Commitments and Contingencies

12 Months Ended

Dec. 31, 2012

Commitments and Contingencies

Commitments and Contingencies

10. Commitments and Contingencies

Operating Leases and Subleases

        The Company entered into amendments to its South San Francisco, CA facility leases in June 2010. These amendments extend the lease terms through May 2020 and the Company may extend the terms for two additional five-year periods. The Company leases approximately 130,000 square feet of office and laboratory space in two buildings.

        The Company leases its South San Francisco, California, facilities under a non-cancelable operating lease. Future minimum lease payments under this lease, exclusive of executory costs, at December 31, 2012, were as follows:

(in thousands)
Years ending December 31:
2013	$	5,029
2014		4,859
2015		5,005
2016		5,155
2017		5,310
Thereafter		13,497
Total	$	38,855

        Expenses and income associated with operating leases were as follows:

	Year Ended December 31,
(in thousands)	2012			2011			2010
Rent expense	$	5,720		$	6,702		$	6,779
Sublease income, net		(160	)		(637	)		(622	)

Purchase Obligations

        As of December 31, 2012, the Company had outstanding purchase obligations on commercially reasonable terms, primarily for services under contract research, development and clinical and commercial supply agreements totaling $2.5 million.

        In 2012, the Company issued purchase orders to Astellas for the purchase of VIBATIV® active pharmaceutical ingredient and other raw materials of up to $7.7 million, and as of December 31, 2012 the Company had purchased $5.8 million pursuant to these orders. The remaining active pharmaceutical ingredient and other raw materials will not be purchased. Also in 2012, the Company issued purchase orders to Astellas for the purchase of VIBATIV® finished goods inventories of up to $4.2 million, and as of December 31, 2012 these finished goods inventories remained subject to release.

Special Long-Term Retention and Incentive Equity Awards Program

        In 2011, the Company granted special long-term retention and incentive RSAs to members of senior management and special long-term retention and incentive cash bonus awards to certain employees. The awards have dual triggers of vesting based upon the achievement of certain performance conditions over a six-year timeframe from 2011 through December 31, 2016 and continued employment. The maximum potential expense associated with this program is $31.9 million related to stock-based compensation expense and $38.2 million related to cash bonus expense, which would be recognized in increments based on achievement of the performance conditions. As of December 31, 2012, the Company's management determined that the achievement of the requisite performance conditions was not probable and, as a result, no compensation expense has been recognized. If sufficient performance conditions are achieved in 2013, then the Company would recognize up to $15.6 million in stock-based compensation expense associated with these RSAs and $18.7 million related to cash bonus expense in 2013.

Guarantees and Indemnifications

        The Company indemnifies its officers and directors for certain events or occurrences, subject to certain limits. The Company believes the fair value of these indemnification agreements is minimal. Accordingly, the Company has not recognized any liabilities relating to these agreements as of December 31, 2012.