| The information in this preliminary prospectus supplement and the accompanying prospectus is not complete and may be changed. A registration statement relating to these securities has been declared effective by the Securities and Exchange Commission. This preliminary prospectus supplement and the accompanying prospectus are not an offer to sell these securities and they are not soliciting an offer to buy these securities in any state or jurisdiction where the offer or sale is not permitted. |
Filed
Pursuant to Rule 424(b)(5)
Registration
Number 333-163561
Subject to Completion. Dated February 3, 2010
PRELIMINARY
PROSPECTUS SUPPLEMENT
(to prospectus dated January 4,
2010)
Nova
Measuring Instruments Ltd.
3,500,000
Ordinary Shares
This is a
public offering of ordinary shares of Nova Measuring Instruments Ltd. We are
offering 3,500,000 ordinary shares in this offering.
Our
ordinary shares are listed on The NASDAQ Global Market and on the Tel Aviv Stock
Exchange in Israel under the symbol “NVMI.” On February 2, 2010, the last
reported sale price of our ordinary shares on The NASDAQ Global Market was $4.55
per share and on February 3, 2010, the last reported sale price of our ordinary
shares on the Tel Aviv Stock Exchange was NIS 16.96 per share.
You should carefully read this
prospectus supplement and the accompanying prospectus (including all of the
information incorporated by reference therein) before you invest. Investing in our ordinary shares
involves a high degree of risk. Before buying any ordinary shares, you should
read the discussion of material risks of investing in our ordinary shares in the
section entitled “Risk Factors” beginning on page S-6 of this prospectus
supplement.
None
of the U.S. Securities and Exchange Commission, the Israeli Securities Authority
or any state securities commission have approved or disapproved of these
securities or passed upon the adequacy or accuracy of this prospectus supplement
or the accompanying prospectus. Any representation to the contrary is a criminal
offense under the laws of the United States and the laws of the State of
Israel.
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Per
Ordinary Share
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Total
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|||||||
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Public
offering price
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$ | $ | ||||||
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Underwriting
discounts and commissions
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$ | $ | ||||||
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Proceeds,
before expenses, to us
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$ | $ | ||||||
We
estimate the total expenses of this offering, excluding the underwriting
discounts and commissions, will be approximately $270,000. We have
also granted the underwriters an option for a period of 30 days from the date of
this prospectus supplement to purchase up to 525,000 ordinary shares at the
public offering price per share, less the underwriting discounts and
commissions, to cover over-allotments, if any.
Delivery
of the shares is expected to be made on or about
February , 2010, by electronic delivery via the
Depository Trust Company, subject to customary closing
conditions. The underwriters are offering the ordinary shares as set
forth under “Underwriting.”
Sole
Book-Running Manager
Needham
& Company, LLC
Co-Manager
Roth
Capital Partners, LLC
The date
of this prospectus supplement is February ,
2010.
Table
Of Contents
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Page
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Prospectus
Supplement
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S-2
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S-3
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S-6
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S-14
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S-15
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S-16
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S-17
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S-17
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S-18
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S-21
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S-31
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S-33
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S-33
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S-33
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Page
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Prospectus
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i
You
should rely only on the information incorporated by reference or provided in
this prospectus supplement and the accompanying prospectus, or to which we have
referred you. We have not authorized anyone to provide you with different
information. If anyone provides you with different or inconsistent
information, you should not rely on it. This prospectus supplement
and the accompanying prospectus do not constitute an offer to sell, or a
solicitation of an offer to purchase, the securities offered by this prospectus
supplement and the accompanying prospectus in any jurisdiction where it is
unlawful to make such offer or solicitation. You should not assume
that the information contained in this prospectus supplement or the accompanying
prospectus, or any document incorporated by reference in this prospectus
supplement or the accompanying prospectus, is accurate as of any date other than
the date on the front cover of the applicable document. Neither the
delivery of this prospectus supplement nor any distribution of securities
pursuant to this prospectus supplement shall, under any circumstances, create
any implication that there has been no change in the information set forth or
incorporated by reference into this prospectus supplement or in our affairs
since the date of this prospectus supplement. Our business, financial
condition, results of operations and prospects may have changed since that
date.
This
prospectus supplement is part of a registration statement (No. 333-163561) that
we filed with the Securities and Exchange Commission, or the SEC, using a
“shelf” registration process. Under the registration statement, we
registered the offering by us of up to $20,000,000 of ordinary shares, debt
securities, warrants, subscription right and units for sale from time to time in
one or more offerings. This prospectus supplement provides specific
information about the offering by us of 3,500,000 of our ordinary shares under
the shelf registration statement, in addition to information concerning the
over-allotment option granted by us. This document comprises two
parts. The first part is this prospectus supplement, which describes the
specific terms of this offering and also adds to and updates information
contained in the accompanying prospectus. The second part, the accompanying
prospectus, gives more general information, some of which may not apply to this
offering. If the description of the offering varies between this prospectus
supplement and the accompanying prospectus or the documents incorporated herein
by reference, you should rely on the information contained in this prospectus
supplement. However, if any statement in one of these documents is inconsistent
with a statement in another document having a later date — for example, a
document incorporated by reference in the accompanying prospectus — the
statement in the document having the later date modifies or supersedes the
earlier statement.
Before
purchasing any securities, you should carefully read both this prospectus
supplement and the accompanying prospectus, together with the additional
information described under the heading, “Where You Can Find More Information;
Incorporation of Information by Reference,” on page S-33 of this prospectus
supplement.
Unless
the context requires otherwise, when used in this prospectus supplement,
references to the terms “Nova,” “the Company,” “we,” “us,” “our” and similar
terms, refer to Nova Measuring Instruments Ltd. and its wholly owned
subsidiaries on a consolidated basis, unless we state or the context implies
otherwise.
Unless
otherwise indicated, all amounts herein are expressed in United States dollars
(“U.S. dollars”, “dollars”, “USD”, “US$” or “$”).
S-2
This summary highlights selected
information about us, this offering and information contained in greater detail
elsewhere in this prospectus supplement, the accompanying prospectus and in the
documents incorporated by reference. This summary is not complete and
does not contain all of the information that you should consider before
investing in our securities. You should carefully read and consider this entire
prospectus supplement, the accompanying prospectus and the documents, including
financial statements and related notes, and information incorporated by
reference into this prospectus supplement, including the financial statements
and “Risk Factors” on page S-6 of this prospectus supplement, before making an
investment decision. If
you invest in our securities, you are assuming a high degree of
risk.
Our Business
We are a
worldwide leading designer, developer and producer of integrated and stand-alone
process control metrology systems. Metrology systems measure various thin film
properties and critical circuit dimensions during various steps in the
semiconductor manufacturing process, allowing semiconductor manufacturers to
increase quality, productivity and yields, lower their manufacturing costs and
increase their profitability. We supply our metrology systems to major
semiconductor manufacturers worldwide, either directly or through process
equipment manufacturers. Of the 20 semiconductor manufacturers that had the
highest capital equipment expenditures in 2009, 15 use our systems. Our systems
were first installed in 1995 and, since that time, we have sold more than 2,000
metrology systems.
The
semiconductor manufacturing process starts with a silicon wafer that has been
highly polished on one side to a mirror finish, upon which circuits are
constructed. To construct the circuits, a series of layers of thin films that
act as conductors, semiconductors or insulators are applied to the polished side
of the wafer. During the manufacturing process, these film layers are subjected
to processes which remove portions of the film layers, create circuit patterns
and perform other functions. The semiconductor manufacturing process requires
exacting steps and strict control of equipment performance and process
sequences. Tight control can be achieved through monitoring silicon wafers and
measuring relevant parameters after each process step with metrology tools such
as those we produce.
Prior to
the introduction of our integrated metrology systems, process control was
achieved through stand-alone measurement equipment. Stand-alone measurement
equipment requires semiconductor manufacturers to interrupt the manufacturing
process sequence, remove sample silicon wafers from the process equipment and
place the silicon wafers on the stand-alone measuring or inspection tool. In
contrast, our integrated metrology approach is based upon patented measuring
methods that enable us to produce optical measuring systems that are small
enough to be integrated directly inside many types of semiconductor process
equipment. We believe that in several instances during the manufacturing
process, our integrated approach offers considerable advantages over the
conventional stand-alone approach to metrology control, enabling manufacturers
using our integrated equipment to reduce costs and to improve production
efficiency, yield and quality.
We
have always emphasized our integrated metrology solutions as this continues to
be an area where we have a leading position. In addition, in the past few years
we developed and started manufacturing stand-alone metrology systems as well. We
have leveraged our technology, methods, metrology expertise and market position
in the integrated metrology field to expand our offerings of stand-alone
metrology systems. Today, both stand alone and integrated metrology solutions
have reached a level of maturity allowing semiconductor manufactures to choose
how to use either technology and make decisions based on merit specific to the
process step in question, always balancing between the amount of data attained
and the use made of the data for capabilities such as automated process control.
Our long-term strategy is focused on advanced metrology and process control
solutions where our integrated process control products and stand alone products
are compatible or complementary and used in a customized way to meet specific
customer needs.
We were
incorporated as a limited liability company under the laws of the State of
Israel in 1993. Our principal executive offices are located at
Weizmann Science Park, Einstein St., Building 22, 2nd Floor, Ness-Ziona,
Israel. Our telephone number is 972-8-9387505 and our website is
http://nova.co.il. The information available on or accessible through
our website does not constitute a part of this prospectus supplement or the
accompanying prospectus and should not be relied upon.
S-3
The
Offering
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Ordinary
Shares offered by us in the offering
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3,500,000
ordinary shares, par value NIS 0.01 per share (4,025,000 ordinary shares
if the underwriters exercise their over-allotment option in
full).
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Total
ordinary shares outstanding immediately after this
offering
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22,954,274
ordinary shares (23,479,274 ordinary shares if the underwriters exercise
their over-allotment option in full).
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Dividend
policy
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Our
board of directors is authorized to declare dividends, although we
anticipate that, for the foreseeable future, we will retain any earnings
to support operations and to finance the growth and development of our
business. Therefore, we do not expect to pay cash dividends for at least
the next several years.
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Over-allotment
option
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525,000
ordinary shares.
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Timing
and settlement of ordinary shares
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The
ordinary shares are expected to be delivered against payment on or about
February , 2010.
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Listing
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Our
ordinary shares are listed on The NASDAQ Global Market and on the Tel Aviv
Stock Exchange in Israel.
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The
NASDAQ Global Market and Tel Aviv Stock Exchange symbol
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“NVMI.”
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Use
of proceeds
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We
intend to use the net proceeds we receive from this offering for general
corporate purposes. See “Use of Proceeds” for additional
information.
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Lock-up
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Subject
to certain exceptions, we and the members of our board of directors, our
executive officers and one of our affiliated shareholders have agreed with
the underwriters not to sell, transfer or dispose of any ordinary shares
for a period of 60 days (subject to certain exceptions) after the date of
this prospectus supplement. See “Underwriting.”
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Risk
factors
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Before
deciding to invest in our ordinary shares, you should carefully consider
the risks related to our business, the offering and our ordinary shares,
and our location in Israel. See “Risk Factors” on page S-6 of this
prospectus supplement.
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The
number of ordinary shares to be outstanding immediately after the offering as
shown above is based on 19,454,274 ordinary shares outstanding as of September
30, 2009. This number does not include, as of September 30, 2009:
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·
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1,453,485
ordinary shares issuable upon the exercise of outstanding warrants at an
exercise price of $3.05 per share;
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·
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2,658,476
ordinary shares issuable upon the exercise of outstanding options to
purchase 2,350,946 ordinary shares at a weighted average exercise price of
$1.81 per share, and vesting of 307,530 restricted share units
outstanding;
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·
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1,321,870
ordinary shares available for grant under our 2007 Incentive Plan;
and
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2,229
treasury shares held by us.
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Unless
otherwise stated, outstanding share information throughout this prospectus
supplement excludes such outstanding securities. Except as otherwise indicated,
all information in this prospectus supplement assumes no exercise by the
underwriters of their option to purchase an additional 525,000 ordinary shares
to cover over-allotments.
S-4
Summary
Consolidated Financial Data
We
derived the summary consolidated financial statement data for the years ended
December 31, 2006, 2007 and 2008 set forth below from our audited
consolidated financial statements and related notes incorporated by reference in
this prospectus supplement and the accompanying prospectus. We derived the
summary consolidated financial statement data as of and for the nine months
ended September 30, 2008 and 2009 from our unaudited condensed consolidated
financial statements and related notes incorporated by reference in this
prospectus supplement and the accompanying prospectus. Our results for interim
periods are not necessarily indicative of the results that may be expected for
the entire year. You should read the information presented below together with
our consolidated financial statements, the notes to those statements and the
other financial information incorporated by reference in this prospectus
supplement and the accompanying prospectus.
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Year
Ended December 31,
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Nine
Months ended September 30,
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|||||||||||||||||||
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2006
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2007
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2008
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2008
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2009
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(unaudited)
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(U.S.
Dollars, in thousands, except per share and weighted average shares
data)
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Consolidated
Statement of Operations Data:
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Revenues
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$ | 48,292 | $ | 58,077 | $ | 38,969 | $ | 32,741 | $ | 24,078 | ||||||||||
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Cost
of revenues
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27,743 | 33,251 | 25,986 | 21,097 | 13,887 | |||||||||||||||
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Gross
profit
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20,549 | 24,826 | 12,983 | 11,644 | 10,191 | |||||||||||||||
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Operating
expenses:
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Research
and development expenses, net
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9,166 | 9,143 | 8,606 | 6,383 | 4,816 | |||||||||||||||
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Sales
and marketing expenses
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8,754 | 10,175 | 7,503 | 6,113 | 3,989 | |||||||||||||||
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General
and administrative expenses
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5,136 | 4,830 | 3,199 | 2,461 | 1,581 | |||||||||||||||
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Other
operating expenses
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- | 3,831 | 633 | 633 | - | |||||||||||||||
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Total
operating expenses
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23,056 | 27,979 | 19,941 | 15,590 | 10,386 | |||||||||||||||
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Operating
loss
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(2,507 | ) | (3,153 | ) | (6,958 | ) | (3,946 | ) | (195 | ) | ||||||||||
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Financing
income (expenses), net
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573 | (764 | ) | 1,537 | 96 | 132 | ||||||||||||||
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Net
loss for the year
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$ | (1,934 | ) | $ | (3,917 | ) | $ | (5,421 | ) | $ | (3,850 | ) | $ | (63 | ) | |||||
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Basic
and diluted loss per share
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$ | (0.12 | ) | $ | (0.21 | ) | $ | (0.28 | ) | $ | (0.20 | ) | $ | (0.00 | ) | |||||
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Shares
used in calculation of basic and diluted loss per share(1)
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||||||||||||||||||||
| 15,976 | 18,606 | 19,369 | 19,366 | 19,391 | ||||||||||||||||
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_____________________
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(1) See Note 2(P) of the
notes to the financial statements incorporated by reference in this
prospectus supplement and the accompanying prospectus for an explanation
of the determination of the number of shares used to compute basic and
dilutive per share amounts for the years ended December 31, 2006,
2007 and 2008. Due to the anti-dilutive effect, basic loss per share was
equal to diluted loss per share for the nine months ended on September 30,
2009. The number of potentially dilutive securities excluded from diluted
loss per share due to the anti-dilutive effect amounted to 357,563 for
the nine month ended September 30, 2009.
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||||||||||||||||||||
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As
of September 30, 2009
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||||||
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Actual
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As
Adjusted
|
|||||
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Consolidated
Balance Sheet Data:
|
(unaudited)
|
|||||
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(U.S.
Dollars, in thousands)
|
||||||
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Cash
and cash equivalents
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$ | 15,546 | $ |
30,206
|
||
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Working
capital
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21,544 |
36,204
|
||||
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Total
Assts
|
32,273 |
46,933
|
||||
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Capital
stock (including additional paid-in capital)
|
84,479 | 99,139 | ||||
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Total
Shareholders’ equity
|
23,183 |
37,843
|
||||
The as
adjusted balance sheet data above reflects the application of the net proceeds
from the sale of 3,500,000 ordinary shares offered by us at an assumed
offering price of $4.55 per share, after deducting estimated underwriting
discounts and commissions and estimated offering expenses.
S-5
You should carefully consider the
risks described below and in our annual report on Form 20-F for the year
ended December 31, 2008, as well as the other information included or
incorporated by reference in this prospectus supplement and the accompanying
prospectus,
including our consolidated financial statements and the related
notes, before you
decide to buy our ordinary shares. The risks and uncertainties described below
and incorporated by reference in this prospectus supplement are not the only
risks facing us. We may face additional risks and uncertainties not currently
known to us or that we currently deem to be immaterial. Any of the risks
described below or incorporated by reference in this prospectus supplement, and
any such additional risks, could materially adversely affect our business,
financial condition or results of operations. In such case, you may lose all or
part of your original investment.
Risks
Related to Our Business and Our Industry
Because
substantially most of our current sales are dependent on two specific product
lines, factors that adversely affect the pricing and demand for these product
lines could substantially reduce our sales.
We are
currently dependent on two process control product lines. We expect revenues
from these product lines to continue to account for the substantial portion of
our revenues for at least the next year. As a result, factors adversely
affecting the pricing of or demand for these product lines, such as competition
and technological change, could significantly reduce our sales.
The
markets we target are highly cyclical and it is difficult to predict the length
and strength of any downturn or expansion period.
The
semiconductor capital equipment market and industries, which are highly
cyclical, experienced in 2008 and 2009 a significant decline in sales after
significant increases in sales in 2006 and 2007. According to Gartner, Inc., a
market research company, the forecast for year 2010 predicts a 57% increase in
wafer fab equipment spending. Although we rely on market research companies, we
cannot predict the length and strength of the downturns or expansions, including
the current period of expansion.
Our
inability to significantly reduce spending during a protracted slowdown in the
semiconductor industry could reduce our prospects of achieving
profitability.
Historically,
we have derived all of our revenues, and we expect to continue to derive
practically all of our revenues, from sales of our products and related services
to the semiconductor industry. Our business depends in large part upon capital
expenditures by semiconductor manufacturers, which in turn depend upon the
current and anticipated demand for semiconductors. The semiconductor industry
has experienced severe and protracted cyclical downturns and upturns.
Specifically, during 2008 and 2009 the semiconductor industry experienced a
severe downturn, as a result of the slowdown in the general economy and the
industry overcapacity build-ups in years 2006 and 2007. During cyclical
downturns, as those we have experienced in the past, and are likely to
experience in the future, material reductions in the demand for the type of
capital equipment and process technology that we offer may result in a decline
in our sales. In addition, our ability to reduce expenses in response to any
downturn or slowdown in the rate of capital investment by manufacturers in these
industries may be limited because of:
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Ÿ
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our
continuing need to invest in research and
development;
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Ÿ
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our
continuing need to market our new products to new and existing customers;
and
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Ÿ
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our
extensive ongoing customer service and support requirements
worldwide.
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As a
result, we may have difficulty achieving profitability.
If
we do not respond effectively and on a timely basis to rapid technological
change, our ability to attract and retain customers could be diminished, which
would have an adverse affect on our sales and ability to remain
competitive.
The
semiconductor manufacturing industry is characterized by rapid technological
change, new product introductions and enhancements and evolving industry
standards. Our ability to remain competitive and generate sales revenue will
depend in part upon our ability to develop new and enhanced systems at
competitive prices in a timely and cost-effective manner and to accurately
predict technology transitions. Because new product development commitments must
be made well in advance of sales, new product decisions must anticipate the
future demand for products. If we fail to correctly anticipate future demand for
products, our sales and competitive position will suffer. In addition, the
development of new measurement technologies, new product introductions or
enhancements by our competitors could cause a decline in our sales or loss of
market acceptance of our existing products.
S-6
We
depend on OEM suppliers for sales of our integrated metrology systems, and the
loss of our OEM suppliers as customers could harm our business.
We
believe that sales of integrated metrology systems will continue to be an
important source of our revenues. Sales of our integrated metrology systems
depend upon the ability of OEMs (original equipment manufacturers) to sell
semiconductor equipment products that include our metrology systems as
components. If our OEMs are unable to sell such products, or if they choose to
focus their attention on products that do not integrate our systems, our
business could suffer. If we were to lose our OEMs as customers for any reason,
our ability to realize sales from integrated metrology systems would be
diminished, which would harm our business.
We
may not be able to develop or market new products, which could slow or prevent
our growth.
Our
business plan requires the introduction of several new product lines. Our plans
to introduce process control products for photolithography, etch, metal
deposition and other processes will require development of new capabilities.
Some of these projects are in the early stages of development, and we cannot be
certain that we will be able to develop or bring to market these new product
lines or, if we do, that these products will be well received or profitable. If
we are unable to successfully introduce new product lines, our future growth
could be adversely affected.
If
any of our systems fail to meet or exceed our internal quality specifications,
we cannot ship them until such time as they have met such specifications. If we
experience significant delays or are unable to ship our products to our
customers as a result of our internal processes or for any other reason, our
business and reputation may be adversely affected.
Our
products are complex and require technical expertise to design and manufacture.
Various problems occasionally arise during the manufacturing process that may
cause delays and/or impair product quality. We actively monitor our
manufacturing processes to ensure that our products meet our internal quality
specifications. Any significant delays stemming from the failure of our products
to meet or exceed our internal quality specifications, or for any other reasons,
would delay our shipments. Shipment delays could be harmful to our business,
revenues and reputation in the industry.
New
product lines that we may introduce in the future may contain defects, which
will require us to allocate time and financial resources to
correct.
Our new
product lines may contain defects when first introduced. If there are defects,
we will need to divert the attention of our personnel from our product
development efforts to address the detection and correction of the
defects. In the past, no liability claims have been filed against us
for damages related to product defects, and we have not experienced any material
delays as a result of product defects. However, we cannot provide
assurances that we will not incur these costs or liabilities or experience these
lags or delays in the future. Moreover, the occurrence of such defects, whether
caused by our products or the products of another vendor, may result in
significant customer relations problems and adversely affect our reputation and
may impair the market acceptance of our products.
