The Company leases office space and various equipment under non-cancelable operating leases, with the longest lease expiring in 2032. These lease agreements provide for various renewal options. Rent expense for the various leased office space and equipment was approximately $1.0 million and $2.9 million for the three and nine months ended September 30, 2023, respectively, and $0.8 million and $2.4 million for the three and nine months ended September 30, 2022, respectively.

The Company leases an insignificant amount of office equipment under a non-cancelable financing lease, with the lease expiring in 2028. The finance lease right-of-use asset is included in Right-of-use assets and the finance lease liability is included in Lease Liabilities in the Consolidated Balance Sheet. Amortization and Interest expense for the finance leased equipment is included in General,administrative and other in the Consolidated Statements of Operations.

The following table presents information regarding the Company’s operating leases as of September 30, 2023:


Operating lease right-of-use assets	$	17,319
Operating lease liabilities	$	20,638
Cash paid for operating lease liabilities	$	2,658
Weighted-average remaining lease term (in years)		7.02
Weighted-average discount rate		4.37	%

The future contractual lease payments as of September 30, 2023 are as follows:


2023		958
2024		3,959
2025		3,211
2026		2,917
2027		2,870
Thereafter		10,293
Total undiscounted lease payments		24,208
Less imputed interest		(3,570	)
Total operating lease liabilities	$	20,638

With the acquisition of WTI, an earnout payment of up to $70.0 million of cash and common stock may be earned upon meeting certain performance metrics. Upon the achievement of $20.0 million, $22.5 million, and $25.0 million of EBTIDA, $35.0 million, $17.5 million, and $17.5 million are earned, respectively. Of the total amount, $50.0 million can be earned by the sellers and the remaining $20.0 million would be allocated to employees of the Company at the time the earnout is earned. Payment to both sellers and employees is contingent on continued employment and, therefore, these earnout payments are recorded as compensation and benefits expense on the Consolidated Statements of Operations. Payments will be made in cash, with the option to pay up to 50.0% in units of P10 Intermediate, no later than 90 days following the last day of the calendar quarter in which a milestone payment is achieved. Total payment will not exceed $70.0 million and any amounts paid will be paid by October 2027, at which point the earnout expires. The Company will evaluate whether each earn-out hurdle is probable of occurring and recognize an expense over the period the hurdle is expected to be achieved. As of September 30, 2023, the Company has determined that only the first two EBITDA hurdles are probable of being achieved. For the three and nine months ended September 30, 2023, $6.0 million and $17.9 million, respectively, was recognized and for the three and nine months ended September 30, 2022, $0 and $0 was recognized, respectively. As of September 30, 2023 and December 31, 2022, the balance was $23.1 million and $5.2 million, respectively, and is included in accrued compensation and benefits in the Consolidated Balance Sheets. No payments have been made on the earnout.

In connection with the acquisition of WTI, certain employees entered into employment agreements. As part of these employment agreements, certain employees may receive a one-time bonus payment if the employee is employed by the Company as of the fifth anniversary of the effective date and the trailing-twelve month EBITDA of WTI at that time is equal to or greater than $20.0 million. Payment can be made in cash or stock of P10, provided that no more than $5.0 million will be payable in cash. Total payment will not exceed $10.0 million and any amounts will be paid in October 2027, the fifth anniversary of the effective date. For the three and nine months ended September 30, 2023, $0.5 million and $1.5 million, respectively, of expense was recognized and for the three and nine months ended September 30, 2022, no expense was recognized. Recognized expense is included in compensation and benefits on the Consolidated Statement of Operations. As of September 30, 2023 and December 31, 2022, the balance was $1.9 million and $0.4 million, respectively, and is included in accrued compensation and benefits on the Consolidated Balance Sheets.

The Company recognizes accrued contingent liabilities and contingent payments to customers asset in our Consolidated Balance Sheets for an agreement that exists between ECG and third parties. The agreements require ECG to share in certain revenues earned with the third parties and also includes an option for the third parties to sell back the revenue share to ECG at a set multiple. The Company’s contingent liabilities and corresponding contingent payments to customers are recognized once determined to be probable and estimable. The contingent payments to customers are amortized and recorded within management and advisory fees on the Consolidated Statements of Operations over the revenue share agreement. As of September 30, 2023, the Company has determined that the put options are probable and have accrued estimated contingent liabilities and contingent payments to customers. As of September 30, 2023 and December 31, 2022, the balance was $14.3 million and $14.3 million, respectively, and is included in accrued contingent liabilities on the Consolidated Balance Sheets. The associated contingent payments to customers asset balance was $12.5 million and $13.6 million as of September 30, 2023 and December 31, 2022, respectively. The Company recognized $0.4 million and $1.1 million of amortization of contingent payments to customers for the three and nine months ended September 30, 2023, respectively, and $0 and $0 of

amortization of contingent payments to customers for the three and nine months ended September 30, 2022, respectively, which is included in management and advisory fees on the Consolidated Statements of Operations. The Company will reassess each period and recognize all changes as if they occurred at inception.

As described in Note 18, subsequent to the end of the quarter, the Company's Co-CEOs transitioned into Board of Directors roles and were succeeded by a newly hired CEO. Associated with their transition, the Co-CEOs received severance payments and accelerated bonus payments. For the three and nine months ended September 30, 2023, the Company recognized $4.9 million of expense related to the executive transition agreement which is included in compensation and benefits in the Consolidated Statement of Operations.

We may be involved, either as plaintiff or defendant, in a variety of ongoing claims, demands, suits, investigations, tax matters and proceedings that arise from time to time in the ordinary course of our business. We evaluated all potentially significant litigation, government investigations, claims or assessments in which we are involved and disclosed anything more likely than not to be recognized below. We do not believe that any of these matters, individually or in the aggregate, will result in losses that are materially in excess of amounts already recognized, if any.

In 2021, the Civil Enforcement Division of the Oregon Department of Justice (Oregon DOJ) initiated an investigation of certain transactions involving the Oregon Low Income Community Jobs Initiative, also known as the Oregon New Markets Tax Credit (NMTC) program, to which a subsidiary of Enhanced Capital, among others, was a party. The Oregon DOJ contends that the subsidiary of Enhanced Capital omitted from the NMTC application information regarding the application of leveraged financing in the transaction and the sources and uses of funds in the proposed transactions. No formal claims have been filed by the Oregon DOJ. The Company continues to assert that it followed all program requirements and met all disclosure obligations. The subsidiary of Enhanced Capital completed non-binding mediation in July 2023 and a settlement has been negotiated which is pending Board and Oregon DOJ approval. The Company has agreed with the insurance carrier to contribute $1.5 million toward the settlement amount and is exploring additional recoveries. Based on our assessment of the current stage of this investigation and settlement, our financial results for the three and nine months ended September 30, 2023, includes an accrual of the settlement amount of $2.6 million and $3.6 million, respectively, related thereto in accrued expenses on the Consolidated Balance Sheets and other (expense)/income on the Consolidated Statements of Operation. Additionally, following an executed insurance recovery agreement, the Company has recorded a receivable of $1.5 million associated with the insurance recovery in accounts receivable on the Consolidated Balance Sheets and other (expense)/income on the Consolidated Statements of Operation. At this time, we do not believe any outcome in this investigation will have a material adverse effect on our business, operating results, or financial position.