreements to the effect that: (A) the Company is assigned or,
in the case of Intellectual Property Rights that cannot be assigned as such under Applicable Laws, exclusively licensed all Company Intellectual Property Rights that is or was created, developed, written, invented, conceived or
discovered by such Business Employee, consultant or contractor in the course of performing work or services for the Company, and (B) such Business Employee, consultant or contractor is obligated not to use or disclose any confidential
or proprietary information of the Company (or of third parties that has been disclosed to the Company under an obligation of confidentiality) except as explicitly authorized by the Company
|
(iii) |
The Company is the owner of all right, title and interest in and to all Company Intellectual Property Rights (other than Intellectual Property
Rights that are identified in Section 2.17(a)(i) of the Disclosure Schedule as exclusively licensed to the Company from a third party) and of all other Intellectual Property Rights used or otherwise practiced, under
development or exploited by the Company (other than Intellectual Property Rights that the Company uses under a valid and enforceable written license for off-the-shelf software or other copyright protected works), all such
Intellectual Property Rights owned by the Company being free and clear of any and all Encumbrances, covenants, conditions or restrictions or other adverse rights or interests of any kind or nature (except for rights of coowners in
case of any co-owned Company Intellectual Property Rights). The Company has not received any notice or claim challenging the Company’s sole and exclusive ownership of any such Intellectual Property Rights or suggesting that any
other Person has any claim of legal or beneficial ownership with respect thereto. There are no facts, circumstances, or information that would or reasonably could be expected to adversely affect, limit, restrict, impair, or impede
the ability of the Company to use the Company Intellectual Property Rights upon the Closing in the same manner as currently used by the Company as of the Closing. (iv)To the Seller’s Knowledge, all of the Intellectual Property
Rights
|
(iv) |
listed in Section 2.17(a)(i) of the Disclosure Schedule (other than applications for Copyright, Patent or Trademark registration) and all other Intellectual Property
Rights which are used or held for use by the Company, including any Company Products (collectively, “Company Intellectual Property Rights”) are valid, subsisting and enforceable. The Company has not received any
notice or claim challenging or questioning the validity or enforceability of any Company Intellectual Property Rights or indicating an intention on the part of any Person to bring a claim that any such Company Intellectual
Property Rights are invalid, unenforceable or have been misused, and no Company Intellectual Property Rights has been challenged or threatened in writing in any way. To the Seller’s Knowledge, each registered Company Intellectual
Property Right is and has been in compliance with all Applicable Laws other than any requirement that, if not satisfied, would not result in a cancellation of any such registration or otherwise affect the use, priority, or
enforceability of the registered Company Intellectual Property Right in question, the defenses potentially available to any accused infringer of the registered Company Intellectual Property Right, or the remedies potentially
available for infringement of the registered Company Intellectual Property Right.
|
(v) |
The Company has taken reasonable steps to protect its rights in and to the Company Intellectual Property Rights and to police its Company Intellectual Property Rights against third-party
infringement or dilution.
|
(vi) |
The Company has duly paid all fees necessary to maintain registration of the Registered Company Intellectual Property Rights.
|
(b) |
Inventions and other Proprietary Rights. There is no invention (Erfindung), technical improvement,
proposal (technischer Verbesserungsvorschlag), or Copyright of the Company which is based on an invention, technical improvement proposal, or work of any past or current Business
Employee, or director, managing director, consultant, or contractor of the Company, for which the Company owes any compensation or remuneration to such director, managing director, Business Employee, or contractor in
relation to such invention or work, except for any remuneration obligations stipulated by Applicable Laws (e.g., the German Employee Inventions Act, ArbNErfG).
There is no Patent, Trade Secret or other Intellectual Property Right on which any part of the Company’s business as conducted relies, or of which any part of the Company’s business as conducted is dependent, in each case as
currently conducted and proposed to be conducted, which is held by a current or former Business Employee, or director, managing director, consultant, or contractor of the Company.
|
(c) |
Trade Secrets. The Company has taken steps reasonably necessary and appropriate in accordance with all Applicable Laws
relating to trade secrets to protect its rights in its confidential information and Trade Secrets. Since October 9, 2019, and, to the Seller’s Knowledge, at all times, the Company has complied in all
material respects with the terms of any agreements or understandings relating to third party confidential information or Trade Secrets to which the Company is a party or which otherwise bind the Company.
There has been no disclosure by the Company of the confidential information or Technology of the Company that would compromise the status or protectability of such Technology and Intellectual Property
Rights embodied therein or the confidentiality of any of its confidential information other than applications for Patents or other registered Company Intellectual Property Rights. To the Seller’s
Knowledge, there has been no wrongful use or disclosure of the confidential information or Technology of the Company by any Person to whom such confidential information or Technology was properly
disclosed (under obligations of confidentiality) by the Company.
|
(d) |
Intellectual Property Agreements.
|
(i) |
Section 2.17(d)(i) of the Disclosure Schedule sets forth a complete and correct list of all
Inbound License Agreements, other than those licenses listed on Section 2.17(g)(ii) of the Disclosure Schedule and other than licenses to the Company of Software
that is (A) used solely internally, (B) not customized or modified, and (C) is either (x) available under an Open Source Technology license or (y) commercially available on
reasonable terms to any Person for a license fee, royalty or other consideration of no more than One Thousand Dollars (US $1,000) per copy or user or other unit.
|
(ii) |
Section 2.17(d)(ii) of the Disclosure Schedule sets forth a complete and correct list of all
Outbound License Agreements that are in effect (or that contain licenses that are in effect) upon the execution of this Agreement (other than any customer Agreements in
which software is embedded or preinstalled on hardware or made available for download (substantially in accordance with the Company’s standard terms and conditions and end
user license agreements that have been Made Available to Purchaser) as part of a product sold in the Company’s ordinary course of business), indicating for each the title,
effective date, and the parties thereto. The Company has not granted to any third parties the right to grant sublicenses under any Company Intellectual Property Rights or
Technology (except to the extent provided for in Company’s standard terms and conditions and end user license agreements that have been Made Available to Purchaser).
|
(iii) |
There is no outstanding or threatened dispute or disagreement in writing with respect to any
Inbound License Agreement or any Outbound License Agreement.
|
(iv) |
There is no Contract, judicial decree, arbitral award or other provision or requirement that
obligates the Company to grant licenses or refrain from pursuing claims in the future with respect to any currently existing Company Intellectual Property Rights or
Technology.
|
(e) |
Sufficiency of Intellectual Property Assets. The Company Intellectual
Property Rights constitute all the Intellectual Property Rights necessary to enable the Company to operate the Company’s business immediately
after the Closing Date in substantially the same manner as such business is conducted.
|
(f) |
No Infringement.
|
(i) |
The products and services used, manufactured,
marketed, sold or licensed by the Company, including all Company Products, and the conduct and activities
of the Company do not infringe, violate, misappropriate, or constitute the unauthorized use of any Intellectual
Property Rights of any third party. No Action is pending (rechtshängig),
and no notice or other claim, dispute, assertion, allegation or Action has been received in writing by the Company
since October 9, 2019, alleging that the Company has engaged in any activity or conduct that infringes upon,
violates, misappropriates, dilutes or constitutes the unauthorized use of, or has infringed upon, violated,
misappropriated, or constituted the unauthorized use of, the Intellectual Property Rights of any third party.
|
(ii) |
To the Seller’s Knowledge, no third party is
misappropriating, infringing, using without authorization, or violating or has misappropriated,
infringed, diluted, used without authorization, or violated any Company Intellectual Property Rights, and no
claims for any of the foregoing have been brought or threatened in writing against any third party by the
Company.
|
(g) |
Software.
|
(i) |
Section 2.17(g) of
the Disclosure Schedule lists material Company Software.
|
(ii) |
The Company has not
incorporated Open Source Technology into, or combined, linked, or distributed
any Open Source Technology with, any Company Products or other Company Intellectual
Property Rights that is distributed to third parties in any manner or that creates
obligations for the Company to license, disclose or distribute any source code of
Company Software to third parties, with respect to any part of any Company Product
that is not Open Source Technology owned by a third Person, or grants to any third
Person, any licenses, rights, or immunities under Company Products or other Company
Intellectual Property Rights and does not prohibit the Company to charge for its
products or otherwise commercialize those. The use of Open Source Technology is in
compliance with the applicable Open Source Technology licenses.
|
(a) |
The Company complies and since October 9, 2019, and, to Seller’s Knowledge, at all times, has complied in all material respects with all of
the Company Privacy Policies and with all applicable legal requirements of all Applicable Laws pertaining to privacy, User Data or Personal Data, in particular the EU General Data Protection Regulation (GDPR).
|
(b) |
The Company has used commercially reasonable efforts to ensure that User Data and Personal Data is protected against loss,
damage, and unauthorized access, use, modification, or other misuse. There has been no loss, damage, or unauthorized access, use, modification, or other misuse of any User Data and Personal
Data by the Company (or any of its employees or, to the Seller’s Knowledge, contractors). No Person (including any Governmental Entity) has made any written claim or commenced any Action
with respect to loss, damage, or unauthorized access, use, modification, or other misuse of any User Data or Personal Data by the Company (or any of its employees or contractors), and, to
the Seller’s Knowledge, there is no reasonable basis for any such claim or Action.
|
(c) |
The Company has since October 9, 2019, and, to the Seller’s Knowledge, at all times, processed
User Data and Personal Data from users, customers, employees, contractors, and other applicable Persons only on a valid legal basis as required by all Data Protection
Laws.
|
(d) |
Where the Company uses data processors to process information relating to an
identified or identifiable natural person, the Company has carried out the appropriate security vetting, and has put in place a written agreement as
required under the Applicable Laws relating to data protection and privacy.
|
(e) |
The Company has not received any written claim, complaint,
demand for compensation, inquiry, or notice from any third party or any Governmental Entity or consumer advocacy
group (or similar organization) related to whether the Company’s processing of information relating to an identified or
identifiable natural person is in violation of any Applicable Laws relating to data protection and privacy.
|
(a) |
Tax Returns. The Company:
|
(i) |
has timely filed all Tax Returns which are required to be filed under Applicable Law in any jurisdiction in which the Company is or has been
subject to Tax or required to file a Tax Return, and such Tax Returns are complete and correct in all material respects and correctly reflect the Liability for Taxes and other information required to be
reported thereon;
|
(ii) |
has paid in full all such amounts shown as due and payable on such Tax Returns; and
|
(iii) |
has not undertaken any transaction or taken any position on any Tax Return that requires special reporting or disclosure statements in
any Tax Return or otherwise, whether or not related to any Tax shelter, Tax avoidance transaction, or aggressive Tax planning as identified by notice, regulation or other form of public guidance under
any Applicable Law.
|
(b) |
Extensions. The Company has not requested nor received an extension of time (other than a permanent
extension (Dauerfristverlängerung) for VAT purposes) to file any Tax Return and has not waived any statute of limitations in respect of
Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency.
|
(c) |
Payment. The Company has timely paid all Taxes that have become due and
payable (whether or not such Taxes were required to be reflected on a Tax Return) and the Company has adequately provided in the Financial Statements for all
material Taxes accrued through the date of such Financial Statements that were not yet due and payable as of the date thereof.
|
(d) |
Withholding. The Company has complied in all material respects
with all Applicable Laws relating to the deduction and withholding of Taxes and has within the time and manner prescribed by
Applicable Law in all respects: (i) deducted or withheld all Taxes required to be deducted or withheld, including sums withheld for
Taxes due in respect of all payments to employees, officers, directors, stockholders and any other Persons; (ii) collected all sales,
use, value added, goods and services, and similar Taxes required to be collected; and (iii) timely remitted all Taxes deducted,
withheld and collected to the appropriate Taxing Authority in accordance with Applicable Law in all respects.
|
(e) |
Payments under Agreement. No Taxes are
required to be deducted or withheld and paid with respect to any payments to be made pursuant to this
Agreement.
|
(f) |
Post-Closing Periods.
The Company has not agreed to include any item of income in, or exclude any item of
deduction from, taxable income for any taxable period or portion thereof ending after the
Closing Date as a result of a change in method of accounting for Tax purposes for a taxable
period or portion thereof ending on or prior to the Closing Date unless such change in
method of accounting for Tax purposes was required by mandatory law. No election has been
made with respect to Taxes of the Company in any Tax Return that has not been Made Available
to Purchaser. No Taxing Authority has operated or agreed to operate any special arrangement
(being an arrangement which is not directly based on relevant legislation, even if based on
any published practice, including rulings and agreements with the Taxing Authorities) or has
agreed on any compromise in relation to the affairs of the Company.
|
(g) |
Post-Closing
Tax Returns. Section 2.20(g) of the Disclosure
Schedule sets forth a complete list of all annual Tax Returns
of the Company required to be filed following the Closing Date with
respect to any period or portion thereof ending prior to the Closing
Date.
|
(h) |
Tax
Characterization. Each of the Company
and Seller is treated as a corporation
for U.S. federal income tax purposes and no
election has been made for U.S. federal income
tax purposes for either Seller or the Company to
be classified as other than a corporation for
U.S. federal income tax purposes. Neither the
Company nor any predecessor of the Company was
(x) created or organized under the laws of the
United States or any state nor (y) created or
organized both in the United States and a
foreign jurisdiction, such that such entity
would be taxable in the United States as a
domestic entity. If there is any actual
Liability for Taxes as a result of being a
transferee or successor of any Person such
Liability for Taxes is reflected in the relevant
Financial Statement.
|
(i) |
Tax
Action. No claim
for assessment or
collection of Taxes has
been or is
presently being asserted
in writing or is otherwise
outstanding against the
Company; and there is no
Action by any Taxing
Authority pending or
threatened in writing
against the Company; and
there are no Encumbrances
for Taxes upon any of the
assets of the Company.
The Company does not have
outstanding powers of
attorney with respect to
Taxes. Neither the
Company nor any director,
managing director or
officer or any shareholder
of the Company (in his,
her or its capacity as
such) has paid or become
liable to pay, and there
are no circumstances by
reason of which it or they
may become liable to pay,
any penalty, fine,
surcharge or interest in
respect of the Company’s
Taxes.
|
(j) |
Tax
Agreements.
The Company is
not a party to
or bound by
any obligation
under any Tax
sharing, Tax
allocation,
Tax indemnity
or similar
agreement or
arrangement
(except
pursuant to a
financing
agreement the
principal
purpose of
which is not
Taxes and for
the avoidance
of doubt
except for the
DPLTA).
|
(k) |
Jurisdictions.
Since October
9, 2019, the
Company has
been a
resident for
Tax
purposes in
its place of
organization
and is not and
has not at any
time been
treated as
resident in
any other
jurisdiction
for any Tax
purpose
(including any
double
taxation
arrangement).
The Company is
not and has
not been
subject to Tax
in any
jurisdiction
other than its
place of
organization
by virtue of
having a
permanent
establishment,
a permanent
representative
or other place
of business or
taxable
presence in
the
jurisdiction.
No written
claim has been
made by a
Taxing
Authority
towards the
Company in a
jurisdiction
where the
Company does
not file a
particular
type of Tax
Return that
the Company is
required to
file such Tax
Return or may
be subject to
Tax with
respect to
such Tax
Return.
|
(l) |
Tax
Information.
The Company
has Made
Available to
Purchaser
complete
and correct
copies of (i)
all
governmental,
federal,
local,
municipal,
state and
foreign
income,
franchise or
similar Tax
Returns, and
all other Tax
Returns, of
the Company
for all tax
years with
respect to
which the
applicable
statute of
limitations
has not
expired, and
(ii) any audit
report,
ruling,
closing
agreement,
technical
advice
memorandum,
Tax holiday or
similar
document
issued since
the inception
of the Company
(or otherwise
with respect
to any audit
or proceeding
in progress)
relating to
Taxes of the
Company.
|
(m) |
Records
and Reporting.
The Company
has complied
with all
information
reporting and
record-keeping
requirements
under all
Applicable
Law, including
retention and
maintenance of
required
records with
respect
thereto, and
all records
kept by the
Company in
compliance
with such
Applicable Law
have been Made
Available to
Purchaser.
|
(n) |
Partnerships.
The Company is
not a party to
any joint
venture,
partnership or
other Contract
that is or
would
reasonably be
expected to be
treated as a
partnership
for any Tax
purposes.
|
(o) |
Mergers.
The Company
has not been
involved in a
business
merger,
share-for-
share merger,
legal merger
or legal
demerger
(split), or
transaction
purported or
intended to
qualify for
treatment
under the
provisions of
the German
Reorganization
Tax Act (Umwandlungssteuergesetz).
|
(p) |
Value
Added Tax.
The Company
has complied
with all Laws
concerning any
value added
tax (“VAT”),
including with
respect to the
making on time
of accurate
returns and
payments and
the
maintenance of
records. In
case any VAT
payable has
been offset
against a VAT
receivable
(i.e.,
recoverable
VAT), the
amount of the
VAT receivable
has been
computed and
reported in an
accurate
manner, in all
respects. The
Company is
registered for
VAT purposes
only in
Germany.
|
(a) |
Section 2.21(a) of the Disclosure Schedule sets forth a complete and correct
list as of the date of this Agreement (grouped according to the categories described in the subsections below) of all Contracts of the following nature to which the Company is a party or by which the Company, or any of its
properties or assets, is otherwise currently bound, whether the Company is currently bound by active provisions or surviving provisions of expired or terminated Contracts (each Contract of the following nature, a “Material
Contract” and collectively, the “Material Contracts”):
|
(i) |
any Contract in respect of the Company’s business as conducted relating to, and evidences of, Indebtedness of the Company for borrowed money or the deferred
purchase price of property (whether incurred, assumed, guaranteed or secured by any asset);
|
(ii) |
any Contract pursuant to which the Company has provided funds to or made any loan, capital contribution or other investment in, or assumed, guaranteed or agreed
to act as a surety with respect to any Liability of, any Person;
|
(iii) |
any Contract for the issuance of any debt or equity security or other ownership interest, or the conversion of any obligation, instrument or security into debt or
equity securities or other ownership interests of the Company, or for the purchase of any debt or equity security or other ownership interest of any Person;
|
(iv) |
any Contract that purports to limit, curtail or restrict the ability of the Company to compete in any geographic area or line of business, make sales to any
Person in any manner, use or enforce any Company Intellectual Property Rights or Technology owned by or exclusively licensed to the Company or hire or solicit any Person in any manner, or that grants the other party or any third
Person “most favored nation” or similar status, any type of special discount rights, or any right of first refusal, first notice or first negotiation;
|
(v) |
any Contract that requires a consent to the transactions contemplated by this Agreement or otherwise contains a provision relating to a “change of control,” or
that would prohibit or delay the consummation of the transactions contemplated by this Agreement or any of the other Transaction Documents;
|
(vi) |
any Contract pursuant to which the Company is the lessee or lessor of, or holds, uses, or makes available for use to any Person (other than the Company), (A) any
Real Property or (B) any tangible personal property and, in the case of clause (B), that involves an aggregate future or potential Liability or receivable, as the case may be;
|
(vii) |
any Contract obligating the Company to indemnify or hold harmless any director, managing director, officer, employee or agent;
|
(viii) |
any Contract relating in whole or in part to, or that includes (A) any sale, assignment, hypothecation, other transfer or option, with respect to any Company
Intellectual Property Rights or (B) any use limitation with respect to any Technology or Intellectual Property Rights;
|
(ix) |
any Contract with any Related Party of the Company;
|
(x) |
(A) any employment, consulting or professional services with those persons detailed in Section 2.21(a)(x) of the Disclosure Schedule, and (B)
any other Contract that provides for annual compensation equal to or in excess of US$ 150,000;
|
(xi) |
any reselling, sales, marketing, merchandising or distribution Contract (except for a Contract for sales comprising solely of a purchase order and that such purchase order does not exceed the
amount of US$ 500,000);
|
(xii) |
any joint venture or partnership, joint development, merger, asset or share purchase or divestiture Contract relating to the Company;
|
(xiii) |
any Contract set forth or required to be set forth in Section 2.17(d)(i) and Section 2.17(d)(ii) of the Disclosure Schedule;
|
(xiv) |
any Contract with any labor union providing for benefits under any Employee Plan;
|
(xv) |
any Contract relating to settlement of any administrative or judicial
proceedings;
|
(xvi) |
any Government Contract;
|
(xvii) |
any customer agreements (including customer purchase orders) to which
the Company is a party with an individual or annual volume exceeding US$ 500,000; and
|
(xviii) |
except for any customer purchase orders, any other
Contract, whether or not made in the ordinary course of business consistent with past practice, that (A) involves a future or potential Liability or receivable, as the case may be, in
excess of US$ 300,000 on an annual basis or in excess of US$ 300,000 over the current Contract term or (B) has a term greater than one year and cannot be cancelled by the Company without penalty
in excess of US$ 20,000 or further payment and without more than thirty (30) Business Days’ notice.
|
(b) |
The Company has Made Available complete and correct copies of the Material Contracts to Purchaser, including all modifications, amendments
and supplements thereto. Each of the Material Contracts constitutes the valid and legally binding obligation of the Company, as applicable, enforceable in accordance with its terms (subject to any
applicable bankruptcy, insolvency, reorganization, moratorium or similar Laws now or hereafter in effect relating to creditors’ rights generally or to general principles of equity), and is in full force
and effect in accordance with its terms. There is no breach or default under any Material Contract by the Company or by any other party thereto, no event has occurred that with the giving of notice,
the lapse of time, or both would constitute a breach or default thereunder by the Company or any other party and the Company has not received any claim of any such breach or default.
|
(c) |
No party to any Material Contract has given written notice to the Company or made
a written claim against the Company in respect of any breach or default thereunder.
|
(d) |
None of the Contracts or other instruments of Parent or any of its Affiliates
grants of any license or right in, any Company Intellectual Property.
|
(a) |
The Company owns, and has good and valid title to, or, in the case of leased properties and assets, valid leasehold interests in, all of its tangible properties and assets that are used
or held for use in its business as conducted, including all of the assets reflected on the Balance Sheet or acquired in the ordinary course of business consistent with past practice since the date of the Balance Sheet (except for those
assets sold or otherwise disposed of for fair value since the date of the Balance Sheet in the ordinary course of business consistent with past practice), in each case free and clear of any Encumbrances, except as reflected on the Balance
Sheet and except for such imperfections of title, if any, that do not interfere with the present value of the subject property. The assets owned or leased by the Company constitute all of the assets necessary for the Company to carry on
its business as conducted. All tangible assets owned or leased by the Company have been maintained in accordance with generally accepted industry practice, are in all material respects in good operating condition and repair, ordinary wear
and tear excepted, and are adequate for the uses to which they are being put.
|
(b) |
The inventories of the Company are generally of a quality and quantity usable and salable in the ordinary course of business consistent with past practice. The inventories of the Company
are reflected on the Balance Sheet and in the books and records of the Company in accordance with US GAAP applied on a basis consistent with past practice. The inventory level is not in excess of normal operating requirements of the
Company.
|
(c) |
This Section 2.22 does not relate to Real Property or interests in Real Property, such items being the subject of Section 2.15, or to Intellectual Property Rights, such items
being the exclusive subject of Section 2.17.
|
(a) |
None of the Company or its directors and officers or, any independent sales representatives, resellers, consultants, intermediaries, or distributors, or other Persons acting on behalf of the Company or, to
Seller’s Knowledge, any of its other Representatives (other than the aforementioned Persons), have, directly or indirectly, taken any action which would cause them to be in violation of any applicable anti-corruption or anti-bribery Laws,
statutes, rules, regulations, ordinances, judgments, Governmental Orders, decrees, injunctions, and writs of any governmental authority of any jurisdiction (whether by virtue of jurisdiction or organization or conduct of business)
(collectively, the “Applicable Anti-Corruption Laws”).
|
(b) |
None of the Company or its directors and officers or, any independent sales representatives, resellers, consultants, intermediaries, or distributors or other Persons acting on behalf of the Company, or, to
Seller’s Knowledge, any of its other Representatives (other than the aforementioned Persons), have, directly or indirectly, offered, paid, promised to pay, or authorized a payment, of any money or other thing of value (including any fee,
gift, sample, travel expense or entertainment) or any commission payment, or any payment related to political activity, to any of the following Persons for the purpose of influencing any act or decision of such Person in his official
capacity, inducing such Person to do or omit to do any act in violation of the lawful duty of such official, securing any improper advantage, or inducing such Person to use his influence with a foreign government or instrumentality thereof
to affect or to influence any act or decision of such government or instrumentality, in order to assist the Company in obtaining or retaining business for or with, or directing the business to: (i) any Person who is an agent,
representative, official, officer, director, managing director, or employee of any non-U.S. government or any department, agency, or instrumentality thereof (including officers, director, managing directors, and employees of state-owned,
operated or controlled entities) or of a public international organization; (ii) any Person acting in an official capacity for or on behalf of any such government, department, agency, instrumentality, or public international organization;
(iii) any political party or official thereof; (iv) any candidate for political or political party office (such recipients in paragraphs (i), (ii), (iii) and (iv) of this subsection collectively, “Government Officials”); or (v) any
other individual or entity, while knowing or having reason to believe that all or any portion of such money or thing of value would be offered, given, or promised, directly or indirectly, to any Government Official.
