10. Commitments and Contingencies

a. Operating Leases

As of December 31, 2013, we leased office, manufacturing and laboratory space, under lease agreements expiring in December 2020.

Rental payments are recognized as rent expense on a straight-line basis over the term of the lease. In addition to rents due under these agreements, we are obligated to pay additional facilities charges, including utilities, taxes and operating expenses.

As of December 31, 2013, future minimum annual payments under all operating lease agreements are as follows:

Years ending December 31,	Minimum Annual Payments
2014	$	1,841
2015		1,887
2016		1,934
2017		1,983
2018		2,032
Thereafter		4,218
Total	$	13,895

Rental expense totaled approximately $3,548, $2,074 and $3,475 for 2013, 2012 and 2011, respectively. For 2013 and 2012, amounts paid exceeded rent expense by $164 and $419, respectively, due to the recognition of lease incentives. For 2011, we recognized rent expense in excess of amounts paid of $63, due to the recognition of escalation clauses and lease incentives. Additional facility charges, including utilities, taxes and operating expenses, for 2013, 2012 and 2011 were approximately $2,330, $2,845 and $4,033, respectively.

b. Licensing, Service and Supply Agreements

Progenics and its subsidiaries have entered into intellectual property-based license and service agreements in connection with product development programs, and have recognized milestone, license and sublicense fees and supply costs, included in research and development expenses, totaling approximately $567, $1,170 and $578 during the last three years, respectively.

	Paid from inception to December 31, 2013		Future ⁽¹⁾ Commitments		Terms
Progenics agreements with:
Lonza Sales AG	$	909	$	824	Annual license fee payments, milestones and royalties, as applicable, in respect of oncology and other products.

PSMA LLC agreements with:
Seattle Genetics, Inc.		4,400		13,900	Milestone and periodic maintenance payments to use ADC technology to link chemotherapeutic agents to monoclonal antibodies that target prostate specific membrane antigen. ADC technology is based in part on technology licensed by SGI from third parties.
Amgen Fremont, Inc. (formerly Abgenix)		1,350		5,750	Milestones and royalties to use XenoMouse^® technology for generating fully human antibodies to PSMA LLC's PSMA antigen.
Former member of PSMA LLC		278		52,188	Annual minimum royalty payments and milestones to use technology related to PSMA.

	Paid from acquisition date to December 31, 2013		Future ⁽¹⁾ Commitments		Terms
MIP agreements with:

University of Zurich and the Paul Scherrer Institute		65		1,225	Annual maintenance and license fee payments, milestones and royalties in respect of licensed technology related to 1404.
University of Western Ontario		4		374	Annual minimum royalty, administration and milestone payments in respect of licensed technology related to Azedra.
Novartis Pharma AG and other interests		-		4,600	Milestone and royalty payments in respect of licensed technology related to Onalta.
Bayer Schering Pharma AG		-		9,000	Milestone and royalty payments in respect of licensed technology related to a MIP asset.

⁽¹⁾ Amounts based on known contractual obligations as specified in the respective license agreements, which are dependent on the achievement or occurrence of future milestones or events and exclude amounts for royalties which are dependent on future sales and are unknown.

We are seeking to out-license or terminate non-germane Molecular Insight licenses and service agreements, as to which we have paid $216 through December 31, 2013, and have future commitments of $3,453, subject to occurrence of future milestones or events.

c. Consulting Agreements

As part of our research and development efforts, we have from time to time entered into consulting agreements with external scientific specialists. These agreements contain various terms and provisions, including fees to be paid by us and royalties, in the event of future sales, and milestone payments, upon achievement of defined events, payable by us. Certain of these scientists are advisors to Progenics, and some have purchased our Common Stock or received stock options which are subject to vesting provisions. We have recognized expenses with regard to the consulting agreements of $39, $8 and $27 for 2013, 2012 and 2011, respectively. Those expenses include the fair value of stock options granted during 2013 and 2011, which were fully vested at grant date, of approximately $7 and $11, respectively. Such amounts of fair value are included in research and development expense for each year presented (see Note 11).

d. Retirement Agreement

On March 14, 2012, Progenics and company founder Paul J. Maddon entered into an agreement providing for his retirement as Chief Science Officer. In connection with Dr. Maddon's retirement and termination of his employment agreement, Progenics agreed to pay him an amount equal to $1,789 and provide other benefits under the agreement.

e. Related Party Agreement

In December 2012, Progenics entered into a financial advisory agreement with MTS Health Partners, L.P., of which the Company's Board Chair is a Senior Managing Director and partner, on customary terms and conditions, whereby, in 2013, MTS has received monthly retainers totaling $55 during the term of the agreement and $300 for MTS' services in connection with the Molecular Insight acquisition described in Note 2. This agreement was terminated in June 2013.

f. Legal Proceedings

Progenics is a party to a proceeding brought by a former employee complaining that the Company violated the anti-retaliation provisions of the federal Sarbanes-Oxley law by terminating the former employee. The Company believes the former employee's claims are without merit and is contesting the matter vigorously. The federal District Court hearing the case issued in July 2013 an order denying our motion for summary judgment dismissing the former employee's complaint, making it likely that the proceeding will continue to trial. Given the inherent uncertainty attendant to the proceeding, it is not possible at this time to estimate the likelihood or potential magnitude of any outcome, and we have accordingly not recorded any associated liability in these Consolidated Financial Statements.

Progenics in October 2013 commenced an arbitration with Ono under the provisions of the parties' License Agreement, following a communication from Ono that it has determined to discontinue development of subcutaneous Relistor in Japan because of "commercial concerns" that Ono contends would permit it to cease development and terminate the Agreement. Under our Agreement with Ono, Ono may cease development of subcutaneous Relistor only if it terminates the License Agreement, which it may do unilaterally only if Progenics is in material default. Progenics is not in default under the Agreement, and Ono has neither asserted that Progenics is, nor terminated the Agreement.