8.	Commitments and Contingencies

Contingencies

A third-party software vendor invoiced us a total of $934,000 for certain licensed software that was lost in transit by a common carrier during the second quarter of 2014. We accrued a liability of $100,000 in the second quarter of 2014 as an estimate of our potential liability for legal and insurance deductible expenses. During the first quarter of 2015, the vendor credited our account for the full $934,000 as the licenses had been deactivated and there was no indication of counterfeit use. Accordingly, we reversed approximately $85,000 of the accrual after payment of legal expenses in the first quarter of 2015.

Contractual Commitments

Our commitments include obligations outstanding under operating leases, which expire through 2020. We have lease commitments for office space in Bellevue, Washington; Taipei, Taiwan; Trowbridge, UK; and Tokyo, Japan. We also lease office space on a month-to-month basis in Akron, Ohio, and on an annual basis in San Diego, California and Boston, Massachusetts.

In August 2013, we amended the lease agreement for our Bellevue, Washington headquarters and extended the term of the original lease that was scheduled to expire in August 2014 to May 2020.

Rent expense was $1.0 million in 2016 and $1.1 million in 2015.

As of December 31, 2015, we had $250,000 pledged as collateral for a bank letter of credit under the terms of our headquarters facility lease. The pledged cash supporting the outstanding letter of credit was recorded as restricted cash equivalents. In September 2016, this letter of credit agreement was replaced by a letter of credit secured by our credit agreement and the corresponding restricted cash equivalents were returned to us.

Operating lease commitments at December 31, 2016 were as follows (in thousands):

2017	$	1,175
2018		1,088
2019		1,038
2020		437
Total	$	3,738

Volume Pricing Agreements

In conjunction with our activities under the OEM Distribution Agreements (“ODAs”) with Microsoft Corporation (“Microsoft”), we previously entered into OEM Volume Royalty Program (“OVRP”) commitments with Microsoft. Under these OVRPs, we were provided with volume pricing on a customer-by-customer basis assuming certain minimum unit volumes were met. The OVRP terms were 12 months. In the event we did not meet the committed minimum unit volumes, we were obligated to pay the difference between the committed per-unit volume rate and the actual per-unit rate we achieved based upon actual units purchased. The OVRP arrangements did not equate to a minimum purchase commitment but rather, the arrangements were a volume pricing arrangement based upon actual volume purchased. In substantially all instances, we had reciprocal agreements with our customers such that we received per-unit price adjustments, similar to the amounts we would have subsequently owed to Microsoft if such OVRP volumes were not met. However, in the event a customer was unwilling or unable to pay us, we would have been negatively impacted. Based upon the credit-worthiness of our customers, our historical OVRP experience with our customers and OVRP arrangements in general, we did not believe we would incur any material liability in the current or future periods relating to existing agreements.

Microsoft has implemented significant pricing changes for its embedded products, including ending its design registration pricing discounts, terminating its OVRP and changing the aggregate volume price structure and product royalties for existing embedded Windows products effective January 1, 2016. In December 2015, Microsoft granted extensions for certain of the OVRPs through 2016.