COMMITMENTS AND CONTINGENT LIABILITIES

a. Charges:

As collateral for the Group’s liabilities, fixed charges have been placed on specific notes collectible.

b. Lease commitments:

Certain of the Group’s facilities are rented under operating leases for various periods ending through 2016.

Future minimum lease commitments in the years subsequent to December 31, under non-cancelable operating lease are as follows:

2012 2011

First year 744 681

Second to fifth years 1,536 1,187

2,280 1,868

c. Contingent liabilities:

The Group, from time to time, is party to various claims and disputes associated with its ongoing business operations. In management’s opinion, none of these claims or disputes is expected, either individually or in the aggregate, to have a material adverse effect on the Company’s financial position, results of operations or cash flows.

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NOTE 21 | EQUITY

a. Composition of share capital:

December 31, 2012 December 31, 2011

Authorized Issued and outstanding*) Authorized Issued and outstanding*) Number of shares

Ordinary shares of NIS 0.01 par value each 14,000,000 10,343,801 14,000,000 10,419,589

*) Net of treasury shares.

volatility - 47.80%; risk-free interest rate - 1.05%; expected dividend - 9.97% for 2011 (0% for 2012 and thereafter);

and expected average life of options - 2.3 years.

On August 10, 2011, the Board of Directors approved the grant of 71,288 options to certain employees under the 2005 Share Option Plan. The weighted average fair value of options granted is CHF 1.626 ($ 2.244). The weighted average fair value was estimated based on the binomial model using the following data and assumptions: share price - CHF 5.4; exercise price - CHF 6.13; expected volatility - 48.91%; risk free interest rate - 0.495%;

expected dividend - 12.64% (0% for 2012 and thereafter);

and expected average life of options - 3.86 years.

On March 25, 2012, the Board of Directors approved the grant of 12,189 options to certain employees under the 2005 Share Option Plan. The weighted average fair value of options granted is CHF 3.232 ($ 3.556). The weighted average fair value was estimated based on the binomial model using the following data and assumptions: share price - CHF 7.0; exercise price - CHF 6.16; expected volatility - 60.23%; risk free interest rate - 0.223%;

expected dividend –0%; and expected average life of options - 3.08 years.

On August 28, 2012, the Board of Directors approved the grant of 95,000 options to certain employees under the 2005 Share Option Plan. The weighted average fair value of options granted is CHF 3.008 ($ 3.138). The weighted average fair value was estimated based on the binomial model using the following data and assumptions: share price - CHF 7.0; exercise price - CHF 6.95; expected volatility - 60.38%; risk free interest rate - 0.193%;

expected dividend –0%; and expected average life of options - 3.15 years.

On September 30, 2012, the Board of Directors approved the grant of 100,000 options to an employee, under the 2005 Share Option Plan. The weighted average fair value of options granted is CHF 3.356 ($ 3.592). The weighted average fair value was estimated based on the binomial model using the following data and assumptions: share Balance at January 1, 2011 10,527,165

-Exercise of employees’ options into shares 3,356 0.01 Purchase of treasury shares (110,932)

-Balance at December 31, 2011 10,419,589

-Exercise of employees’ options into shares 26,303 0.01 Purchase of treasury shares (102,091)

-Balance at December 31, 2012 10,343,801

-c. Treasury shares:

The Company holds 466,759 shares (364,668 shares as of December 31, 2011) at a total cost of $ 2,920 as of December 31, 2012 ($ 2,201 as of December 31, 2011).

d. Share option plans:

On March 27, 2011, the Board of Directors approved the grant of 50,000 options to an employee, under the 2005 Share Option Plan. The weighted average fair value of options granted is CHF 1.887 ($ 2.07). The weighted average fair value was estimated based on the binomial model using the following data and assumptions: share price - CHF 6.46; exercise price - CHF 6.46; expected volatility - 45.98%; risk-free interest rate - 1.32%; expected dividend - 9.26% for 2011 (0% for 2012 and thereafter);

and expected average life of options - 2.3 years.

On June 21, 2011, the Board of Directors approved the grant of 34,790 options to certain employees, under the 2005 Share Option Plan. The weighted average fair value of options granted is CHF 1.782 ($ 2.113). The weighted average fair value was estimated based on the binomial model using the following data and assumptions: share price - CHF 5.82; exercise price - CHF 5.81; expected

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volatility - 60.44%; risk free interest rate - 0.153%;

expected dividend –0%; and expected average life of options - 3.13 years.

In the years ended December 31, 2012 and 2011, the Company recorded share-based compensation in general and administrative expenses in the amount of $ 385 and

$ 467, respectively.

e. The following table illustrates the number and weighted average exercise prices (“WAEP”) of, and movements in, share options during the year.

2012 2011

No. of options WAEP (CHF) No. of options WAEP (CHF)

Outstanding at the beginning of the year 820,853 6.52 895,295 6.85

Granted during the year 207,189 6.91 156,078 6.32

Forfeited during the year (75,515) 6.96 (227,164) 7.58

Exercised during the year *) (26,303) 5.32 (3,356) 5.9

Outstanding at the end of the year 926,224 6.61 820,853 6.52

Exercisable at the end of the year 532,648 6.53 444,429 6.44

Options outstanding at Weighted average Vested December 31, 2011 exercise price in CHF options

Under the 2003 Share Option Plan 269,080 6.03 269,078

Under the 2005 Key Employee Share Option Plan 657,144 6.84 263,570

926,224 6.61 532,648

*) The weighted average share price at the date of exercise of these options was CHF 7.16 (2011 - CHF 7.05).

f. On November 7, 2010, the Board of Directors of the Company determined that all exercise of options shall be effectuated by way of net exercise for all currently outstanding options and all new options to be granted under the 2005 Key Employee Share Option Plan. In addition, the Board amended the 2003 Share Option Plan in order to allow for a net exercise of the options outstanding. Such amendment allows the option holders holding such options to choose whether to exercise their options by way of net exercise or using the current regular exercise mechanism.

g. Dividend

On August 23, 2011, the Board of Directors of the Company approved the distribution of a dividend in the amount of $ 0.66 per share totaling approximately

$ 7,000, which was paid on September 23, 2011, to shareholders of record on September 22, 2011. The Board of Directors also approved to increase the aggregate share repurchase amount by an additional $ 2,000.

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NOTE 22 | SUPPLEMENTARY