|
(c) |
The Company has devised and maintained a system of internal accounting controls sufficient to provide reasonable assurance that: (i) transactions are executed and access to assets is permitted only in
accordance with the Company’s applicable policies and procedures and management’s general or specific authorization, and (ii) the Company has established reasonable and adequate internal controls and procedures intended to ensure compliance
with Applicable AntiCorruption Laws.
|
(d) |
There have never been any false or fictitious entries made in the books, records or accounts of the Company relating to any illegal payment or secret or unrecorded fund, and the Company has not established or
maintained a secret or unrecorded fund.
|
(e) |
None of the Company or its directors and officers, or any independent sales representatives, resellers, consultants, intermediaries, or distributors, or other Persons acting on behalf of the Company, or, to
Seller’s Knowledge, any of its Representatives (other than the aforementioned Persons), have made any payments or transfers of value with the intent, or which have the purpose or effect, of engaging in commercial bribery, or acceptance of
or acquiescence in kickbacks or other unlawful or improper means of obtaining business.
|
(a) |
No contractual warranties have been given with respect to the Company Products and services other than those for which complete and correct copies
have been Made Available to Purchaser, and no oral warranties have been given or made other than those described in Section 2.25(a) of the Disclosure Schedule. None of Parent, Seller, any of their Affiliates or the
Company has received any warranty claims in writing, has no warranty claims pending, and has not been threatened with any warranty claims under any Contract, and to the Seller’s Knowledge, there is no reasonable basis for any such
claim, in each instance, relating to Company Core Software Assets. The Company has not received any warranty claims in writing, has no warranty claims pending, and has not been threatened in writing with any warranty claims under any
Contract, and, to the Seller’s Knowledge, there is no basis for any such claim, in each instance, relating to Company Products (other than Company Core Software Products) for aggregate amounts in excess of €100,000 per quarter.
|
(b) |
There are no material defects in the design or manufacture of any of the products of the Company. The Company has not received any written
notice of a claim against the Company alleging a design or manufacturing defect in any products of the Company, in each case, excluding any and all requests for product returns in the ordinary course consistent with past experience of
the Company and, to the Seller’s Knowledge, there is no reasonable basis therefor.
|
(c) |
Each Company Product developed (or under development), sold, leased, licensed, or provided by Company and each material service performed
by Company has been in material conformity with any applicable material contractual commitments or any material express and implied warranties, and the Company has no material Liability for replacement or repair thereof or other
damages in connection therewith which will not be satisfied prior to the Closing.
|
(a) |
Section 2.26(a) of the Disclosure Schedule sets forth a complete and correct list of: (i)
(a) the five (5) largest suppliers to the Company (including indirect engagement with the Company via Seller or any of Seller’s Affiliates), taken together, the period of fiscal year 2022 through June 2023 (based on the aggregate USD
amount paid to such supplier by the Company or on its behalf during such period); and (b) the ten (10) suppliers to the Company (including indirect engagement with the Company via Seller or any of Seller’s Affiliates) who supply
components that are key to the Company Products (including assembly, technologies, etc.) (the “Top Suppliers”); (ii) the five (5) largest retail customers of the Company (including indirect engagement with the Company via Seller or
any of Seller’s Affiliates ), taken together, during the period of fiscal year 2022 through June 2023 (based on the aggregate USD amount of revenue recognized by the Company, Seller or the applicable Seller’s Affiliate, during such
period) (the “Top Customers”); and (iii) the five (5) largest distributors of the Company Products, taken together, during the period of fiscal year 2022 through June 2023 (based on the aggregate USD amount of revenue recognized by
the Company during such period) (the “Top Distributors”).
|
(b) |
The Company has not received any notice, letter, written complaint or other written communication from any Top Supplier, Top Customer or Top Distributor to the effect that it (i) has
changed, modified, amended or reduced, or is reasonably likely to change, modify, amend or reduce, its business relationship with the Company in a manner that is, or is reasonably likely to be, materially adverse to the Company, or (ii)
will fail to perform, or is reasonably likely to fail to perform, its material obligations under any Contract with the Company in any manner that is, or is reasonably likely to be, materially adverse to the Company.
|
(a) |
No Related Party of the Company (i) owns or has owned, directly or indirectly, or has or has had any interest in any property (real or personal, tangible or intangible) that the Company
uses or has used in or pertaining to the business of the Company, or (ii) has or has had any business dealings or a financial interest in any transaction with the Company or involving any assets or property of the Company, other than
business dealings or transactions conducted in the ordinary course of business consistent with past practice at prevailing market prices and on prevailing market terms.
|
(b) |
None of Seller’s Affiliate (other than Parent, Seller and the Company), nor any entity that is a former Affiliate of Seller, currently (i) is a party to an agreement with or maintains
business relationships with the Company, (ii) holds any consent or approval rights in respect of any business or other conduct of the Company, (iii) is a co-owner of any assets, shares any premises or holds any rights or Permits jointly
with the Company, (iv) provides or receives any products or services to/from the Company, (v) licenses to or from the Company any Company Intellectual Property Rights or holds any Intellectual Property Rights, tangible or fixed assets or
any other assets currently used or required by the Company to carry on its business as conducted, (vi) has any outstanding payment claims (including fees from licenses, services or products, whether for specific performance, damages or
otherwise), (vii) has any claims to enter into an agreement with, or to acquire from or dispose to the Company any Company Intellectual Property Rights, fixed or tangible assets or other assets or to license to or from the Company any
Intellectual Property Rights, or (viii) has made or threatened in writing any alleged claims against the Company.
|
(a) |
The execution, delivery and performance by Purchaser of this Agreement and each of the Transaction Documents to which it is or will be a party, and the consummation of the transactions
contemplated hereby and thereby, do not and will not: (i) conflict with or violate the articles of association or equivalent organization documents of Purchaser, as the case may be; (ii) conflict with or violate any Applicable Law with
respect to Purchaser, as the case may be; or (iii) result in any breach of, constitute a default (or an event that, with notice or lapse of time or both, would become a default or breach) under or require any consent of any Person pursuant
to, any Contract or permit of Purchaser, as applicable, except, in the case of the foregoing clauses (i), (ii) and (iii), for any such conflicts, violations, breaches, defaults or other occurrences that would not, individually or in the
aggregate, have a material adverse effect on Purchaser’s ability to consummate the Share Sale or any of the other transactions contemplated by this Agreement or any of the other Transaction Documents.
|
(b) |
The execution, delivery and performance by Purchaser of this Agreement and each of the Transaction Documents to which it is or will be a party and the consummation of the transactions
contemplated hereby or thereby by Purchaser do not, and the performance of this Agreement by Purchaser will not, require any consent, approval, authorization or permit of, or filing with or notification to, any Governmental Entity for such
performance.
|
(a) |
conduct the business of the Company in the ordinary course of business consistent with past practice (except to the extent (i) expressly provided otherwise herein
or (ii) with Purchaser’s prior written consent (which consent will not be unreasonably withheld, conditioned or delayed)) and in compliance in all material respects with all Applicable Law and Contracts;
|
(b) |
except as required under this Agreement, use its commercially reasonable efforts consistent with past practices to preserve intact the Company’s present business
organizations, lines of business and its relationships with customers, suppliers, distributors, licensors, lessors and other third parties having business dealings with the Company;
|
(c) |
(i) timely pay in full prior to the Closing all undisputed outstanding accounts payable when due (including outstanding invoices for services provided by third
parties to the Company) as determined in accordance with US GAAP and pay all other Indebtedness when due, (ii) timely pay all of its Taxes when due and payable unless there is a good faith dispute over such Taxes as long as
non-payment of such Taxes is compliant with Applicable Laws, (iii) timely file all Tax Returns required to be filed prior to Closing in a manner consistent with past practice except as otherwise required by Applicable Law and pay
the reasonable expenses of preparation for such Tax Returns, (iv) pay or perform its other obligations when due, (v) use commercially reasonable efforts consistent with past practices to collect accounts receivable when due and not
extend credit outside of the ordinary course of business consistent with past practice, (vi) sell products and services consistent with past practices as to service and maintenance terms and incentive programs, (vii) recognize
revenue consistent with past practice and policies and in accordance with US GAAP requirements, (viii) maintain its assets and properties in good operating condition and repair and (ix) prosecute and maintain all registrations and
applications to register the Company’s Intellectual Property Rights, including paying any related fees when due;
|
(d) |
assure that each of the Company’s Contracts (other than with Purchaser) entered into after the date hereof (i) that would constitute a Material Contract or
(ii) the termination of which would impose any material penalty or material damage on the Company will not require the procurement of any consent, waiver or novation or provide for any change in the obligations of any party in
connection with, or terminate as a result of the consummation of, the Share Sale or any of the transactions contemplated hereunder, and shall give reasonable advance notice to Purchaser prior to allowing any Material Contract or
right thereunder to lapse or terminate by its terms;
|
(e) |
maintain the Company’s current insurance coverage covering the reasonably anticipated risks of the Company’s business as conducted, and upon any damage,
destruction or loss to any of the Company’s assets, apply any and all insurance proceeds received with respect thereto to the prompt repair, replacement and restoration thereof;
|
(f) |
perform in all material respects its then-current obligations under each Material Contract; and
|
(g) |
terminate any agreements between Seller or any of Affiliates and the Company, in particular any cash pool or intercompany financing arrangements, and
settle any outstanding amounts thereunder prior to Closing.
|
(a) |
amend or otherwise change the Company’s articles of association or equivalent governing documents;
|
(b) |
issue, sell, pledge, dispose of, grant or otherwise subject to any Encumbrance, any of its capital shares, or any options, warrants, convertible
securities, silent participations, or other rights of any kind to acquire any of its securities and/or its capital shares, or any other ownership interest;
|
(c) |
transfer, lease, sell, pledge, license, dispose of or subject to any Encumbrance (other than Permitted Encumbrances) any assets or properties of the
Company, except for sales and nonexclusive licenses of products in the ordinary course of business consistent with past practice;
|
(d) |
declare, set aside, make or pay any dividend or other distribution, with respect to any of its capital shares;
|
(e) |
reclassify, combine, split, subdivide or redeem, or purchase or otherwise acquire, directly or indirectly, any of its capital shares
or make any change to its capital structure;
|
(f) |
(i) acquire, directly or indirectly (including by merger, consolidation, or acquisition of shares or assets or any other
business combination), any corporation, partnership, other business organization or any division thereof or any other business, or any equity interest in any Person or any amount of assets that are
material to the Company’s business as conducted, except inventory in the ordinary course of business consistent with past practice; (ii) incur any Indebtedness, or assume, guarantee or endorse, or
otherwise become responsible for (contingently or otherwise), the obligations of any Person, unless in the ordinary course of business consistent with past practices; (iii) make any loans, advances or
capital contributions, except for loans or advances to Business Employees for travel expenses and extended payment terms for customers, in each case subject to Applicable Law and only in the ordinary
course of business consistent with past practice; or (iv) make, authorize, or make any commitment with respect to any single capital expenditure that is, individually, in excess of US$ 50,000 or is,
together with other capital expenditures that the Company has made, authorized or made a commitment with respect to following the date of this Agreement, in excess of US$ 200,000; (v) make or direct
to be made any capital investments in any Person; or (vi) enter into or amend any Contract with respect to any matter set forth in this subsection (f);
|
(g) |
other than as set out in Schedule 4.2, (i) increase or accelerate the compensation payable or to become payable
(including bonus grants and retention payments) or increase or accelerate the vesting of any benefits provided, or pay or award any payment or benefit not required as of the date hereof by an
Employee Plan as existing on the date hereof and disclosed in Section 2.13(a) of the Disclosure Schedule, to its current and former directors, managing directors, officers or Business
Employees or other service providers; (ii) grant any severance or termination pay or retention payments or benefits to, or enter into or amend or terminate any employment, severance,
retention, change in control, consulting or termination Contract with, any current or former director, managing director, officer or other Business Employee or other service providers of the
Company (other than payments or acceleration made pursuant to an Employee Plan as existing on the date hereof and disclosed in Section 2.13(a) of the Disclosure Schedule); (iii)
unless required by Applicable Law, establish, adopt, enter into or amend or terminate any collective bargaining agreement, shop agreement or other agreement with Business Employee
representatives, bonus, profit-sharing, thrift, compensation, share option, restricted shares, pension, retirement, deferred compensation, employment, termination, severance or other plan,
Contract, trust, fund or policy for the benefit of any current or former director, managing director, officer or Business Employee or other service providers; (iv) solely to the extent such
payment or agreement to take any action is outside of the ordinary course of business consistent with past practice, pay or make, or agree to pay or make, any accrual or other arrangement for,
or take, or agree to take, any action to fund or secure payment of, any severance pension, indemnification, retirement allowance, or other benefit; (v) hire, elect or appoint any managing
director or senior executive; or (vi) terminate the employment, change the title, office or position, or materially reduce the responsibilities of any managing director or Key Employee;
|
(h) |
make or change any GAAP accounting treatment election, adopt or change any accounting period, adopt or change any
accounting method, except in each case as required by changes in GAAP as concurred with the Company’s independent auditors and after notice to Purchaser;
|
(i) |
make, change or revoke any Tax election or allow any Tax election previously made to expire, file any
amended Tax Return, adopt or change any Tax accounting method or Tax accounting period, enter into, cancel or modify any agreement with a Taxing Authority, except consistent with
past practices, settle any Tax claim or assessment relating to the Company, surrender any right to claim a refund of Taxes or consent to any extension or waiver of the limitation
period applicable to any Tax claim or assessment relating to the Company (other than an extension resulting solely from an ordinary course extension of time to file a Tax Return,
consistent in all respects with past practice as illustrated on Section 2.20(b) of the Disclosure Schedule), destroy or dispose of any books or records with respect to Tax
matters relating to any Tax periods for which the statute of limitations is still open, or take any other similar action relating to the filing of any Tax Return or the payment of
any Tax if such other similar action would have the effect of increasing the liability for Taxes of the Company for any taxable period (or portion thereof) ending after the Closing
Date and provided that any of the actions described in this Section are not obligatory or required by Applicable Law or order of a Tax Authority;
|
(j) |
Other than in the ordinary course of business consistent with past practice, enter into (i) any Contract
that would (if entered into, amended, renewed or modified prior to the date of the Agreement) constitute a Material Contract with new or existing customers with any (A)
material term that is inconsistent with the Company’s existing Material Contracts with such customers or past contracting practices with similarly situated customers, as
applicable; or (B) that does not provide for a defined monetary limitation of liability, other than any such Material Contract that has received Purchaser’s prior written
approval; (ii) any Material Contract with existing customers other than on terms materially consistent with the Company’s existing Material Contracts with such customers, as
long as they provide with a defined monetary limitation of liability, and provided such were Made Available to Purchaser prior to the date hereof, unless reasonably required
with regard to the circumstances of a particular Material Contract or customer; or (iii) any Contract that would (if entered into, amended, renewed or modified prior to the
date of the Agreement) constitute a Material Contract with new customers other than on terms that are materially consistent with the Company’s past contracting practices with
similarly situated customers, as long as they provide with a defined monetary limitation of liability, and provided such were Made Available to Purchaser unless reasonably
required with regard to the circumstances of a particular Material Contract or customer;
|
(k) |
enter into any Contract (i) under which the Company grants or provides or agrees to grant or
provide to any third Person any assignment, license or other right with respect to any Intellectual Property Rights or Technology (other than non-exclusive licenses
granted to the Company’s customers in the ordinary course of business consistent with past practice); (ii) under which the Company establishes with any third party a
joint venture, strategic relationship, or partnership pursuant to which the Company agrees to develop or create any material Technology, Intellectual Property Right;
(iii) under which the Company agrees to create or develop any Technology, Intellectual Property Right, products, or services with any third party; (iv) apply, amend,
terminate any Contract related to registration of Company Intellectual Property Rights; or (v) that will cause or require the Company or Purchaser or any of their
Affiliates to (A) grant to any third party any license (other than non-exclusive licenses granted to the Company’s customers in the ordinary course of business consistent
with past practice), covenant not to sue, immunity or other right with respect to or under any of the Intellectual Property Right or Technology of Purchaser or any of its
Affiliates; or (B) be obligated to pay any material royalties or other amounts, or offer any discounts, to any third party (other than in connection with non-exclusive
Inbound License Agreements entered into in the ordinary course of business consistent with past practice);
|
(l) |
enter into or amend any Contract (i) pursuant to which any other party is granted, or that
otherwise constrains or subjects the Company or Purchaser or any of its Affiliates to, any non-competition, “most-favored nation,” exclusive marketing or other
exclusive rights of any type or scope or that otherwise restricts the Company or, upon completion of the Share Sale, Purchaser or any of its Affiliates, from
engaging or competing in any line of business, in any location or in any other manner; (ii) with respect to joint ventures, partnerships or material strategic
alliances; or (iii) with respect to future services requirements;
|
(m) |
commence or settle any Action with an
amount in controversy in excess of US$ 25,000 other than (i) for the routine collection of bills, (ii)
in such cases where Seller or the Company is in good faith determines that failure to commence suit
would result in the material impairment of a valuable aspect of its business or (iii) for a breach of
this Agreement;
|
(n) |
not to enter into (i) any new
Contracts or transactions with Seller or any of its Affiliates, or (ii) any other Related Party to
any of Seller’s Affiliates;
|
(o) |
accelerate the payment of any
material (individually or in the aggregate) Accounts Receivable or Intercompany Receivables,
or change or deviate from any cash management practices, in each case except in the ordinary
course of business consistent with past practice; or
|
(p) |
enter into any Contract
or otherwise make a commitment to take any of the actions described in subsections
(a) through (o) in this Section 4.2.
|
(a) |
Subject to the terms and conditions contained in this Section 4.3, Seller and Purchaser shall, and Seller shall cause the Company and any of their Affiliates
to, cooperate and use their respective commercially reasonable efforts to take, or cause to be taken, all appropriate action, and to make, or cause to be made, all filings necessary, proper or advisable under applicable Laws and
to consummate and make effective the transactions contemplated by this Agreement, including their respective commercially reasonable efforts to obtain, prior to the Closing Date, all Permits, consents, approvals, authorizations,
qualifications and Orders of Governmental Entities and parties to Contracts with the Company (including landlords) as are necessary for consummation of the transactions contemplated by this Agreement and to fulfill the
conditions to consummation of the transactions contemplated hereby set forth in Section 5.1 and Section 5.2; provided, that no Indebtedness for borrowed money shall be repaid, except as otherwise required
pursuant to the terms of the applicable loan agreement, and no Material Contract shall be amended to increase the amount payable thereunder or otherwise to be materially more burdensome to the Company, to obtain any such
consent, approval or authorization, without first obtaining the written approval of Purchaser.
|
(b) |
Based on their respective analyses, the parties have the common understanding that, with respect to the consummation of the transactions contemplated
under this Agreement, it is advisable to make a filing pursuant to Foreign Direct Investment (“FDI”) Laws in the Federal Republic of Germany. To the extent a mandatory German FDI filing should not be required, the
parties agree that a voluntary filing should be made in order to pre-empt any call-in of the transaction by the German Ministry for Economic Affairs and Climate Action (the “BMWK”). Without prejudice to the foregoing
sentences, if not already filed prior to the date hereof, Seller and Purchaser shall use their respective commercially reasonable efforts to promptly file or cause to be filed, within five (5) Business Days from the date
hereof, a precautionary notification and application for a non-objection certificate to the BMWK. Seller and Purchaser shall consult and cooperate with each other in the preparation of such filing, and shall promptly inform
the other parties of any material communication received by such party from the BMWK regarding the transactions contemplated by this Agreement. Seller shall review and discuss in advance, and consider in good faith the
views of Purchaser in connection with any proposed written or material oral communication with the BMWK. Seller shall not participate in any scheduled meeting with the BMWK unless it first consults with Purchaser in
advance, and to the extent permitted by the BMWK, gives Purchaser the opportunity to be present thereat. Neither Parent, Seller nor Purchaser shall agree to any voluntary extension of any statutory deadline or waiting
period or to any voluntary delay of the consummation of the transactions contemplated by this Agreement at the behest of the BMWK without the written consent of Purchaser (such consent not to be unreasonably withheld,
conditioned or delayed). Each of Purchaser and Seller shall be responsible for their respective input to be provided for the FDI filing and external advisor fees required to be paid in connection with such filing.
|
(c) |
Purchaser’s obligations under this Section 4.3 to use commercially reasonable efforts shall not include (i) proposing, negotiating,
committing to or effecting, by consent decree, hold separate order, or otherwise, the sale, transfer, license, divestiture or other disposition of, or any prohibition or limitation on the ownership, operation,
effective control or exercise of full rights of ownership of, any of the businesses, product lines or assets of Purchaser or any of its Affiliates or of the Company, or (ii) defending any judicial or administrative
action or similar proceeding instituted (or threatened to be instituted) by any Person under any German FDI Law or seeking to have any stay, restraining order, injunction or similar order entered by the BMWK vacated,
lifted, reversed, or overturned.
|
(d) |
Without limiting the generality of Section 4.3(a), Seller shall cause the Company to deliver each of the agreements or documents referred
to in Section 5.1(g).
|
(a) |
Seller, as controlling entity, and the Company, as controlled entity, entered into a domination and profit and loss transfer agreement (Beherrschungs-
und Gewinnabführungsvertrag) dated August 12, 2020, which became effective as of December 12, 2020 (the “DPLTA”).
|
(b) |
Seller shall implement a short fiscal year in the Company ending on or before the Closing Date (the “Short Fiscal Year”). The DPLTA shall be terminated with effect as of the expiry of the Short Fiscal
Year by mutual termination agreement between the Company and Seller (the “DPLTA Termination Date”).
|
(c) |
Seller and the Company shall take any actions, and Purchaser shall procure that any actions will be taken by the Company, that the DPLTA will in any event be effectively implemented (durchgeführt) for periods as of the date hereof up to and including the DPLTA Termination Date in accordance with section 14 para. 1 sent. 1 no. 3 of the German Corporate Income Tax Act (Körperschaftsteuergesetz).
|
(d) |
Obligations to transfer profits or assume losses under the DPLTA for the period until the DPLTA Termination Date shall be determined on the basis of individual annual financial statements of the Company for
the Short Fiscal Year (“DPLTA Financial Statement”), which shall be drawn up by the Company in cooperation with Seller, granting full access to any relevant documents prior to the DPLTA Termination Date, in accordance with German
generally accepted accounting principles to be applied in accordance with past practices. As from the Closing, Purchaser shall procure that the DPLTA Financial Statements will be drawn up and adopted in accordance with this Section 4.4(d)
and made available to Seller as soon as reasonably practicable after the DPLTA Termination Date. Any profit (abzuführender Gewinn) of the Company to be transferred to Seller under the DPLTA as shown
in the DPLTA Financial Statements shall belong to Seller (“DPLTA Seller Claim”). Any loss (auszugleichender Jahresfehlbetrag) of the Company to be assumed by Seller under the DPLTA as shown
in the DPLTA Financial Statements shall be borne by Seller (“DPLTA Seller Liability”). Between each other, Seller and Purchaser shall treat any DPLTA Seller Claim and any DPLTA Seller Liability as final claims and/or obligations
under the DPLTA (for all fiscal years prior to the Closing Date).
|
(e) |
In this respect, except as legally required in order to ensure that the DPLTA is effectively implemented pursuant to section 14 para. 1 sent. 1 no. 3 German Corporate Income Tax Act (to safeguard the fiscal
unity for corporate income and trade tax purposes between Seller and the Company), the DPLTA Financial Statements and the financial statements for any previous fiscal years of the Company shall not be amended by the parties, or by the
Company, and no further payments under or in respect of the DPLTA shall be required. In case an amendment or payment is required in accordance with the foregoing, the parties shall (i) procure that all relevant payments are made and claims
settled in a way accepted by the competent Tax Authority for purposes of the effective implementation of the DPLTA and (ii) the parties shall further procure the following: If Seller has to make a payment under the DPLTA to the Company,
Purchaser shall make a payment in the respective amount to Seller or if the Company has to make a payment under the DPLTA to Seller, Seller shall make a payment in the respective amount to Purchaser, in each case concurrently with the
relevant other payment. Any payment made between the parties under this Section 4.4(e) shall be considered as a Purchase Price Adjustment. For the avoidance of doubt, this Section 4.4(e) does not prevent or exclude
Purchaser from any claims under Article II.
|
(f) |
Subject to the other provisions of Section 4.4(d) which shall prevail, the Parties agree that the DPLTA shall be preliminarily settled between Seller and the Company at Closing based on a good faith
estimate determined by Seller in connection with the Estimated Closing Statement pursuant to Section 1.5(a) to the extent it is compliant with Applicable Laws. Following Closing, the final DPLTA Seller Claim or DPLTA Seller
Liability will be calculated according to Section 4.4(d) above and any preliminary settlement of the DPLTA will be adjusted accordingly. The parties agree that there shall be no double-counting of any DPLTA Seller Claim or DPLTA
Seller Liability when calculating, paying or adjusting the (Estimated) Purchase Price.
