9. COMMITMENTS, CONTINGENCIES, AND GUARANTEES

Lease Obligations

The Company has payment obligations under non-cancellable operating leases, primarily for office space and furniture and fixtures to support its global operations. These leases often contain customary scheduled rent increases or escalation clauses and renewal options. Rent expense is recorded on a straight line basis. As of December 31, 2016, minimum future lease payments required under these leases are as follows (in thousands):

			Non-Related		Total
	Related Party		Parties Operating		Operating
	Operating Lease		Leases		Leases
2017	$	2,112	$	4,844	$	6,956
2018		2,112		3,715		5,827
2019		2,112		2,206		4,318
2020		2,112		1,559		3,671
2021		2,112		1,368		3,480
Thereafter		1,760		3,340		5,100
Total minimum lease payments	$	12,320	$	17,032	$	29,352

The related party operating lease is for one of the Company’s three buildings within its corporate headquarters. The non-related party operating leases are for the Company’s remaining leases throughout the world consisting primarily of office space, fixtures and vehicles.

Rental expense under operating leases totaled $6.7 million, $5.8 million, $4.3 million and $1.4 million for the Successor years ended December 31, 2016 and 2015, the Successor Period ended December 31, 2014 and the Predecessor Period ended March 31, 2014, respectively, and is allocated between Direct costs, excluding depreciation and amortization, and Selling, general and administrative in the consolidated statements of operations.

Deemed Landlord Liabilities

As of December 31, 2016, minimum annual payments required in conjunction with the Deemed landlord liabilities are as follows (in thousands):

	Related Party				Total
	Minimum Lease		Less:		Principal
	Payments		Interest		Amounts Due
2017	$	3,792	$	2,089	$	1,703
2018		3,886		1,961		1,925
2019		3,937		1,819		2,118
2020		3,988		1,662		2,326
2021		4,040		1,490		2,550
Thereafter		23,934		4,326		19,608
Total	$	43,577	$	13,347	$	30,230

Purchase Commitments

In May 2013, Medpace committed to the aggregate purchase of $2.0 million of software services from a vendor during the period from June 1, 2013 through May 31, 2016. In return for the commitment, Medpace received preferential fixed rate pricing and a 5% discount on all purchases made pursuant to this agreement during its three-year term. As of December 31, 2014, the Company had met the aggregate purchase commitment. There are no other material (individually or in aggregate) outstanding purchase commitments as of December 31, 2016.

Legal Proceedings

Medpace periodically becomes involved in various claims and lawsuits that are incidental to its business. Management believes, after consultation with counsel, that no matters currently pending would, in the event of an adverse outcome, have a material impact on the Company’s consolidated balance sheets, statements of operations, or cash flows.

In March 2012, the Company filed a legal claim against one of its customers, citing as a basis for its claim the customer’s non-payment of more than $6.5 million in outstanding invoices. In response, the customer filed a counterclaim against the Company for compensatory damages, asserting that the Company had willfully and wrongly withheld clinical study data alleged to be owned by the customer. The Company objected to these allegations and believed it had meritorious defenses against these claims and also believed that it would ultimately prevail in this matter. During 2015, a Settlement and Mutual Release Agreement (the “Agreement”) was entered into whereas the Company agreed to settle all outstanding claims for payment of $2.0 million from the customer and both parties waived the right to file any future suits. The customer paid the $2.0 million settlement during 2015 and the Company recorded a bad debt recovery of $2.0 million in Selling, general and administrative in the consolidated statements of operations.