Commitments and Contingencies

Operating Lease Commitments

The Company's corporate headquarters are located in San Francisco, California, and consist of approximately 155,000 square feet of space under lease agreements, most of which expire in June 2022. Under these lease agreements, the Company has an option to extend nearly all of the space for five years.

On April 16, 2015, the Company entered into a lease agreement for additional office space in San Francisco, California. The lease agreement commenced in the second quarter of 2015 with delivery of portions of the leased space to occur in stages through March 2017. The lease agreement expires on March 31, 2026, with the right to renew the lease term for two consecutive renewal terms of five years each.

The Company has additional leased office space of approximately 26,000 square feet in Westborough, Massachusetts, under a lease agreement that expires in July 2021.

Total facilities rental expense for the third quarter and first nine months of 2015 was $2.0 million and $5.0 million, respectively. Total facilities rental expense for the third quarter and first nine months of 2014 was $1.0 million and $2.5 million, respectively. Minimum lease payments for the third quarter and first nine months of 2015 were $1.5 million and $4.1 million, respectively. Minimum lease payments for the third quarter and first nine months of 2014 were $0.9 million and $2.2 million, respectively. As of September 30, 2015, we have pledged $0.7 million of cash as a security deposit under these lease agreements.

Expected annual minimum rental payments under these leases at September 30, 2015, are as follows:



(in millions)	Minimum Rental Payments
2015	$	1.9
2016	11.4
2017	14.1
2018	15.1
2019	14.6
Thereafter	71.1
Total	$	128.2

Loan Funding and Purchase Commitments

The Company commits to fund loans resulting from our direct marketing efforts if such loans are not otherwise funded by investors on our platform. During the third quarter and first nine months of 2015, the Company was not required to fund any such loans. Additionally, loans in the process of being facilitated and originated by our issuing bank partner at September 30, 2015, were fully funded in October 2015 and the Company was not required to fund any of these loans.

Springstone has a commitment to purchase certain loans that it facilitates that are originated by an issuing bank partner if Springstone cannot arrange investors to purchase such loans. In connection with this arrangement, in June 2014 the Company entered into a contingent purchase agreement with the issuing bank and a third-party investor who agreed to purchase 100% participation interests in certain loans originated by the issuing bank through the Springstone platform. In March 2015, this agreement was extended to January 2016. The Company's contingent purchase commitment provides that if the third-party investor defaults on its purchase obligation then the Company will purchase such loans from the issuing bank. The remaining limit of this contingent loan purchase commitment under the March 2015 agreement was $32.2 million at September 30, 2015.

In July 2015, the issuing bank, the Company and a second third-party investor entered into a second loan participation purchase agreement with respect to the same type of loans covered by the March 2015 agreement. With respect to this second agreement, the Company also has a contingent purchase obligation in the event that the second third-party investor defaults on its purchase obligation. Although this second agreement does not have a purchase limit, Springstone may cease facilitating loans that are subject to these purchase commitments upon proper notice to the issuing bank.

During the third quarter and first nine months of 2015 we were not required to purchase any loan participation interests pursuant to these contingent purchase commitments. The Company does not anticipate that the Company will be required to purchase loan participation interests under these commitments.

Credit Support Agreement

We are subject to a credit support agreement with a certificate investor. The credit support agreement requires us to pledge and restrict cash in support of our contingent obligation to reimburse the investor for credit losses on loans underlying the investor’s certificates that are in excess of a specified, aggregate loss threshold. We are contingently obligated to pledge cash, not to exceed $5.0 million, to support this contingent obligation. As of September 30, 2015, and December 31, 2014, approximately $3.4 million was pledged and restricted to support this contingent obligation.

As of September 30, 2015, the credit losses pertaining to the investor’s certificates have not exceeded the specified threshold, nor are future credit losses expected to exceed the specified threshold, and thus no liability has been recorded. We currently do not anticipate recording losses under this credit support agreement. If losses related to the credit support agreement are later determined to be likely to occur and are estimable, results of operations could be affected in the period in which such losses are recorded.

Loan Purchase Obligation

Under our loan account program with WebBank, a Utah-chartered industrial bank that serves as our primary issuing bank, WebBank retains ownership of the loans facilitated through our marketplace for two business days after origination. As part of this arrangement, we have committed to purchase the loans at par plus accrued interest, at the conclusion of the two business days. As of September 30, 2015, we were committed to purchase loans with an outstanding principal balance of $14.0 million at par plus accrued interest. At December 31, 2014, we were committed to purchase loans with an outstanding principal balance of $4.1 million at par plus accrued interest.

Legal

On June 5, 2014, Springstone received a Civil Investigative Demand from the Consumer Financial Protection Bureau, referred to as CFPB, related to the period from 2009 through May 2014. The purpose of the investigation was to determine whether Springstone engaged in unlawful acts or practices in connection with the marketing, issuance, and servicing of loans for certain healthcare related financings during the period. On August 19, 2015, Springstone agreed to settle with the CFPB related to the CFPB's concerns about possible borrower confusion of the terms of a deferred interest product, which was terminated by the Company in December 2014. To resolve this matter, Springstone agreed to pay restitution of $700 thousand to certain borrowers under the Springstone finance program between 2009 and 2014. The settlement amount has been recorded as a liability as of September 30, 2015. The settlement amount is fully covered by the indemnification provisions of the Springstone purchase agreement and, therefore, did not result in an adverse financial charge to the Company.

In addition to the foregoing, we may be subject to legal proceedings and regulatory actions in the ordinary course of business. We do not believe it is probable that the ultimate liability, if any, arising out of any such matter will have a material effect on our financial condition, results of operations or cash flows.