Commitments and Contingencies

Operating Lease Commitments

The Company's corporate headquarters are located in San Francisco, California, and consist of approximately 169,000 square feet of space under lease agreements, the longest of which is expected to expire in June 2022. Under these lease agreements, the Company has an option to extend nearly all of the space for five years.

In April 2015, the Company entered into a lease agreement for approximately 112,000 square feet of 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 first quarters of 2016 and 2015 was $3.2 million and $1.4 million, respectively. Minimum lease payments for the first quarters of 2016 and 2015 were $2.2 million and $1.2 million, respectively.

As of March 31, 2016, the Company pledged $0.8 million of cash and $4.7 million in letters of credit as security deposits in connection with its lease agreements.

The Company's future minimum payments under non-cancelable operating leases in excess of one year as of March 31, 2016, were as follows:



	Minimum Rental Payments
2016	$	9,702
2017	15,090
2018	16,051
2019	15,619
2020	16,521
Thereafter	57,190
Total	$	130,173

Loan Purchase Obligation

Under the Company's loan account program with WebBank, a Utah-chartered industrial bank that serves as the Company's primary issuing bank, WebBank retains ownership of the loans facilitated through Lending Club's marketplace for two business days after origination. As part of this arrangement, the Company has committed to purchase the loans at par, at the conclusion of the two business days. As of March 31, 2016 and December 31, 2015, the Company was committed to purchase loans with an outstanding principal balance of $180.7 million and $77.6 million at par, respectively.

Loan Repurchase Obligations

The Company has historically limited its loan or note repurchase obligations to events of verified identity theft or in connection with certain customer accommodations. As institutional investors seek to securitize loans purchased through the marketplace, the Company has increased the circumstances and the required burden of proof of economic harm under which the Company is obligated to repurchase loans from these investors. We believe these repurchase obligations are consistent with institutional loan market standards.

In addition to and distinct from the repurchase obligations described in the preceding paragraph, the Company performs certain administrative functions for a variety of retail and institutional investors, including executing, without discretion, loan investments as directed by the investor. To the extent loans not meeting the investor's investment criteria at the time of issuance are transferred to the investor as a result of a system error by the Company, the Company is obligated to repurchase such loans at par. As a result of these obligations, we repurchased $3.8 million in loans during the first quarter of 2016.

Subsequent to March 31, 2016, the Company in a private transaction repurchased $22.3 million of near-prime loans from a single institutional investor that did not meet a non-credit, non-pricing requirement of the investor, of which $15.1 million were originally sold to the investor prior to March 31, 2016 and that are accounted for as secured borrowings at March 31, 2016. See “Item 2 – Management's Discussion and Analysis of Financial Condition and Results of Operations – Board Review” and “Item 4 – Controls and Procedures.”

Loan Funding and Purchase Commitments

As required by applicable regulations, the Company is required to purchase loans resulting from direct marketing efforts if such loans are not otherwise invested in by investors on the platform. During the first quarter of 2016, the Company did not purchase any such loans. Additionally, loans in the process of being facilitated and originated by the Company's issuing bank partner at March 31, 2016, were substantially funded in April 2016. As of the date of this report, no loans remained without investor commitments and the Company was not required to purchase any of these loans. However, in light of events following a review by a sub-committee of the board of directors that began in the second quarter of 2016, a number of investors that, in the aggregate, have contributed a significant amount of funding on the platform, have paused their investments in loans through the platform. As a result, the Company may need to use its own funds to purchase these loans in the coming months. See “Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations - Current Economic and Business Environment” and “Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources - Liquidity.”

Separately, if neither Springstone nor the Company can arrange for other investors to invest in or purchase Pool B loans that Springstone facilitates and that are originated by an issuing bank partner, Springstone and the Company are contractually committed to purchase these loans.

