Commitments and Contingencies

Contingencies-In connection with the shareholder class action styled In re: Ebix, Inc. Securities Litigation, Civil Action No. 1:11-CV-02400-RWS (N.D. Ga.), which as previously disclosed was settled in 2014 and is now concluded, there have been three derivative complaints brought by certain shareholders on behalf of the Company, which name certain of the Company's officers and its entire board of directors as Defendants. The first such derivative action was brought by an alleged shareholder named Paul Nauman styled Nauman v. Raina, et al., Civil Action File No. 2011-cv-205276 (Superior Court of Fulton County, Georgia), filed September 1, 2011. The second such derivative action was brought by an alleged shareholder named Gilbert Spagnola styled Spagnola v. Bhalla, et al., Civil Action No. 1:13-CV-00062-RWS (N.D. Ga.), filed January 7, 2013. The third such derivative action was brought by an alleged shareholder named Hotel Trades Council and Hotel Association of New York City, Inc. Pension Fund styled Hotel Trades Council and Hotel Association of New York City, Inc. Pension Fund v. Raina, et al., Civil Action No. 1:13-CV-00246-RWS (N.D. Ga.), filed January 23, 2013. These derivative actions are based on substantially the same factual allegations in the now settled shareholder class action suit, but also variously claim breach of fiduciary duties, abuse of control, gross mismanagement, the wasting of corporate assets, negligence, unjust enrichment by the Company's directors, and violation of Section 14 of the Exchange Act. The Nauman case was stayed pending the completion of expert discovery in the shareholder class action suit. On April 12, 2013, the Federal Court entered an Order consolidating the Spagnola and Hotel derivative cases under the style In re Ebix, Inc. Derivative Litigation, File No. 1:13-CV-00062-RWS (N.D. Ga.), appointing Hotel Trades Council and Hotel Association of New York City, Inc. Pension Fund as Lead Derivative Plaintiff, and appointing the law firm Cohen Milstein Sellers & Toll PLLC as Lead Derivative Counsel and The Law Offices of David A. Bain LLC as Liaison Counsel. Lead Derivative Plaintiff filed its Consolidated Shareholder Derivative and Class Action Complaint on May 20, 2013. Thereafter, the Federal Court entered a Consent Order on June 4, 2013, setting a schedule for Lead Derivative Plaintiff to amend its Complaint in light of the anticipated preliminary proxy related to a proposed transaction announced on May 1, 2013 with affiliates of Goldman Sachs & Co. On September 23, 2014, following several months of extensive arms-length negotiations, the parties to both the Federal Court and Fulton Superior Court derivative actions entered into a Stipulation of Settlement, which, together with the exhibits annexed thereto, sets forth the terms and conditions for a proposed settlement of both the derivative actions and for dismissal of both the derivative actions with prejudice upon the terms and conditions set forth therein. On September 30, 2014, the Federal Court entered an Order preliminarily approving the proposed settlement. On December 2, 2014, following a final fairness hearing, the Federal Court entered a Final Order and Judgment Approving Settlement and Dismissing Actions with Prejudice. On December 12, 2014, the Fulton Superior Court entered a Stipulation and Order of Dismissal With Prejudice. As part of the settlement, the Company has agreed to adopt, implement, and/or maintain certain corporate governance measures and to pay attorneys’ fees and expenses to Plaintiffs’ Counsel in the amount of $690 thousand. The appeal period has passed and these matters are now concluded. During the week of January 19^th 2015 the Company paid the $690 thousand of legal fees, of which $350 thousand was accrued to expense in Q3 2014, and the remaining $340 thousand was recognized and accrued to expense in Q4 2014.

On December 3, 2012, the Company received a subpoena and letter from the Securities and Exchange Commission (“SEC”) dated November 30, 2012, stating that the SEC is conducting a formal, non-public investigation styled In the Matter of Ebix, Inc. (A-3318) and seeking documents primarily related to the issues raised in the In re: Ebix, Inc. Securities Litigation. On April 16, 2013, the Company received a second subpoena from the SEC seeking additional documents. The Company has cooperated with the SEC to provide the requested documents.

On June 6, 2013, the Company was notified that the U.S. Attorney for the Northern District of Georgia had opened an investigation into allegations of intentional misconduct that had been brought to its attention from the pending shareholder class action lawsuit against the Company's directors and officers, the media and other sources. The Company is cooperating with the U.S. Attorney's office.