|
(g) |
Purchaser shall indemnify and hold harmless Seller and its Affiliate from and against, and shall compensate and reimburse Seller for, any and all Taxes related to the time period ending on or before the DPLTA
Termination Date resulting from, arising out of, relating to, or imposed upon or incurred by Seller or its former and present Affiliates by reason of a breach of any obligation of Purchaser set forth in Section 4.4, Section
4.12(c), Section 4.12(d) and Section 4.12(e) (as applicable), if and to the extent Seller demonstrates that the failure to oblige with such obligations has caused the indemnifiable Tax to accrue or impaired the ability
of Seller to lower or reduce the amount of any Tax assessment or enforcement.
|
(a) |
Parent and Seller shall cause the Company to use commercially reasonable efforts to deliver to the applicable third party or obtain prior to the Closing, and deliver to Purchaser at or prior to the Closing,
those consents and/or notices (as applicable) that are set forth in Section 2.4 of the Disclosure Schedule; provided, however, all obligations with respect to the purchase orders set forth in Schedule 4.18(b)
shall be governed exclusively by Section 4.18(b).
|
(b) |
Parent and Seller shall cause the Company to give all notices and other information required to be given to the Business Employees and any applicable Governmental Entity under Applicable Laws in connection
with the transactions contemplated by this Agreement.
|
(a) |
Effective as of the date hereof, each party agrees to keep secret and to treat with confidentiality the Confidential Information of the other parties and not to disclose any such
Confidential Information to any person or entity whatsoever or to use any Confidential Information for any purpose whatsoever; provided, however, that in the event that a party or parties, as applicable, (a “Required Disclosing
Party”) shall be legally required to disclose any Confidential Information, the Required Disclosing Party shall immediately notify the other party or parties, as applicable, of such request or requirement prior to disclosure so that
the other party or parties, as applicable, may seek an appropriate protective order with the reasonable assistance of the Required Disclosing Party.
|
(b) |
Without limiting from the foregoing, each Party hereby agrees that (i) it will be bound by and comply with the obligations of the Confidentiality Agreement, which will continue in full
force and effect in accordance with its terms, except that any Confidential Information concerning the Company shall be deemed Purchaser’s Confidential Information for all purposes under this Section 4.6; and (ii) it and its
Affiliates will hold, and that it will direct its other Representatives to hold, the terms of this Agreement, and the fact of this Agreement’s existence, in strict confidence in accordance with the terms and conditions of the
Confidentiality Agreement. At no time will a party hereto or its officers, directors, Affiliates or employees disclose any of the terms of this Agreement (including the economic terms) or any non-public information about a party hereto to
any other Person without the prior written consent of such other party.
|
(c) |
Notwithstanding anything to the contrary in the foregoing, a party hereto will be permitted to disclose Confidential Information and any and all terms of this Agreement (i) to its
financial, tax, and legal advisors (subject to the provisions of Section 3 to the Confidentiality Agreement) and (ii) subject to Section 4.7 below, to the extent applicable, to any Governmental Entity to the extent necessary to
comply with Applicable Law or the rules of the primary exchange, if any, on which such party is listed.
|
(a) |
Except as required pursuant to any mandatory disclosures under Applicable Law, including stock market rules, no party to this Agreement, nor any of
their Affiliates and Representatives shall issue any press release or otherwise make any public statements in any form, including any statements accessible to the public via the internet or other means, with respect to this Agreement,
the Share Sale or the other transactions contemplated by this Agreement or any of the other Transaction Documents without the prior written consent of Purchaser, Parent or Seller, as applicable, which consent shall not be unreasonably
withheld or delayed.
|
(b) |
Purchaser, Parent and Seller shall consult with each other before issuing, and give each other the opportunity to review and comment upon, any
press release or other public statements with respect to the Share Sale contemplated by this Agreement, and shall not issue any such press release or make any such public statement prior to such consultation, except as such party may
reasonably conclude may be required by Applicable Law, court process or by obligations pursuant to any listing agreement with any national securities exchange; provided, that each party may make statements without such
consultation that are consistent with previous press releases, public disclosures or public statements made by either party in compliance with this Section 4.7(b). Purchaser, Parent and Seller agree that the initial press release
to be issued with respect to the Share Sale contemplated by this Agreement shall be in the form heretofore agreed to by the parties.
|
(a) |
During the Pre-Closing Period, Parent and Seller will not, nor will Parent nor Seller authorize or permit the Company or any of its Affiliates or
Representatives to, directly or indirectly, (i) solicit, initiate, seek, or knowingly entertain, encourage, facilitate, support or induce the making, submission or announcement of any inquiry, expression of interest, proposal or offer
that constitutes, or would reasonably be expected to lead to, an Acquisition Proposal, (ii) enter into, participate in, maintain or continue any communications (except solely to provide written notice as to the existence of these
provisions) or negotiations regarding, or deliver or make available to any Person any non-public information with respect to, or take any other action regarding, any inquiry, expression of interest, proposal or offer that constitutes,
or would reasonably be expected to lead to, an Acquisition Proposal or (iii) agree to, accept, approve, endorse or recommend (or publicly propose or announce any intention or desire to agree to, accept, approve, endorse or recommend)
any Acquisition Proposal. Parent and Seller will immediately cease and cause to be terminated any and all existing activities, discussions or negotiations with any Persons conducted prior to or on the date hereof with respect to any
Acquisition Proposal.
|
(b) |
Without limiting the effectiveness of Section 4.8(a) above, Parent and/or Seller shall, within 24 hours, notify Purchaser orally and
in writing after receipt by the Company, Parent or Seller or, to Seller’s Knowledge, any of their Affiliates (or, to Seller’s Knowledge, by any of its respective Representatives), of (i) any Acquisition Proposal, (ii) any inquiry,
expression of interest, proposal or offer that constitutes, or would reasonably be expected to lead to, an Acquisition Proposal, or (iii) any other notice that any Person is considering making an Acquisition Proposal. Such notice shall
describe (1) the terms and conditions of such Acquisition Proposal, and (2) the identity of the Person or group (as such term’s meaning set forth in Section 13(D) of the Securities Exchange Act of 1934, as amended, the rules and
regulations thereunder and related case law) making any such Acquisition Proposal.
|
(a) |
Non-compete – Restrictions. In consideration of the purchase of the Shares by Purchaser, within three (3) years from the Closing Date (the “Restricted Period”), Seller
and Parent shall not, and to the extent permissible under Applicable Law, shall cause their Affiliates and, solely with respect to work performed at the direct instruction of Seller, Parent or their Affiliates, their respective
employees not to:
|
(i) |
within any jurisdiction in which the Company is either (a) operating; (b) is contemplating as of the Closing Date to do operate; or (c) in which it operated within 12
months prior to the Closing Date; directly or indirectly own, manage, operate, control, or participate in the ownership, management, or operation or control, or otherwise engage in, a business engaged in the research, development,
assembly, production, marketing, distributing, selling and service of, manual or automated non-contact optical metrology systems for panel or semiconductor wafer, in the areas that the Company was operating in within 12 months
prior to the Closing Date or was contemplating to operate in as of the Closing Date (the “Business”); provided, however, the parties acknowledge and agree that nothing in this Section will limit Seller,
Parent or any of their Affiliates from engaging in any of the following activities: (A) engineering probers with optical measurement capabilities, (B) probing or testing of optical integrated circuits, (C) optical metrology for
use in cryogenic applications and (D) optical metrology for probe cards and test/package consumables; the term “operating”, “operate” or the like, for the purposes of this Section 4.9(i) shall include doing
business, developing, manufacturing, marketing, selling, or providing services, in each case, through Parent or its Affiliates or their respective distributors.
|
(ii) |
persuade or attempt to persuade any potential customer or client regarding the Business to which the Company has made a presentation, or with which the
Company has had discussions, not to hire the Company, or to hire another company; or
|
(iii) |
interfere with the relationship between the Company and any customer or client of the Company, nor make any negative or disparaging statements or
communications about the Company with such customer or client, nor with any providers of the Company, regarding the Business.
|
(b) |
Non-compete – Exceptions.
Notwithstanding the terms of the foregoing subsection (a), nothing contained herein will prohibit or restrict Seller, Parent or any of their Affiliates, from directly or indirectly:
|
(i) |
owning securities constituting five percent (5%) or less of any class of securities of any private or publicly traded company, provided such ownership is of a passive financial
investment nature only;
|
(ii) |
engaging in any merger, acquisition (whether of shares or assets), consolidation or any other business combination with any Person if the stockholders of Parent immediately prior to
closing of such transaction own less than sixty percent (60%) (for the avoidance of doubt, including none) of the outstanding common stock of the resulting or surviving entity (or the parent thereof) (a “Permitted Business Combination”).
The parties agree that Section 4.9 will automatically terminate and be of no further force or effect upon the closing of a Permitted Business Combination, provided that (A) the stockholders of Parent immediately prior to the
closing of such Permitted Business Combination are not entitled, pursuant to the terms of the merger agreement (or similar agreement governing the terms of such Permitted Business Combination), to elect or designate more than sixty percent
(60%) (for the avoidance of doubt, including none) of the members of the board of directors or similar governing body of the surviving entity (or parent thereof), (B) neither Parent nor any of its directors or officers (x) have directly
elected or designated or (y) are entitled to directly elect or designate, more than sixty percent (60%) (for the avoidance of doubt, including none) of the members of the board of directors or similar governing body of the surviving entity
(or parent thereof), in each case (x) and (y), solely pursuant to or as disclosed in the terms of any document filed by Parent with the Securities and Exchange Commission directly in connection with and prior to the closing of such
Permitted Business Combination, and (C) persons serving on the board of directors of Parent as of immediately prior to closing of such Permitted Business Combination do not comprise more than 60% (for the avoidance of doubt, including none)
of the persons serving on the board of directors (or similar governing body) of the surviving entity (or parent thereof) as of immediately following the consummation of such Permitted Business Combination;
|
(iii) |
divesting any business (whether by way of asset sale or otherwise); or
|
(iv) |
acquiring (whether by acquisition of assets, merger or otherwise) any business entity for which revenues from the Business represented an amount less than fifteen percent (15%) of such
entity’s aggregate revenues during such entity’s last fiscal year; provided, that Seller, Parent or such Affiliate, as applicable, will provide written notice to Purchaser upon consummation of such transaction and will use
commercially reasonable efforts to divest itself of such rights in the Business within six (6) months from the closing of such acquisition (but in any event will divest itself of such rights in the Business before the date that is 12 months
of such acquisition), and during such period prior to divestment, the ownership, conduct, management, operation or control of such Business will not be in violation of the foregoing subsection (a). The obligation to divest set
forth in this Section 4.9(b)(iv) will expire upon expiration of the Restricted Period.
|
(c) |
Non-solicit. From and after the Closing Date, Seller
and Parent shall not, and shall cause their Affiliates not to, for a period of three (3) years after the Closing Date, knowingly solicit for employment any Business Employee; provided, that
this paragraph shall not preclude Seller or its Affiliates from hiring any such employee (i) who responds to a general solicitation through a public medium or general or mass mailing by or on behalf of Seller or any of its Affiliates that
is not targeted at employees of the Company, (ii) who contacts Seller or its Affiliates directly on such individual’s own initiative except for any employee of the Company who is a Key Employee, as demonstrated by written evidence; or
(iii) whose employment by or term in office with the Company or its Affiliates ceased at least six (6) months prior to the date of the applicable solicitation or hiring for any reason other than such employee’s voluntary resignation.
|
(d) |
It is the desire and intent of the parties to this Agreement that the provisions of this Section 4.9 shall be enforced to the fullest extent permissible under the Laws and public
policies applied in each jurisdiction in which enforcement is sought. If any particular provisions or portion of this Section 4.9 shall be adjudicated to be invalid or unenforceable, this Section 4.9 shall be deemed amended
to delete therefrom such provision or portion adjudicated to be invalid or unenforceable, such amendment to apply only with respect to the operation of this Section 4.9 in the particular jurisdiction in which such adjudication is
made.
|
(e) |
Subject to Section 4.9(f), the parties recognize that the performance of the obligations under this Section 4.9 by Parent and Seller is special, unique and extraordinary
in character, and that in the event of the breach by Parent or Seller of the terms and conditions of this Section 4.9 to be performed by Parent or Seller, Purchaser and the Company shall be entitled, if they so elect, to pursue
damages for any breach of this Section 4.9, and to enforce the specific performance thereof by Parent or Seller or to enjoin Parent or Seller or its Affiliates from performing such breach.
|
(f) |
Non-Compete – Cure Period. Notwithstanding anything herein to the contrary:
|
(i) |
In the event Purchaser becomes aware of the existence of any circumstances which Purchaser in good faith believes may result in an
indemnification claim pursuant to Section 6.2(a)(iii) with respect to a breach of Section 4.9(a) (Non-Compete), Purchaser shall provide a Claim Notice with respect to such alleged
breach to Parent as soon as practicable after Purchaser becomes aware of such circumstances.
|
(ii) |
Parent will have two (2) Business Days following receipt of the Claim Notice (the “Cure Period”) to dispute or cure such alleged breach of Section
4.9(a) as outlined in the Claim Notice.
|
(iii) |
If such alleged breach is not cured within the Cure Period, the parties agree that any remaining dispute arising out of the alleged breach
of Section 4.9(a) outlined in the Claim Notice shall be referred to the respective chief executive officers of the parties for resolution. The respective chief executive officers will use reasonable best efforts to resolve
such alleged breach and come to an agreement within ten (10) Business Days after referral of the matter to them (the “Resolution Period”).
|
(iv) |
If, upon the expiration of the Resolution Period, such alleged breach outlined in the Claim Notice has not been resolved, Purchaser
may exercise any rights or remedies it may have pursuant to this Agreement with respect to the unsolved portion of such alleged breach. In the event Purchaser requests judicial relief of any kind to enforce its rights under Section
4.9(e) or Section 8.6(f) (or both), Parent agrees not to raise the following arguments in opposition to the requested judicial relief: (A) the fact that Purchaser complied with the procedures set forth in this Section
4.9(f); or (B) that twelve (12) Business Days (or any portion thereof) have passed due to the Cure Period and the Resolution Period provided for in this Section. Parent does not waive, and may assert, any other argument
in opposition to Purchaser’s request for judicial relief.
|
(v) |
Notwithstanding any other provision in this Section, there will be no limitations or restrictions on the time period in which
Purchaser’s damages accrued due to the Cure Period and Resolution Period provided for in this Section.
|
(a) |
Transferred Employees. For the purposes hereof, (i) each Company
Employee other than the Carve-Out Employees, and (ii) each Additional Employee who either (A) transfers to the Company, Purchaser or any Affiliate of Purchaser by operation of Law on the Closing
Date, or (B) accepts the Purchaser offer of employment pursuant to the terms of this Section, will be referred to as a “Transferred Employee”. Any employee, including directors and officers, of Seller, any Affiliate of Seller or
the Company who is not a Transferred Employee, including for the removal of doubt any Offered Employees who do not become Transferred Employees, will be referred to as an “Excluded Employee”.
|
(b) |
General Principle. Anything to the contrary hereunder notwithstanding, the Parties agree that Seller shall assume and bear all Liabilities,
Losses, responsibilities and obligations, whether past, present or future, with respect to the employment of (i) Excluded Employees and (ii) Transferred Employees, except to the extent relating exclusively to the period of their
engagement with the Company post-Closing (“Seller Employee Liabilities”). Unless stipulated otherwise in this Agreement, Purchaser shall indemnify and hold harmless Seller and its Affiliates from and against, and shall
compensate and reimburse Seller for, all Liabilities, Losses, responsibilities and obligations with respect to the Transferred Employees, solely to the extent relating to the period of their engagement with Purchaser, its Affiliates and
the Company post-Closing (“Purchaser Employee Liabilities”). Notwithstanding anything to the contrary under this Agreement, (A) Seller shall indemnify and hold harmless Purchaser and its Affiliates from and against, and shall
compensate and reimburse Purchaser for, any and all Liabilities, Losses and obligations in respect to the Seller Employee Liabilities and (B) Purchaser shall indemnify and hold harmless Seller and its Affiliates from and against, and
shall compensate and reimburse Seller for, any and all Liabilities, Losses and obligations in respect to the Purchaser Employee Liabilities. Notwithstanding the foregoing, none of Seller, Parent or Purchaser shall be entitled to
recover specific Losses for a corresponding Loss that was already included as the same Liability (in all respects) and to the extent such Liability was accurately calculated, depicted and clearly taken into full account in determining
the Net Working Capital, Transaction Expenses, Indebtedness taken into account as downward adjustments to the Purchase Price.
|
(c) |
Automatic Transfer Employees. Effective as of the Closing Date, the Automatic Transfer Employees will be transferred by operation of
Applicable Law unless the Automatic Transfer Employees object to their transfer pursuant to Applicable Law. Unless otherwise set forth in this Agreement, the rights, powers, duties, Liabilities and obligations of Parent, Seller and any
Affiliate of Seller with respect to such Automatic Transfer Employees in respect of their terms and conditions of employment in force immediately before the Closing Date will be transferred to Company, Purchaser or any Affiliate of
Purchaser in accordance with Applicable Law.
|
(d) |
Offered Employees. Within 10 Business Days of the date hereof,
Purchaser will make offers of employment to the Offered Employees in accordance with Applicable Law and to become effective as of the Closing Date. Such offers of employment will be on terms and
conditions, including pay, position, responsibility and benefits, including equity incentive arrangements and restricted stock units, that are substantially comparable to the terms and conditions provided to such Offered Employees by
Parent and/or its Affiliates on the date hereof and for employment at a work location within a 10-mile radius of the location where such Offered Employees are permanently providing services with respect to the Company’s business as
conducted. No later than eight (8) Business Days prior to delivering such offers of employment to the Offered Employees, Purchaser will provide the material terms of such offers to Seller and Purchaser will consider in good faith any
comments provided by Seller. Parent or its Affiliates may terminate the employment of any Offered Employee who does not become a Transferred Employee on the Closing Date, provided that Parent will be entitled to prompt
reimbursement from Purchaser of any severance or separation costs (including the employer portion of any withholding and payroll Taxes thereon) required to be paid by Parent or its Affiliates but only with respect to any Offered
Employee who both (i) does not receive an offer of employment made by Purchaser or one of its Affiliates that materially complies with the requirements set forth in this Section and (ii) does not become a Transferred Employee on the
Closing Date. For the avoidance of doubt, should an Offered Employee (A) receive an offer of employment made by Purchaser or one of its Affiliates that materially complies with the requirements set forth in this Section and (B) does
not become a Transferred Employee, Parent or its applicable Affiliate will bear the costs associated with any severance or separation costs (including the employer portion of any withholding and payroll Taxes thereon) required to be
paid by Parent or its Affiliates.
|
(e) |
Employment Protection.
|
(i) |
The parties and their applicable Affiliates will use commercially reasonable efforts to ensure that each Automatic Transfer Employee and
Offered Employee who is inactive because of a leave of absence due to a short- or long-term disability becomes employed by Purchaser on the Closing Date, if permitted by Applicable Law, and otherwise as soon as possible after such
employee’s return to active employment.
|
(ii) |
Purchaser and its Affiliates will take into account all service that the Transferred Employees earned while employed by Seller or any of its
Affiliates, as applicable, prior to the Closing Date and will treat such service as service with Purchaser and its Affiliates for purposes of determining such Transferred Employees’ eligibility for holidays, sick days, vacation,
and benefits. Purchaser and its Affiliates will take into account all service of the Transferred Employees with Seller or any of its Affiliates prior to the Closing Date for purposes of participation, vesting and benefit accrual
under the employee benefit plans, funds or programs of Purchaser and its Affiliates, to the extent such are based upon tenure. Any group health plan of Purchaser or any of its Affiliates in which a Transferred Employee or the
dependents thereof participate will recognize for purposes of calculating any deductible, co-pay or out of pocket maximum thereunder the covered expenses that such Transferred Employee and such Transferred Employee’s dependents
incurred in the group health plan of the same type with Seller, any of its Affiliates or the Company, as applicable, prior to the Closing Date. For these purposes, “covered expenses” are those that counted towards the deductible,
co-pay or maximum out of pocket expenses in the group health plan of Seller, any of its Affiliates or the Company, as applicable, that is the same type of group health plan that the Transferred Employee and such Transferred
Employee’s dependents are participating in with Purchaser or its Affiliates and that were incurred in a plan year of Seller’s (or its Affiliates’) relevant group health plan that ends with or within the plan year of Purchaser’s
(or its Affiliates’) relevant group health plan that ends after the Closing Date. Notwithstanding anything in this Agreement to the contrary, any service credited by Seller, any of its Affiliates or the Company, as applicable,
with respect to any Transferred Employee for any period or periods of time prior to the Transferred Employee’s commencement of employment with Seller, any of its Affiliates or the Company, as applicable, will be counted as service
of the Transferred Employee while employed by Seller, any of its Affiliates or the Company, as applicable, prior to the Closing Date and will be taken into account by Purchaser and its Affiliates for purposes of this Section 4.10(e).
|
(iii) |
Without limiting any other obligation of Purchaser hereunder, Purchaser and its Affiliates, as applicable, will (i) establish new employee
benefit or fringe benefit plans, funds or programs to cover the Transferred Employees (and, to the extent appropriate, their dependents and other beneficiaries), (ii) cover the Transferred Employees (and, to the extent
appropriate, their dependents and other beneficiaries) under its existing employee benefit or fringe benefit plans, funds or programs, (iii) assume the Employee Plans to the extent it is mandatory under Applicable Law, or (iv)
any combination of clauses (i), (ii) and (iii) above as Purchaser and Seller reasonably agree.
|
(iv) |
The provisions of this Section 4.10(e) are solely for the benefit of the parties hereto, and nothing in this Section 4.10(e) or any
other provision of this Agreement, whether express or implied, is intended to, or will (i) constitute the establishment or adoption of or an amendment to any employee benefit plan for purposes of ERISA or Applicable Law or
otherwise be treated as an amendment or modification of any benefit plan, agreement or arrangement, (ii) limit the right of Seller, Purchaser or any of their respective Affiliates to amend, terminate or otherwise modify any
benefit plan, agreement or arrangement, or (iii) create any third-party beneficiary or other right in any Person, including any current or former employee of Seller or any of its Affiliates, any participant in any benefit
plan, agreement or arrangement (or any dependent or beneficiary thereof).
|
(v) |
Purchaser and its applicable Affiliates will timely provide any information relating to the Company’s business that is necessary for Seller and its
Affiliates to discharge their obligations under Applicable Laws (including under any Transfer Regulations) to notify and/or consult with the Company Employees or Offered Employees or their representatives, unions, works
councils or other employee representative bodies, if any.
|
(f) |
Equity Incentives.
|
(i) |
Seller shall procure that any equity incentives, including any restricted stock units granted to Transferred Employees by Seller or any Affiliate of
Seller (“Equity Incentives”), will terminate with effect as of the Closing Date to the extent the Equity Incentives have not become vested on the Closing Date (“Unvested Equity Incentives”). To the extent
the Equity Incentives have become vested on the Closing Date, all Liabilities resulting therefrom shall be deemed as Seller Employee Liabilities.
|
(ii) |
At the Closing, each Company restricted stock unit held by a Transferred Employee that is unvested, unexpired, unexercised and outstanding immediately prior
to the Closing (the “Unvested RSUs”) shall, on the terms and subject to the conditions set forth in this Agreement, be cancelled and in substitution for the cancelled Unvested RSUs, the Transferred Employee will
receive restricted stock units in Camtek IL at the same fair market value as the Unvested RSUs. For this purpose, “fair market value” of the share price of each Unvested RSU will be equal to the average closing price of
a share on the stock exchange or a national market system on which the shares are listed over the 30 trading days as of the end of trade two Business Days prior to Closing. Each cancelled and substituted Unvested RSU
shall be subject to the similar terms and conditions (including vesting schedule) that were applicable to such Unvested RSU immediately prior to or at the Closing. Camtek IL will not substitute any Unvested RSUs held by
Persons that are Excluded Employees. Promptly after the Closing Date, Camtek IL shall issue to each Person who immediately prior to the Closing was a holder of Unvested RSUs a document evidencing the foregoing
assumption by Camtek IL. Subject to Section 4.13, Purchaser will have the opportunity to provide documentation, explanation, data and discuss all matters regarding the above grants with the relevant Transferred
Employees.
|
(g) |
Continuing Contractors. Parent and Seller shall cause the Company or any of its Affiliates who are supporting the Company’s business as conducted to cooperate and work with Purchaser to help Purchaser identify independent contractors of the Company whom Purchaser may wish to engage
following the Closing. Subject to the prior written consent by Seller not unreasonably withheld or delayed, Purchaser shall have the right to furnish to independent contractors referred to in the preceding sentence
terms and conditions of employment with the Company, Purchaser, or any other legal entity as determined by Purchaser becoming effective as of Closing. The independent contractors of the Company referred to in the
preceding sentence shall be hereinafter referred to as the “Continuing Contractors.” Notwithstanding anything in this Agreement to the contrary, no Continuing Contractor, and no other independent
contractor of the Company, shall be deemed to be a third party beneficiary of this Agreement.
|
(h) |
Collaboration Regarding Employee Communications. During the Pre-Closing Period
Parent, the Company and Purchaser shall collaborate in approaching all Company Employees, the employees who shall become Additional Employees and independent contractors in order to communicate to them the pending
transactions hereunder, with the goal to ensure a smooth continuation of their engagement with the Company (or its relevant Affiliate, as applicable).
|
(i) |
Carve-Out Employees. The Parties agree and Prior to Closing, Seller shall procure that the employment and/or services relationships of the Carve-Out Employees shall be transferred to Seller or any Affiliate of Seller with effect as of the Closing Date.
