8. Commitments and contingencies Leases We lease our headquarters facility under a 15 -year lease agreement which was entered into in October 2008, and has two five-year renewal options. The annual base rent of the lease is $ 3.6 million payable in equal monthly installments. The base rent escalates annually at a rate equal to the change in the consumer price index, as defined in the agreement, but not to exceed 5.5 % in any year. In addition, under the terms of the lease, the lessor will reimburse us an aggregate amount of $ 4.0 million for leasehold improvements, which will be recorded as a reduction to rent expense ratably over the term of the lease. Rent expense was reduced by $ 66,700 related to this lease provision during each of the three month periods ended March 31, 2012 and 2011, respectively. The $4.0 million leasehold improvement allowance has been included in the table of operating lease commitments below as a reduction in our lease commitments ratably over the then remaining life of the lease from October 2008. The timing of the reimbursements for the actual leasehold improvements may vary from the amount reflected in the table below. Additionally, we have subleased a portion of our facilities under various agreements extending through 2014. Under these agreements, rent expense was reduced by $ 0.1 million for each of the three month periods ended March 31, 2012 and 2011, respectively. The operating lease commitments in the table below have been reduced by minimum aggregate sublease commitments of $ 0.3 million for each of 2012 and 2013, respectively; the amount in 2014 is immaterial. No minimum aggregate sublease commitments exist after 2014. We have also received, and expect to receive through 2016, quarterly South Carolina state incentive payments as a result of locating our headquarters facility in Berkeley County, South Carolina. These amounts are recorded as a reduction of rent expense and were $ 0.5 million and $ 0.7 million for the three months ended March 31, 2012 and 2011, respectively. To