We
have historically generated losses and may incur future losses.
Since our
inception in 1993, we have had several years of losses and only one profitable
year. We may incur a net loss in 2010 or in future years. As of September 30,
2009, we had an accumulated deficit of approximately $62 million. We plan to
increase our aggregate operating expenses in 2010 relative to 2009. However, our
ability to generate profits is dependent mainly on our ability to increase
sales. In the future, our sales may not grow and we may not achieve
profitability.
Our
dependence on a single manufacturing facility magnifies the risk of an
interruption in our production capabilities.
We have
only one manufacturing facility, which is located in Ness-Ziona, Israel. Any
event affecting this site, including natural disaster, labor stoppages or armed
conflict, may disrupt or indefinitely discontinue our manufacturing capabilities
and could significantly impair our ability to fulfill orders and generate
revenues, thus negatively impacting our business.
We
experience quarterly fluctuations in our operating results, which may adversely
impact our stock price.
Our
quarterly operating results have fluctuated significantly in the past. This
trend may continue. A principal reason is that we derive a substantial portion
of our revenue from the sale of a relatively small number of systems to a
relatively small number of customers. As a result, our revenues and results of
operations for any given quarter may decrease due to factors relating to the
timing of orders, the timing of shipments of systems, and the timing of
recognizing these revenues. Furthermore, our quarterly results are affected by
the highly cyclical nature of the semiconductor capital equipment market and
industries.
We also
have a limited ability to predict revenues for future quarterly periods and, as
a result, face risks of revenue shortfalls. If the number of systems
we actually ship, and thus the amount of revenues we are able to record in any
particular quarter, is below our expectations, the adverse effect may be
magnified by our inability to adjust spending quickly enough to compensate for
the revenue shortfall.
S-7
We
depend on a small number of large customers, and the loss of one or more of them
would lower our revenues.
Like our
peers serving the semiconductor market, our customer base is highly concentrated
among a limited number of large customers, primarily because the semiconductor
industry is dominated by a small number of large companies. We anticipate that
our revenues will continue to depend on a limited number of major customers,
although the companies considered to be our major customers and the percentage
of our revenue represented by each major customer may vary from period to
period. The loss of any one of our major customers would adversely affect our
sales and revenues. Furthermore, if any of our customers become insolvent or
have difficulties meeting their financial obligations to us for any reason, we
may suffer losses.
We
operate in an extremely competitive market, and if we fail to compete
effectively, our revenues and market share will decline.
Although
the market for integrated process control systems used in semiconductor
manufacturing is currently concentrated and characterized by relatively few
participants, the semiconductor capital equipment industry is intensely
competitive. We compete mainly with Nanometrics, Inc., Rudolph Technologies,
Inc., and KLA-Tencor Corp. which manufacture and sell integrated and/or
stand-alone process control systems. In addition, we compete with original
semiconductor equipment manufacturers, such as Tokyo Electron Ltd., which
manufacture integrated metrology products and with original semiconductor
equipment manufacturers, such as Applied Materials, Inc., which develop in-situ
sensors and products. Established companies, both domestic and foreign, compete
with our product lines, and new competitors are entering our market. Some of our
competitors have greater financial, engineering, manufacturing and marketing
resources than we do. If a particular customer selects a competitor’s capital
equipment, we expect to experience difficulty in selling to that customer for a
significant period of time. A substantial investment is required by customers to
evaluate, test, select and integrate capital equipment into a production line.
As a result, once a manufacturer has selected a particular vendor’s capital
equipment, we believe that the manufacturer generally relies upon that equipment
for the specific production line application and frequently will attempt to
consolidate its other capital equipment requirements with the same vendor.
Accordingly, unless our systems offer performance or cost advantages that
outweigh a customer’s expense of switching to our systems, it will be difficult
for us to achieve significant sales from that customer once it has selected
another vendor’s system for an application. We believe that our ability to
compete successfully depends on a number of factors both within and outside of
our control, including:
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the
contribution of our equipment to our customers’
productivity;
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our
product quality and performance;
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our
global technical service and
support;
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the
return on investment (ROI) of our equipment and its cost of
ownership;
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the
breadth of our product line;
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our
success in developing and marketing new products;
and
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the
extendibility of our product.
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If we
fail to compete in a timely and cost-effective manner against current or future
competitors, our revenues and market share will decline.
The
ongoing consolidation in our industry may harm us if our competitors are able to
offer a broader range of products and greater customer support than we can
offer.
We
believe that the semiconductor capital equipment market is undergoing
consolidation. A number of capital equipment suppliers have been acquired by
larger equipment manufacturers. For example, in 2005 Rudolph Technologies, Inc.
acquired August Technologies, Inc., in 2006 Nanometrics, Inc. acquired Soluris,
Inc. and Accent Technologies, Inc., and in 2007 KLA-Tencor Corp. acquired
Therma-Wave, Inc. and Nanometrics, Inc. acquired Tevet Ltd. We believe that
similar acquisitions and business combinations involving our competitors and
customers may occur in the future. These acquisitions could adversely impact our
competitive position by enabling our competitors and potential competitors to
expand their product offerings and customer service, which could provide them an
advantage in meeting customers’ needs, particularly with those customers that
seek to consolidate their capital equipment requirements with a smaller number
of vendors. The greater resources, including financial, marketing and support
resources, of competitors involved in these acquisitions could allow them to
accelerate the development and commercialization of new competitive products and
the marketing of existing competitive products to their larger installed bases.
Accordingly, such business combinations and acquisitions by competitors or
customers could jeopardize our competitive position.
S-8
We
may not be successful in our efforts to identify, complete and integrate future
acquisitions, which could disrupt our current business activities and adversely
affect our results of operations or future growth.
Any
future acquisitions may involve many risks, including the risks of:
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diverting
management’s attention and other resources from our ongoing business
concerns;
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entering
markets in which we have no direct prior
experience;
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improperly
evaluating new services, products and
markets;
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being
unable to maintain uniform standards, controls, procedures and
policies;
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being
unable to integrate new technologies or
personnel;
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incurring
the expenses of any undisclosed or potential liabilities;
and
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the
departure of key management and
employees.
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If we are
unable to successfully complete future acquisitions or to effectively integrate
any future acquisitions, our ability to grow our business or to operate our
business effectively could be reduced, and our business, financial condition and
operating results could suffer. Even if we are successful in completing
acquisitions, we cannot assure you that we will be able to integrate the
operations of the acquired business without encountering difficulty regarding
different business strategies with respect to marketing, integration of
personnel with disparate business backgrounds and corporate cultures,
integration of different point-of-sale systems and other technology and managing
relationships with other business partners.
One
of our major customers has no cancellation fee with regard to cancellation of
orders, and we have been facing difficulties to collect cancellation fees from
another customer.
Our
supply agreement with one of our largest customers does not include cancellation
fee with regard to cancellation of this customer’s orders. In addition, during
the recent slowdown in the semiconductors industry, another customer cancelled
his orders and we were unable to collect cancelation fees from that customer.
Because of that, our ability to rely on our backlog for future forecasting and
planning is impaired and harm our ability to forecast our financial
results.
Because
of our small size, we depend on a small number of employees who possess both
executive and technical expertise, and the loss of any of these key employees
would hurt our ability to implement our strategy and to compete
effectively.
Because
of our small size and our reliance on employees with both executive and advanced
technical skills, our success depends significantly upon the continued
contributions of our officers and key personnel. All of our key management and
technical personnel have expertise, which is in high demand among our
competitors, and the loss of any of these individuals could cause our business
to suffer. We do not maintain life insurance policies for our officers and
directors.
Our
lengthy sales cycle increases our exposure to customer delays in orders, which
may result in obsolete inventory and volatile quarterly revenues.
Sales of
our systems depend, in significant part, upon our customers adding new
manufacturing capacity or expanding existing manufacturing capacity, both of
which involve a significant capital commitment. We may experience delays in
finalizing sales following initial system qualification while a customer
evaluates and approves an initial purchase of our systems. In general, for new
customers or applications, our normal sales cycle takes between 12 and 24 months
to complete. During this time, we may expend substantial funds and management
effort, but fail to make any sales. Lengthy sales cycles subject us to a number
of significant risks, including inventory obsolescence and fluctuations in
operating results, over which we have limited control.
Because
of the technical nature of our business, our intellectual property is extremely
important to our business, and our inability to protect our intellectual
property would harm our competitive position.
As of
December 31, 2009, we have obtained 80 U.S. patents and have 20 U.S. patent
applications pending. In addition, we have obtained more than 40 non-U.S.
patents and have more than 40 non-U.S. patent applications pending including 5
PCT applications.
We cannot
assure that:
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pending
patent applications will be
approved;
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any
patents will be broad enough to protect our technology, will provide us
with competitive advantages or will not be challenged or invalidated by
third parties; or
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the
patents of others will not have an adverse effect on our ability to do
business.
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S-9
We also
cannot assure that others will not independently develop similar products,
duplicate our products or, if patents are issued to us, design around these
patents. Furthermore, because patents may afford less protection under foreign
law than is available under U.S. law, we cannot assure that any foreign patents
issued to us will adequately protect our proprietary rights.
In
addition to patent protection, we also rely upon trade secret protection,
employee and third-party nondisclosure agreements and other intellectual
property protection methods to protect our confidential and proprietary
information. Despite these efforts, we cannot be certain that others will not
otherwise gain access to our trade secrets or disclose our
technology.
Furthermore,
we may be required to institute legal proceedings to protect our intellectual
property. If such legal proceedings are resolved adversely to us, our
competitive position and/or results of operations could be harmed.
There
has been significant litigation involving intellectual property rights in the
semiconductor and related industries, and similar litigation involving Nova
could force us to divert resources to defend against this litigation or deter
our customers from purchasing our systems.
We have
been, and may in the future be, notified of allegations that we may be
infringing intellectual property rights possessed by others. In addition, we may
be required to commence legal proceedings against third parties, which may be
infringing our intellectual property, in order to defend our intellectual
property. In the future, protracted litigation and expense may be incurred to
defend ourselves against alleged infringement of third party rights or to defend
our intellectual property against infringement by third parties. Adverse
determinations in that type of litigation could:
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result
in our loss of proprietary rights;
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subject
us to significant liabilities, including treble damages in some
instances;
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require
us to seek licenses from third parties, which licenses may not be
available on reasonable terms or at all;
or
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prevent
us from selling our products.
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Any
litigation of this type, even if we are ultimately successful, could result in
substantial cost and diversion of time and effort by our management, which by
itself could have a negative impact on our profit margin, competitive position
and ability to develop and market new and existing products.
We
depend on a limited number of suppliers, and in some cases a sole supplier. Any
disruption or termination of these supply channels may adversely affect our
ability to manufacture our products and to deliver them to our
customers.
We
purchase components, subassemblies and services from a limited number of
suppliers and occasionally from a single source. Disruption or termination of
these sources could occur, and these disruptions could have at least a temporary
adverse effect on our operations. To date, we have not experienced any material
disruption or termination of our supply sources. A prolonged inability on our
part to obtain components included in our systems on a cost-effective basis
could adversely impact our ability to deliver products on a timely basis, which
could harm our sales and customer relationships.
We
are dependent on international sales, which expose us to foreign political and
economic risks that could impede our plans for expansion and
growth.
Our
principal customers are located in the United States, Japan, Taiwan, Singapore,
Europe and South Korea and we produce our products in Israel. International
operations expose us to a variety of risks that could seriously impact our
financial condition and impede our growth. For instance, trade restrictions,
changes in tariffs and import and export license requirements could adversely
affect our ability to sell our products in the countries adopting or changing
those restrictions, tariffs or requirements. This could reduce our sales by a
material amount.
Because
we derive a significant portion of our revenues from sales in Asia, our sales
could be hurt by the instability of Asian economies.
A number
of Asian countries have experienced political and economic instability. For
instance, Taiwan and China have had a number of disputes, as have North and
South Korea, and Japan had for a number of years experienced significant
economic instability. We have a subsidiary in Taiwan and we have significant
customers in Japan and South Korea as well as in China. An outbreak of
hostilities or other political upheaval or economic downturns in these or other
Asian countries would likely harm the operations of our customers in these
countries, causing our sales to suffer.
S-10
A
large number of our ordinary shares continue to be owned by a relatively small
number of shareholders, whose future sales of our stock, if substantial, may
depress our share price.
If our
principal shareholders sell substantial amounts of our ordinary shares,
including shares issued upon the exercise of outstanding options or warrants,
the market price of our ordinary shares may fall. As of September 30, 2009, we
had 19,454,274 ordinary shares outstanding (not including treasury shares), and
based on reports filed with the SEC and on the information provided to us by our
transfer agent, 10,709,150 of such shares were held by six
shareholders.
Certain
shareholders may control the outcome of matters submitted to a vote of our
shareholders, including the election of directors.
As of
September 30, 2009, based on reports filed with the SEC and on the information
provided to us by our transfer agent, six of our shareholders controlled
approximately 55.05% of our outstanding
ordinary shares (not including warrants exercisable or exercisable within 60
days of September 30, 2009). As a result, and although we are currently not
aware of any voting agreement between such shareholders, if these shareholders
voted together or in the same manner, they would have the ability to control the
outcome of corporate actions requiring an ordinary majority vote of shareholders
as set in our amended and restated articles of association. Even if these five
shareholders do not vote together, some of which have the ability to influence
the outcome of corporate actions requiring the vote of shareholders as set in
our amended and restated articles of association.
The
market price of our ordinary shares may be affected by a limited trading volume
and may fluctuate significantly.
In the
past there has been a limited public market for our ordinary shares and there
can be no assurance that an active trading market for our ordinary shares will
continue. An absence of an active trading market could adversely affect our
shareholders’ ability to sell our ordinary shares in short time periods. Our
ordinary shares have experienced, and are likely to experience in the future,
significant price and volume fluctuations, which could adversely affect the
market price of our ordinary shares without regard to our operating
performance.
We
manage our available cash through various bank institutions and invest portions
of our cash reserves in bank deposits. Recently, following the global financial
crisis, a few bank institutions announced bankruptcy or were on the verge of
bankruptcy. A bankruptcy of one of the banks in which or through which we hold
or invest our cash reserves, might prevent us to access that cash for an
uncertain period of time.
We manage
our available cash through various bank institutions and invest portions of our
cash reserves in bank deposits. Recently, following the global financial crisis,
few bank institutions announced bankruptcy or were on the verge of bankruptcy.
As of September 30, 2009, approximately 3% of our cash reserves were invested in
or through U.S. based bank institutions, and approximately 93% of our cash was
invested in or through Israeli based bank institutions. A bankruptcy of one of
the banks in which we hold our cash reserves or through which we invest our cash
reserves, might prevent us to access that cash for an uncertain period of
time.
We may fail to maintain effective
internal control over financial reporting in accordance with Section 404 of the
Sarbanes-Oxley Act of 2002.
The
Sarbanes-Oxley Act of 2002 imposes certain duties on us and our executives and
directors. Our efforts to comply with the requirements of Section 404, which
started in connection with our Annual Report on Form 20-F for the fiscal year
ended December 31, 2007, have resulted in increased general and administrative
expense and a diversion of management time and attention, and we expect these
efforts to require the continued commitment of resources. Section 404 of the
Sarbanes-Oxley Act of 2002 requires (i) management’s annual review and
evaluation of our internal control over financial reporting and (ii) an
attestation report issued by an independent registered public accounting firm on
our internal control over financial reporting, in connection with the filing of
our Annual Report on Form 20-F for each fiscal year (such requirement is
currently expected to be applicable to us starting with our Annual Report on
Form 20-F for the fiscal year ending December 31, 2010). We have documented and
tested our internal control systems and procedures in order for us to comply
with the requirements of Section 404. While our assessment of our internal
control over financial reporting resulted in our conclusion that as of December
31, 2008, our internal control over financial reporting was effective, we cannot
predict the outcome of our testing in future periods. If we fail to maintain the
adequacy of our internal controls, we may not be able to ensure that we can
conclude on an ongoing basis that we have effective internal controls over
financial reporting. Failure to maintain effective internal control over
financial reporting could result in investigation or sanctions by regulatory
authorities, and could have a material adverse effect on our operating results,
investor confidence in our reported financial information, and the market price
of our ordinary shares.
S-11
Risks
Related to Operations in Israel
Potential
political, economic and military instability in Israel may adversely affect our
growth and revenues.
Our
principal offices and manufacturing facilities and many of our suppliers are
located in Israel. Although most of our sales are currently being made outside
Israel, political, economic and military conditions in Israel directly affect
our operations. Following the recession and the instability that characterized
the Israeli economy during the years 2001 and 2003, the Israeli economy showed
signs of improvement and stability during the years thereafter. However, in 2008
and 2009, the global economic recession, instability and uncertainty affected
the economic conditions in Israel, and as a result, our ability to obtain
financing from Israeli banks was affected.
In
addition, since the establishment of the State of Israel in 1948, a number of
armed conflicts have occurred between Israel and its Arab neighbors. In July
2006, there have been extensive hostilities along Israel’s northern border with
Lebanon and to a lesser extent in the Gaza Strip. Since June 2007, the Hamas
militant group has taken over the Gaza Strip from the Palestinian Authority, and
the hostilities along Israel’s border with the Gaza Strip have increased,
escalating to a wide scale attack by Israel in December 2008, in retaliation to
rocket attacks into southern Israel. The resumption of hostilities in the
region, and the on-going tension in the region, have a negative effect on the
stability of the region which might have a negative effect on our business and
harm our growth and revenues.
Our
operations may be disrupted by the obligation of key personnel to perform
military service.
Some of
our executive officers and employees in Israel are obligated to perform up
to 84 days of military reserve service on a three year basis until the
age of 40 for soldiers and until the age of 45 for officers. This time-period
may be extended by the Military Chief of the General Staff and the approval of
the Minister of Defense or by a directive of the Minister of Defense in the
event of a declared national emergency. Our operations could be disrupted by the
absence for a significant period of one or more of our executive officers or key
employees due to military service. To date, our operations have not been
materially disrupted as a result of these military service obligations. Any
disruption in our operations due to such obligations would adversely affect our
ability to produce and market our existing products and to develop and market
future products.
Provisions
of our amended and restated articles of association and Israeli law may delay,
prevent or make difficult an acquisition of Nova, which could prevent a change
of control and negatively affect the price of our ordinary shares.
Israeli
corporate law regulates mergers, requires tender offers for acquisitions of
shares above specified thresholds, requires special approvals for transactions
involving directors, officers or significant shareholders and regulates other
matters that may be relevant to these types of transactions. Furthermore,
Israeli tax considerations may make potential transactions unappealing to us or
to some of our shareholders.
These
provisions of Israeli law may delay, prevent or make difficult an acquisition of
Nova, which could prevent a change of control and therefore depress the price of
our shares.
The rights and responsibilities of
our shareholders are governed by Israeli law and differ in some respects from
the rights and responsibilities of shareholders under U.S.
law.
We are
incorporated under Israeli law. The rights and responsibilities of holders of
our ordinary shares are governed by our amended and restated articles of
association and by the Israeli Companies Law, 5759-1999, or the “Companies Law”.
These rights and responsibilities differ in some respects from the rights and
responsibilities of shareholders in typical U.S. corporations. In particular,
pursuant to the Companies Law each shareholder of an Israeli company has to act
in good faith in exercising his or her rights and fulfilling his or her
obligations toward the company and other shareholders and to refrain from
abusing his power in the company, including, among other things, in voting at
the general meeting of shareholders and class meetings, on amendments to a
company’s articles of association, increases in a company’s authorized share
capital, mergers, and transactions requiring shareholders’ approval under the
Companies Law. In addition, a controlling shareholder of an Israeli company or a
shareholder who knows that it possesses the power to determine the outcome of a
shareholder vote or who has the power to appoint or prevent the appointment of a
director or officer in the company, or has other powers toward the company has a
duty of fairness toward the company. However, Israeli law does not define the
substance of this duty of fairness. Because Israeli corporate law has undergone
extensive revision in recent years, there is little case law available to assist
in understanding the implications of these provisions that govern shareholder
behavior.
Because
most of our revenues are generated in U.S. dollars, but a significant portion of
our expenses is incurred in currencies other than U.S. dollars, and mainly New
Israeli Shekels, our profit margin may be seriously harmed by currency
fluctuations.
We
generate most of our revenues in U.S. dollars, but incur a significant portion
of our expenses in currencies other than U.S. dollars, and mainly New Israeli
Shekels, commonly referred to as NIS. As a result, we are exposed to risk of
devaluation of the U.S. dollar in relation to the NIS and other currencies. In
that event, the dollar cost of our operations in countries other than the U.S.
will increase and our dollar measured results of operations will be adversely
affected. During 2009, the U.S. dollar depreciated against the NIS by 0.7%,
after revaluating approximately 1% in 2008 and devaluating approximately 9% in
2007. We cannot predict the future trends in the rate of devaluation or
revaluation of the U.S. dollar against the NIS, and our operations also could be
adversely affected if we are unable to hedge against currency fluctuations in
the future.
S-12
We
participate in government programs under which we receive tax and other
benefits. These programs impose restrictions on our ability to use the
technologies developed under these programs. In addition, the reduction or
termination of these programs would increase our costs.
We
receive grants from the Office of the Chief Scientist of the Israeli Ministry of
Industry, Trade and Labor for research and development programs that meet
specified criteria. We are also eligible to receive tax benefits under Israeli
law for capital investments that are designated as “approved enterprises”. To
maintain our eligibility for these programs and tax benefits, we must continue
to meet certain conditions, including paying royalties related to grants
received and making specified investments in fixed assets. Some of these
programs also restrict our ability to manufacture particular products and
transfer particular technology, which was developed as part of the “approved
enterprises” outside of Israel, by requiring approval of the research and
development committee nominated by the Office of the Chief Scientist of the
Israeli Ministry of Industry, Trade and Labor under applicable law. Such
approval may be given only if the recipient abides by all the provisions of the
law and related regulations. Approval to manufacture products outside of Israel
or consent to the transfer of technology, if requested, might not be
granted.
