The Company has operating leases for facilities and certain equipment. Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheet. Lease expense for operating leases is recognized on a straight-line basis over the lease term. For lease agreements, other than long-term real estate leases, the Company combines lease and non-lease components.

In March 2019, the Company executed a five-year lease for a facility in Irvine, California, where substantially all operations of the Company have been located since September 2019. The lease expires in September 2024 and contains two optional extension periods of five years each. In addition to the minimum future lease commitments presented below, the lease requires the Company to pay property taxes, insurance, maintenance, and repair costs, which are considered variable lease payments and not included in the lease liability. The lease includes a one-month rent holiday concession and escalation clauses for increased rent over the lease term. Concurrent with the execution of a new ten-year lease (see below), the Company entered into a termination agreement (as amended) that releases the Company from the current facility lease obligation 12 months following the commencement date of the new lease, with options to extend the lease term for up to three periods of an additional 30 days each. As of June 30, 2022, the operating lease right-of-use asset and liability were $52,000 and $59,000, respectively, with the remaining lease term of 1 month.

In October 2020, the Company entered into a ten-year lease for a facility located in Irvine, California (the “Oak Canyon lease”) with two option extension periods of five years each, which the Company has determined that it's reasonably certain to exercise. The Oak Canyon lease requires the Company to make variable lease payments, which are not included in the lease liability due to the amounts not being fixed, for property taxes, insurance, maintenance, repair costs, and certain improvements deemed to be assets of the lessor. The Oak Canyon lease includes scheduled payment escalation clauses over the lease term. The Oak Canyon lease also requires the Company to maintain a letter of credit for the benefit of the landlord in the amount of $1.5 million, which is secured by the Company’s Credit Agreement. The Company has moved in and taken control of the facility and has determined the lease commencement date to be September 30, 2021. On the commencement date, the Company recorded approximately $42.2 million and $28.6 million of right-of-use asset and lease liability, respectively. The right-of use-asset includes approximately $13.5 million, net of $3.7 million tenant allowance, related to prepaid lease payments for the lessor’s owned leasehold improvements which were reclassified from assets in progress and deposits and other assets. The operating right-of-use assets also include $5.8 million of additional prepaid lease payments for the lessor's owned leasehold improvements paid subsequent to the commencement date. As of June 30, 2022, the operating lease right-of-use assets and lease liabilities were $46.5 million and $28.5 million, respectively, with the remaining lease term of 229 months.

The Company's wholly owned subsidiary, Inari Medical Europe GmbH entered into a five-year commercial lease agreement for office space located in Basel, Switzerland (the "Basel lease"). The lease will be effective July 1, 2022 with an option to extend for a period of five years, which the Company has determined that it is reasonably certain to exercise. The lease payment is also indexed to the national consumer price index, which may be adjusted once per calendar year. The Basel lease will also require the Company to maintain a bank guarantee deposit for the benefit of the landlord in the amount of approximately $186,000.

As of June 30, 2022, the weighted average incremental borrowing rate used to measure operating lease liabilities was 6.1%. Cash paid for amounts included in the measurement of operating lease liabilities was $705,000 and $199,000 for the three months ended June 30, 2022 and 2021 and $1,419,000 and $398,000 for the six months ended June 30, 2022 and 2021, respectively.

Total lease cost for the three and six months ended June 30, 2022, are as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021

Operating lease cost	$	1,057	$	186	$	2,100	$	371
Short-term lease cost		30		23		45		34
Variable lease cost		157		81		296		123
Total lease costs	$	1,244	$	290	$	2,441	$	528

Future minimum lease payments under operating leases liabilities as of June 30, 2022 are as follows (in thousands):


Year ending December 31:	Amount
Remainder of 2022	$	1,124
2023		2,163
2024		2,234
2025		2,295
2026		2,361
Thereafter		39,536
Total lease payments		49,713
Less imputed interest		(21,052	)
Total lease liabilities		28,661
Less: lease liabilities - current portion		(465	)
Lease liabilities - noncurrent portion	$	28,196

The following are future minimum lease payments owed for the Basel lease, which has not yet commenced as of June 30, 2022 (in thousands):


Year ending December 31:	Amount
Remainder of 2022	$	90
2023		284
2024		293
2025		300
2026		308
Thereafter		1,797
Total lease payments	$	3,072

In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties and may provide for general indemnifications. The Company’s exposure under these agreements is unknown because it involves claims that may be made against the Company in the future but have not yet been made. To date, the Company has not been subject to any claims or required to defend any action related to its indemnification obligations.

The Company’s amended and restated certificate of incorporation contains provisions limiting the liability of directors, and its amended and restated bylaws provide that the Company will indemnify each of its directors to the fullest extent permitted under Delaware law. The Company’s amended and restated certificate of incorporation and amended and restated bylaws also provide its board of directors with discretion to indemnify its officers and employees when determined appropriate by the board. In addition, the Company has entered and expects to continue to enter into agreements to indemnify its directors and executive officers.

From time to time, the Company may become involved in legal proceedings arising out of the ordinary course of its business. Management is currently not aware of any matters that will have a material adverse effect on the consolidated financial position, results of operations or cash flows of the Company.

In August 2019, the Company entered into a sublicense agreement of intellectual property rights related to the tubular braiding for the non-surgical removal of clots and treatment of embolism and thrombosis in human vasculature other than carotid arteries, coronary vasculature and cerebral vasculature. Under the sublicense agreement, the Company is required to pay an ongoing quarterly administration fee, which amounted to $29,000 for the three months ended June 30, 2022 and 2021 and $58,000 for the six months ended June 30, 2022 and 2021. Additionally, the Company is obligated to pay an ongoing royalty ranging from 1% to 1.5% of the net sales of products utilizing the licensed intellectual property, subject to a minimum royalty quarterly fee of $1,000. The Company recorded royalty expense to cost of goods sold of $0 and $195,000 for the three months ended June 30, 2022 and 2021, respectively, and $212,000 and $385,000 for the six months ended June 30, 2022 and 2021, respectively.