12. Commitments and contingencies

Capital and operating leases

We lease space in managed and operated locations, primarily airports, under exclusive long-term, non-cancellable contracts to provide Wi-Fi connectivity and cellular phone access to our DAS network. Our leases generally contain initial terms that range up to 20 years. The agreements generally contain renewal clauses and may include escalation clauses. Minimum rent expense is recorded on a straight-line basis over the term of the lease. Rent expense related to our leases for the years ended December 31, 2016, 2015 and 2014 was $27,140 $25,099 and $29,434, respectively.

We lease equipment, primarily data communication equipment and database software under non-cancellable capital leases that will expire over the next three years. The leases are collateralized by the equipment under the lease. Interest expense associated with the capital leases for the years ended December 31, 2016, 2015 and 2014 was $158, $58 and $33, respectively. We also lease office space under non-cancellable operating leases and our long-term office leases may include escalation clauses, rent holidays, and/or leasehold improvement incentives. Rent expense for our leases of office facilities, which is recorded on a straight-line basis over the term of the lease, for the years ended December 31, 2016, 2015 and 2014 was $2,993, $2,995 and $1,621, respectively. Included in rent expense for the years ended December 31, 2015 and 2014 was sublease income of $13 and $27, respectively.

Future minimum lease obligations under non-cancellable operating and capital leases at December 31, 2016 are as follows:

Years ended December 31,	Capital Leases			Operating Leases and Venue Guarantees
2017	$	3,035		$	10,784
2018		2,105			10,112
2019		924			7,684
2020		—			7,306
2021		—			7,178
Thereafter		—			23,382

Minimum lease payments		6,064		$	66,446


Less: Amounts representing interest ranging from 3.1% to 7.7%		(243	)

Minimum lease payments	$	5,821


Current portion	$	2,870


Non-current portion	$	2,951

As of December 31, 2016 and 2015, the carrying amount reflected in the accompanying consolidated balance sheets for the current portion of capital leases of $2,870 and $1,610, respectively, and long-term portion of capital leases of $2,951 and $2,217, respectively, approximates fair value (Level 2) based on the lack of significant change in our credit risk.

Notes payable

We purchase data communication equipment under financing arrangements with a non-related third party. Our agreements are collateralized by the equipment and generally contain three year terms. Interest rates for outstanding notes payable range from 2.0% to 4.8%.

Future payments at December 31, 2016 are as follows:

Year	Notes Payable
2017	$	1,123
2018		1,109
2019		552

	$	2,784

As of December 31, 2016 and 2015, the carrying amount reflected in the accompanying consolidated balance sheets for the current portion of notes payable of $1,123 and $151, respectively, and long-term portion of notes payable of $1,661 and $119, respectively, approximates fair value (Level 2) based on the lack of significant change in our credit risk.

Letters of credit

We have entered into Letter of Credit Authorization agreements (collectively, "Letters of Credit"), which are issued under our Credit Agreement. The Letters of Credit are irrevocable and serve as performance guarantees that will allow our customers to draw upon the available funds if we are in default. As of December 31, 2016, we have Letters of Credit totaling $3,840 that are scheduled to expire or renew over the next one year period. There have been no drafts drawn under these Letters of Credit as of December 31, 2016.

Legal proceedings

From time to time, we may be subject to claims, suits, investigations and proceedings arising out of the normal course of business. We are not currently a party to any litigation that we believe could have a material adverse effect on our business, financial position, results of operations or cash flows. Legal costs are expensed as incurred.

Indemnification

Indemnification provisions in our third-party service provider agreements provide that we will indemnify, hold harmless, and reimburse the indemnified parties on a case-by-case basis for losses suffered or incurred by the indemnified parties in connection with any claim by any third party as a result of our website, advertising, marketing, payment processing, collection or customer service activities. The maximum potential amount of future payments we could be required to make under these indemnification provisions is undeterminable. We have never paid a claim, nor have we been sued in connection with these indemnification provisions. At December 31, 2016 and 2015, we have not accrued a liability for these guarantees, because the likelihood of incurring a payment obligation in connection with these guarantees is not probable.

Employment contracts

As of December 31, 2016, we have entered into employment contracts with nine of our officers. These contracts generally provide for severance benefits, including salary continuation, if employment is terminated by us without cause or by the officer for good reason. In addition, in order to assure that they would continue to provide independent leadership consistent with our best interests in the event of an actual or threatened change in control, the contract also generally provides for certain protections in the event of such a change in control. These protections include the payment of certain severance benefits, including salary continuation, upon the termination of employment following a change in control.

Other matters

We have received a claim from one of our venue partners with respect to contractual terms on our revenue share payments. The claim asserts that we have underpaid revenue share payments and related interest by approximately $4,600. We believe this claim to be without merit and plan to defend against such claim. As of December 31, 2016, we have accrued for the probable and estimable losses that have been incurred. We are not currently a party to any other claims that we believe could have a material adverse effect on our business, financial position, results of operations or cash flows.