If we
fail to comply with these conditions in the future, the benefits received could
be cancelled. We could also be required to pay increased taxes or refund any
benefits previously received, adjusted for inflation and interest. In 2007 and
in 2006, we recorded an aggregate of $2.4 million and $1.9 million,
respectively, in grants under Israeli government programs, and in 2008 we
recorded $1.9 million in grants under Israeli government programs. As of
September 30, 2009, our contingent liability to the Office of the Chief
Scientist for grants received was approximately $9.9 million. From time to time,
we submit requests for new grants from the Office of the Chief Scientist and for
expansion of our approved enterprise programs. These requests might not be
approved. Also, the Israeli government may reduce or eliminate these benefits in
the future. The termination or reduction of these grants or tax benefits could
harm our business, financial condition and results of operations. In addition,
if we increase our activities outside Israel due to, for example, future
acquisitions, our increased activities generally will not be eligible for
inclusion in Israeli tax benefit programs. Accordingly, our effective corporate
tax rate could increase significantly in the future.
Any
shareholder with a cause of action against us as a result of buying, selling or
holding our ordinary shares may have difficulty asserting a claim under U.S.
securities laws or enforcing a U.S. judgment against us or our officers,
directors or Israeli auditors.
We are
organized under the laws of the State of Israel, and we maintain most of our
operations in Israel. Most of our officers and directors as well as our Israeli
auditors reside outside of the United States and a substantial portion of our
assets and the assets of these persons are located outside the United States.
Therefore, if you wish to enforce a judgment obtained in the United States
against us, or our officers, directors and auditors, you will probably have to
file a claim in an Israeli court. Additionally, you might not be able to bring
civil actions under U.S. securities laws if you file a lawsuit in Israel. We
have been advised by our Israeli counsel that Israeli courts generally enforce a
final executory judgment of a U.S. court for liquidated amounts in civil matters
after a hearing in Israel. If a foreign judgment is enforced by an Israeli
court, it will be payable in Israeli currency. However, payment in the local
currency of the country where the foreign judgment was given shall be
acceptable, subject to applicable foreign currency restrictions.
Our
shares are listed for trade on more than one stock exchange, and this may result
in price variations.
Our
ordinary shares are listed for trading on The NASDAQ Global Market and on the
Tel Aviv Stock Exchange. This may result in price variations. Our ordinary
shares are traded on these markets in different currencies, U.S. dollars on The
NASDAQ Global Market and New Israeli Shekels on the Tel Aviv Stock Exchange.
These markets have different opening times and close on different days.
Different trading times and differences in exchange rates, among other factors,
may result in our shares being traded at a price differential on these two
markets. In addition, market influences in one market may influence the price at
which our shares are traded on the other.
We
may be classified as a passive foreign investment company and, as a result, our
U.S. shareholders may suffer adverse tax consequences.
Generally,
if for any taxable year 75% or more of our gross income is passive income, or at
least 50% of our assets are held for the production of, or produce, passive
income, we may be characterized as a passive foreign investment company for U.S.
federal income tax purposes. Our passive income would not include income derived
from the sale of our products, but would include amounts derived by reason of a
temporary investment of any cash amounts. Characterization as a
passive foreign investment company could result in adverse U.S. tax consequences
to our shareholders, including having gain realized on the sale of our shares
being treated as ordinary income, as opposed to capital gain income, and having
potentially punitive interest charges applied to such sales proceeds. U.S.
shareholders should consult with their own U.S. tax advisors with respect to the
U.S. tax consequences of investing in our ordinary shares.
Passive foreign investment company status is determined as of the
end of a full tax year and is dependent on a number of factors, including the
value of a corporation’s assets, the trading price of our ordinary shares and
the amount and type of its gross income. Therefore, there can be no assurances
that we will not become a passive foreign investment company for the current
fiscal year ending on December 31, 2010, or any future year.
S-13
Risks Related to This
Offering
Investors
will incur an immediate dilution from the public offering price.
Because
the price per share of our ordinary shares being offered is substantially higher
than the book value per share of our ordinary shares, you will suffer
substantial dilution in the net tangible book value of the ordinary shares you
purchase in this offering. Based on the assumed public offering price of $4.55
per share, the closing price of our ordinary shares on The NASDAQ Global Market
on February 2, 2010, if you purchase ordinary shares in this offering, you will
suffer immediate and substantial dilution of $2.90 per ordinary share in the net
tangible book value of the ordinary shares, as of September 30, 2009. See
“Dilution” for a more detailed discussion of the dilution you will incur in this
offering.
A
substantial percentage of our outstanding shares may be sold in this offering,
which could cause the price of our ordinary shares
to decline.
Pursuant
to this offering, we will sell 3,500,000 ordinary shares, or approximately
18.0%, of our outstanding ordinary shares as of September 30, 2009. This
sale and any future sales of a substantial number of ordinary shares in the
public market, or the perception that such sales may occur, could adversely
affect the price of our ordinary shares. We cannot predict the effect, if any,
that market sales of those ordinary shares or the availability of those ordinary
shares for sale will have on the market price of our ordinary
shares.
Our management has broad discretion
over the use of proceeds from this offering.
Our
management and board of directors have significant flexibility in applying, and
retain significant discretion with respect to the use of, the proceeds that we
receive from this offering. The proceeds of this offering may be used in a
manner that does not generate favorable returns. We could use such net
proceeds for purposes other than those contemplated at the time of this
offering.
We
may need additional funds in the future. We may be unable to obtain additional
funds or if we obtain financing it may not be on terms favorable to us. You may
lose your entire investment.
Based on
our current plans, we believe our existing cash and cash equivalents along with
cash generated from operations will be sufficient to fund our operating expenses
and capital requirements through December 31, 2010, although there is no
assurance of this result, and we may need funds in the future. If our capital
resources are insufficient to meet future capital requirements, we will have to
raise additional funds. If we are unable to obtain additional funds on terms
favorable to us, we may be required to cease or reduce our operating
activities.
We
do not anticipate paying any dividends.
No
dividends have been paid on our ordinary shares. We do not intend to pay cash
dividends on our ordinary shares in the foreseeable future, and anticipate that
profits, if any, received from operations will be devoted to our future
operations. Any decision to pay dividends will depend upon our profitability at
the time, cash available and other relevant factors.
This
prospectus supplement, the accompanying prospectus, and the information
incorporated by reference herein and therein contain forward-looking statements
which involve known and unknown risks and uncertainties. We include this notice
for the express purpose of permitting us to obtain the protections of the safe
harbor provided by the Private Securities Litigation Reform Act of 1995 with
respect to all such forward-looking statements. Examples of forward-looking
statements include: projections of capital expenditures, competitive pressures,
revenues, growth prospects, product development, financial resources and other
financial matters. You can identify these and other forward-looking statements
by the use of words such as “may,” “plans,” “anticipates,” “believes,”
“estimates,” “predicts,” “intends,” “potential” or the negative of such terms,
or other comparable terminology.
Our
ability to predict our operating results or the effects of various events on our
operating results is inherently uncertain. Therefore, we caution you to consider
carefully the matters described under the caption “Risk Factors” on
page S-6 of this prospectus supplement, and certain other matters discussed
in this prospectus supplement, the accompanying prospectus, and the information
incorporated by reference herein and therein, and other publicly available
sources. Such factors and many other factors beyond the control of our
management could cause our actual results, performance or achievements to be
materially different from any future results, performance or achievements that
may be expressed or implied by the forward-looking statements.
S-14
We
estimate that the net proceeds from the sale of 3,500,000 of our ordinary shares
in this offering will be approximately $14.7 million at an assumed offering
price of $4.55 per ordinary share, the closing price of our ordinary shares on
The NASDAQ Global Market on February 2, 2010, and after deducting underwriting
discounts and commissions and estimated offering expenses payable by us. If the
underwriters’ over-allotment option is exercised in full, we estimate that we
will receive net proceeds of approximately $16.9 million, after deducting
underwriter discounts and commissions and estimated offering expenses payable by
us.
We
currently intend to use the net proceeds we receive from this offering for
general corporate purposes.
The
amounts and timing of our use of proceeds will vary depending on a number of
factors, including the amount of cash generated or used by our operations, and
the rate of growth, if any, of our business. As a result, our management will
have broad discretion in the allocation of the net proceeds of this offering
for any purpose, and
investors will be relying on the judgment of our management with regard to the
use of these net proceeds. In addition, while we have not entered into
any agreements, commitments or understandings relating to any significant
transaction as of the date of this prospectus supplement, we may use a portion
of the net proceeds to pursue acquisitions, joint ventures and other strategic
transactions.
Pending
the final application of the net proceeds of this offering, we intend to invest
the net proceeds of this offering in interest-bearing and investment-grade
securities.
S-15
If you
purchase our ordinary shares in this offering, your interest will be diluted to
the extent of the difference between the public offering price per share and the
net tangible book value per share of our ordinary shares after this offering.
Our net tangible book value as of September 30, 2009, was approximately $23.2
million, or approximately $1.20 per ordinary share. Net tangible book value per
share is equal to total assets minus the sum of total liabilities and intangible
assets divided by the total number of shares outstanding. Unless
otherwise noted, all information contained in this dilution section assumes that
the underwriters do not exercise their over-allotment option.
Dilution
in net tangible book value per share to new investors represents the difference
between the amount per share paid by purchasers of shares of ordinary shares in
this offering and the net tangible book value per ordinary share immediately
after completion of this offering. After giving effect to the sale of 3,500,000
ordinary shares in this offering at an assumed public offering price of $4.55
per share, the closing price of our ordinary shares on The NASDAQ Global Market
on February 2, 2010, and after deducting the underwriting discounts and
commissions and estimated offering expenses, our net tangible book value as of
September 30, 2009, would have been $37.8 million, or $1.65 per share. This
amount represents an immediate increase in net tangible book value to existing
shareholders of $3.35 per share and an immediate dilution in net tangible book
value of $2.90 per share to purchasers of shares of ordinary shares in this
offering, as illustrated in the following table (without giving effect to the
over-allotment option granted to the underwriters):
|
Assumed
public offering price per ordinary share
|
$
|
4.55
|
||||
| Net tangible book value per share as of September 30, 2009 |
|
$
|
1.20
|
|||
| Increase in net tangible book value per share after giving effect to this offering |
|
$
|
0.45
|
|
||
|
|
|
|||||
|
Pro
forma net tangible book value per share as of September 30,
2009
|
|
|
$
|
1.65
|
||
|
|
|
|||||
|
Dilution
in net tangible book value per share to new investors
|
|
|
$
|
2.90
|
This
table assumes no exercise of outstanding options or warrants or vesting or
outstanding restricted share units. To the extent that options or warrants are
exercised, there will be further dilution to new investors.
If the
underwriters’ over-allotment option is exercised in full, our pro forma net
tangible book value per share after giving effect to this offering would be
$1.71 per share, and the dilution in pro forma net tangible book value per share
to investors in this offering would be $2.84 per share.
The as
adjusted information discussed above is illustrative only. Our net tangible book
value following the completion of the offering is subject to adjustment based on
the actual offering price of our ordinary shares and other terms of this
offering determined at pricing.
S-16
The
following table sets forth our consolidated capitalization as of
September 30, 2009:
|
•
|
on
an actual basis; and
|
|
|
•
|
on
an as adjusted basis to give effect to our sale of 3,500,000 ordinary
shares at an assumed public offering price of $4.55 per share, the closing
price for our ordinary shares on The NASDAQ Global Market on February 2,
2010), after deducting an assumed underwriting discount and estimated
offering expenses payable by us (assuming no exercise of the underwriters’
option to purchase an additional 525,000
ordinary shares).
|
The
information set forth in the following table should be read in conjunction with
and is qualified in its entirety by reference to the audited and unaudited
financial statements and notes thereto incorporated by reference in this
prospectus supplement and the accompanying prospectus.
|
As of September 30,
2009
|
||||||||
|
(In
thousands, except share data)
|
Actual
|
As
Adjusted
|
||||||
|
(unaudited)
|
||||||||
|
Shareholders’
equity:
|
||||||||
|
Ordinary
shares, par value NIS 0.01 per share: 40,000,000 shares authorized;
19,456,503 actual shares issued and 19,454,274 actual shares outstanding;
and 22,956,503 shares issued and 22,954,274 shares outstanding(1),
on an as adjusted basis
|
$ | 55 | $ |
64
|
||||
|
Additional
paid-in capital
|
84,447 |
99,098
|
||||||
|
Deferred
equity-based compensation
|
- | - | ||||||
|
Accumulated
other comprehensive income
|
236 | 236 | ||||||
|
Accumulated
deficit
|
(61,555 | ) | (61,555 | ) | ||||
|
Total
shareholders’ equity
|
$ | 23,183 | $ |
37,843
|
||||
|
(1)
|
Based
on 19,454,274 ordinary shares
outstanding as of September 30, 2009. This number does not include, as of
September 30, 2009:
|
| · |
1,453,485
ordinary shares issuable upon the exercise of outstanding warrants at an
exercise price of $3.05 per share;
|
| · |
2,658,476
ordinary shares issuable upon the exercise of outstanding options to
purchase 2,350,946 ordinary shares at a weighted average exercise price of
$1.81 per share, and vesting of 307,530 restricted share units
outstanding; and
|
| · |
1,321,870 ordinary shares
available for grant under our 2007 Incentive
Plan.
|
Our
ordinary shares are listed and traded on The NASDAQ Global Market and on the Tel
Aviv Stock Exchange under the symbol “NVMI”.
For the
month of December, 2009, the daily reported sale prices of our ordinary shares
on The NASDAQ Global Market ranged from a high of $6.55 to a low of $3.77 per
ordinary share, and, on the Tel Aviv Stock Exchange, from a high of 25.00 NIS to
a low of 14.41 NIS per ordinary share.
For the
forth quarter of 2009, the daily reported sale prices of our ordinary shares on
the The NASDAQ Global Market ranged from a high of $6.55 to a low of $2.60 per
ordinary share, and, on the Tel Aviv Stock Exchange, from a high of 25.00 NIS to
a low of 9.71 NIS per ordinary share.
For the
month of January, 2010, the daily reported sale prices of our ordinary shares on
The NASDAQ Global Market ranged from a high of $6.72 to a low of $4.40 per
ordinary share, and, on the Tel Aviv Stock Exchange, from a high of 25.94 NIS to
a low of 16.50 NIS per ordinary share.
For the
partial month of February 1 through February 2, 2010, the daily reported sale
prices of our ordinary shares on The NASDAQ Global Market ranged from a high of
$4.62 to a low of $4.31 per ordinary share, and, on the Tel Aviv Stock Exchange,
from a high of 17.05 NIS to a low of 15.89 NIS per ordinary share from February
1 through February 3, 2010.
S-17
The
following is the list of our senior management and directors:
|
Name
|
Age
|
Position
|
||
|
Micha
Brunstein
|
66 |
Chairman
of the board of directors
|
||
|
Giora
Dishon
|
65 |
Director
and co-founder
|
||
|
Avi
Kerbs
|
63 |
Director
|
||
|
Alon
Dumanis
|
59 |
Director
|
||
|
Dan
Falk
|
65 |
External
Director
|
||
|
Naama
Zeldis
|
46 |
External
Director
|
||
|
Avi
Cohen
|
56 |
Director
|
||
|
Gabi
Seligsohn
|
43 |
President
and Chief Executive Officer
|
||
|
Dror
David
|
40 |
Chief
Financial Officer
|
||
|
Avi
Magid
|
48 |
Executive
Vice President Global Business Management Group
|
||
|
Gabi
Sharon
|
47 |
Vice
President Operations
|
||
|
Boaz
Brill
|
45 |
Vice
President Technology Development
|
||
|
Hila
Mukevisius
|
35 |
Vice
President Human Resources
|
Our
directors (other than the external directors) serve as such until the next
annual general meeting of our shareholders. Our external directors, in
accordance with Israeli law, serve for a three-year term, which may be renewed
for one additional three-year term and thereafter for additional three-year
terms, if both the audit committee and the board of directors confirm that in
light of the expertise and contribution of the external director, the extension
of such external director’s term would be in the interest of our company. Mr.
Dan Falk was elected in 2005 to serve for a three-year term that expired in 2008
and was re-elected in 2008 for an additional three-year term. Ms. Zeldis was
elected in 2006 to serve for a three-year term that expired in 2009 and was
re-elected in 2009 for an additional three-year term.
Dr. Micha Brunstein was named
chairman of our board of directors in June 2006, after serving as member of our
board of directors from November 2003. During the years 1990 and 1999, Dr.
Brunstein served as Managing Director of Applied Materials Israel Ltd. Prior to
that, Dr. Brunstein served as President of Opal Inc., and as a Director of New
Business Development in Optrotech Ltd. At present, Dr. Brunstein serves as a
board member of Ham-let Ltd., a company listed on the Tel Aviv Stock Exchange
and Valor Computerized Systems Ltd., a company listed on the Frankfurt Stock
Exchange. He is a chairman and serves on boards of directors of several
privately owned companies. Dr. Brunstein holds a B.Sc. in Mathematics and
Physics from the Hebrew University, Jerusalem, and a M.Sc. and a Ph.D. in
Physics from Tel Aviv University.
Dr. Giora Dishon is a
co-founder of Nova and served as President and Chief Executive Officer since
Nova’s formation in 1993 until August 2006. From 1989 to 1993 he served as Thin
Film and Flat Panel Display Product Line Manager at Orbot Systems and Orbotech
Ltd., a manufacturer of automated optical inspection equipment. From 1986 to
1988 he was a Visiting Scientist at the Microelectronics Center of North
Carolina, and from 1982 to 1986 he served as Managing Director at AVX Israel
Ltd., a manufacturer of electronic devices. Dr. Dishon is a founder of several
private companies, and also serves on the boards of several privately owned
companies, as chairman and director. Dr. Dishon holds a B.Sc. in Chemistry, a
M.Sc. and a Ph.D. in Materials Science from the Hebrew University, Jerusalem,
Israel.
Mr. Avi Kerbs has served as a
director of Nova since 1993. He serves as the President and Chief Executive
Officer of Teuza Management & Development Ltd., the management company of
Teuza-A Fairchild Technology Venture Ltd., a venture capital company and has
served in this capacity since 1991. Teuza-A Fairchild Technology Venture Ltd. is
a major shareholder of Nova. He serves as a director of most of the companies
comprising the investment portfolio of the Teuza Fund. Mr. Kerbs holds a B.Sc.
in Industrial Engineering and Management and a M.Sc. in Industrial Management
from the Technion - Israel Institute of Technology. Mr. Kerbs serves as a member
of the Technion’s Board of Governors and the Haifa University Board of
Governors. Mr. Kerbs is also a member of the Board of CPI – Cerebral Palsy
International Foundation in the U.S. and a member of the board & executive
committee of Amit (Alfred Mann Institute) in the Technion. Mr. Kerbs was
originally appointed to our board of directors by Teuza.
S-18
Dr. Alon Dumanis, has served
as a director of Nova from 2002. He is the Chief Executive Officer of Docor
International Management, a Dutch investment company, subsidiary of The Van-Leer
Group Foundation. Dr. Dumanis is currently a chairman of XSight System, Softlib,
DNR Imaging, and a member of the board of directors of Spectronix (TASE-SPCT)
and other Hi Tech companies in Docor’s investment portfolio. Dr. Dumanis is a
former member of the board of directors of Tadiran Communications (TASE-TDCM), a
former member of the board of directors of El Al Israel Airlines (TASE-LY), and
a former member of the board of directors of Inventech Investments Co. Ltd.
(TASE-IVTC). Previously, Dr. Dumanis was the Head of the Material Command in the
Israel Air Force at the rank of Brigadier General. Dr. Dumanis currently serves
as chairman and member of several national steering committees and is the author
of many papers published in a number of subject areas, including technology and
management. Dr. Dumanis holds a Ph.D. in Aerospace Engineering from Purdue
University, West Lafayette, Indiana, USA.
Mr. Dan Falk was elected as
the Company’s external director in accordance with the provisions of the
Companies Law in 2005, and was re-elected for an additional term on September
25, 2008. Mr. Falk is a business consultant to public and private companies.
During 1999 to 2000, Mr. Falk served as Chief Executive Officer and Chief
Operating Officer of Sapiens International NV. Prior to that, Mr.
Falk served as Executive Vice President and Chief Financial Officer of
Orbotech Ltd. Mr. Falk serves as a member of various companies’ boards of
directors such as Orbotech Ltd., Nice Systems Ltd., Ormat Technologies, Inc.,
Attunity Ltd., Jacada Ltd., (all of which are companies publicly traded in the
United States). Mr. Falk also serves as the chairman of the board of directors
of Orad Hi-tech Systems Ltd., AVT Ltd., Amiad Filtration Systems, Oridion
Medical Ltd. (all of which are companies publicly traded in Europe) and
Plastopil Ltd. (traded on Tel Aviv Stock Exchange). Mr. Falk’s son-in-law
is a partner at Gross, Kleinhendler, Hodak, Halevy, Greenberg & Co., our
outside counsel.
Ms. Naama Zeldis was elected
as the Company’s external director in accordance with the provisions of the
Companies Law in 2006, and was re-elected for an additional term in 2009. Ms.
Zeldis has been serving as Chief Financial Officer of Netafim Ltd. since
December 2005. Prior to that, she served as Chief Financial Officer of EDS
Israel, Radguard, and Director of Finance of RAD Data Communications. Ms. Zeldis
is a former member of the board of directors and of the audit committee of
Metalink. Ms. Zeldis holds a B.A. in Economics and an M.A. in Business
Administration, majoring in Financing, from the Hebrew University of Jerusalem
and a B.A. in Accounting from Tel-Aviv University.
Mr. Avi Cohen was elected to
serve as a director of Nova by its board of directors on February 18, 2008. Mr.
Cohen serves as President and Chief Executive Officer at Orbit Technologies, a
public company traded on the Tel Aviv Stock Exchange. Orbit is a leading
designer, developer, and manufacturer of a wide range of advanced communication
systems for the commercial and defense markets. Prior to joining Orbit in
December 2008, Mr. Cohen served as Chief Operating Officer and Deputy to the CEO
at ECI Telecom Ltd. a leading supplier of best-in-class networking
infrastructure equipment for carrier and service provider networks worldwide.