Seller shall indemnify and hold harmless Purchaser, the Company and their Affiliates from any Liabilities, Losses and obligations arising from and in connection with the employment and/or services
relationships of the Carve-Out Employees, including the costs for a continuation of the employments until the effective date of any transfer and termination, respectively, and any severance costs.
|
(a) |
Cooperation. Each of Purchaser and Seller agrees to
retain and furnish or cause to be furnished to one another, upon request, as promptly as practicable, such information in their possession (or, in the case of Purchaser, following the Closing, in the
possession of the Company) and assistance relating to the Company as is reasonably necessary for the filing of all Tax Returns of or with respect to the Company, the making of any election related to Taxes of or with respect to the
Company and the period ending on or before the Closing Date, the preparation for any audit by any Taxing Authority relating to any Tax Return of or with respect to the Company and the period ending on or before the Closing Date, and the
prosecution or defense of any Action relating to any Tax Return of or with respect to the Company and the period ending on or before the Closing Date. Purchaser and Seller shall cooperate with each other in the conduct of any audit or
other proceeding related to Taxes of or with respect to the Company and the period ending on or before the Closing Date and each shall execute and deliver such powers of attorney and other documents as are necessary to carry out the
intent of this Section 4.12. In the event any Taxing Authority informs Seller, on the one hand, or Purchaser or the Company, on the other, of any notice of proposed audit, claim, assessment or other dispute concerning an amount
of Taxes with respect to which the other party may incur Liability hereunder, the party so informed shall promptly notify the other party of such matter.
|
(b) |
Transfer Taxes. Any Transfer Taxes shall be borne by
Purchaser. Except as otherwise required by Applicable Law, Purchaser shall, at its own expense, prepare and file all necessary Tax Returns and other documentation with respect to all such Transfer
Taxes, and provide Seller with a complete and correct copy thereof.
|
(c) |
Filing Tax Returns.
|
(i) |
Tax Returns (x) required to be filed by or on behalf of the Company, (y) relating to any Tax assessment periods (Veranlagungszeiträume,
Erhebungszeiträume, sonstige Besteuerungszeiträume) which fully or partially cover the period until the Closing Date and (z) which have an effect on Seller’s or its Affiliate’s Tax obligations (due to the fiscal unity for
corporate income and trade tax purposes between Seller and the Company as described in Section 4.4(e)) (“Tax Returns of Seller’s Interest” and any Tax or Tax basis to be covered by law in a Tax Return of Seller’s
Interest hereafter “Tax Item of Seller’s Interest”) shall be filed by Purchaser or the Company when due but subject to the review and prior written consent of Seller which shall not be unreasonably withheld and shall
be deemed granted twenty (20) Business Days after such consent has been requested in writing by Purchaser. The Tax Returns of Seller’s Interest have to be prepared on a basis consistent with Seller’s reasonable and lawful
instructions and further consistent with and by making elections in accordance with those Tax Returns prepared for past Tax assessment periods unless otherwise required by mandatory law or order of a Tax Authority. Any instructions
given by Seller must comply with Applicable Law and past practice unless otherwise required by mandatory law or binding order of a Tax Authority. Purchaser shall ensure that any Tax Returns to be reviewed and approved by Seller (y)
will be furnished to Seller no later than thirty (30) Business Days prior to the due date of the relevant Tax Return and (z) will be filed in time (taking into account any extensions). Purchaser shall take into account any
instructions received from Seller no later than twenty (20) Business Days prior to the due date of the relevant Tax Return provided that such instructions are in accordance with Applicable Law.
|
(ii) |
Any Tax Returns of Seller’s Interest may not be amended or changed without the prior written consent of Seller (such consent not to be unreasonably withheld
and deemed granted twenty (20) Business Days after such consent has been requested in writing by Purchaser), and Purchaser shall follow, and shall cause the Company to follow, any reasonable and lawful instructions of Seller
regarding the amendment of such Tax Returns; for the avoidance of doubt, corrections of filed Tax Returns which are required by law are not prevented by this clause.
|
(d) |
Tax Assessments and Tax Audits.
|
(i) |
After the Closing, Purchaser shall procure that Seller will be informed in writing without undue delay, at the latest however within ten (10) Business Days
after receipt, by the Company or Purchaser, of all Tax assessments (Steuerbescheide) and announcements of Tax audits (Betriebsprüfungen) or other
written administrative or judicial procedure, dispute or circumstance, in relation to a Tax Item of Seller’s Interest.
|
(ii) |
Purchaser shall procure that Seller, at his costs, will be provided with all relevant documents and other information which are reasonably available to
the Company or Purchaser and are required to enable Seller to evaluate such Tax Item of Seller’s Interest.
|
(iii) |
If and to the extent that Tax audits of the Company relate to Tax Item of Seller’s Interest, Seller shall, at its reasonable request and sole cost and expense, be
given the opportunity to engage and instruct, at their choice, a German Tax counsel in relation to such Tax audits regarding Tax Item(s) of Seller’s Interest. The German Tax counsel is entitled to participate in meetings with
Tax Authorities in relation to such Tax proceedings and audits acting reasonably.
|
(iv) |
Purchaser shall use commercially reasonable efforts with regard to Tax audits relating to Tax Item of Seller’s Interest that,
|
(A) |
the Tax auditor shall address questions and statements in writing (unless otherwise agreed between Purchaser and Seller in advance and in writing); and
|
(B) |
such questions and statements are forwarded to Seller without undue delay and give Seller the opportunity to provide answers and comments on these questions and statements prior to their
filing. Any such answers and comments must be provided by Seller within fifteen (15) Business Days after the receipt of the questions or statements, provided that, Seller shall bear all out-of-pocket costs and expenses in
connection with this Section 4.12(d)(iv).
|
(e) |
Defense.
|
(i) |
Purchaser shall take, and shall procure that the Company take, at Seller’s sole expenses, such lawful action as Seller may request by written notice to Purchaser to
avoid, dispute, resist, appeal or otherwise defend, including by suspension of enforcement or other injunction, against any assessment or enforcement of a Tax Item of Seller’s Interest. The Tax counsel of Seller’s choice shall
be appointed by the Company, at the expense of Seller, in connection with actions relating to Tax Item of Seller’s Interest. The Company will allow this Tax counsel to report to Seller the status of such proceedings and is
further entitled to discuss with Seller further procedural steps. Further, Seller is entitled to give instructions to this Tax counsel with regard to the defense and any legal remedy (including injunction) to be lodged
including any arguments which may be used, provided that such instructions or arguments are reasonable, comply with mandatory law, where a continuous, unchanged past practice compliant with Applicable Law has been
applied by the Company before the Closing Date, with such continuous and past practice applied by the Company. Purchaser procures that Seller and the Tax counsel will be provided without undue delay with all relevant documents,
other information, and with such further assistance as reasonably required for the defense. The obligation to bear the expenses of any defense measure requested by Seller includes the fees and other costs payable in respect of
any injunction, appeal or court proceeding.
|
(ii) |
With respect to a Tax Item of Seller’s Interest no concession shall be made by Purchaser or the Company and no claim for Tax Item of Seller’s Interest
shall be acknowledged or settled, without prior written consent of Seller, which shall not be unreasonably withheld or delayed and shall be deemed granted twenty (20) Business Days after request of such consent in writing by
Purchaser.
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(f) |
All Taxes and Tax Liabilities with respect to the income, property
or operations of the Company that relate to any Straddle Period shall be apportioned between the Pre-Closing Tax Period and the Tax period ending after the Closing Date as follows: (i) in the case
of Taxes other than income, sales and use and withholding Taxes, on a per-diem basis, and (ii) in the case of income, sales and use and withholding Taxes, as determined from the books and records of the Company as though the Tax year of
the Company terminated at the end of the Closing Date.
|
(g) |
For the avoidance of doubt, Section 4.12(c) through (e) shall only apply to Taxes of
Seller relating to the fiscal unity for income tax and trade tax purposes in place between Seller as fiscal unity parent and the Company as fiscal unity subsidiary, and shall not apply to any other Taxes.
|
(a) |
Parent and Seller Release. Effective as of the Closing Date and subject to the Closing and the payment
of the Purchase Price, in consideration of the consummation of the transactions contemplated hereunder, Parent and Seller (with respect to itself and any of its Affiliates except for the Company) hereby irrevocably, unconditionally and
completely releases, acquits and forever discharges the Company and each of the Company’s directors, officers, employees, agents, advisors, Representatives, Affiliates, successors, heirs and assigns, executors and administrators and the
Transferred Employees (the “Company Releasees”) from any past, present and future disputes, claims, controversies, demands, rights, obligations, costs, expenses (including attorneys’ and accountants’ fees and expenses),
Liabilities, actions and causes of action of every kind and nature, in law or in equity, whether known or unknown, matured or unmatured, fixed or contingent, involving, or that may be asserted or exercised by Parent, Seller or and any
of their Affiliates, in any capacity, except for Seller’s rights under this Agreement, in connection with the transactions contemplated hereby and each agreement attached as an exhibit hereto or entered into in connection herewith.
|
(b) |
Company Release. In consideration of the consummation of the transactions contemplated
hereunder, the Company hereby irrevocably, unconditionally releases, acquits and forever discharges, effective as of the Closing Date and subject to the Closing, Seller and each of Seller’s directors, officers or employees who acted as
any current or former or serving as of immediately prior to the Closing Date director or officer of the Company, as well as its successors, heirs and assigns, executors and administrators (the “Seller Releasees”) from any past,
present and future disputes, claims, controversies, demands, rights, obligations, liabilities, actions and causes of action of every kind and nature, in law or in equity, whether known or unknown, matured or unmatured, fixed or
contingent, involving, or that may be asserted or exercised by the Company that arise from or out of, are based upon or relate to the service of such person as a director or officer of the Company, except with respect to such rights and
claims available to Purchaser under this Agreement, in connection with the transactions contemplated hereby and each agreement attached as an exhibit hereto or entered into in connection herewith.
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(c) |
Notwithstanding anything to the contrary in this Section, the foregoing
releases and covenants will not apply to any claims (i) involved fraud or breach of applicable law of the Company Releasee (in case of Seller Release) or Seller Releasee (in case of Company
Release), (ii) relating to the other Party’s failure to perform any of its obligations, undertakings or covenants set forth in this Agreement, (iii) relating to any employment payment, including salary, bonuses, accrued vacation,
any other employee compensation and/or benefits and unreimbursed expenses and (iv) relating to or arising from any commercial relationship (including for the removal of doubt any services engagements) Seller may have with any of the
Company Releasees or that Purchaser or the Company may have with any Seller Releasee.
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(d) |
Notwithstanding anything to the contrary: (i) the foregoing release is conditioned upon the consummation of the Closing and will become null and void, and will have no effect whatsoever, without any action on the part of any Person, upon termination of this Agreement in
accordance with Article VII and (ii) should any provision of this release be found, held, declared, determined, or deemed by any court of competent jurisdiction to be void, illegal, invalid or unenforceable under any
Applicable Law, the legality, validity, and enforceability of the remaining provisions will not be affected and the illegal, invalid, or unenforceable provision will be deemed not to be a part of the release pursuant to this
Section.
|
(a) |
Restructuring Assets and Activities.
|
(i) |
Parent and Seller will use reasonable best efforts to perform, at their own cost and expense (except as specified in clause (ii) below), restructuring activities to transfer certain
assets, listed on Schedule 4.18(a), (the “Restructured Assets”) to the Company on or prior to the Closing (the “Restructuring Activities”). Neither Parent nor Seller will be required to perform any Restructuring
Activities to the extent that it would violate Applicable Law. Parent and Seller will reasonably respond to reasonable questions by Purchaser regarding the status of the Restructuring Activities. Any executed documents, instruments or
certificates (or forms thereof) to implement the Restructuring Activities will be made available to Purchaser reasonably promptly following their completion. For purposes of this Agreement, the Restructuring Activities will be deemed to be
in the ordinary course of business of the Company.
|
(ii) |
Notwithstanding the foregoing, promptly but in any event no later than 60 calendar days following the Closing Date, Purchaser will, at Purchaser’s cost and expense, prepare for relocation
of the Restructured Assets and relocate such Restructured Assets. Subject to the provisions hereof, Parent agrees to cooperate, and agrees to cause its Affiliates to cooperate, with Purchaser and provide Purchaser all assistance reasonably
requested by Purchaser in connection with the planning and implementation of the transfer of any Restructured Assets or any portion of any of them to such location as Purchaser will designate. The Restructured Assets will be transported by
or on behalf of Purchaser, and until all of the Restructured Assets are removed from Parent’s or its Affiliates’ facilities, Parent will permit, and will cause its Affiliates to permit, Purchaser and its authorized agents or
representatives, upon prior notice, to have reasonable access to such facilities during normal business hours to the extent necessary to disconnect, detach, remove, package and crate the Restructured Assets for transport. Purchaser will be
responsible for (A) disconnecting and detaching all fixtures and equipment that are Restructured Assets from the floor, ceiling and walls of Parent’s or its Affiliates’ facilities so as to be freely removed from such facilities and (B)
packaging and loading the Restructured Assets for transporting to and reinstalling the Restructured Assets at such location(s) as Purchaser will determine.
|
(b) |
Purchase Orders. Purchaser, Parent and Seller will
work together in good faith to transition the commercial arrangements described in Schedule 4.18(b) to Purchaser (or an Affiliate of Purchaser designated by Purchaser, including the Company)
post-Closing and, effective as of the Closing, Purchaser shall become the beneficial owner of all amounts due or received thereby in respect of such commercial arrangements, which shall be transferred to Purchaser by Parent, Seller or any
Affiliate thereof, as applicable.
|
(a) |
Representations, Warranties and Covenants of Parent, Seller and Company. (i) each of Parent, Seller and
the Company shall have performed and satisfied in all material respects each of its respective covenants and obligations hereunder required to be performed and satisfied by it on or prior to the Closing Date, (ii) each of the
representations and warranties of Parent, Seller and Company set forth in the Fundamental Representations shall have been true and correct in all respects as of the date of this Agreement and at and as of the Closing with the same force
and effect as if made as of the Closing (except that representations and warranties that are made as of a specified date shall be true and correct as of such specified date), (iii) the representations and warranties of Parent, Seller
and Company set forth in Section 2.10 (Financial Statements), Section 2.11 (Absence of Change), and Section 2.26 (Suppliers and Customers) shall have been true and correct in all material respects as of the date of this Agreement and at and as of the Closing with the same force and effect as if made as of the
Closing (except that representations and warranties that are made as of a specified date shall be true and correct as of such specified date), and (iv) each of the representations and warranties of Parent, Seller and Company contained
herein, other than those set forth above, shall have been true and correct as of the date of this Agreement and at and as of the Closing with the same force and effect as if made as of the Closing (except that representations and
warranties that are made as of a specified date shall be true and correct as of such specified date), except, in the case of this clause (iv), where the failure to be true and correct would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
|
(b) |
FDI Clearance. The transactions contemplated by this Agreement are cleared (for the avoidance of
doubt, the issuance of a non-objection certificate shall suffice) or deemed to be cleared under the German FDI Laws (e.g., due to lapse of applicable waiting periods or due to jurisdiction having been declined by the BMWK) or it turns
out that the closing of the transactions contemplated by this Agreement is otherwise permissible pursuant to German FDI Laws.
|
(c) |
Short Fiscal Year and Termination of DPLTA.
|
(i) |
The competent Tax authorities have granted their consent to change the Company’s fiscal year and to introduce in the Company the short
Fiscal Year.
|
(ii) |
a change of the fiscal year of the Company to implement the Short Fiscal Year is registered with the commercial register.
|
(iii) |
The DPLTA has been terminated with effect as of the expiry of the Short Fiscal Year.
|
(d) |
Board Approval. Parent and Seller have submitted to Purchaser a written confirmation that the respective boards of Parent and Seller have approved the transactions contemplated by this Agreement.
|
(e) |
No Restraints. No Law shall have been enacted or exist
that would prohibit the transactions contemplated by this Agreement and the other Transaction Documents or the consummation of the Closing. There shall not be any temporary
restraining order, preliminary or permanent injunction or other order or consent issued by any court of competent jurisdiction or other restraint or prohibition of any Governmental Entity (i) preventing the consummation of
the Share Sale or other transactions contemplated by this Agreement or the other Transaction Documents or (ii) limiting or restricting Purchaser’s ownership, conduct or operation of the business of the Company following
the Closing. Nor shall there be any threatened (in writing) Action seeking any of the foregoing or any other injunction, restraint, prohibition or material damages in connection with the Share Sale or the other
transactions contemplated by this Agreement and the other Transaction Documents.
|
(f) |
No Material Adverse Effect. Since the date hereof there shall not have occurred Material Adverse Effect.
|
(g) |
Employment and Consulting Arrangements.
|
(i) |
None of the Key Employees shall have terminated employment with the Company or shall have terminated or repudiated (or
indicated or provided notice of an intent to terminate or repudiate) his or her Employment Arrangement or shall be unable to continue employment under his or her Employment Arrangement upon Closing.
|
(ii) |
At least 10 of the employees set forth in Schedule 5.1(h)(ii) are employed by the Company, Purchaser or an
Affiliate of Purchaser at Closing; provided, however, to the extent any of the employees set forth on Schedule 5.1(h)(ii) are Offered Employees and did not receive offers in compliance with Section
4.10, such employees will not be included in the calculation of this percentage requirement.
|
(iii) |
The Consulting Agreement shall be in full force and effect at the time of the Closing.
|
(h) |
Agreements and Documents. Purchaser shall have received the
following agreements and documents, each of which shall be in full force and effect:
|
(i) |
a certificate duly executed by Seller and containing the representation and warranty of Seller that the
conditions set forth in Sections 5.1(a) (as they relate to Seller) have been duly satisfied; and
|
(ii) |
letters of resignation and separation letters, in form reasonably satisfactory to Purchaser, duly executed by each managing director or officer of the
Company, evidencing the resignation of each such director, managing director and officer (but only from such office, not as employee, unless otherwise required pursuant to the terms of this Agreement), in
each case, effective as of the Closing.
|
(i) |
Other Documents. Purchaser shall have received the Estimated Closing Statement and the certificate
referenced in Section 5.1(h)(i) above, proof of termination of Encumbrances on any assets of the Company satisfactory to Purchaser, and such other documents, agreements, filings, third party consents,
assignments and other instruments, in form and substance reasonably satisfactory to Purchaser, as may be required to consummate the Share Sale.
|
(a) |
Representations, Warranties and Covenants of Purchaser. Except as would not reasonably be expected to prevent consummation of the Share Sale by Purchaser and other transactions contemplated hereby, (i) Purchaser shall have performed and satisfied in all material respects each of its
respective covenants and obligations hereunder required to be performed and satisfied by it on or prior to the Closing Date, (ii) each of the representations and warranties of Purchaser set forth in Section 3.1 (Organization and Qualification), Section 3.2 (Authority), and Section 3.3 (No Conflict; Required Consents and
Approvals) shall have been true and correct in all respects as of the date of this Agreement and at and as of the Closing with the same force and effect as if made as of the Closing (except that representations and warranties
that are made as of a specified date shall be true and correct as of such specified date) and (iii) each of the representations and warranties of Purchaser contained herein, other than those set forth in subsection (ii) above,
shall have been true and correct as of the date of this Agreement and at and as of the Closing with the same force and effect as if made as of the Closing (except that representations and warranties that are made as of a specified date
shall be materially true and correct as of such specified date), except, in the case of clause (iii), where the failure to be true and correct would not, individually or in the aggregate, reasonably be expected to have a Material Adverse
Effect.
|
(b) |
Certificate. A certificate duly executed by Purchaser and containing the representation and warranty of Purchaser that the conditions set forth in Section 5.2(a) have been duly satisfied;
|
(c) |
Board Approval. Purchaser has submitted to Parent and Seller a written confirmation the board of Purchaser has approved the transactions contemplated by this Agreement.
|
(d) |
No Restraints. No Law shall have been enacted or exist that would prohibit the
transactions contemplated by this Agreement and the other Transaction Documents or the consummation of the Closing. There shall not be any temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or other restraint or prohibition of any Governmental Entity preventing the consummation of the Share Sale or other transactions contemplated by this Agreement.
|
(a) |
The covenants and agreements of the Company, Parent, Seller and Purchaser contained in this Agreement shall survive the Closing Date; provided, that none of the covenants and agreements of the Company, Parent, Seller and Purchaser
contained in this Agreement shall survive beyond the periods set forth in Section 6.1(b) below.
|
(b) |
The representations, warranties, covenants and agreements of Parent, the Company and of Seller contained in this Agreement shall
survive as follows:
|
(i) |
the representations and warranties of the parties contained herein and in any certificates delivered pursuant hereto, as the case may be, will terminate and be of no further force or effect at the Closing,
except for the Fundamental Representations, which shall survive the Closing and continue in full force and effect six (6) years from the Closing Date (the “Fundamental Claims Expiration Date”) and provided that nothing in the
foregoing shall affect the period for indemnification with respect to fraud as detailed in clause (ii) below;
|
(ii) |
notwithstanding anything to the contrary herein, any claim of fraud on the part of Parent, the Company or Seller shall survive until the expiration of the applicable statutes of limitations;
|
(iii) |
any claims relating to or arising out of a breach of the covenants and agreements contained in this Agreement that are required to be performed in whole prior to the Closing (the “Pre-Closing Covenants”)
will survive until the date that is twelve (12) months following the Closing Date (the “Pre-Closing Covenant Expiration Date”) and the covenants and agreements contained in this Agreement that require performance after the Closing
(the “Post-Closing Covenants”) will survive until fully performed or observed in accordance with their terms (the “Post-Closing Covenant Expiration Date” and, together with the Pre-Closing Covenant Expiration the “Covenant
Expiration Date”); and
|
(iv) |
if, in accordance with this Article VI, (A) any indemnification claims arising from any breach of any representations and warranties set forth in Section 6.1(b)(i) above are asserted
pursuant to Section 6.3 prior to the Fundamental Claims Expiration Date, (B) any indemnification claims arising from any claims of fraud are asserted pursuant to Section 6.3 at any time prior to the expiration of the
applicable statute of limitations period or (C) any indemnification claims arising from any breach of any covenant or agreement set forth in Section 6.1(b)(iii) asserted pursuant to Section 6.3 prior to the applicable
Covenant Expiration Date, such indemnification claims shall continue until the final amount of recoverable Losses are determined by final agreement, settlement, judgment or award binding on Parent and/or Seller and Purchaser in accordance
with this Article VI.
|
(a) |
Indemnification by Parent and Seller. Subject to Section 6.1 and the other provisions of this Article
VI, from and after the Closing Date, Parent and Seller shall, jointly and severally, in the manner set forth herein, indemnify and hold harmless Purchaser, the Company and their Affiliates, and their respective Representatives
(collectively, the “Indemnitees”), from and against all Losses resulting from, arising out of, relating to, or imposed upon or incurred by any Indemnitee by reason of (including any Third Party Claim relating thereto):
|
(i) |
any breach of any Fundamental Representation;
|
(ii) |
any breach by Parent, Seller or the Company of a Pre-Closing Covenant;
|
(iii) |
any breach by Parent, Seller or the Company of a Post-Closing Covenant; and
|
(iv) |
any fraud on the part of Parent, Seller or the Company;
|
(b) |
Limitations.
|
(i) | No Indemnitee shall be entitled to recover specific Losses for a corresponding Loss that was already included as the same Liability (in all respects) and to the extent such Liability was accurately calculated, depicted and clearly taken into full account in determining the Net Working Capital, Transaction Expenses, Indebtedness clearly taken into account as downward adjustments to the Purchase Price, including with respect to any claim made under this Article VI. |
(ii) |
The amount of any Losses that are subject to indemnification under this Article VI will be calculated net of the amount of any insurance
proceeds, indemnification payments, or reimbursements actually received by the Indemnitee from third parties in respect of such Losses (net of any costs or expenses incurred in obtaining or enforcing such insurance,
indemnification, or reimbursement, including any increases in insurance premiums or retro-premium adjustments resulting from such recovery). If an Indemnitee receives any amounts under applicable insurance policies or third
party indemnification or reimbursement payments subsequent to its receipt of an indemnification payment by Parent and/or Seller, then such Indemnitee will, without duplication, promptly reimburse Parent and/or Seller for any
payment made by Parent and/or Seller up to the aforementioned net amount received by the Indemnitee (or the proportionate amount to each, based on the pro rata allocation of the amounts paid by each in respect of such Loss).
