Commitments and Contingencies

12 Months Ended

Dec. 31, 2015

Note 17. Commitments and Contingencies

Legal Matters

We are subject to legal proceedings and claims, either asserted or unasserted, that arise in the ordinary course of business. While the outcome of these proceedings and claims cannot be predicted with certainty, management does not believe that the outcome of any of these legal matters will have a material adverse effect on our consolidated financial position, results of operations or cash flows.

Leases

We lease certain office space, warehouse facilities and equipment under long-term operating leases expiring at various dates through December 2025. The majority of our lease obligations relates to our lease agreement for the facility in Fremont, California with approximately 19,467 square feet. Total rent expenses under these operating leases were $313,000, $260,000 and $638,000 for the years ended December 31, 2015, 2014 and 2013, respectively. Total minimum lease payments under these leases as of December 31, 2015 are summarized below (in thousands):


	Lease Payments
2016	$	173
2017		167
2018		39
2019		30
2020		27
Thereafter		97
	$	533

Royalty Agreement

We entered into a royalty agreement with a competitor effective December 3, 2010 with a term of eight years, terminating December 31, 2018. We and our related companies are granted a worldwide, nonexclusive, royalty bearing, irrevocable license to certain patents for the term on the agreement. We shall pay up to $7.0 million royalty payment over eight years that began in 2011 based on future royalty bearing sales. This agreement contains a clause that allows us to claim a credit, starting in 2013, in the event that the royalty bearing sales for the year is lower than a pre-determined amount set forth in this agreement. Royalty expense under this agreement was $583,000 which was net of claim for credit of $217,000 for the year ended December 31, 2015. Royalty expense for years ended December 31, 2014 and 2013 were $577,000 which was net of claim for credit of $223,000 and $530,000 which was net of claim for credit of $270,000, respectively. These expenses were included in cost of revenue. Total maximum, remaining royalty payments under this agreement as of December 31, 2015 are summarized below (in thousands):


	Royalty Payments
2016	$	575
2017		575
2018		575
	$	1,725