Prior to joining ECI in September 2006, Mr. Cohen served in a variety of
management positions at KLA-Tencor. From 2003 he was a Group Vice
President, Corporate Officer and Member of the Executive Management Committee
based at the corporate headquarters in the U.S. During his tenure, he
successfully led the creation of KLA-Tencor’s global Metrology Group. From
1995 he was the President of KLA-Tencor Israel responsible for the Optical
Metrology Division. Before joining KLA-Tencor, Mr. Cohen also spent three
years as Managing Director of Octel Communications, Israel, after serving as
Chief Executive Officer of Allegro Intelligent Systems, which he founded and
which was acquired by Octel. Mr. Cohen holds B.Sc. and M.Sc. degrees in
electrical engineering and applied physics from Case Western Reserve University,
USA.
Mr. Gabi Seligsohn has served
as the President and Chief Executive Officer since August 2006. Having joined
Nova in 1998, Mr. Seligsohn has served in several key positions in the Company
including as the Executive Vice President, Global Business Management Group from
August 2005 to August 2006. From August 2002 until August 2005 he was
President of Nova’s U.S. Subsidiary, Nova Measuring Instruments Inc. Prior to
that he was Vice President Strategic Business Development at Nova Measuring
Instruments Inc. where he established Nova’s OEM group managing the Applied
Materials and Lam Research accounts between the year 2000 to 2002. From 1998 to
2000 he served as Global Strategic Account Manager for the Company’s five
leading customers. Mr. Seligsohn joined Nova after two years service as Sales
Manager for key financial accounts at Digital Equipment Corporation. Mr.
Seligsohn holds an LL.B. from the University of Reading, Reading,
England.
Mr. Dror David has served as
the Chief Financial Officer since November 2005. Mr. David joined Nova in April
1998, as the Company’s Controller, and since than served in various financial
and operational positions, including the position of Vice President of
Resources, in which he was responsible for the finance, operations, information
systems and human resources functions of the Company. Mr. David was also a
leading member in the Company’s initial public offering on NASDAQ in 2000 and
the Company’s private placement in 2007. Prior to joining Nova, Mr. David spent
five years in public accounting with Delloitte Touch in Tel Aviv, specializing
in industrial high-tech companies. Mr. David is a Certified Public Accountant in
Israel, holds a B.A. in Accounting and Economics from Bar Ilan University, and
an M.B.A. from Derby University of Britain.
Mr. Avi Magid has served as
Executive Vice President Global Business Management since November 2006. From
2001 to 2006, Mr. Magid served as Managing Director and Vice President at
Kulicke & Soffa, a leading supplier of semiconductor assembly equipment.
From 2000 to 2001, Mr. Magid served as Deputy Managing Director for Business
Development at K&S Micro Swiss LTD. Prior to that, Mr. Magid served as
Managing Director and Deputy Managing Director for Sales & Marketing at
Semitec, Santa Clara, CA. Mr. Magid holds a B.A. in Industrial Engineering from
Polytechnic University-Pomona, Pomona, California.
S-19
Mr. Gabi Sharon is serving as Vice
President of Operations since September 2006. Having joined Nova in 1995, Mr.
Sharon served in several key positions in the Company including as Global
Customer Support Manager from September 1995 to September 2004. From September
2004 until September 2006 Mr. Sharon managed the Product Development Division,
and spearheaded the NovaScan 3090 product line and its successful market launch.
For a period of 2 years, from 2004 to 2006, he also served as the Product
Marketing Manager and led the initial penetration of the Copper CMP
market. Prior to joining Nova Mr. Sharon served as Project Manager in ECI
Israel. Mr. Sharon holds a B.Sc. in Computer Science from Northeastern
University, Boston, Massachusetts, and a M.Sc. in Technology Management from
Polytechnic University, New York.
Dr. Boaz Brill is serving as
Vice President Technology Development since September 2006. Dr. Brill has been
with Nova since 1999 and was the lead scientist who managed Nova’s entry into
the Optical CD market and developed the NovaScan 3090 platform. A well-known
technologist, he headed Nova’s Physics department. From 1995 until 1999, Dr.
Brill served as System Engineer and Project Manager at El-Op Ltd. Dr. Brill
holds a B.Sc. in Physics and Mathematics from the Hebrew University, Jerusalem,
M.Sc and Ph.D in Physics from the Weizmann Institute of Science, Rehovot, Israel
and MBA from Bradford University, UK. He has published over 10 patents and
patent applications, mostly in the field of Optical CD.
Ms. Hila Mukevisius is
serving as Vice President Human Resources since May 2008. Ms. Mukevisius joined
Nova after 8 years at Amdocs, a market leader in customer experience systems
innovations, where she held several positions as HR Director of large scale
global groups. Ms. Mukevisius holds a B.A. in Behavioral Science from the
College of Management, Academic Studies, Tel Aviv, Israel, specializing in
organization development.
S-20
Israeli
Taxation
The
following is a summary of the principal Israeli tax laws applicable to us, and
of the Israeli government programs benefiting us. This summary does not discuss
all the acts of Israeli tax law that may be relevant to a particular investor in
light of his or her personal investment circumstances or to some types of
investors subject to special treatment under Israeli law. Examples of this kind
of investor include residents of Israel, traders in securities or persons that
own, directly or indirectly, 10% or more of our outstanding voting capital, all
of whom are subject to special tax regimes not covered in this discussion. Some
parts of this discussion are based on new tax legislation which has not been
subject to judicial or administrative interpretation. The discussion should not
be construed as legal or professional tax advice and does not cover all possible
tax consequences.
SHAREHOLDERS
ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE ISRAELI OR OTHER TAX
CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF OUR ORDINARY SHARES,
INCLUDING, IN PARTICULAR, THE EFFECT OF ANY FOREIGN, STATE OR LOCAL
TAXES.
General
Corporate Tax Structure in Israel
The
corporate tax rate applicable in 2009 was 26%. This rate was reduced to 25% in
2010 and is scheduled to be reduced to 18% by 2016.
However,
as discussed below, the rate is effectively reduced for income derived from an
Approved Enterprise/Privileged Enterprise.
Law
for the Encouragement of Capital Investments, 1959
General. The Law for the
Encouragement of Capital Investments, 1959, or the “Investment Law”, provides
that a capital investment in eligible facilities may, upon application to the
Investment Center of the Ministry of Industry Trade, and Labor of the State of
Israel, or the “Investment Center”, be designated as an Approved Enterprise.
Each certificate of approval for an Approved Enterprise relates to a specific
investment program delineated both by its financial scope, including its capital
sources, and by its physical characteristics, e.g., the equipment to be
purchased and utilized pursuant to the program. The tax benefits derived from
any such certificate of approval relate only to taxable income attributable to
the specific Approved Enterprise.
Subject
to certain provisions concerning income and subject to the Alternative Benefits
(see below), any distributed dividends are deemed attributable to the entire
enterprise, and the effective tax rate and the effective withholding tax rates
represent the weighted combination of the various applicable tax
rates.
Tax Benefits. Taxable income
of a company derived from an Approved Enterprise is subject to corporate tax at
the rate of up to 25%, instead of the tax rates under the “General Corporate Tax
Structure in Israel” above, for a certain period of time. The benefit period is
a period of seven years commencing in the year in which the Approved Enterprise
first generates taxable income. The benefits may be shorter as it is limited to
12 years from the commencement of production of the Approved Enterprise or 14
years from the date of approval, whichever is earlier. Under certain
circumstances (as further detailed below), the benefit period may extend to a
maximum of ten years from the commencement of the benefit period. A company
which operates under more than one approval or that has capital investments
which are only partly approved (such a company being designated as a Mixed
Enterprise), may have an effective company tax rate that is the result of a
weighted combination of the various applicable rates.
A company
owning an Approved Enterprise which was approved after April 1, 1986 may elect
to forego the entitlement to grants or state guarantees and apply for an
alternative package of tax benefits. These benefits provide that undistributed
income from the Approved Enterprise is fully tax exempt from corporate tax for a
defined period, which ranges between two and ten years from the first year of
taxable income, subject to the limitations described above, depending
principally upon the geographic location within Israel and the type of the
Approved Enterprise. Upon expiration of such period, the Approved Enterprise is
subject to tax at the rate of 25% (or a lower rate in the case of an FIC, as
described below), for the remainder of the otherwise applicable period of
benefits, as described above.
S-21
Should
the percentage of share capital of the companies having Approved Enterprises
held by foreign shareholders exceed 25%, future Approved Enterprises of such
companies would qualify for reduced tax rates for an additional three years,
after the seven years mentioned above. The company tax rate applicable to income
earned from Approved Enterprise programs in the benefit period by a company
meeting these qualifications is as follows:
|
%
of Foreign Ownership
|
Tax
Rate
|
|||
|
Over
25% but less than 49%
|
25 | % | ||
|
49%
or more but less than 74%
|
20 | % | ||
|
74%
or more but less than 90%
|
15 | % | ||
|
90%
or more
|
10 | % | ||
Entitlement
to these tax benefits for enterprises to which Investment Center granted an
Approved Enterprise status prior to December 31, 2004 is subject to the final
ratification of the Investment Center, and is conditioned upon fulfillment of
all terms of the approved program. However, there can be no assurance that our
company, which currently enjoys Approved Enterprise benefits, will obtain
approval for additional Approved Enterprises, or that the provisions of the
Investment Law will not change with respect to future approvals, or that the
above-mentioned shareholding portion will be reached for each subsequent year.
In the event of our failure to comply with these conditions, the tax and other
benefits could be canceled, in whole or in part, and we might be required to
refund the amount of the canceled benefits, together with the addition of
Israeli CPI linkage difference and interest. We believe that our Approved
Enterprise substantially complies with all such conditions at present, but there
can be no assurance that it will continue to do so.
A company
that pays a dividend out of income derived from the Approved Enterprise(s)
during the tax exemption period will be subject to deferred corporate tax in
respect of the amount distributed (including the recipient’s tax thereon) at the
rate which would have been applicable had such company not elected the
Alternative Package. This rate is generally 10% to 25%, depending, as described
above, on the extent to which non-Israeli shareholders hold such company’s
shares.
The
dividend recipient is taxed at the reduced rate applicable to dividends from
Approved Enterprises (generally 15% as compared to 20%/25% for individuals or an
exemption for Israeli resident companies), if the dividend is distributed during
the tax benefit period or within 12 years after this period. However, the
limitation does not apply if the company qualifies as a foreign investors’
company. This tax must be withheld by such company at source, regardless of
whether the dividend is converted into foreign currency.
Subject
to certain provisions concerning income subject to Mixed Enterprises, all
dividends are considered to be attributable to the entire enterprise and the
effective tax rate on the dividend is the result of a weighted combination of
the various applicable tax rates. However, such company is not obliged to
distribute exempt retained profits under the Alternative Package, and such
company may generally decide from which year’s profits to declare
dividends.
Each
application to the Investment Center is reviewed separately, and a decision as
to whether or not to approve such application is based, among other things, on
the then prevailing criteria set forth in the Investment Law, on the specific
objectives of the applicant company set forth in such application and on certain
financial criteria of the applicant company. Accordingly, there can be no
assurance that any such application by our company will be approved. In
addition, the benefits available to an Approved Enterprise are conditional upon
the fulfillment of certain conditions stipulated in the Investment Law and its
regulations and the criteria set forth in the certificate of approval, as
described above. In the event that these conditions are violated, in whole or in
part, a company with an Approved Enterprise would be required to refund the
amount of tax benefits, with the addition of the Israeli CPI linkage differences
and interest.
A company
which qualifies as a foreign investment company, or “FIC”, is a company in which
more than 25% of the share capital (in terms of shares, rights to profit, voting
rights and appointment of directors) and of the combined share and loan capital
is owned, directly or indirectly, by non-residents of Israel and is therefore
entitled to further tax benefits relating to its approved enterprises. Such a
company will be eligible for an extension of the period of tax benefits for its
approved enterprises (up to ten years) and further tax benefits, should the
level of foreign ownership in it increase above 49%.
S-22
From time
to time, the government of Israel has discussed reducing the benefits available
to companies under the Investment Law and currently such proposal is
pending.
Amendment no. 60.
Notwithstanding the foregoing, an amendment to the Investments Law, which
effective as of April 1, 2005, has changed certain provisions of the Investments
Law. The amendment includes revisions to the criteria for investments qualified
to receive tax benefits as a “Privileged Enterprise”. This amendment applies to
new investment programs and investment programs commencing after 2004, and does
not apply to investment programs approved prior to December 31, 2004. However, a
company that was granted benefits according to section 51 of the Investments Law
prior to the amendment would not be allowed to apply for benefits under the new
amendment for a period of three years from the date of commencement of the
beginning of the year the privileged enterprise was operated (reduced to a
period of two years under certain conditions). According to the amendment, only
Approved Enterprises receiving cash grants require the prior approval of the
Investment Center.
The
Amendment does not apply to benefits included in any certificate of approval
that was granted before the amendment came into effect, which will remain
subject to the provisions of the Investments Law as they were on the date of
such approval.
The basic
condition for receiving the benefits for a “Privileged Enterprise” under this
track is that the enterprise contributes to the country’s economic independence
and is a competitive factor for the Gross Domestic Product (a “Competitive
Enterprise”). In order to comply with this condition, the Investment Law
prescribes various requirements regarding industrial enterprises. In each tax
year during the benefit period, one of the following conditions must be
met:
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1.
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The
enterprise’s main activity is in the area of biotechnology or
nanotechnology as approved by the Head of the Administration of Industrial
Research and Development, prior to the approval of the aforementioned
plan.
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2.
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The
enterprise’s revenues during the tax year from the plant’s sales in a
certain market do not exceed 75% of total revenues from the plant’s total
sales during that tax year. A “market” is defined as a distinct country or
customs territory.
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3.
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25%
or more of the enterprise’s total revenues from the plant’s sales during
the tax year are from sales to a certain market that numbers at least 12
million residents.
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An
industrial enterprise that sells a specific product that constitutes a component
in another product manufactured by another industrial enterprise (which is, or
was, a beneficiary enterprise or an approved enterprise), the enterprise must
meet the conditions stipulated in the relevant regulations regarding the
encouragement of capital investments.
In order
to receive the tax benefits, the amendment states that a company must make an
investment in the Privileged Enterprise exceeding a certain percentage or a
minimum amount specified in the Investments Law. Such investment may be made
over a period of no more than three years, ending at the end of the year in
which the company requested to have the tax benefits apply to the Privileged
Enterprise (the “Year of Election”). Where the company requests to have the tax
benefits apply to an expansion of existing facilities, then only the expansion
will be considered a Privileged Enterprise and the company’s effective tax rate
will be the result of a weighted combination of the applicable rates. In this
case, the minimum investment required in order to qualify as a Privileged
Enterprise is required to exceed a certain percentage or a minimum amount of the
company’s production assets before the expansion.
S-23
The
duration of these tax benefits is limited to the earlier of seven
to ten years from the Commencement Year or 12 years from the first day of
the Year of Election. Commencement Year is defined as the later of the first tax
year in which a company had derived liable income for tax purposes from the
Privileged Enterprise, or the year of election which is the year in which a
company requested to have the tax benefits apply to the Privileged Enterprise.
The tax benefits granted to a Privileged Enterprise are determined, depending on
the geographic location of the Privileged Enterprise within Israel, inter alia,
according to one of the following:
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1.
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Similar
to the currently available Alternative Track, exemption from corporate tax
may be available on undistributed income for a period of two to ten years,
depending on the geographic location of the Privileged Enterprise within
Israel, and a reduced corporate tax rate of 10% to 25% for the remainder
of the benefit period, depending on the level of foreign investment in
each year. Benefits may be granted for a term of seven to ten years,
depending on the level of foreign investment in the company. If the
company pays a dividend out of income derived from the Privileged
Enterprise during the tax exemption period, such income will be subject to
corporate tax at the applicable rate (10%-25%) with respect to the gross
amount of the dividend that we may distribute. The company is required to
withhold tax on such distribution at a rate of 15%;
or
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2.
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A
special track which enables companies owning facilities in certain
geographical locations in Israel to pay corporate tax at the flat rate of
11.5% on income of the Privileged Enterprise (the “Ireland Track”). The
benefit period is for ten years. Upon payment of dividends, the company is
required to withhold tax on such dividend at a rate of 15% for Israeli
residents and at a rate of 4% for foreign
residents.
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Generally,
a company that is abundant in foreign investment (owned by at least 74% foreign
shareholders and has undertaken to invest a minimum sum of $20 million in the
Privileged Enterprise) is entitled to an extension of the benefit period by an
additional five years, depending on the rate of its income that is derived in
foreign currency.
The
amendment changes the definition of “Foreign Investment” in the Investments Law
so that the new definition requires a minimal investment of NIS 5 million by
foreign investors. Furthermore, the new definition also includes the purchase of
shares of a company from another shareholder, provided that the company’s
outstanding and paid-up share capital exceeds NIS 5 million. Such changes to the
aforementioned definition will take effect retroactively from 2003.
Law
for the Encouragement of Industry (Taxes), 1969
Pursuant
to the Law for the Encouragement of Industry (Taxes), 1969, a company qualifies
as an “Industrial Company” if it is a resident of Israel and at least 90% of its
gross income in any tax year (exclusive of income from certain defense loans,
capital gains, interest and dividends) is derived from an “industrial
enterprise” it owns. An “industrial enterprise” is defined as an enterprise
whose major activity, in a given tax year, is industrial
manufacturing.
Industrial
Company is entitled to certain tax benefits, including a deduction of 12.5% per
annum on the cost of purchase of patents or certain other intangible property
rights (other than goodwill) used for the development or promotion of the
industrial enterprise over a period of eight years beginning with the year in
which such rights were first used.
The tax
laws and regulations dealing with the adjustment of taxable income for local
inflation provide that an industrial enterprise is eligible for special rates of
depreciation deductions. These rates vary in the case of plant and machinery
according to the number of shifts in which the equipment is being operated and
range from 20% to 40% on a straight-line basis, or 30% to 50% on a declining
balance basis (instead of the regular rates which are applied on a straight-line
basis).
Moreover,
industrial enterprises which are Approved Enterprises/Privileged Enterprise (see
above) can choose between (a) the special rates referred to above and (b)
accelerated regular rates of depreciation applied on a straight-line basis with
respect to property and equipment, generally ranging from 200% (with respect to
equipment) to 400% (with respect to buildings) of the ordinary depreciation
rates during the first five years of service of these assets, provided that the
depreciation on a building may not exceed 20% per annum. In no event may the
total depreciation exceed 100% of the cost of the asset.
In
addition, Industrial Companies may (i) elect to file consolidated tax returns
with additional related Israeli Industrial Companies and (ii) deduct expenses
related to public offerings in equal amounts over a period of
three-years.
Eligibility
for benefits under the Encouragement of Industry Law is not contingent upon the
approval of any governmental authority.
S-24
Taxation
of Shareholders
Capital
Gains
Capital
gain tax is imposed on the disposal of capital assets by an Israeli resident,
and on the disposal of such assets by a non- Israel resident if those assets are
either (i) located in Israel; (ii) are shares or a right to a share in an
Israeli resident corporation, or (iii) represent, directly or indirectly, rights
to assets located in Israel. The Israeli Income Tax Ordinance distinguishes
between “Real Gain” and the “Inflationary Surplus”. Real Gain is the excess of
the total capital gain over Inflationary Surplus computed generally on the basis
of the increase in the Israeli CPI between the date of purchase and the date of
disposal.
The
capital gain accrued by individuals on the sale of an asset purchased on or
after January 1, 2003 will be taxed at the rate of 20%. However, if the
individual shareholder is a “Controlling Shareholder” (i.e., a person
who holds, directly or indirectly, alone or together with other, 10% or more of
one of the Israeli resident company’s means of control) at the time of sale or
at any time during the preceding 12 months period such gain will be taxed at the
rate of 25%. In addition, capital gain derived by an individual claiming
deduction of financing expenses in respect of such gain will be taxed at the
rate of 25%. The real capital gain derived by corporation will be generally
subject to a 25% tax rate (corporate tax rate in 2010 and onwards). However, the
real capital gain derived from sale of securities, as defined in Section 6 of
the Inflationary Adjustment Law, by a corporation, which was subject on August
10, 2005 to the provisions of Section 6 of the Inflationary Adjustment Law, will
be taxed at the corporate tax rate (26% in 2009 and 25% in 2010). The capital
gain accrued on the sale of an asset purchased prior to January 1, 2003 will be
subject to tax at a blended rate. The marginal tax rate for
individuals (up to 46% in 2009 and 45% in 2010) and the regular corporate tax
rate for corporations (26% in 2009 and 25% in 2010) will be applied to the
portion of the gain amount which bears the same ratio to the total gain realized
as the ratio which the holding period commencing at the acquisition date and
terminating on January 1, 2003 bears to the total holding period. The
remainder of the gain realized will be subject to capital gains tax at the rates
applicable to an asset purchased after January 1, 2003 (see
aforementioned).
Individual
and corporate shareholder dealing in securities in Israel are taxed at the tax
rates applicable to business income (26% in 2009 and 25% in 2010 tax rate for a
corporation and a marginal tax rate of up to 46% in 2009 and 45% in 2010 for
individual). Notwithstanding the foregoing, capital gain derived from the sale
of securities by a non-Israeli shareholder may be exempt under the Israeli
Income Tax Ordinance from Israeli taxation provided the following cumulative
conditions are met: (i) the securities were purchased upon or after the
registration of the securities on the stock exchange (this condition shall not
apply to shares purchased on or after 1.1.2009), (ii) the seller doesn’t have a
permanent establishment in Israel to which the derived capital gain is
attributed, and (iii) if the seller is a corporation, less than 25% of its means
of control are held, directly and indirectly, by Israeli resident shareholders.