Notwithstanding the foregoing, except as required in order to reasonably mitigate losses, in no event shall an Indemnitee be obligated to commence or maintain any litigation or other proceeding against any third party in respect
of any such Loss.
|
(iii) |
Except for the representations and warranties contained in Article II and the certificate delivered pursuant to Section 5.1(h)(i),
Purchaser acknowledges that neither Parent nor Seller has made and will not be deemed to have made (and Purchaser has not relied on and will not rely on) any representation or warranty to Purchaser, express or implied, at Law or
in equity.
|
(iv) |
Parent and Seller shall not be liable to an Indemnitee for, and no Indemnitee shall be entitled to, any indemnification for a Loss pursuant to Section
6.2(a)(ii) and Section 6.2(a)(iii) if, with respect to an individual item of Loss (together with any related series or group of related Losses), such item is less than USD $20,000.
|
(v) |
In no event with the aggregate liability of Parent and Seller for any indemnification claim under Section 6.2(a)(ii) exceed US $50,000,000.
Except in cases of fraud or Parent’s or Seller’s (or both) intentional breach of Section 4.9(a) and (b), in no event will the aggregate Liability of Parent and Seller, jointly and severely, for any
indemnification claim exceed the Purchase Price actually received by Seller.
|
(c) |
Order of Recovery.
|
(i) | Except in the case of the Fundamental Representations, Pre-Closing Covenants, Post-Closing Covenants, and fraud and/or as stipulated under Section 6.4, the Indemnitee’s sole and exclusive source of recovery for claims against Seller and its Affiliates under this Agreement will be coverage under the Representation and Warranty Policy. Purchaser expressly waives the right to recover any amount outside of or in excess of the Representation and Warranty Policy for any Loss arising from any breach of any representations and warranties other than Fundamental Representations, Pre-Closing Covenants, Post-Closing Covenants, and fraud and/or as stipulated under Section 6.4. |
(ii) |
Subject to the limitations in Section 6.2(c)(i), the Indemnitee will only be permitted to recover Losses directly from Parent and/or
Seller pursuant to claims under Section 6.2(a) if the coverage under the Representation and Warranty Policy has been exhausted, unless such indemnity claim is being made in respect of fraud. The foregoing
shall not limit (A) Parent and Seller’s obligations under Section 6.4 or (B) Indemnitee’s right to seek recovery for any claims under Section 6.2(a)(i) simultaneously (x) under the Representation
and Warranty Policy and (y) from Parent, provided, however, that Indemnitee will only be entitled to seek recovery from Parent for any amounts in excess of the aggregate amount then recoverable
under the Representation and Warranty Policy.
|
(a) |
In the event that an Indemnitee seeks a recovery in accordance with the terms of this Article VI in respect of an indemnification claim, Purchaser (on behalf of such other Indemnitee, if applicable) will deliver a written notice (a “Claim Notice”) to Parent and Seller.
Each Claim Notice will, with respect to each indemnification claim set forth therein, (i) specify in reasonable detail and in good faith the nature of the indemnification claim being made, including any amounts that an Indemnitee has
paid, incurred, suffered, or sustained, and/or reasonably anticipates that it may pay, incur, suffer, or sustain Losses and (ii) if reasonably practicable under the circumstances, state the aggregate Dollar amount of Losses to which
such Indemnitee is entitled to indemnification pursuant to this Article VI that have been incurred, or a good faith preliminary estimate of the aggregate Dollar amount of such Losses reasonably expected to be incurred, by such
Indemnitee pursuant to such indemnification claim (the “Claim Amount”).
|
(b) |
If Parent or Seller wishes to object to the allowance of some or all indemnification claims made in a Claim
Notice, Parent or Seller, as applicable must deliver a written objection to Purchaser (on behalf of any Indemnitee), within twenty (20) Business Days after receipt by Parent and Seller of such Claim Notice expressing such
objection and explaining in reasonable detail and in good faith the basis therefor. Following receipt by Purchaser of Parent’s or Seller’s written objection, if any, Purchaser (on behalf of any other Indemnitee, if
applicable), and Parent or Seller, as applicable, will promptly, and within ten (10) Business Days, meet in order to agree on the rights of the respective parties with respect to each indemnification claim that is the
subject of such written objection. If the parties should so agree, (i) a memorandum setting forth such agreement will be prepared and executed by Purchaser (on behalf of any other Indemnitee, if applicable), and Parent or
Seller, as applicable, shall as promptly as practicable and within five (5) Business Days following the execution of such memorandum, in accordance with Section 6.3(c) below, pay the agreed amount to Purchaser. In
the event that the parties do not prepare and sign such a memorandum or such memorandum does not address in full the written objections timely delivered, within twenty (20) Business Days of receipt by Purchaser (on behalf of
any other Indemnitee, if applicable), from Parent or Seller of the written objection, or in the event that such written objection was not provided by Parent or Seller within the abovementioned twenty (20) Business Days
timeframe, then Purchaser or Parent or Seller, as applicable, may commence an Action to resolve such dispute and enforce its rights with respect thereto in any court available therefor.
|
(c) |
Any amount payable by Parent and/or Seller to Purchaser pursuant to Section 6.3(b) above will be paid promptly (but in no
event later than five (5) Business Days after the applicable payment obligation accrues) by wire transfer of Dollars in immediately available funds to such account or accounts as may be designated in writing by
Purchaser. Any amounts paid to Purchaser, in respect of any indemnification claim asserted on behalf of an Indemnitee other than Purchaser will be received by Purchaser on behalf of such other Indemnitee.
|
(d) |
Third Party Actions. In the event Purchaser becomes aware of a third party claim (a “Third
Party Claim”) which Purchaser in good faith believes will result in an indemnification claim pursuant to this Article VI, Purchaser shall notify Parent and Seller of such Third Party Claim by providing a
Claim Notice which will be accompanied by copies of any documentation submitted by the third party making such Third Party Claim, if any. Parent and Seller shall be entitled on its expense, to participate in, but not
to determine or conduct, the defense of such Third Party Claim. The failure to so notify Parent and Seller shall not relieve Parent and/or Seller of any Liability except to the extent Parent and/or Seller (as
applicable) demonstrates that Parent’s and/or Seller’s defense of such action is materially prejudiced thereby. Purchaser shall have the right in its sole discretion to conduct the defense of, and to settle, any Third
Party Claim; provided, however, that, if Purchaser settles any such Third Party Claim without the consent of Parent and
Seller (which shall not be unreasonably withheld or delayed), then Purchaser shall be entitled to seek indemnification hereunder, however such settlement shall not represent the amount of such Losses indemnifiable
hereunder, provided further however that, if Purchaser seeks prior written consent of Parent and Seller to settlement and Parent or Seller shall not have objected within 20 Business Days after such written
request (or upon any such written consent by Parent), then such lack of objection (or such consent) shall represent the agreement of Parent and Seller that the Losses incurred in connection therewith shall be
indemnifiable hereunder and, for the avoidance of doubt, represent the amount of such Losses.
|
(a) |
by mutual written consent of Purchaser and Seller;
|
(b) |
by either Purchaser or Seller, if the Share Sale shall not have been consummated on or before January 31, 2024 or
such other date that Purchaser and Seller may agree upon in writing (the “Termination Date”); provided, however, that the right to terminate this Agreement under this Section 7.1(b) shall not be
available to Seller if a breach of this Agreement by the Company or Seller has resulted in the failure of the Share Sale to be consummated before the Termination Date; and provided, further, that the right to
terminate this Agreement under this Section 7.1(b) shall not be available to Purchaser if a breach of this Agreement by Purchaser has resulted in the failure of the Share Sale to be consummated before the Termination Date.
|
(c) |
by either Purchaser or Seller, if any Law preventing the consummation of the Share Sale shall have become final and non-appealable;
|
(d) |
by Purchaser if it is not in material breach of its obligations under this Agreement and there has been a breach of any representation, warranty,
covenant, or agreement of Seller contained in this Agreement such that the conditions set forth in Section 5.1(a) would not be satisfied as of the time of such breach or inaccuracy and such breach or inaccuracy has not
been cured or cannot be cured upon the earlier of (i) thirty (30) calendar days after written notice thereof to Seller or (ii) the Termination Date;
|
(e) |
by Seller if it is not in material breach of its obligations under this Agreement and there has been a
breach of any representation, warranty, covenant, or agreement of Purchaser contained in this Agreement such that the conditions set forth in Section 5.2(a) would not be satisfied as of the time of such breach or
inaccuracy and such breach or inaccuracy has not been cured or cannot be cured upon the earlier of (i) thirty (30) calendar days after written notice thereof to Purchaser or (ii) the Termination Date; or
|
(f) |
by Purchaser, if between the date hereof and the Closing, there has been a Material Adverse Effect.
The party seeking to terminate this Agreement pursuant to this Section 7.1 (other than Section 7.1(a)) shall give written notice of
such termination to the other party.
|
(a) |
if to Purchaser, or the Company after the Closing:
|
(b) |
if to the Company (prior to Closing), Parent or Seller:
|
(a) |
To initiate arbitration, any party shall submit its notice of arbitration to the International Court of Arbitration and to all other parties. The arbitration proceeding
will take place in Paris and will be conducted in the English language. The arbitration panel will consist of three (3) arbitrators, all of whom (including the chairperson) shall be appointed by the International Court of Arbitration
pursuant to the ICC Rules. The expenses of the arbitration shall be borne as determined by the arbitral tribunal. The award of the arbitral tribunal shall be final and binding on the parties thereto, including any joined or
intervening party, who hereby agree to undertake it without recourse to any judicial proceedings in any jurisdiction whatsoever seeking annulment, setting aside, modification or any diminution or impairment of its terms or effect.
|
(b) |
Judgment upon any arbitral award rendered may be entered and a confirmation order sought in any court having jurisdiction thereof. Each party hereby consents to
process being served in any such proceeding by the mailing of a copy thereof by registered or certified mail, postage prepaid, to its address specified in Section 8.3 or in any other manner permitted by Law. EACH PARTY HEREBY
KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUCH ACTION OR PROCEEDING.
|
(c) |
Any respondent named in a notice of arbitration or counterclaim or cross claim hereunder may join any other party to any arbitral proceedings hereunder; provided
that (i) such joinder is based upon a dispute, controversy or claim substantially related to the dispute, controversy or claim in the relevant notice of arbitration or counterclaim or cross claim, and (ii) such joinder is made by
written notice to the ICC and to all other parties within either twenty (20) Business Days from the receipt by such respondent of the relevant notice of arbitration or counterclaim or cross claim or such longer time as may be
determined by the ICC or the arbitrators.
|
(d) |
Any party may intervene in any arbitral proceedings hereunder; provided that (i) such intervention is based upon a dispute, controversy or claim
substantially related to the dispute, controversy or claim in the relevant notice of arbitration or counterclaim or cross claim and such intervention is accepted by the arbitral tribunal or if the arbitral tribunal has not been
appointed, by the ICC, and (ii) such intervention is made by written notice to the arbitral tribunal (if appointed), the ICC and to all other parties within either twenty (20) Business Days from the receipt by such party of the
relevant notice of arbitration or counterclaim or cross claim or such longer time as may be determined by the ICC or the arbitrators.
|
(e) |
Any joined or intervening party may make a counterclaim or cross claim against any party; provided that (A) such counterclaim or cross claim is
based upon a dispute, controversy or claim substantially related to the dispute, controversy or claim in the relevant notice of arbitration or counterclaim or cross claim, and (B) such counterclaim or cross claim is made by
written notice to the arbitral tribunal (if appointed), the ICC and to all other parties within either thirty (30) days from the receipt by such party of the relevant notice of arbitration or counterclaim or such longer time as
may be determined by the ICC or the arbitrators.
|
(f) |
Notwithstanding the forgoing but subject to Section 4.9(f), the parties hereto hereby acknowledge and agree that each party is entitled to an
injunction or injunctions to enforce specifically the terms and provisions hereof and may apply to any court having jurisdiction for such injunctive relief, including, but not limited to temporary restraining orders or
preliminary injunctions, in addition to any remedy to which the parties may be entitled in any arbitration proceeding or in equity.
|
|
Camtek IL:
CAMTEK Ltd.
By: ______________________________________
Name: Rafi Amit
Title: CEO
Camtek GER:
Citus 49. GmbH
By: ______________________________________
Name: Rafi Amit
Title: Managing Director
|
|
Seller:
FormFactor GmbH
By: ______________________________________
Name: Jens Klattenhoff
Title: Managing Director
Parent:
FormFactor, Inc.
By: ______________________________________
Name: Mike Slessor
Title: Chief Executive Officer
Company:
FRT GmbH
By: ______________________________________
Name: Thomas Fries
Title: Managing Director
|
|
|
A-1 |
Law of the employment of any such Additional Employees upon the transfer of the Company as a going concern pursuant to the transactions contemplated by this Agreement. |
Name of Subsidiary
|
Jurisdiction of Incorporation
|
Camtek H.K. Ltd.
|
Hong Kong
|
Camtek USA Inc.
|
New Jersey, USA
|
Camtek (Europe) NV
|
Belgium
|
Camtek Germany GmbH
|
Germany
|
Camtek Inspection Technology (Suzhou) Ltd.
|
China
|
Camtek Japan Ltd.
|
Japan
|
Camtek Inspection Technology Limited
|
Taiwan
|
Camtek South East Asia Pte Ltd.
|
Singapore
|
Camtek Korea Ltd.
|
South Korea
|
Camtek Germany Holding GmbH
|
Germany
|
FRT GmbH
|
Germany
|
|
By: /s/ Rafi Amit
Name: Rafi Amit
Title: Chief Executive Officer |
|
By: /s/ Moshe Eisenberg
Name: Moshe Eisenberg
Title: Chief Financial Officer
|
|
By: /s/ Rafi Amit
Name: Rafi Amit
Title: Chief Executive Officer By: /s/Moshe Eisenberg
Name: Moshe Eisenberg
Title: Chief Financial Officer |
1. |
Persons Subject to Clawback Policy
|
2. |
Compensation Subject to Clawback Policy
|
3. |
Recovery of Compensation
|
4. |
Manner of Recovery; Limitation on Duplicative Recovery
|
5. |
Administration
|
6. |
Interpretation
|
7. |
No Indemnification; No Liability
|
8. |
Application; Enforceability
|
9. |
Severability
|
10. |
Amendment and Termination
|
11. |
Miscellaneous
|
12. |
Definitions
|
_______________________
|
__________________________________________
|
Date
|
Signature
|
__________________________________________
|
|
Name
|
|
__________________________________________
|
|
Title
|
Consolidated Balance Sheets (Parenthetical) - ₪ / shares |
Dec. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Ordinary shares, par value per share | ₪ 0.01 | ₪ 0.01 |
Ordinary shares, shares authorized | 100,000,000 | 100,000,000 |
Ordinary shares, shares issued | 46,993,998 | 46,505,318 |
Ordinary shares, shares outstanding | 44,901,622 | 44,412,942 |
Treasury stock, shares | 2,092,376 | 2,092,376 |
Consolidated Statements of Income - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
Dec. 31, 2021 |
|
Income Statement [Abstract] | |||
Revenues | $ 315,375 | $ 320,909 | $ 269,659 |
Cost of revenues | 167,742 | 161,053 | 132,315 |
Gross profit | 147,633 | 159,856 | 137,344 |
Operating expenses: | |||
Research and development | 31,470 | 28,859 | 23,473 |
Selling, general and administrative | 50,751 | 49,499 | 42,973 |
Total operating expenses | 82,221 | 78,358 | 66,446 |
Operating profit | 65,412 | 81,498 | 70,898 |
Financial income, net | 22,218 | 6,690 | 1,030 |
Income before incomes taxes | 87,630 | 88,188 | 71,928 |
Income tax expense | (8,998) | (8,239) | (11,651) |
Net income | $ 78,632 | $ 79,949 | $ 60,277 |
Earnings per share information: | |||
Basic net earnings per share | $ 1.76 | $ 1.81 | $ 1.38 |
Diluted net earnings per share | $ 1.63 | $ 1.68 | $ 1.34 |
Weighted average number of ordinary shares outstanding (in thousands): | |||
Basic | 44,725 | 44,158 | 43,644 |
Diluted | 48,863 | 48,229 | 45,035 |
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
Dec. 31, 2021 |
|
Statement of Comprehensive Income [Abstract] | |||
Net income | $ 78,632 | $ 79,949 | $ 60,277 |
Other comprehensive income, net of tax: | |||
Change in net unrealized gains on available-for-sale marketable securities | 740 | 0 | 0 |
Deferred tax expense | (611) | 0 | 0 |
Total other comprehensive income | 129 | 0 | 0 |
Total comprehensive income | $ 78,761 | $ 79,949 | $ 60,277 |
Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands |
Ordinary Shares NIS 0.01 par value [Member] |
Treasury Stock NIS 0.01 par value [Member] |
Additional paid-in capital [Member] |
Other Comprehensive Income [Member] |
Retained earnings [Member] |
Total |
---|---|---|---|---|---|---|
Balance, value at Dec. 31, 2020 | $ 171 | $ (1,898) | $ 170,497 | $ 0 | $ 58,494 | $ 227,264 |
Balance, shares at Dec. 31, 2020 | 45,365,354 | (2,092,376) | ||||
Exercise of share options and RSUs | $ 1 | $ 0 | 270 | 1,340 | 0 | 271 |
Exercise of share options and RSUs, shares | 573,665 | |||||
Share-based compensation expense | $ 0 | 0 | 5,815 | 0 | 0 | 5,815 |
Unrealised gain on investments | 0 | |||||
Deferred tax expense | 0 | |||||
Net income | 0 | 0 | 0 | 0 | 60,277 | 60,277 |
Balance, value at Dec. 31, 2021 | $ 172 | $ (1,898) | 176,582 | 0 | 118,771 | 293,627 |
Balance, shares at Dec. 31, 2021 | 45,939,019 | (2,092,376) | ||||
Exercise of share options and RSUs | $ 3 | $ 0 | 0 | 0 | 0 | 3 |
Exercise of share options and RSUs, shares | 566,299 | |||||
Share-based compensation expense | $ 0 | 0 | 10,523 | 0 | 0 | 10,523 |
Unrealised gain on investments | 0 | |||||
Deferred tax expense | 0 | |||||
Net income | 0 | 0 | 0 | 0 | 79,949 | 79,949 |
Balance, value at Dec. 31, 2022 | $ 175 | $ (1,898) | 187,105 | 0 | 198,720 | $ 384,102 |
Balance, shares at Dec. 31, 2022 | 46,505,318 | (2,092,376) | 44,412,942 | |||
Exercise of share options and RSUs | $ 1 | $ 0 | 181 | 0 | 0 | $ 182 |
Exercise of share options and RSUs, shares | 488,680 | |||||
Share-based compensation expense | $ 0 | 0 | 12,598 | 0 | 0 | 12,598 |
Share-based compensation adjustment | 0 | 0 | 505 | 0 | 0 | 505 |
Unrealised gain on investments | 740 | 740 | ||||
Deferred tax expense | (611) | (611) | ||||
Net income | 0 | 0 | 0 | 0 | 78,632 | 78,632 |
Balance, value at Dec. 31, 2023 | $ 176 | $ (1,898) | $ 200,389 | $ 129 | $ 277,352 | $ 476,148 |
Balance, shares at Dec. 31, 2023 | 46,993,998 | (2,092,376) | 44,901,622 |
Nature of Operations |
12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2023 | ||||||||||
Nature of Operations [Abstract] | ||||||||||
Nature of Operations |
Note 1 - Nature of Operations
|
Significant Accounting Policies |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Significant Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Significant Accounting Policies |
Note 2 - Significant Accounting Policies
The consolidated financial statements of Camtek and its subsidiaries (collectively “the Company”) have been prepared in accordance with accounting principles generally accepted in United States of America (“US GAAP”). All amounts in the notes to the financial statements are in thousands unless otherwise stated.
The accompanying consolidated financial statements include the accounts of Camtek and its subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation.
The preparation of the consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions about future events. These estimates and the underlying assumptions affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities, and reported amounts of revenues and expenses. As applicable to these financial statements, the most significant estimates and assumptions relate to revenue recognition, valuation of accounts receivable, acquired intangible assets and inventories. These estimates and assumptions are based on management’s best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances.
The functional currency of Camtek and its subsidiaries is the U.S. Dollar. Revenue generated by Camtek and its subsidiaries is primarily generated outside of Israel and a majority thereof is received in U.S. Dollars. A significant portion of materials and components purchased and operating expenses incurred are either paid for in U.S. Dollars or in New Israeli Shekels (“NIS”).
Transactions not denominated in U.S. Dollars are recorded upon their initial recognition according to the exchange rate in effect on the date of the transaction. Exchange rate differences arising upon the settlement of monetary items or upon reporting the Company’s monetary items at exchange rates different from that by which they were initially recorded during the period, or reported in previous financial statements, are charged to financial income (expenses), net.
All highly liquid investments purchased with original maturities of three months or less are considered to be cash equivalents.
Short-term deposits are bank deposits in US Dollars with an original maturity of more than three months and remaining term at the balance sheet date of no more than twelve months. As of December 31, 2023 the average annual interest rate was 5.81% (2022 – 4.22%).
G. Marketable Securities
The Company accounts for marketable securities in accordance with ASC Topic 320, “Investments – Debt Securities”. The Company’s investments in marketable securities consist of high-grade treasury, corporate and municipal bonds.
Investments in marketable securities are classified as available for sale at the time of purchase. Available for sale securities are carried at fair value based on quoted market prices, with unrealized gains and losses, reported in accumulated other comprehensive income (loss) in shareholders’ equity. Realized gains and losses on sales of marketable securities, are included in financial income (expenses), net. The amortized cost of marketable securities is adjusted for amortization of premium and accretion of discount to maturity, both of which, together with interest, are included in financial income (expenses), net.
The Company classifies its marketable securities as either short term or long term based on each instrument’s underlying contractual maturity date. Marketable securities with maturities of 12 months or less are classified as short-term and marketable securities with maturities greater than 12 months are classified as long-term.
The Company accounts for Credit losses in accordance with ASU 2016-13, Topic 326 “Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments”. The guidance requires the Company to determine whether a decline in fair value below the amortized cost basis of an available for sale debt security is due to credit related factors or noncredit related factors. A credit related impairment should be recognized as an allowance on the balance sheet with a corresponding adjustment to earnings, however, if the Company intends to sell an impaired available for sale debt security or more likely than not would be required to sell such a security before recovering its amortized cost basis, the entire impairment amount would be recognized in earnings with a corresponding adjustment to the security’s amortized cost basis.
The Company did not recognize an allowance for credit losses on marketable securities as there were no expected credit losses for the year ended December 31,2023.
Trade accounts receivables are recorded and carried at the original invoiced amount less an allowance for any potential uncollectible amounts, in accordance with ASC 326. The Company makes estimates of expected credit losses based upon its assessment of various factors, including historical experience, the age of the trade receivable balances, credit quality of its customers, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect its ability to collect from customers.
Inventories consist of completed systems, partially completed systems and components and other raw materials, and are recorded at the lower of cost or net realizable value. Cost is determined by the moving – average cost method basis.
Inventory write-downs are recorded at the end of each fiscal period for damaged, obsolete, excess and slow-moving inventory. These write-downs, to the lower of cost or net realizable value, create a new cost basis that is not subsequently marked up based on changes in underlying facts and circumstances.
Management periodically evaluates its inventory composition, giving consideration to factors such as changing product demands due to uncertain industry related market conditions and technological changes, the probability and timing of anticipated usage and the physical condition of the items, and then estimates a charge (reducing the inventory) to be provided for slow moving, technological obsolete or damaged inventory. These estimates could vary significantly from actual use based upon future economic conditions, customer inventory levels or competitive factors that were not foreseen or did not exist when the inventory write-downs were established.
Spare parts included in inventory that are not expected to be converted or consumed within the next year are classified as non-current, based on Management’s estimates taking into account market conditions.
These assets are stated at cost less accumulated depreciation and are depreciated over their estimated useful lives on a straight-line basis.
Annual rates of depreciation are as follows:
Leasehold improvements are amortized by the straight-line method over the shorter of the lease term or the estimated useful economic life of such improvements.
Certain of the Company’s finished goods are systems used as demonstration systems, training systems, and for product development in the Company’s laboratories (“internal use”). These systems are identical to the systems that Camtek sells in its ordinary course of business. In circumstances where the Company intends to utilize such systems for its internal use, the Company transfers them from inventory to fixed assets. The rationale for the transfer is that the Company does not have the intention to sell these systems in the ordinary course of business but rather expects to use them for its internal use over their expected useful lives. These systems are recorded as fixed assets at cost and depreciated over their useful lives.
The Company accounted for business combination in accordance with ASC 805, "Business Combinations" ("ASC 805"). Under ASU 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business (“2017-01”), the Company first determines whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. If this threshold is met, the single asset or group of assets, as applicable, is not a business.
ASC 805 requires recognition of assets acquired, liabilities assumed, and any non-controlling interest at the acquisition date, measured at their fair values as of that date. Any excess of the fair value of net assets acquired over purchase price and any subsequent changes in estimated contingencies are to be recorded in earnings.
