NOTE

COMMITMENTS AND CONTINGENT LIABILITIES

a. Liens:

The Company has several liens granted to financial institutions mainly to secure various operating lease agreements in connection with its office space.

b. Lease Commitments:

The Company rents its facilities in all locations under operating leases with lease periods expiring from

2017

2026.

The lease agreement of VSL includes extension options. VSL leases cars for its employees under operating lease agreements expiring at various dates from

2017

–

2020.

Aggregate minimum rental commitments under non-cancelable leases as of

September 30, 2017

for the upcoming years were as follows:

	(unaudited)

2017	$	1,629
2018		5,801
2019		5,643
2020		3,310
2021		3,508
Thereafter		13,074
	$	32,965

Total rent expenses for the

nine

months ended

September 30, 2017

and the year ended

December 31, 2016

were

$2,903

and

$3,258,

respectively. The total minimum rent to be received in the future under the non-cancelable sublease as of

September 30, 2017

was

$927.

For leases that contain predetermined fixed escalations of the minimum rent, the Company recognizes the related rent expense on a straight-line basis from the date of possession of the property to the end of the initial lease term. The Company records any differences between the straight-line rent amounts and amounts payable under the leases as part of deferred rent, in accrued liabilities or long-term liabilities, as appropriate. Cash or lease incentives received upon entering into certain leases (“tenant allowances”) are recognized on a straight-line basis as a reduction to rent from the date of possession of the property through the end of the initial lease term. The Company records the unamortized portion of tenant allowances as a part of deferred rent, in current liabilities or other long-term liabilities, as appropriate.

c. Credit Facility:

March

31,

2014,

the Company entered into a promissory note and related security documents with Bank Leumi USA. The Company

may

borrow up to

$7,000

against certain of its accounts receivable outstanding amount, based on several conditions, at an annual interest rate of the Wall Street Journal Prime Rate less

0.15%;

provided, however, that the annual interest rate for advances will

not

be less than

4.10%.

As of

September 30, 2017,

that rate amounted to

4.10%.

This promissory note enables the Company, among other things, to engage in foreign currency hedging transactions with Bank Leumi USA to manage exposure to foreign currency risk without restricted cash requirements. The Company

may

borrow under the promissory note until

August 15, 2018

at which time the principal sum of each such loan, together with accrued and unpaid interest payable, will become due and payable. As of

September 30, 2017,

the Company had

balance outstanding under the promissory note. As part of the transaction, the Company granted the lender a security interest in its personal property, excluding intellectual property and other intangible assets. The promissory note also contains customary events of default