COMMITMENTS AND CONTINGENCIES


(a)	Leases of Property and Equipment

Office rental and automobile leasing expenses, for 2010, 2011 and 2012, were $662, $871 and $1,028 respectively. The Company and its subsidiaries lease office space, cars and equipment under operating lease agreements. Those leases will expire on different dates from 2013 to 2015. Future minimum lease payments on non-cancelable operating leases as of December 31, 2012 are as follows:



Years ending December 31,
2013	$	880
2014	539
2015	365
2016	205
2017	149
2018 and thereafter	242
	$	2,380


(b)	Guarantees

The Company’s DSIT subsidiary provides various performance, advance and tender guarantees as required in the normal course of its operations. As at December 31, 2012, such guarantees totaled approximately $2,648 with $2,265 due to expire in 2013 and the remaining $383 in 2014. As a security for these guarantees, DSIT has deposited with an Israeli bank $814 as restricted deposits ($699 as current restricted deposits and $115 as non-current restricted deposits) on the Company’s Consolidated Balance Sheets.

See Note 12(d) with respect to guarantees on the Company’s lines of credit.


(c)	Royalties

(i) In April 2012, USSI and Northrop Grumman Guidance and Electronics Company, Inc. signed a license agreement involving several of Northrop Grumman’s fiber-optic technology patents. The license agreement calls for an initial payment of $150 and for a royalty payment of 10% of the net selling price of each unit of licensed products used or sold during the term of the agreement, subject to an annual minimum royalty of $50 for the first ten years of the license term.

(ii) In June 2012, the Company's DSIT and USSI subsidiaries were awarded a joint $900 grant from the Israel-United States Binational Industrial Research and Development (“BIRD”) Foundation for the joint development of the next generation integrated passive/active threat detection system for underwater site protection. In September 2012, a Cooperation and Project Funding Agreement was signed between the companies and the BIRD Foundation which allowed for the commencement of the funding which is expected to take place over a 24 month period. DSIT anticipates receipt of a majority of the grant based on the expected allocation of project costs between DSIT and USSI. The first advance payment from the BIRD Foundation of $180 ($113 by DSIT and $67 by USSI) was received in the fourth quarter of 2012. Grant amounts from the BIRD Foundation are netted against research and development expense.

Under the terms of the grant agreement between BIRD, DSIT and USSI, both DSIT and USSI will have to repay the grant based on 5% if gross sales of the commercialized product. If repaid within one year of the successful completion of the project, the total repayment amount is equal to the grant amount. The companies are entitled to extend the repayment period to two years in return for total repayment of 113% of the grant amount, to three years in return for total repayment of 125%, to four years in return for total repayment of 138%, or to five years or more in return for total repayment of 150% of the grant amount. The companies are entitled to prepay the repayment of the grant amount at any time.

(iii) One of the employees of GridSense is entitled to a royalty of 6% of the sales of a particular product in excess of cumulative product sales of $4,000. Cumulative sales of the product at December 31, 2012 are approximately $2,180.