7. Commitments and Contingencies Operating Lease On February 1, 2017, the Company entered into a sublease agreement (the Sublease) for approximately 12,400 square feet of building space for the relocation of the Companys corporate headquarters to Englewood, Colorado (the Sublease Premises), which was effective as of January 26, 2017. The lease term commenced on June 1, 2017 and will terminate in May 2020. The Company relocated its corporate headquarters from Sunnyvale, California to Englewood, Colorado in June 2017. The monthly base rent under the Sublease is equal to $20.50 per rentable square foot of the Sublease Premises during the first year. The monthly base rent is equal to $21.12 and $21.75 per rentable square foot during the second and third years, respectively. In connection with the execution of the Sublease, the Company also agreed to pay a security deposit of approximately $22,000. The Company is entitled to an allowance of approximately $88,000 for certain tenant improvements relating to the engineering, design and construction of the Sublease Premises. Rent expense for the three months ended September 30, 2018 and 2017 was $65,000 and $138,000, respectively. Rent expense for the nine months ended September 30, 2018 and 2017 was $293,000 and $305,000, respectively. In September 2018, the Company entered into a 36 -month noncancelable operating lease agreement for office equipment. The lease commenced on September 20, 2018. The monthly payment is approximately $2,600. As of September 30, 2018, future minimum payments under the leases are as follows (in thousands): Year Ending December 31, 2018 (remaining three months) $ 73 2019 296 2020 143 2021 23 Total minimum lease payments $ 535 Indemnification Agreements The Company enters into standard indemnification arrangements in the ordinary course of business. Pursuant to these arrangements, the Company indemnifies, holds harmless and agrees to reimburse the indemnified parties for losses suffered or incurred by the indemnified party, in connection with performance of services within the scope of the agreement, breach of the agreement by the Company, or noncompliance of regulations or laws by the Company, in all cases provided the indemnified party has not breached the agreement and/or the loss is not attributable to the indemnified partys negligence or willful malfeasance. The term of these indemnification agreements is generally perpetual any time after the execution of the agreement. The maximum potential amount of future payments the Company could be required to make under these arrangements is not determinable. The Company has never incurred costs to defend lawsuits or settle claims related to these indemnification agreements. As a result, the Company believes the estimated fair value of these agreements is minimal. Loss Contingencies The Company is or has been subject to proceedings, lawsuits and other claims arising in the ordinary course of business. The Company evaluates contingent liabilities, including threatened or pending litigation, for potential losses. If the potential loss from any claim or legal proceeding is considered probable and the amount can be estimated, the Company accrues a liability for the estimated loss. Because of uncertainties related to these matters, accruals are based upon the best information available. For potential losses for which there is a reasonable possibility (meaning the likelihood is more than remote but less than probable) that a loss exists, the Company will disclose an estimate of the potential loss or range of such potential loss or include a statement that an estimate of the potential loss cannot be made. As additional information becomes available, the Company reassesses the potential liability related to pending claims and litigation and may revise its estimates, which could materially impact its condensed consolidated financial statements. Management does not believe that the outcome of any outstanding legal matters will have a material adverse effect on the Company's consolidated financial position, results of operations and cash flows. Legal Proceedings On March 11, 2016, the Company filed a demand for Arbitration with the American Arbitration Association ("AAA") against a former employee asserting common law and statutory negligence claims against the former employee arising from the former employee's negligent performance of certain work duties. The demand seeks damages for lost profits, along with attorney's fees, interest, and costs. The former employee filed a counterclaim in the proceeding, alleging discrimination, retaliation, wrongful termination, and various claims for alleged wage and hour violations under the California Labor Code, stemming from the cessation of her employment with the Company. The former employee seeks damages for lost wages, punitive damages, statutory penalties, injunctive relief, and attorneys fees, interest and costs. On June 4, 2018, the Company entered into a Settlement and License Agreement (the Settlement Agreement) with ThermiGen LLC and ThermiAesthetics LLC (ThermiGen, collectively) as well as Red Alinsod, M.D. resolving the Companys patent litigation against ThermiGen and Dr. Alinsod. The Settlement Agreement also resolved ThermiGens inter partes review proceedings against the Company. The litigation arose from the Companys claim that ThermiGen and Dr. Alinsod were improperly using the Companys patented technology without consent. Pursuant to the Settlement Agreement, the parties agreed to resolve all currently pending disputes between them. Under the terms of the Settlement Agreement, the Company received an initial monetary payment to settle the litigation and past claims and an on-going royalty for future sales. Viveve granted to ThermiGen a non-exclusive, non-transferable license to use the Companys U.S. patent for the current version of ThermiGens ThermiVa system (which includes RF generators and consumables). The Company has recorded the monetary payment as a gain on litigation settlement in selling, general and administrative expenses on the condensed consolidated statements of operations during the nine months ended September 30, 2018.