In addition, the sale of the securities may be exempt from Israeli capital gain
tax under the provisions of an applicable tax treaty. Thus, the
U.S.-Israel Double Tax Treaty exempts U.S. resident from Israeli capital gain
tax in connection with such sale, provided (i) the U.S.
resident owned, directly or indirectly, less than 10% of an Israeli
resident company’s voting power at any time within the 12 – month
period preceding such sale; (ii) the seller, being an individual, is present in
Israel for a period or periods of less than 183 days at the taxable year; and
(iii) the capital gain from the sale was not derived through a permanent
establishment of the U.S. resident in Israel.
Either
the seller, the Israeli stockbrokers or financial institution through which the
sold securities are held are obliged, subject to the above mentioned exemptions,
to withhold tax upon the sale of securities from the real capital gain at the
rate of 25% in respect of a corporation and 20% in respect of an
individual.
At the
sale of traded securities a detailed return, including a computation of the tax
due, should be filed and an advanced payment should be paid on January 31 and
June 31 of every tax year in respect of sales of securities made within the
previous six months. However, if all tax due was withheld at source according to
applicable provisions of the Israeli Income Tax Ordinance and regulations
promulgated thereunder the aforementioned return should not be filed and no
advance payment should be paid. Capital gain is also reportable on the annual
income tax return.
Dividends
A
distribution of dividend from income attributed to an Approved
Enterprise/Privileged Enterprise (either to individual or corporation) will be
subject to tax in Israel at the rate of 15%, subject to a reduced rate under the
provisions of any applicable double tax treaty. A distribution of dividend from
income, which is not attributed to an Approved Enterprise/Privileged Enterprise
to an Israeli resident individual, will generally be subject to income tax at a
rate of 20%. However, a 25% tax rate will apply if the dividend recipient is a
“Controlling Shareholder” at the time of distribution or at any time during the
preceding 12 months period. If the recipient of the dividend is an Israeli
resident corporation, such dividend will be exempt from income tax provided the
income from which such dividend is distributed was derived or accrued within
Israel.
S-25
Under the
Israeli Income Tax Ordinance, a non-Israeli resident (either individual or
corporation) is generally subject to an Israeli income tax on the receipt of
dividends at the rate of 20% (25% if the dividends recipient is a “Controlling
Shareholder” (as defined above), at the time of distribution or at any time
during the preceding 12 months period); those rates are subject to a reduced tax
rate under the provisions of an applicable double tax treaty. Thus, under the
U.S.-Israel Double Tax Treaty the following rates will apply in respect of
dividends distributed by an Israeli resident company to a U.S. resident: (i) if
the U.S. resident is a corporation which holds during that portion of the
taxable year which precedes the date of payment of the dividend and during the
whole of its prior taxable year (if any), at least 10% of the outstanding shares
of the voting stock of the Israeli resident paying corporation and not more then
25% of the gross income of the Israeli resident paying corporation for such
prior taxable year (if any) consists of certain type of interest or dividends –
the tax rate is 12.5%, (ii) if both the conditions mentioned in section (i)
above are met and the dividend is paid from an Israeli resident company’s income
which was entitled to a reduced tax rate applicable to an Approved
Enterprise/Privileged Enterprise – the tax rate is 15%, and (iii) in all other
cases, the tax rate is 25%. The aforementioned rates under the Israel U.S.
Double Tax Treaty will not apply if the dividend income was derived through a
permanent establishment of the U.S. resident in Israel.
An
Israeli resident company whose shares are listed in a stock exchange is
obligated to withhold tax, upon the distribution of a dividend attributed to an
Approved Enterprise’s/Privileged Enterprise income, from the amount distributed,
at the following rates: (i) Israeli resident corporation – 15%, (ii) Israeli
resident individual – 15%, and (iii) non-Israeli resident – 15% (4% under the
Ireland Track), subject to a reduced tax rate under the provisions of an
applicable double tax treaty. If the dividend is distributed from an
income not attributed to the Approved Enterprise/Privileged Enterprise, the
following withholding tax rates will apply: (i) Israeli resident corporation –
0%, (ii) Israeli resident individual – 20% (iii) non-Israeli resident - 20%,
subject to a reduced tax rate under the provisions of an applicable double tax
treaty.
Estate
and Gift Tax
The
Israeli law presently does not impose estate or gift tax.
U.S.
Federal Income Tax Considerations
U.S.
Taxation
The
following discussion describes the material U.S. federal income tax consequences
of the purchase, ownership and disposition of our ordinary shares to a U.S.
holder.
For
purposes of this discussion, a “U.S. holder” is:
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a
natural person who is a citizen or resident of the United
States;
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a
corporation or another entity taxable as a corporation created or
organized under the laws of the United States or any political subdivision
of the United States;
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an
estate, the income of which is includable in gross income for U.S. federal
income tax purposes regardless of its source;
or
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a
trust, if (a) a U.S. court is able to exercise primary supervision over
its administration and (b) one or more U.S. persons have the authority to
control all of its substantial decisions, or if the trust has a valid
election in effect under applicable U.S. Treasury Regulations to be
treated as a U.S. person.
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This
summary is for general information purposes only and does not purport to be a
comprehensive description of all of the U.S. federal income tax considerations
that may be relevant to a decision to purchase, hold or dispose of the Company’s
ordinary shares. This summary generally considers only U.S. holders that will
own the ordinary shares as capital assets and does not consider the U.S. tax
consequences to a person that is not a U.S. holder or the tax treatment of
persons who hold the ordinary shares through a partnership or other pass-through
entity. In addition, the possible application of U.S. federal estate or gift
taxes or any aspect of state, local or non-U.S. tax laws is not considered. This
discussion is based on current provisions of the Internal Revenue Code of 1986,
as amended (the “Code”), current and proposed Treasury Regulations promulgated
under the Code, and administrative and judicial interpretations of the Code, all
as in effect today and all of which may change, possibly with a retroactive
effect.
S-26
This
discussion does not address all aspects of U.S. federal income taxation that may
be relevant to any particular U.S. holder based on the holder’s particular
circumstances, such as,
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persons
who own, directly, indirectly or constructively, 10% or more (by voting
power or value) of our outstanding voting
shares;
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persons
who hold the ordinary shares as part of a hedging, straddle or conversion
transaction;
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persons
whose functional currency is not the U.S.
dollar;
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persons
who acquire their ordinary shares in a compensatory
transaction;
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broker-dealers;
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insurance
companies;
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regulated
investment companies;
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real
estate investment companies;
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traders
who elect to mark-to-market their
securities;
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tax-exempt
organizations;
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banks
or other financial institutions;
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U.S.
expatriates; and
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persons
subject to the alternative minimum
tax.
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EACH
U.S. SHAREHOLDER SHOULD CONSULT HIS OR HER TAX ADVISOR AS TO THE PARTICULAR
TAX CONSEQUENCES TO HIM OR HER OF AN INVESTMENT IN THE ORDINARY SHARES,
INCLUDING THE EFFECTS OF APPLICABLE STATE, LOCAL OR NON-U.S. TAX LAWS AND
POSSIBLE CHANGES IN THE TAX LAWS.
Distributions
on the Ordinary Shares
We
currently do not intend to pay dividends for at least the next several years.
However, if we make any distributions of cash or other property to a U.S. holder
of our ordinary shares, the amount of the distribution for U.S. federal income
tax purposes will equal the amount of cash and the fair market value of any
property distributed and will also include the amount of Israeli taxes withheld,
if any, as described above under “Dividends”. In general (and subject to the
PFIC rules discussed below), any distribution paid by us on the ordinary shares
to a U.S. holder will be treated as dividend income if the distribution does not
exceed our current or accumulated earnings and profits, as determined for U.S.
federal income tax purposes. If holding period and other requirements
are met, dividends paid to non-corporate U.S. holders in taxable years beginning
no later than December 31, 2010 should generally qualify for the reduced maximum
tax rate of 15% as long as our common shares remain “readily tradable on an
established securities market in the United States,” provided that we are not
considered a PFIC (as discussed below) in the taxable year in which the dividend
is paid or in the preceding taxable year. Dividends paid to
non-corporate U.S. holders in taxable years beginning after December 31, 2010
(and earlier dividends if we are a PFIC (as discussed below)) will be taxable at
regular ordinary income rates. The amount of any distribution which
exceeds these earnings and profits will be treated first as a non-taxable return
of capital, reducing the U.S. holder’s tax basis in its ordinary shares to the
extent thereof, and then as capital gain, and as long-term capital gain if the
U.S. holder’s holding period exceeds one year, from the deemed disposition of
the ordinary shares (subject to the PFIC rules discussed
below). Corporate holders generally will not be allowed a deduction
for dividends received on the ordinary shares.
S-27
A
dividend paid by us in NIS will be included in the income of U.S. holders at the
U.S. dollar value of the dividend, based upon the spot rate of exchange in
effect on the date of the distribution. U.S. holders will have a tax basis in
NIS for U.S. federal income tax purposes equal to that U.S. dollar value. Any
subsequent gain or loss resulting from exchange rate fluctuations between the
day the dividend was included in the income of U.S. holders and the day the NIS
are converted into U.S. dollars or are otherwise disposed of, will be taxable as
ordinary income, gain or loss from U.S. sources.
Dividends
paid by us generally will be foreign source “passive income” for U.S. foreign
tax credit purposes or, in the case of a U.S. holder that is a financial
services entity, “financial services income.” U.S. holders may elect to claim as
a foreign tax credit against their U.S. federal income tax liability the Israeli
income tax withheld from dividends received on the ordinary shares. The Code
provides limitations on the amount of foreign tax credits that a U.S. holder may
claim. U.S. holders that do not elect to claim a foreign tax credit may instead
claim a deduction for Israeli income tax withheld, but only for a year in which
these U.S. holders elect to do so for all foreign income taxes. The rules
relating to foreign tax credits are complex (and may also be impacted by the tax
treaty between the United States and Israel), and you should consult your tax
advisor to determine whether and if you would be entitled to this
credit.
Sale
or Exchange of the Ordinary Shares
Upon the
sale or exchange of the ordinary shares (subject to the PFIC rules discussed
below), a U.S. holder generally will recognize capital gain or loss in an amount
equal to the difference between the amount realized on the sale or exchange and
the U.S. holder’s tax basis in the ordinary shares. The gain or loss recognized
on the sale or exchange of the ordinary shares generally will be long-term
capital gain or loss if the U.S. holder’s holding period of the ordinary shares
is more than one year at the time of the disposition.
Gain or
loss recognized by a U.S. holder on a sale or exchange of ordinary shares
generally will be treated as U.S. source income or loss for U.S. foreign tax
credit purposes. Under the tax treaty between the United States and Israel, gain
derived from the sale, exchange or other disposition of ordinary shares by a
holder who is a resident of the U.S. for purposes of the treaty and who sells
the ordinary shares within Israel may be treated as foreign source income for
U.S. foreign tax credit purposes.
Passive
Foreign Investment Company Status
In
general, a foreign (i.e., non-U.S.) corporation will be a passive foreign
investment company (a “PFIC”) for any taxable year in which, after
applying the relevant look-through rules with respect to the income and assets
of its subsidiaries, either (1) 75% or more of its gross income in the taxable
year is “passive income,” or (2) assets held for the production of, or that
produce, passive income comprise 50% or more of the average of its total asset
value in the taxable year. For purpose of the income test, passive
income includes dividends, interest, royalties, rents, annuities and net gains
from the disposition of assets, which produce passive income. For purposes of
the assets test, assets held for the production of passive income includes
assets held for the production of, or that produce dividends, interest,
royalties, rents, annuities, and other income included in the income test. In
determining whether we meet the assets test, cash is considered a passive asset
and the total value of our assets generally will be treated as equal to the sum
of the aggregate fair market value of our outstanding stock plus our
liabilities. If we own at least 25% (by value) of the stock of another
corporation, we will be treated, for purposes of the PFIC tests, as owning our
proportionate share of the other corporation’s assets and receiving our
proportionate share of the other corporation’s income. The income
test is conducted at the taxable year-end. The asset test is conducted on a
quarterly basis and the quarterly results are then averaged
together.
If a
corporation is treated as a PFIC for any year during a U.S. holder’s holding
period and the U.S. holder does not timely elect to treat the corporation as a
“qualified electing fund” under Section 1295 of the Code or elect to mark its
ordinary shares to market (both as described below), any gain on the disposition
of the shares will be treated as ordinary income, rather than capital gain, and
the holder will be required to compute its tax liability on that gain, as well
as on dividends and other distributions, as if the income had been earned
ratably over each day in the U.S. holder’s holding period for the shares. The
portion of the gain and distributions allocated to prior taxable years in which
a corporation was a PFIC will be ineligible for any preferential tax rate
otherwise applicable to any “qualified dividend income” or capital gains, and
will be taxed at the highest ordinary income tax rate in effect for each taxable
year to which this portion is allocated. An interest charge will be imposed on
the amount of the tax allocated to these taxable years. A U.S. holder may elect
to treat a corporation as a qualified electing fund only if the corporation
complies with requirements imposed by the IRS to enable the shareholder and the
IRS to determine the corporation’s ordinary income and net capital gain.
Additionally, if a corporation is a PFIC, a U.S. holder who acquires shares in
the corporation from a decedent will be denied the normally available step-up in
tax basis to fair market value for the shares at the date of death and instead
will have a tax basis equal to the decedent’s tax basis if lower than fair
market value. These adverse tax consequences associated with PFIC status could
result in a material increase in the amount of tax that a U.S. holder would owe
and an imposition of tax earlier than would otherwise be imposed and additional
tax form filing requirements.
Status of Nova as a PFIC.
Under the income test, less than 75% of our gross income was passive income in
2009. For 2009,
while we continued to have substantial amounts of cash and short-term deposits
and the market value of our ordinary shares continued to be volatile and
decreased, a determination of the value of our assets by reference to the
average market value of our ordinary shares and our liabilities results in a
conclusion that the average value of our passive assets did not exceed 50% of
the average value of our gross assets in 2009. Nonetheless, there is a risk that
we were a PFIC in 2009 or we will be a PFIC in 2010 or subsequent years. For
example, taking into account our existing cash balances, if the value of our
stock were to decline materially, it is possible that we could become a PFIC in
2010 or a subsequent year. Additionally, due to the complexity of the
PFIC provisions and the limited authority available to interpret such
provisions, there can be no assurance that our determination regarding our PFIC
status could not be successfully challenged by the IRS.
S-28
Available Elections. If we
become as a PFIC for any taxable year, U.S. holders should consider whether or
not to elect to treat us as a “qualified electing fund” or to elect to
“mark-to-market” their ordinary shares in order to mitigate the adverse tax
consequences of PFIC status.
If a U.S.
holder makes a qualified electing fund election (a “QEF election”) for its
ordinary shares that is effective from the first taxable year that the U.S.
holder holds our ordinary shares and during which we are a PFIC, the electing
U.S. holder will avoid the adverse consequences of our being classified as a
PFIC but will instead be required to include in income a pro rata share of our
net capital gain, if any, and other earnings and profits (“ordinary earnings”)
as long-term capital gains and ordinary income, respectively, on a current
basis, in each case whether or not distributed, in the taxable year of the U.S.
holder in which or with which our taxable year ends. A subsequent distribution
of amounts that were previously included in the gross income of U.S. holders
should not be taxable as a dividend to those U.S. holders who made a QEF
Election. In the event we incur a net loss for a taxable year, such
loss will not be available as a deduction to an electing U.S. holder, and may
not be carried forward or back in computing our net capital gain or ordinary
earnings in other taxable years. The tax basis of the shares of an
electing U.S. holder generally will be increased by amounts that are included in
income, and decreased by amounts distributed but not taxed as dividends, under
the QEF rules described above. In order to make (or maintain) a QEF
election, the U.S. holder must annually complete and file IRS Form 8621. In
addition, we must make certain information regarding our net capital gains and
ordinary earnings available to the U.S. holder and permit our books and records
to be examined to verify such information. Therefore, we will monitor our PFIC
status and make a disclosure to our shareholders if we determine that we have
become a PFIC. If we are a PFIC for any year and you make a request
to us in writing at the address on the cover of our latest Annual Report on Form
20-F, Attention Chief Financial Officer, for the information required to make a
QEF election, we will promptly make the information available to you and comply
with any other applicable requirements of the Code.
A QEF
election, once made with respect to us, applies to the tax year for which it was
made and to all subsequent tax years, unless the election is invalidated or the
IRS consents to revocation of the election. If you make a QEF
election and we cease to be classified as a PFIC in a subsequent tax year, the
QEF election will remain in effect, although it will not be applicable during
those tax years in which we are not classified as a PFIC. Therefore, if we –
after ceasing to be classified as a PFIC – again are classified as a PFIC in a
subsequent tax year, the QEF election will be effective and you will again be
subject to the rules described above for U.S. holders making QEF elections in
such tax year and any subsequent tax years in which we are classified as a
PFIC. A QEF election also remains in effect even after you dispose of
all of your direct and indirect interest in our ordinary shares. As a result, if
you subsequently acquire any of our ordinary shares or an interest in any of our
ordinary shares, you will again be subject to the rules described above for U.S.
holders making a QEF election for each tax year in which we are classified as a
PFIC.
Alternatively,
if a U.S. holder elects to “mark-to-market” its ordinary shares, the U.S. holder
will generally include in its income any excess of the fair market value of our
ordinary shares at the close of each taxable year over the holder’s adjusted
basis in such ordinary shares. If a U.S. holder makes a valid mark-to-market
election with respect to our ordinary shares for the first taxable year of the
U.S. holder in which the U.S. holder holds (or is deemed to hold) our ordinary
shares and for which we are determined to be a PFIC, such holder generally will
not be subject to the PFIC rules described above in respect to its common
shares. A U.S. holder generally will be allowed an ordinary deduction
for the excess, if any, of the adjusted tax basis of the ordinary shares over
the fair market value of the ordinary shares as of the close of the taxable
year, or the amount of any net mark-to-market gains recognized for prior taxable
years, whichever is less. A U.S. holder’s adjusted tax basis in the ordinary
shares will generally be adjusted to reflect the amounts included or deducted
under the mark-to-market election. Additionally, any gain on the actual sale or
other disposition of the ordinary shares generally will be treated as ordinary
income. Ordinary loss treatment also will apply to any loss recognized on the
actual sale or other disposition of ordinary shares to the extent that the
amount of such loss does not exceed the net mark-to-market gains previously
included with respect to such ordinary shares. A mark-to-market
election applies to the tax year for which the election is made and to each
subsequent year, unless our ordinary shares cease to be marketable, as
specifically defined, or the IRS consents to revocation of the election. No view
is expressed regarding whether our ordinary shares are marketable for these
purposes or whether the election will be available.
If a U.S.
holder makes either the QEF election or the mark-to-market election,
distributions and gain will not be recognized ratably over the U.S. holder’s
holding period or be subject to an interest charge as described above. Further,
the denial of basis step-up at death described above will not apply. If a U.S.
holder elects to treat us as a “qualified electing fund,” gain on the sale of
the ordinary shares will be characterized as capital gain. However, U.S. holders
making one of these two elections may experience current income recognition,
even if we do not distribute any cash. The elections must be made with the U.S.
holder’s federal income tax return for the year of election, filed by the due
date of the return (as it may be extended) or, under certain circumstances
provided in applicable Treasury Regulations, subsequent to that
date.
The
foregoing discussion relating to the QEF election and mark-to-market elections
assumes that a U.S. holder makes the applicable election with respect to the
first year in which Nova qualifies as a PFIC. If the election is not made for
the first year in which Nova qualifies as a PFIC, the procedures for making the
election and the consequences of election will be different.
A NUMBER
OF SPECIFIC RULES AND REQUIREMENTS APPLY TO BOTH THE QEF ELECTION AND THE
MARK-TO-MARKET ELECTION, AND YOU ARE URGED TO CONSULT YOUR TAX ADVISOR
CONCERNING OUR PFIC STATUS AND THE VARIOUS ELECTIONS YOU CAN MAKE.
S-29
United
States Information Reporting and Backup Withholding
Dividend
payments and proceeds from the sale or disposal of ordinary shares may be
subject to information reporting to the Internal Revenue Service and possible
U.S. federal backup withholding at the rate of 28%. Certain holders (including,
among others, corporations) are generally not subject to information reporting
and backup withholding. A U.S. holder generally will be subject to
backup withholding if such holder is not otherwise exempt and such
holder:
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fails
to furnish its taxpayer identification number, or TIN, which, for an
individual, is ordinarily his or her social security
number,
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furnishes
an incorrect TIN,
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is
notified by the IRS that it is subject to backup withholding because it
has previously failed to properly report payments of interest or
dividends, or
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fails
to certify, under penalties of perjury, that it has furnished a correct
TIN and that the IRS has not notified the U.S. holder that it is subject
to backup withholding.
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Any U.S.
holder who is required to establish exempt status generally must file Internal
Revenue Service Form W-9 (“Request for Taxpayer Identification Number and
Certification”).
Amounts
withheld as backup withholding may be credited against a U.S. holder’s federal
income tax liability. A U.S. holder may obtain a refund of any excess amounts
withheld under the backup withholding rules by filing the appropriate claim for
refund with the Internal Revenue Service and furnishing any required
information.
S-30
Under the
terms and subject to the conditions in an underwriting agreement dated the date
of this prospectus supplement, the underwriters named below, for whom Needham & Company, LLC
is acting as representative, have agreed to purchase, and we have agreed
to sell to them, the number of shares of our ordinary shares at the public
offering price, less the underwriting discounts and commissions, as set forth on
the cover page of this prospectus supplement as indicated below:
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Underwriter
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Number
of Ordinary Shares
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Needham
& Company, LLC
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Roth
Capital Partners, LLC
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Total:
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The
underwriters are offering our ordinary shares subject to their acceptance of the
shares from us and subject to prior sale. The underwriting agreement provides
that the obligations of the underwriters to pay for and accept delivery of our
ordinary shares offered by this prospectus supplement are subject to the
approval of certain legal matters by their counsel and to other conditions. The
underwriters are obligated to take and pay for all of the ordinary shares
offered by this prospectus supplement if any such shares are taken.
