Commitments and Contingencies

Leases

The Company leases certain computer equipment and its corporate office and data center facilities under noncancelable operating leases for varying periods through 2019. The Company has also entered into capital lease obligations, with varying interest rates from 1.8% to 4.0%, a portion of which are secured by the related computer software as of September 30, 2013 and December 31, 2012.

In 2011, the Company entered into a $3.1 million financing arrangement for computer software, accounted for as a capital lease, with minimum quarterly payments scheduled through 2014. In connection with this transaction, the Company also has minimum obligations for related maintenance and support, which was amended in June 2013. The minimum obligations were $0.4 million and $1.6 million at September 30, 2013 and December 31, 2012, respectively. Such obligations for maintenance and support are recorded in current liabilities in the condensed consolidated balance sheets at September 30, 2013 and current and noncurrent liabilities at December 31, 2012.

The following are the minimum annual lease payments due under these leases at September 30, 2013:



	Operating Leases		Capital Leases
	(in thousands)
Remainder of 2013	$	1,026	$	268
2014	3,693		815
2015	2,676		—
2016	1,850		—
2017	1,623		—
2018 and thereafter	295		—
Total minimum lease payments	$	11,163	1,083
Less amount representing interest			(12		)
Present value of minimum payments			1,071
Less current portion			(1,071		)
Capital lease obligations, noncurrent			$	—

Rent expense was $1.3 million and $1.1 million for the three months ended September 30, 2013 and 2012, respectively, and $4.0 million and $3.1 million for the nine months ended September 30, 2013 and 2012, respectively. Although certain of the operating lease agreements provide for escalating rent payments over the terms of the leases, rent expense under these agreements is recognized on a straight-line basis. As of September 30, 2013 and December 31, 2012, the Company has accrued $0.5 million of deferred rent related to these agreements, which is reflected in other noncurrent liabilities in the accompanying condensed consolidated balance sheets.

Sales and Other Taxes

The Company’s software-as-a-service solutions are subject to sales and other taxes in certain jurisdictions where the Company does business. The Company bills sales and other taxes to customers and remits these amounts to the respective government authorities. For those jurisdictions where the Company has not yet billed sales tax to its customers and believes it is probable it may have exposure and can reasonably estimate such exposure, it has recorded a liability of $0.4 million at September 30, 2013 and December 31, 2012, which is recorded within accrued liabilities in the condensed consolidated balance sheets. However, taxing jurisdictions have differing rules and regulations, which are subject to varying interpretations that may change over time. Other than the liability that the Company has accrued in its condensed consolidated balance sheets, the Company has been unable to assess the probability, or estimate the amount, of its sales tax exposure, if any. There are no pending reviews at September 30, 2013 of which the outcome is expected to result in sales and other taxes due in excess of accrued liabilities. Management does not anticipate that its sales tax exposure, if any, would have a material adverse effect on the financial position, results of operations or cash flows of the Company.

Indemnifications

The Company from time to time enters into certain types of contracts that contingently require it to indemnify various parties against claims from third parties. These contracts primarily relate to (i) the Company's by-laws, under which it must indemnify directors and executive officers, and may indemnify other officers and employees, for liabilities arising out of their relationship, (ii) contracts under which the Company must indemnify directors and certain officers for liabilities arising out of their relationship, and (iii) contracts under which the Company may be required to indemnify customers or resellers from certain liabilities arising from potential infringement of intellectual property rights, as well as potential damages caused by limited product defects. To date, the Company has not incurred and has not recorded any liability in connection with such indemnifications.

The Company maintains director and officer insurance, which may cover certain liabilities arising from its obligation to indemnify its directors.

Contingencies

From time to time, the Company may have certain contingent liabilities that arise in the ordinary course of its business activities. The Company accrues a liability for such matters when it is probable a loss has been incurred and such loss can be reasonably estimated. At September 30, 2013, other than an accrual for sales and other taxes, the Company has not recorded any material liabilities in accordance with accounting for contingencies.