Enom 2014 Annual Report Download - page 85

F-21
8. Commitments and Contingencies
Leases
We conduct our operations utilizing leased office facilities in various locations and lease certain equipment under non-
cancellable operating and capital leases. Our leases expire between March 2015 and February 2020.
The following is a schedule of future minimum lease payments under operating and capital leases as of December 31, 2014 (in
thousands):
Operating Capital
leases leases
Year ending December 31,
2015 .............................................................................................. $ 2,879 $ 61
2016 .............................................................................................. 2,702
2017 .............................................................................................. 2,192 -
2018 .............................................................................................. 3,479 -
2019 .............................................................................................. 1,465 -
Thereafter ........................................................................................... 25 -
Total minimum lease payments ......................................................... $ 12,742 61
Less interest expense .......................................................................... -
Capital lease obligation ...................................................................... $ 61
We incurred rent expense of $3.5 million, $6.7 million and $5.0 million, respectively, for the years ended December 31, 2014,
2013 and 2012. As of December 31, 2014 and 2013, accrued expenses and other current liabilities include a deferred rent liability of
$1.6 million and $2.6 million, respectively, and $1.6 million and $2.4 million were included in other long-term liabilities as of
December 31, 2014 and 2013, respectively.
Litigation
On November 5, 2014, Charles Saatchi filed a lawsuit against our wholly owned subsidiary, Saatchi Online, Inc. (“Saatchi
Art”), in the High Court of Justice, Chancery Division (United Kingdom) relating to an intellectual property licensing agreement (the
“IP Agreement”) between Charles Saatchi and Saatchi Art, dated February 18, 2010. Mr. Saatchi alleges that Saatchi Art committed a
repudiatory breach of the IP Agreement, effectively terminating it, and that Saatchi Art must cease using the “Saatchi” name. Mr.
Saatchi is seeking a permanent injunction restricting Saatchi Art from continuing to use the “Saatchi” name, a declaration that the IP
Agreement has been validly terminated, a disgorgement of any profits derived from Saatchi Art’s use of the name since the alleged
termination date and unspecified monetary damages. We do not believe that the conduct alleged by Mr. Saatchi constitutes a
repudiatory breach of the IP Agreement and intend to vigorously defend the lawsuit. The litigation is in its early stages.
On December 30, 2014, Charles Saatchi and Robert Norton, common stockholders of Saatchi Art prior to Demand Media’s
acquisition of it, filed a lawsuit in the Delaware Chancery Court against the former directors, certain former officers and certain
former preferred stockholders of Saatchi Art, and Saatchi Art itself. Messrs. Saatchi and Norton allege that, in connection with
Demand Media’s acquisition of Saatchi Art, (i) the former directors of Saatchi Art and the former officers named in the lawsuit
breached their fiduciary duties to the common stockholders; (ii) certain preferred stockholders of Saatchi Art breached their fiduciary
duties to the common stockholders, aided and abetted the former officers’ and directors’ breach of their fiduciary duties and violated a
Saatchi Art voting agreement by breaching the implied covenant of good faith and fair dealing; and (iii) Saatchi Art violated the
voting agreement by breaching the implied covenant of good faith and fair dealing. The complaint seeks rescissory damages, a
constructive trust over the acquisition proceeds, disgorgement of all profits related thereto, and unspecified compensatory damages,
costs and fees. The litigation is in its early stages.
In addition, from time to time we are a party to various legal matters incidental to the conduct of our business. Certain of our
outstanding legal matters include speculative claims for indeterminate amounts of damages. We record a liability when we believe that
it is probable that a loss has been incurred and the amount can be reasonably estimated. Based on our current knowledge, we do not
believe that there is a reasonable possibility that the final outcome of the pending or threatened legal proceedings to which we are a
party, either individually or in the aggregate, will have a material adverse effect on our future financial results. However, the outcome
of such legal matters is subject to significant uncertainties.