9. Commitments and Contingencies

Lease Agreements.

The Company leases its operating facilities under a non-cancelable operating lease. In December 2009, the lease for the Mountain View, California facility was amended and renewed to lease for an additional six year period beginning March 1, 2010 until February 28, 2015. In August 2014, the Company executed an amendment to extend the term of the lease through February 28, 2017. There are no remaining options to extend or renew the terms of this lease. Rent expense totaled $0.6 million for each of the fiscal years 2014, 2013 and 2012.

Future minimum lease payments under current operating leases at January 3, 2015 are summarized as follows (in thousands):

Fiscal Year	Operating Lease Payments
2015	$	858
2016		993
2017		164
Total future minimum lease payments	$	2,015

Manufacture and Supply Agreement.

In January 2014, the Company and Peregrine Surgical Ltd. amended the manufacture, supply and distributor agreement that was originally entered into in April 2013. The amendment modified the term and termination period from April 1, 2013 through April 1, 2017 to January 1, 2014 through January 1, 2018. All other terms under the original agreement remained in force.

Under the agreement, the Company has a minimum commitment to purchase annually $750 thousand of certain components and ophthalmic instrumentation. In 2014, the Company was not able to meet the minimum commitment, having purchased only $678 thousand. The deficient amount of $72 thousand was mutually agreed upon by both parties to be added to the 2015 minimum commitment.

Future minimum payments for manufacture and supply commitments as of January 3, 2015 are summarized as follows (in thousands):

Fiscal Year	Contract Manufacturing and Supply Commitments
2015	$	6,171
2016		2,013
2017		750
Total contract manufacturing and supply commitments	$	8,934

License Agreements.

The Company is obligated to pay royalties equivalent to 5% of sales on certain products under certain license agreements with termination dates as early as the end of 2018 and as late as the end of 2021. Royalty expense, charged to cost of revenues, was approximately $0.2 million, $0.1 million, and $0.1 million for the fiscal years 2014, 2013 and 2012, respectively.

Indemnification Arrangements.

The Company enters into standard indemnification arrangements in our 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, generally our business partners or customers, in connection with any trade secret, copyright, patent or other intellectual property infringement claim by any third-party with respect to our products. The term of these indemnification agreements is generally perpetual anytime after the execution of the agreement. The maximum potential amount of future payments the Company could be required to make under these agreements 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.

The Company has entered into indemnification agreements with its directors and officers that may require the Company to indemnify its directors and officers against liabilities that may arise by reason of their status or service as directors or officers, other than liabilities arising from willful misconduct of a culpable nature; to advance their expenses incurred as a result of any proceeding against them as to which they could be indemnified; and to make good faith determination whether or not it is practicable for the Company to obtain directors and officers insurance. The Company currently has directors and officers liability insurance.

In general, management believes that claims which are pending or known to be threatened, will not have a material adverse effect on the Company’s financial position or results of operations and are adequately covered by the Company’s liability insurance. However, it is possible that cash flows or results of operations could be materially affected in any particular period by the unfavorable resolution of one of more of these contingencies or because of the diversion of management’s attention and the incurrence of significant expenses.