The
underwriters have an option to buy up to 525,000 additional ordinary shares from
us to cover sales of shares by the underwriters which exceed the number of
shares specified in the table above. The underwriters may exercise this option
at any time and from time to time during the 30-day period from the date of this
prospectus supplement. If any additional ordinary shares are purchased, the
underwriters will offer the additional shares on the same terms as those on
which the shares are being offered.
The
underwriters initially propose to offer the ordinary shares directly to the
public at the public offering price listed on the cover page of this prospectus
supplement. After the initial offering of the ordinary shares, the offering
price and other selling terms may from time to time be varied by the
underwriters.
The
underwriting agreement provides that the obligations of the underwriters are
subject to certain conditions precedent, including the absence of any material
adverse change in our business and the receipt of customary legal opinions,
letters and certificates.
Commissions
and Discounts
The
following table shows the public offering price, underwriting discount and
proceeds before expenses to us.
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Total
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Per Unit
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Without
Over-Allotment
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With
Over-Allotment
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Public
offering price
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$ | $ | $ | |||||||||
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Underwriting
discount
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$ | $ | $ | |||||||||
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Proceeds,
before expenses, to us
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$ | $ | $ | |||||||||
The
expenses of the offering, not including the underwriting discounts and
commissions, payable by us are estimated to be $270,000, which includes up
to $125,000 of legal fees and up to $25,000 of other out-of-pocket expenses
incurred that we have agreed to reimburse the underwriters in connection
with this offering.
Quotation
on The NASDAQ Global Market, Listing on Tel Aviv Stock Exchange and Transfer
Agent
Our
ordinary shares are listed on the The NASDAQ Global Market and Tel Aviv Stock
Exchange under the symbol “NVMI.”
The
transfer agent and registrar for our ordinary shares is BNY Mellon Shareowner
Services, P.O. Box 358016, Pittsburgh, PA 15252-8016.
No
Sales of Similar Securities
We, each
of our executive officers and directors and one of our affiliated shareholder,
subject to certain exceptions, have agreed with Needham & Company, LLC to
enter into a lock-up agreement pursuant to which they will not to dispose of or
hedge any of our ordinary shares for 60 days after the date of this prospectus
without first obtaining the written consent of Needham & Company,
LLC. Clal Electronics Industries Ltd. (“Clal”), an existing
shareholder of the company, has also agreed to enter into a 60 day lock-up
agreement, however, it may sell up to one million ordinary shares of the company
previously held by Clal. The 60-day “lock-up” period during which we and our
executive officers and directors and Clal, are restricted from engaging in
transactions in our ordinary shares is subject to extension such that, in the
event that either (i) during the last 17 days of the “lock-up” period,
we issue an earnings or financial results release or material news or a material
event relating to us occurs, or (ii) prior to the expiration of the
“lock-up” period, we announce that we will release earnings or financial results
during the 16-day period beginning on the last day of the “lock-up” period, then
in either case the expiration of the “lock-up” period will be extended until the
expiration of the 18-day period beginning on the issuance of the earnings or
financial results release or the occurrence of the material news or material
event, as applicable, unless Needham & Company, LLC waives, in writing, such
an extension.
S-31
Price
Stabilization, Short Positions
In order
to facilitate the offering of the ordinary shares, the underwriters may engage
in transactions that stabilize, maintain or otherwise affect the price of the
ordinary shares. Specifically, the underwriters may sell more shares than they
are obligated to purchase under the underwriting agreement, creating a short
position. The underwriters must close out any short position by purchasing
shares in the open market. A short position may be created if any of the
underwriters is concerned that there may be downward pressure on the price of
the ordinary shares in the open market after pricing that could adversely affect
investors who purchased in this offering. As an additional means of facilitating
this offering, each underwriter may bid for, and purchase, shares of our
ordinary shares in the open market to stabilize the price of the ordinary
shares. These activities may raise or maintain the market price of our ordinary
shares above independent market levels or prevent or slow a decline in the
market price of our ordinary shares. The underwriter are not required to engage
in these activities, and may end any of these activities at any
time.
We and
the underwriters have agreed to indemnify each other against certain
liabilities, including liabilities under the Securities Act or to contribute to
payments the underwriters may be required to make in respect of those
liabilities.
A
prospectus in electronic format may be made available on websites maintained by
the underwriters. The underwriters may agree to allocate a number of our
ordinary shares to each of the underwriters for sale to such underwriter’s
online brokerage account holders. Internet distributions will be allocated by
the underwriters on the same basis as other allocations.
Israel
To the
extent that the offer of the ordinary shares is made in the State of Israel, the
offer is only addressed to persons who qualify as one of the types of
investors listed in the First Schedule to the Securities Law, 5728-1968, of the
State of Israel, who are purchasing the ordinary shares for their own account,
or for the account of other persons who so qualify, and not for purposes of
distribution.
United
Kingdom
This
document is only being distributed to and is only directed at (i) persons
who are outside the United Kingdom or (ii) to investment professionals
falling within Article 19(5) of the Financial Services and Markets Act 2000
(Financial Promotion) Order 2005 (the “Order”) or (iii) high net worth
entities, and other persons to whom it may lawfully be communicated, falling
within Article 49(2)(a) to (e) of the Order (all such persons together
being referred to as “relevant persons”). The ordinary shares are only available
to, and any invitation, offer or agreement to subscribe, purchase or otherwise
acquire such ordinary shares will be engaged in only with, relevant persons. Any
person who is not a relevant person should not act or rely on this document or
any of its contents.
Each
underwriter has represented and agreed that:
(a) it
has only communicated or caused to be communicated and will only communicate or
cause to be communicated an invitation or inducement to engage in investment
activity (within the meaning of Section 21 of the Financial Services and
Markets Act 2000 or FSMA) received by it in connection with the issue or sale of
the shares in circumstances in which Section 21(1) of the FSMA does not
apply to us, and
(b) it
has complied with, and will comply with all applicable provisions of FSMA with
respect to anything done by it in relation to the shares in, from or otherwise
involving the United Kingdom.
European
Economic Area
To the
extent that the offer of the ordinary shares is made in any Member State of the
European Economic Area that has implemented the Prospectus Directive before the
date of publication of a prospectus in relation to the ordinary shares which has
been approved by the competent authority in the Member State in accordance with
the Prospectus Directive (or, where appropriate, published in accordance with
the Prospectus Directive and notified to the competent authority in the Member
State in accordance with the Prospectus Directive), the offer (including any
offer pursuant to this document) is only addressed to qualified investors in
that Member State within the meaning of the Prospectus Directive or has been or
will be made otherwise in circumstances that do not require us to publish a
prospectus pursuant to the Prospectus Directive.
S-32
In
relation to each Member State of the European Economic Area which has
implemented the Prospectus Directive (each, a “Relevant Member State”), each of
the underwriters has represented and agreed that with effect from and including
the date on which the Prospectus Directive is implemented in that Relevant
Member State (the “Relevant Implementation Date”) it has not made and will not
make an offer of shares to the public in that Relevant Member State prior to the
publication of a prospectus in relation to the shares which has been approved by
the competent authority in that Relevant Member State or, where appropriate,
approved in another Relevant Member State and notified to the competent
authority in that Relevant Member State, all in accordance with the Prospectus
Directive, except that it may, with effect from and including the Relevant
Implementation Date, make an offer of shares to the public in that Relevant
Member State at any time:
(a) to
legal entities which are authorized or regulated to operate in the financial
markets or, if not so authorized or regulated, whose corporate purpose is solely
to invest in securities,
(b) to
any legal entity which has two or more of (1) an average of at least
250 employees during the last financial year; (2) a total balance
sheet of more than ˆ43,000,000 and (3) an annual net turnover of more than
ˆ50,000,000, as shown in its last annual or consolidated
accounts, or
(c) in
any other circumstances which do not require the publication by us of a
prospectus pursuant to Article 3 of the Prospectus Directive. For the
purposes of this provision, the expression an “offer of shares to the public” in
relation to any shares in any Relevant Member State means the communication in
any form and by any means of sufficient information on the terms of the offer
and the shares to be offered so as to enable an investor to decide to purchase
or subscribe the shares, as the same may be varied in that Relevant Member State
by any measure implementing the Prospectus Directive in that Relevant Member
State and the expression “Prospectus Directive” means Directive 2003/71/EC and
includes any relevant implementing measure in each Relevant Member
State.
The EEA
selling restriction is in addition to any other selling restrictions set out
below. In relation to each Relevant Member State, each purchaser of our ordinary
shares (other than the underwriters) will be deemed to have represented,
acknowledged and agreed that it will not make an offer of our ordinary our
ordinary shares to the public in any Relevant Member State, except that it may,
with effect from and including the date on which the Prospectus Directive is
implemented in the Relevant Member State, make an offer of ordinary shares to
the public in that Relevant Member State at any time in any circumstances which
do not require the publication by us of a prospectus pursuant to Article 3
of the Prospectus Directive, provided that such purchaser agrees that it has not
and will not make an offer of any ordinary shares in reliance or purported
reliance on Article 3(2)(b) of the Prospectus Directive. For the purposes
of this provision, the expression an “offer of Shares to the public” in relation
to any ordinary shares in any Relevant Member State has the same meaning as in
the preceding paragraph.
Certain
matters of United States federal securities law and Israeli law relating to this
offering will be passed upon for us by Gross, Kleinhendler, Hodak, Halevy,
Greenberg & Co., Tel Aviv, Israel. Certain matters of United States federal
securities law relating to this offering will be passed upon for the
underwriters by Proskauer Rose LLP. The validity of the securities offered in
this prospectus will be passed upon for us by Gross, Kleinhendler, Hodak,
Halevy, Greenberg & Co., Tel Aviv, Israel. Certain matters of Israeli law
relating to this offering will be passed upon for the underwriters by Meitar
Liquornik Geva & Leshem Brandwein Law Offices.
The
financial statements as of December 31, 2008 and 2007, and for each of the three
years in the period ended December 31, 2008, incorporated by reference in this
prospectus supplement have been audited by Brightman Almagor Zohar & Co. a
member of Deloitte Touche Tohmatsu, an independent registered public accounting
firm, as stated in their reports, which are incorporated by reference herein,
and have been so incorporated in reliance upon the report of such firm given
upon their authority as experts in accounting and auditing.
We have
filed a registration statement on Form F-3 with the SEC in connection with this
offering. In addition, we file reports with, and furnish information to, the
SEC. You may read and copy the registration statement and any other documents we
have filed at the SEC, including any exhibits and schedules, at the SEC’s public
reference room at 100 F Street N.E., Washington, D.C. 20549. You may call the
SEC at 1-800-SEC-0330 for further information on this public reference room. In
addition, the SEC maintains a web site that contains reports and other
information regarding issuers that file electronically with the SEC. You may
access the SEC's website at http://www.sec.gov. These SEC filings are
also available to the public on the Israel Securities Authority’s Magna website
at www.magna.isa.gov.il and from commercial document retrieval
services.
S-33
This
prospectus supplement is part of the registration statement and does not contain
all of the information included in the registration statement. Whenever a
reference is made in this prospectus supplement to any of our contracts or other
documents, the reference may not be complete and, for a copy of the contract or
document, you should refer to the exhibits that are a part of the registration
statement.
The SEC
allows us to “incorporate by reference” into this prospectus supplement the
information we file with it, which means that we can disclose important
information to you by referring you to those documents. Information incorporated
by reference is part of this prospectus supplement and the accompanying
prospectus. The following documents filed with or furnished to the SEC by our
company are incorporated by reference in the registration
statement:
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our
Annual Report on Form 20-F for the year ended December 31, 2008, as filed
with the SEC on March 30, 2009, to the extent the information in that
report has not been updated or superseded by this prospectus supplement
and the accompanying prospectus;
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our
Report on Form 6-K, furnished to the SEC on May 6,
2009;
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our
Report on Form 6-K, furnished to the SEC on May 7,
2009;
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our
Report on Form 6-K, furnished to the SEC on August 4,
2009;
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our
Report on Form 6-K, furnished to the SEC on August 5,
2009;
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our
Report on Form 6-K, furnished to the SEC on December 8, 2009;
and
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the
description of our ordinary shares which is contained in our registration
statement on Form 8-A filed with the SEC on March 22,
2000.
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All
subsequent annual reports filed by our company pursuant to the Securities
Exchange Act of 1934, as amended (the “Exchange Act”) on Form 20-F prior to the
termination of the offering shall be deemed to be incorporated by reference in
this prospectus supplement and to be a part hereof from the date of filing of
such documents. We may also incorporate any Form 6-K subsequently submitted by
us to the SEC prior to the termination of the offering by identifying in such
Forms 6-K that they are being incorporated by reference herein, and any Forms
6-K so identified shall be deemed to be incorporated by reference in this
prospectus supplement and to be a part hereof from the date of submission of
such documents. Any statement contained in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this prospectus supplement to the extent that a statement
contained herein or in any other subsequently filed document which also is
incorporated or deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
prospectus supplement.
We will
provide to each person, including any beneficial owner, to whom this prospectus
supplement is delivered, a copy of these filings, at no cost, upon written or
oral request to us at: Weizmann Science Park, Einstein St., Building 22, 2nd
Floor, Ness-Ziona, Israel, Attn: Corporate Secretary, telephone number:
972-8-9387505.
A copy of
this prospectus supplement and the accompanying prospectus, our amended and
restated articles of association, are available for inspection at our offices at
Weizmann Science Park, Einstein St., Building 22, 2nd Floor, Ness-Ziona, Israel,
and on the Israel Securities Authority’s Magna website,
www.magna.isa.gov.il.
As a
foreign private issuer, we are exempt from the rules under Section 14 of the
Exchange Act prescribing the furnishing and content of proxy statements and our
officers, directors and principal shareholders are exempt from the reporting and
other provisions in Section 16 of the Exchange Act.
S-34
PROSPECTUS
$20,000,000
Ordinary
Shares
Debt
Securities
Warrants
Subscription
Rights
Units
From time
to time, we may offer and sell up to $20,000,000 of any combination of the
securities described in this prospectus, either individually or in units. We
will provide specific terms of these offerings and securities in one or more
supplements to this prospectus. We may also authorize one or more free writing
prospectuses to be provided to you in connection with these offerings. The
prospectus supplement and any related free writing prospectus may also add,
update or change information contained in this prospectus. You should read this
prospectus, the applicable prospectus supplement and any related free writing
prospectus carefully before buying any of the securities being
offered.
This
prospectus may not be used to consummate a sale of any securities unless
accompanied by a prospectus supplement.
Our
ordinary shares are listed on The NASDAQ Global Market and on the Tel Aviv Stock
Exchange in Israel under the symbol “NVMI.” On December 28, 2009, the last
reported sale price of our ordinary shares on The NASDAQ Global Market was $6.19
per share and on the Tel Aviv Stock Exchange was NIS 24.00 per share. We have
not yet determined whether any of the other securities that may be offered by
this prospectus will be listed on any exchange, inter-dealer quotation system or
over-the-counter market. If we decide to seek listing of any such securities, a
prospectus supplement relating to those securities will disclose the exchange,
quotation system or market on which the securities will be listed.
Investing
in our securities involves a high degree of risk. You should review
carefully the risks and uncertainties described under the heading “Risk Factors”
contained on page 3 herein and in the applicable prospectus supplement and any
related free writing prospectus, and under similar headings in the other
documents that are incorporated by reference into this prospectus.
The
securities may be sold directly by us to investors, through agents designated
from time to time or to or through underwriters or dealers, on a continuous or
delayed basis. For additional information on the methods of sale, you should
refer to the section entitled “Plan of Distribution” in this prospectus. If any
agents or underwriters are involved in the sale of any securities with respect
to which this prospectus is being delivered, the names of such agents or
underwriters and any applicable fees, commissions, discounts and over-allotment
options will be set forth in a prospectus supplement. The price to the public of
such securities and the net proceeds that we expect to receive from such sale
will also be set forth in a prospectus supplement.
None
of the U.S. Securities and Exchange Commission, the Israeli Securities Authority
or any state securities commission have approved or disapproved of these
securities or passed upon the adequacy, completeness or accuracy of this
prospectus. Any representation to the contrary is a criminal offense under the
laws of the United States and the laws of the State of Israel.
The date
of this prospectus is January 4, 2010
Table
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i
This
prospectus is part of a registration statement on Form F-3 that we filed with
the Securities and Exchange Commission, or SEC, utilizing a “shelf” registration
process. Under this shelf registration process, we may from time to time offer
and sell ordinary shares, debt securities, warrants, subscription rights or
units, or any combination of these securities, in one or more offerings up to a
total dollar amount of $20,000,000. This prospectus provides you with a general
description of the securities we may offer. Each time we offer any securities
under this prospectus, we will provide a prospectus supplement that will contain
more specific information about the terms of those securities. We may also
authorize one or more free writing prospectuses to be provided to you that may
contain material information relating to these offerings. This prospectus,
together with applicable prospectus supplements and any related free writing
prospectuses, includes all material information relating to these offerings. We
may also add, update or change in the prospectus supplement (and in any related
free writing prospectus that we may authorize to be provided to you) any of the
information contained in this prospectus or in the documents that we have
incorporated by reference into this prospectus. We urge you to read carefully
this prospectus, any applicable prospectus supplement and any related free
writing prospectus, together with the information incorporated herein by
reference as described under the heading “Where You Can Find Additional
Information,” before buying any of the securities being offered.
This
prospectus may not be used to consummate a sale of securities unless it is
accompanied by a prospectus supplement.
You
should rely only on the information we have provided or incorporated by
reference in this prospectus, any applicable prospectus supplement and any
related free writing prospectus that we may authorize to be provided to you. We
have not authorized anyone to provide you with different information. No dealer,
salesperson or other person is authorized to give any information or to
represent anything not contained in this prospectus, any applicable prospectus
supplement or any related free writing prospectus that we may authorize to be
provided to you. You must not rely on any unauthorized information or
representation. This prospectus is an offer to sell only the securities offered
hereby, but only under circumstances and in jurisdictions where it is lawful to
do so. You should assume that the information in this prospectus, any applicable
prospectus supplement or any related free writing prospectus is accurate only as
of the date on the front of the document and that any information we have
incorporated by reference is accurate only as of the date of the document
incorporated by reference, regardless of the time of delivery of this
prospectus, any applicable prospectus supplement or any related free writing
prospectus, or any sale of a security.
This
prospectus contains summaries of certain provisions contained in some of the
documents described herein, but reference is made to the actual documents for
complete information. All of the summaries are qualified in their entirety by
the actual documents. Copies of some of the documents referred to herein have
been filed with or furnished to the SEC, will be filed with or furnished to the
SEC or will be incorporated by reference as exhibits to the registration
statement of which this prospectus is a part, and you may obtain copies of those
documents as described below under “Where You Can Find Additional
Information.”
In this
prospectus, references to the terms “Nova,” “the Company,” “we,” “us,” “our” and
similar terms, refer to Nova Measuring Instruments Ltd. and its wholly owned
subsidiaries on a consolidated basis, unless we state or the context implies
otherwise.
We are a
worldwide leading designer, developer and producer of integrated and stand-alone
process control metrology systems. Metrology systems measure various thin film
properties and critical circuit dimensions during various steps in the
semiconductor manufacturing process, allowing semiconductor manufacturers to
increase quality, productivity and yields, lower their manufacturing costs and
increase their profitability. We supply our metrology systems to major
semiconductor manufacturers worldwide, either directly or through process
equipment manufacturers. Of the 20 semiconductor manufacturers that had the
highest capital equipment expenditures in 2008, 17 use our systems. Our systems
were first installed in 1995 and, since that time, we have sold more than 1,900
metrology systems.
The
semiconductor manufacturing process starts with a silicon wafer that has been
highly polished on one side to a mirror finish, upon which circuits are
constructed. To construct the circuits, a series of layers of thin films that
act as conductors, semiconductors or insulators are applied to the polished side
of the wafer. During the manufacturing process, these film layers are subjected
to processes which remove portions of the film layers, create circuit patterns
and perform other functions. The semiconductor manufacturing process requires
exacting steps and strict control of equipment performance and process
sequences. Tight control can be achieved through monitoring silicon wafers and
measuring relevant parameters after each process step with metrology tools such
as those we produce.
1
Prior to
the introduction of our integrated metrology systems, process control was
achieved through stand-alone measurement equipment. Stand-alone measurement
equipment requires semiconductor manufacturers to interrupt the manufacturing
process sequence, remove sample silicon wafers from the process equipment and
place the silicon wafers on the stand-alone measuring or inspection tool. In
contrast, our integrated metrology approach is based upon patented measuring
methods that enable us to produce optical measuring systems that are small
enough to be integrated directly inside many types of semiconductor process
equipment. We believe that in several instances during the manufacturing
process, our integrated approach offers considerable advantages over the
conventional stand-alone approach to metrology control, enabling manufacturers
using our integrated equipment to reduce costs and to improve production
efficiency, yield and quality.
We have
always emphasized our integrated metrology solutions as this continues to be an
area where we have a leading position. In addition, in the past few years we
developed and started manufacturing stand-alone metrology systems as well. We
have leveraged our technology, methods, metrology expertise and market position
in the integrated metrology field to expand our offerings of stand-alone
metrology systems. Today, both stand alone and integrated metrology solutions
have reached a level of maturity allowing semiconductor manufactures to choose
how to use either technology and make decisions based on merit specific to the
process step in question, always balancing between the amount of data attained
and the use made of the data for capabilities such as automated process control.
Our long-term strategy is focused on advanced metrology and process control
solutions where our integrated process control products and stand alone products
are compatible or complementary and used in a customized way to meet specific
customer needs.
This
prospectus, including the information incorporated by reference into this
prospectus, contains, and any prospectus supplement may contain, statements that
are forward-looking statements within the meaning of the federal securities
laws. We caution you that any forward-looking statements presented in this
prospectus, or which management may make orally or in writing from time to time,
are based on management’s beliefs and assumptions made by, and information
currently available to, management. When we use the words “believe,” “expect,”
“anticipate,” “plan,” “intend,” “estimate,” “project,” “may,” “will,” “should,”
“continue,” “assume” and other similar expressions, they are generally
forward-looking statements. These statements include, among other things,
statements regarding our intent, belief or expectations with respect
to:
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our
strategic plans;
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our
business outlook;
and
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our
future business and financial
performance.
