7. Commitments and Contingencies Leases Aduro leases one facility in Berkeley, California under an operating lease that has a remaining lease term of approximately 10 years. Aduro also leased one facility in Oss, the Netherlands, under an operating lease that was set to expire in December 2020. In June 2020, Aduro terminated its lease agreement for its leased facility in connection with the closure of its European site in Oss, the Netherlands. Aduro will continue to pay the lease obligation, which is reimbursable to Aduro if the landlord enters into a new lease agreement with a new tenant, until the original expiration of the lease agreement in December 2020. Both leases contain an option to extend for an additional term, however, Aduro is not reasonably certain to exercise the option for the Berkeley lease and Aduro will not be exercising the option for the Oss lease due to the closure of the Oss facility in June 2020. Refer to Note 10 Restructuring and Related Expense for additional information. On August 25, 2020, Aduro entered into an agreement to sublease the Berkeley facility, consisting of approximately 112,000 square feet, to Perfect Day, Inc., through the expiration of the master lease in December 2029 . Subject to various options, the leased premises will be delivered to the sublessee over time, beginning in August 2020, as the current sublessees vacate the premises upon the expiration or sooner termination of their existing sublease agreements and as Aduro vacates the premises. The base sublease rent rate is $5.25 per rental square foot per month and will increase by 3% cumulatively beginning on June 1, 2021, and every June 1 st thereafter through expiration of the agreement. Additionally, the subtenant is required to pay its pro rata share of operating expenses and taxes as required to be paid by Aduro related to its lease of the Berkeley facility. Aduro incurred initial direct costs of $2.2 million in sublease commissions related to entering into the agreement to sublease the Berkeley facility. To account for the commissions, Aduro capitalized the total commissions amount and will amortize the balance over the term of the sublease. The total sublease income to be earned, in aggregate, will be approximately $70.9 million, which exceeds the amount payable by Aduro under the master lease. As of September 30, 2020, Aduro is subleasing approximately 60,400 square feet in its Berkeley facility under subleases that expire on or prior to December 31, 2029. Sublease income was $0.6 million and $0.3 million for the three months ended September 30, 2020 and 2019, respectively, and $1.3 million and $1.1 million for the nine months ended September 30, 2020 and 2019, respectively. During 2016, Aduro established a letter of credit with Bank of America Merrill Lynch as security for the Berkeley lease in the amount of $0.5 million. During the three months ended September 30, 2020, Aduro increased its letter of credit by $1.3 million as security for the Berkeley lease as part of the requirement related to entering into an agreement to sublease the Berkeley facility. The letter of credit is collateralized by a certificate of deposit for a total of $1.8 million which has been included in restricted cash in the consolidated balance sheet as of September 30, 2020. The maturity of Aduros operating lease liabilities as of September 30, 2020 is as follows (in thousands): Undiscounted Lease Payments Amounts 2020 (remaining three months) $ 1,436 2021 5,332 2022 5,460 2023 5,570 2024 5,681 Thereafter 30,155 Total undiscounted lease payments 53,634 Present value adjustment 21,505 Total net lease liability $ 32,129 Net lease liability - current $ 1,715 Net lease liability - non-current 30,414 Total net lease liability $ 32,129 Straight-line rent expense recognized for operating leases was $0.5 million and $1.2 million for the three months ended September 30, 2020 and 2019, respectively, and $3.2 million and $3.7 million for the nine months ended September 30, 2020 and 2019, respectively. Variable lease payments, including non-lease components such as common area maintenance fees, recognized as rent expense for operating leases was $0.3 million and $0.5 million for the three months ended September 30, 2020 and 2019, respectively, and $1.0 million and $1.1 million for the nine months ended September 30, 2020 and 2019, respectively. Aduro does not have any finance leases. The following information represents supplemental disclosure for the condensed consolidated statement of cash flows related to operating leases (in thousands): Nine months ended September 30, 2020 2019 Cash flows from operating activities Cash paid for amounts included in the measurement of lease liabilities $ 4,245 $ 4,106 The following summarizes additional information related to operating leases: September 30, 2020 December 31, 2019 Weighted-average remaining lease terms (in years) Operating leases 9.2 9.9 Weighted-average discount rate Operating leases 12 % 12 % Indemnification In the ordinary course of business, Aduro enters into agreements that may include indemnification provisions. Pursuant to such agreements, Aduro may indemnify, hold harmless and defend an indemnified party for losses suffered or incurred by the indemnified party. Some of the provisions will limit losses to those arising from third party actions. In some cases, the indemnification will continue after the termination of the agreement. The maximum potential amount of future payments Aduro could be required to make under these provisions is not determinable. Aduro has never incurred material costs to defend lawsuits or settle claims related to these indemnification provisions. Aduro has also entered into indemnification agreements with its directors and officers that may require Aduro to indemnify its directors and officers against liabilities that may arise by reason of their status or service as directors or officers to the fullest extent permitted by Delaware corporate law. Aduro currently has directors and officers insurance. Legal Aduro is not party to any material legal proceedings at this time. From time to time, Aduro may become involved in various legal proceedings that arise in the ordinary course of its business. Other Commitments Aduro has various manufacturing, clinical, research and other contracts with vendors in the conduct of the normal course of its business. All contracts are terminable, with varying provisions regarding termination. If a contract with a specific vendor were to be terminated, Aduro would only be obligated for the products or services that Aduro had received at the time the termination became effective as well as non-cancelable and non-refundable obligations, including payment obligations for costs or expenses incurred by the vendor for products or services before the termination became effective. In the case of terminating a clinical trial agreement at a particular site, Aduro would also be obligated to provide continued support for appropriate medical procedures at that site until completion or termination.