The Company and the issuing bank have entered into purchase agreements with three investors to purchase Pool B loans or participation interests in Pool B loans. As of January 5, 2016, any contractual minimum purchase requirements by these three investors had expired. During the first quarter of 2016, the Company was not required to purchase any Pool B loans or interests in such loans. In connection with re-negotiations of the program agreement with the issuing bank in the first quarter of 2016, the Company deposited $9.0 million into an account at the bank to secure potential, future purchases of these loans.

Credit Support Agreement

The Company is subject to a credit support agreement with Cirrix Capital (Investment Fund). The credit support agreement requires the Company to pledge and restrict cash in support of its contingent obligation to reimburse the Investment Fund for net credit losses on loans underlying the Investment Fund's certificates that are in excess of a specified, aggregate net loss threshold. The Company is contingently obligated to pledge cash, not to exceed $5.0 million, to support this contingent obligation. As of March 31, 2016, $3.4 million was pledged and restricted to support this contingent obligation.

As of March 31, 2016 and December 31, 2015, the net credit losses pertaining to the Investment Fund's certificates have not exceeded the specified threshold, nor are future net credit losses expected to exceed the specified threshold, and thus no liability has been recorded. The Company currently does 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.

Legal

Federal Securities Class Actions. In the first quarter of 2016, four putative class action lawsuits alleging violations of federal securities laws were filed in the California Superior Court in San Mateo County, naming as defendants the Company, its directors, certain officers, and the underwriters in the initial public offering that closed on December 16, 2014 (the IPO). The lawsuits allege violations of the Securities Act of 1933 (Securities Act) by the Company, the individual defendants and the underwriters for allegedly making materially false and misleading statements in the registration statement and prospectus issued in connection with the IPO regarding, among other things, the Company’s business model, compliance with regulatory matters and their impact on the Company’s business, operations and future results. The Company, the selling stockholders and the underwriters have agreed to indemnify each other against certain liabilities, including liabilities under the Securities Act. Plaintiffs seek to represent a class of persons who purchased or otherwise acquired the Company’s securities pursuant or traceable to the IPO registration statement and prospectus. Plaintiffs seek class certification, unspecified compensatory damages, costs and expenses, including attorneys’ fees, and other further relief as the Court may deem just and proper. The Company believes that the plaintiff’s allegations are without merit, and intends to vigorously defend against the claims.

Federal Consumer Class Action. In April 2016, a putative class action lawsuit was filed in federal court in New York, alleging that persons received loans, through the Company's platform, that exceeded states' usury limits in violation of state usury and consumer protection laws, and the federal RICO statute. The defendants, in addition to the Company, are WebBank, Steel Partners Holdings, L.P. and the Lending Club Members Trust. The Company has agreed to indemnify WebBank and Steel Partners Holdings, L.P. against certain liabilities in connection with this matter. The plaintiff seeks treble damages, attorneys' fees, and injunctive relief. The Company believes that the plaintiff's allegations are without merit, and intends to defend this matter vigorously.

The Company was engaged in an arbitration proceeding with a prior employee who claimed that additional equity was due to him. The Company believed the claim to be without merit. The Company did not accrue a liability for this action as of March 31, 2016. On May 3, 2016, the arbitration panel delivered its final opinion denying all claims of the employee.

On February 23, 2016, Phoenix Licensing, L.L.C. and LPL Licensing, L.L.C. filed a complaint for patent infringement against the Company in the U.S. District Court for the Eastern District of Texas. The complaint alleges infringement of U.S. Patent Nos. 8,234,184, 6,999,938, 5,987,434, 8,352,317, and 7,860,744 by generating customized marketing materials, replies, and offers to client responses. The Company believes the plaintiffs allegations are without merit, and intends to defend this matter vigorously.

On May 9, 2016, following the announcement of the board review described elsewhere in this filing, the Company received a grand jury subpoena from the U.S. Department of Justice (DOJ). The Company also contacted the SEC. The Company intends to cooperate with the DOJ and the SEC. The DOJ and the SEC may have additional requests, and no assurance can be given as to the timing or outcome of these matters.

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