11. Commitments and Contingencies

Operating Leases

The Company leases office and warehouse space under operating leases that expire between 2019 and 2025. The terms of the leases include periods of free rent, options for the Company to extend the leases (three to five years) and increasing rental rates over time. The Company recognizes rental expense under these operating leases on a straight-line basis over the lease term and has accrued for rental expense recorded but not paid.

 

Rental expense was approximately $3.8 million, $2.9 million and $2.5 million, for the years ended December 31, 2018, 2017 and 2016, respectively.

Future minimum rental payments required under non‑cancelable operating leases with initial or remaining terms in excess of one year consist of the following as of December 31, 2018 (in thousands):

 

Purchase Commitments

The Company had non‑cancellable purchase commitments for the purchase of inventory, which extend through October 2019 totaling approximately $59.6 million as of December 31, 2018.

Indemnification

The Company has agreed to indemnify its officers and directors for certain events or occurrences while the officer or director is or was serving at the Company’s request in such capacity. The maximum amount of potential future indemnification is unlimited; however, the Company has a directors’ and officers’ insurance policy that provides corporate reimbursement coverage that limits its exposure and enables it to recover a portion of any future amounts paid. The Company has no liabilities recorded for these agreements as of December 31, 2018, as there were no outstanding claims.

 

Legal Matters

From time to time, the Company may become involved in legal proceedings arising in the ordinary course of business. The Company is not presently a party to any legal proceedings, that if determined adversely to Control4, would individually or in the aggregate have a material adverse effect on the business, results of operations, financial condition or cash flows.