NOTE 9COMMITMENTS AND CONTINGENCIES

Facility Leases

The Company leases certain of its manufacturing and office facilities and equipment under non-cancelable leases, certain of which contain renewal options. In addition to the base rent, the Company is generally required to pay insurance, real estate taxes and other operating expenses relating to such facilities. In some cases, base rent increases during the term of the lease based on a predetermined schedule. The Company recognizes rent expense on a straight-line basis over the life of the lease for leases containing stated rent escalations.

Future minimum rental commitments under the terms of these leases at January 2, 2016 were as follows:

	Capital			Operating		Total
(In thousands)	Leases			Leases		Obligations
Payments Due By Period:
2016	$	16		$	10,550	$	10,566
2017	14			8,875		8,889
2018	7			7,997		8,004
2019	—			7,167		7,167
2020	—			6,177		6,177
Thereafter	—			6,518		6,518


Total minimum payments	37			$	47,284	$	47,321


Less amount representing interest	(1		)

Present value of obligation	$	36

The Company has subleased one of its facilities under a non-cancelable sublease. Future minimum rentals to be received under such sublease as of January 2, 2016 were as follows:

	Operating
(In thousands)	Leases
Payments Due By Period:
2016	$	345
2017	427
2018	488
2019	494

Total minimum sublease payments	$	1,754

Rental expense, net of sublease income, under all leases totaled $10.0 million, $10.0 million and $11.5 million for 2015, 2014 and 2013, respectively.

Environmental Reserves

Certain portions of the soil at Spectra-Physics’ former facility located in Mountain View, California, and certain portions of the aquifer surrounding the facility, through which contaminated ground water flowed, are part of an EPA-designated Superfund site and are subject to a cleanup and abatement order from the California Regional Water Quality Control Board. Spectra-Physics, along with several other entities with facilities located near the Mountain View, California facility, have been identified as Responsible Parties with respect to this Superfund site, due to releases of hazardous substances during the 1960s and 1970s. The site is mature, and investigations and remediation efforts have been ongoing for approximately 30 years. Spectra-Physics and the other Responsible Parties have entered into a cost-sharing agreement covering the costs of remediating the off-site groundwater contamination, pursuant to which Spectra-Physics is responsible for 30% of the remediation costs.

At the time of the Company’s acquisition of Spectra-Physics, it established a reserve to cover known costs relating to this site for which it was liable, the balance of which was immaterial at January 2, 2016 and January 3, 2015. The Company is currently unaware of any material future expenses associated with this site for which the Company will be liable.

Indemnification Obligations

The Company from time to time enters into certain types of agreements that contingently require the Company to indemnify the other parties against certain claims. These contracts primarily include: (i) contracts for the development and/or sale of products, under which the Company customarily agrees to hold the other party harmless against losses arising from bodily injury or damage to personal property caused by the Company’s personnel or products or infringement by the Company’s products of third-party intellectual property rights; (ii) certain real estate leases, under which the Company may be required to indemnify property owners for environmental and other liabilities, and other claims arising from the Company’s use of the applicable premises; (iii) divestiture agreements, under which the Company may provide customary indemnifications to purchasers of the Company’s businesses or assets; and (iv) certain agreements with the Company’s officers, directors and employees, under which the Company may be required to indemnify such persons for liabilities incurred by them in the course of their employment.

In each of these circumstances, payment by the Company is typically subject to the other party making a claim to and cooperating with the Company pursuant to the procedures specified in the particular contract. This usually allows the Company to challenge the other party’s claims and to control the defense or settlement of any third-party claims brought against the other party. The Company’s obligations under these agreements are typically not limited in terms of amount or duration. In some instances, the Company may have recourse against third parties and/or insurance covering certain payments made by the Company.

It is not possible to predict the maximum potential amount of future payments under these or similar agreements due to the conditional nature of the Company’s obligations and the unique facts and circumstances involved in each particular agreement. Historically, the Company has not been obligated to make significant payments for these obligations, and no liabilities have been recorded for these obligations as of January 2, 2016 and January 3, 2015.

Other Contingencies

From time to time, the Company may be involved in litigation relating to claims arising out of its operations in the normal course of business. The Company currently is not a party to any legal proceedings, the adverse outcome of which, in management’s opinion, individually or in the aggregate, would have a material adverse effect on the Company’s results of operations, financial position or cash flows.