8. Commitments and Contingencies

Operating Leases

Rent expense under operating leases was $227,000 and $192,000 for the years ended December 31, 2016 and 2015, respectively.

Future minimum lease payments under noncancelable lease agreements as of December 31, 2016, were as follows:



	Operating
	Leases
2017	$	61,000
2018		38,000
2019		6,000
Total minimum lease payments	$	105,000

The Company entered into an agreement with Virginia Biotechnology Research Partnership Authority for Richmond, Virginia laboratory space. At December 31, 2016, the Company’s minimum payment commitment for the Richmond laboratory space was approximately $14,000.

In June 2015, the Company entered into an agreement with Savills Studley, Inc. for San Diego, California office space. The agreement renews on a monthly basis, until terminated by the Company. At December 31, 2016, the Company’s minimum payment commitment for the San Diego office space was approximately $6,000.

In February 2014, the Company entered into an agreement with Avtotehna d.o.o. for manufacturing and research space in Ljubljana, Slovenia. The lease has a termination date of February 2019, with extension provisions at the option of the Company, and a monthly payment of $3,128. At December 31, 2016, our minimum payment commitment for the Ljubljana space was approximately $81,000. In addition, the Company expended $185,000 in 2014 for leasehold improvements related to this facility. These costs are being amortized on a straight-line basis over the life of the related lease, or the useful life of the asset, whichever is shorter.

Legal Proceedings

On November 12, 2016, we entered into a settlement agreement with NRM VII Holdings I, LLC (“NRM”) to settle a complaint filed by NRM in April 2016 against the Company and its members of the board of directors, alleging that the Company breached the implied covenant of good faith and fair dealing by entering into an alleged scheme to force NRM to convert its shares of Series B redeemable convertible preferred stock into shares of our common stock. Pursuant to the settlement agreement, NRM dismissed the allegation with prejudice upon receipt of a cash payment of $2.0 million, which was paid to NRM by our insurance carrier in November 2016. The settlement agreement contains mutual releases covering all claims that we or our affiliates, or NRM or its affiliates, have or may have against the other party or such other party's affiliates in connection with the allegation or otherwise as of the date of the settlement agreement.

Upon the automatic conversion of NRM's shares of our Series B convertible preferred stock into shares of our common stock on April 8, 2016, we became obligated to pay NRM accrued dividends in the amount of approximately $914,000. The accrued dividends obligation to NRM was reflected in current liabilities on our consolidated balance sheet at September 30, 2016. Upon NRM's receipt of the $2.0 million settlement payment described above, our accrued dividends payment obligation to NRM was extinguished. We have agreed to repay our insurance carrier an aggregate amount equal to the accrued dividends, or $914,000, of which $100,000 was paid in December 2016, and the remainder of the balance of $803,000, net of imputed interest, was included in the consolidated balance sheet as of December 31, 2016 as Note Payable, and would be paid as follows: approximately $205,000 in January 2017, approximately $305,000 in April 2017 and a final payment of $305,000 in July 2017. In March 2017, the payment terms of the last two installments of $305,000 each were modified to be payable in July 2017 and October 2017, respectively.