7.Commitments and Contingencies

Operating Leases

At June 30, 2014, the Company had various non‑cancellable operating leases related to the Company’s equipment and office facilities which expire through 2024. Additionally, in July 2014, the Company entered into a new facility lease in Santa Monica that will increase its total future minimum lease commitments over the next fifteen years, beginning in January 2015, by $36.3 million.

At June 30, 2014 and including the new facility lease executed in July 2014, future minimum payments for obligations under non‑cancellable operating leases are as follows (in thousands):


Six months ending December 31, 2014	$	1,337
2015		5,149
2016		5,922
2017		5,201
2018		5,530
Thereafter		37,008
Total minimum lease payments	$	60,147

The Company recorded rent expense of $0.7 million and $0.7 million for the three months ended June 30, 2014 and 2013, respectively. For the six months ended June 30, 2014 and 2013, total rent expense was $1.3 million and $1.3 million, respectively.

In connection with the facility lease executed in July 2014, the Company was required to obtain an irrevocable standby letter of credit, in the amount of $3.5 million for the benefit of its landlord. Beginning October 1, 2019 through October 1, 2025, the letter of credit is subject to an annual reduction to as little as $1.2 million.

Automotive Website Program Partnership Agreement

As part of the Company’s prior partnership agreement with Yahoo!, Inc. or Yahoo! in June 2012, the Company was required to issue a stand‑by letter of credit in the amount of $10.0 million. The Company is required to maintain restricted cash equal to the amount of the stand‑by letter of credit. In April 2013, the stand‑by letter of credit was reduced to $2.0 million and will be reduced to zero on September 29, 2014, the expiration date of the stand-by letter of credit agreement.

Legal Proceedings

From time to time, the Company may become subject to legal proceedings, claims and litigation arising in the ordinary course of business. The Company is not currently a party to any material legal proceedings, nor is the Company aware of any pending or threatened litigation that would have a material adverse effect on the Company’s business, operating results, cash flows or financial condition should such litigation be resolved unfavorably.

Employment Contracts

The Company has entered into employment contracts with certain executives of the Company. Employment under these contracts is at‑will employment. However, under the provisions of the contracts, the Company would incur severance obligations up to twelve months of the executive’s annual base salary for certain events such as involuntary terminations. In addition, upon the consummation of the IPO, certain executives earned liquidity bonuses totaling $2.6 million, which were recorded in sales and marketing and general and administrative expenses in the Company’s consolidated statements of comprehensive loss during the three and six months ended June 30, 2014.

Indemnifications

In the ordinary course of business, the Company may provide indemnifications of varying scope and terms to customers, vendors, lessors, investors, directors, officers, employees and other parties with respect to certain matters, including, but not limited to, losses arising out of the Company’s breach of such agreements, services to be provided by the Company, or from intellectual property infringement claims made by third‑parties. These indemnifications may survive termination of the underlying agreement and the maximum potential amount of future payments the Company could be required to make under these indemnification provisions may not be subject to maximum loss provisions. The maximum potential amount of future payments the Company could be required to make under these indemnification provisions is indeterminable. To date, there has not been a material claim paid by the Company, nor has the Company been sued in connection with these indemnification arrangements. At June 30, 2014 and December 31, 2013, the Company has not accrued a liability for these guarantees, because the likelihood of incurring a payment obligation, if any, in connection with these guarantees is not probable or reasonably estimable.

Marketing Sponsorships

The Company has entered into marketing sponsorship agreements with professional sporting affiliations. At June 30, 2014, the sponsorship agreements require future commitments of $0.2 million payable during the remainder of 2014 and $0.8 million payable in 2015.