When the Company acquires a business, the purchase price is allocated to the tangible and identifiable intangible assets, net of liabilities assumed. Any residual purchase price is recorded as goodwill. The allocation of the purchase price requires management to make significant estimates in determining the fair values of assets acquired and liabilities assumed, especially with respect to intangible assets. The Company uses the Discounted Cash Flow Method to assign fair values to acquired identifiable intangible assets. These estimates can include, but are not limited to, the cash flows that an asset is expected to generate in the future, forecasted future revenue, forecasted operating results, discount rates and the appropriate weighted-average cost of capital. These estimates are inherently uncertain and unpredictable.
These models are based on reasonable estimates and assumptions given available facts and circumstances, including industry estimates and averages, as of the acquisition dates and are consistent with the plans and estimates of management.
During the measurement period, which may be up to one year from the acquisition date, adjustments to the fair value of these tangible and intangible assets acquired and liabilities assumed may be recorded, with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the fair value of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the Company’s consolidated statements of income (loss).
Patent registration costs are recorded at cost and amortized on a straight-line basis, beginning with the first year of utilization, over its expected useful life of ten years.
Intangible assets purchased as part of the FRT acquisition (See Note 3) are recorded at their fair value and amortized based on their estimated revenue producing life span.
Goodwill has been recorded as a result of the acquisition of FRT. Goodwill represents the excess of the purchase price in a business combination over the fair value of net tangible and identifiable intangible assets acquired, and related liabilities.
Goodwill is carried at cost and is not amortized, but rather is subject to an impairment test, in accordance with ASC 350, “Intangibles – Goodwill and Other”, at least annually (in the third quarter), or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. ASC 350 allows the Company to first perform a qualitative assessment to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying value prior to performing the quantitative goodwill impairment test. The Company operates in one operating segment, and this segment comprises its only reporting unit.
Any excess of the carrying value of the reporting unit over its fair value is recognized as an impairment loss, and the carrying value of goodwill is written down to the fair value of the reporting unit.
The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to undiscounted future cash flows expected to be generated by the asset. If the carrying amount of the long-lived asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized to the extent that the asset’s carrying amount exceeds its fair value. In 2023 and 2022, no impairment was noted.
The carrying amounts of the Company’s financial instruments, including cash and cash equivalents, short-term deposits, trade accounts receivable, trade accounts payable and amounts from related parties approximate fair value because of their short-term nature.
The Company’s contracts with its customers include performance obligations to provide its products or to service the installed products. A product sale contract may include an extended warranty (that is, for longer than the twelve-month standard warranty) as well as installation, both of which are considered separate performance obligations. For such arrangements, the Company allocates revenue to each performance obligation based on its relative standalone selling price. The Company generally determines standalone selling prices based on the prices charged to customers. The Company recognizes revenue from contracts for sales of products at the point of time when the Company transfers control of the product to the customer. The transfer in control event is generally determined based on shipping terms.
Revenues from the contract are recognized in an amount that reflects the consideration the Company expects to be entitled to receive once the control of the product had been transferred to the customer and signed documentation of the arrangement, such as a signed contract or purchase order, has been received. Payment terms with customers may vary but are generally based on milestones within the delivery process such as shipping and installation. Payment terms do not include significant financing components.
The Company does not incur costs in obtaining a contract except for agents’ commissions, which are incurred upon the recognition of revenues. Since revenues are recognized over a period of less than a year, sales commissions are not required to be capitalized.
Service revenues consist mainly of contracts charged under time and material arrangements. Service revenues from maintenance contracts are recognized ratably over the contract period.
The Company records contract liabilities when the customer has been billed in advance of the Company completing its performance obligations. These amounts are recorded as deferred revenue in the Consolidated Balance Sheets.
The Company records a liability for standard product warranty obligations at the time of sale based upon historical warranty experience. The term of the warranty is generally twelve months.
The Company accounts for income taxes in accordance with the asset and liability method whereby deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts and the tax bases of assets and liabilities and are measured using the enacted tax rates and laws expected to apply to taxable income in the years in which the deferred tax asset or liability is expected to be recovered or settled. The Company includes the foreign currency transaction gains or losses that result from re-measuring deferred taxes in income tax expense. If necessary, the Company reduces deferred tax assets with a valuation allowance to the amount that is more likely than not to be realized.
The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50 percent likely of being realized. Changes in recognition or measurement are reflected in the period in which the change occurs. The Company recognizes interest and penalties related to unrecognized tax benefits as a component of income tax expenses.
The Company may incur additional tax liability in the event of intercompany dividend distributions by some of its subsidiaries. Such additional tax liability in respect of these non-Israeli subsidiaries has not been provided for in these consolidated financial statement as it is the Company’s policy permanently to reinvest the subsidiaries’ earnings and to consider distributing dividends only when this can be facilitated in connection with a specific tax or other opportunity that may arise.
Tax liabilities which would apply in the event of disposal of investments in non-Israeli subsidiaries have not been taken into account in computing the deferred taxes, as it is the Company’s intention to hold, and not to realize, these investments.
Research and development costs, which consists primarily of salaries, materials consumption and costs associated with subcontracting certain development efforts, are expensed as incurred.
Basic earnings per ordinary share is calculated using only weighted average ordinary shares outstanding. Diluted earnings per share, if relevant, gives effect to dilutive potential ordinary shares outstanding during the year. Such dilutive shares consist of incremental shares, using the treasury stock method, from the assumed exercise of share options.
The Company’s convertible notes are included in the calculation of diluted Earnings Per Share (“EPS”) if the assumed conversion into common shares is dilutive, using the “if-converted” method. This involves adding back the periodic non-cash interest expense net of tax associated with the Notes to the numerator and by adding the shares that would be issued in an assumed conversion (regardless of whether the conversion option is in or out of the money) to the denominator for the purposes of calculating diluted EPS, unless the Notes are antidilutive (See also Note 2Y).
The Company accounts for its employee share-based compensation as an expense in the financial statements. All awards are equity classified and therefore such cost is measured at the grant date fair value of the award. The Company estimates share option grant date fair value using the Black-Scholes-Merton option-pricing model. Forfeitures are recognized when they occur. The Company recognizes compensation cost for an award with only service conditions that has a graded vesting schedule on a straight-line basis over the requisite service period for the entire award, provided that the cumulative amount of compensation cost recognized at any date at least equals the portion of the grant-date value of such award that is vested at that date (For details see Note 16B).
The Company implements the provisions of ASC Topic 820 "Fair Value Measurements and Disclosures" ("ASC 820"). ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy provides the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3 inputs are unobservable inputs for the asset or liability.
The level in the fair value hierarchy within which an asset or liability is classified is based on the lowest level input that is significant to the fair value measurement in its entirety.
A contingency (provision) is an existing condition or situation involving uncertainty as to the range of possible loss to the entity.
A provision for claims is recognized if it is probable (likely to occur) that a liability has been incurred and the amount can be estimated reasonably.
Under Topic 842, the Company determines if an arrangement is a lease at inception. Rights of use (“ROU”) assets and lease liabilities are recognized at commencement date based on the present value of remaining lease payments over the lease term. For this purpose, the Company considers only payments that are fixed and determinable at the time of commencement. As most of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company's incremental borrowing rate is a hypothetical rate based on its understanding of what its credit rating would be (7.0% in 2023). The Company's lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options. When determining the probability of exercising such options, the Company considers contract-based, asset-based, entity-based, and market-based factors. For leases agreements, the Company has elected the practical expedient to account for the lease and non-lease maintenance components as a single lease component. Therefore, for those leases, the lease payments used to measure the lease liability include all of the fixed consideration in the contract. The Company's lease agreements generally do not contain any residual value guarantees or restrictive covenants.
Operating lease ROU assets consist mainly of vehicles and real estate and are presented as property, plant and equipment on the consolidated balance sheet. The current portion of operating lease liabilities is included in other current liabilities and the long-term portion is presented within long-term liabilities on the consolidated balance sheet.
For operating leases, the ROU asset is subsequently measured throughout the lease term at the carrying amount of the lease liability, plus initial direct costs, plus (minus) any prepaid (accrued) lease payments, less the unamortized balance of lease incentives received. Lease expense for lease payments is recognized on a straight-line basis over the lease term.
ROU assets for operating leases are periodically reduced by impairment losses. The Company uses the long-lived assets impairment guidance in ASC Subtopic 360-10, Property, Plant, and Equipment – Overall, to determine whether an ROU asset is impaired, and if so, the amount of the impairment loss to recognize. See Note 2N.
The Company accounts for its convertible notes in accordance with ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (Topic 470-20). The Notes are accounted for as a single liability measured at its amortized cost, as no other embedded features require bifurcation and recognition as derivatives.
The transaction costs are amortized on a straight-line basis along the lifetime of the Notes.
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires public entities to disclose information about their reportable segments’ significant expenses and other segment items on an interim and annual basis. Public entities with a single reportable segment are required to apply the disclosure requirements in ASU 2023-07, as well as all existing segment disclosures and reconciliation requirements in ASC 280 on an interim and annual basis. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2023-07.
In December 2023, the FASB issued Accounting Standards Update No. 2023-09, Income Taxes (Topic 740) Improvements to Income Tax Disclosure. The standard requires to disclose additional information in tax rate reconciliation table about federal, state and foreign income taxes and to provide more details about the reconciling items in some categories. The standard will become effective for fiscal years beginning after December 15, 2024. The Company is currently assessing the impact of the adoption of this standard on its consolidated financial statements. |
Acquisition of FRT |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition of FRT |
Note 3 –Acquisition of FRT
On October 31, 2023, as part of Camtek’s strategy of expanding its product offering to semiconductor manufacturers, the Company acquired 100% of the shares of FRT GmbH ("FRT"), a German-based company, for total cash consideration of $100.4 million, net of cash acquired of $2.1 million. This includes a payment received after the balance sheet date in respect of customary working capital adjustments.
The acquisition was accounted for using the acquisition method of accounting, with the Company treated as the acquirer. The acquired assets and liabilities of FRT were recorded at their respective fair values including an amount for goodwill representing the difference between the acquisition consideration and the fair value of the identifiable net assets.
During the year ended December 31, 2023, the Company incurred approximately $1.4 million in transaction costs related to the acquisition, which primarily consisted of legal, accounting and valuation-related expenses. These expenses were recorded in Selling, general and administrative expense in the accompanying Consolidated Statements of Income.
Our Consolidated Statements of income include the financial results of FRT subsequent to the acquisition date of October 31, 2023.
Under the preliminary purchase price allocation, the Company allocated the purchase price to tangible and identified intangible assets acquired and liabilities assumed based on the preliminary estimates of their fair values, which were determined using generally accepted valuation techniques based on estimates and assumptions made by management at the time of the acquisition. Such estimates are subject to change during the measurement period which is not expected to exceed one year. The fair values assigned to assets acquired and liabilities assumed were based on management’s assumptions as of the reporting date.
As part of the acquisition, the Company granted share-based compensation to FRT employees to replace awards previously granted by the seller. The table below summarizes the fair value of assets acquired and liabilities assumed following the adjustments mentioned above as of the acquisition date:
The intangible assets as of the closing date of the acquisition included:
Indications of fair value of the intangible assets acquired in connection with the acquisition were determined using either the income, market or replacement cost methodologies. The intangible assets are being amortized based on their estimated revenue producing life span.
Identifiable Intangible Assets
Valuation of intangible assets involves multiple assumptions. The key assumptions are described below.
Developed technology acquired primarily consists of existing technology related to hybrid 3D surface metrology measurement equipment. The developed technology was valued using the multi-period excess earnings method under the income approach. Using this approach, the estimated fair values were calculated using expected future cash flows from specific products discounted to their net present values at an appropriate risk-adjusted rate of return.
The identified trade names intangibles relate to the estimated fair value of future cash flows related to the FRT brand. The trade names were valued by applying the relief-from-royalty method under the income approach. This method is based on the application of a royalty rate to forecasted revenue under the trade name.
Customer relationships represent the fair value of future projected revenues that will be derived from the sale of products to FRT's existing customers. Customer relationships were valued using the with and without method of the income approach. This method estimates value by calculating the difference between two discounted cash flow models: one that represents the status quo for the business enterprise with the asset in place, and another without it.
Goodwill
The goodwill arising from the acquisition represents, inter alia, the synergies between the technology acquired and the Company’s existing operational, R&D and sales and marketing infrastructure. Amortization of the goodwill is not a recognized expense for tax purposes.
Pro Forma on acquisitions
The following unaudited pro forma financial information summarizes the combined results of operations for the Company, FRT, as if the acquisitions had been completed on January 1, 2022. The unaudited pro forma financial information was as follows:
The pro forma financial information for all periods presented above has been calculated after adjusting the results of FRT to reflect the business combination accounting effects resulting from this acquisition, including the amortization expense from acquired intangible assets, goodwill, and tangible assets and add-back of interest income of Camtek's cash, cash equivalents, deposits and marketable securities used as a cash consideration in the acquisition. The historical consolidated financial statements have been adjusted in the pro forma combined financial statements to give effect to pro forma events that are directly attributable to the business combination and factually supportable. The pro forma financial information is for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of 2022. |
Cash and Cash Equivalents |
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Cash and Cash Equivalents |
Note 4 - Cash and Cash Equivalents
The Company’s cash and cash equivalents balance at December 31, 2023 and 2022, is denominated in the following currencies:
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Marketable Securities |
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Marketable Securities |
Note 5 – Marketable Securities
Summary of marketable securities amortized cost, unrealized gains, unrealized losses, and fair value as of December 31, 2023:
The amortized cost and estimated fair value of marketable securities classified by the maturity date listed on the security, regardless of the Consolidated Balance Sheet classification, is as follows at December 31, 2023:
The following table summarizes the estimated fair value and gross unrealized holding losses of marketable securities, aggregated by investment instrument and period of time in an unrealized loss position, at December 31, 2023.
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Inventories |
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Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories |
Note 6 - Inventories
* includes systems at customer locations not yet sold, as of December 31, 2023 and 2022, in the amount of $8,626 and $5,664 respectively.
Inventories are presented in:
At December 31, 2023, $9,023 of the Company's inventory is classified among long-term assets according to Management’s estimate based on the recent level of sales (at December 31, 2022 - $5,357). These amounts are comprised of spare parts. The Company’s policy is to keep components to provide support and service to systems sold by it to its customers over the past years (usually the support is over a period of seven to ten years) until the Company announces it will not continue to support certain systems. Therefore, this inventory is usually consumed over longer periods than inventory classified as current, and as such the respective amount that is not expected to be consumed in the next year is classified as non-current. Management believes that this inventory will be utilized according to its forecasted sales and that no loss will be incurred.
In 2023, based on Management's estimates regarding future sales, a provision of $1,204 was made against damaged, obsolete, excess and slow-moving inventory (in 2022 - $263). This includes certain items which were considered obsolete following the acquisition of FRT.
The provisions were recorded in the costs of revenues line item in the consolidated statement of income. The provisions result in a new cost basis that is not subsequently marked up based on changes in underlying facts and circumstances.
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Other Current Assets |
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Dec. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Current assets [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Current Assets |
Note 7 - Other Current Assets
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Long-term Deposits |
12 Months Ended |
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Dec. 31, 2023 | |
Long-term Investments [Abstract] | |
Long-term Deposits |
Note 8 – Long-term Deposits
Long-term deposits include bank deposits in US Dollars with terms at the balance sheet date of more than 12 months with average annual interest rates of 5.59% (2022 – 4.45%).
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Property, Plant and Equipment, Net |
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Dec. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment, Net |
Note 9 - Property, Plant and Equipment, Net
Depreciation for the years ended December 31, 2023, 2022 and 2021 amounted to $6,428, $5,252, and $3,682, respectively.
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Intangible Assets, Net |
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Dec. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets, Net |
Note 10 - Intangible Assets, Net
Amortization expense for the years ended December 31, 2023, 2022 and 2021 amounted to $733, $110 and $110, respectively.
As of December 31, 2023, the estimated amortization expenses of intangible assets for the years 2024 to 2028 is as follows:
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Other Current Liabilities |
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Other Current Liabilities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Current Liabilities |
Note 11 - Other Current Liabilities
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Other Long-Term Liabilities |
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Dec. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Liabilities, Noncurrent [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Long Term Liabilities |
Note 12 – Other Long-Term Liabilities
Other long-term liabilities consist of the following:
A. Liability for Employee Severance Benefits
Under Israeli law and labor agreements the Company is required to pay severance payments to each employee who was employed by the Company for over one year and has been terminated by the Company or resigned under certain specified circumstances. The liability related to these severance payments is calculated on the basis of the latest salary of the employee multiplied by the number of years of employment as of the balance sheet date. The Company also has defined contribution plans for which it makes contributions to severance pay funds and appropriate insurance policies. Withdrawal of the reserve monies is contingent upon the fulfillment of detailed provision in the Severance Law.
Under local law in various territories in which the Company operates, employees with one year or more of service are entitled to receive a lump-sum payment upon termination of their employment based on their length of service and rate of pay at the time of termination.
B. Deferred Revenues
As of December 31, 2023, deferred revenues related to non-standard warranty in the amount of $6,262 are expected to be recognized from 2025 onwards.
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Convertible Notes |
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Dec. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Convertible Notes |
Note 13 – Convertible Notes
On November 17, 2021, the Company sold $200,000 aggregate principal amount of its 0.00% convertible senior notes due (the “Notes”). The Notes will not bear regular interest, and the principal amount of the Notes will not accrete. The Notes will mature on December 1, 2026, unless earlier repurchased, redeemed or converted in accordance with their terms prior to such date.
The Notes will be convertible based on an initial conversion rate of 17.1092 ordinary shares per $1,000 principal amount of notes, equivalent to an initial conversion price of approximately $58.45 per ordinary share, which represents a conversion premium of approximately 30% to the last reported sale price of the Company’s ordinary shares on The Nasdaq Global Market on November 18, 2021. The closing price of the Company’s shares on December 31, 2023 was $69.38. The conversion rate is subject to adjustment if certain events occur. Prior to the close of business on the business day immediately preceding August 1, 2026, the Notes will be convertible at the option of the holders of Notes only upon the occurrence of certain events, the satisfaction of certain conditions and during certain periods. On or after August 1, 2026 and until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their notes at any time irrespective of the foregoing conditions. The Notes will be convertible into cash, ordinary shares of the Company or a combination thereof, with the form of consideration determined at the Company’s election.
The Company may not redeem the Notes prior to December 6, 2024, except in the event of certain tax law changes. On or after December 6, 2024, the Company may at any time and from time to time redeem for cash all or part of the Notes (subject to a certain partial redemption limitation), at the Company’s option, if the last reported sale price of the Company’s ordinary shares has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption, at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid special interest (if any) to, but excluding, the redemption date. Holders of the Notes will have the right to require the Company to repurchase all or a portion of their Notes upon the occurrence of a fundamental change (as defined in the indenture governing the Notes) at a cash repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus any accrued and unpaid special interest (if any) to, but excluding the fundamental change repurchase date.
The Notes are the Company’s general unsecured obligations that rank senior in right of payment to any of the Company’s indebtedness that is expressly subordinated in right of payment to the Notes; will rank equal in right of payment with all of the Company’s unsecured indebtedness that is not so subordinated; will effectively rank junior in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness, and to the Company’s liabilities in priority under the applicable bankruptcy laws of Israel; and structurally junior to all indebtedness and other liabilities (including trade payables) of the Company’s subsidiaries.
The Convertible Senior Notes consisted of the following:
As of December 31, 2023, the debt issuance costs of the Notes will be amortized over the remaining term of approximately 3 years.
The annual effective interest rate of the Notes is 0.56%. In the year ended December 31, 2023, $1,094 (2022 -$1,094) was recorded as amortization of debt issuance costs.
As of December 31, 2023, the estimated fair value of the Notes, which the Company has classified as Level 2 financial instruments, is $258,941 (2022 - $152,565). The estimated fair value was determined based on the quoted bid price of the Notes in an over-the-counter market on the last trading day of the reporting period.
As of December 31, 2023, the if-converted value exceeded the principal amount of the Notes by $58,941 (2022 – the principle amount exceeded the if-converted value by $47,435).
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Commitments and Contingencies |
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Commitments and Contingencies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies |
Note 14 - Commitments and Contingencies
The Company’s subsidiaries have entered into various non-cancelable operating lease agreements for office space and operating leases for vehicles.
Amounts reported in the consolidated balance sheets are as follows:
In the year ended December 31, 2023, the Company recognized lease costs in the amount of $1,854 (2022 - $1,480, 2021 - $1,060).
Minimum future payments under non-cancellable leases as of December 31, 2023 are as follows:
The weighted average term of the operating leases as of December 31, 2023 is 32 months.
B. Outstanding Purchase Orders
As of December 31, 2023, the Company has purchase orders of $51,110 (2022 - $43,169) which mainly represent outstanding purchase commitments for inventory components ordered by the Company in the normal course of business.
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Concentration of Risk and Financial Instruments |
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Risks and Uncertainties [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Concentration of Risk and Financial Instruments |
Note 15 - Concentration of Risk and Financial Instruments
Financial instruments that potentially expose the Company to concentrations of credit risk consist of cash equivalents, short-term bank deposits and trade receivables. The carrying amounts of financial instruments approximate fair value.
Cash and cash equivalents, short-term deposits and long-term deposits
The Company's cash equivalents, short-term deposits and long-term deposits are maintained with multiple high-quality institutions and the composition and maturities of investments are regularly monitored by management.
Trade receivables
The trade receivables of the Company are derived from sales to a large number of customers, primarily large industrial corporations located mainly in Asia, the United States and Europe. The Company generally does not require collateral: however, in certain circumstances, the Company may require a letter of credit, other collateral or additional guarantees. An allowance for doubtful accounts is determined with respect to those amounts that the Company has determined to be doubtful of collection. The Company performs ongoing credit evaluations of its customers.
Marketable securities Allowance for doubtful debts
The following is a summary of the allowance for doubtful accounts related to accounts receivable for the years ended December 31:
Trade payables
The Company relies on limited source of suppliers and in some cases a sole supplier and/or subcontractors for a number of essential components and subsystems of its products. The Company does not have agreements with all of these suppliers and subcontractors for the continued supply of the components or subsystems they provide. An interruption in supply from these sources would disrupt production and adversely affect the Company’s ability to deliver products to its customers, which could have an adverse effect on the Company’s business, revenues and results of operations.
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Shareholders' Equity |
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Shareholders' Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shareholders' Equity |
Note 16 - Shareholders’ Equity
A. General
The Company shares are traded on the NASDAQ Global Market under the symbol of CAMT, and also listed and traded on the Tel-Aviv stock exchange.
B. Stock Option Plan
As of December 31, 2023, the Company has one effective Share Incentive Plan (and Sub-Plan for Grantees Subject to Israeli Taxation) for the issuance of options, restricted share units and/ or restricted shares to employees, officers, directors, consultants and other services providers of the Company or any affiliated companies thereof (the “2018 Plan”). The 2018 Plan was adopted by the Company in April 2018 and thereby replaced the Company’s previous equity plans (the “2014 Share Option Plan” and the “2007 Restricted Share Unit Plan”). The total number of equity awards that may be granted under the 2018 Plan during each calendar year is equal to three and a half percent (3.5%) of the Company’s total issued and outstanding Share capital as of December 31 of the preceding calendar year.
The fair value of each option award is estimated on the date of grant using the Black-Scholes-Merton option-pricing model that used the weighted average assumptions in the following table and recognized over the vesting period of four years. The risk‑free rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant. In 2023, 16,224 options were granted.
*Expected life for the periods presented was determined according to the simplified method since the Company does not have enough history to make an estimate.
The total intrinsic value of outstanding options as of December 31, 2023, 2022, and 2021 is $1,207, $375 and $738, respectively.
The total intrinsic value of vested options as of December 31, 2023, 2022, and 2021 is $1,189, $375 and $683 respectively.
The total stock option compensation expense amounted to $100, $63, and $110 in 2023, 2022 and 2021, respectively.
As of December 31, 2023, 3,520 options were unvested. The unrecognized compensation cost related to non-vested share-based compensation arrangements amounted to $100, which will be recognized over one year.
Share option activity during the past three years is as follows:
The income tax benefit associated with stock options exercised each year was immaterial.
The following table summarizes information about non-vested options at December 31, 2023:
In April 2018, the Company adopted a Restricted Share Unit (“RSU”) Plan (the “Plan”) to replace the 2007 Restricted Share Unit Plan, pursuant to which the Company’s Board of Directors may grant shares to officers and key employees. The total number of shares, which may be granted to directors, officers, employees and consultants under this Plan, is limited to 3.5% out of the outstanding shares (1,571,557 as of December 31, 2023). Forfeited units are returned to the pool.
The exercise price for each grantee shall be as determined by the Board and specified in the applicable RSU notice of grant; provided, however, that unless otherwise determined by the Board (which determination shall not require shareholder approval unless so required in order to comply with Mandatory Law), the exercise price shall be no more than the underlying share’s nominal value. For the removal of any doubt, the Board is authorized (without the need for shareholder approval unless so required in order to comply with Mandatory Law) to determine that the exercise price of an RSU is to be $0.00.
Unless otherwise determined by the Board with respect to any specific grantee or to any specific grant, (which determination shall not require shareholder approval unless so required in order to comply with Mandatory Law) and provided accordingly in the applicable RSU notice of grant, the RSUs shall vest (become automatically exercised) according to the vesting schedules as determined by the Board.
