Commitments and Contingencies

12 Months Ended

Dec. 31, 2016

Note 17. Commitments and Contingencies

Legal Proceedings

From time to time we may be involved in judicial or administrative proceedings concerning matters arising in the ordinary course of business. We do not expect that any of these matters, individually or in the aggregate, will have a material adverse effect on our business, financial condition, cash flows or results of operations.

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 which expires in 2017. Total rent expenses under these operating leases were $331,000, $313,000 and $260,000 for the years ended December 31, 2016, 2015 and 2014, respectively. Total minimum lease payments under these leases as of December 31, 2016 are summarized below (in thousands):


	Lease Payments
2017	$	174
2018		37
2019		28
2020		25
2021		25
Thereafter		66
	$	355

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 $447,000 which was net of claim for credit of $128,000 for the year ended December 31, 2016. Royalty expense for years ended December 31, 2015 and 2014 were $583,000, which was net of claim for credit of $217,000 and $577,000 which was net of claim for credit of $233,000, respectively. These expenses were included in cost of revenue. Total maximum, remaining royalty payments under this agreement as of December 31, 2016 are summarized below (in thousands):


	Royalty Payments
2017	$	575
2018		575
	$	1,150