8. Commitments and Contingencies

Operating Leases

The Company’s noncancelable operating lease for its former facilities in South San Francisco, California expired in June 2014. In connection with the lease, the Company has issued a standby letter of credit for approximately $0.2 million for the deposit requirement under the terms of the lease. The Company was also responsible for certain operating expenses. The lease provided an allowance of approximately $0.2 million from the landlord for leasehold improvements that was utilized in the year ended December 31, 2011. This amount had been included in deferred rent in the accompanying balance sheets and was being amortized over the term of the lease, on a straight‑line basis. Rent expense is recognized on a straight‑line basis over the term of the lease.

In December 2013, the Company entered into a lease agreement for a new facility in South San Francisco, California. The new lease commenced in July 2014 and will expire in 2019. The Company moved into the new premises in June 2014 and received a rent holiday so that rental payments did not start until October 2014. Per the terms of the lease agreement, the Company has the option to terminate the lease after 36 months, subject to additional fees and expenses. If the Company elects not to terminate the lease, it will receive a rent holiday in July 2017 and August 2017. At the end of the five year term of the new lease, the Company has the option to extend its term for an additional five years at the then current fair market value rental rate determined in accordance with the terms of the Lease.

As of December 31, 2014, future minimum lease payments due under our lease are as follows:


(in thousands)
2015	$	700
2016		759
2017		680
2018		843
2019		428
Total	$	3,410

In January 2009, the Company entered into a sublease agreement, as amended in April 2009, with a third party to sublease a portion of the Company’s facility in South San Francisco, California. The sublease had a 29 month term that began February 1, 2009 and ended June 2011. In January 2011, the third party renewed the sublease for the term beginning July 2011 and ending June 2014. In August and December 2011, the third party amended the sublease to include additional space. In March 2012, the Company entered into a second sublease agreement with another third party to sublease a portion of the Company’s facility in South San Francisco, California. The sublease had a 28 month term that began March 1, 2012 and ended June 2014. Under the agreements, the Company received sublease payments of $553,000 in 2014. The sublease income received is recorded as an offset to the Company’s rent expenses.

Rent expense, net of sublease income, was $0.4 million, nil and $0.1 million for the years ended December 31, 2014, 2013 and 2012, respectively. Sublease income was $0.6 million, $1.1 million and $1.0 million for the years ended December 31, 2014, 2013 and 2012, respectively.

Indemnifications

The Company, as permitted under Delaware law and in accordance with its bylaws, has agreed to indemnify its officers and directors for certain events or occurrences, subject to certain limits, while the officer or director is or was serving at the Company’s request in such capacity. The term of the indemnification period is equal to the officer’s or director’s lifetime.

The maximum amount of potential future indemnification is unlimited; however, the Company currently holds director and officer liability insurance. This insurance limits the Company’s exposure and may enable it to recover a portion of any future amounts paid. The Company believes that the fair value of these indemnification obligations is minimal. Accordingly, the Company has not recognized any liabilities relating to these obligations for any period presented.

The Company has certain agreements with service providers with which it does business that contain indemnification provisions pursuant to which the Company typically agrees to indemnify the party against certain types of third‑party claims. The Company accrues for known indemnification issues when a loss is probable and can be reasonably estimated. The Company would also accrue for estimated incurred but unidentified indemnification issues based on historical activity. As the Company has not incurred any indemnification losses to date, there were no accruals for or expenses related to indemnification issues for any period presented.