The total intrinsic value of outstanding RSUs as of December 31, 2023, 2022 and 2021 is $78.77, $21.96 and $46.04, respectively.
The weighted average grant date fair value of RSUs granted during 2023, 2022, and 2021 is $26.43, $36.69 and $34.33, respectively.
The total compensation cost from RSUs recognized in the year ending December 31, 2023, amounted to $12,489. This is recorded as salary expenses within cost of goods and operating expenses. The unrecognized compensation expense in the amount of $25,200 will be recognized in the years 2024 to 2027.
The income tax benefit associated with all compensation cost for share-based payment awards is immaterial. |
Earnings Per Share |
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Earning per share information: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share |
Note 17 - Earnings Per Share
The following table summarizes information related to the computation of basic and diluted earnings per Share for the years indicated:
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Entity-Wide Information |
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Entity Wide Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Entity-Wide Information |
Note 18 – Entity-Wide Information
Substantially all fixed assets are located in Israel and substantially all revenues are derived from sales to other countries. Revenues are attributable to geographic areas/countries based upon the destination of shipment of products and related services as follows:
(*) Long-lived assets are comprised of property, plant and equipment, net, and intangible assets excluding goodwill
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Selected Income Statement Data |
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Selected Income Statement Data [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Selected Income Statement Data |
Note 19 - Selected Income Statement Data
In 2023, one customer accounted for 15% of total revenues. In 2022, one customer accounted for 11% of total revenues. In 2021, no customer accounted for more than 10% of revenues.
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Income Taxes |
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Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes |
Note 20 - Income Taxes
Camtek and its subsidiaries are each assessed for income tax purposes on a separate basis. Each of the subsidiaries is subject to the tax rules prevailing in the country tax residence.
Non-Israeli subsidiaries are taxed according to the tax laws in their countries of residence under local tax laws and regulations. The tax rates range from 16.5-30%.
(*) see Note 20B(b)
In addition, $611 of income tax expense was allocated to the gains and losses on intra-entity foreign currency transactions that are of a long-term investment nature component of other comprehensive income.
The following is a reconciliation of the theoretical income tax expense, assuming all income is taxed at the statutory income tax rate applicable to Israeli companies, the standard income tax rate of our country of tax residence, and the actual income tax expense:
(*) Including non-deductible share-based compensation and FRT transaction expenses.
(**) The Company has elected, as from the 2021 tax year, to measure its results for tax purposes on the basis of the changes in the exchange rate of the Dollar. The Company must continue to be taxed on this basis for at least three years.
The tax effects of temporary differences and carryforwards that give rise to significant portions of the deferred tax assets and liabilities are presented below:
(*) Related to FRT acquisition
The deferred tax assets and liabilities were presented on the consolidated balance sheet as below:
Deferred tax assets are recognized for the anticipated tax benefits associated with operating loss carryforwards, tax credit carryforwards and deductible temporary differences. If it is more likely than not that some or all of the deferred tax assets will not be realized, the deferred tax credits are reduced by a valuation allowance. In assessing the realizability of deferred tax assets, Management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.
At December 31, 2023 and 2022 the Company had no valuation allowance.
For the years ended December 31, 2022 and 2021 (see also note 20B(b)), the Company did not have any significant unrecognized tax benefits. For the year ended December 31, 2023, the Company recorded an unrecognized tax benefit of $1,718 as result of a tax position taken during the current period. In addition, the Company does not expect that the amount of unrecognized tax benefits will change significantly within the next twelve months.
As of December 31, 2023, the entire amount of the unrecognized tax benefits could affect the Company’s income tax provision and the effective tax rate.
The Company accounts for interest and penalties related to income taxes as a component of income tax expense. For the years ended December 31, 2023, 2022 and 2021, no interest and penalties related to income taxes have been accrued.
The Company files its income tax returns in Israel while its principle foreign subsidiaries file their income tax returns in Belgium, Germany, Hong Kong, and United States of America. The Israeli tax return of Camtek is open to examination by the Israeli Tax Authorities for the tax year 2022 and 2023, while the tax returns of its principal foreign subsidiaries remain subject to examination for the tax years beginning 1999 in Belgium, 2018 in Germany, 2016 in Hong Kong and 2019 in the United States of America.
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Balances and Transactions with Related Parties |
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||
Balances and Transactions with Related Parties |
Note 21 - Balances and Transactions with Related Parties
On March 1, 2004, the Company entered into a registration rights agreement providing for the Company to register with the SEC certain of its ordinary shares held by Priortech. This registration rights agreement may be used in connection with future offerings of ordinary shares, and includes, among others, the following terms: (a) Priortech is entitled to make up to three demands that the Company registers its ordinary shares held by Priortech, subject to delay due to market conditions; (b) Priortech will be entitled to participate and sell the Company’s ordinary shares in any future registration statements initiated by the Company, subject to delay due to market conditions; (c) the Company will indemnify Priortech in connection with any liabilities incurred in connection with such registration statements due to any misstatements or omissions other than information provided by Priortech, and Priortech will indemnify the Company in connection with any liabilities incurred in connection with such registration statements due to any misstatements or omissions in written statements by Priortech made for the purpose of their inclusion in such registration statements; and (d) the Company will pay all expenses related to registrations which the Company has initiated, except for certain underwriting discounts or commissions or legal fees, and Priortech will pay all expenses related to a registration initiated at its demand in which the Company is not participating.
On December 30, 2004, the Registration Rights Agreement with Priortech was amended. The amendment concerns primarily the grant of unlimited shelf registration rights thereunder to Priortech with respect to its holdings in the Company, and the assignability of those shelf registration rights to its transferees.
On May 13, 2015, following the approval of the Company’s Audit Committee and Board of Directors the Registration Rights Agreement with Priortech was renewed for an additional 5 year period effective as of December 31, 2014.
In 2019, the Company entered into a Second Amended and Restated Registration Rights Agreement with Priortech and Chroma which replaced the previous Registration Rights Agreement, according to which Chroma is entitled to the same rights Priortech has with respect to registration of the Company’s shares.
Technological Cooperation Agreement with Chroma
In 2019, the Company entered into a Technological Cooperation Agreement with Chroma under which the Company granted Chroma a license for an application under Company’s triangulation technology platform.
Employment Agreements with the Chief Executive Officer
Pursuant to the employment agreement with the Chief Executive Officer ("CEO"), the CEO dedicates 10% of his time in providing consulting and management services for Priortech through Amitec – Advanced Multilayer Interconnect Technologies Ltd. – a wholly owned subsidiary of Priortech ("Amitec"). The CEO receives from the Company 90% of a full-time salary and is compensated directly by Amitec for the remaining 10% of his time.
The CEO serves as the Chairman of Priortech.
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Fair Value Measurements |
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements |
Note 22 - Fair Value Measurements
The level in the fair value hierarchy within which an asset or liability is classified is based on the lowest level input that is significant to the fair value measurement in its entirety.
The following table presents the Company’s assets and liabilities measured at fair value on a recurring basis as of December 31, 2023, aggregated by the level in the fair-value hierarchy within which those measurements fall:
The Company’s accounting policy is to recognize transfers between levels of the fair value hierarchy on the date of the event or change in circumstances that caused the transfer. In the year ended December 31, 2023, the Company invested in marketable securities.
Marketable securities are classified within Level 2 because these assets are valued using quoted market prices or alternative pricing sources and models utilizing market observable inputs. See also Note 5.
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Subsequent Events |
12 Months Ended |
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Dec. 31, 2023 | |
Subsequent Events [Abstract] | |
Subsequent Events [Text Block] |
Note 23 - Subsequent Events
In March 2024, the Company’s Board of Directors declared a cash dividend in the amount of $1.33 per share representing an aggregate distribution of approximately $60 million.
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Significant Accounting Policies (Policies) |
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Basis of preparation of the financial statements |
The consolidated financial statements of Camtek and its subsidiaries (collectively “the Company”) have been prepared in accordance with accounting principles generally accepted in United States of America (“US GAAP”). All amounts in the notes to the financial statements are in thousands unless otherwise stated.
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Principles of consolidation |
The accompanying consolidated financial statements include the accounts of Camtek and its subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation.
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Use of estimates |
The preparation of the consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions about future events. These estimates and the underlying assumptions affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities, and reported amounts of revenues and expenses. As applicable to these financial statements, the most significant estimates and assumptions relate to revenue recognition, valuation of accounts receivable, acquired intangible assets and inventories. These estimates and assumptions are based on management’s best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances.
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Foreign currency transactions |
The functional currency of Camtek and its subsidiaries is the U.S. Dollar. Revenue generated by Camtek and its subsidiaries is primarily generated outside of Israel and a majority thereof is received in U.S. Dollars. A significant portion of materials and components purchased and operating expenses incurred are either paid for in U.S. Dollars or in New Israeli Shekels (“NIS”).
Transactions not denominated in U.S. Dollars are recorded upon their initial recognition according to the exchange rate in effect on the date of the transaction. Exchange rate differences arising upon the settlement of monetary items or upon reporting the Company’s monetary items at exchange rates different from that by which they were initially recorded during the period, or reported in previous financial statements, are charged to financial income (expenses), net.
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Cash and cash equivalents |
All highly liquid investments purchased with original maturities of three months or less are considered to be cash equivalents.
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Short-term deposits |
Short-term deposits are bank deposits in US Dollars with an original maturity of more than three months and remaining term at the balance sheet date of no more than twelve months. As of December 31, 2023 the average annual interest rate was 5.81% (2022 – 4.22%).
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Marketable Securities |
G. Marketable Securities
The Company accounts for marketable securities in accordance with ASC Topic 320, “Investments – Debt Securities”. The Company’s investments in marketable securities consist of high-grade treasury, corporate and municipal bonds.
Investments in marketable securities are classified as available for sale at the time of purchase. Available for sale securities are carried at fair value based on quoted market prices, with unrealized gains and losses, reported in accumulated other comprehensive income (loss) in shareholders’ equity. Realized gains and losses on sales of marketable securities, are included in financial income (expenses), net. The amortized cost of marketable securities is adjusted for amortization of premium and accretion of discount to maturity, both of which, together with interest, are included in financial income (expenses), net.
The Company classifies its marketable securities as either short term or long term based on each instrument’s underlying contractual maturity date. Marketable securities with maturities of 12 months or less are classified as short-term and marketable securities with maturities greater than 12 months are classified as long-term.
The Company accounts for Credit losses in accordance with ASU 2016-13, Topic 326 “Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments”. The guidance requires the Company to determine whether a decline in fair value below the amortized cost basis of an available for sale debt security is due to credit related factors or noncredit related factors. A credit related impairment should be recognized as an allowance on the balance sheet with a corresponding adjustment to earnings, however, if the Company intends to sell an impaired available for sale debt security or more likely than not would be required to sell such a security before recovering its amortized cost basis, the entire impairment amount would be recognized in earnings with a corresponding adjustment to the security’s amortized cost basis.
The Company did not recognize an allowance for credit losses on marketable securities as there were no expected credit losses for the year ended December 31,2023.
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Trade accounts receivable and allowance for doubtful accounts |
Trade accounts receivables are recorded and carried at the original invoiced amount less an allowance for any potential uncollectible amounts, in accordance with ASC 326. The Company makes estimates of expected credit losses based upon its assessment of various factors, including historical experience, the age of the trade receivable balances, credit quality of its customers, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect its ability to collect from customers.
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Inventories |
Inventories consist of completed systems, partially completed systems and components and other raw materials, and are recorded at the lower of cost or net realizable value. Cost is determined by the moving – average cost method basis.
Inventory write-downs are recorded at the end of each fiscal period for damaged, obsolete, excess and slow-moving inventory. These write-downs, to the lower of cost or net realizable value, create a new cost basis that is not subsequently marked up based on changes in underlying facts and circumstances.
Management periodically evaluates its inventory composition, giving consideration to factors such as changing product demands due to uncertain industry related market conditions and technological changes, the probability and timing of anticipated usage and the physical condition of the items, and then estimates a charge (reducing the inventory) to be provided for slow moving, technological obsolete or damaged inventory. These estimates could vary significantly from actual use based upon future economic conditions, customer inventory levels or competitive factors that were not foreseen or did not exist when the inventory write-downs were established.
Spare parts included in inventory that are not expected to be converted or consumed within the next year are classified as non-current, based on Management’s estimates taking into account market conditions.
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Property, plant and equipment |
These assets are stated at cost less accumulated depreciation and are depreciated over their estimated useful lives on a straight-line basis.
Annual rates of depreciation are as follows:
Leasehold improvements are amortized by the straight-line method over the shorter of the lease term or the estimated useful economic life of such improvements.
Certain of the Company’s finished goods are systems used as demonstration systems, training systems, and for product development in the Company’s laboratories (“internal use”). These systems are identical to the systems that Camtek sells in its ordinary course of business. In circumstances where the Company intends to utilize such systems for its internal use, the Company transfers them from inventory to fixed assets. The rationale for the transfer is that the Company does not have the intention to sell these systems in the ordinary course of business but rather expects to use them for its internal use over their expected useful lives. These systems are recorded as fixed assets at cost and depreciated over their useful lives.
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Business Combinations |
The Company accounted for business combination in accordance with ASC 805, "Business Combinations" ("ASC 805"). Under ASU 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business (“2017-01”), the Company first determines whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. If this threshold is met, the single asset or group of assets, as applicable, is not a business.
ASC 805 requires recognition of assets acquired, liabilities assumed, and any non-controlling interest at the acquisition date, measured at their fair values as of that date. Any excess of the fair value of net assets acquired over purchase price and any subsequent changes in estimated contingencies are to be recorded in earnings.
When the Company acquires a business, the purchase price is allocated to the tangible and identifiable intangible assets, net of liabilities assumed. Any residual purchase price is recorded as goodwill. The allocation of the purchase price requires management to make significant estimates in determining the fair values of assets acquired and liabilities assumed, especially with respect to intangible assets. The Company uses the Discounted Cash Flow Method to assign fair values to acquired identifiable intangible assets. These estimates can include, but are not limited to, the cash flows that an asset is expected to generate in the future, forecasted future revenue, forecasted operating results, discount rates and the appropriate weighted-average cost of capital. These estimates are inherently uncertain and unpredictable.
These models are based on reasonable estimates and assumptions given available facts and circumstances, including industry estimates and averages, as of the acquisition dates and are consistent with the plans and estimates of management.
During the measurement period, which may be up to one year from the acquisition date, adjustments to the fair value of these tangible and intangible assets acquired and liabilities assumed may be recorded, with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the fair value of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the Company’s consolidated statements of income (loss).
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Intangible assets |
Patent registration costs are recorded at cost and amortized on a straight-line basis, beginning with the first year of utilization, over its expected useful life of ten years.
Intangible assets purchased as part of the FRT acquisition (See Note 3) are recorded at their fair value and amortized based on their estimated revenue producing life span.
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Goodwill |
Goodwill has been recorded as a result of the acquisition of FRT. Goodwill represents the excess of the purchase price in a business combination over the fair value of net tangible and identifiable intangible assets acquired, and related liabilities.
Goodwill is carried at cost and is not amortized, but rather is subject to an impairment test, in accordance with ASC 350, “Intangibles – Goodwill and Other”, at least annually (in the third quarter), or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. ASC 350 allows the Company to first perform a qualitative assessment to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying value prior to performing the quantitative goodwill impairment test. The Company operates in one operating segment, and this segment comprises its only reporting unit.
Any excess of the carrying value of the reporting unit over its fair value is recognized as an impairment loss, and the carrying value of goodwill is written down to the fair value of the reporting unit.
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Impairment of long-lived assets |
The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to undiscounted future cash flows expected to be generated by the asset. If the carrying amount of the long-lived asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized to the extent that the asset’s carrying amount exceeds its fair value. In 2023 and 2022, no impairment was noted.
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Fair values of financial instruments |
The carrying amounts of the Company’s financial instruments, including cash and cash equivalents, short-term deposits, trade accounts receivable, trade accounts payable and amounts from related parties approximate fair value because of their short-term nature.
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Revenue recognition |
The Company’s contracts with its customers include performance obligations to provide its products or to service the installed products. A product sale contract may include an extended warranty (that is, for longer than the twelve-month standard warranty) as well as installation, both of which are considered separate performance obligations. For such arrangements, the Company allocates revenue to each performance obligation based on its relative standalone selling price. The Company generally determines standalone selling prices based on the prices charged to customers. The Company recognizes revenue from contracts for sales of products at the point of time when the Company transfers control of the product to the customer. The transfer in control event is generally determined based on shipping terms.
Revenues from the contract are recognized in an amount that reflects the consideration the Company expects to be entitled to receive once the control of the product had been transferred to the customer and signed documentation of the arrangement, such as a signed contract or purchase order, has been received. Payment terms with customers may vary but are generally based on milestones within the delivery process such as shipping and installation. Payment terms do not include significant financing components.
The Company does not incur costs in obtaining a contract except for agents’ commissions, which are incurred upon the recognition of revenues. Since revenues are recognized over a period of less than a year, sales commissions are not required to be capitalized.
Service revenues consist mainly of contracts charged under time and material arrangements. Service revenues from maintenance contracts are recognized ratably over the contract period.
The Company records contract liabilities when the customer has been billed in advance of the Company completing its performance obligations. These amounts are recorded as deferred revenue in the Consolidated Balance Sheets.
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Warranty |
The Company records a liability for standard product warranty obligations at the time of sale based upon historical warranty experience. The term of the warranty is generally twelve months.
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Income taxes |
The Company accounts for income taxes in accordance with the asset and liability method whereby deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts and the tax bases of assets and liabilities and are measured using the enacted tax rates and laws expected to apply to taxable income in the years in which the deferred tax asset or liability is expected to be recovered or settled. The Company includes the foreign currency transaction gains or losses that result from re-measuring deferred taxes in income tax expense. If necessary, the Company reduces deferred tax assets with a valuation allowance to the amount that is more likely than not to be realized.
The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50 percent likely of being realized. Changes in recognition or measurement are reflected in the period in which the change occurs. The Company recognizes interest and penalties related to unrecognized tax benefits as a component of income tax expenses.
The Company may incur additional tax liability in the event of intercompany dividend distributions by some of its subsidiaries. Such additional tax liability in respect of these non-Israeli subsidiaries has not been provided for in these consolidated financial statement as it is the Company’s policy permanently to reinvest the subsidiaries’ earnings and to consider distributing dividends only when this can be facilitated in connection with a specific tax or other opportunity that may arise.
Tax liabilities which would apply in the event of disposal of investments in non-Israeli subsidiaries have not been taken into account in computing the deferred taxes, as it is the Company’s intention to hold, and not to realize, these investments. |
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Research and development |
Research and development costs, which consists primarily of salaries, materials consumption and costs associated with subcontracting certain development efforts, are expensed as incurred.
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Earnings per ordinary share |
Basic earnings per ordinary share is calculated using only weighted average ordinary shares outstanding. Diluted earnings per share, if relevant, gives effect to dilutive potential ordinary shares outstanding during the year. Such dilutive shares consist of incremental shares, using the treasury stock method, from the assumed exercise of share options.
The Company’s convertible notes are included in the calculation of diluted Earnings Per Share (“EPS”) if the assumed conversion into common shares is dilutive, using the “if-converted” method. This involves adding back the periodic non-cash interest expense net of tax associated with the Notes to the numerator and by adding the shares that would be issued in an assumed conversion (regardless of whether the conversion option is in or out of the money) to the denominator for the purposes of calculating diluted EPS, unless the Notes are antidilutive (See also Note 2Y).
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Share-based compensation |
The Company accounts for its employee share-based compensation as an expense in the financial statements. All awards are equity classified and therefore such cost is measured at the grant date fair value of the award. The Company estimates share option grant date fair value using the Black-Scholes-Merton option-pricing model. Forfeitures are recognized when they occur. The Company recognizes compensation cost for an award with only service conditions that has a graded vesting schedule on a straight-line basis over the requisite service period for the entire award, provided that the cumulative amount of compensation cost recognized at any date at least equals the portion of the grant-date value of such award that is vested at that date (For details see Note 16B).
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Fair value measurements |
The Company implements the provisions of ASC Topic 820 "Fair Value Measurements and Disclosures" ("ASC 820"). ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy provides the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3 inputs are unobservable inputs for the asset or liability.
The level in the fair value hierarchy within which an asset or liability is classified is based on the lowest level input that is significant to the fair value measurement in its entirety.
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Contingent liabilities |
A contingency (provision) is an existing condition or situation involving uncertainty as to the range of possible loss to the entity.
A provision for claims is recognized if it is probable (likely to occur) that a liability has been incurred and the amount can be estimated reasonably.
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Leases |
Under Topic 842, the Company determines if an arrangement is a lease at inception. Rights of use (“ROU”) assets and lease liabilities are recognized at commencement date based on the present value of remaining lease payments over the lease term. For this purpose, the Company considers only payments that are fixed and determinable at the time of commencement. As most of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company's incremental borrowing rate is a hypothetical rate based on its understanding of what its credit rating would be (7.0% in 2023). The Company's lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options. When determining the probability of exercising such options, the Company considers contract-based, asset-based, entity-based, and market-based factors. For leases agreements, the Company has elected the practical expedient to account for the lease and non-lease maintenance components as a single lease component. Therefore, for those leases, the lease payments used to measure the lease liability include all of the fixed consideration in the contract. The Company's lease agreements generally do not contain any residual value guarantees or restrictive covenants.
Operating lease ROU assets consist mainly of vehicles and real estate and are presented as property, plant and equipment on the consolidated balance sheet. The current portion of operating lease liabilities is included in other current liabilities and the long-term portion is presented within long-term liabilities on the consolidated balance sheet.
For operating leases, the ROU asset is subsequently measured throughout the lease term at the carrying amount of the lease liability, plus initial direct costs, plus (minus) any prepaid (accrued) lease payments, less the unamortized balance of lease incentives received. Lease expense for lease payments is recognized on a straight-line basis over the lease term.
ROU assets for operating leases are periodically reduced by impairment losses. The Company uses the long-lived assets impairment guidance in ASC Subtopic 360-10, Property, Plant, and Equipment – Overall, to determine whether an ROU asset is impaired, and if so, the amount of the impairment loss to recognize. See Note 2N. |
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Convertible Notes |
The Company accounts for its convertible notes in accordance with ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (Topic 470-20). The Notes are accounted for as a single liability measured at its amortized cost, as no other embedded features require bifurcation and recognition as derivatives.
The transaction costs are amortized on a straight-line basis along the lifetime of the Notes.
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New Accounting Pronouncements |
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires public entities to disclose information about their reportable segments’ significant expenses and other segment items on an interim and annual basis. Public entities with a single reportable segment are required to apply the disclosure requirements in ASU 2023-07, as well as all existing segment disclosures and reconciliation requirements in ASC 280 on an interim and annual basis. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2023-07.
In December 2023, the FASB issued Accounting Standards Update No. 2023-09, Income Taxes (Topic 740) Improvements to Income Tax Disclosure. The standard requires to disclose additional information in tax rate reconciliation table about federal, state and foreign income taxes and to provide more details about the reconciling items in some categories. The standard will become effective for fiscal years beginning after December 15, 2024. The Company is currently assessing the impact of the adoption of this standard on its consolidated financial statements. |
Significant Accounting Policies (Tables) |
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Schedule of deferred revenue in Consolidated Balance Sheets |
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Acquisition of FRT (Tables) |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of assets acquired and liabilities assumed |
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Schedule of intangible assets as of closing date of acquisition |
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Schedule of Pro-forma Financial Information |
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Cash and Cash Equivalents (Tables) |
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Schedule of cash and cash equivalents, currencies |
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Marketable Securities (Tables) |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of marketable securities |
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Schedule of amortized cost and estimated fair value of marketable securities classified by the maturity date listed on the security |
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Schedule of estimated fair value and gross unrealized holding losses of marketable securities, aggregated by investment instrument and period of time in an unrealized loss position |
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Inventories (Tables) |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of inventories |
* includes systems at customer locations not yet sold, as of December 31, 2023 and 2022, in the amount of $8,626 and $5,664 respectively.
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Schedule of presentation of Inventories |
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Other Current Assets (Tables) |
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Property, Plant and Equipment, Net (Tables) |
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Schedule of Property, Plant and Equipment, Net |
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Intangible Assets, Net (Tables) |
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Schedule of intangible assets |
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Schedule of estimated amortization expense |
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Other Current Liabilities (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Current Liabilities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of other current liabilities |
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Schedule of changes in product warranty obligation |
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Other Long-Term Liabilities (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Liabilities, Noncurrent [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of other long term liabilities |
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Convertible Notes (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Scheduled of convertible senior notes |
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Commitments and Contingencies (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of balance sheet information related to leases |
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Schedule of minimum future rental payments |
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Concentration of Risk and Financial Instruments (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risks and Uncertainties [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of allowance for doubtful accounts |
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Shareholders' Equity (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shareholders' Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of fair value assumptions |
*Expected life for the periods presented was determined according to the simplified method since the Company does not have enough history to make an estimate. |
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Schedule of stock option activity |
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Schedule of options outstanding |
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Schedule of information about non-vested options |
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Schedule of restricted share unit activity |
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Earnings Per Share (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earning per share information: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of computation of basic and diluted earnings per share |
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Entity-Wide Information (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Entity Wide Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of revenues by geographic area |
(*) Long-lived assets are comprised of property, plant and equipment, net, and intangible assets excluding goodwill
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Selected Income Statement Data (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Selected Income Statement Data [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of selected revenues |
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Schedule of selected selling, general and administrative expenses data |
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Schedule of selected financial income (expenses) data |
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Income Taxes (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of composition of income (loss) from continuing operations before income taxes and income tax expense (benefit) |
(*) see Note 20B(b)
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Schedule of reconciliation of the theoretical income tax expense |
(*) Including non-deductible share-based compensation and FRT transaction expenses.
