12. COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2012

Commitments And Contingencies

NOTE 12: COMMITMENTS AND CONTINGENCIES

Litigation

We are from time to time involved in legal proceedings arising from the normal course of business. As of the date of this Report, we are not currently involved in any material legal proceedings.

Operating Leases

We lease certain offices, facilities, equipment and vehicles under non-cancellable operating and capital leases expiring at various dates through 2016.

At December 31, 2012, future minimum contractual lease obligations were as follows:

Years ending December 31,:	Capital Leases			Operating Leases
2013	$	608		$	345
2014		67			241
2015		58			234
2016		–			38
2017		–			–
Thereafter		–			–
Total minimum lease payments	$	733		$	858
Residual principal balance		–
Amount representing interest		(26	)
Present value of minimum lease payments	$	707
Less current maturities of capital lease obligations		(596	)
Long-term contractual obligations	$	111

Rent expense for the years ended December 31, 2012 and 2011 was $498 and $488, respectively.

Letters of Credit

Certain customers could require us to issue standby letters of credit in the normal course of business to ensure performance under terms of contracts or as a form of product warranty. The beneficiary of a letter of credit could demand payment from the issuing bank for the amount of the outstanding letter of credit. Letters of credit outstanding at December 31, 2012 and 2011 under the Fifth Amendment with Whitney are as follows:

Type	December 31, 2012		December 31, 2011
Performance	$	235	$	470
Warranty		592		592
Total	$	827	$	1,062

Employment Agreements

Certain of our Executives are employed under employment agreements containing severance provisions. In the event of termination of an Executive’s employment for any reason, the Executive will be entitled to receive all accrued, unpaid salary and vacation time through the date of termination and all benefits to which the Executive is entitled or vested under the terms of all employee benefit and compensation plans, agreements and arrangements in which the Executive is a participant as of the date of termination.

In addition, subject to executing a general release in favor of the Company, the Executive will be entitled to receive certain severance payments in the event his employment is terminated by the Company “other than for cause” or by the Executive with “good reason.” These severance payments include: (i) a lump sum in cash equal to one to three times the Executive’s annual base salary; ii) a lump sum in cash equal to one to two times the average annual bonus paid to the Executive for the prior two full fiscal years preceding the date of termination; (iii) a lump sum in cash equal to a pro rata portion of the annual bonus payable for the period in which the date of termination occurs based on the actual performance under the Company’s annual incentive bonus arrangement, but no less than fifty percent of Executive’s annual base salary; and (iv) if the Executive’s termination occurs prior to the date that is twelve months following a change of control, then each and every share option, restricted share award and other equity-based award that is outstanding and held by the Executive shall immediately vest and become exercisable.