Following our announcement on May 1, 2013 of the Company's execution of a merger agreement with affiliates of Goldman Sachs & Co., twelve putative class action complaints challenging the proposed merger were filed in the Delaware Court of Chancery. These complaints name as Defendants some combination of the Company, its directors, Goldman Sachs & Co. and affiliated entities. On June 10, 2013, the twelve complaints were consolidated by the Delaware Court of Chancery, now captioned In re Ebix, Inc. Stockholder Litigation, CA No. 8526-VCN. On June 19, 2013, the Company announced that the merger agreement had been terminated pursuant to a Termination and Settlement Agreement. After Defendants moved to dismiss the consolidated proceeding, Lead Plaintiffs amended their operative complaint to drop their claims against Goldman Sachs & Co. and focus their allegations on an Acquisition Bonus Agreement (“ABA”) between the Company and Robin Raina. On September 26, 2013, Defendants moved to dismiss the Amended Consolidated Complaint. On July 24, 2014, the Court issued its Memorandum Opinion. The only surviving counts are as follows: (i) Counts II and IV, but only to the extent the Plaintiffs seek non-monetary relief for alleged material misstatements related to the ABA base price in the 2010 Proxy Statement; (ii) Count II, but only to the extent it challenges the continued existence of the ABA as an alleged unreasonable anti-takeover device; and, (iii) Count V, but only to the extent that it relates to the compensation the Board received under the Company’s 2010 Stock Incentive Plan. On September 15, 2014, the Court entered an Order implementing its Memorandum Opinion. On January 16, 2015, the Court entered an Order permitting Plaintiffs to file a Second Amended and Supplemented Complaint. On February 10, 2015, Defendants filed a Motion to Dismiss the Second Amended and Supplemented Complaint, which is pending. The Company denies any liability and intends to defend the action vigorously.

The Company has been sued by Microsoft for alleged copyright infringement, breach of contract, and unjust enrichment. Microsoft Corporation and Microsoft Licensing GP v. Ebix, Inc., Case No. 1:13-CV-01655-CAP (N.D.Ga), filed May 15, 2013. The Company filed a Motion to Dismiss on July 10, 2013. In response, Microsoft filed an Amended Complaint. The Company filed a Motion to Dismiss the Amended Complaint on August 29, 2013. On February 14, 2014, the Court denied the Company’s Motion to Dismiss. The Company cooperated with Microsoft in an audit of all of the Company's Microsoft licenses. The parties reached a confidential settlement and, on September 18, 2014, filed a Notice of Confidential Settlement in Principle and Stipulated Motion for 45-Day Extension of Time to finalize the various provisions of the settlement, which was granted by Order dated September 19, 2014. On October 13, 2014, the parties filed a Joint Stipulation of Dismissal with prejudice.

The Company is involved in various other claims and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate likely disposition of these matters will not have a material adverse effect on the Company’s consolidated financial position, results of operations or liquidity.

Lease Commitments—The Company leases office space under non-cancelable operating leases with expiration dates ranging through 2021, with various renewal options. Capital leases range from three to five years and are primarily for computer equipment. There were multiple assets under various individual capital leases at December 31, 2014 and 2013.

Commitments for minimum rentals under non-cancellable leases, debt obligations, and future purchase obligations as of December 31, 2014 were as follows:



Year	Debt			Capital Leases		Operating Leases			Future Purchase Obligations
	(in thousands)
2015	$	943		$	—	$	5,863		$	3,715
2016	600			—		4,136			541
2017	—			—		3,886			541
2018	—			—		3,120			541
2019	120,465			—		2,088			406
Thereafter	—			—		1,340			—
Total	$	122,008		$	—	$	20,433		$	5,744
Less: sublease income						(1,296		)
Net lease payments						$	19,137
Less: amount representing interest				—
Present value of obligations under capital leases				$	—
Less: current portion	(943		)	—
Long-term obligations	$	121,065		$	—

Rental expense for office facilities and certain equipment subject to operating leases for 2014, 2013, and 2012 was $6.3 million, $6.5 million and $5.9 million, respectively.

Sublease income for 2014, 2013 and 2012 was $381 thousand, $55 thousand, and $5 thousand, respectively.

Self Insurance—For most of the Company’s U.S. employees the Company is currently self-insured for its health insurance program and has a stop loss policy that limits the individual liability to $120 thousand per person and the aggregate liability to 125% of the expected claims based upon the number of participants and historical claims. As of December 31, 2014 and 2013, the amount accrued on the Company’s consolidated balance sheet for the self-insured component of the Company’s employee health insurance was $250 thousand and $302 thousand, respectively. The maximum potential estimated cumulative liability for the annual contract period, which ends in September 2015, is $2.9 million.