(**) The Company has elected, as from the 2021 tax year, to measure its results for tax purposes on the basis of the changes in the exchange rate of the Dollar. The Company must continue to be taxed on this basis for at least three years.
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Schedule of tax effects of temporary differences and carryforwards deferred tax assets and liabilities |
(*) Related to FRT acquisition
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Schedule of deferred tax assets and liabilities |
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Balances and Transactions with Related Parties (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||
Schedule of related party balances and transactions |
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Fair Value Measurements (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of fair value, assets and liabilities measured on recurring basis |
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Nature of Operations (Narrative) (Details) - USD ($) $ in Thousands |
1 Months Ended | ||
---|---|---|---|
Nov. 30, 2021 |
Dec. 31, 2023 |
Oct. 31, 2023 |
|
Schedule of Equity Method Investments [Line Items] | |||
Aggregate principal amount | $ 200,000 | ||
Percentage of convertible senior notes | 0.00% | ||
Purchase of additional convertible note | $ 25,000 | ||
Amount of shares | $ 194,530 | ||
Priortech Ltd [Member] | |||
Schedule of Equity Method Investments [Line Items] | |||
Ownership percentage | 21.42% | ||
Chroma Ate Inc [Member] | |||
Schedule of Equity Method Investments [Line Items] | |||
Percentage of voting equity interests acquired | 17.41% | ||
FRT GmbH [Member] | |||
Schedule of Equity Method Investments [Line Items] | |||
Percentage of voting equity interests acquired | 100.00% |
Significant Accounting Policies (Narrative) (Details) |
12 Months Ended | |
---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
|
Average annual interest rate for short-term deposits | 5.81% | 4.22% |
Patents, useful life | 10 years | |
Lease borrowing rate | 7.00% |
Significant Accounting Policies (Schedule of Deferred Revenue in Consolidated Balance Sheets) (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
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Significant Accounting Policies [Abstract] | ||
Beginning of year | $ 9,567 | $ 6,867 |
Deferral of revenue | 8,934 | 6,948 |
Recognition of deferred revenue | (4,508) | (4,248) |
Balance at end of year | $ 13,993 | $ 9,567 |
Acquisition of FRT (Narrative) (Details) - FRT GmbH [Member] - USD ($) $ in Millions |
1 Months Ended | |
---|---|---|
Oct. 31, 2023 |
Dec. 31, 2023 |
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Business Acquisition [Line Items] | ||
Percentage of voting equity interests acquired | 100.00% | |
Total consideration | $ 100.4 | |
Cash paid | $ 2.1 | |
Net working capital of acquisition Acquisition related costs | $ 1.4 |
Acquisition of FRT (Schedule of assets acquired and liabilities assumed) (Details) - USD ($) $ in Thousands |
Dec. 31, 2023 |
Oct. 31, 2023 |
---|---|---|
Business Acquisition [Line Items] | ||
Working capital (excluding cash and cash equivalents) | $ (15,288) | |
Fixed assets, net | 1,615 | |
Intangible assets | 16,900 | |
Goodwill | 74,345 | |
Capitalized share-based compensation adjustment | $ (102,286) | |
FRT GmbH [Member] | ||
Business Acquisition [Line Items] | ||
Cash and cash equivalents | $ 2,053 | |
Working capital (excluding cash and cash equivalents) | 15,288 | |
Fixed assets, net | 1,615 | |
Intangible assets | 16,900 | |
Goodwill | 74,345 | |
Deferred taxes liabilities, net | (7,157) | |
Fair value of assets acquired and liabilities | 103,044 | |
Cash consideration | 102,539 | |
Capitalized share-based compensation adjustment | $ (505) |
Acquisition of FRT (Schedule of intangible assets as of closing date of acquisition) (Details) - USD ($) $ in Thousands |
1 Months Ended | |
---|---|---|
Oct. 31, 2023 |
Dec. 31, 2023 |
|
Business Acquisition [Line Items] | ||
Intangible assets | $ 16,900 | |
FRT GmbH [Member] | ||
Business Acquisition [Line Items] | ||
Intangible assets | $ 16,900 | |
Weighted average useful life (in years) | 5 years 4 months 24 days | |
FRT GmbH [Member] | Technology [Member] | ||
Business Acquisition [Line Items] | ||
Intangible assets | $ 12,200 | |
Weighted average useful life (in years) | 5 years | |
FRT GmbH [Member] | Trade name [Member] | ||
Business Acquisition [Line Items] | ||
Intangible assets | $ 2,700 | |
Weighted average useful life (in years) | 10 years | |
FRT GmbH [Member] | Customer relationship [Member] | ||
Business Acquisition [Line Items] | ||
Intangible assets | $ 2,000 | |
Weighted average useful life (in years) | 2 years |
Acquisition of FRT (Schedule of Pro-forma Financial Information) (Details) - Frt Gmbh [Member] - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
|
Business Acquisition [Line Items] | ||
Revenue | $ 334,030 | $ 349,879 |
Net income | $ 69,483 | $ 81,143 |
Cash and Cash Equivalents (Schedule of Currencies) (Details) - USD ($) $ in Thousands |
Dec. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Cash and Cash Equivalents [Line Items] | ||
Cash and cash equivalents | $ 119,968 | $ 148,156 |
U.S. Dollars [Member] | ||
Cash and Cash Equivalents [Line Items] | ||
Cash and cash equivalents | 113,190 | 139,644 |
New Israeli Shekels [Member] | ||
Cash and Cash Equivalents [Line Items] | ||
Cash and cash equivalents | 2,795 | 4,008 |
Other Currencies [Member] | ||
Cash and Cash Equivalents [Line Items] | ||
Cash and cash equivalents | $ 3,983 | $ 4,504 |
Marketable Securities (Schedule of amortized cost and estimated fair value of marketable securities) (Details) $ in Thousands |
Dec. 31, 2023
USD ($)
|
---|---|
Investments, Debt and Equity Securities [Abstract] | |
Amortized Cost, Due within one year | $ 18,804 |
Amortized Cost, Due after one through five years | 72,210 |
Amortized Cost, Due after five through ten years | 638 |
Amortized Cost, Total marketable securities | 91,652 |
Fair Value, Due within one year | 18,816 |
Fair Value, Due after one through five years | 72,908 |
Fair Value, Due after five through ten years | 668 |
Fair Value, Total marketable securities | $ 92,392 |
Inventories (Narrative) (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
|
Long Term Inventory [Line Items] | ||
Finished products, Systems at customer locations | $ 8,626 | $ 5,664 |
Long-term inventory | $ 9,023 | 5,357 |
Customer support, term | seven to ten years | |
Provision for damages, obsolete, excess and slow-moving inventory | $ 1,204 | $ 263 |
Inventories (Schedule of Inventories) (Details) - USD ($) $ in Thousands |
Dec. 31, 2023 |
Dec. 31, 2022 |
||
---|---|---|---|---|
Inventory Disclosure [Abstract] | ||||
Components | $ 55,598 | $ 43,017 | ||
Work in process | 20,038 | 13,951 | ||
Finished products | [1] | 19,292 | 13,930 | |
Total inventories | $ 94,928 | $ 70,898 | ||
|
Inventories (Schedule of Presentation of Inventories) (Details) - USD ($) $ in Thousands |
Dec. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Current assets | $ 85,905 | $ 65,541 |
Long-term assets (A) | 9,023 | 5,357 |
Total inventories | $ 94,928 | $ 70,898 |
Other Current Assets (Schedule of other current assets) (Details) - USD ($) $ in Thousands |
Dec. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Current assets [Abstract] | ||
Interest receivable | $ 8,386 | $ 3,979 |
Prepaid expenses | 5,164 | 3,832 |
Due from Government institutions | 3,690 | 2,598 |
Other | 2,308 | 747 |
Other current assets | $ 19,548 | $ 11,156 |
Long-term Deposits (Narrative) (Details) |
12 Months Ended | |
---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
|
Long-term Investments [Abstract] | ||
Percentage of average annual interest rates | 5.59% | 4.45% |
Property, Plant and Equipment, Net (Narrative) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
Dec. 31, 2021 |
|
Property, Plant and Equipment [Abstract] | |||
Depreciation expenses | $ 6,428 | $ 5,252 | $ 3,682 |
Intangible Assets, Net (Schedule of intangible assets, net) (Details) - USD ($) $ in Thousands |
Dec. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Patent registration costs | $ 2,308 | $ 2,135 |
Acquired technology | 12,200 | 0 |
Acquired trade names | 2,700 | 0 |
Acquired customer relationship | 2,000 | 0 |
Finite-Lived Intangible Assets, Gross | 19,208 | 2,135 |
Less accumulated amortization | 2,271 | 1,538 |
Total intangible assets, net | $ 16,937 | $ 597 |
Intangible Assets, Net (Schedule of estimated amortization expense) (Details) $ in Thousands |
Dec. 31, 2023
USD ($)
|
---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | |
2024 | $ 3,827 |
2025 | 3,652 |
2026 | 2,805 |
2027 | 2,795 |
2028 | $ 2,378 |
Intangible Assets, Net (Narrative) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
Dec. 31, 2021 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Patents, useful life | 10 years | ||
Amortization expense related to intangible assets | $ 733 | $ 110 | $ 110 |
Other Current Liabilities (Schedule of other current liabilities) (Details) - USD ($) $ in Thousands |
Dec. 31, 2023 |
Dec. 31, 2022 |
||
---|---|---|---|---|
Lessee, Lease, Description [Line Items] | ||||
Total other current liabilities | $ 54,487 | $ 56,833 | ||
Operating Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration] | Total other current liabilities | |||
Accrued Expenses And Other Current Liabilities [Member] | ||||
Lessee, Lease, Description [Line Items] | ||||
Advances from customers and deferred revenues | $ 14,701 | 12,825 | ||
Commissions | 13,588 | 18,048 | ||
Accrued employee compensation and other related benefits | 13,137 | 11,941 | ||
Government institutions and income tax payable | 5,316 | 7,991 | ||
Accrued warranty costs | [1] | 3,397 | 3,161 | |
Accrued expenses | 2,661 | 1,570 | ||
Operating lease obligations (See Note 2(V)) | 1,687 | 1,297 | ||
Total other current liabilities | $ 54,487 | $ 56,833 | ||
|
Other Current Liabilities (Schedule of changes in product warranty obligation) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
Dec. 31, 2021 |
|
Other Current Liabilities [Abstract] | |||
Beginning of year | $ 3,161 | $ 3,265 | $ 2,328 |
Accruals | 5,505 | 5,823 | 6,333 |
Usage | (5,269) | (5,927) | (5,396) |
Balance at end of year | $ 3,397 | $ 3,161 | $ 3,265 |
Other Long-Term Liabilities (Narrative) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
Dec. 31, 2021 |
|
Other Liabilities, Noncurrent [Abstract] | |||
Severance liability | $ 1,577 | $ 1,284 | |
Severance expenses | 1,936 | $ 1,903 | $ 1,636 |
Deferred revenue expected to be recognized in 2023 | $ 6,262 |
Other Long-Term Liabilities (Schedule of other long term liabilities) (Details) - USD ($) $ in Thousands |
Dec. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Other Liabilities Non Current [Line Items] | ||
Liability for severance pay | $ 1,577 | $ 1,284 |
Deferred revenues related to non-standard warranty | 6,262 | 5,060 |
Operating lease obligations | 2,634 | 2,404 |
Total Other long term liabilities | $ 10,473 | $ 8,748 |
Convertible Notes (Narrative) (Details) - USD ($) $ in Thousands |
1 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Nov. 17, 2021 |
Dec. 31, 2023 |
Dec. 31, 2022 |
Dec. 31, 2021 |
|
Debt Instrument [Line Items] | ||||
Term of debt issuance costs amortization | 3 years | |||
Debt interest rate | 0.56% | |||
Amortization of debt issuance costs | $ 1,094 | $ 1,094 | $ 113 | |
Estimated fair value of the notes classified as Level 2 financial instruments | 258,941 | 152,565 | ||
Exceeded principal amount | 58,941 | 47,435 | ||
Convertible Notes | ||||
Debt Instrument [Line Items] | ||||
Principal amount | $ 200,000 | $ 200,000 | $ 200,000 | |
Percentage of convertible senior note | 0.00% | |||
Due date | 2026-12-01 | |||
Conversion rate description | The Notes will be convertible based on an initial conversion rate of 17.1092 ordinary shares per $1,000 principal amount of notes, equivalent to an initial conversion price of approximately $58.45 per ordinary share, which represents a conversion premium of approximately 30% to the last reported sale price of the Company’s ordinary shares on The Nasdaq Global Market on November 18, 2021. The closing price of the Company’s shares on December 31, 2023 was $69.38. | |||
Conversion rate percentage | 130.00% | |||
Percentage of repurchase price equal to principal amount of convertible notes | 100.00% |
Convertible Notes (Details) - Convertible Senior Notes - USD ($) $ in Thousands |
Dec. 31, 2023 |
Dec. 31, 2022 |
Nov. 17, 2021 |
---|---|---|---|
Debt Instrument, Unamortized Discount (Premium) and Debt Issuance Costs, Net [Abstract] | |||
Principle | $ 200,000 | $ 200,000 | $ 200,000 |
Unamortized issuance costs | (3,169) | (4,263) | |
Net carrying amount | $ 196,831 | $ 195,737 |
Commitments and Contingencies (Narrative) (Details) - USD ($) $ in Thousands |
Dec. 31, 2023 |
Dec. 31, 2022 |
Dec. 31, 2021 |
---|---|---|---|
Commitments And Contingencies [Line Items] | |||
Right-of-Use Asset | $ 1,854 | $ 1,480 | $ 1,060 |
Operating Lease, Weighted Average Remaining Lease Term | 32 months | ||
Outstanding purchase commitments for inventory components | $ 51,110 | $ 43,169 |
Commitments and Contingencies (Schedule of Supplemental Balance Sheet Information Related to Leases) (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
|
Lessee, Lease, Description [Line Items] | ||
ROU assets - opening balance | $ 6,087 | $ 4,969 |
ROU assets - additions | 2,573 | 2,079 |
ROU assets - disposals | (1,473) | (961) |
ROU assets - accumulated depreciation | 2,866 | 2,386 |
ROU assets, net | 4,321 | 3,701 |
Other current liabilities | 1,687 | 1,297 |
Other long term liabilities | 2,634 | 2,404 |
Other liabilities | 4,321 | 3,701 |
ROU assets - Ending balance | $ 7,187 | $ 6,087 |
Commitments and Contingencies (Schedule of minimum future rental payments) (Details) $ in Thousands |
Dec. 31, 2023
USD ($)
|
---|---|
2023 | $ 1,947 |
2024 | 1,733 |
2025 | 911 |
2026 | 212 |
2027 | 0 |
Lessee, Operating Lease, Liability, to be Paid, Total | 4,803 |
Less imputed interest | 482 |
Other Liabilities [Member] | |
Total lease liabilities | $ 4,321 |
Concentration of Risk and Financial Instruments (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
Dec. 31, 2021 |
|
Risks and Uncertainties [Abstract] | |||
Balance at beginning of period | $ 0 | $ 7 | $ 39 |
Provision | 100 | 0 | 0 |
Reversal of provision | 0 | (7) | 0 |
Write-off of provision | 0 | 0 | (32) |
Balance at end of period | $ 100 | $ 0 | $ 7 |
Shareholders' Equity (Schedule of fair value assumptions) (Details) |
12 Months Ended | |||
---|---|---|---|---|
Dec. 31, 2023 | ||||
Shareholders' Equity [Abstract] | ||||
Dividend yield | 0.00% | |||
Expected volatility, minimum | 39.00% | |||
Expected volatility, maximum | 48.00% | |||
Risk-free interest rate, minimum | 2.00% | |||
Risk-free interest rate, maximum | 4.00% | |||
Expected life (years) | 4 years | [1] | ||
Vesting period (years) | 1 year | |||
|
Shareholders' Equity (Schedule of information about non vested options) (Details) - $ / shares |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
Dec. 31, 2021 |
|
Options | |||
Beginning balance | 0 | ||
Number of options granted | 16,224 | 0 | 5,704 |
Vested | (12,704) | ||
Forfeited | 0 | ||
Ending balance | 3,520 | 0 | |
Weighted average grant- date fair value | |||
Beginning balance | $ 0 | ||
Granted | 12.32 | ||
Vested | 7.87 | ||
Forfeited | 0 | ||
Ending balance | $ 28.4 | $ 0 |
Selected Income Statement Data (Narrative) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
Dec. 31, 2021 |
|
Selected Income Statement Data [Line Items] | |||
Foreign currency income (expense) | $ (78) | $ (351) | $ 58 |
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Customer One [Member] | |||
Selected Income Statement Data [Line Items] | |||
Percentage of Concentration Risk | 15.00% | 11.00% | 10.00% |
Selected Income Statement Data (Schedule of selected revenues) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
Dec. 31, 2021 |
|
Selected Income Statement Data [Line Items] | |||
Total revenues | $ 315,375 | $ 320,909 | $ 269,659 |
Sales of products [Member] | |||
Selected Income Statement Data [Line Items] | |||
Total revenues | 301,899 | 307,791 | 259,332 |
Service fees [Member] | |||
Selected Income Statement Data [Line Items] | |||
Total revenues | $ 13,476 | $ 13,118 | $ 10,327 |
Selected Income Statement Data (Schedule of selected selling, general and administrative expenses data) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||||
---|---|---|---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
Dec. 31, 2021 |
|||
Selected Income Statement Data [Abstract] | |||||
Selling | [1] | $ 36,896 | $ 38,249 | $ 33,614 | |
General and administrative | 13,855 | 11,250 | 9,359 | ||
Total selling, general and administrative expenses | 50,751 | 49,499 | 42,973 | ||
Including shipping and handling costs | $ 2,744 | $ 2,294 | $ 1,867 | ||
|
Selected Income Statement Data (Schedule of selected financial income (expenses) data) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||||
---|---|---|---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
Dec. 31, 2021 |
|||
Selected Income Statement Data [Abstract] | |||||
Interest income | $ 24,051 | $ 8,648 | $ 1,408 | ||
Convertible notes amortization | (1,094) | (1,094) | (113) | ||
Other, net | [1] | (739) | (864) | (265) | |
Financial income (expenses), net | $ 22,218 | $ 6,690 | $ 1,030 | ||
|
Income Taxes (Narrative) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
Dec. 31, 2021 |
|
Operating Loss Carryforwards [Line Items] | |||
Effective income tax rate | 23.00% | 23.00% | 23.00% |
Corporate statutory tax rate on 2018 and thereafter | 7.50% | ||
Income tax on earning | $ 5,315 | ||
Tax-exempt earnings | $ 1,718 | ||
Tax expense on gains and losses on intra entity foreign currency transactions | $ 611 | ||
Israel [Member] | Minimum [Member] | |||
Operating Loss Carryforwards [Line Items] | |||
Effective income tax rate | 16.50% | ||
Israel [Member] | Maximum [Member] | |||
Operating Loss Carryforwards [Line Items] | |||
Effective income tax rate | 30.00% |
Income Taxes (Schedule of composition of income (loss) from continuing operations before income taxes and income tax expense (benefit)) (Details) - USD ($) $ in Thousands |
12 Months Ended | |||||
---|---|---|---|---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
Dec. 31, 2021 |
||||
Income Tax Disclosure [Abstract] | ||||||
Income from continuing operations before income taxes: Israel | $ 84,186 | $ 82,933 | $ 67,643 | |||
Income from continuing operations before income taxes: Non-Israeli | 3,444 | 5,255 | 4,285 | |||
Income before incomes taxes | 87,630 | 88,188 | 71,928 | |||
Income tax expense from continuing operations, Current: Israel | 8,054 | 6,973 | 9,930 | [1] | ||
Income tax expense from continuing operations, Current: Non-Israeli | 2,198 | 2,043 | 1,603 | |||
Current Income tax expense from continuing operations, Total | 10,252 | 9,016 | 11,533 | |||
Deferred tax (benefit) expense: Israel | 109 | (2) | 714 | |||
Deferred tax (benefit) expense: Non-Israeli | (1,363) | (775) | (596) | |||
Deferred tax (benefit) expense | (1,254) | (777) | 118 | |||
Actual income tax expense (benefit) | $ 8,998 | $ 8,239 | $ 11,651 | |||
|
Income Taxes (Schedule of reconciliation of the theoretical income tax expense) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||||
---|---|---|---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
Dec. 31, 2021 |
|||
Income Tax Disclosure [Abstract] | |||||
Income from continuing operations before income taxes | $ 87,630 | $ 88,188 | $ 71,928 | ||
Statutory tax rate | 23.00% | 23.00% | 23.00% | ||
Theoretical income tax expense | $ 20,154 | $ 20,283 | $ 16,543 | ||
Income tax on earning of previous years | 0 | 0 | 5,306 | ||
Non-deductible expenses | [1] | 651 | 358 | 285 | |
Income tax rate differential | (12,417) | (12,702) | (10,715) | ||
Other | 610 | 300 | 232 | ||
Actual income tax expense (benefit) | $ 8,998 | $ 8,239 | $ 11,651 | ||
|
Income Taxes (Schedule of tax effects of temporary differences and carryforwards) (Details) - USD ($) $ in Thousands |
Dec. 31, 2023 |
Dec. 31, 2022 |
||
---|---|---|---|---|
Deferred Tax Assets [Abstract] | ||||
Deferred revenue | $ 2,186 | $ 1,598 | ||
Accrued expenses | 647 | 638 | ||
Net operating loss and tax credit carryforwards | 0 | 35 | ||
Operating lease obligations | 442 | 344 | ||
Other temporary differences | 762 | 589 | ||
Total deferred tax assets | 4,037 | 3,204 | ||
Deferred tax liabilities: | ||||
Property, plant and equipment | (938) | (795) | ||
Inventories | [1] | (1,430) | 0 | |
Intangible assets | [1] | (4,885) | 0 | |
Right of use assets | (442) | (344) | ||
Undistributed earnings | (1,241) | (1,061) | ||
Total deferred tax liabilities | (8,936) | (2,200) | ||
Deferred Tax Assets, Net, Total | $ (4,899) | $ 1,004 | ||
|
Income Taxes (Schedule of deferred tax assets and liabilities) (Details) - USD ($) $ in Thousands |
Dec. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Income Tax Disclosure [Abstract] | ||
Deferred tax asset, net | $ 2,642 | $ 1,004 |
Deferred tax liabilities, net | (7,541) | 0 |
Net deferred tax assets (liabilities) | $ (4,899) | $ 1,004 |
Balances and Transactions with Related Parties (Schedule of related party balances and transactions) (Details) - USD ($) $ in Thousands |
Dec. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Related Party Transaction [Line Items] | ||
Due from related parties | $ 54,487 | $ 56,833 |
Affiliated Entity [Member] | ||
Related Party Transaction [Line Items] | ||
Due from related parties | $ 18 | $ 15 |
Fair Value Measurements (Schedule of fair value, assets and liabilities measured on recurring basis) (Details) - USD ($) $ in Thousands |
Dec. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Assets, Fair Value Disclosure [Abstract] | ||
Marketable securities (current assets) | $ 18,816 | $ 0 |
Marketable securities (non-current assets) | 73,576 | $ 0 |
Fair Value, Recurring [Member] | ||
Assets, Fair Value Disclosure [Abstract] | ||
Marketable securities (current assets) | 18,816 | |
Marketable securities (non-current assets) | 73,576 | |
Total Assets | 92,392 | |
Fair Value, Recurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | ||
Assets, Fair Value Disclosure [Abstract] | ||
Marketable securities (current assets) | 6,988 | |
Marketable securities (non-current assets) | 6,981 | |
Total Assets | 13,969 | |
Fair Value, Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | ||
Assets, Fair Value Disclosure [Abstract] | ||
Marketable securities (current assets) | 11,828 | |
Marketable securities (non-current assets) | 66,595 | |
Total Assets | 78,423 | |
Fair Value, Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | ||
Assets, Fair Value Disclosure [Abstract] | ||
Marketable securities (current assets) | 0 | |
Marketable securities (non-current assets) | 0 | |
Total Assets | $ 0 |
Subsequent Events (Narrative) (Details) - Subsequent Event [Member] $ / shares in Units, $ in Millions |
Mar. 01, 2024
USD ($)
$ / shares
|
---|---|
Subsequent Event [Line Items] | |
Declared dividend per share | $ / shares | $ 1.33 |
Declared dividend total value | $ | $ 60 |
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