18. Commitments and Contingencies

Lease Commitments

The Company leases its office space under non-cancelable operating leases, some of which contain payment escalations. The Company recognizes rent expense on a straight-line basis over the non-cancelable lease term and records the difference between cash rent payments and rent expense recognized in the consolidated statements of operations as accrued rent within accrued expenses (current) and other liabilities (non-current). The Company also leases office equipment under operating leases that expire at various dates through 2014. At December 31, 2013, the accrued rent balance for office leases was $947, of which $125 was included in accrued expenses (current) and $822 was included in other long-term liabilities. At December 31, 2012, the accrued rent balance related for office leases was $476, of which $42 was included in accrued expenses (current) and $434 was included in other long-term liabilities.

Total rent expense under these operating leases was approximately $3,041, $1,652 and $1,387 for the years ended December 31, 2013, 2012 and 2011, respectively. The Company also leases furniture and computer equipment under capital leases that expire at various dates through 2015.

Future minimum lease payments under non-cancelable operating and capital leases at December 31, 2013 are as follows:


Years Ending December 31,	Operating Leases		Capital Leases			Total
2014	$	3,067	$	486		$	3,553
2015		3,118		168			3,286
2016		3,153		—			3,153
2017		3,031		—			3,031
2018		1,680		—			1,680
Thereafter		2,068		—			2,068

Total	$	16,117		654		$	16,771

Less amount representing interest				(24	)

Present value of minimum lease payments			$	630

Data Center Agreements

The Company has agreements with various vendors to provide specialized space and services for the Company to host its software application. Future minimum payments under non-cancelable data center agreements at December 31, 2013 totaled $3,338, comprised of $2,190 due in the year ending December 31, 2014 and $1,148 due in the year ending December 31, 2015.

Purchase Commitments

As of December 31, 2013, the Company had non-cancelable purchase commitments related to telecommunications, subscription fees for third-party data (such as Internet maps and posted speed limits) and subscription fees for software services totaling $8,840, of which $7,177, $1,613 and $50 will become payable in the years ending December 31, 2014, 2015 and 2016, respectively.

Indemnification Agreements

In the ordinary course of business, the Company may provide indemnifications of varying scope and terms to customers, vendors, lessors, business partners, and other parties with respect to certain matters including, but not limited to, losses arising out of breach of such agreements, from services to be provided by the Company, or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with members of its Board of Directors and certain of its officers that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is, in many cases, unlimited. To date, the Company has not incurred any material costs as a result of such indemnifications. The Company does not believe that the outcome of any claims under indemnification arrangements will have a material effect on its consolidated financial position, results of operations or cash flows, and it has not accrued any liabilities related to such obligations in its consolidated financial statements as of December 31, 2013 and 2012.

Litigation

From time to time, the Company may become subject to legal proceedings, claims and litigation arising in the ordinary course of business. In addition, the Company may receive notification alleging infringement of patent or other intellectual property rights. The Company is not a party to any material legal proceedings, nor is the Company aware of any pending or threatened litigation, that, in its opinion, would have a material adverse effect on its business or its consolidated financial position, results of operations or cash flows should such litigation be resolved unfavorably. The Company accrues contingent liabilities when it is probable that future expenditures will be made and such expenditures can be reasonably estimated.

On January 2, 2014, we were sued by GPNE Corp. in a patent-infringement case (GPNE Corp. v. FleetMatics USA, LLC, Civil Action No. 13-2049 (LPS)) (United States District Court for the District of Delaware). The complaint alleges that we have infringed U.S. Patent No. 7,555,267 entitled “Network Communication System Wherein a Node Obtains Resources For Transmitting Data By Transmitting Two Reservation Requests” and U.S. Patent No. 8,086,240 entitled “Data Communications Using A Reserve Request And Four Frequencies To Enable Transmitting Data Packets Which Can Include a Count Value And Termination Indication Information.” GPNE Corp. is seeking damages rather than an injunction. As this matter is in its early stages, we are unable to estimate whether a loss is reasonably possible. While we do not believe that this litigation will have a material adverse effect on our business, financial condition, operating results, or cash flows, we cannot assure you that this will be the case.

On August 14, 2012, a putative class action complaint was filed in the Sixth Judicial Circuit in Pinellas County, Florida, entitled U.S. Prisoner Transport, et al. v. FleetMatics USA, LLC, et al., Case No. 1200-9933 CI-20. We removed the case to the United States District Court for the Middle District of Florida on September 13, 2012, U.S. Prisoner Transport, et al. v. FleetMatics USA, LLC, et al., Case No. 8:12-CV-2079. We moved to dismiss the complaint on September 20, 2012. Plaintiffs filed an amended complaint on October 4, 2012 and changed the case caption to Brevard Extraditions, Inc., d/b/a U.S. Prisoner Transport, et al. v. FleetMatics USA, LLC, et al. We moved to dismiss the amended complaint on October 18, 2012. The Court denied our motion to dismiss in part and granted it in part on September 27, 2013, and granted plaintiffs leave to file a second amended complaint. Plaintiffs filed a second amended complaint on October 11, 2013. The second amended complaint alleges essentially the same claims as previously alleged. On January 21, 2014, the parties executed an agreement to a settlement with class members for an aggregate of $525,000, which was subject to Court approval. On January 23, 2014, the Court issued an order granting preliminary approval of the class action settlement, conditionally certifying the settlement class, approving the form of notice to the class. In the order, the Court also set a hearing on final approval of the settlement for June 27, 2014. In the event the final settlement agreement is not approved, and, given the inherent uncertainties of litigation, we are unable to estimate a reasonably possible range of additional loss, if any, at this time, but there can be no assurance that this matter will not have a material adverse effect on our business, financial condition, operating results, and cash flows.

Management Services Agreement

The Company was party to a Management Services Agreement that required the Company to make payments of up to $15,000 through 2014 if certain performance targets were achieved (see Note 20). On August 20, 2012, the Company paid Privia an aggregate of $7,800 in full satisfaction of all present and future amounts that were payable by the Company under the agreement.