Commitments and Contingencies

Lease Arrangements

We lease facilities and equipment under non-cancelable operating lease arrangements with various expiration dates through fiscal 2021. Certain of these arrangements provide for free or escalating rent payment provisions and for options to renew, which could increase future minimum lease payments if exercised. We account for rent of our facilities on a straight-line basis over the respective lease terms. Rent expense was $3.5 million, $3.1 million and $2.9 million in fiscal 2016, 2015 and 2014, respectively.

Future minimum payments under our operating leases agreements are as follows (in thousands):



Fiscal Years Ending February 28/29:
2017	$	3,178
2018	2,616
2019	1,819
2020	1,243
2021	461
	$	9,317

Unrecognized Purchase Commitments

We have future unrecognized contractual obligations, primarily for purchase commitments of goods and services related to inventory, advertising and marketing, royalty and licensing arrangements and data center operations. Future minimum payments for these unrecognized purchase commitments are as follows (in thousands):



Fiscal Years Ending February 28/29:
2017	$	21,306
2018	5,889
2019	1,411
	$	28,606

Intellectual Property Settlement

In fiscal 2016, we entered into an intellectual property settlement agreement (the "Agreement"), whereby we resolved all current and potential future claims between us and a third party relating to certain patents. Under the terms of the Agreement, we agreed to make future settlement payments in exchange for a license to the relevant patents and a covenant by the third party not to sue for any past or future infringement of such licensed patents. We accounted for the Agreement as a multiple-element arrangement and allocated the fair value of the consideration to the identifiable elements based on their estimated fair values. We determined that the primary benefit of the arrangement is avoided litigation costs and the release of any potential past claims. $2.3 million was allocated to the resolution of any past claims and recorded as a legal settlement charge within general and administrative expense in fiscal 2016, while $1.4 million was ascribed to patent assets based on the estimated future economic benefits of the license acquired in the Agreement.

Legal Matters

In late 2011, following a voluntary internal review of our compliance with U.S. export control and sanctions laws, our management team became aware that certain of our physical appliances had been sold indirectly into embargoed countries via our distributors and resellers, potentially in violation of U.S. export control and economic sanctions laws. In addition, certain of our solutions incorporate encryption components and may be exported from the United States only with the required approvals; in the past, we may have exported products prior to receiving these required authorizations. After completion of a comprehensive internal investigation conducted by outside counsel, we submitted voluntary disclosures regarding these matters to the U.S. Commerce Department, Bureau of Industry and Security ("BIS"), and to the U.S. Treasury Department, Office of Foreign Assets Control ("OFAC"). These disclosures summarized potential violations of export controls and economic sanctions laws, including reexports by third parties and provision of services to end users in embargoed countries including Iran, Sudan and Syria. In May 2015, we agreed to a settlement with OFAC pursuant to which we agreed to pay $38,930 as consideration for the final resolution of all issues related to the voluntary disclosure that we submitted to OFAC. In November 2015, we agreed to a settlement with BIS pursuant to which we agreed to pay $1.5 million as consideration for the final resolution of all issues related to the voluntary disclosure that we submitted to BIS.

On April 18, 2016, R. David Hunt, as Seller Representative of stockholders of C2C, filed a lawsuit against us in the Court of Chancery of the State of Delaware, for alleged breach of contract of the Share Purchase Agreement dated August 13, 2014, pursuant to which we acquired all of the assets and liabilities of C2C. To date, we have not yet responded to the complaint, but intend to vigorously defend the lawsuit. Given the early stage of the litigation, we are unable to estimate a possible loss or range of possible loss, if any.

We may, from time to time, be party to litigation and subject to claims that arise in the ordinary course of business. In addition, third parties may, from time to time, assert claims against us in the form of letters and other communications. We currently believe that these ordinary course matters will not have a material adverse effect on our business, consolidated financial position, results of operations or cash flows; however, the results of litigation and claims are inherently unpredictable. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.