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These
statements are not guarantees of future performance and are subject to certain
risks, uncertainties, and other factors, some of which are beyond our control,
are difficult to predict, and could cause actual results to differ materially
from those expressed or forecasted in the forward-looking statements. The risks
and uncertainties to which these statements are subject include, but are not
limited to, those risks and uncertainties described in “Risk Factors” and
elsewhere in this prospectus, the accompanying prospectus supplement, and the
documents incorporated by reference herein and therein, and include the
following:
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unanticipated
consequences of the global economic
crisis;
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our
dependency on a single integrated process control product
line;
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the
highly cyclical nature of the markets we
target;
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our
inability to reduce spending during a slowdown in the semiconductor
industry;
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our
ability to respond effectively on a timely basis to rapid technological
changes;
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risks
associated with our dependence on a single manufacturing
facility;
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our
ability to expand our manufacturing capacity or marketing efforts to
support our future growth;
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our
dependency on a small number of large customers and small number of
suppliers;
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risks
related to our intellectual
property;
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changes
in customer demands for our
products;
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new
product offerings from our
competitors;
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changes
in or an inability to execute our business
strategy;
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unanticipated
manufacturing or supply problems;
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2
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changes
in tax requirements;
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changes
in customer demand for our
products;
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risks
related to currency fluctuations;
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risks
related to our operations in Israel;
and
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various
other factors beyond our control.
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We
caution you to carefully consider these risks and not to place undue reliance on
our forward-looking statements. Except as required by law, we assume no
responsibility for updating any forward-looking statements.
Investing
in our securities involves significant risks. Please see the risk factors under
the heading “Risk Factors” in our most recent Annual Report on Form 20-F on
file with the SEC, as revised or supplemented by our reports filed with or
furnished to the SEC since the filing of our most recent Annual Report on
Form 20-F and incorporated by reference in this prospectus. Before making
an investment decision, you should carefully consider these risks as well as
other information we include or incorporate by reference in this prospectus and
any prospectus supplement. The risks and uncertainties we have described are not
the only ones facing our company. Additional risks and uncertainties not
presently known to us or that we currently deem immaterial may also affect our
business operations. The occurrence of any of these risks might cause you to
lose all or part of your investment in the offered securities. The discussion of
risks includes or refers to forward-looking statements; you should read the
explanation of the qualifications and limitations on such forward-looking
statements discussed elsewhere in this prospectus.
3
Our
ordinary shares are listed and traded on The NASDAQ Global Market and on the Tel
Aviv Stock Exchange under the symbol “NVMI”.
The
following table sets forth, for the periods indicated, the high and low reported
sales prices of the ordinary shares on The NASDAQ Global Market and Tel Aviv
Stock Exchange:
|
NASDAQ
GLOBAL MARKET
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TEL
AVIV STOCK EXCHANGE
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|||||||||||||||
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PERIOD
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HIGH
($)
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LOW
($)
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HIGH
(NIS)
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LOW
(NIS)
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||||||||||||
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Last Six Months and
December 2009:
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||||||||||||||||
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June
2009
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1.21 | 0.68 | 8.69 | 2.80 | ||||||||||||
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July
2009
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1.40 | 0.89 | 4.95 | 3.60 | ||||||||||||
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August
2009
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1.74 | 1.15 | 5.99 | 4.54 | ||||||||||||
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September
2009
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2.75 | 1.55 | 10.00 | 5.70 | ||||||||||||
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October
2009
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3.25 | 2.60 | 12.22 | 9.71 | ||||||||||||
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November
2009
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3.97 | 2.69 | 14.86 | 10.54 | ||||||||||||
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December
2009 (Until December 28, 2009).
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6.25
|
3.77
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24.75
|
14.41
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||||||||||||
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Last Eleven Quarters:
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||||||||||||||||
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First
Quarter 2007
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3.10 | 2.17 | 13.50 | 10.36 | ||||||||||||
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Second
Quarter 2007
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3.09 | 2.54 | 12.74 | 10.02 | ||||||||||||
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Third
Quarter 2007
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3.05 | 2.21 | 13.75 | 9.25 | ||||||||||||
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Fourth
Quarter 2007
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2.99 | 2.10 | 13.20 | 8.50 | ||||||||||||
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First
Quarter 2008
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2.55 | 1.70 | 9.79 | 6.67 | ||||||||||||
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Second
Quarter 2008
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2.17 | 1.25 | 8.50 | 4.80 | ||||||||||||
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Third
Quarter 2008
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1.60 | 1.11 | 5.36 | 4.28 | ||||||||||||
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Fourth
Quarter 2008
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1.27 | 0.41 | 4.50 | 1.85 | ||||||||||||
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First
Quarter 2009
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1.00 | 0.34 | 3.80 | 1.89 | ||||||||||||
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Second
Quarter 2009
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1.21 | 0.55 | 8.69 | 2.80 | ||||||||||||
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Third
Quarter 2009
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2.75 | 0.89 | 10.00 | 3.60 | ||||||||||||
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Last Five Years:
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||||||||||||||||
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2004
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8.21 | 3.00 | * | * | ||||||||||||
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2005
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3.91 | 1.94 | 14.89 | 9.56 | ||||||||||||
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2006
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2.90 | 1.45 | 12.79 | 8.08 | ||||||||||||
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2007
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3.10 | 2.10 | 13.75 | 8.50 | ||||||||||||
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2008
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2.55 | 0.41 | 9.79 | 1.85 | ||||||||||||
On
December 28, 2009, the last reported sale price of the ordinary shares was $6.19
on The NASDAQ Global Market and NIS 24.00 on the Tel Aviv Stock
Exchange.
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*
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During
2004 there was no market activity on the Tel Aviv Stock
Exchange
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4
The
following table sets forth our consolidated unaudited capitalization as of
September 30, 2009, on an actual basis. The financial date in the following
table should be read in conjunction with our consolidated financial data and
notes thereto incorporated by reference herein.
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As
of September 30, 2009
(unaudited,
in thousands)
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||||
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Shareholders’
equity:
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||||
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Ordinary
shares, par value NIS 0.01 per share: 40,000,000 shares
authorized;
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||||
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19,456,503
shares issued and outstanding (1)
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$ | 55 | ||
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Additional
paid-in capital
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84,447 | |||
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Deferred
equity-based compensation
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- | |||
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Accumulated
other comprehensive income
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236 | |||
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Accumulated
deficit
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(61,555 | ) | ||
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Total
shareholders’ equity
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$ | 23,183 | ||
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(1)
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Does
not include 1,453,485 ordinary shares issuable upon the exercise of
warrants outstanding as of September 30, 2009, at an exercise price of
$3.05 per share and 2,658,476 ordinary shares issuable upon the exercise
of 2,350,946 options, at a weighted average exercise price of $1.81 per
share, and vesting of 307,530 restricted share units outstanding as of
September 30, 2009.
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We
currently intend to use the net proceeds from the sale of any securities under
this prospectus for general corporate purposes, which may include the
following:
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working
capital;
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capital
expenditures;
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the
acquisition of other companies or businesses;
and
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other
purposes as mentioned in any prospectus
supplement.
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We have
not yet determined the amount of net proceeds to be used specifically for any of
the foregoing purposes. Accordingly, our management will have significant
discretion and flexibility in applying the net proceeds from the sale of these
securities. Pending such uses, we may temporarily invest the net proceeds. The
precise amounts and timing of the application of proceeds will depend upon our
funding requirements and the availability of other funds.
Based upon our financial needs, we may engage in additional financings of a
character and amount that we determine as the need arises.
The
descriptions of the securities contained in this prospectus, together with the
applicable prospectus supplements, summarize the material terms and provisions
of the various types of securities that we may offer. We will describe in the
applicable prospectus supplement relating to any securities the particular terms
of the securities offered by that prospectus supplement. If we indicate in the
applicable prospectus supplement, the terms of the securities may differ from
the terms we have summarized below. We will also include in the prospectus
supplement information, where applicable, about material Israeli and U.S.
federal income tax considerations relating to the securities, and the securities
exchange, if any, on which the securities will be listed.
5
We may
sell from time to time, in one or more offerings:
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ordinary
shares;
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·
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debt
securities;
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·
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warrants;
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·
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subscription
rights;
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·
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units;
and
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·
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any
combination of the foregoing
securities.
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In this
prospectus, we will refer to the ordinary shares, debt securities, warrants,
subscription rights and units collectively as “securities.” The total dollar
amount of all securities that we may issue under this prospectus will not exceed
$20,000,000.
This
prospectus may not be used to consummate a sale of securities unless it is
accompanied by a prospectus supplement.
Our
authorized share capital consists of 40,000,000 (forty million) ordinary shares,
par value NIS 0.01 per share. We may from time to time, by approval of a
majority of our shareholders, increase our authorized share capital. All
ordinary shares are registered shares, rather than bearer shares.
The
ownership or voting rights of our ordinary shares by non-residents of Israel is
not restricted in any way by our memorandum of association or amended and
restated articles of association. The State of Israel does not restrict in any
way the ownership or voting rights of ordinary shares of Israeli entities by
non-residents of the State of Israel, except with respect to subjects of
countries that are in a state of war with the State of Israel. Our ordinary
shares do not have cumulative voting rights for the election of directors. The
affirmative vote of the shareholders present in person or by proxy that
represent more than 50% of the voting power present in person or by proxy have
the power to elect all nominees up for election to our board of
directors.
In the
event of our liquidation, after satisfaction of liabilities to creditors, our
assets will be distributed to the holders of our ordinary shares in proportion
to the nominal value of their respective holdings. This liquidation right may be
affected by the grant of a preferential dividend or distribution right to the
holder of a class of shares with preferential rights that may be authorized in
the future. Dividends may be paid only out of profits, as defined in the Israeli
Companies Law, 1999, or Companies Law. Our board of directors is authorized to
declare dividends, although we anticipate that, for the foreseeable future, we
will retain any earnings to support operations and to finance the growth and
development of our business. Therefore, we do not expect to pay cash dividends
for at least the next several years.
Holders
of ordinary shares have one vote for each ordinary share held on all matters
submitted to a vote of shareholders. Subject to the provisions set forth in
Section 46B of the Israeli Securities Law, 1968, these voting rights may be
affected by the grant of any special voting rights to the holders of a class of
shares with preferential rights that may be authorized in the future. Our major
shareholders do not have different voting rights from each other or other
shareholders.
Resolutions
of shareholders (e.g. resolutions amending our articles of association, electing
or removing directors, appointing an independent registered public accounting
firm, authorizing changes in capitalization or the rights attached to our shares
or approving a wind-up or merger) require the affirmative vote (at a meeting
convened upon advance notice of no less than twenty one days) of shareholders
present in person or by proxy and holding shares conferring, in the aggregate,
at least a majority of the votes actually cast on such resolutions.
The
quorum required for a meeting of shareholders is at least two shareholders
present, in person or by proxy, within half an hour of the time fixed for the
meeting’s commencement that together hold shares conferring in the aggregate
more than 33% of the total voting power of our shares. A meeting adjourned for
lack of a quorum is adjourned to the following day at the same time and place.
At the reconvened meeting, in the event a quorum is not present within half an
hour of the time fixed for the meetings commencement, the persons present shall
constitute a quorum.
Our
registration number at the Israeli Registrar of Companies is
51-181246-3.
The
objectives stated in our amended and restated articles of association
are:
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to
invent, design, plan, develop, manufacture, market and trade in the field
of measuring instruments in electronics, micro-electronics, medicine,
chemistry, metallurgy, ceramics, and any other
field;
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·
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to
initiate, participate, manage, execute, import and export any kind of
project within the boarders of the State of Israel and/or outside
Israel;
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6
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to
register patents, trademarks, trade names, intellectual property rights
marketing rights and any other right of any kind whatsoever, both in
Israel and abroad; and
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to
engage in any legal activity, both in Israel and
abroad.
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Modification
or abrogation of the rights of any existing class of shares requires either the
written consent of all of the holders of the issued shares of such class or the
adoption of a resolution by an ordinary majority of a general meeting of holders
of such class.
We had
19,716,045 ordinary shares issued as of December 1, 2009. The above number of
issued ordinary shares includes 2,229 treasury shares held by us through a
trustee.
The
transfer agent and registrar for our ordinary shares is BNY Mellon Shareowner
Services, P.O. Box 358016, Pittsburgh, PA 15252-8016.
This
prospectus describes the general terms and provisions of the debt securities we
may offer and sell by this prospectus. When we offer to sell a particular series
of debt securities, we will describe the specific terms of the series in a
prospectus supplement. We will also indicate in the prospectus supplement
whether the general terms and provisions described in this prospectus apply to a
particular series of debt securities.
We may
offer under this prospectus up to $20,000,000 in aggregate principal amount of
debt securities, or if debt securities are issued at a discount, or in a foreign
currency or composite currency, such principal amount as may be sold for an
initial offering price of up to $20,000,000. We may offer debt securities in the
form of either senior debt securities or subordinated debt securities. The
senior debt securities and the subordinated debt securities are together
referred to in this prospectus as the “debt securities.” Unless otherwise
specified in a prospectus supplement, the senior debt securities will be our
direct, unsecured obligations and will rank equally with all of our other
unsecured and unsubordinated indebtedness. The subordinated debt securities
generally will be entitled to payment only after payment of our senior
debt.
The debt
securities will be issued under an indenture between us and a trustee, the form
of which is filed as an exhibit to the registration statement of which this
prospectus forms a part. We have summarized the general features of the debt
securities to be governed by the indenture. The summary is not complete. The
executed indenture will be incorporated by reference from a report on Form 6-K.
We encourage you to read the indenture, because the indenture, and not this
summary, will govern your rights as a holder of debt securities. Capitalized
terms used in this summary will have the meanings specified in the
indenture.
Additional
Information
The terms
of each series of debt securities will be established by or pursuant to a
resolution of our board of directors, and set forth or determined in the manner
provided in an officers’ certificate or by a supplemental indenture. The
particular terms of each series of debt securities will be described in a
prospectus supplement relating to such series, including any pricing
supplement.
We may
issue an unlimited amount of debt securities under the indenture, and the debt
securities may be in one or more series with the same or various maturities, at
par, at a premium or at a discount. Except as set forth in any prospectus
supplement, we will also have the right to “reopen” a previous series of debt
securities by issuing additional debt securities of such series without the
consent of the holders of debt securities of the series being reopened or any
other series. Any additional debt securities of the series being reopened will
have the same ranking, interest rate, maturity and other terms as the previously
issued debt securities of that series. These additional debt securities,
together with the previously issued debt securities of that series, will
constitute a single series of debt securities under the terms of the applicable
indenture.
We will
set forth in a prospectus supplement, including any pricing supplement, relating
to any series of debt securities being offered, the aggregate principal amount
and other terms of the debt securities, which will include some or all of the
following:
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the
title;
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·
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any
limit on the amount that may be
issued;
|
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·
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whether
or not we will issue the series of debt securities in global form, and, if
so, the terms and the name of the
depository;
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·
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the
maturity date;
|
7
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·
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the
interest rate, which may be fixed or variable, or the method for
determining the rate and the date interest will begin to accrue, the dates
interest will be payable and the regular record dates for interest payment
dates or the method for determining such
dates;
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·
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whether
or not the debt securities will be secured or unsecured, and the terms of
any securities;
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classification
as senior or subordinated debt
securities;
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·
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in
the case of subordinated debt securities, the degree, if any, to which the
subordinated debt securities of the series will be senior to or be
subordinated to other indebtedness of our in right of payment, whether the
other indebtedness is outstanding or
not;
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·
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the
terms on which any series of debt securities may be convertible into or
exchangeable for our ordinary shares or other of our securities, including
(a) provisions as to whether conversion or exchange is mandatory, at the
option of the holder or at our option and (b) provisions pursuant to which
the number of ordinary shares or other securities of ours that the holders
of the series of debt securities receive would be subject to
adjustment;
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·
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the
place where payments will be
payable;
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·
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our
right, if any, to defer payment of interest and the maximum length of any
such deferral period;
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the
date, if any, after which, and the price at which, we may, at our option,
redeem the series of debt securities pursuant to any optional redemption
provisions;
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·
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the
date, if any, on which, and the price at which we are obligated, pursuant
to any mandatory sinking fund provisions or otherwise, to redeem, or at
the holder’s option to purchase, the series of debt
securities;
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·
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whether
the indenture will restrict our ability to pay dividends, or will require
us to maintain any asset ratios or
reserves;
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·
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whether
we will be restricted from incurring any additional
indebtedness;
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·
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any
listing of a series of debt securities on a securities exchange or
market;
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the
denominations in which we will issue the series of debt securities, if
other than denominations of $1,000 and any integral multiple thereof;
and
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·
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any
other specific terms, preferences, rights or limitations of, or
restrictions on, the debt
securities.
|
We will
provide information on the applicable United States and Israeli income tax
considerations and other special considerations applicable to any of these debt
securities in the applicable prospectus supplement.
If we
denominate the purchase price of any of the debt securities in a foreign
currency or currencies or a foreign currency unit or units, or if the principal
of, and premium and interest on, any series of debt securities is payable in a
foreign currency or currencies or a foreign currency unit or units, we will
provide you with information on the restrictions, elections, general tax
considerations, specific terms and other information with respect to that issue
of debt securities and such foreign currency or currencies or foreign currency
unit or units in the applicable prospectus supplement.
Transfer
and Exchange
Each debt
security will be represented by either one or more global securities registered
in the name of The Depositary Trust Company, as Depositary, or a nominee (we
will refer to any debt security represented by a global debt security as a
“book-entry debt security”), or a certificate issued in definitive registered
form (we will refer to any debt security represented by a certificated security
as a “certificated debt security”) as set forth in the applicable prospectus
supplement.
You may
transfer or exchange certificated debt securities at any office we maintain for
this purpose in accordance with the terms of the indenture. No service charge
will be made for any transfer or exchange of certificated debt securities, but
we may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection with a transfer or
exchange.
You may
effect the transfer of certificated debt securities and the right to receive the
principal of, and any premium and interest on, certificated debt securities only
by surrendering the certificate representing those certificated debt securities
and either reissuance by us or the trustee of the certificate to the new holder
or the issuance by us or the trustee of a new certificate to the new
holder.
No
Protection in the Event of a Change of Control
Unless we
state otherwise in the applicable prospectus supplement, the debt securities
will not contain any provisions which may afford holders of the debt securities
protection in the event we undergo a change in control or in the event of a
highly leveraged transaction (whether or not such transaction results in a
change in control) which could adversely affect holders of debt
securities.
8
Covenants
We will
set forth in the applicable prospectus supplement any restrictive covenants
applicable to any issue of debt securities.
Consolidation,
Merger and Sale of Assets
We may
not consolidate with or merge with or into, or convey, transfer or lease all or
substantially all of our properties and assets to, any person, which we refer to
as a successor person, unless:
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we
are the surviving corporation or the successor person (if other than us)
expressly assumes our obligations on the debt securities and under the
indenture;
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immediately
after giving effect to the transaction, no event of default, and no event
which, after notice or lapse of time, or both, would become an event of
default, shall have occurred and be continuing under the indenture;
and
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certain
other conditions are met, including any additional conditions described in
the applicable prospectus
supplement.
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Events
of Default
Event of
default means, with respect to any series of debt securities, any of the
following:
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default
in the payment of any interest upon any debt security of that series when
it becomes due and payable, and continuance of that default for a period
of 30 days (unless the entire amount of the payment is deposited by us
with the trustee or with a paying agent prior to the expiration of the
30-day period);
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default
in the payment of principal of or premium on any debt security of that
series when due and payable;
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default
in the performance or breach of any other covenant or warranty by us in
the indenture (other than a covenant or warranty that has been included in
the indenture solely for the benefit of a series of debt securities other
than that series), which default continues uncured for a period of 90 days
after we receive written notice from the trustee or we and the trustee
receive written notice from the holders of not less than a majority in
principal amount of the outstanding debt securities of that series as
provided in the indenture;
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certain
events of bankruptcy, insolvency or reorganization of our company;
and
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any
other event of default provided with respect to debt securities of that
series that is described in the applicable prospectus
supplement.
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No event
of default with respect to a particular series of debt securities (except as to
certain events of bankruptcy, insolvency or reorganization) necessarily
constitutes an event of default with respect to any other series of debt
securities. The occurrence of an event of default may constitute an event of
default under our bank credit agreements as may be in existence from time to
time. In addition, the occurrence of certain events of default or an
acceleration under the indenture may constitute an event of default under
certain of our other indebtedness outstanding from time to time.
If an
event of default with respect to debt securities of any series at the time
outstanding occurs and is continuing, then the trustee or the holders of not
less than a majority in principal amount of the outstanding debt securities of
that series may, by a notice in writing to us (and to the trustee if given by
the holders), declare to be due and payable immediately the principal (or, if
the debt securities of that series are discount securities, that portion of the
principal amount as may be specified in the terms of that series) of, and
accrued and unpaid interest, if any, on all debt securities of that series. In
the case of an event of default resulting from certain events of bankruptcy,
insolvency or reorganization, the principal (or such specified amount) of and
accrued and unpaid interest, if any, on all outstanding debt securities will
become and be immediately due and payable without any declaration or other act
on the part of the trustee or any holder of outstanding debt securities. At any
time after a declaration of acceleration with respect to debt securities of any
series has been made, but before a judgment or decree for payment of the money
due has been obtained by the trustee, the holders of a majority in principal
amount of the outstanding debt securities of that series may rescind and annul
the acceleration if all events of default, other than the non-payment of
accelerated principal and interest, if any, with respect to debt securities of
that series, have been cured or waived as provided in the indenture. We refer
you to the prospectus supplement relating to any series of debt securities that
are discount securities for the particular provisions relating to acceleration
of a portion of the principal amount of such discount securities upon the
occurrence of an event of default.
9
The
indenture provides that the trustee will be under no obligation to exercise any
of its rights or powers under the indenture at the request of any holder of
outstanding debt securities, unless the trustee receives indemnity satisfactory
to it against any loss, liability or expense. Subject to certain rights of the
trustee, the holders of a majority in principal amount of the outstanding debt
securities of any series will have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the trustee or
exercising any trust or power conferred on the trustee with respect to the debt
securities of that series.
