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Commitments and Contingencies
 12 Months Ended
Dec. 31, 2011
Commitments and Contingencies

11.    Commitments and Contingencies

Leases

The Company leases facilities located in Taunton and Westborough, Massachusetts, Scotts Valley, California, and Dalgety Bay, Scotland under non-cancelable operating leases. The Taunton leases expire in 2012 and 2020. The Westborough lease expires in 2023. The Scotts Valley lease terminates in 2012.The Dalgety Bay lease expires in 2013. Substantially all real estate taxes, insurance and maintenance expenses under these leases are the Company’s obligations and are expensed as incurred and were immaterial. The following is a schedule of minimum rental commitments under non-cancelable operating leases at December 31, 2011:

 

Fiscal Year ending,

    Amount  

2012

      1,031,000   

2013

      496,000   

2014

      461,000   

2015

      533,000   

2016

      569,000   

Thereafter

      1,897,000   
  

 

 

  

Total minimum lease payments

    $ 4,987,000   
  

 

 

  

Amounts incurred under operating leases are recorded as rent expense on a straight-line basis and aggregated approximately $1.8 million in fiscal year 2011, $1.6 million in fiscal year 2010 and $1.5 million in fiscal year 2009.

Other Agreements

The Company has entered into various license agreements which require payment of royalties based upon a set percentage of product sales, subject in some cases, to certain minimum amounts. Total royalty expense approximated $18,000, $27,000 and $20,000, respectively, in fiscal years 2011, 2010 and 2009.

 

The Company has a purchase and supply agreement with a significant HBT customer that expires in July 2012, excluding a last time buy option contained in the agreement. Under the terms of this agreement, the Company agreed to maintain capacity levels for manufacturing HBT wafers and the Company committed to a pricing schedule under certain circumstances. The agreement also requires the Company to give prior notice if the Company exits its HBT product line. In consideration for this agreement the customer agreed to source a certain percentage of its HBT wafer needs from the Company subject to the customer’s right to source HBT wafers from other sources if the Company is unable to meet their requirements under certain circumstances. The Company agreed that failure to meet its supply obligations under the agreement would allow the Company’s customer to obtain court ordered specific performance and if the Company does not perform it could then be liable for monetary damages up to a maximum of $40.0 million. To date the Company has met its commitments under this agreement.

Included in Billings in excess of revenue earned is $2.2 million which was received in 2008 from a state grant. Amounts from this grant are earned by achieving certain employment levels and other conditions through 2017. In the event the Company does not achieve these employment levels some or all of the $2.2 million will be refunded. The agreement also contains repayment provisions which require us to repay certain amounts back to the state if the Company fails to achieve certain employment milestones after years three and five of the agreement, or if we move certain parts of the Company’s operations out of the state. Based on current the Company has estimated that it may be required to repay $1.0 million to the state in 2012.