COMMITMENTS AND CONTINGENCIES

Leases. The Company leases office space and equipment under leases with varying expiration dates through 2023. Rental expense, net of subleases, was $1.4 million, $1.5 million and $2.3 million for 2013, 2012 and 2011, respectively. The Company’s office space leases in New York and in Philadelphia contain extension clauses. The Company has the ability to extend the New York lease for an additional five-year term, and one of the Philadelphia leases provides one option to extend for an additional five-year term. In addition, one of the Philadelphia office leases allows the Company to terminate the lease early with a termination payment to the landlord in January 2020. At December 31, 2013, future minimum rental commitments (net of subleases) under operating and capital leases over the next five years ending December 31, and thereafter, were as follows (in thousands):



	Operating		Capital ⁽¹⁾		Total
2014	$	2,085	$	203	$	2,288
2015	2,183		147		2,330
2016	2,107		—		2,107
2017	1,971		—		1,971
2018	1,938		—		1,938
Thereafter	5,103		—		5,103
Total	$	15,387	$	350	$	15,737


(1)	Includes $14,131 and $3,914 in 2014 and 2015, respectively, related to the interest portion of capital lease payments.

LEAF lease valuation commitment. In conjunction with the formation of LEAF, the Company and RSO had undertaken a contingent obligation with respect to the value of the equity on the balance sheet of LRF 3. To the extent that the value of the equity on the balance sheet of LRF 3 is less than $18.7 million (the value of the equity of LRF 3 on the date it was contributed to LEAF by RSO), as of the final testing date, which must be within 90 days following December 31, 2013, the Company and RSO would have been jointly and severally obligated to contribute cash to LEAF to make up the deficit. The LRF 3 equity as of December 31, 2013 was in excess of this commitment.

Limited loan guarantee. The Company and Lease Equity Appreciation Fund I, L.P. (“LEAF I”), one of its sponsored commercial finance investment partnerships, had provided a limited guarantee to a lender to the LEAF partnership in exchange for a waiver of any existing defaulted loan covenants and certain future financial covenants. The LEAF I loan matures at the earlier of (a) the maturity date (March 20, 2014) or (b) the date on which an event of default under the loan agreement occurs. The maximum guarantee provided by the Company as of December 31, 2013 is up to $1.0 million. If the Company were required to make any such payment under the guarantee, it would have the option to either step in as the lender or otherwise make a capital contribution to LEAF I for the amount of the required guarantee payment. Under certain circumstances, the lender will also discount the LEAF I loan by approximately $250,000. Management has determined that, based on projected cash flows from the underlying lease and loan portfolio collateralizing the loan, there should be sufficient funds to repay the outstanding LEAF I loan balance such that the Company has no liability under this guarantee.

Broker-Dealer capital requirement. Resource Securities serves as a dealer-manager for the sale of securities of direct participation investment programs, both public and private, sponsored by subsidiaries of the Company who also serve as general partners and/or managers of these programs. Additionally, Resource Securities serves as an introducing agent for transactions involving sales of securities of financial services companies, REITs and insurance companies for the Company and for RSO. As a broker-dealer, Resource Securities is required to maintain minimum net capital, as defined in regulations under the Securities Exchange Act of 1934, as amended, which was $221,000 and $113,000 as of December 31, 2013 and 2012, respectively. As of December 31, 2013 and 2012, Resource Securities net capital was $2.7 million and $258,000, respectively, which exceeded the minimum requirements by $2.5 million and $145,000, respectively.

Clawback liability. On November 1, 2009 and January 28, 2010, the general partners of two of the Trapeza entities, which are owned equally by the Company and its co-managing partner, repurchased substantially all of the remaining limited partnership interests in the two Trapeza entities with potential clawback liabilities for $4.4 million. The Company contributed $2.2 million (its 50% share). The clawback liability was $1.2 million at December 31, 2012. During 2013, the general partner began the process of dissolving the two partnerships and settled the clawback commitments. The Company's proportionate share of these payments was $1.1 million.

Legal proceedings. In September 2011, First Community Bank, (“First Community”) filed a complaint against First Tennessee Bank and approximately thirty other defendants including Trapeza Capital Management, LLC (“TCM”), and certain of its sponsored CDOs (collectively referred to as "Trapeza"). The Court dismissed this matter in June 2012. First Community appealed and the appellate court affirmed the dismissal in August 2013. Accordingly, as of December 31, 2013, this matter has been resolved.

The Company is also a party to various routine legal proceedings arising out of the ordinary course of business. Management believes that none of these actions, individually or, in the aggregate, will have a material adverse effect on the Company's consolidated financial condition or operations.

Real estate commitments. As a specialized asset manager, the Company sponsors and manages investment funds in which it may make an equity investment along with outside investors. This equity investment is generally based on a percentage of funds raised and varies among investment programs. With respect to RRE Opportunity REIT II, Inc. ("RRE Opportunity REIT II"), the Company is committed to invest 1% of the first $100.0 million of equity raised to a maximum amount of $1.0 million. As of December 31, 2013, the Company has funded $200,000 of this commitment.

The liabilities for the real estate commitments will be recorded in the future as amounts become due and payable.

General corporate commitments. The Company is also party to employment agreements with certain executives that provide for compensation and other benefits, including severance payments under specified circumstances.

As of December 31, 2013, except for the real estate commitment and executive compensation, the Company did not believe it was probable that any payments would be required under any of its commitments and contingencies and, accordingly, no liabilities for these obligations were recorded in the consolidated financial statements.