10. COMMITMENTS AND CONTINGENCIES

Lease Commitments

The Company leases office space pursuant to operating leases that are subject to specific escalation clauses. Rent expense charged to operations for the years ended December 31, 2016, 2015 and 2014 amounted to $3,760, $3,766, and $3,667, respectively. The Company received sub-lease income from subtenants during the years ended December 31, 2016, 2015 and 2014 of $289, $433, and $379, respectively. Therefore, for the years ended December 31, 2016, 2015 and 2014, net rent expense amounted to $3,471, $3,333, and $3,288, respectively, and is included in general and administrative expenses in the Consolidated Statement of Operations.  

As security for performance under the leases, the Company is required to maintain letters of credit in favor of the landlord totaling $506 as of December 31, 2016 and $587 as of December 31, 2015.  The letter of credit was collateralized by the Company’s revolving credit facility with City National Bank in 2016 and 2015.  Furthermore, the Company maintains an $80 letter of credit in favor of its Boston landlord that is collateralized by the Company’s revolving credit facility with City National Bank.                

In March 2014, the Company entered into a lease agreement for additional office space.  The lease commenced on May 1, 2014 and expires July 31, 2019. The lease is subject to escalation clauses and provides for a rent-free period of three months.  Monthly rent expense is $5.  The Company paid a refundable security deposit of $3.  In September 2016, the Company entered into Lease Amendment Number One (“Amendment Number One”) to expand its space and extend its lease.  This expansion will occur on or about October 1, 2017, and the lease is extended to November 30, 2024.  The amended lease provides for a rent credit of $40,000.  Monthly rent expense under the amended lease is $10.

In June 2015, the Company entered into a lease agreement for office space in Charlottesville, VA.  The lease commenced on June 30, 2015 and expires on June 30, 2018.  The lease is subject to escalation clauses and provides for a rent-free period of two months.  Monthly rent expense is $2.  The Company paid a refundable security deposit of $2.

In connection with the Jamison Acquisition, the Company assumed lease agreements for office space in Bedminster and Princeton, NJ.  The Bedminster lease, as extended, expires on March 31, 2022.  Monthly rent expense on this lease is $11.  The Princeton lease, as extended, expired on April 30, 2016.  Monthly rent expense on this lease was $5.  Both leases are subject to escalation clauses, and the Bedminster lease provides for a rent-fee period of four months.

In December 2015, the Company extended its lease related to its New York City office space.  The amended lease commences on October 1, 2017 and expires on September 30, 2028.  The lease is subject to escalation clauses, and provides for a rent-free period of twelve months and for tenant improvements of up to $2,080.  Monthly rent expense under this extension will be $446.  

In January 2016, the Company entered into a lease agreement for office space in Princeton, NJ.  The lease commenced April 23, 2016 and expires on August 31, 2022.  This lease replaces the Princeton lease discussed above that expired on April 30, 2016.  Monthly rent expense on this lease is $6.  The lease is subject to escalation clauses, and provides for a rent-free period of five months.

With the Cappiccille Acquisition, the Company assumed a lease agreement for office space in Livingston, NJ.  The lease is month-to-month.  Monthly rent expense is $2.

Future minimum lease payments and rentals under lease agreements which expire through 2028 are as follows:

The Company has capital leases for certain office equipment. The Company entered into a new capital lease agreement for a telephone system during the year ended December 31, 2014.  The amount financed was $321 and the lease has a term of five years, which began on March 1, 2014.   Monthly minimum lease payments are $5, and continue through November 30, 2018. On June 30, 2015, the Company assumed certain capital leases for equipment totaling $253 as part of the Jamison Acquisition.  In July 2015, the Company entered into a new capital lease for a copier.  The amount financed was $21 and the lease has a term of three years, which began on July 1, 2015.  Monthly minimum lease payments are $1, and continue through June 30, 2018.  In October 2015, the Company entered into a new capital lease for a copier.  The amount financed was $18 and the lease has a term of three years, which began on November 1, 2015.  Monthly minimum lease payments are $1, and continue through October 31, 2018.The aggregate principal balance of capital leases was $267 and $440 as of December 31, 2016 and December 31, 2015, respectively.

The assets relating to capital leases that are included in equipment are as follows:

Depreciation expense relating to capital lease assets was $124, $123 and $81 for the years ended December 31, 2016, 2015 and 2014, respectively.

Future minimum lease payments under capital leases are as follows:

Contingent Consideration

In connection with its acquisition of MCG in October 2008, SLP entered into a contingent consideration agreement whereby the former members of MCG were entitled to contingent consideration equal to 22% of adjusted annual EBITDA in addition to any performance fee payments for each of the five years subsequent to the date of acquisition. As the acquisition was completed prior to January 1, 2009, contingent consideration is recognized when the contingency is resolved pursuant to the authoritative guidance on business combinations in effect at the date of the closing of the acquisition. The contingent consideration related to the MCG acquisition is recorded on the date when the contingency is resolved. Contingent consideration payments of $0, $0 and $1,805 were made during the years ended December 31, 2016, 2015 and 2014, respectively, related to MCG and are reflected in investing activities in the Consolidated Statements of Cash Flows.

Quarterly contingent payments related to the Commodity Advisors acquisition, completed on April 1, 2012, were accrued when the contingency was resolved. The total accrual for these payments for the years ended December 31, 2016 and 2015 were $10 and $3, respectively, which was recorded as compensation expense in the Consolidated Statements of Operations.