No holder
of any debt security of any series will have any right to institute any
proceeding, judicial or otherwise, with respect to the indenture or for the
appointment of a receiver or trustee, or for any remedy under the indenture,
unless:
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that
holder has previously given to the trustee written notice of a continuing
event of default with respect to debt securities of that series;
and
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the
holders of at least a majority in principal amount of the outstanding debt
securities of that series have made written request, and offered
reasonable indemnity, to the trustee to institute the proceeding as
trustee, and the trustee has not received from the holders of a majority
in principal amount of the outstanding debt securities of that series a
direction inconsistent with that request and has failed to institute the
proceeding within 60 days.
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Notwithstanding
the foregoing, the holder of any debt security will have an absolute and
unconditional right to receive payment of the principal of, and any premium and
interest on, that debt security on or after the due dates expressed in that debt
security and to institute suit for the enforcement of payment.
If any
securities are outstanding under the indenture, the indenture requires us,
within 120 days after the end of our fiscal year, to furnish to the trustee
a statement as to compliance with the indenture. The indenture provides that the
trustee may withhold notice to the holders of debt securities of any series of
any default or event of default (except in payment on any debt securities of
that series) with respect to debt securities of that series if it in good faith
determines that withholding notice is in the interest of the holders of those
debt securities.
Modification
and Waiver
We may
modify and amend the indenture with the consent of the holders of at least a
majority in principal amount of the outstanding debt securities of each series
affected by the modifications or amendments. We may not make any modification or
amendment without the consent of the holders of each affected debt security then
outstanding if that amendment will:
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reduce
the amount of debt securities whose holders must consent to an amendment
or waiver;
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reduce
the rate of or extend the time for payment of interest (including default
interest) on any debt security;
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reduce
the principal of, or premium on, or change the fixed maturity of, any debt
security or reduce the amount of, or postpone the date fixed for, the
payment of any sinking fund or analogous obligation with respect to any
series of debt securities;
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reduce
the principal amount of discount securities payable upon acceleration of
maturity;
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waive
a default in the payment of the principal of, or premium or interest on,
any debt security (except a rescission of acceleration of the debt
securities of any series by the holders of at least a majority in
aggregate principal amount of the then outstanding debt securities of that
series and a waiver of the payment default that resulted from such
acceleration);
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make
the principal of, or premium or interest on, any debt security payable in
currency other than that stated in the debt
security;
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make
any change to certain provisions of the indenture relating to, among other
things, the right of holders of debt securities to receive payment of the
principal of, and premium and interest on, those debt securities and to
institute suit for the enforcement of any such payment and to waivers or
amendments; or
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waive
a redemption payment with respect to any debt
security.
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Except
for certain specified provisions, the holders of at least a majority in
principal amount of the outstanding debt securities of any series may on behalf
of the holders of all debt securities of that series waive our compliance with
provisions of the indenture. The holders of a majority in principal amount of
the outstanding debt securities of any series may on behalf of the holders of
all the debt securities of such series waive any past default under the
indenture with respect to that series and its consequences, except a default in
the payment of the principal of, or any premium or interest on, any debt
security of that series or in respect of a covenant or provision, which cannot
be modified or amended without the consent of the holder of each outstanding
debt security of the series affected; provided, however, that the
holders of a majority in principal amount of the outstanding debt securities of
any series may rescind an acceleration of the debt securities of such series and
its consequences, including any related payment default that resulted from the
acceleration.
10
Discharging
Our Obligations
We may
choose to either discharge our obligations on the debt securities of any series
in a legal defeasance, or to release ourselves from our covenant restrictions on
the debt securities of any series in a covenant defeasance. We may do so at any
time after we deposit with the trustee sufficient cash or government securities
to pay the principal, interest, any premium and any other sums due to the stated
maturity date or a redemption date of the debt securities of the series. If we
choose the legal defeasance option, the holders of the debt securities of the
series will not be entitled to the benefits of the indenture except for
registration of transfer and exchange of debt securities, replacement of lost,
stolen, destroyed or mutilated debt securities, conversion or exchange of debt
securities, sinking fund payments and receipt of principal and interest on the
original stated due dates or specified redemption dates.
We may
discharge our obligations under the indenture or release ourselves from covenant
restrictions only if, in addition to making the deposit with the trustee, we
meet some specific requirements. Among other things:
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we
must deliver an opinion of our legal counsel that the discharge will not
result in holders having to recognize taxable income or loss or subject
them to different tax treatment. In the case of legal defeasance, this
opinion must be based on either an IRS letter ruling or change in federal
tax law;
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we
may not have a default on the debt securities discharged on the date of
deposit;
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the
discharge may not violate any of our agreements;
and
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the
discharge may not result in our becoming an investment company in
violation of the Investment Company Act of
1940.
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Governing
Law
The
indenture and the debt securities will be governed by, and construed in
accordance with, the internal laws of the State of New York, without regard to
conflict of law principles that would result in the application of any law other
than the laws of the State of New York.
We may
issue warrants to purchase ordinary shares and/or debt securities in one or more
series together with other securities or separately, as described in the
applicable prospectus supplement. Below is a description of certain general
terms and provisions of the warrants that we may offer. Particular terms of the
warrants will be described in the warrant agreements and the prospectus
supplement to the warrants.
The
prospectus supplement relating to any warrants we offer, if any, will, to the
extent applicable, include specific terms relating to the offering, including
some or all of the following:
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the
specific designation and aggregate number of, and the price at which we
will issue, the warrants;
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the
currency or currency units in which the offering price, if any, and the
exercise price are payable;
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the
designation, amount and terms of the securities purchasable upon exercise
of the warrants;
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if
applicable, the exercise price for our ordinary shares and the number of
ordinary shares to be received upon exercise of the
warrants;
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if
applicable, the exercise price for our debt securities, the amount of debt
securities to be received upon exercise, and a description of that series
of debt securities;
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the
date on which the right to exercise the warrants will begin and the date
on which that right will expire or, if you may not continuously exercise
the warrants throughout that period, the specific date or dates on which
you may exercise the warrants;
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if
applicable, provisions for changes to or adjustments in the exercise price
of the warrants;
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whether
the warrants will be issued in fully registered form or bearer form, in
definitive or global form or in any combination of these forms, although,
in any case, the form of a warrant included in a unit will correspond to
the form of the unit and of any security included in that
unit;
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the
identity of the warrant agent for the warrants and of any other
depositaries, execution or paying agents, transfer agents, registrars or
other agents;
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11
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the
proposed listing, if any, of the warrants or any securities purchasable
upon exercise of the warrants on any securities
exchange;
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if
applicable, the date from and after which the warrants and the ordinary
shares and/or debt securities will be separately
transferable;
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if
applicable, the minimum or maximum amount of the warrants that may be
exercised at any one time;
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information
with respect to book-entry procedures, if
any;
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the
anti-dilution provisions of the warrants, if
any;
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any
redemption or call provisions;
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whether
the warrants are to be sold separately or with other securities as parts
of units; and
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any
additional material terms of the warrants, including terms, procedures and
limitations relating to the exchange and exercise of the
warrants.
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The
description in the applicable prospectus supplement of any warrants we offer
will not necessarily be complete and will be qualified in its entirety by
reference to the applicable warrant agreement, which will be filed with the SEC
if we offer warrants. For more information on how you can obtain copies of the
applicable warrant agreement if we offer warrants, see “Where You Can Find More
Information; Incorporation of Information by Reference” beginning on
page 16. We urge you to read the applicable warrant agreement and any
applicable prospectus supplement in their entirety.
We may
issue subscription rights to purchase our ordinary shares. These subscription
rights may be issued independently or together with any other security offered
hereby and may or may not be transferable by the shareholder receiving the
subscription rights in such offering. In connection with any offering of
subscription rights, we may enter into a standby arrangement with one or more
underwriters or other purchasers pursuant to which the underwriters or other
purchasers may be required to purchase any securities remaining unsubscribed for
after such offering.
The
prospectus supplement relating to any subscription rights we offer, if any,
will, to the extent applicable, include specific terms relating to the offering,
including some or all of the following:
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the
price, if any, for the subscription
rights;
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the
exercise price payable for each ordinary share upon the exercise of the
subscription rights;
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the
number of subscription rights to be issued to each
shareholder;
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the
number and terms of the shares ordinary shares which may be purchased per
each subscription right;
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the
extent to which the subscription rights are
transferable;
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any
other terms of the subscription rights, including the terms, procedures
and limitations relating to the exchange and exercise of the subscription
rights;
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the
date on which the right to exercise the subscription rights shall
commence, and the date on which the subscription rights shall
expire;
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the
extent to which the subscription rights may include an over-subscription
privilege with respect to unsubscribed
securities; and
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if
applicable, the material terms of any standby underwriting or purchase
arrangement which may be entered into by us in connection with the
offering of subscription rights.
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The
description in the applicable prospectus supplement of any subscription rights
we offer will not necessarily be complete and will be qualified in its entirety
by reference to the applicable subscription right agreement, which will be filed
with the SEC if we offer subscription rights. For more information on how you
can obtain copies of the applicable subscription right agreement if we offer
subscription rights, see “Where You Can Find More Information; Incorporation of
Information by Reference” beginning on page 16. We urge you to read the
applicable subscription right agreement and any applicable prospectus supplement
in their entirety.
12
We may
issue units comprised of one or more of the other securities that may be offered
under this prospectus, in any combination. Each unit will be issued so that the
holder of the unit is also the holder of each security included in the unit.
Thus, the holder of a unit will have the rights and obligations of a holder of
each included security. The unit agreement under which a unit is issued may
provide that the securities included in the unit may not be held or transferred
separately at any time, or at any time before a specified date.
The
prospectus supplement relating to any units we offer, if any, will, to the
extent applicable, include specific terms relating to the offering, including
some or all of the following:
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the
material terms of the units and of the securities comprising the units,
including whether and under what circumstances those securities may be
held or transferred separately;
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any
material provisions relating to the issuance, payment, settlement,
transfer or exchange of the units or of the securities comprising the
units; and
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any
material provisions of the governing unit agreement that differ from those
described above.
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The
description in the applicable prospectus supplement of any units we offer will
not necessarily be complete and will be qualified in its entirety by reference
to the applicable unit agreement, which will be filed with the SEC if we offer
units. For more information on how you can obtain copies of the applicable unit
agreement if we offer units, see “Where You Can Find More Information;
Incorporation of Information by Reference” beginning on page 16. We urge
you to read the applicable unit agreement and any applicable prospectus
supplement in their entirety.
13
We may
sell the securities being offered hereby in one or more of the following methods
from time to time:
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a
block trade (which may involve crosses) in which the broker or dealer so
engaged will attempt to sell the securities as agent but may position and
resell a portion of the block as principal to facilitate the
transaction;
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purchases
by a broker or dealer as principal and resale by such broker or dealer for
its own account pursuant to this
prospectus;
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exchange
distributions and/or secondary
distributions;
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ordinary
brokerage transactions and transactions in which the broker solicits
purchasers;
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to
one or more underwriters for resale to the public or to
investors;
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in
“at the market offerings,” within the meaning of Rule 415(a)(4) of the
Securities Act of 1933, as amended (the “Securities Act”), to or through a
market maker or into an existing trading market, on an exchange or
otherwise;
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transactions
not involving market makers or established trading markets, including
direct sales or privately negotiated
transactions;
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transactions
in options, swaps or other derivatives that may or may not be listed on an
exchange; or
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through
a combination of these methods of
sale.
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The securities that we distribute by any of these methods may be sold, in one or
more transactions, at:
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a
fixed price or prices, which may be
changed;
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market
prices prevailing at the time of
sale;
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prices
related to prevailing market prices;
or
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negotiated
prices.
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We will set forth in a prospectus supplement the terms of the
offering of securities, including:
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the
name or names of any agents or
underwriters;
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the
purchase price of the securities being offered and the proceeds we will
receive from the sale;
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any
over-allotment options under which underwriters may purchase additional
securities from us;
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any
agency fees or underwriting discounts and other items constituting agents’
or underwriters’ compensation;
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the
public offering price;
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any
discounts or concessions allowed or reallowed or paid to dealers;
and
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any
securities exchanges or markets on which such securities may be
listed.
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If
underwriters are used in the sale, they will acquire the securities for their
own account and may resell the securities from time to time in one or more
transactions at a fixed public offering price or at varying prices determined at
the time of sale. The obligations of the underwriters to purchase the securities
will be subject to the conditions set forth in the applicable underwriting
agreement. We may offer the securities to the public through underwriting
syndicates represented by managing underwriters or by underwriters without a
syndicate. Subject to certain conditions, the underwriters will be obligated to
purchase all of the securities offered by the prospectus supplement, other than
securities covered by any over-allotment option. Any public offering price and
any discounts or concessions allowed or reallowed or paid to dealers may change
from time to time. We may use underwriters with whom we have a material
relationship. We will describe in the prospectus supplement, naming the
underwriter, the nature of any such relationship.
We may
sell securities directly or through agents we designate from time to time. We
will name any agent involved in the offering and sale of securities and we will
describe any commissions we will pay the agent in the prospectus supplement.
Unless the prospectus supplement states otherwise, our agent will act on a
best-efforts basis for the period of its appointment.
We may
also sell securities directly to one or more purchasers without using
underwriters or agents.
Underwriters,
dealers and agents that participate in the distribution of the securities may be
underwriters as defined in the Securities Act and any discounts or commissions
they receive from us and any profit on their resale of the securities may be
treated as underwriting discounts and commissions under the Securities Act. We
will identify in the applicable prospectus supplement any underwriters, dealers
or agents and will describe their compensation. We may have agreements with the
underwriters, dealers and agents to indemnify them against specified civil
liabilities, including liabilities under the Securities Act. Underwriters,
dealers and agents may engage in transactions with or perform services for us in
the ordinary course of their businesses.
14
The debt
securities, warrants and the units that we may offer will be new issues of
securities with no established trading market. Any underwriters may make a
market in these securities, but will not be obligated to do so and may
discontinue any market making at any time without notice. We cannot guarantee
the liquidity of the trading markets for any securities.
Unless
otherwise specified in the applicable prospectus supplement, each class or
series of securities will be a new issue with no established trading market,
other than our ordinary shares, which are listed on The NASDAQ Global Market. We
may elect to list any other class or series of securities on any exchange, but
we are not obligated to do so. It is possible that one or more underwriters may
make a market in a class or series of securities, but the underwriters will not
be obligated to do so and may discontinue any market making at any time without
notice. We cannot give any assurance as to the liquidity of the trading market
for any of the securities.
In
connection with an offering, an underwriter may purchase and sell securities in
the open market. These transactions may include short sales, stabilizing
transactions and purchases to cover positions created by short sales. Short
sales involve the sale by the underwriters of a greater number of securities
than they are required to purchase in the offering. “Covered” short sales are
sales made in an amount not greater than the underwriters’ option to purchase
additional securities, if any, from us in the offering. If the underwriters have
an over-allotment option to purchase additional securities from us, the
underwriters may close out any covered short position by either exercising their
over-allotment option or purchasing securities in the open market. In
determining the source of securities to close out the covered short position,
the underwriters may consider, among other things, the price of securities
available for purchase in the open market as compared to the price at which they
may purchase securities through the over-allotment option. “Naked” short sales
are any sales in excess of such option or where the underwriters do not have an
over-allotment option. The underwriters must close out any naked short position
by purchasing securities in the open market. A naked short position is more
likely to be created if the underwriters are concerned that there may be
downward pressure on the price of the securities in the open market after
pricing that could adversely affect investors who purchase in the
offering.
Accordingly,
to cover these short sales positions or to otherwise stabilize or maintain the
price of the securities, the underwriters may bid for or purchase securities in
the open market and may impose penalty bids. If penalty bids are imposed,
selling concessions allowed to syndicate members or other broker-dealers
participating in the offering are reclaimed if securities previously distributed
in the offering are repurchased, whether in connection with stabilization
transactions or otherwise. The effect of these transactions may be to stabilize
or maintain the market price of the securities at a level above that which might
otherwise prevail in the open market. The impositions of a penalty bid may also
affect the price of the securities to the extent that it discourages resale of
the securities. The magnitude or effect of any stabilization or other
transactions is uncertain. These transactions may be effected on The NASDAQ
Global Market or otherwise and, if commenced, may be discontinued at any
time.
In
compliance with guidelines of the Financial Industry Regulatory Authority, or
FINRA, the maximum consideration or discount to be received by any FINRA member
may not exceed 8% of the aggregate proceeds of the securities offered pursuant
to this prospectus and any applicable prospectus supplement.
The
financial statements as of December 31, 2008 and 2007, and for each of the three
years in the period ended December 31, 2008, incorporated by reference in this
prospectus have been audited by Brightman Almagor Zohar & Co. a member of
Deloitte Touche Tohmatsu, an independent registered public accounting firm, as
stated in their reports, which are incorporated by reference herein, and have
been so incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
The
validity of the securities offered in this prospectus will be passed upon for us
by Gross, Kleinhendler, Hodak, Halevy, Greenberg & Co., Tel Aviv, Israel.
Any underwriters will be advised with respect to other issues relating to any
offering by their own legal counsel.
15
We have
filed a registration statement on Form F-3 with the SEC in connection with this
offering. In addition, we file reports with, and furnish information to, the
SEC. You may read and copy the registration statement and any other documents we
have filed at the SEC, including any exhibits and schedules, at the SEC’s public
reference room at 100 F Street N.E., Washington, D.C. 20549. You may call the
SEC at 1-800-SEC-0330 for further information on this public reference room. In
addition, the SEC maintains a web site that contains reports and other
information regarding issuers that file electronically with the SEC. You may
access the SEC's website at http://www.sec.gov. These SEC filings
are also available to the public on the Israel Securities Authority’s Magna
website at www.magna.isa.gov.il
and from commercial document retrieval services.
This
prospectus is part of the registration statement and does not contain all of the
information included in the registration statement. Whenever a reference is made
in this prospectus to any of our contracts or other documents, the reference may
not be complete and, for a copy of the contract or document, you should refer to
the exhibits that are a part of the registration statement.
The SEC
allows us to “incorporate by reference” into this prospectus the information we
file with it, which means that we can disclose important information to you by
referring you to those documents. Information incorporated by reference is part
of this prospectus. The following documents filed with or furnished to the SEC
by our company are incorporated by reference in this registration
statement:
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our
Annual Report on Form 20-F for the year ended December 31, 2008, as filed
with the SEC on March 30, 2009, to the extent the information in that
report has not been updated or superseded by this
prospectus;
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our
Report on Form 6-K, furnished to the SEC on May 6,
2009;
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our
Report on Form 6-K, furnished to the SEC on May 7,
2009;
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our
Report on Form 6-K, furnished to the SEC on August 4,
2009;
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our
Report on Form 6-K, furnished to the SEC on August 5,
2009;
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our
Report on Form 6-K, furnished to the SEC on December 8, 2009;
and
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|
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·
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the
description of our ordinary shares which is contained in our registration
statement on Form 8-A filed with the SEC on March 22,
2000.
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All
subsequent annual reports filed by our company pursuant to the Securities
Exchange Act of 1934, as amended (the “Exchange
Act”) on Form 20-F prior to the termination of the offering shall be
deemed to be incorporated by reference in this prospectus and to be a part
hereof from the date of filing of such documents. We may also incorporate any
Form 6-K subsequently submitted by us to the SEC prior to the termination of the
offering by identifying in such Forms 6-K that they are being incorporated by
reference herein, and any Forms 6-K so identified shall be deemed to be
incorporated by reference in this prospectus and to be a part hereof from the
date of submission of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is incorporated or deemed to be incorporated by reference herein modifies
or supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
prospectus.
We will
provide to each person, including any beneficial owner, to whom this prospectus
is delivered, a copy of these filings, at no cost, upon written or oral request
to us at: Weizmann Science Park, Einstein St., Building 22, 2nd Floor,
Ness-Ziona, Israel, Attn: Corporate Secretary, telephone number:
972-8-9387505.
A copy of
this prospectus, our amended and restated articles of association,
are available for inspection at our offices at Weizmann Science Park, Einstein
St., Building 22, 2nd Floor, Ness-Ziona, Israel, and on the Israel Securities
Authority’s Magna website, www.magna.isa.gov.il.
As a
foreign private issuer, we are exempt from the rules under Section 14 of the
Exchange Act prescribing the furnishing and content of proxy statements and our
officers, directors and principal shareholders are exempt from the reporting and
other provisions in Section 16 of the Exchange Act.
16
We
are incorporated in Israel, most of our executive officers and directors and the
Israeli experts named herein are nonresidents of the United States, and a
substantial portion of our assets and of such persons’ assets are located
outside the United States. For further information regarding enforceability of
civil liabilities against us and other persons, see the risk factor “Any
shareholder with a cause of action against us as a result of buying, selling or
holding our ordinary shares may have difficulty asserting a claim under U.S.
securities laws or enforcing a U.S. judgment against us or our officers,
directors or Israeli auditors.” under the heading “Risk Factors” in our Annual
Report on Form 20-F for the year ended December 31, 2008, which is
incorporated by reference herein.
The
following is a statement of expenses in connection with the distribution of the
securities registered. All amounts shown are estimates except the SEC
registration fee. The estimates do not include expenses related to offerings of
particular securities. Each prospectus supplement describing an offering of
securities will reflect the estimated expenses related to the offering of
securities under that prospectus supplement.
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SEC
registration fees
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$ | 1,116 | ||
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Legal
fees and expenses
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$ | 15,000 | ||
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Accountants
fees and expenses
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$ | 5,000 | ||
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Miscellaneous
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$ | 2,000 | ||
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TOTAL
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$ | 23,116 |
17
3,500,000
Ordinary Shares
__________________________________________
PRELIMINARY
PROSPECTUS SUPPLEMENT
__________________________________________
NEEDHAM
& COMPANY, LLC
ROTH
CAPITAL PARTNERS, LLC
February ,
2010